<PAGE>
-------------------
OFFITBANK VIF-HIGH YIELD FUND
OFFITBANK VIF-EMERGING MARKETS FUND
DJG VALUE EQUITY FUND
OFFITBANK VIF - U.S. SMALL CAP FUND
-------------------
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1998
THE
OFFITBANK
VARIABLE INSURANCE FUND, INC.
<PAGE>
THE OFFITBANK VARIABLE
INSURANCE FUND, INC.
PRESIDENT'S LETTER
- --------------------------------------------------------------------------------
Dear Policyholder:
We are very pleased to present you with the September 30, 1998 Semi-Annual
Report for The OFFITBANK Variable Insurance Fund, Inc. As of that date the
Fund's portfolios have assets in excess of $51 million, an increase of almost
$11 million since year-end.
The specific results of the respective Funds, along with an investment and
market commentary from each portfolio manager, are part of this Semi-Annual
Report. As always, we have tried to make each market commentary informative,
and I hope that you will find them helpful.
We greatly value your participation in our Funds. Let us know of your interests
and concerns as we continue to try to serve you better. If you have any
questions, please do not hesitate to call.
Sincerely,
/s/ Morris W. Offit
Morris W. Offit
November 5, 1998
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
VIF - HIGH YIELD FUND
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S LETTER
The Fund's net investment return for the first half of the fiscal year was
- -2.10%. The September 30, 1998 NAV price of $10.28 is lower versus the $11.00
NAV at year end March 31, 1998. As of September 30, 1998, the Fund had a 30 day
SEC yield of 10.28%, average quality of B1/B+ and an effective duration of 4.7
years. Net assets were $43.6 million as of September 30, 1998.
The high yield asset class, while under no specific credit stress of its own,
was caught up in the turmoil of global market risk. The default of Russia, the
continuing shocks from Asia, and the forced liquidation of levered positions by
hedge funds all contributed to higher risk premiums for the high yield market.
Dealers were unwilling to bid aggressively for securities when they were writing
down their own high yield inventory and were suffering losses in the emerging
market sector. Additionally, the high yield market reacted strongly to the
downdraft of the U.S. Equity market. All told, these events have clipped
approximately 10 points from the quoted bid of the average high yield issue,
with lower quality credits falling even more.
During the past quarter the ten year Treasury yield plummeted 100 basis points
as global investors sought safety in the U.S. Treasury market. Yield spreads
widened across the board. Investment grade spreads widened 50 to 100 basis
points while average high yield spreads widened 250 basis points to
approximately 600 basis points over Treasurys. Double B spreads moved out over
150 basis points on average to 400 basis points while single B spreads moved out
over 280 basis points to nearly 700 basis points. At quarter end, the quality
spread between double B's and single B's was approximately 290 basis points or
about 130 basis points wider than at June 30. The spread between cash paying
securities and deferred coupon securities also widened, moving out over 125
basis points to about 275 basis points.
For the first time, high yield spreads widened significantly in the absence of
any large scale defaults. Market risk, liquidity premiums and the fear of
future defaults have pushed spreads back to levels last seen in late 1991.
Current spreads are compensating investors for a return of default rates back to
record levels.
While the U.S. economic fundamentals still appear sound, especially for upper
tier credits, global events may force lenders to tighten credit availability.
We are already seeing a curtailment of real estate lending related to wider
spreads for commercial mortgage securities. Declining credit availability is
beginning to surface before borrowers show signs of trouble. Such actions are
likely to lead to higher default rates from today's very low levels. However,
we continue to expect domestic default rates to remain at or below the
historical averages.
The bonds of fundamentally sound credits have turned around after every cyclical
decline in the high yield market. History has shown that following a major
repricing of the high yield market, above average returns are earned over the
following 12 to 24 months. The benefit of higher spreads compounded over a
reasonable period of time cannot be emphasized strongly enough. Current spreads
provide a large cushion against a further increase in risk premiums or the
occasional credit loss that may occur.
Several noteworthy developments occurred during the third quarter which affected
the portfolio. The Fund owned 5 issues that had ratings upgraded by Moody's or
Standard & Poor's and 5 that were downgraded. A large number of holdings,
including Centennial Cellular, Sifto Canada and Host Marriott Properties
announced tenders for their debt securities at investment grade spreads. During
the quarter, 3 issues totaling approximately $800,000 were either called or
tendered. Nearly 14% of average net assets over the past twelve months have
been either tendered, called or defeased.
As the portfolio continues to grow in size, the composition of the Fund has
remained steady. When replacing issues and investing new monies, we continue to
focus on the better quality segment of the high yield market. Approximately 48%
of the holdings in the Fund are rated either Ba3 or better by Moody's or BB- or
better by Standard & Poor's. Additionally, over 73% of the holdings are rated
at least B1 or B+. The Fund is very well diversified with over 115 issues and
no single credit larger than 2.1% of the Fund's assets at September 30, 1998.
We continue to believe that better quality high yield credits will outperform
fixed income alternatives over time.
Stephen T. Shapiro
October 21, 1998
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
CORPORATE BONDS (95.8%)
AEROSPACE/DEFENSE (0.3%)
Sequa Corp. Sr Notes, 8.75%, 12/15/01 $ 150,000 $ 153,000
----------
AUTOMOTIVE (3.8%)
Exide Corp. Sr Notes, 10.00%, 04/15/05 150,000 142,875
Exide Holding Europe S.A.*(2),9.125%, 04/15/04 500,000 269,243
Federal-Mogul Inc. Sr Notes, 7.875%, 07/01/10 500,000 511,720
Hayes Wheels International, Inc. Sr Sub Notes, 9.125%, 07/15/07 500,000 505,000
Sonic Automotive, Inc. Sr Sub Notes*, 11.00%, 08/01/08 250,000 230,000
----------
1,658,838
----------
BROADCAST/TELECOMMUNICATIONS (11.4%)
CCPR Services Sr Sub Notes, 10.00%, 02/01/07 150,000 133,500
Centennial Cellular Sr Notes, 8.875%, 11/01/01 500,000 532,500
Comcast Cellular Holdings, Sr Notes, 9.50%, 05/01/07 350,000 369,250
Echostar Communications Sr Discount Notes (1), 0/12.875%, 06/01/04 500,000 487,500
Heritage Media Corp. Sr Sub Notes, 8.75%, 02/15/06 200,000 209,000
Intermedia Communications Fla. Inc. Sr Discount Notes (1), 0/11.25%, 07/15/07 600,000 433,500
Nextel Communications Sr Discount Notes (1), 0/10.65%, 09/15/07 350,000 222,250
Nextel Communications Sr Discount Notes (1), 0/9.75%, 10/31/07 300,000 180,750
Paging Network Sr Sub Notes, 10.125%, 08/01/07 500,000 500,000
Price Communications Sr Notes*, 9.125%, 12/15/06 500,000 490,000
Rogers Cantel, Inc. Sr Sub Notes, 8.80%, 10/01/07 500,000 482,500
Satelites Mexicanos SA Sr Notes*, 10.125%, 11/01/04 200,000 130,000
Vanguard Cellular Systems Inc. Sr Debs, 9.375%, 04/15/06 300,000 303,000
Viacom Inc. Sub Notes, 8.00%, 07/07/06 500,000 510,625
----------
4,984,375
----------
CABLE (8.3%)
Adelphia Communications Corp. Sr Notes, 9.875%, 03/01/07 200,000 216,000
Century Communications Corp. Sr Notes, 8.875%, 01/15/07 400,000 424,000
CSC Holdings Sr Sub Notes, 9.25%, 11/01/05 300,000 315,000
Comcast Corporation Sr Sub Debs, 9.375%, 05/15/05 250,000 265,000
Jones Intercable Inc. Sr Sub Debs, 10.50%, 03/01/08 500,000 542,500
Lenfest Communication Inc. Sr Notes, 8.375%, 11/01/05 300,000 314,250
NTL, Inc. Sr Notes* (1), 0/9.75%, 04/01/08 500,000 302,500
Olympus Communications L.P. Sr Notes, 10.625%, 11/15/06 300,000 332,250
Rogers Cablesystems Ltd. Sr Secured Second Priority Notes, 9.625%, 08/01/02 300,000 318,000
TeleWest PLC Debs, 9.625%, 10/01/06 250,000 250,000
TeleWest PLC Sr Discount Debs (1), 0/11.00%, 10/01/07 400,000 330,000
----------
3,609,500
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------- ---------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
CHEMICAL (3.3%)
Borden Chemicals & Plastics Sr Notes, 9.50%, 05/01/05 $ 500,000 $ 455,000
Harris Chemical North America, Inc. Sr Secured Notes,10.25%, 07/15/01 250,000 257,500
ISP Holding, Inc. Sr Notes, 9.00%, 10/15/03 300,000 311,250
Polymer Group, Inc. Sr Sub Notes, 8.75%, 03/01/08 300,000 283,500
Sifto Canada, Inc. Sr Notes, 8.50%, 07/15/00 150,000 159,266
---------
1,466,516
---------
CONSUMER GROUPS (8.9%)
Ameriserve Food Co. Sr Sub Notes, 8.875%, 10/15/06 500,000 442,500
Aurora Foods, Inc. Sr Sub Notes, 8.75%, 07/01/08 250,000 257,500
Chiquita Brands International, Inc. Sr Notes, 10.25%, 11/01/06 850,000 875,500
CHS Electronics Sr Notes, 9.875%, 04/15/05 200,000 184,000
Fedders N.A. Sr Sub Notes, 9.375%, 08/15/07 200,000 196,000
Fisher Scientific International Sr Sub Notes, 9.00%, 02/01/08 500,000 480,000
Fleming Companies, Inc. Sr Sub Notes, 10.625%, 12/15/01 500,000 505,000
Playtex Products, Inc. Sr Notes, 8.875%, 07/15/04 250,000 253,750
Revlon Consumer Products Sr Sub Notes, 8.625%, 02/01/08 250,000 243,750
United Artist Theatre Pass Through Certificates, 9.30%, 07/01/15 477,406 470,245
---------
3,908,245
---------
FINANCIAL SERVICES/INSURANCE (2.1%)
Amresco, Inc. Sr Sub Notes, 9.875%, 03/15/05 500,000 390,000
Presidential Life Corp. Sr Notes, 9.50%, 12/15/00 400,000 409,248
Veritas Holdings Sr Notes, 9.625%, 12/15/03 126,000 124,110
---------
923,358
---------
FOREST & PAPER PRODUCTS (2.2%)
Doman Industries Ltd. Sr Notes, 8.75%, 03/15/04 200,000 140,000
Pepap New Brunswick Sr Notes, 9.00%, 06/01/04 300,000 273,000
Stone Container Corp. First Mortgage Notes, 10.75%, 10/01/02 300,000 303,375
Stone Container Corp. Sr Sub Debs, 12.25%, 04/01/02 250,000 240,000
---------
956,375
---------
GENERAL INDUSTRIES/MANUFACTURING (5.5%)
Furon Co. Sr Sub Notes, 8.125%, 03/01/08 250,000 246,250
Nortek, Inc. Sr Notes, 9.25%, 03/15/07 600,000 603,000
Unisys Corp. Sr SF Debs, 9.75%, 09/15/16 400,000 333,330
Wesco Distribution, Inc. Sr Sub Notes, 9.125%, 06/01/08 500,000 485,000
Williams Scotsman, Inc. Sr Notes, 9.875%, 06/01/07 750,000 745,250
---------
2,413,830
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
HEALTH CARE (6.0%)
Columbia HCA Healthcare Sr Notes, 8.85%, 01/01/07 $ 300,000 $ 327,912
Extendicare Health Sr Sub Notes, 9.35%, 12/15/07 250,000 233,750
Fresenius Medical Care Capital Trust Series I, 9.00%, 12/01/06 600,000 585,000
Integrated Health Services Inc. Sr Sub Notes, 9.50% 09/15/07 400,000 394,000
Medaphis Corporation Sr Notes, 9.50%, 02/15/05 200,000 176,000
Sun Healthcare Group Inc. Sr Sub Notes, 9.50%, 07/01/07 500,000 440,000
Tenet Healthcare Corp. Sr Sub Notes, 8.625%, 01/15/07 300,000 311,250
Vencor Inc. Sr Sub Notes, 9.875%, 05/01/05 200,000 158,000
---------
2,625,912
---------
HOTELS & GAMING (6.3%)
Hollywood Park Inc., 9.50%, 08/01/07 300,000 294,000
Host Marriot Properties Inc. Sr Secured Notes, 9.50%, 05/15/05 250,000 256,250
John Q. Hammons Hotels L.P. First Mortgage Notes, 8.875%, 02/15/04 550,000 497,750
John Q. Hammons Hotels L.P. First Mortgage Notes, 9.75%, 10/01/05 200,000 186,000
Meristar Hospitality Corp. Sr Sub Notes, 8.75%, 08/15/07 200 000 191,500
Prime Hospitality Corp. First Mortgage Notes, 9.25%, 01/15/06 250,000 247,500
Prime Hospitality Corp. Sr Sub Notes, 9.75%, 04/01/07 250,000 235,000
Station Casinos Sr Sub Notes, 9.625%, 06/01/03 250,000 246,875
Sun International Hotels Ltd. Sr Sub Notes, 9.00%, 03/15/07 300,000 307,500
Trump Atlantic City First Mortgage Notes II, 11.25%, 05/01/06 350,000 290,500
---------
2,752,875
---------
INDEPENDENT POWER (1.2%)
AES Corp. Sr Sub Notes, 8.50%, 11/01/07 250,000 236,250
Calpine Corp. Sr Notes, 10.50%, 05/15/06 285,000 302,100
---------
538,350
---------
METALS & MINING (0.3%)
AK Steel Corp. Sr Notes, 9.125%, 12/15/06 400,000 402,000
Armco, Inc. Sr Notes, 9.375%, 11/01/00 200,000 200,750
Armco, Inc. Sr Notes, 9.00%, 09/15/07 550,000 544,500
Centaur Mining Exploration Sr Secured Notes, 11.00%, 12/01/07 250,000 215,000
Freeport Memoran C&G Sr Deb, 7.20%, 11/15/26 300,000 186,000
Glencore Nickel Pty Ltd, Sr Secured Bonds, 9.00%, 12/01/14 250,000 202,500
Inland Steel Co. First Mortgage, 7.90%, 01/15/07 300,000 296,250
Kaiser Aluminum & Chemical Corp. Sr Notes, 10.875%, 10/15/06 175,000 169,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
METALS/MINING (8.1%) (CONTINUED)
LTV Corp. Sr Notes, 8.20%, 09/15/07 $ 500,000 $ 470,000
National Steel Corp. First Mortgage, 8.35%, 08/01/06 348,000 339,300
P&L Coal Holding Sr Sub Notes, 8.875%, 05/15/08 500,000 508,750
---------
3,534,800
---------
OIL/GAS (8.9%)
Ferrellgas Partner L.P. Sr Notes, 9.375%, 06/15/06 600,000 600,000
Giant Industries Services Sr Sub Notes, 9.00%, 09/01/07 200,000 188,000
Grey Wolf Inc. Sr Notes, 8.875%, 07/01/07 500,000 383,750
Gulf Canada Resources Ltd. Sr Sub Debs, 9.25%, 01/15/04 300,000 305,025
J Ray McDermott S.A. Sr Sub Notes, 9.375%, 07/15/06 300,000 312,750
KCS Energy, Inc. Sr Notes, 11.00%, 01/15/03 725,000 721,375
Newpark Resources, Inc. Sr Sub Notes, 8.625%, 12/15/07 500,000 475,000
Tesoro Petroleum Corp. Sr Sub Notes, 9.00%, 07/01/08 500,000 470,000
Trico Marine Services, Sr Notes, 8.50%, 08/01/05 500,000 432,500
---------
3,888,400
---------
PACKAGING/CONTAINERS (1.3%)
Gaylord Container Corp. Sr Notes., 9.75%, 06/15/07 400,000 328,000
Silgan Holding Sr Sub Debs, 9.00%, 06/01/09 250,000 247,500
---------
575,500
---------
PUBLISHING/ADVERTISING (3.4%)
Big Flower Press Sr Sub Notes, 8.875%, 07/01/07 530,000 516,750
Hollinger International Publishing Sr Notes, 8.625%, 03/15/05 250,000 257,500
Lamar Advertising Co. Sr Sub Notes, 9.625%, 12/01/06 250,000 267,500
Outdoor Systems, Inc. Sr Sub Notes, 9.375%, 10/15/06 250,000 265,000
Sun Media Corp. Sr Sub Notes, 9.50%, 05/15/07 155,000 158,875
---------
1,465,625
---------
REAL ESTATE (4.1%)
CB Richard Ellis Services Sr Sub Notes, 8.875%, 06/01/06 500,000 487,500
Forest City Enterprises Sr Notes, 8.50%, 03/15/08 300,000 294,000
HMH Properties, Inc. Sr Notes, 7.875%, 08/01/08 400,000 395,000
Rockefeller Center Property Trust Debs., 0.00%, 12/31/00 670,000 522,600
Trizec Financial Ltd. Sr Notes, 10.875%, 10/15/05 100,000 110,750
---------
1,809,850
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
RETAIL (2.5%)
Nine West Group, Inc. Sr Notes, 8.375%, 08/15/05 $ 250,000 $ 228,750
Petro Shopping Centers Sr. Notes, 10.50%, 02/01/07 200,000 197,000
Stater Brothers Holding Sr Notes, 11.00%, 03/01/01 250,000 263,125
Travelcenters of America Sr Sub Notes, 10.25%, 04/01/07 400,000 390,000
----------
1,078,875
----------
TELECOMMUNICATIONS (2.4%)
Flag Ltd. Sr Notes, 8.25%, 01/30/08 500,000 475,000
Orange PLC Sr Notes (b), 7.625%, 08/01/08 500,000 559,324
----------
1,034,324
----------
TEXTILES (1.0%)
Galey & Lord, Inc. Sr Sub Notes, 9.125%, 03/01/08 200,000 175,500
Pillowtex Corp. Sr Sub Notes, 9.00%, 12/15/07 300,000 283,500
----------
459,000
----------
TRANSPORTATION (4.5%)
Airtran Airlines Sr Notes, 10.50%, 04/15/01 250,000 222,500
Eletson Holding, Inc. First Pfd. Mortgage Notes, 9.25%, 11/15/03 500,000 480,000
Navigator Gas Transport First Priority Ship Mortgage Notes*, 10.50%, 06/30/07 250,000 238,750
Piedmont Aviation Inc. Equipment Trust Certificates 1988 Series A, 9.65%, 05/08/99 277,000 281,595
Piedmont Aviation Inc. Equipment Trust Certificates 1988 Series F, 9.80%, 05/08/04 261,000 271,440
Stena Line AB Sr Notes, 8.75%, 06/15/07 500,000 467,500
----------
1,961,785
---------
TOTAL COMMON STOCKS (COST $43,176,197) 41,799,333
----------
REPURCHASE AGREEMENT (2.2%)
Bank of New York Repurchase Agreement, 5.00%, 10/01/98 (dated 09/30/98; proceeds
$950,732, collateralized by $969,612 U.S. Treasury Notes, 6.375% due 05/15/99) 950,600 950,600
----------
TOTAL REPURCHASE AGREEMENT (COST $950,600) 950,600
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
MONEY MARKET FUND (0.0%)
Bank of New York Cash Reserve MM Fund $ 15 $ 15
----------
TOTAL MONEY MARKET FUNDS (COST $15) 15
----------
TOTAL INVESTMENTS (COST $44,126,812) (+) - 98.0% 42,749,948
OTHER ASSETS IN EXCESS OF LIABILITIES (2.0%) 892,864
----------
TOTAL NET ASSETS - 100.0% $43,642,812
----------
----------
</TABLE>
________________
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securties as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 561,972
Unrealized depreciation (1,938,836)
---------
Net unrealized depreciation $(1,376,864)
---------
---------
</TABLE>
* 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.
Principal denominated in the following currencies:
(a) German Deutsche Mark (b) European Currency Unit
(1) Step-up Bond.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
VIF - EMERGING MARKETS FUND
SEPTEMBER 30, 1998
- -------------------------------------------------------------------------------
The OFFITBANK VIF Emerging Markets Fund, for the period of March 31, 1998 to
September 30, 1998 produced a disappointing total return of negative 31.77%.
The net asset value per share as of September 30, 1998 was $6.72.
As of September 30, 1998, the Fund had an average yield to maturity of 18%, an
average duration of 3.4 years and an average maturity of 6.4 years. The 30-day
SEC yield as of September 30 for the Fund was 13.32%.
As of September 30, the Fund was 68% invested in U.S. dollar-denominated
Eurobonds, 23% in U.S. dollar-denominated Brady and pre-Brady sovereign debt, 3%
in local market instruments and 6% in cash and accrued interest. Strategically,
we maintain our core investment allocation with 100% of invested funds in Latin
America. Our primary sovereign allocations remain Brazil (53%), Argentina (28%)
and Mexico (14%).
INVESTMENT STRATEGY
We remain focused on U.S. dollar-denominated investments, which account for 93%
of the portfolio with the remaining 7% allocated to the Argentine peso. With
significant portions of the Argentine economy effectively dollarized through the
denomination of contracts in U. S. dollars and a significant portion of
financial assets held in U.S. dollars, we believe that Argentina's currency
board, the linchpin of its economic program, will not be broken.
As we noted in our Emerging Markets Fixed Income Commentary dated September 4,
1998 as well as our letter to you dated September 25, 1998, Emerging Debt
Markets have been under unusual pressure arising from a crisis of confidence
precipitated by the Russian default in August of this year. The resulting
technical market forces have helped force down prices throughout the Emerging
Markets universe.
In the midst of the great price volatility currently dominating the market, the
key question remains whether default is a legitimate concern. We believe that
the fundamental macroeconomic and financial strengths of the Latin American
sovereign and corporate credits we invest in are sufficient to withstand the
current crisis of confidence in global financial markets.
BRAZIL
Brazil is the focal point of the current stage of the global crisis of
confidence. For Brazil to emerge successfully from the current turmoil, there
are three fundamental conditions, one of which is already met:
1) President Fernando Henrique Cardoso must be re-elected in the first
round;
2) A credible fiscal deficit reduction must be implemented;
3) A multilateral financial support package supported by the United
States and IMF must be announced.
We believe that the remaining conditions will be addressed in the very near
future.
The successful first round re-election of President Fernando Henrique Cardoso in
Brazil signals commitment to continuing reform in the largest economy in region.
Brazil is expected to move swiftly and effectively to reduce current fiscal
deficits and pass the measures necessary to achieve long term fiscal balance.
The dimensions of such a package has already been indicated by President Cardoso
in a number of speeches and announcements. We also believe that a significant
supportive financial package for Brazil will shortly be announced by the IMF and
other multilateral and bilateral lending agencies. Such a package is as equally
important for the its message of confidence in Brazil's reform program as it is
for assuring available financing if necessary.
ARGENTINA
Argentina has completed its external funding needs for 1998 and for First
Quarter 1998 with an announced US$5.9 billion loan package led by the World
Bank, Inter-American Development Bank, and local pension funds. The government
has met IMF mandated fiscal budget requirements this year and the economy
continues to grow above 4% with negligible inflation.
MEXICO
In Mexico, the depreciation of the peso (28% year to date) has improved the
export competitiveness of manufacturers. The government has consistently
responded to external pressures this year with pro-active budget cuts and
tightened monetary policy to contain inflation. GDP remains on track for 2%-3%
positive economic growth next year and employment continues to rise. Investment
continues to be supported by Mexico's strong trade ties through NAFTA and other
regional trade arrangements.
CONCLUSIONS
The leading companies of Latin America hold dominant positions in their domestic
markets and are increasingly effective global competitors. The underlying
franchise value of these companies far outweigh their debt commitments. The
ultimate strategic value of these firms is implicit in the prices being paid by
increasingly aggressive foreign investors acquiring businesses throughout the
region.
Given our outlook for Brazil, we continue to see opportunities to invest in the
dollar-denominated debt of top-tier Latin American corporations which are
yielding 17%-20%. These companies have strengthened their balance sheets and
businesses in recent years in order to be well-positioned to survive and prosper
in periods of economic uncertainty. Recognizing the importance and demands of
continued capital markets access, these Latin American blue chips are responsive
to investor concerns and provide disclosure and transparency unmatched in most
other Emerging Markets.
Richard M. Johnston Wallace Mathai-Davis
October 21, 1998
<PAGE>
OFFITBANK
VIF - EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
CORPORATE BONDS (67.8%)
AUTOMOTIVE (3.2%)
BRAZIL (3.2%)
Ford Brasil LTDA, 9.25%, 01/22/07 $ 200,000 $ 155,000
---------
BANKS (6.3%)
ARGENTINA (6.3%)
Banco Hipotecario S.A., 10.00%, 04/17/08 400,000 308,000
---------
BUILDING MATERIALS (6.8%)
MEXICO (6.8%)
Cemex*, 9.66%, 12/29/49 250,000 185,000
Internacional De Ceremica*, 9.75%, 08/01/02 125,000 83,438
Internacional De Ceremica, 9.75%, 08/01/02 100,000 66,750
---------
335,188
---------
FOOD (5.4%)
ARGENTINA (2.6%)
Mastellone Hermanos S.A.*, 11.75%, 04/01/08 200,000 128,000
---------
BRAZIL (2.8%)
Arisco Productos Alimenticios*, 10.75%, 05/22/05 250,000 137,500
---------
265,500
---------
INFRASTRUCTURE (3.7%)
ARGENTINA (3.7%)
CLISA, 11.625%, 06/01/04 250,000 180,000
---------
MEDIA (7.4%)
BRAZIL (7.4%)
Globo Communicacoes Participacoes, 10.50%, 12/20/06 70,000 36,400
Globo Communicacoes Participacoes*, 10.50%, 12/20/06 100,000 52,000
RBS Participacoes S.A.*, 14.00%, 12/15/03 100,000 92,000
RBS Participacoes S.A., 14.00%, 12/15/03 200,000 184,000
---------
364,400
---------
PACKAGING (3.7%)
MEXICO (3.7%)
Grupo Industrial Durango, 12.625%, 08/01/03 125,000 90,000
Grupo Industrial Durango, 12.00%, 07/15/01 125,000 91,250
---------
181,250
---------
PETROCHEMICALS (1.6%)
BRAZIL (1.6%)
OPP Petroquimica, 11.50%, 02/23/04 100,000 79,000
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
VIF - EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
RETAIL (2.7%)
ARGENTINA (2.7%)
Disco S.A.*, 9.875%, 05/15/08 $ 200,000 $ 130,000
----------
STEEL (10.6%)
ARGENTINA (2.7%)
Acindar, 11.25%, 02/15/04 200,000 134,000
----------
BRAZIL (4.5%)
CSN Iron S.A., 9.125%, 06/01/07 200,000 110,000
CSN Iron S.A.*, 9.125%, 06/01/07 200,000 110,000
----------
220,000
----------
MEXICO (3.4%)
Hylsa S.A. de C.V. Bonds*, 9.25%, 09/15/07 250,000 167,500
----------
521,500
----------
TELECOMMUNICATIONS (2.4%)
ARGENTINA (2.4%)
Telefonica De Argentina*, 9.125%, 05/07/08 150,000 120,000
----------
UTILITIES (14.0%)
BRAZIL (14.0%)
Sabesp*, 10.00%, 07/28/05 200,000 101,000
CEMIG, 9.125%, 11/18/04 450,000 315,000
COPEL, 9.75%, 05/02/05 400,000 272,000
----------
688,000
----------
TOTAL CORPORATE BONDS (COST $4,382,271) 3,327,838
----------
FOREIGN GOVERNMENTS (26.2%)
SOVEREIGN DEBT (26.2%)
ARGENTINA (7.2%)
Argentina Bocon Pro 1 Floating Rate Bonds (a) (1), 0/3.15%, 04/01/07 250,000 167,188
Republic of Argentina Brady Floating Rate Bond, 6.625%, 03/31/05 237,500 186,734
----------
353,922
----------
BRAZIL (19.0%)
Brazil Brady DCB Floating Rate Brady Bond (2), 6.688%, 04/15/12 200,000 99,750
Brazil Brady Capitalization Step-Up Bond (1), 3/8.00%, 04/15/14 226,241 134,331
Republic of Brazil IDU, Floating Rate Note (2), 6.75%, 01/01/01 430,500 363,503
Republic of Brazil - EI Floating Rate Note (2), 6.625%, 04/15/06 582,000 334,286
----------
931,870
----------
TOTAL FOREIGN GOVERNMENTS (COST $1,593,349) 1,285,792
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
VIF - EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED)
SEPTEMBER 30,1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
REPURCHASE AGREEMENT (3.5%)
UNITED STATES (3.5%)
Chase Manhattan Bank Repurchase Agreement, 4.75%, 10/01/98 (dated $ 169,217 $ 169,217
09/30/98; proceeds $169,239, collateralized by $172,601 U.S. Treasury ----------
Notes, 6.625%, due 03/31/02)
TOTAL REPURCHASE AGREEMENT (COST $169,217) 169,217
----------
TOTAL INVESTMENTS (COST $6,144,837) (+) - 97.5% 4,782,847
OTHER ASSETS IN EXCESS OF LIABILITIES - 2.5% 123,158
----------
TOTAL NET ASSETS - 100.0% $ 4,906,005
----------
----------
</TABLE>
________________
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $10,322
Unrealized depreciation (1,372,312)
----------
Net unrealized depreciation $(1,361,990)
----------
----------
</TABLE>
*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.
Principal denominated in the following currencies:
(a) Argentine Peso
(1) Step-Up Bond.
(2) Interest rate reflected is rate in effect at September 30, 1998.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
DJG VALUE EQUITY FUND
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
Dear Investor:
In our letter this past April covering the first fiscal year of the DJG Value
Equity Fund, we observed that the 49.40% gain for that fiscal year was
unsustainable, and equity valuations in general were at levels that reflected
what some observers at the time characterized as "investment nirvana". We also
posed the question: how long can these optimal conditions persist? That has
been clearly answered in the last six months.
The investment climate during the period changed radically from "investment
nirvana" to "investment purgatory". The spreading impact of the Asian contagion
to other emerging markets, notably Russia and Brazil, was largely responsible.
As a result, investors began to doubt all assumptions regarding prospective
earnings, particularly those related to foreign sources and commodity prices.
With this background, the equity market declined meaningfully from April 1st to
September 30th, with especially steep declines in stocks that were not at the
top tier of quality and liquidity. The market tiering can be vividly seen in
the differentiation in performance over the six month period by capitalization
size: S&P 500 -7.52%; S&P 400 Mid Cap -17.08%; and S&P 600 Small Cap -25.20%.
Given the market's penchant for size without regard to underlying valuation, and
a portfolio with an average capitalization that mirrored the mid to small "cap"
indices, we were not immune to the steep decline. As a result, the Fund had a
negative return for the six months of -21.98%.
This extreme tiering of the equity markets during the past six months led to
incongruous price moves in the Fund's portfolio. Several positions continued to
narrow the price/value gaps and were reduced or eliminated. Others, not
withstanding already wide price/value gaps, declined in price as the financial
markets continued a relentless flight to liquidity. We took this opportunity to
add to a number of our investments with excellent risk/reward characteristics.
In the short run, the portfolio shifts hindered performance as they ran counter
to the markets focus on quality irrespective of underlying valuation.
Although surprised and disappointed by the extent of the decline in many of our
holdings, the current large discounts from intrinsic value should provide
downside protection and substantial recovery potential. Just as the euphoria in
the beginning of the year did not persist, the current disconnect between stock
prices of most Fund holdings and the companies underlying values is equally
unsustainable.
Erwin Zeuschner
Portfolio Manager and
Principal of David J. Greene & Company LLC
October 21, 1998
<PAGE>
OFFITBANK
DJG VALUE EQUITY FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
COMMON STOCKS (86.0%)
AGRICULTURE (3.3%)
Agco Corp. 2,000 $ 13,250
IMC Global, Inc. 1,950 37,781
--------
51,031
--------
AUTOMOTIVE (6.1%)
General Motors Corp. 600 32,812
Ryder System, Inc. 2,500 62,188
--------
95,000
--------
CABLE (2.2%)
Time Warner, Inc. 700 35,025
--------
COMPUTERS (2.7%)
BancTec, Inc. 2,500 42,750
--------
CONSULTING (2.3%)
Comdisco, Inc. 2,700 36,787
--------
ELECTRONICS (4.9%)
Sensormatic Electronics Corp. 4,000 23,500
Varian Associates, Inc. 1,500 52,875
--------
76,375
--------
FINANCIAL SERVICES (3.2%)
Dime Bancorp, Inc. 2,000 50,625
--------
HEALTHCARE/HEALTH SERVICES (4.0%)
Aetna, Inc. 500 34,750
Foundation Health Services, Inc. - Class A* 3,000 28,125
--------
62,875
--------
HOTELS/GAMING (4.5%)
International Game Technology 2,500 46,406
Mirage Resorts, Inc.* 1,400 23,450
--------
69,856
--------
HUMAN RESOURCES (1.3%)
Olsten Corp. 3,500 19,906
--------
INSURANCE (6.2%)
Everest Reinsurance Holdings, Inc. 1,100 41,044
TIG Holdings, Inc. 4,000 56,250
--------
97,294
--------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
DJG VALUE EQUITY FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURING (13.3%)
Calgon Carbon Corp. 5,000 $ 37,187
Hussmann International, Inc. 3,000 42,563
ITT Industries, Inc. 1,500 50,813
Navistar International Corp.* 2,000 45,250
Whitman Corp. 2,000 31,875
---------
207,688
---------
METALS/MINING (1.2%)
Freeport-McMoran Sulphur, Inc.* 1,816 18,727
---------
PAPER PRODUCTS, (2.9%)
Georgia Pacific Corp. 1,000 45,625
---------
RETAIL (14.6%)
American Stores Co. 2,500 80,469
Footstar, Inc.* 1,800 40,837
Homebase, Inc.* 5,800 38,788
Trican Global Restaurants, Inc. 500 19,499
Toys "R" Us, Inc. 3,000 48,563
---------
228,156
---------
TELECOMMUNICATIONS (13.3%)
AirTouch Communications, Inc.* 900 51,300
COMSAT Corp. 2,000 70,500
Telephone and Data Systems, Inc. 2,500 87,188
---------
208,988
---------
TOTAL COMMON STOCKS (COST $1,449,387) 1,346,708
---------
WARRANTS (0.0%)
CHEMICAL
IMC Global, Inc. 500 250
---------
TOTAL WARRANTS (COST $0) 250
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
DJG VALUE EQUITY FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
MONEY MARKET FUND (13.3%)
Bank of New York Cash Reserve MM Fund $ 208,038 $ 208,038
---------
TOTAL MONEY MARKET FUND (COST $208,038) 208,038
---------
TOTAL INVESTMENTS (COST $1,657,425) (+) - 99.3% 1,554,996
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.7% 11,588
---------
TOTAL NET ASSETS - 100.0% $1,566,584
---------
---------
</TABLE>
________________
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 208,694
Unrealized depreciation (311,123)
--------
Net unrealized depreciation $(102,429)
--------
--------
</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
SEPTEMBER 30, 1998
- -------------------------------------------------------------------------------
The last six months of 1998 (April 1, 1998 through September 30, 1998) have been
marked by weakening corporate profits and an unstable global economy, resulting
in a highly volatile marketplace. An imbalance in the supply/demand equation,
and the almost indiscriminate selling of healthy and wounded stocks alike, has
resulted in a particularly difficult environment for small capitalization
stocks. For the six months ended September 30, 1998, the S&P 500 Index was down
nearly 6.9% while the Russell 2000 Index declined 23.8%. The difference in
quarterly returns between large capitalization and small capitalization stocks
has not been this wide since late 1990.
The OFFITBANK VIF U.S. Small Cap Fund for the six months ended September 30,
1998 declined 24.22%, net of fees, while its index benchmark, the Russell 2000
Index returned -23.8%. Financial stocks were the worst performing sector during
this six month period. In the bank and thrift sectors, a flat yield curve and
intense loan competition led to narrowing spreads. The returns for technology
stocks were mixed, but overall negatively impacted our absolute and relative
performance. Stock selection within the health care sector added positively to
performance while in the utility sector our slightly overweight position, as
well as stock selection, added to the total Fund performance.
During the last six months we have added a few new names to the portfolio,
including two consumer related stocks. Dal-Tile International, a manufacturer,
distributor and marketer of ceramic tile, is a clear market leader with 20% of
the U.S. market and EchoStar Communications is an operator of a direct broadcast
satellite subscription television service in the U.S. In the business services
category, we added Sykes Enterprises, a provider of outsourcing services to
companies including support services for back office and point-of-sale
customers, and Trex Medical, a worldwide leader in the manufacturing and sale of
mammography equipment. Amkor Technology, the largest independent integrated
circuits manufacturer in the world, is benefiting from semiconductor companies'
need to reduce costs and switch to outsourcing and was also purchased.
The portfolio on September 30th, had maintained its overweight position, versus
the Russell 2000 Index, in the technology, health care and consumer sectors,
while remaining underweight in the financial, autos and producer durable
sectors.
Looking forward, small capitalization stock prices remain vulnerable as heavier
than usual tax loss selling will most likely continue through year-end 1998. In
addition, any harsh or prolonged credit crunch could severely hurt small
companies that rely on outside funds for growth or acquisitions. Although
relative valuations remain attractive, the expected growth rates for both small
and large capitalization stocks are continuing to come down. On a more positive
note, there is some indication that investors are beginning to nibble at small
capitalization stocks. During the first ten days of October, the Russell 2000
Index was down over 12%; the next ten days it returned over 10%. As we have
stated previously, our focus is on specific company analysis and we look to hold
those companies with strong fundamentals and compelling valuations.
Rockefeller & Co.
October 21, 1998
<PAGE>
OFFITBANK
VIF - U.S. SMALL CAP FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
COMMON STOCKS (84.7%)
AUTOMOTIVE (3.1%)
Exide Corp. 1,410 $ 16,215
Monroe Muffler Brake, Inc.* 1,759 16,711
---------
32,926
---------
BUILDING/CONSTRUCTION (1.0%)
Dal-tile International, Inc.* 1,165 10,558
---------
COMMERCIAL SERVICES (3.9%)
Iron Mountain, Inc.* 1,365 40,950
---------
COMPUTERS (18.6%)
BancTec, Inc.* 1,458 20,776
The BISYS Group, Inc.* 1,000 44,125
Broadway & Seymour, Inc.* 3,730 12,123
Integrated Systems, Inc.* 2,230 18,537
Kronos, Inc.* 1,085 40,145
PLATINUM technology, Inc. 1,383 24,894
Skyes Enterprises, Inc.* 2,050 34,850
---------
195,450
---------
DATA PROCESSING (13.0%)
Information Resources, Inc.* 2,030 26,644
Network Appliance, Inc.* 775 39,234
Object Design, Inc.* 4,500 23,203
Sterling software, Inc. 1,740 47,959
---------
137,040
---------
ELECTRONICS (5.7%)
Amkor Technology, Inc. 4,300 20,962
Mentor Graphics Corp. 3,580 24,836
Microsemi Corp. 1,740 13,920
---------
59,718
---------
FINANCIAL SERVICES (10.3%)
DVI, Inc.* 1,570 23,059
Financial Federal Corp. 1,802 39,531
Imperial Credit Industries, Inc.* 1,000 6,250
Novastar Financial, Inc. 1,700 22,100
Warwick Community Bancorp, Inc. 1,400 17,675
---------
108,615
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
VIF - U.S. SMALL CAP FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
HEALTH SERVICES/HEALTHCARE (13.6%)
ADAC Laboratories 1,320 $ 31,680
Healthcare Services Group, Inc. 2,825 26,484
HealthPlan Services Corp. 1,290 13,867
ReSound Corp.* 5,870 24,948
Trex Medical Crop.* 1,500 19,125
Unilab Corp.* 13,000 26,813
---------
142,917
---------
MANUFACTURING (0.5%)
Windmere-Durable Holdings, Inc. 900 5,063
---------
OIL/GAS (1.4%)
Range Resources Corp. 2,010 14,196
---------
RETAIL (2.5%)
Buffets, Inc.* 2,420 26,166
---------
SAFETY SERVICES (1.7%)
Rural/Metro Corp.* 2,200 17,600
---------
TELECOMMUNICATIONS (9.4%)
EchoStar Communications Corp. - Class A* 1,000 24,000
Primus Telecommunications Group* 1,598 13,883
RSL Communications, Ltd.* 1,240 33,635
Vanguard Cellular Systems, Inc.* 1,450 27,550
---------
99,068
---------
TOTAL COMMON STOCKS (COST $1,016,203) 890,267
---------
FOREIGN STOCKS (2.0%)
METALS/MINING (0.0%)
Real del Monte Mining Corp. (a)* 879 86
---------
OIL/GAS (2.0%)
Rio Alto Exploration Ltd. (a)* 1,900 20,665
---------
TOTAL FOREIGN STOCKS (COST $27,946) 20,751
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFITBANK
VIF - U.S. SMALL CAP FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)(CONTINUED)
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
<S> <C> <C>
MONEY MARKET FUND (11.9%)
Bank of New York Cash Reserve MM Fund $ 125,124 $ 125,124
---------
TOTAL MONEY MARKET FUND (COST $125,124) 125,124
---------
TOTAL INVESTMENTS (COST $1,169,273) (+) - 98.6% 1,036,142
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.4% 14,971
---------
TOTAL NET ASSETS - 100.0% $1,051,113
---------
---------
</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 $533. Cost for federal income tax purposes differs from value by net
unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 133,432
Unrealized depreciation (267,096)
-------
Net unrealized depreciation $(133,664)
-------
-------
</TABLE>
Principal denominated in the following currency:
(a) Canadian Dollar
* 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
SEPTEMBER 30, 1998 (UNAUDITED)
VIF - HIGH YIELD FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
ASSETS:
<S> <C> <C>
Investments, at market value (cost $44,126,812) $ 42,749,948
Deferred organization expense 35,288
Interest and dividends receivable 1,008,412
Prepaid expenses and other assets 1,493
-------------
Total Assets $ 43,795,141
LIABILITIES:
Advisory fees payable 25,765
Administration fees payable 3,310
Fund accounting fees payable 1,250
Transfer agent fees payable 1,530
Unrealized depreciation on open forward currency
contracts and foreign transactions 58,645
Other payables and accrued expenses 61,829
-------------
Total Liabilities 152,329
-------------
NET ASSETS $ 43,642,812
-------------
-------------
Net Assets consist of:
Shares of capital stock, $0.001 par value
per share, 4,245,173 issued and outstanding $ 4,245
Additional paid-in capital 44,900,041
Accumulated net realized gains on investment and
foreign currency transactions 174,035
Net unrealized depreciation of investments and
foreign currency transactions (1,435,509)
-------------
NET ASSETS $ 43,642,812
-------------
-------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE) $ 10.28
-------------
-------------
</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)
SEPTEMBER 30, 1998 (UNAUDITED)
VIF - EMERGING MARKETS FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
ASSETS:
<S> <C> <C>
Investments, at market value (cost $6,144,837) $ 4,782,847
Cash 8,250
Interest and dividends receivable 196,663
Deferred organization expense 41,092
Prepaid expenses and other assets 2,156
-------------
Total Assets $ 5,031,008
LIABILITIES:
Payable for investment securities purchased 91,917
Advisory fees payable 3,294
Administration fees payable 6,360
Transfer agent fees payable 1,620
Other fees payable 21,812
-------------
Total Liabilities 125,003
-------------
NET ASSETS $ 4,906,005
-------------
-------------
Net Assets consist of:
Shares of capital stock, $0.001 par value per share,
730,236 issued and outstanding $ 730
Additional paid-in capital 7,562,320
Distributions in excess of net investment income (8,312)
Accumulated net realized losses on investment and
foreign currency transactions (1,286,743)
Net unrealized depreciation of investments (1,361,990)
-------------
NET ASSETS $ 4,906,005
-------------
-------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE) $ 6.72
-------------
-------------
</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)
SEPTEMBER 30, 1998 (UNAUDITED)
DJG VALUE EQUITY FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
ASSETS:
<S> <C> <C>
Investments, at market value (cost $1,657,425) $ 1,554,996
Interest and dividends receivable 1,906
Receivable from Advisor 20,924
Deferred organizational expense 6,711
Prepaid expenses and other assets 88
-------------
Total Assets $ 1,584,625
LIABILITIES:
Audit fees payable 16,763
Other payables and accrued expenses 1,278
-------------
Total Liabilities 18,041
-------------
NET ASSETS $ 1,566,584
-------------
-------------
Net Assets consist of:
Shares of capital stock, $0.001 par value per share,
143,762 issued and outstanding $ 144
Additional paid-in capital 1,566,109
Accumulated undistributed net investment income 1,782
Accumulated net realized gains on investment transactions 100,978
Net unrealized depreciation of investments (102,429)
-------------
NET ASSETS $ 1,566,584
-------------
-------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE) $ 10.90
-------------
-------------
</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)
SEPTEMBER 30, 1998 (UNAUDITED)
VIF - U.S. SMALL CAP FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
ASSETS:
<S> <C> <C>
Investments, at market value (cost $1,169,273) $ 1,036,142
Interest and dividends receivable 877
Receivable for investment securities sold 15
Receivable from Advisor 25,097
Deferred organization expense 6,711
Prepaid expenses and other assets 80
-------------
Total Assets $ 1,068,922
LIABILITIES:
Audit fees payable 16,798
Other payables and accrued expenses 1,011
-------------
Total Liabilities 17,809
-------------
NET ASSETS $ 1,051,113
-------------
-------------
Net Assets consist of:
Shares of capital stock, $0.001 par value
per share, 107,713 issued and outstanding $ 108
Additional paid-in capital 1,151,016
Accumulated net investment loss (5,950)
Accumulated net realized gains on investment
transactions 39,070
Net unrealized depreciation of investments (133,131)
-------------
NET ASSETS $ 1,051,113
-------------
-------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE) $ 9.76
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
VIF - HIGH YIELD FUND
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED SEPTEMBER 30, 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 1,838,279
-------------
Total Income $ 1,838,279
EXPENSES:
Advisory 168,569
Administration 26,444
Fund accounting 10,797
Transfer agent 6,327
Professional 40,082
Amortization of organization expenses 7,290
Miscellaneous 15,436
-------------
Total expenses before waivers/reimbursements 274,945
Less expenses waived/ reimbursed (46,977)
-------------
Net expenses 227,968
-------------
NET INVESTMENT INCOME 1,610,311
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains on investment and foreign
currency transactions 174,035
Net change in unrealized depreciation of investments
and foreign currency transactions (2,776,079)
-------------
Net realized and unrealized loss on investments (2,602,044)
-------------
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (991,733)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED) (CONTINUED)
VIF - EMERGING MARKETS FUND
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED SEPTEMBER 30, 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 328,964
-------------
Total Income $ 328,964
EXPENSES:
Advisory 27,555
Administration 4,071
Fund accounting 10,004
Transfer agent 6,029
Legal 4,731
Audit 18,996
Amortization of organization expenses 7,278
Miscellaneous and other expenses 1,110
-------------
Total expenses before waivers/ reimbursements 79,774
Less expenses waived/ reimbursed (33,848)
-------------
Net expenses 45,926
-------------
NET INVESTMENT INCOME 283,038
REALIZED AND UNREALIZED LOSSES ON INVESTMENTS:
Net realized losses on investment and foreign currency
transactions (1,286,743)
Net change in unrealized depreciation of investments (1,474,525)
Net change in unrealized depreciation of foreign currency
transactions (7,713)
-------------
Net realized and unrealized loss on investments (2,768,981)
-------------
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (2,485,943)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED) (CONTINUED)
DJG VALUE EQUITY FUND
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED SEPTEMBER 30, 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 4,001
Dividends 9,410
-------------
Total Income $ 13,411
EXPENSES:
Advisory 14,595
Administration 1,247
Fund accounting 10,185
Transfer agent 6,000
Legal 6,695
Audit 15,164
Amortization of organization expenses 940
Miscellaneous & other expenses 1,325
-------------
Total expenses before waivers/ reimbursements 56,151
Less expenses waived/ reimbursed (44,522)
-------------
Net expenses 11,629
-------------
NET INVESTMENT INCOME 1,782
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains on investment transactions 100,978
Net change in unrealized depreciation of investments (544,481)
-------------
Net realized and unrealized loss on investments (443,503)
-------------
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (441,721)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED) (CONTINUED)
VIF - U.S. SMALL CAP FUND
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED SEPTEMBER 30, 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 2,095
Dividends 1,631
-------------
Total Income $ 3,726
EXPENSES:
Advisory 6,585
Administration 858
Fund accounting 10,139
Transfer agent 6,290
Professional 21,552
Amortization of organization expenses 941
Other Expenses 4,112
-------------
Total expenses before waivers/reimbursements 50,477
Less expenses waived/ reimbursed (40,801)
-------------
Net expenses 9,676
-------------
NET INVESTMENT LOSS (5,950)
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains on investment transactions 39,603
Net change in unrealized depreciation of investments (370,295)
-------------
Net realized and unrealized loss on investments (330,692)
-------------
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (336,642)
-------------
-------------
</TABLE>
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 SIX MONTHS ENDED FOR THE PERIOD FROM
SEPTEMBER 30, 1998 APRIL 11, 1997* THROUGH
(UNAUDITED) MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss $ (5,950) $ (8,068)
Net realized gains on investment transactions 39,603 125,730
Net change in unrealized appreciation (depreciation) of investments (370,295) 237,164
------------- -------------
Net increase (decrease) in net assets resulting from operations (336,642) 354,826
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net realized gains (119,956) -
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued - 1,054,094
Dividends reinvested 119,956 -
Cost of shares redeemed (6,525) (14,640)
------------- -------------
Net increase in net assets from capital share transactions 113,431 1,039,454
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (343,167) 1,394,280
NET ASSETS:
Beginning of period 1,394,280 -
------------- -------------
End of period $ 1,051,113 $ 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.
STATEMENT OF CHANGES IN NET ASSETS
VIF - HIGH YIELD FUND
<TABLE>
<CAPTION>
FOR SIX MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1998 (UNAUDITED) MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,610,311 $ 2,248,457
Net realized gains on investment and foreign currency transactions 174,035 199,824
Net change in unrealized appreciation (depreciation) of investments
and foreign currency transactions (2,776,079) 1,342,036
------------- -------------
Net increase (decrease) in net assets resulting from operations (991,733) 3,790,317
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,652,483) (2,248,457)
Net realized gains (199,824) -
------------- -------------
Total dividends and distributions to shareholders (1,852,307) (2,248,457)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 17,442,530 6,518,774
Dividends reinvested 2,059,623 2,040,697
Cost of shares redeemed (4,690,267) (3,540,505)
------------- -------------
Net increase in net assets from capital share transactions 14,811,886 5,018,966
------------- -------------
TOTAL INCREASE IN NET ASSETS 11,967,846 6,560,826
NET ASSETS:
Beginning of period 31,674,966 25,114,140
------------- -------------
End of period $ 43,642,812 $ 31,674,966
------------- -------------
------------- -------------
</TABLE>
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 SIX MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1998 (UNAUDITED) MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 283,038 $ 454,983
Net realized gain (loss) on investment and foreign
currency transactions (1,286,743) 64,003
Net change in unrealized appreciation (depreciation) of investments
and foreign currency transactions (1,482,238) 69,906
------------- -------------
Net increase (decrease) in net assets resulting from operations (2,485,943) 588,892
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (283,038) (454,983)
Excess of net investment income (41,459) (10,015)
Net realized gains (52,829) -
------------- -------------
Total dividends and distributions to shareholders (377,326) (464,998)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 3,645,787 1,004,183
Dividends reinvested 500,339 338,633
Cost of shares redeemed (2,156,384) (32,780)
------------- -------------
Net increase in net assets from capital share transactions 1,989,742 1,310,036
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (873,527) 1,433,930
NET ASSETS:
Beginning of period 5,779,532 4,345,602
------------- -------------
End of period $ 4,906,005 $ 5,779,532
------------- -------------
------------- -------------
</TABLE>
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 SIX MONTHS ENDED FOR THE PERIOD FROM
SEPTEMBER 30, 1998 APRIL 11, 1997* THROUGH
(UNAUDITED) MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,782 $ 2,137
Net realized gains on investment transactions 100,978 120,079
Net change in unrealized appreciation (depreciation) of investments (544,481) 442,052
------------- -------------
Net increase (decrease) in net assets resulting from operations (441,721) 564,268
------------- -------------
DIVIDENDS TO DISTRIBUTIONS SHAREHOLDERS FROM:
Net investment income (3,898) -
Net realized gains (120,079) -
------------- -------------
Total dividends and distributions to shareholders (123,977) -
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued - 1,472,103
Dividends reinvested 123,977 -
Cost of shares redeemed (9,578) (18,488)
------------- -------------
Net increase in net assets from capital share transactions 114,399 1,453,615
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (451,299) 2,017,883
NET ASSETS:
Beginning of period 2,017,883 -
------------- -------------
End of period $ 1,566,584 $ 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.
FINANCIAL HIGHLIGHTS
VIF - HIGH YIELD FUND
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE PERIOD FROM
SEPTEMBER 30, 1998 FOR THE YEAR ENDED APRIL 1, 1996* THROUGH
(UNAUDITED) MARCH 31, 1998 MARCH 31, 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.00 $ 10.37 $ 10.00(d)
--------- --------- --------
Net investment income 0.43 0.86 0.78
Net realized and unrealized gain (loss) (0.65) 0.63 0.37
--------- --------- --------
Total income (loss) from investment operations (0.22) 1.49 1.15
--------- --------- --------
LESS DIVIDEND DISTRIBUTIONS FROM:
Net investment income (0.44) (0.86) (0.78)
Net realized gain (0.06) 0.00 0.00
--------- --------- --------
Total dividends and distributions (0.50) (0.86) (0.78)
--------- --------- --------
Net change in net asset value per share (0.72) 0.63 0.37
--------- --------- --------
NET ASSET VALUE, END OF PERIOD $ 10.28 $ 11.00 $ 10.37
--------- --------- --------
--------- --------- --------
TOTAL RETURN (a) (2.11%)(b) 14.84% 11.90%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 43,643 $ 31,675 $ 25,114
Ratios to average net assets:
Expenses** 1.15%(c) 1.15% 1.15%(c)
Net investment income 8.12%(c) 7.98% 7.45%(c)
PORTFOLIO TURNOVER RATE 17% 32% 4%
</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 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.
(b) Not Annualized.
(c) Annualized.
(d) 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 - EMERGING MARKETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE PERIOD FROM
SEPTEMBER 30, 1998 FOR THE YEAR ENDED AUGUST 28, 1996* THROUGH
(UNAUDITED) MARCH 31, 1998 MARCH 31, 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.55 $ 10.30 $ 10.00(d)
--------- --------- --------
Net investment income 0.42 0.86 0.48
Net realized and unrealized gain (loss) (3.67) 0.27 0.34
--------- --------- --------
Total income (loss) from investment operations (3.25) 1.13 0.82
--------- --------- --------
LESS DIVIDENDS AND DISTRIBUTION FROM:
Net investment income (0.42) (0.86) (0.48)
Excess of net investment income (0.07) (0.02) 0.00
Realized gains (0.09) 0.00 (0.04)
--------- --------- --------
Total dividends and distributions (0.58) (0.88) (0.52)
--------- --------- --------
Net change in net asset value per share (3.83) 0.25 0.30
--------- --------- --------
NET ASSET VALUE, END OF PERIOD $ 6.72 $ 10.55 $ 10.30
--------- --------- --------
--------- --------- --------
TOTAL RETURN (a) (31.79%)(b) 11.26% 8.29%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 4,906 $ 5,780 $ 4,346
Ratios to average net assets:
Expenses** 1.50%(c) 1.50% 1.50%(c)
Net investment income 9.19%(c) 8.27% 8.04%(c)
PORTFOLIO TURNOVER RATE 89% 53% 96%
</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 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.
(b) Not annualized.
(c) Annualized.
(d) Initial offering price.
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 SIX MONTHS ENDED FOR THE PERIOD FROM
SEPTEMBER 30, 1998 APRIL 11, 1997* THROUGH
(UNAUDITED) MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.94 $ 10.00(d)
--------- -------
Net investment income 0.01 0.02
Net realized and unrealized gain (loss) (3.13) 4.92
--------- -------
Total income (loss) from investment operations (3.12) 4.94
--------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.03) 0.00
Net realized gains (0.89) 0.00
--------- -------
Total dividends and distributions (0.92) 0.00
--------- -------
Net change in net asset value per share (4.04) 4.94
--------- -------
NET ASSET VALUE, END OF PERIOD $ 10.90 $ 14.94
--------- -------
--------- -------
TOTAL RETURN (a) (21.98%)(b) 49.40%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (in thousands) $ 1,567 $ 2,018
Ratios to average net assets:
Expenses** 1.25%(c) 1.25%(c)
Net investment income 0.19%(c) 0.16%(c)
PORTFOLIO TURNOVER RATE 17% 33%
</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) 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 SIX MONTHS ENDED FOR THE PERIOD FROM
SEPTEMBER 30, 1998 APRIL 11, 1997* THROUGH
(UNAUDITED) MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.14 $ 10.00(d)
--------- -------
Net investment loss (0.06) (0.08)
Net realized and unrealized gain (loss) (3.10) 4.22
--------- -------
Total income (loss) from investment operations (3.16) 4.14
--------- -------
LESS DIVIDEND DISTRIBUTION FROM:
Net realized gains (1.22) 0.00
--------- -------
Total dividends and distributions (1.22) 0.00
--------- -------
Net change in net asset value per share (4.38) 4.14
--------- -------
NET ASSET VALUE, END OF PERIOD $ 9.76 $ 14.14
--------- -------
--------- -------
TOTAL RETURN (a) (24.22%)(b) 41.40%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (in thousands) $ 1,051 $ 1,394
Ratios to average net assets
Expenses** 1.50%(c) 1.50%(c)
Net Investment Income (1.13%)(c) (0.74%)(c)
PORTFOLIO TURNOVER RATE 25% 51%
</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) 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 (UNAUDITED)
- --------------------------------------------------------------------------------
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. Effective June 1, 1998, PFPC
Inc. ("PFPC"), an indirect wholly owned subsidiary of PNC Bank Corp., began
providing administrative and fund accounting services for the Funds. OFFIT Funds
Distributor, Inc. (the "Distributor"), serves as the distributor of the Funds'
shares. PFPC also provides transfer and dividend disbursing agent services for
the Funds. Prior to June 1, 1998, BISYS Fund Services, Limited Partnership, and
BISYS Fund Services, Inc. provided the aforementioned Services.
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 (UNAUDITED)(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.
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.
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- --------------------------------------------------------------------------------
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
September 30, 1998 are recorded for financial reporting purposes as unrealized
gains and losses by the Funds.
At September 30, 1998, there were no outstanding forward currency contracts for
the VIF-Emerging Markets, DJG Value Equity and VIF-U.S. Small Cap Funds. The
table below indicates the VIF-High Yield Fund's outstanding forward currency
contract position at September 30, 1998:
<TABLE>
<CAPTION>
VALUE ON VALUE AT
CONTRACT MATURITY ORIGINATION SEPTEMBER UNREALIZED
CURRENCY AMOUNTS DATE DATE 30, 1998 DEPRECIATION
-------- -------- -------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sell DEM (506,000) 10/6/98 $(560,547) $(596,206) $(35,659)
Sell ECU (252,000) 10/6/98 (290,320) (314,379) (24,059)
------------
Net unrealized depreciation on forward positions.............................................................. $(59,718)
------------
------------
</TABLE>
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- --------------------------------------------------------------------------------
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; 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 September 30, 1998, the Adviser
earned fees of $168,569 and $27,555 and waived fees of $35,950 and $22,137 for
the VIF-High Yield Fund and VIF-Emerging Markets Fund, and earned and waived
fees of $6,585 for the VIF-U.S. Small Cap Fund. David J. Greene and Company
earned and waived fees of $14,595 for the DJG Value Equity Fund.
PFPC provides the Company with administrative services pursuant to an
administration agreement (the "Administration Agreement"). The services under
the Administration Agreement are subject to the supervision of the Company's
Board of Directors and officers and include the day-to-day administration of
matters related to the corporate existence of the Company, maintenance of its
records, preparation of reports, supervision of the Company's arrangements with
its 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 PFPC a monthly fee for its services at an annual
rate of 0.125% of each Portfolio's first $300 million in average daily net
assets; 0.11% of each Portfolio's next $300 million in average daily net assets;
0.08% of each Portfolio's next $300 million in average daily net assets; 0.05%
of each Portfolio's next $300 million in average daily net assets; and 0.0275%
of each Portfolio's average daily net assets in excess of $1.2 billion. From
time to time, PFPC may waive all or a portion of its fees. For period from June
1, 1998 through September 30, 1998. PFPC was entitled to fees of $19,067,
$2,603, $742 and $542 for the VIF-High Yield Fund, VIF-Emerging Markets Fund,
DJG Value Equity Fund and VIF-U.S. Small Cap Fund, respectively. PFPC waived
fees of $4,478, $2,603, $742 and $542 for the VIF-High Yield Fund, VIF-Emerging
Markets Fund, DJG Value Equity Fund and VIF-U.S. Small Cap Fund, respectively.
For the period prior to June 1, 1998 BISYS Fund Services, Inc., the previous
administrator was entitled to fees of $7,377, $1,468, $505 and $316 for VIF-High
Yield Fund, VIF-Emerging Markets Fund, DJG Value Equity Fund and VIF-U.S. Small
Cap Fund, respectively. BISYS Fund Services, Inc. waived fees of $3,689,
$1,468, $505 and $316 for VIF-High Yield Fund, VIF-Emerging Markets Fund, DJG
Value Equity Fund and VIF-U.S. Small Cap Fund, respectively.
PFPC provides the Funds with fund accounting and related services pursuant to a
fund accounting agreement with the Company. For these services PFPC is
entitled a fee of $1,250 per month per Fund plus out of pocket expenses. From
time to time, PFPC may waive all or a portion of its fees. For the period from
June 1, 1998 through September 30, 1998, PFPC waived fees of $5,000, $5,000 and
$5,242 for the VIF-Emerging Markets Fund, DJG Value Equity Fund and VIF-U.S.
Small Cap Fund, respectively. For the period prior to June 1, 1998 BISYS Funds
Services, Inc., the previous Fund accounting agent earned fees, including
reimbursement of out of pocket expenses, of $5,555, $5,004, $5,185, and $4,897
for the VIF-High Yield Fund, VIF-Emerging Markets Fund, DJG Value Equity Fund
and VIF-U.S. Small Cap Fund.
PFPC also serves as transfer agent for the Funds and receives reimbursement of
certain expenses plus a fee for related services pursuant to a transfer agency
agreement with the Company. From time to time, PFPC may waive all or portion of
these fees. For the period from June 1, 1998 through September 30, 1998, PFPC
earned fees of $6,290, $6,029, $6,000
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- --------------------------------------------------------------------------------
and $6,290 for the VIF-High Yield Fund, VIF-Emerging Markets Fund, DJG Value
Equity Fund and VIF-U.S. Small Cap Fund. PFPC waived fees of $2,860, $2,640,
$2,756 and $3,019 for the VIF-High Yield Fund, VIF-Emerging Markets Fund, DJG
Value Equity Fund and VIF-U.S. Small Cap Fund, respectively. For the period
prior to June 1, 1998 BISYS Fund Services, Inc., the previous transfer agent
earned fees, including reimbursement of out pocket expenses of $37, for the
VIF-High Yield Fund.
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 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 Fund,
respectively. In order to maintain these ratios, for the period ended September
30, 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 DJG Value
Equity Fund and VIF-U.S. Small Cap Fund for expenses in the amounts of $20,924
and $25,097, respectively.
NOTE 4 -- SECURITIES TRANSACTIONS
For the six months ended September 30, 1998, the cost of purchases and the
proceeds from sales of the Funds' portfolio securities (excluding short-term
investments), were as follows:
<TABLE>
<CAPTION>
Common Stocks
And Corporate Bonds
-------------------
Purchases Sales
--------- -----
<S> <C> <C>
VIF-High Yield Fund $19,215,188 $6,553,064
VIF-Emerging Markets Fund 6,512,677 4,692,128
DJG Value Equity Fund 328,093 264,500
VIF-U.S. Small Cap Fund 263,300 308,056
</TABLE>
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 six
months ended September 30, 1998 and for the period ended March 31, 1998, were as
follows:
<TABLE>
<CAPTION>
VIF-HIGH YIELD
---------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1998 MARCH 31, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares issued...................... 1,604,860 $17,442,530 608,193 $6,518,774
Shares reinvested ................. 192,303 2,059,623 189,195 2,040,697
Shares redeemed.................... (432,058) (4,690,267) (338,000) (3,540,505)
---------- ----------- --------- -----------
Net increase....................... 1,365,105 $14,811,886 459,388 $5,018,966
---------- ----------- --------- -----------
---------- ----------- --------- -----------
</TABLE>
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF-EMERGING MARKETS
---------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1998 MARCH 31, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares issued...................... 374,422 $3,645,787 97,067 $1,004,183
Shares reinvested ................. 57,214 500,339 31,980 338,633
Shares redeemed.................... (249,186) (2,156,384) (3,135) (32,780)
---------- ----------- --------- -----------
Net increase....................... 182,450 $1,989,742 125,912 $1,310,036
---------- ----------- --------- -----------
---------- ----------- --------- -----------
<CAPTION>
DJG VALUE EQUITY
---------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
SEPTEMBER 30, 1998 MARCH 31, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares issued...................... 0 $0 136,577 $1,472,103
Shares reinvested ................. 9,350 123,977 0 0
Shares redeemed.................... (699) (9,578) (1,466) (18,488)
---------- ----------- --------- -----------
Net increase....................... 8,651 $114,399 135,111 $1,453,615
---------- ----------- --------- -----------
---------- ----------- --------- -----------
<CAPTION>
VIF-U.S. SMALL CAP
---------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
SEPTEMBER 30, 1998 MARCH 31, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares issued..................... 0 $0 99,803 $1,054,094
Shares reinvested ................ 9,627 119,956 0 0
Shares redeemed................... (517) (6,525) (1,200) (14,640)
---------- ----------- --------- -----------
Net increase...................... 9,110 $113,431 98,603 $1,039,454
---------- ----------- --------- -----------
---------- ----------- --------- -----------
</TABLE>
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>
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 AND New York, New York 10022
DIRECTOR
DIRECTOR
INVESTMENT ADVISOR - 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
DIRECTOR CAP FUND
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 Four Falls Corporate Center, 6th Floor
West Conshocken, PA 19428-2961
Vincent M. Rella
ASSISTANT TREASURER ADMINISTRATOR; TRANSFER AND DIVIDEND
DISBURSING AGENT
PFPC Inc.
David D. Marky 400 Bellevue Parkway
ASSISTANT TREASURER Wilmington, DE 19809
Stephen M. Wynne CUSTODIAN - VIF-EMERGING MARKETS FUND
ASSISTANT TREASURER 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
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
<PAGE>
This report is submitted for the information of the shareholders of the Funds.
It is not authorized for distribution to prospective investors in the Funds
unless preceded or accompanied by an effective prospectus which includes
information regarding the Funds' objectives and policies, charges, expenses and
other data. Please read the prospectus carefully before you invest or send
money.
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
400 BELLEVUE PARKWAY, SUITE 108, WILMINGTON, DE 19809
(212) 758-9600
