<PAGE>
----------------------
OFFITBANK VIF-HIGH YIELD FUND
OFFITBANK VIF-EMERGING MARKETS FUND
DJG VALUE EQUITY FUND
OFFITBANK VIF - U.S. SMALL CAP FUND
----------------------
ANNUAL REPORT
MARCH 31, 1998
THE
OFFITBANK
VARIABLE INSURANCE FUND, INC.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
VIF - HIGH YIELD FUND
MARCH 31, 1998
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S LETTER
The first quarter 1998 total return for the OFFITBANK VIF High Yield Fund was
3.15%. For comparative purposes, the return on 5 Year U.S. Treasuries was 1.60%
and the Merrill Lynch High Yield "BB" index returned 1.96%. The March 31, 1998
NAV price of $11.00 compares favorably to the $10.87 NAV at year end 1997. The
total return for the year ended March 31, 1998 was 14.84%. For comparative
purposes, the return on the 5 Year U.S. Treasuries was 10.61% and the Merrill
Lynch High Yield "BB" index returned 12.50%.
During the quarter, Treasury rates fell modestly even though the economy
remained strong. Intermediate Treasury rates fell about 9 basis points during
the quarter and the high yield market performed even better tightening an
incremental 8 to 10 basis points. This spread tightening represents a partial
recovery of the 40 basis point widening of the fourth quarter. Additionally,
high yield returns were helped by a large number of premium calls and tenders
during the quarter. The best high yield performance was seen in the middle
tier, primarily single B and low single B credits. For the quarter, single B's
outperformed double B's by about 150 basis points. As has been true for the
past year, lower quality and unseasoned telecommunication issues were the
stellar performers. Deferred coupon securities also outperformed over the
period returning in excess of 150 basis points to cash pay securities.
New issuance of high yield securities continues to smash all historic records
with $47 billion in new issues priced in the quarter, up 42% over the first
quarter of 1997. Approximately $21 billion of these new securities came to
market in the month of March. Over the quarter, the new issue forward calendar
increased dramatically rising from $3.3 billion at year end to $7.5 billion at
the end of March. This strong supply has been readily absorbed. Demand is so
robust, the heavy new issue market has failed to appreciably soften the
secondary market. Demand factors include strong net cash flows to the mutual
funds totaling over $5.7 billion, reinvestment of corporate calls and tenders
which totaled about $9 billion, new retirement fund allocations and continued
growth in CBO issuance.
We estimate the high yield market currently exceeds $500 billion, approximately
$250 billion of which has been issued in the last two and a quarter years.
Along with the growth, the character of the market is changing as well. Credit
quality is slipping as more triple C and non-rated securities are flowing
through the new issue market. In the first quarter of 1998 over 20% of the
issues were either non-rated or rated triple C as compared to 12% in the fourth
quarter of 1997. Additionally, over 20% of the new issues were either deferred
coupon or zero coupon securities. Partially offsetting this lower credit trend
is the large number of positive credit events resulting from the strong economy.
Many of these events have led to credit upgrades. In the first quarter,
upgrades exceeded downgrades by 1.6 to 1 and have been averaging 2 to 1 since
January 1997.
We remain positive on the high yield market. Today's spreads are still well in
excess of any historic loss experience for better quality high yield. However,
we are mindful that the positive credit environment can readily change for the
worse. The increasing risk of the market is not reflected in the tight intra-
sector spreads of BB to B. We believe the key determinant of long term success
in high yield investing is credit experience. We intend to maintain our focus
on the better quality part of the high yield market.
Several noteworthy actions occurred during the quarter which affected the
portfolio. The Dominion Textile tender was accomplished. Vencor announced a
tender for their notes at 50 basis points over Treasuries to the first call
date, as they wish to split the company into a REIT and an operating company.
Steel credits, including Armco, LTV and Wheeling Pittsburgh, were all up in
price by 3.75 points or more. Rumors of a global refinancing of Echostar, a
strongly improving credit, raised the Echostar bond price over 5%.
The composition of the Fund has remained steady. We continue to focus on the
better quality segment of the high yield market. 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. 71% of the holdings are rated at least B1 or B+. During
the quarter, 7 issues were upgraded while 3 were downgraded by either Moody's
and/or Standard & Poor's. We continue to believe that better quality high yield
credits will outperform fixed income alternatives over time.
Stephen T. Shapiro
April 15, 1998
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
The following graph illustrates comparative total return for a $250,000
investment made in the OFFITBANK VIF-High Yield Fund at the trading commencement
date of April 1, 1996 and held through March 31, 1998 against the performance of
the Merrill Lynch High Yield "BB" 5-6.99 Year and the 5 Year Treasury over the
same period.
[GRAPH]
VIF - HIGH YIELD FUND
OFFITBANK VIF MERRILL LYNCH YEILD 5 YEAR TREASURY
4/1/96 250,000 250,000 250,000
6/30/96 254,575 252,275 249,325
9/30/96 267,406 260,146 253,339
12/31/96 278,262 270,084 259,622
3/31/97 279,793 272,703 257,597
6/30/97 293,056 283,839 265,689
9/30/97 304,764 293,693 273,560
12/31/97 311,516 300,857 280,455
3/31/98 321,317 306,784 284,930
Since Inception
Total Return* One Year (April 1, 1996)
- ------------- -------- ---------------
OFFITBANK VIF-High Yield Fund 14.84% 13.37%
Merrill Lynch High Yield "BB" 5-6.99 Year 12.50% 10.78%
5 Year Treasury 10.61% 6.76%
* Assumes reinvestment of all dividends and distributions. The total return
may reflect the waiver of a portion of the Fund's advisory or administrative
fees for certain periods since inception date. In such instances, and without
waiver of fees, total return would have been lower.
Performance data quoted represents past performance and is not predictive of
future performance. Investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance data quoted does not include insurance charges
imposed in connection with variable insurance contracts, and if insurance
charges were included, performance numbers would have been lower. Indices shown
for comparative purposes only, and are not available for investment.
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
CORPORATE BONDS (96.9%)
AEROSPACE/DEFENSE (0.5%)
Sequa Corp. Sr Notes, 8.75%, 12/15/01 $ 150,000 $ 152,625
----------
AUTOMOTIVE (1.3%)
Exide Corp. Sr Notes, 10.00%, 04/15/05 150,000 158,250
Hayes Wheels International Inc. Sr Sub Notes, 9.125%, 07/15/07 250,000 264,375
----------
422,625
----------
BROADCAST/TELECOMMUNICATIONS (13.6%)
CCPR Services Inc. Sr Sub Notes, 10.00%, 02/01/07 150,000 149,250
Centennial Cellular Corp. Sr Notes, 8.875%, 11/01/01 500,000 517,499
Comcast Cellular Holdings Inc. Sr Notes, 9.50%, 05/01/07 350,000 367,500
Echostar Communications Sr Disc Notes, 0/12.875%, 06/01/04 500,000 (2) 481,250
Granite Broadcasting Corp. Sr Sub Notes, 9.375%, 12/01/05 250,000 258,125
Heritage Media Corp. Sr Sub Notes, 8.75%, 02/15/06 200,000 215,000
Nextel Communications Sr Disc Notes, 0/10.65%, 09/15/07 350,000 (2) 235,375
Nextel Communications Sr Disc Notes, 0/9.75%, 10/31/07 300,000 (2) 195,375
Paging Network Sr Sub Notes, 10.125%, 08/01/07 250,000 262,500
PriCellular Wireless Sr Notes, 10.75%, 11/01/04 275,000 312,125
Rogers Cantel Inc. Sr Sub Notes, 8.80%, 10/01/07 250,000 253,750
Satelites Mexicanos S.A. Sr Notes, 10.125%, 11/01/04 (144A) 200,000 (1) 207,000
Vanguard Cellular Systems Inc. Sr Debs., 9.375%, 04/15/06 300,000 318,000
Viacom Inc. Sub Notes, 8.00%, 07/07/06 500,000 511,250
----------
4,283,999
----------
CABLE (10.3%)
Adelphia Communications Corp. Sr Notes, 9.875%, 03/01/07 200,000 218,000
Cablevision Systems Corp. Sr Sub Notes, 9.25%, 11/01/05 300,000 320,250
Century Communications Corp. Sr Notes, 8.875%, 01/15/07 400,000 417,000
Comcast Corp. Sr Sub Debs., 9.375%, 05/15/05 250,000 267,500
Jones Intercable Inc. Sr Sub Debs., 10.50%, 03/01/08 500,000 551,249
Lenfest Communications Inc. Sr Notes, 8.375%, 11/01/05 300,000 310,875
NTL Inc. Sr Notes, 10.00%, 02/15/07 200,000 215,500
Olympus Communications L.P. Sr Notes, 10.625%, 11/15/06 300,000 333,000
Rogers Cablesystems Ltd. Sr Secured 2nd Priority Notes, 9.625%, 08/01/02 300,000 321,375
TeleWest Plc Sr Debs., 9.625%, 10/01/06 250,000 269,375
----------
3,224,124
----------
CHEMICAL (4.1%)
Borden Chemicals & Plastics Sr Notes, 9.50%, 05/01/05 250,000 261,250
Harris Chemical North America Inc. Sr Secured Notes, 10.25%, 07/15/01 250,000 261,875
ISP Holdings Inc. Sr Notes, 9.00%, 10/15/03 300,000 314,250
Polymer Group Sr Sub Notes, 8.75%, 03/01/08 (144A) 300,000 (1) 306,000
Sifto Canada Inc. Sr Notes, 8.50%, 07/15/00 150,000 155,625
----------
1,299,000
----------
</TABLE>
The accompanying notes are an intregral part of the financial statements.
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
CONSUMER GROUPS (5.8%)
Ameriserve Food Co. Sr Notes, 8.875%, 10/15/06 $ 300,000 $ 310,500
Chiquita Brands International Inc. Sr Notes, 10.125%, 11/01/06 250,000 272,500
Fedders N.A. Sr Sub Notes, 9.375%, 08/15/07 200,000 204,000
Fleming Companies Inc. Sr Notes, 10.625%, 12/15/01 500,000 535,000
Host Marriott Travel Plaza Sr Notes, 9.50%, 05/15/05 250,000 265,625
Revlon Consumer Products Sr Sub Notes, 8.625%, 02/01/08 (144A) 250,000 (1) 253,438
----------
1,841,063
----------
FINANCIAL SERVICES/INSURANCE (3.2%)
Amresco Inc. Sr Sub Notes, 10.00%, 03/15/04 200,000 205,500
Presidential Life Corp. Sr Notes, 9.50%, 12/15/00 400,000 414,540
Reliance Group Holdings Inc. Sr Sub Notes, 9.75%, 11/15/03 250,000 262,500
Veritas Holdings Sr Notes, 9.625%, 12/15/03 126,000 135,135
----------
1,017,675
----------
FOREST & PAPER PRODUCTS (3.7%)
Doman Industries Ltd. Sr Notes, 8.75%, 03/15/04 200,000 200,000
Repap New Brunswick 1st Priority Floating Rate Sr Secured Notes,
8.9375%, 07/15/00 250,000 (3) 248,125
Repap New Brunswick 1st Priority Sr Secured Notes, 9.875%, 07/15/00 150,000 154,875
Stone Container Co. Sr Sub Debs., 12.25%, 04/01/02 250,000 256,875
Stone Container Corp. Sr Secured Notes, 10.75%, 10/01/02 300,000 320,625
----------
1,180,500
----------
GENERAL INDUSTRIES/MANUFACTURING (7.1%)
Allied Waste N.A. Sr Sub Notes, 10.25%, 12/01/06 200,000 221,750
Emcor Group Inc. Notes, 11.00%, 12/15/01 210,100 218,504
Furon Company Sr Sub Notes, 8.125%, 03/01/08 (144A) 250,000 (1) 250,938
Nortek Inc. Sr Notes, 9.25%, 03/15/07 300,000 312,000
Unisys Corp. Sr Notes, 11.75%, 10/15/04 250,000 288,750
Williams Scotsman Inc. Sr Notes, 9.875%, 06/01/07 450,000 468,000
Zilog Inc. Sr Notes, 9.50%, 03/01/05 (144A) 500,000 (1) 490,000
----------
2,249,942
----------
HEALTH CARE (5.5%)
Columbia/HCA Healthcare Meduim Term Note, 8.85%, 01/01/07 300,000 315,162
Extendicare Health Sr Sub Notes, 9.35%, 12/15/07 (144A) 250,000 (1) 259,688
Integrated Health Services Inc. Sr Sub Notes, 9.50%, 09/15/07 300,000 319,500
Medaphis Corp. Sr Notes, 9.50%, 02/15/05 (144A) 200,000 (1) 200,000
Tenet Healthcare Corp. Sr Sub Notes, 8.625%, 01/15/07 300,000 311,250
Vencor Inc. Sr Sub Notes, 8.625%, 07/15/07 300,000 339,000
----------
1,744,600
----------
HOTELS & GAMING (8.9%)
Capstar Hotel Co. Sr Sub Notes, 8.75%, 08/15/07 200,000 207,000
Hollywood Park Inc. Sr Sub Notes, 9.50%, 08/01/07 300,000 317,250
</TABLE>
The accompanying notes are an intregral part of the financial statements.
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
HOTELS & GAMING (CONTINUED)
Host Marriott Properties Inc. Sr Secured Notes, 9.50%, 05/15/05 $ 500,000 $ 532,500
John Q Hammons Hotels L.P. 1st Mtg. Notes, 8.875%, 02/15/04 300,000 303,750
Prime Hospitality Corp. 1st Mtg. Notes, 9.25%, 01/15/06 250,000 266,875
Prime Hospitality Corp. Sr Sub Notes, 9.75%, 04/01/07 250,000 269,375
Station Casinos Sr Sub Notes, 9.625%, 06/01/03 250,000 259,375
Sun International Hotels Ltd. Sr Sub Notes, 9.00%, 03/15/07 300,000 313,500
Trump Atlantic City 1st Mtg. Notes, 11.25%, 05/01/06 350,000 359,625
----------
2,829,250
----------
INDEPENDENT POWER (1.8%)
AES Corp. Sr Sub Notes, 8.50%, 11/01/07 250,000 257,500
Calpine Corp. Sr Notes, 10.50%, 05/15/06 285,000 314,925
----------
572,425
----------
METALS & MINING (8.1%)
AK Steel Corp. Sr Notes, 9.125%, 12/15/06 250,000 267,813
Armco Inc. Sr Notes, 9.375%, 11/01/00 200,000 206,000
Centaur Mining Exploration Sr Secured Notes, 11.00%, 12/01/07 (144A) 250,000 (1) 258,125
Freeport McMoran C&G Sr Notes, 7.20%, 11/15/26 300,000 252,000
Inland Steel Co. 1st Mtg. Notes, 7.90%, 01/15/07 300,000 299,250
Kaiser Aluminum & Chemical Corp. Sr Notes, 9.875%, 02/15/02 200,000 207,750
LTV Corp. Sr Notes, 8.20%, 9/15/07 200,000 202,000
Murrin Murrin Sr Sub Notes, 9.375%, 08/31/07 250,000 249,375
National Steel Corp. 1st Mtg. Notes, 8.375%, 08/01/06 348,000 348,870
Westmin Resources Ltd. Sr Secured Notes, 11.00%, 03/15/07 250,000 288,750
----------
2,579,933
----------
OIL/GAS (4.2%)
Ferrellgas Partner L.P. Sr Notes, 9.375%, 06/15/06 400,000 424,000
Giant Industries Sr Sub Notes, 9.00%, 09/01/07 200,000 205,000
J Ray McDermott S.A. Sr Sub Notes, 9.375%, 07/15/06 300,000 322,500
Petroleum Heat & Power Sub Notes, 10.125%, 04/01/03 200,000 184,000
Trico Marine Serv Sr Note, 8.50%, 08/01/05 200,000 202,000
----------
1,337,500
----------
PACKAGING/CONTAINERS (2.1%)
Gaylord Container Corp. Sr Notes, 9.75%, 06/15/07 400,000 409,000
Silgan Corp. Sr Sub Debs., 9.00%, 06/01/09 250,000 262,500
----------
671,500
----------
PUBLISHING/ADVERTISING (4.7%)
Big Flower Press Sr Sub Notes, 8.875%, 07/01/07 300,000 305,999
Hollinger International Publishing Sr Notes, 8.625%, 03/15/05 250,000 263,750
K-III Communication Corp. Sr Notes, 8.50%, 02/01/06 200,000 207,880
Lamar Advertising Co. Sr Sub Notes, 9.625%, 12/01/06 250,000 271,563
Outdoor Systems Inc. Sr Sub Notes, 9.375%, 10/15/06 250,000 268,125
</TABLE>
The accompanying notes are an intregral part of the financial statements.
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
PUBLISHING/ADVERTISING (CONTINUED)
Sun Media Corp. Sr Sub Notes, 9.50%, 05/15/07 $ 155,000 $ 167,013
----------
1,484,330
----------
REAL ESTATE (2.3%)
Forest City Enterprises Sr Notes, 8.50%, 03/15/08 300,000 301,500
Rockefeller Center Properties Sr Notes, 0.00%, 12/31/00 400,000 302,000
Trizec Finance Ltd. Sr Notes, 10.875%, 10/15/05 100,000 112,500
----------
716,000
----------
RETAIL (3.1%)
Nine West Group Inc. Sr Notes, 8.375%, 08/15/05 (144A) 250,000 (1) 238,750
Petro Stopping Centers Sr Notes, 10.50%, 02/01/07 200,000 216,000
Stater Brothers Holdings Sr Notes, 11.00%, 03/01/01 250,000 273,125
TravelCenters of America Sr Sub Notes, 10.25%, 04/01/07 250,000 266,875
----------
994,750
----------
TEXTILES (2.3%)
Galey & Lord Inc. Sr Sub Notes, 9.125%, 03/01/08 (144A) 200,000 (1) 203,000
Westpoint Stevens Inc. Sr Sub Notes, 9.375%, 12/15/05 500,000 530,625
----------
733,625
----------
TRANSPORTATION (4.3%)
Navigator Gas Transport, First Priority Ship Mtg. Notes, 10.50%, 06/30/07 (144A) 250,000 (1) 265,000
Piedmont Aviation Inc. Equipment Trust Certificates, 9.65%, 05/08/99 277,000 282,540
Piedmont Aviation Inc. Equipment Trust Certificates, 9.80%, 05/08/04 261,000 270,135
Stena Sr Notes, 8.75%, 06/15/07 300,000 307,875
Airtran Airlines Inc. Sr Notes, 10.50%, 04/15/01 250,000 247,500
----------
1,373,050
----------
TOTAL CORPORATE BONDS (COST $29,346,156) 30,708,516
----------
PREFERRED STOCKS (1.1%)
FOREST & PAPER PRODUCTS (0.4%)
Asia Pulp & Paper, 12.00%, Series A 150,000 125,250
----------
HEALTH CARE (0.7%)
Fresenius Medical Care Capital Trust, Trust Pfd., 9.00% 200,000 210,000
----------
TOTAL PREFERRED STOCKS (COST $357,040) 335,250
----------
REPURCHASE AGREEMENTS (0.4%)
Bank Of New York Repurchase Agreement 5.60%, 04/01/98 (dated 03/31/98;
proceeds $125,119, collateralized by $130,000 U.S. Treasury Notes, 5.375%,
due 05/31/98) 125,100 125,100
----------
TOTAL REPURCHASE AGREEMENTS (COST $125,100) 125,100
----------
</TABLE>
The accompanying notes are an intregral part of the financial statements.
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
SHARES
OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
TOTAL INVESTMENTS (COST $29,828,296) (+) - 98.4% 31,168,866
OTHER ASSETS IN EXCESS OF LIABILITIES 1.6% 506,100
------------
TOTAL NET ASSETS - 100.0% $ 31,674,966
------------
------------
________________
+ Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation $1,412,752
Unrealized depreciation (72,182)
----------
Net unrealized appreciation $1,340,570
----------
----------
(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 reflected is rate in effect at March 31, 1998.
The accompanying notes are an intregral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
VIF - EMERGING MARKETS FUND
MARCH 31, 1998
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S LETTER
The OFFITBANK VIF Emerging Markets Fund produced a net investment return of
5.17% for the period of December 31, 1997 to March 31, 1998, and for the entire
fiscal year ended March 31, 1998 was 11.26%.
Since its inception on August 28, 1996, the Fund has produced an average
annualized return of 12.42% with an annualized standard deviation of 8.79%. The
J.P. Morgan Latin America Eurobond Index produced an average annualized return
of 15.40% for the same period with an annualized standard deviation of 10.11%.
As of March 31, 1998 the net asset value per share was $10.55. The approximate
average maturity of the Fund as of March 31, 1998 was 6.8 years, the approximate
average duration was 4.1 years and the 30 day SEC yield was 8.63%.
At quarter end, 73.6% of the Fund was invested in Eurobonds, 16.7% in U.S.
dollar-denominated Brady and pre-Brady sovereign debt, 3.9% in local market
instruments, and 5.8% in cash and accrued income. The Fund's foreign currency
exposure was limited to 5.2% of assets. At quarter end, the fund maintained a
90.4% allocation to Latin America with the largest allocations to Brazil
(29.8%), Mexico (29.6%), and Argentina (15.4%), as well as 3.8% in Moroccan
sovereign, dollar-denominated bank debt.
The market remains concerned with developments in Asia as well as the cyclical
downturn in global commodity prices, particularly oil. Against this backdrop of
difficult external circumstances, we believe regional segmentation is
accelerating as investors recognize the inherent differences in the various sub-
components of Emerging Markets.
Latin America has demonstrated responsive and responsible economic management in
the face of these external difficulties. Throughout the region, policymakers
(particularly the Brazilian economic team) have moved to reduce fiscal deficits
and accelerate structural reforms. Emblematic of Latin America's newfound
leadership role, Mexico has spearheaded international efforts to shore up oil
prices.
Having maintained credibility with investors, Latin American issuers are the
leaders in re-entering the international capital markets in the wake of the Asia
crisis. The market is rewarding Latin America's high standards of economic
management, disclosure, and commitment to reform with spread compression as
measured by the JP Morgan Emerging Markets Bond Index spread over Treasuries:
503 basis points on Dec. 31, 1997, 529 on Jan. 31, 1998, 486 on Feb. 28, 1998,
and 448 on March 31, 1998.
In addition to the positive momentum of economic policy, financial results of
corporate issuers have generally been above expectations. Companies are now
generating higher levels of cash flow for debt retirement and investment, thanks
to the balance sheet de-leveraging and corporate restructuring undertaken in the
past few years. In our view, Latin corporate management appears to be
increasingly committed to minority investor and bond holder interests. To that
end, they are dedicated to improved disclosure and generating attractive
sustainable returns to capital invested.
We remain focused on the absolute value offered by US dollar denominated
instruments of good quality issuers (B+ rated or equivalent in our opinion)
offering spreads above Treasuries of 350 - 450 basis points.
Richard M. Johnston Wallace Mathai-Davis
April 15, 1998
<PAGE>
OFFITBANK
VIF - EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
The following graph illustrates comparative total return for a $250,000
investment made in the OFFITBANK VIF-Emerging Markets Fund at the trading
commencement date of August 28, 1996 and held through March 31, 1998 against the
performance of the J.P. Morgan Emerging Markets Bond Index+ and the J.P. Morgan
Latin America Eurobond Index over the same period. In addition, the graph below
includes a composite of the return of such indices which we believe provides a
comparison to the overall performance of the various asset classes in which the
Fund invests.
[GRAPH]
50% J.P. Morgan
Emerging
Markets
Bond Index+
OFFITBANK VIF and 50% J.P. J.P. Morgan J.P. Morgan
Emerging Morgan Latin Emerging Latin
Markets America Markets America
Fund Eurobond Index Bond Index+ Eurobond
Index
8/28/96 250,000 250,000 250,000 250,000
9/30/96 256,325 259,450 264,225 254,675
12/31/96 264,835 276,159 282,959 269,446
3/31/97 270,714 279,638 285,166 274,135
6/30/97 286,598 301,954 312,014 292,137
9/30/97 297,659 319,203 333,567 305,419
12/31/97 286,403 309,345 319,825 299,135
3/31/98 301,199 325,118 336,489 314,016
Since Inception
Total Return* One Year (August 28, 1996)
------------- -------- -----------------
OFFITBANK VIF-Emerging Markets Fund 11.26% 12.42%
Composite Index: 50% J.P. Morgan Emerging
Markets Bond Index+ and 50% J.P. Morgan
Latin America Eurobond Index 16.26% 17.98%
J.P. Morgan Emerging Markets Bond Index+ 18.00% 20.56%
J.P. Morgan Latin America Eurobond Index 14.55% 15.40%
* Assumes reinvestment of all dividends and distributions. The total return
may reflect the waiver of a portion of the Fund's advisory or administrative
fees for certain periods since inception date. In such instances, and without
waiver of fees, total return would have been lower.
Performance data quoted represents past performance and is not predictive of
future performance. Investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance data quoted does not include insurance charges
imposed in connection with variable insurance contracts, and if insurance
charges were included, performance numbers would have been lower. Indices shown
for comparative purposes only, and are not available for investment.
<PAGE>
OFFITBANK
VIF - EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
CORPORATE BONDS (68.7%)
FOOD (4.2%)
BRAZIL (4.2%)
Arisco Prod Alimenticios, 10.75%, 05/22/05 (144A) $ 250,000 (1) $ 243,750
---------
HOTEL & TOURISM (4.5%)
MEXICO (4.5%)
Grupo Posadas S.A. de C.V., 10.375%, 02/13/02 (144A) 250,000 (1) 260,625
---------
INDUSTRIAL (12.4%)
ARGENTINA (3.5%)
Mastellone Hermanos S.A., 11.75%, 04/01/08 (144A) 200,000 (1) 205,000
---------
BRAZIL (4.4%)
Elevadores Atlas, 11.00/11.50/11.75%, 07/11/04 250,000 (2) 252,813
---------
MEXICO (4.5%)
Vicap S.A. Gtd. Sr Notes, 10.25%, 05/15/02 (144A) 250,000 (1) 260,625
---------
718,438
---------
INFRASTRUCTURE (4.5%)
ARGENTINA (4.5%)
Cia Latino Americana, 11.625%, 06/01/04 250,000 257,500
---------
MANUFACTURING (2.1%)
MEXICO (2.1%)
Internacional De Ceramica, 9.75%, 08/01/02 (144A) 125,000 (1) 120,000
---------
MEDIA (8.3%)
BRAZIL (4.9%)
Globo Communicacoes Participacoes, 10.50%, 12/20/06 70,000 71,138
Globo Communicacoes Participacoes, 10.50%, 12/20/06 (144A) 100,000 (1) 101,625
RBS Participacoes S.A., 14.00%, 12/15/03 100,000 111,500
---------
284,263
---------
MEXICO (3.4%)
Grupo Televisa, 0/13.25%, 05/15/08 (144A) 200,000 (1)(2) 156,500
Grupo Televisa S.A. (Regular), 0/13.25%, 05/15/08 50,000 (2) 39,125
---------
195,625
---------
479,888
---------
PAPER/PULP (2.5%)
MEXICO (2.5%)
Grupo Industrial Durango, 12.625%, 08/01/03 125,000 141,875
---------
PETROCHEMICALS (6.1%)
BRAZIL (1.7%)
Opp Petroquimica, 11.50%, 02/23/04 (144A) 100,000 (1) 100,000
---------
</TABLE>
The accompanying notes are an intregral part of the financial statements.
<PAGE>
OFFITBANK
VIF - EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
PETROCHEMICALS (CONTINUED)
MEXICO (4.4%)
Cydsa S.A., 9.375%, 06/25/02 (144A) $ 250,000 (1) $ 251,250
----------
351,250
----------
STEEL (15.6%)
ARGENTINA (3.6%)
Acindar, 11.25%, 02/15/04 200,000 210,000
----------
BRAZIL (3.2%)
Csn Iron S.A., 9.125%, 06/01/07 (144A) 200,000 (1) 187,500
----------
MEXICO (8.8%)
Hylsa S.A. de C.V. Bonds, 9.25%, 09/15/07 (144A) 250,000 (1) 250,625
Ispat Mexicana S.A., 10.375%, 03/15/01 250,000 260,624
----------
511,249
----------
908,749
----------
TELECOMMUNICATIONS (2.6%)
VENEZUELA (2.6%)
Cantv Finance Ltd., 8.875%, 02/01/02 50,000 50,625
Cantv Finance Ltd., 9.25%, 02/01/04 100,000 101,125
----------
151,750
----------
UTILITIES (5.9%)
BRAZIL (5.9%)
Comp Energetica Sao Paulo, 9.25%, 05/10/01 250,000 (b) 142,196
Companhia Saneamento Basico, 10.00%, 07/28/05 (144A) 200,000 (1) 196,000
----------
338,196
----------
TOTAL CORPORATE BONDS (COST $3,938,949) 3,972,021
----------
FOREIGN GOVERNMENTS (27.1%)
SOVEREIGN DEBT (27.1%)
ARGENTINA (4.0%)
Argentina Bocon Pro 1 Floating Rate Bonds, 3.15%, 04/01/07 250,000 (a)(3) 230,503
----------
BRAZIL (6.0%)
Brazil Brady Capitalization Step-Up Bonds, 4.00/8.00%, 04/15/14 222,351 (2) 186,566
Brazil Brady DCB Floating Rate Brady Bonds, 6.75%, 04/15/12 200,000 (3) 160,000
----------
346,566
----------
ECUADOR (3.6%)
Republic of Ecuador, 11.25%, 04/25/02 200,000 207,250
----------
MOROCCO (3.9%)
Morocco Tranche A Loan, 6.66%, 01/01/09 250,000 (3) 224,375
----------
</TABLE>
The accompanying notes are an intregral part of the financial statements.
<PAGE>
OFFITBANK
VIF - EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
FOREIGN GOVERNMENTS (CONTINUED)
VENEZUELA (9.6%)
Republic of Venezuela, 10.25%, 10/04/03 $ 250,000 (b) $ 148,149
Venezuela Brady DCB, Floating Rate Bond, 6.8125%, 12/18/07 238,095 (3) 216,370
Venezuela Brady FLIRB, Floating Rate Bonds, 6.625%, 03/31/07 214,285 (3) 194,731
-----------
559,250
-----------
TOTAL FOREIGN GOVERNMENTS (COST $1,488,481) 1,567,944
-----------
REPURCHASE AGREEMENTS (2.6%)
UNITED STATES (2.6%)
Chase Manhattan Bank Repurchase Agreement, 5.55%, 04/01/98 (dated 148,558 148,558
03/31/98; proceeds $148,581, collateralized by $135,000 U.S. Treasury -----------
Bonds, 7.875%, due 11/15/04)
TOTAL REPURCHASE AGREEMENTS (COST $148,558) 148,558
-----------
TOTAL INVESTMENTS (COST $5,575,988) (+) - 98.4% 5,688,523
OTHER ASSETS IN EXCESS OF LIABILITIES 1.6% 91,009
-----------
TOTAL NET ASSETS - 100.0% $ 5,779,532
-----------
-----------
</TABLE>
________________
+ Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation $156,524
Unrealized depreciation (43,989)
--------
Net unrealized appreciation $112,535
--------
--------
Principal denominated in the following currencies:
(a) Argentine Peso (b) German Deutsche Mark
(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 reflected is rate in effect at March 31, 1998.
The accompanying notes are an intregral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
DJG VALUE EQUITY FUND
MARCH 31, 1998
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S LETTER
Dear Investor:
The DJG Value Equity Fund completed its first fiscal year on March 31st and what
a year it was. During the nearly twelve months from the inception of the fund
on April 11, 1997 through the end of the fiscal year, the net asset value of the
Fund grew by 49.40% which compares favorably to the 47.65% increase in the S&P
500. These rates of gain are in our view clearly unsustainable and have raised
equity valuations in general to levels that fully reflect what some observers
have characterized as "investment nirvana"- an expanding economy, rising
corporate profits, and an ever diminishing low rate of inflation. The question
has to be asked: how long can these optimal conditions persist?
The Fund's investment focus, however, is not on macro forces that influence
equity valuations, but rather on seeking investment opportunities in individual
equity securities where a substantial gap exists between a company's intrinsic
worth as a business and what it is selling for in the market. Particular
emphasis is placed on those situations where management has a specific strategic
plan in place to narrow the value/price gap. The strategic plan often includes
asset restructurings, cost re-engineering, split-ups/spin-offs and share
repurchases. During the first year of the Fund's existence we successfully
uncovered many opportunities that fit the criteria that are the basis of our
investment disciplines. Examples of Fund holdings include American Express,
Waban (split into BJ's Wholesale Club and Homebase), Comdisco, Comsat, Navistar
and Whitman (split into Whitman, Hussmann International and Midas). All these
securities exhibited large value/price gaps when purchased and those gaps were
largely closed by specific actions taken by management to enhance value.
In the current euphoric market atmosphere, we are constantly reviewing our
holdings for their risk-reward profiles. This discipline recently caused us to
take substantial profits in a number of holdings that we believed were fully
valued. Conversely, with stock prices elevated, it is increasingly difficult to
find good absolute value. Nevertheless, we continue to be able to find an
occasional opportunity where a reasonable discount exists from intrinsic value.
Finally, in reviewing the Fund's largest holdings, we see the potential for
further appreciation in this group based upon the companies' improving prospects
and underlying values when compared to each stocks' current market price.
With the popular indices at new highs and equity valuations stretched, we remain
quite cautious regarding the investment environment. We reiterate that the
market's exuberance will not cause us to stray from our disciplined investment
policy philosophy. By doing so, we will seek to continue to build the Fund's
assets over time while helping to contain risk.
Erwin Zeuschner
Portfolio Manager and
Principal of David J. Greene & Company LLC
<PAGE>
OFFITBANK
DJG VALUE EQUITY FUND
- --------------------------------------------------------------------------------
The following graph represents the total return based on a $250,000 investment
made in the DJG Value Equity Fund at April 30, 1997 and held through March 31,
1998 as well as the performance of the S&P 500 Stock Index over the same period.
<TABLE>
<CAPTION>
[GRAPH]
DJG VALUE EQUITY FUND
DJG Value Equi S&P 500 Stock Index
<S> <C> <C>
4/30/97 250,000 250,000
5/31/97 268,014 265,350
6/30/97 280,185 277,175
7/31/97 301,607 299,200
8/31/97 302,580 282,550
9/30/97 322,785 298,025
10/31/97 315,725 288,075
11/30/97 315,969 301,425
12/31/97 324,002 306,600
1/31/98 312,568 310,000
2/28/98 348,588 332,375
3/31/98 363,681 349,375
</TABLE>
<TABLE>
<CAPTION>
Since
Total Return* (April 11, 1998)
------------- ----------------
<S> <C>
DJG Value Equity Fund 49.40%
</TABLE>
* Assumes reinvestment of all dividends and distributions. The total return
may reflect the waiver of a portion of the Fund's advisory or administrative
fees for certain periods since inception date. In such instances, and without
waiver of fees, total return would have been lower.
Performance data quoted represents past performance and is not predictive of
future performance. Investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance data quoted does not include insurance charges
imposed in connection with variable insurance contracts, and if insurance
charges were included, performance numbers would have been lower. Indices shown
for comparative purposes only, and are not available for investment.
<PAGE>
OFFITBANK
DJG VALUE EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
COMMON STOCKS (84.2%)
AUTOMOTIVE (8.3%)
General Motors Corp. 600 $ 40,463
ITT Industries, Inc. 1,500 57,094
Navistar International Corp.* 2,000 69,999
-----------
167,556
-----------
BEVERAGES (2.0%)
Whitman Corp. 2,000 39,500
-----------
BUSINESS EQUIPMENT & SERVICES (5.7%)
Comdisco, Inc. 1,350 58,894
Ryder Systems, Inc. 1,500 57,000
-----------
115,894
-----------
CAPITAL GOODS (2.8%)
Hussmann International, Inc. 3,000 56,250
-----------
CHEMICAL (6.9%)
Calgon Carbon Corp. 5,000 58,438
Freeport McMoran Sulphur, Inc.* 1,816 26,332
IMC Global, Inc. 1,350 51,384
IMC Global, Inc. Warrants* 500 3,000
-----------
139,154
-----------
COMMERCIAL SERVICES (2.8%)
Olsten Corp. 3,500 55,563
-----------
COMPUTER SOFTWARE (3.1%)
BancTec, Inc.* 2,500 61,563
-----------
ENTERTAINMENT (4.2%)
Mirage Resorts, Inc.* 1,400 34,038
Time Warner, Inc. 700 50,400
-----------
84,438
-----------
FINANCIAL SERVICES/INSURANCE (9.6%)
American Express Co. 400 36,725
Dime Bancorp, Inc. 2,000 60,124
Everest Reinsurance Holdings, Inc. 1,100 45,238
TIG Holdings, Inc. 2,000 52,625
-----------
194,712
-----------
HEALTH CARE (4.8%)
Aetna, Inc. 500 41,719
Foundation Health Systems, Inc., Class A* 2,000 55,125
-----------
96,844
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
DJG VALUE EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
COMMON STOCKS (CONTINUED)
PAPER PRODUCTS (3.2%)
Georgia Pacific Corp. 1,000 $ 64,750
-----------
RESTAURANTS (1.5%)
Tricon Global Restaurants* 1,000 30,063
-----------
RETAIL (14.2%)
American Stores Co. 3,500 90,999
BJ's Wholesale Club, Inc.* 1,800 70,200
Footstar, Inc.* 2,100 75,600
Homebase, Inc.* 5,800 48,575
-----------
285,374
-----------
TECHNOLOGY (5.5%)
International Game Technology 2,500 62,500
Sensormatic Electronics Corp. 3,000 49,125
-----------
111,625
-----------
TELECOMMUNICATIONS (9.6%)
AirTouch Communications, Inc.* 900 44,044
COMSAT Corp. 1,600 55,100
Telephone and Data Systems, Inc. 2,000 94,999
-----------
194,143
-----------
TOTAL COMMON STOCKS (COST $1,255,377) 1,697,429
-----------
MONEY MARKET FUNDS (15.1%)
Bank of New York Cash Reserve MM Fund $305,382 305,382
-----------
TOTAL MONEY MARKET FUNDS (COST $305,382) 305,382
-----------
TOTAL INVESTMENTS (COST $1,560,759) (+) - 99.3% 2,002,811
OTHER ASSETS IN EXCESS OF LIABILITIES 0.7% 15,072
---------
TOTAL NET ASSETS - 100.0% $ 2,017,883
-----------
-----------
</TABLE>
- ----------------
+ Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation $451,161
Unrealized depreciation (9,109)
---------
Net unrealized appreciation $442,052-
---------
---------
</TABLE>
* Denotes non-income producing security.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
VIF - U.S. SMALL CAP FUND
MARCH 31, 1998
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S LETTER
Dear Investor:
The first quarter of 1998 saw the continuation of high returns for most
investors in the U.S. equity markets. Fueled by global investors seeking safe
havens and heavy net inflows into mutual funds that invest in "blue chip, brand
name companies," large capitalization equities outperformed the smaller
capitalization equities as they did last year. For the full year ended March
31, 1998 the S&P 500 Index rose 48% and the Russell 2000 Index a most
respectable 42.1%.
The OFFITBANK VIF U.S. Small Cap Fund more than matched its benchmark gaining
41.4%, after all fees and expenses, for the period since inception (April 11,
1997 to March 31, 1998) which was ten days short of a full year. The benchmark,
the Russell 2000 Index* rose 40.8%.
Following the disappointing performance of technology stocks in the market
overall in late 1997, the first quarter of 1998 saw that trend reversed with the
technology sector providing particularly favorable performance. In the Russell
2000 Index, other market sectors which recorded even stronger returns were the
utilities (telecommunications), transportation and consumer stocks. In our
portfolio, Computer Task Group, in the technology sector, benefited from the
increasing need for companies to become Year 2000 compliant and, in the
telecommunications sector, TresCom International and Vanguard Cellular aided by
consolidation and takeover activities in the telecommunications sector, have all
performed exceedingly well.
We have recently purchased Rio Alto Exploration, a Canadian oil and gas company
expected to benefit from the narrowing of gas price differentials between the
U.S. and Canada and in the technology sector, Komag, a leading independent
producer of magnetic discs for computer memories.
The portfolio on March 31, 1998 has maintained its overweight versus the Russell
2000 Index in the technology, consumer and health care sectors while remaining
underweight in the financial, autos and producer durables.
Looking forward, we believe that valuations for small capitalization stocks are
reasonable. On a price to sales and price to book ratio, small capitalization
stocks continue to trade at a discount to large capitalization stocks. On a
relative P/E basis, small capitalization equities are selling almost on par with
large capitalization equities. Our primary focus continues to be on specific
company analysis and on holding companies we believe have strong fundamentals
and are selling at compelling discounts to their respective fair market value
and we believe will produce returns in excess of the overall market.
* price only return for the Russell 2000 Index for the period 4/11/97 through
4/30/97, total return thereafter.
Jane A. Freeman
Senior Portfolio Manager
<PAGE>
OFFITBANK
VIF - U.S. SMALL CAP FUND
- --------------------------------------------------------------------------------
The following graph represents the total return based on a $250,000 investment
made in the OFFITBANK VIF-U.S. Small Cap Fund at April 30, 1997 and held through
March 31, 1998 as well as the performance of the Russell 2000 Index over the
same period.
[GRAPH]
<TABLE>
<CAPTION>
VIF - SMALL CAP EQUITY FUND
OFFITBANK VIF RUSSELL 2000 INDEX
<S> <C> <C>
4/30/97 250,000 250,000
5/31/97 282,242 277,800
6/30/97 283,777 289,725
7/31/97 306,807 303,200
8/31/97 320,880 310,125
9/30/97 337,257 332,825
10/31/97 322,416 318,225
11/30/97 323,695 316,150
12/31/97 324,463 321,700
1/31/98 317,042 316,625
2/28/98 343,398 340,025
3/31/98 361,822 354,050
</TABLE>
<TABLE>
<CAPTION>
Since
Total Return* (April 11, 1998)
------------- ----------------
<S> <C>
OFFITBANK VIF-U.S. Small Cap Fund 41.40%
</TABLE>
* Assumes reinvestment of all dividends and distributions. The total return
may reflect the waiver of a portion of the Fund's advisory or administrative
fees for certain periods since inception date. In such instances, and without
waiver of fees, total return would have been lower.
Performance data quoted represents past performance and is not predictive of
future performance. Investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance data quoted does not include insurance charges
imposed in connection with variable insurance contracts, and if insurance
charges were included, performance numbers would have been lower. Indices
shown for comparative purposes only, and are not available for investment.
Small Cap Funds typically carry additional risk since smaller companies
generally have a higher risk of failure.
<PAGE>
OFFITBANK
VIF - U.S. SMALL CAP FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
COMMON STOCKS (92.6%)
AUTOMOTIVE PARTS (3.6%)
Exide Corp. 1,310 $ 22,188
Monro Muffler Brake, Inc.* 1,676 27,864
-----------
50,052
-----------
COMMERCIAL SERVICES (2.4%)
Iron Mountain, Inc.* 910 34,125
-----------
COMPUTER EQUIPMENT (8.0%)
Computer Task Group, Inc. 290 11,944
Komag, Inc.* 1,100 15,950
Kronos, Inc.* 1,085 38,111
Network Appliance, Inc.* 1,300 46,150
-----------
112,155
-----------
COMPUTER SOFTWARE (18.6%)
BancTec, Inc.* 1,458 35,903
Broadway & Seymour, Inc.* 3,800 30,875
Information Resources, Inc.* 2,030 32,988
Integrated Systems, Inc.* 2,270 48,947
Object Design, Inc.* 3,900 24,984
Platinum Technology, Inc.* 1,383 35,612
Sterling Software, Inc.* 870 49,155
-----------
258,464
-----------
ELECTRICAL & ELECTRONICS (3.4%)
Microsemi Corp.* 1,740 28,710
Paxar Corp.* 1,348 19,125
-----------
47,835
-----------
ELECTRONIC COMPONENTS (2.6%)
Mentor Graphics Corp.* 3,680 36,110
-----------
FINANCIAL (10.8%)
DVI, Inc.* 2,070 47,480
Financial Federal Corp.* 1,802 45,951
Imperial Credit Industries, Inc.* 1,000 23,688
Novastar Financial, Inc. 1,700 33,575
-----------
150,694
-----------
HEALTH CARE (15.5%)
ADAC Laboratories* 1,320 30,525
Datascope Corp.* 1,140 29,640
Healthcare Services Group, Inc.* 2,300 33,350
HealthPlan Services Corp. 1,800 47,362
ReSound Corp.* 5,870 32,285
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
VIF - U.S. SMALL CAP FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
COMMON STOCKS (CONTINUED)
HEALTH CARE (15.5%) (CONTINUED)
Rural/Metro Corp.* 1,300 $ 42,738
-----------
215,900
-----------
HOME FURNISHINGS (1.7%)
Windmere-Durable Holdings, Inc. 900 23,400
-----------
INDUSTRIAL (2.7%)
American Disposal Services, Inc.* 1,015 38,316
-----------
METALS & MINING (0.3%)
Consolidated Nevada* 26,090 3,486
-----------
OIL/GAS EXPLORATION (3.0%)
Cad Rio Alto Exploration Ltd.* 1,000 11,110
Lomak Petroleum, Inc. 1,910 31,276
-----------
42,386
-----------
PHARMACEUTICALS (2.6%)
Unilab Corp.* 13,000 35,750
-----------
RESTAURANTS (2.8%)
Buffets, Inc.* 2,820 38,775
-----------
RETAIL (6.0%)
Mazel Stores, Inc.* 760 14,440
The Sports Authority, Inc.* 2,250 36,844
United Retail Group, Inc.* 5,180 32,699
-----------
83,983
-----------
TELECOMMUNICATIONS (8.6%)
RSL Communications Ltd. Class A* 1,300 29,900
TresCom International, Inc.* 4,400 44,825
Vanguard Cellular Systems, Inc. Class A* 2,450 44,559
-----------
119,284
-----------
TOTAL COMMON STOCKS (COST $1,056,014) 1,290,715
-----------
PREFERRED STOCKS (1.8%)
BANKS (1.8%)
Warwick Community Bancorp* 1,400 24,850
-----------
TOTAL PREFERRED STOCKS (COST $22,400) 24,850
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
VIF - U.S. SMALL CAP FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
<S> <C> <C>
MONEY MARKET FUNDS (6.0%)
Bank of New York Cash Reserve MM Fund $83,800 $ 83,800
-----------
TOTAL MONEY MARKET FUNDS (COST $83,800) 83,800
-----------
TOTAL INVESTMENTS (COST $1,162,214) (+) - 100.4% 1,399,365
LIABILITIES IN EXCESS OF OTHER ASSETS (0.4%) (5,085)
-----------
TOTAL NET ASSETS - 100.0% $ 1,394,280
-----------
-----------
</TABLE>
- ----------------
+ Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $533. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation $286,563
Unrealized depreciation (49,945)
---------
Net unrealized appreciation $236,618
---------
---------
</TABLE>
* Denotes non-income producing security.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value (cost $29,828,296) $ 31,168,866
Interest and dividends receivable 730,240
Receivable from Adviser 892
Deferred organization expense 42,578
Prepaid expenses and other assets 2,095
-------------
Total Assets $ 31,944,671
LIABILITIES:
Dividends payable 207,507
Administration fees payable 2,013
Fund accounting fees payable 2,772
Transfer agent fees payable 265
Other payables and accrued expenses 57,148
-------------
Total Liabilities 269,705
-------------
NET ASSETS $ 31,674,966
-------------
-------------
Net Assets consist of:
Shares of capital stock, $0.001 par value per share, 2,880,068 issued
and outstanding $ 2,880
Additional paid-in capital 30,089,520
Accumulated undistributed net investment income 42,172
Accumulated net realized gains on investment transactions 199,824
Net unrealized appreciation of investments 1,340,570
-------------
NET ASSETS $ 31,674,966
-------------
-------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE) $ 11.00
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
MARCH 31, 1998
VIF - EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value (cost $5,575,988) $ 5,688,523
Cash 38,010
Interest and dividends receivable 149,703
Receivable from Adviser 6,205
Deferred organization expense 48,370
Foreign tax reclaim receivable 2,635
Unrealized appreciation on open forward currency contracts 8,312
Prepaid expenses and other assets 486
------------
Total Assets $ 5,942,244
LIABILITIES:
Dividends payable 126,259
Fund accounting fees payable 2,503
Other payables and accrued expenses 33,950
------------
Total Liabilities 162,712
------------
NET ASSETS $ 5,779,532
------------
------------
Net Assets consist of:
Shares of capital stock, $0.001 par value per share, 547,786 issued
and outstanding $ 548
Additional paid-in capital 5,572,760
Accumulated undistributed net investment income 33,147
Accumulated net realized gains on investment and foreign
currency transactions 52,829
Net unrealized appreciation of investments and foreign currency 120,248
------------
NET ASSETS $ 5,779,532
------------
------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE) $ 10.55
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
MARCH 31, 1998
DJG VALUE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value (cost $1,560,759) $ 2,002,811
Receivable for investment securities sold 29,439
Deferred organization expense 7,296
Interest and dividends receivable 2,305
Receivable from Adviser 1,386
Prepaid expenses and other assets 139
------------
Total Assets $ 2,043,376
LIABILITIES:
Fund accounting fees payable 2,617
Other payables and accrued expenses 22,876
------------
Total liabilities 25,493
------------
NET ASSETS $ 2,017,883
------------
------------
Net Assets consist of:
Shares of capital stock, $0.001 par value per share, 135,111 issued
and outstanding $ 135
Additional paid-in capital 1,451,719
Accumulated undistributed net investment income 3,898
Accumulated net realized gains on investment transactions 120,079
Net unrealized appreciation of investments 442,052
------------
NET ASSETS $ 2,017,883
------------
------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE) $ 14.94
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
MARCH 31, 1998
VIF - U.S. SMALL CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value (cost $1,162,214) $ 1,399,365
Receivable for investment securities sold 11,490
Deferred organization expense 7,296
Receivable from Adviser 5,232
Interest and dividends receivable 870
Prepaid expenses and other assets 607
------------
Total Assets $ 1,424,860
LIABILITIES
Payable for investment securities purchased 3,330
Fund accounting fees payable 2,694
Other payables and accrued expenses 24,556
------------
Total Liabilities 30,580
------------
NET ASSETS $ 1,394,280
------------
------------
Net Assets consist of:
Shares of capital stock, $0.001 par value per share, 98,603 issued
and outstanding $ 99
Additional paid-in capital 1,037,594
Accumulated net realized gains on investment and foreign
Currency transactions 119,423
Net unrealized appreciation of investments and foreign currency transactions 237,164
------------
NET ASSETS $ 1,394,280
------------
------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE) $ 14.14
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS
VIF - HIGH YIELD FUND
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED MARCH 31, 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 2,552,527
Dividends 19,959
------------
Total Income $ 2,572,486
EXPENSES:
Advisory 239,489
Administration 42,263
Fund accounting 32,308
Transfer agent 446
Professional 78,377
Amortization of organization expenses 14,184
Trustees 9,896
Miscellaneous 18,401
------------
Total expenses before waivers/ reimbursements 435,364
Less expenses waived/ reimbursed (111,335)
------------
Net expenses 324,029
------------
NET INVESTMENT INCOME 2,248,457
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investment transactions 199,824
Net change in unrealized appreciation of investments 1,342,036
------------
Net realized and unrealized gains on investments 1,541,860
------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,790,317
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS (CONTINUED)
VIF - EMERGING MARKETS FUND
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED MARCH 31, 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 536,223
Dividends 1,206
----------
Total Income $ 537,429
EXPENSES:
Advisory 49,468
Administration 8,245
Fund accounting 30,000
Professional 30,748
Amortization of organization expenses 14,184
Custody 9,563
Miscellaneous 4,155
----------
Total expenses before waivers/ reimbursements 146,363
Less expenses waived/ reimbursed (63,917)
----------
Net expenses 82,446
----------
NET INVESTMENT INCOME 454,983
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investment transactions 42,169
Net realized gains on foreign currency transactions 21,834
Net change in unrealized appreciation of investments 65,549
Net change in unrealized appreciation of foreign currency transactions 4,357
----------
Net realized and unrealized gains on investments 133,909
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 588,892
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS (CONTINUED)
DJG VALUE EQUITY FUND
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
APRIL 11, 1997*
THROUGH MARCH 31, 1998
- ------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 19,228
----------
Total Income $ 19,228
EXPENSES:
Advisory 10,934
Administration 2,050
Fund accounting 30,154
Professional 22,751
Amortization of organization expenses 1,761
Miscellaneous 2,160
----------
Total expenses before waivers/ reimbursements 69,810
Less expenses waived/ reimbursed (52,719)
----------
Net expenses 17,091
----------
NET INVESTMENT INCOME 2,137
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investment transactions 120,079
Net unrealized appreciation of investments 442,052
----------
Net realized and unrealized gains on investments 562,131
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 564,268
----------
----------
</TABLE>
* Commencement of operations.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS (CONTINUED)
VIF - U.S. SMALL CAP FUND
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
APRIL 11, 1997*
THROUGH MARCH 31, 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 451
Dividends 7,682
----------
Total Income $ 8,133
EXPENSES:
Advisory 10,796
Administration 1,619
Fund accounting 30,685
Professional 22,660
Amortization of organization expenses 1,761
Miscellaneous 4,818
----------
Total expenses before waivers/ reimbursements 72,339
Less expenses waived/ reimbursed (56,138)
----------
Net expenses 16,201
----------
NET INVESTMENT LOSS (8,068)
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investment and foreign currency transactions 125,730
Net unrealized appreciation of investments and foreign
currency transactions 237,164
----------
Net realized and unrealized gains on investments 362,894
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 354,826
----------
----------
</TABLE>
* Commencement of operations.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
VIF - HIGH YIELD FUND
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE YEAR ENDED APRIL 1, 1996* THROUGH
MARCH 31, 1998 MARCH 31, 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 2,248,457 $ 677,139
Net realized gains on investment transactions 199,824 24,669
Net change in unrealized appreciation of investments 1,342,036 (1,466)
------------- -------------
Net increase in net assets resulting from operations 3,790,317 700,342
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (2,248,457) (677,139)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 6,518,774 25,477,804
Dividends reinvested 2,040,697 677,347
Cost of shares redeemed (3,540,505) (1,097,547)
------------- -------------
Net increase in net assets from capital share transactions 5,018,966 25,057,604
------------- -------------
Total increase in net assets 6,560,826 25,080,807
NET ASSETS:
Beginning of year 25,114,140 33,333
------------- -------------
End of year (Including undistributed net investment income of $42,172
and $8,755, respectively.) $ 31,674,966 $ 25,114,140
------------- -------------
------------- -------------
</TABLE>
* Commencement of operations.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
VIF - EMERGING MARKETS FUND
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE YEAR ENDED AUGUST 28, 1996* THROUGH
MARCH 31, 1998 MARCH 31, 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 454,983 $ 120,931
Net realized gains on investment and foreign
currency transactions 64,003 28,664
Net change in unrealized appreciation of investments
and foreign currency transactions 69,906 50,342
------------ ------------
Net increase in net assets resulting from operations 588,892 199,937
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (454,983) (120,931)
Excess of net investment income (10,015) -
Net realized gains - (11,806)
------------ ------------
Total dividends and distributions to shareholders (464,998) (132,737)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 1,004,183 4,138,941
Dividends reinvested 338,633 120,931
Cost of shares redeemed (32,780) (14,803)
------------ ------------
Net increase in net assets from capital share transactions 1,310,036 4,245,069
------------ ------------
Total increase in net assets 1,433,930 4,312,269
NET ASSETS:
Beginning of year 4,345,602 33,333
------------ ------------
End of year (Including undistributed net investment income
of $33,147 and $11,824, respectively.) $ 5,779,532 $ 4,345,602
------------ ------------
------------ ------------
</TABLE>
* Commencement of operations.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
DJG VALUE EQUITY FUND
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
APRIL 11, 1997* THROUGH
MARCH 31, 1998
- --------------------------------------------------------------------------------------------------
<S> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 2,137
Net realized gains on investment transactions 120,079
Net unrealized appreciation of investments 442,052
------------
Net increase in net assets resulting from operations 564,268
------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 1,472,103
Cost of shares redeemed (18,488)
------------
Net increase in net assets from capital share transactions 1,453,615
------------
Total increase in net assets 2,017,883
NET ASSETS:
Beginning of period -
------------
End of period (Including undistributed net investment income of $3,898) $ 2,017,883
------------
------------
</TABLE>
* Commencement of operations.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
VIF - U.S. SMALL CAP FUND
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
APRIL 11, 1997* THROUGH
MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------
<S> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment loss $ (8,068)
Net realized gains on investment and foreign currency transactions 125,730
Net unrealized appreciation of investments and foreign currency transactions 237,164
------------
Net increase in net assets resulting from operations 354,826
------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 1,054,094
Cost of shares redeemed (14,640)
------------
Net increase in net assets from capital share transactions 1,039,454
------------
Total increase in net assets 1,394,280
NET ASSETS:
Beginning of period -
------------
End of period $ 1,394,280
------------
------------
</TABLE>
* Commencement of operations.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS
VIF - HIGH YIELD FUND
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED APRIL 1, 1996* THROUGH
MARCH 31, 1998 MARCH 31, 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.37 $ 10.00
---------- ----------
Net investment income 0.86 0.78
Net realized and unrealized gains 0.63 0.37
---------- ----------
Total income from investment operations 1.49 1.15
---------- ----------
LESS DIVIDENDS FROM:
Net investment income (0.86) (0.78)
---------- ----------
Net change in net asset value per share 0.63 0.37
---------- ----------
NET ASSET VALUE, END OF PERIOD $ 11.00 $ 10.37
---------- ----------
---------- ----------
TOTAL RETURN (a) 14.84% 11.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $ 31,675 $ 25,114
Ratios to average net assets:
Expenses** 1.15% 1.15%
Net investment income 7.98% 7.45%
PORTFOLIO TURNOVER RATE 32% 4%
- -------------------------------------------------------
</TABLE>
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/ or
reductions and/ or reimbursements had not occurred, the ratios 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.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF - EMERGING MARKETS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED APRIL 1, 1996* THROUGH
MARCH 31, 1998 MARCH 31, 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.30 $ 10.00
---------- ------------
Net investment income 0.86 0.48
Net realized and unrealized gains 0.27 0.34
---------- ------------
Total income from investment operations 1.13 0.82
---------- ------------
LESS DIVIDENDS AND DISTRIBUTION FROM:
Net investment income (0.86) (0.48)
Excess of net investment income (0.02) -
Realized gains - (0.04)
---------- ------------
Total dividends and distributions (0.88) (0.52)
---------- ------------
Net change in net asset value per share 0.25 0.30
---------- ------------
NET ASSET VALUE, END OF PERIOD $ 10.55 $ 10.30
---------- ------------
---------- ------------
TOTAL RETURN (a) 11.26% 8.29% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $ 5,780 $ 4,346
Ratios to average net assets:
Expenses** 1.50% 1.50% (c)
Net investment income 8.27% 8.04% (c)
PORTFOLIO TURNOVER RATE 53% 96%
- -------------------------------------------------------
</TABLE>
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/ or
reductions and/ or reimbursements had not occurred, the ratios would
(a) Total return is based on the change in net asset value during the period
and dividends and distributions.
(b) Not annualized.
(c) Annualized.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
DJG VALUE EQUITY FUND
<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 11, 1997*
MARCH 31, 1998
- -------------------------------------------------------------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 (e)
-----------
Net investment income 0.02
Net realized and unrealized gains 4.92
-----------
Total income from investment operations 4.94
-----------
Net change in net asset value per share 4.94
-----------
NET ASSET VALUE, END OF PERIOD $ 14.94
-----------
-----------
TOTAL RETURN (a) 49.40%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 2,018
Ratios to average net assets:
Expenses** 1.25%(c)
Net investment income 0.16%(c)
PORTFOLIO TURNOVER RATE 33%
AVERAGE COMMISSION RATE PAID (d) $ 0.0600
- ---------------------------------------------------------
</TABLE>
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such 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 dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) Represents the dollar amount of commissions paid on portfolio
transactions divided by the number of portfolio shares purchased and
sold for which commissions were charged.
(e) Initial offering price.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF - U.S. SMALL CAP FUND
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
APRIL 11, 1997* THROUGH
MARCH 31, 1998
- --------------------------------------------------------------------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00(e)
----------
Net investment loss (0.08)
Net realized and unrealized gains 4.22
----------
Total income from investment operations 4.14
----------
Net change in net asset value per share 4.14
----------
NET ASSET VALUE, END OF PERIOD $ 14.14
----------
----------
TOTAL RETURN (a) 41.40%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 1,394
Ratios to average net assets
Expenses** 1.50%(c)
Net Investment Income (0.74%)(c)
PORTFOLIO TURNOVER RATE 51%
AVERAGE COMMISSION RATE PAID (d) $ 0.0370
- -----------------------------------------------------------------
</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) Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of portfolio shares purchased and sold for
which commissions were charged.
(e) Initial offering price.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 -- ORGANIZATION
The OFFITBANK Variable Insurance Fund, Inc. (the "Company") was incorporated in
Maryland on July 1, 1994. The Company is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Company consists of ten
separately managed funds, of which four, OFFITBANK VIF-High Yield Fund (VIF-High
Yield Fund), OFFITBANK VIF-Emerging Markets Fund (VIF-Emerging Markets Fund),
DJG Value Equity Fund and OFFITBANK VIF-U.S. Small Cap Fund (VIF-U.S. Small Cap
Fund) (individually, a "Fund", and collectively, the "Funds") have commenced
operations. The Funds have the following inception dates:
VIF-High Yield Fund April 1, 1996
VIF-Emerging Markets Fund August 28, 1996
DJG Value Equity Fund April 11, 1997
VIF-U.S. Small Cap Fund April 11, 1997
The VIF-High Yield Fund and VIF-Emerging Markets Fund operate as non-
diversified, open-end management investment companies. The DJG Value Equity
Fund and VIF-U.S. Small Cap Fund operate as diversified, open-end management
investment companies.
The VIF-High Yield Fund seeks to provide investors with a high level of current
income by investing primarily in high yield, high risk corporate debt securities
and sovereign debt obligations. The VIF-Emerging Markets Fund seeks to provide
investors with a competitive total investment return by focusing on current
yield and opportunities for capital appreciation primarily by investing in
corporate and sovereign debt securities of emerging market countries. The DJG
Value Equity Fund seeks to achieve its objectives of long-term appreciation and
preservation of capital by researching and investing in equity securities priced
at a discount to their intrinsic values. The VIF-U.S. Small Cap Fund invests
primarily in a diversified portfolio of securities of smaller companies located
in the United States to achieve its investment objective of capital
appreciation.
OFFITBANK serves as the VIF-High Yield, VIF-Emerging Markets and VIF-U.S. Small
Cap Funds' investment adviser. David J. Greene and Company serves as the DJG
Value Equity Fund's investment adviser. Rockefeller & Company, Inc. serves as
the sub-adviser for the VIF-U.S. Small Cap Fund. BISYS Fund Services, Limited
Partnership ("BISYS"), serves as the Funds' administrator. OFFIT Funds
Distributor, Inc. (the "Distributor"), serves as the distributor of the Funds'
shares. BISYS Fund Services, Inc., serves as fund accountant and transfer and
dividend disbursing agent of the Funds. BISYS, the Distributor, and BISYS Fund
Services, Inc. are each a wholly-owned subsidiary of The BISYS Group, Inc.
NOTE 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
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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.
ORGANIZATIONAL EXPENSES:
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 VIF-High Yield Fund's net investment income, if any, are
declared daily and paid monthly. Dividends from the VIF-Emerging Markets Fund's
net investment income, if any, are declared daily and paid quarterly. Dividends
from the DJG Value Equity and VIF-U.S. Small Cap Funds' net investment income,
if any, are declared and paid annually. 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 distributions from net investment income and net realized gains
are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either 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 distributions in excess of 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.
As of March 31, 1998, the following reclassifications have been made to increase
(decrease) such accounts with offsetting adjustments made to paid-in-capital:
ACCUMULATED ACCUMULATED
UNDISTRIBUTED NET REALIZED
NET INVESTMENT GAIN/(LOSS) ON
INCOME INVESTMENTS
-------------- --------------
VIF-High Yield Fund $33,417 ($24,669)
VIF-Emerging Markets Fund 31,338 (21,834)
DJG Value Equity Fund 1,761 -
VIF-U.S. Small Cap Fund 8,068 (6,307)
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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.
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:
The Funds may invest in various financial instruments including positions in
forward currency contracts, enter into currency swaps and purchase foreign
currency options. The Funds enter into such contracts for the purposes of
hedging exposure to changes in foreign currency exchange rates on their
portfolio holdings.
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
March 31, 1998 are recorded for financial reporting purposes as unrealized gains
and losses by the Funds.
At March 31, 1998, there were no outstanding forward currency contracts for the
VIF-High Yield, DJG Value Equity and VIF-U.S. Small Cap Funds. The table below
indicates the VIF-Emerging Markets Fund's outstanding forward currency contract
position at March 31, 1998:
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
VALUE ON VALUE AT
CONTRACT MATURITY ORIGINATION MARCH 31, UNREALIZED
CURRENCY AMOUNTS DATE DATE 1998 APPRECIATION
-------- --------- -------- ----------- ---------- --------------
Sell DEM (565,000) 4/27/98 $(314,588) $(306,276) $8,312
The VIF-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.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES:
The Company has entered into investment advisory agreements (the "Investment
Advisory Agreements") with OFFITBANK (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 million of average daily
net assets for the VIF-High Yield Fund and 0.75% of average daily net assets in
excess of $200 million; 0.90% of the first $200 million of average daily net
assets for the VIF-Emerging Markets Fund and 0.80% of average daily net assets
in excess of $200 million; and 1.00% of average daily net assets for the VIF-
U.S. Small Cap Fund. Rockefeller & Company, Inc. serves as sub-adviser for the
U.S. Small Cap Fund and is entitled to a fee from the Adviser that is calculated
daily and payable monthly at the annual rate of 1.00% of the Fund's average
daily net assets. Pursuant to the terms of its Investment Advisory Agreement,
David J. Greene and Company is entitled to a fee that is calculated daily and
payable monthly at the annual rate of 0.80% of the average daily net assets of
the DJG Value Equity Fund. For the period ended March 31, 1998, the Adviser
earned fees of $239,489 and waived fees of $77,746 for the VIF-High Yield Fund,
and earned and waived fees of $49,468, and $10,796 for the VIF-Emerging Markets
and VIF-U.S. Small Cap Funds, respectively. David J. Greene and Company earned
and waived fees of $10,934 for the DJG Value Equity Fund.
BISYS 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 custodian and assistance in the preparation of the Company's registration
statements under federal and state laws. Pursuant to the Administration
Agreement, the Company pays BISYS a monthly fee for its services which on an
annualized basis will not exceed 0.15% of the average daily net assets of the
Company. For the period ended March 31, 1998, BISYS earned fees of $42,263 and
waived fees of $23,302 for the VIF-High Yield Fund, and earned and waived fees
of $8,245, $2,050 and $1,619 for the VIF-Emerging Markets Fund, DJG Value Equity
Fund and VIF-U.S. Small Cap Fund, respectively.
BISYS Fund Services, Inc., provides the Funds with fund accounting and related
services pursuant to a fund accounting agreement with the Company. For these
services BISYS was paid a fee of $2,500 per month per Fund. For the period
ended March 31, 1998, BISYS earned fees of $32,308, $30,000, $30,154 and $30,685
for the VIF-High Yield Fund, VIF-Emerging Markets Fund, DJG Value Equity Fund
and VIF-U.S. Small Cap Fund, respectively.
BISYS Fund Services, Inc., also serves as transfer agent for the Funds and
pursuant to a transfer agency agreement with the Company, receives reimbursement
of certain expenses plus a per account fee of $15.00 per year. For the period
ended March 31, 1998, BISYS earned fees of $446, $165, $79 and $77 for the VIF-
High Yield Fund, VIF-Emerging Markets Fund, DJG Value Equity Fund and VIF-U.S.
Small Cap Fund, respectively.
The Company has entered into a distribution agreement (the "Distribution
Agreement') with the Distributor. Under the Distribution Agreement, the
Distributor, as agent of the Company, agrees to use its best efforts as sole
distributor of the Company's shares. The Distribution Agreement provides that
the Company will bear the costs of the registration of its
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
shares with the Commission and various states and the printing of its
prospectuses, statements of additional information and reports to shareholders.
There is no fee payable under the Distribution Agreement.
OFFITBANK and David J. Greene and Company have voluntarily agreed to limit the
expense ratios for the Funds at 1.15%, 1.50%, 1.25%, and 1.50% for the VIF-High
Yield, VIF-Emerging Markets, DJG Value Equity, and VIF-U.S. Small Cap Funds,
respectively. In order to maintain these ratios, for the period ended March 31,
1998, the Adviser and David J. Greene and Company have waived all or a portion
of their advisory fee and have also agreed to reimburse the VIF-High Yield Fund,
VIF-Emerging Markets Fund, DJG Value Equity Fund and VIF-U.S. Small Cap Fund for
expenses in the amounts of $10,287, $6,204, $39,735 and $43,723, respectively.
NOTE 4 -- SECURITIES TRANSACTIONS
For the period ended March 31, 1998, the cost of purchases and the proceeds from
sales of the Funds' portfolio securities (excluding short-term investments),
were as follows:
Common Stocks
And Corporate Bonds
-------------------
Purchases Sales
--------- -----
VIF-High Yield Fund $20,252,709 $8,411,086
VIF-Emerging Markets Fund 4,647,734 2,657,263
DJG Value Equity Fund 1,536,497 401,186
VIF-U.S. Small Cap Fund 1,466,903 514,232
NOTE 5 -- CAPITAL SHARE TRANSACTIONS
The Company's Articles of Incorporation permit the Company to issue nine billion
shares (par value $0.001). Transactions in shares of common stock for the
period ended March 31, 1998, were as follows:
VIF-HIGH YIELD
-----------------------------------------------------
YEAR ENDED PERIOD ENDED
MARCH 31, 1998 MARCH 31, 1997
-----------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
Shares issued. . . . . . 608,193 $ 6,518,774 2,458,912 $25,477,804
Shares reinvested. . . . 189,195 2,040,697 65,476 677,347
Shares redeemed. . . . . (338,000) (3,540,505) (107,041) (1,097,547)
----------- ----------- ----------- -----------
Net increase . . . . . . 459,388 $ 5,018,966 2,417,347 $25,057,604
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
VIF-EMERGING MARKETS
-----------------------------------------------------
YEAR ENDED PERIOD ENDED
MARCH 31, 1998 MARCH 31, 1997
-----------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- -----------
Shares issued. . . . . . 97,067 $1,004,183 408,159 $4,138,941
Shares reinvested. . . . 31,980 338,633 11,829 120,931
Shares redeemed. . . . . (3,135) (32,780) (1,447) (14,803)
----------- ----------- ----------- -----------
Net increase . . . . . . 125,912 $1,310,036 418,541 $4,245,069
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DJG VALUE EQUITY
-------------------------
PERIOD ENDED
MARCH 31, 1998
-------------------------
SHARES AMOUNT
---------- ----------
Shares issued. . . . . . . . . 136,577 $1,472,103
Shares redeemed. . . . . . . . (1,466) (18,488)
---------- ----------
Net increase . . . . . . . . . 135,111 $1,453,615
---------- ----------
---------- ----------
VIF-U.S. SMALL CAP
-------------------------
PERIOD ENDED
MARCH 31, 1998
-------------------------
SHARES AMOUNT
---------- ----------
Shares issued. . . . . . . . . 99,803 $1,054,094
Shares redeemed. . . . . . . . (1,200) (14,640)
---------- ----------
Net increase . . . . . . . . . 98,603 $1,039,454
---------- ----------
---------- ----------
NOTE 6 -- OTHER MATTERS
The VIF-High Yield Fund and the VIF-Emerging Markets 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.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders
and Board of Directors of
The OFFITBANK Variable Insurance Fund, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of OFFITBANK VIF-High Yield Fund,
OFFITBANK VIF-Emerging Markets Fund, DJG Value Equity Fund and OFFITBANK VIF-
U.S. Small Cap Fund (collectively, the "Funds", each constituting a portfolio of
the OFFITBANK Variable Insurance Fund, Inc.) at March 31, 1998, and the results
of each of their operations, the changes in each of their net assets and the
financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at March 31, 1998 by
correspondence with the custodians and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
May 8, 1998
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
- --------------------------------------------------------------------------------
Officers and Directors INVESTMENT ADVISER - DJG VALUE EQUITY FUND
David J. Greene & Company
Morris W. Offit 599 Lexington Avenue
CHAIRMAN OF THE BOARD, PRESIDENT New York, New York 10022
AND DIRECTOR
INVESTMENT ADVISER - ALL OTHER VIF FUNDS
Edward J. Landau OFFITBANK
DIRECTOR 520 Madison Avenue
New York, New York 10022-4213
The Very Reverend
James Parks Morton INVESTMENT SUB-ADVISER - U.S. SMALL CAP FUND
DIRECTOR Rockefeller & Company, Inc.
30 Rockefeller Plaza
Dr. Wallace Mathai-Davis New York, New York 10112
SECRETARY AND TREASURER
DISTRIBUTOR
Stephen Brent Wells OFFIT Funds Distributor, Inc.
ASSISTANT TREASURER 3435 Stelzer Road
Columbus, Ohio 43219
Vincent M. Rella
ASSISTANT TREASURER ADMINISTRATOR
BISYS Fund Services Limited Partnership
125 West 55th Street
New York, New York 10019
TRANSFER AND DIVIDEND DISBURSING AGENT
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
CUSTODIAN - VIF-EMERGING MARKETS FUND
The Chase Manhattan Bank
3 Metro Tech Center, 6th Floor
Brooklyn, New York 11245
CUSTODIAN - ALL OTHER VIF FUNDS
The Bank of New York
90 Washington Street, 11th Floor
New York, New York 10286
LEGAL COUNSEL
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
INDEPENDENT ACCOUNTANTS
Price Waterhouse 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 VARIABLE INSURANCE FUND, INC.
125 WEST 55TH STREET, NEW YORK, NY 10019
(212) 758 - 9600
