OFFITBANK VARIABLE INSURANCE FUND INC, 485APOS, 1999-03-01

OFFITBANK VARIABLE INSURANCE FUND INC
485APOS, 1999-03-01

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Registration Nos. 33-81748
811-8640

As filed via EDGAR with the Securities and Exchange Commission on March 1, 1999

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No.
Post-Effective Amendment No. 13
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 14
(Check appropriate box or boxes)

THE OFFITBANK VARIABLE INSURANCE FUND, INC.
(Exact name of Registrant as specified in charter)

400 Bellevue Parkway
Wilmington, Delaware 19809
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (800) 618-9510

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

Stephen Brent Wells, Esq.
OFFITBANK
520 Madison Avenue
New York, New York 10022

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

(Name and Address of Agent for Service)

with a copy to:
Carl Frischling, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022

It is proposed that this filing will become effective:

|_| immediately upon filing pursuant to paragraph (b)
|_| on (date) pursuant to paragraph (b)
|_| on (date) pursuant to paragraph (a)(i)
|X| 60 days after filing pursuant to paragraph (a)(i)
|_| 75 days after filing pursuant to paragraph (a)(ii)
|_| on (date) pursuant to paragraph (a)(ii) of rule 485.

If appropriate, check the following box:

|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
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THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFITBANK VIF - High Yield Fund

The OFFITBANK Variable Insurance Fund, Inc. (the "Company") is an open-end,
management investment company offering ten separate, no-load investment
portfolios. This Prospectus contains information relating only to the OFFITBANK
VIF - High Yield Fund (the "Fund").

Shares of the Fund are sold by the Company's Distributor to certain life
insurance companies (collectively, "Participating Companies") and their separate
accounts (collectively, the "Accounts") to fund benefits under variable annuity
contracts ("Contracts") and variable life insurance policies ("Policies") to be
offered by the Participating Companies. The Accounts invest in shares of one or
more of the Company's Funds in accordance with allocation instructions received
from Contract and Policy owners ("Contract Owners" or "Policy Owners," as
appropriate). Such allocation rights are further described in the accompanying
Account Prospectus. Shares are redeemed to the extent necessary to provide
benefits under the Contracts and Policies.

PROSPECTUS

APRIL __, 1999

Like all mutual fund shares, these Fund shares have not been approved or
disapproved by the Securities and Exchange Commission (the "SEC") nor has the
SEC determined whether this prospectus is truthful or complete. To state
otherwise is a criminal offense.
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TABLE OF CONTENTS

A look at goals, strategies, FUND DESCRIPTION
risks and financial history. Investment Objective........................3
Principal Investment Strategies.............3
Principal Risk Factors......................3
Prior Performance...........................3
Financial Highlights........................5
Additional Information on the Fund..........6
Risks of Investing in the Fund..............7

Details on the management MANAGEMENT OF THE FUND
and operations of the Fund. Investment Adviser.........................18
Service Provider Chart.....................19

Policies and instructions for SHAREHOLDER INFORMATION
opening, maintaining and Pricing of Fund Shares.....................20
closing an account in the Purchase of Fund Shares....................21
Fund. Redemption of Fund Shares..................21
Shareholder Services.......................21
Dividends and Distributions................21
Taxes......................................22
Shareholder Communications.................22
Performance Information....................23

Appendix A: Ratings......................A-1
Appendix B: Hedging and Other Strategic
Transactions............................B-1

FOR MORE INFORMATION...........see back cover

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OFFITBANK VIF - HIGH YIELD FUND

Investment Objective

The Fund's investment objective is to seek high current income. Capital
appreciation is a secondary objective.

Principal Investment Strategies

The Fund invests at least 65% of its total assets in U.S. corporate fixed income
securities that are lower rated or unrated at the time of investment.

Principal Risk Factors

o All or a substantial portion of the securities purchased by the Fund are
lower rated or unrated debt securities (i..e., high yield, high risk debt
securities). High yield, high risk debt securities have a higher risk of
default in the payment of interest and principal and are subject to
significant changes in price. Investment by the Fund in such securities
involves a high degree of credit risk and such securities are regarded as
speculative by the major rating agencies.

o The Fund's yield will change with changes in interest rates.

o The net asset value ("NAV") of the Fund will change with changes in the
market value of its portfolio positions.

o The Fund is a "non-diversified" mutual fund. This permits the Fund to
invest most of its assets in securities issued by a small number of
companies. This makes the Fund more susceptible to the risks associated
with these particular companies, or to a single economic, political or
regulatory occurrence.

Because investing in the Fund involves certain risks, you could lose money. For
further information on the risks associated with the Fund, please see "Risks of
Investing in the Fund" below.

PRIOR PERFORMANCE

Annual Total Returns

The bar chart below shows the annual total returns for the Fund for the last two
calendar years. The bar chart provides some indication of the risks of
investment in the Fund by showing changes in the Fund's performance from year to
year. Past performance is not necessarily an indicator of how the Fund will
perform in the future.

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[INSERT BAR CHARTS]

1997 - 11.93
1998 - 4.35

Since inception (April 1, 1996), the highest calendar quarter total return for
the Fund was 5.04% (quarter ended September 30, 1996) and the lowest calendar
quarter total return was (3.16%) (quarter ended September 30, 1998).

Average Annual Total Returns - Comparison

The table below shows how the Fund's average annual total returns for the past
one year and since inception compare with the Merrill Lynch High Yield "BB" for
the same periods. The table, like the bar chart, provides some indication of the
risks of investing in the Fund by showing how the Fund's average annual total
returns for 1 year and since inception compare with that of a broad measure of
market performance. Past performance is not necessarily an indicator of how the
Fund will perform in the future.

Average Annual Total Returns
----------------------------
1 Year Since Inception
------ ---------------

Fund Shares*........................ 4.34% 10.01%

Merrill Lynch High Yield "BB"....... 5.65% Not applicable

* Commenced operations on April 1, 1996.

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FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand the Fund's
financial performance for the periods presented. This information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that a shareholder would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The information for the period ended December 31, 1998 has been
audited by PricewaterhouseCoopers LLP, whose unqualified report, along with the
Fund's financial statements, is included in the Fund's Annual Report dated
December 31, 1998, which is available without charge upon request.

[INSERT FINANCIAL HIGHLIGHTS]

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ADDITIONAL INFORMATION ON THE FUND

Investment Objectives and Policies

The Fund's primary investment objective is high current income. Capital
appreciation is a secondary objective. The Fund seeks to achieve its objectives
by investing, under normal circumstances, at least 65% of its total assets in
U.S. corporate fixed income securities (including debt securities, convertible
securities and preferred stocks) which are rated below investment grade or are
unrated at the time of investment. The Fund is managed for total return and
safety and does not seek the highest yields available. Rather, the Fund intends
to buy and hold better quality high yield issues that the Adviser expects will
earn above average returns over time, while minimizing the broad market risk to
high yield investments. Ultimately, the Fund seeks to outperform over market
cycles by compounding higher yielding coupons while avoiding large capital
losses.

Investment decisions on portfolio securities are primarily credit driven.
Generally, the Adviser seeks to invest in high yield securities that have one or
more of the following characteristics: (1) at least $50 million in earnings
before interest, taxes and depreciation ("EBITDA"); (2) at least two times
EBITDA interest coverage; (3) at least 25% of the issuer's capital structure
must be subordinated to the selected security; (4) approximately five times
maximum total debt to EBITDA; and (5) over two years operating experience in
current legal form ("seasoned").

Securities that meet the Adviser's credit quality criteria are then selected for
purchase after consideration of relative value. In selecting a security for
investment by the Fund, the Adviser may also consider the following factors,
among others: (1) the current yield, the yield to maturity where appropriate,
and the price of the security relative to other securities of comparable quality
and maturity; (2) the market price of the security relative to its face value;
(3) the rating, or absence of a rating, by Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. ("Moody's") or Duff & Phelps Credit
Rating Co. ("D&P"); and (4) the variety of issuers and industries represented in
the Fund's portfolio. Industry trends and fundamental developments that may
affect an issuer are also analyzed, including factors such as liquidity,
profitability and asset quality.

The Fund's investments are typically structured to include higher quality high
yield holdings with intermediate maturities in order to avoid the risk and
volatility generally associated with lower rated, longer dated maturities. The
Fund will generally purchase securities at par or a discount to capture coupon
dollars and to maintain exposure to a potential increase in value of the
security. By approximately equally weighting the security holdings, the Adviser
maximizes diversification and protects the portfolio from possible credit
disappointments.

The Fund invests primarily in "seasoned" senior securities. The Fund defines a
"seasoned" security as any security whose issuer has been operating in its
current form for over two years. The Fund generally does not invest in original
issue high yield securities of newly formed, highly leveraged corporations but
reserves the right to do so. An additional risk associated with such investments
is the unproven credit quality of newly formed corporations because of the lack
of any operating history. The Fund is free to invest in high yield, high risk
debt securities of any

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maturity and duration and the interest rates on such securities may be fixed or
floating.

The higher yields sought by the Fund are generally obtainable from
non-investment grade securities (i.e., rated BB or lower by S&P or D&P, or Ba or
lower by Moody's, or if unrated, of equivalent quality as determined by the
Adviser). See Appendix A to this Prospectus for a description of ratings of S&P,
Moody's and D&P. Investments in high yield, high risk debt securities involve
comparatively greater risks, including price volatility and the risk of default
in the timely payment of interest and principal, than higher rated securities.
Some of such investments may be non-performing when purchased. See "Risks of
Investing in the Fund-High Yield, High Risk Debt Securities."

Although the Fund's investments are primarily in U.S. corporate securities, it
may also invest in foreign debt securities, sovereign debt and mortgage-backed
debt having many of the characteristics of its corporate portfolio. In addition,
the Fund may invest in U.S. dollar denominated municipal obligations in seeking
to achieve its investment objectives. Such investments may include municipal
bonds issued at a discount, in circumstances where the Adviser determines that
such investments would facilitate the Fund's ability to achieve its investment
objectives. Dividends on shares attributable to interest on municipal securities
held by the Fund will not be exempt from Federal income taxes. The Adviser does
not currently anticipate seeking investments in the common stock of any issuers.
However, the Fund may acquire securities convertible into common stock or
receive common stock in lieu of dividends, interest, or principal.

The Fund retains the flexibility to respond promptly to changes in market and
economic conditions. Accordingly, consistent with the Fund's investment
objective, the Adviser may employ a temporary defensive investment strategy if
it determines such a strategy is warranted. Under such a defensive strategy, the
Fund temporarily may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and/or invest up to 100% of its assets in high
quality debt securities or money market instruments of U.S. or foreign issuers,
and most or all of the Fund's investments may be made in the United States and
denominated in U.S. dollars.

In addition, pending investment of proceeds from new sales of Fund shares or to
meet ordinary daily cash needs, the Fund temporarily may hold cash (U.S.
dollars, foreign currencies or multinational currency units) and may invest any
portion of its assets in high quality foreign or domestic money market
instruments.

RISKS OF INVESTING IN THE FUND

General

The Fund's NAV will fluctuate, reflecting fluctuations in the market value of
its portfolio positions and its net currency exposure. The value of the
securities held by the Fund generally fluctuates, based on, among other things,
(i) interest rate movements and, for debt securities, their duration, (ii)
changes in the actual and perceived creditworthiness of the issuers of such
securities, (iii) changes in any applicable foreign currency exchange rates,
(iv) social, economic or political factors, (v) factors affecting the industry
in which the issuer operates, such as competition or technological advances, and
(vi) factors affecting the issuer directly, such as

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management changes or labor relations. There is no assurance that the Fund will
achieve its investment objective.

The Fund is generally managed in a style similar to other open-end investment
companies which are managed by OFFITBANK and whose shares are generally offered
to the public. These other OFFITBANK Funds may, however, employ different
investment practices and may invest in securities different from those in which
the Fund invests, and, as such, may not have identical portfolios or experience
identical investment results.

High Yield, High Risk Debt Securities

General. The Fund may invest all or substantially all of its assets in high
yield, high risk debt securities. High yield, high risk debt securities are
those debt securities rated below investment grade and unrated securities of
comparable quality. They offer yields that fluctuate over time, but which
generally are superior to the yields offered by higher-rated securities.
However, securities rated below investment grade also involve greater risks,
including greater price volatility and a greater risk of default in the timely
payment of principal and interest, than higher-rated securities. Under rating
agency guidelines, medium- and lower-rated securities and comparable unrated
securities will likely have some quality and protective characteristics that are
outweighed by large uncertainties or major risk exposures to adverse conditions.
Certain of the debt securities in which the Fund may invest may have, or be
considered comparable to securities having, the lowest ratings for
non-subordinated debt instruments assigned by Moody's, S&P or D&P (i.e., rated C
by Moody's or CCC by S&P or D&P). Under rating agency guidelines, these
securities are considered to have extremely poor prospects of ever attaining any
real investment standing, to have a current identifiable vulnerability to
default, to be unlikely to have the capacity to pay interest and repay principal
when due in the event of adverse business, financial or economic conditions,
and/or to be in default or not current in the payment of interest or principal.
Such securities are considered speculative with respect to the issuer's capacity
to pay interest and repay principal in accordance with the terms of the
obligations. Unrated securities deemed comparable to these lower- and
lowest-rated securities will have similar characteristics. Accordingly, it is
possible that these types of factors could, in certain instances, reduce the
value of securities held by the Fund with a commensurate effect on the value of
its shares. Therefore, an investment in the Fund should not be considered as a
complete investment program for all investors.

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more difficult for the Company's Board of Directors to value the Fund's
portfolio securities and the Company's Directors may have to use a greater
degree of judgment in making such valuations. Furthermore, adverse publicity and
investor perceptions about lower-rated securities, whether or not based on
fundamental analysis, may tend to decrease the market value and liquidity of
such lower-rated securities. Less liquid secondary markets may also affect the
Fund's ability to sell securities at fair value. In addition, the Fund may
invest up to 15% of its net assets, measured at the time of investment, in
illiquid securities, which may be more difficult to value and to sell at fair
value. If the secondary markets for high yield, high risk debt securities
contract due to adverse economic conditions or for other reasons, certain
previously liquid securities in the Fund's portfolio may become illiquid and the
proportion of the Fund's assets invested in illiquid securities may increase.

The ratings of fixed income securities by Moody's, S&P and D&P are a generally
accepted barometer of credit risk. You should be aware, however, that they are
subject to certain limitations. The rating of an issuer is heavily weighted by
past developments and does not necessarily reflect probable future conditions.
There is frequently a lag between the time a rating is assigned and the time it
is updated. In addition, there may be varying degrees of difference in credit
risk of securities within each rating category. See Appendix A to this
Prospectus for a description of such ratings.

Corporate Debt Securities. While the market values of securities rated below
investment grade and comparable unrated securities tend to react less to
fluctuations in interest rate levels than do those of higher-rated securities,
the market values of certain of these securities also tend to be more sensitive
to individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, such securities generally present a higher
degree of credit risk. Issuers of these securities are often highly leveraged
and may not have more traditional methods of financing available to them, so
that their ability to service their debt obligations during an economic downturn
or during sustained periods of rising interest rates may be impaired. The risk
of loss due to default in payment of interest or principal by such issuers is
significantly greater than with investment grade securities because such
securities generally are unsecured and frequently are subordinated to the prior
payment of senior indebtedness.

Many fixed income securities, including certain U.S. corporate fixed income
securities in which the Fund may invest, contain call or buy-back features which
permit the issuer of the security to call or repurchase it. Such securities may
present risks based on payment expectations. If an issuer exercises such a "call
option" and redeems the security, the Fund may have to replace the called
security with a lower yielding security, resulting in a decreased rate of return
for the Fund.

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trade difficulties and extreme poverty and unemployment. Many of these countries
are also characterized by political uncertainty or instability. Additional
factors which may influence the ability or willingness to service debt include,
but are not limited to, a country's cash flow situation, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
its debt service burden to the economy as a whole, and its government's policy
towards the International Monetary Fund, the World Bank and other international
agencies.

The ability of a foreign sovereign obligor to make timely and ultimate payments
on its external debt obligations will also be strongly influenced by the
obligor's balance of payments, including export performance, its access to
international credits and investments, fluctuations in interest rates and the
extent of its foreign reserves. A country whose exports are concentrated in a
few commodities or whose economy depends on certain strategic imports could be
vulnerable to fluctuations in international prices of these commodities or
imports. To the extent that a country receives payment for its exports in
currencies other than U.S. dollars, its ability to make debt payments
denominated in dollars could be adversely affected. If a foreign sovereign
obligor cannot generate sufficient earnings from foreign trade to service its
external debt, it may need to depend on continuing loans and aid from foreign
governments, commercial banks and multilateral organizations, and inflows of
foreign investment. The commitment on the part of these foreign governments,
multilateral organizations and others to make such disbursements may be
conditioned on the government's implementation of economic reforms and/or
economic performance and the timely service of its obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may curtail the willingness of such third parties
to lend funds, which may further impair the obligor's ability or willingness to
service its debts in a timely manner. The cost of servicing external debt will
also generally be adversely affected by rising international interest rates,
because many external debt obligations bear interest at rates which are adjusted
based upon international interest rates. The ability to service external debt
will also depend on the level of the relevant government's international
currency reserves and its access to foreign exchange. Currency devaluations may
affect the ability of a sovereign obligor to obtain sufficient foreign exchange
to service its external debt.

As a result of the foregoing, a governmental obligor may default on its
obligations. If such a default occurs, the Fund may have limited legal recourse
against the issuer and/or guarantor. Remedies must, in some cases, be pursued in
the courts of the defaulting party itself, and the ability of the holder of
foreign sovereign debt securities to obtain recourse may be subject to the
political climate in the relevant country. In addition, no assurance can be
given that the holders of commercial bank debt will not contest payments to the
holders of other foreign sovereign debt obligations in the event of default
under their commercial bank loan agreements.

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obtaining new credit to finance interest payments. Holders of certain foreign
sovereign debt securities may be requested to participate in the restructuring
of such obligations and to extend further loans to their issuers. There can be
no assurance that the Brady Bonds and other foreign sovereign debt securities in
which the Fund may invest will not be subject to similar defaults or
restructuring arrangements which may adversely affect the value of such
investments. Furthermore, certain participants in the secondary market for such
debt may be directly involved in negotiating the terms of these arrangements and
may therefore have access to information not available to other market
participants.

In addition to high yield foreign sovereign debt securities, the Fund may also
invest in foreign corporate securities. For a discussion of such securities and
their associated risks, see "Securities of Non-U.S. Issuers," below.

Securities of Non-U.S. Issuers

A portion of the Fund's assets may be invested in the securities of non-U.S.
issuers. You should recognize that investing in securities of non-U.S. issuers
involves certain risks and special considerations, including those set forth
below, which are not typically associated with investing in securities of U.S.
issuers. Further, certain investments of the Fund, and investment techniques in
which the Fund may engage involve risks, including those set forth below.

Social, Political and Economic Factors. Many countries in which the Fund will
invest, and emerging market countries in particular, may be subject to a
substantially greater degree of social, political and economic instability than
is the case in the United States, Japan and Western European countries. Such
instability may result from, among other things, some or all of the following:
(i) authoritarian governments or military involvement in political and economic
decision-making, and changes in government through extra-constitutional means;
(ii) popular unrest associated with demands for improved political, economic and
social conditions; (iii) internal insurgencies and terrorist activities; (iv)
hostile relations with neighboring countries; and (v) drug trafficking. Social,
political and economic instability could significantly disrupt the principal
financial markets in which the Fund invests and adversely affect the value of
the Fund's assets.

Individual foreign economies in general and those of emerging market countries
in particular, may differ favorably or unfavorably and significantly from the
U.S. economy in such respects as the rate of growth of gross domestic product or
gross national product, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency, structural unemployment and balance of
payments position. Governments of many of these countries have exercised and
continue to exercise substantial influence over many aspects of the private
sector. In some cases, the government owns or controls many companies, including
some of the largest in the country. Accordingly, government actions in the
future could have a significant effect on economic conditions in many countries,
including emerging market countries, which could affect private sector companies
and the Fund, and on market conditions, prices and yields of securities in the
Fund's portfolio. There may be the possibility of nationalization or
expropriation of assets, or future confiscatory levels of taxation affecting the
Fund. In the event of nationalization,

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expropriation or other confiscation, the Fund may not be fairly compensated for
its loss and could lose its entire investment in the country involved.

Investment And Repatriation Restrictions. Investment by the Fund in non-U.S.
issuers may be restricted or controlled to varying degrees. These restrictions
may limit or preclude investment in certain of such issuers or countries and may
increase the costs and expenses of the Fund. For example, certain countries
require governmental approval prior to investments by foreign persons in the
country or in a particular company or industry sector or limit investment by
foreign persons to only a specific class of securities of a company which may
have less advantageous terms (including price) than securities of the company
available for purchase by nationals. Certain countries may also restrict or
prohibit investment opportunities in issuers or industries deemed important to
national interests. As a result of investment restrictions, the Fund may, in
certain countries, such as Mexico, invest through intermediary vehicles or
trusts. In addition, the repatriation of both investment income and capital from
some of these countries requires governmental approval and if there is a
deterioration in a country's balance of payments or for other reasons, a country
may impose temporary restrictions on foreign capital remittances abroad. Even
where there is no outright restriction on repatriation of capital, the mechanics
of repatriation may affect certain aspects of the operation of the Fund.

The Fund could be adversely affected by delays in, or a refusal to grant any
required governmental approval for repatriation of capital, as well as by the
application to the Fund of any restrictions on investments. If, because of
restrictions on repatriation or conversion, the Fund was unable to distribute
substantially all of its net investment income and net capital gain within
applicable time periods, the Fund could be subject to U.S. federal income and
excise taxes which would not otherwise be incurred and may cease to qualify for
the favorable tax treatment afforded to regulated investment companies under the
Internal Revenue Code of 1986, as amended ("the Code"), in which case it would
become subject to U.S. federal income tax on all of its income and gains. See
"Taxes" below.

Currency Fluctuations. Because the Fund may invest a portion of its assets
in the securities of non-U.S. issuers which are denominated in foreign
currencies, the strength or weakness of the U.S. dollar against such foreign
currencies will account for part of the Fund's investment performance. A
decline in the value of any particular currency against the U.S. dollar will
cause a decline in the U.S. dollar value of the Fund's holdings of securities
denominated in such currency and, therefore, will cause an overall decline in
the Fund's NAV and any net investment income and capital gains to be
distributed in U.S. dollars to shareholders of the Fund.

The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the pace of business activity in certain other countries and the United
States, and other economic and financial conditions affecting the world economy.

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foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference ("spread") between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to sell that currency to the dealer.

Euro Risk. The securities of European issuers may be adversely affected by the
introduction of the new European common currency, the euro. On January 1, 1999,
eleven of the fifteen member countries of the European Monetary Union (Austria,
Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands,
Portugal and Spain) adopted the euro as their common legal currency.
Consequently, some European holdings of the Fund, particularly government
securities, will be redenominated in euros. The face value of other investments
might remain in the existing national currencies for a time, but they will be
priced, settled, and valued in euros by stock exchanges and other agencies.
Thus, some of the European holdings of the Fund will be valued in euros. This
will not affect the investment value of the Fund in U.S. dollar terms, since the
euro will be converted into the dollar in the same way deutschemarks, francs,
lire and other European currencies are currently converted at the prevailing
exchange rates. However, the Fund's service providers, as well as businesses in
Europe, may incur increased costs to conduct transactions in their former
currencies during the transition to the euro, and be compelled to allot capital
resources to update information systems necessary for the euro conversion.

Upon the euro's introduction, the participating countries ceased to retain
control of their respective monetary policies and agreed to follow a single
monetary policy established by the European Central Bank. For participating
countries, adopting the same monetary policy, regardless of the conditions of
their domestic economies, could have a negative impact on those economies. Some
of the economic criteria for the participating countries include the following:
a sustainable budget deficit less than 3% of Gross Domestic Product (GDP),
public debt less than 60% of GDP, low inflation and interest rates and no
currency devaluations within two years of application. Some of the original
participating countries are not fully compliant with these terms but are
expected to embrace them by 2002. Countries joining later may have to be in
strict accord before entering the European Monetary Union, or at least be well
along the path to achieving them. So far, the transition seems to be progressing
smoothly, but there has been resistance to some of the more stringent terms.
Therefore, it is unclear whether complete economic and monetary convergence will
be attained as planned.

Inflation. Many countries have experienced substantial, and in some periods
extremely high and volatile, rates of inflation. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on the economies and securities markets of these countries and emerging
market countries in particular. In an attempt to control inflation, wage and
price controls have been imposed at times in certain countries.

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market countries, to the extent that established securities markets even exist,
are in the earlier stages of their development. A high proportion of the shares
of many foreign companies may be held by a limited number of persons, which may
limit the number of shares available for investment by the Fund. A limited
number of issuers in most, if not all, of these securities markets may represent
a disproportionately large percentage of market capitalization and trading
volume. In addition, the application of certain Investment Company Act of 1940,
as amended ("1940 Act") provisions may limit the Fund's ability to invest in
certain non-U.S. issuers and to participate in public offerings in these
countries. The limited liquidity of certain non-U.S. securities markets may also
affect the Fund's ability to acquire or dispose of securities at the price and
time it wishes to do so.

Many companies traded on securities markets in foreign countries are smaller,
newer and less seasoned than companies whose securities are traded on securities
markets in the United States. Investments in smaller companies involve greater
risk than is customarily associated with investing in larger companies. Smaller
companies may have limited product lines, markets or financial or managerial
resources and may be more susceptible to losses and risks of bankruptcy.
Additionally, market making and arbitrage activities are generally less
extensive in such markets and with respect to such companies, which may
contribute to increased volatility and reduced liquidity of such markets or such
securities. Accordingly, each of these markets and companies may be subject to
greater influence by adverse events generally affecting the market, and by large
investors trading significant blocks of securities, than is usual in the United
States. To the extent that any of these countries experience rapid increases in
their money supplies and investment in equity securities for speculative
purposes, the equity securities traded in any such country may trade at
price-earning multiples higher than those of comparable companies trading on
securities markets in the United States, which may not be sustainable. In
addition, risks due to the lack of modern technology, the lack of a sufficient
capital base to expand business operations, the possibility of permanent or
temporary termination of trading, and greater spreads between bid and ask prices
may exist in such markets.

Trading practices in certain foreign securities markets are also significantly
different from those in the United States. Brokerage commissions and other
transaction costs on the securities exchanges in many countries are generally
higher than in the United States. In addition, securities settlements and
clearance procedures in certain countries, and emerging market countries in
particular, are less developed and less reliable than those in the United States
and the Fund may be subject to delays or other material difficulties and could
experience a loss if a counterparty defaults. Delays in settlement could result
in temporary periods when assets of the Fund are uninvested and therefore no
return is earned. The inability of the Fund to make intended security purchases
due to settlement problems could cause the Fund to miss attractive investment
opportunities. The inability to dispose of a portfolio security due to
settlement problems could result either in losses to the Fund due to subsequent
declines in the value of such portfolio security or, if the Fund has entered
into a contract to sell the security, could result in possible liability to the
purchaser.

14
<PAGE>

in which event the Fund may be precluded from purchasing securities in which it
would otherwise invest, and other banks that are eligible subcustodians may be
recently organized or otherwise lack extensive operating experience. At present,
custody arrangements complying with the requirements of the SEC are available in
each of the countries in which the Adviser intends to invest. In certain
countries in which the Fund may make investments, there may be legal
restrictions or limitations on the ability of the Fund to recover assets held in
custody by subcustodians in the event of the bankruptcy of the subcustodian.

Government Supervision; Legal Systems. Disclosure and regulatory standards in
certain foreign countries, including emerging market countries, are in many
respects less stringent than U.S. standards. There may be less government
supervision and regulation of securities exchanges, listed companies and brokers
in these countries than exists in the United States. Brokers in some countries
may not be as well capitalized as those in the United States, so that they may
be more susceptible to financial failure in times of market, political, or
economic stress, exposing the Fund to a risk of loss. Less information may be
available to the Fund than with respect to investments in the United States and,
in certain of these countries, less information may be available to the Fund
than to local market participants. In addition, existing laws and regulations
are often inconsistently applied. Foreign investors may be adversely affected by
new laws and regulations, changes to existing laws and regulations and
preemption of local laws and regulations by national laws. In circumstances
where adequate laws exist, it may not be possible to obtain swift and equitable
enforcement of the law.

Financial Information and Standards. Non-U.S. issuers may be subject to
accounting, auditing and financial standards and requirements that differ, in
some cases significantly, from those applicable to U.S. issuers. In particular,
the assets and profits appearing on the financial statements of certain non-U.S.
issuers may not reflect their financial position or results of operations in the
way they would be reflected had the financial statements been prepared in
accordance with U.S. generally accepted accounting principles. In addition, for
an issuer that keeps accounting records in local currency, inflation accounting
rules may require, for both tax and accounting purposes, that certain assets and
liabilities be restated on the issuer's balance sheet in order to express items
in terms of currency of constant purchasing power. Inflation accounting may
indirectly generate losses or profits. Consequently, financial data may be
materially affected by restatements for inflation and may not accurately reflect
the real condition of those issuers and securities markets. Moreover,
substantially less information may be publicly available about non-U.S. issuers
than is available about U.S. issuers.

Foreign Taxes. The Fund's investment income from foreign issuers may be subject
to non-U.S. withholding taxes, thereby reducing the Fund's net investment
income. For more information about tax risks related to the Fund, see "Taxes"
below and "Additional Information Concerning Taxes" in the Statement of
Additional Information.

Hedging and Other Strategic Transactions

15
<PAGE>

or to seek to increase the Fund's income or gain. Currently, the Fund may use,
as portfolio management strategies, cross currency hedges, interest rate
transactions, commodity futures contracts in the form of futures contracts on
securities, securities indices and foreign currencies, and related options
transactions. The Fund also may enter into forward foreign currency contracts
and options transactions to hedge in connection with currency and interest rate
positions and in order to enhance the Fund's income or gain. Limitations on the
portion of the Fund's assets that may be used in connection with the investment
strategies described below are set out in Appendix B to this Prospectus.

The Fund may (if and to the extent so authorized) purchase and sell (or write)
exchange-listed and over-the-counter put and call options on securities, index
futures contracts, financial futures contracts and fixed income indices and
other financial instruments, and enter into financial futures contracts,
interest rate transactions, and currency transactions (collectively, these
transactions are referred to in this Prospectus as "Hedging and other Strategic
Transactions"). The Fund's interest rate transactions may take the form of
swaps, caps, floors and collars, and the Fund's currency transactions may take
the form of currency forward contracts, currency futures contracts, currency
swaps and options on currencies or currency futures contracts.

Hedging and Other Strategic Transactions may generally be used to attempt to
protect against possible changes in the market value of securities held or to be
purchased by the Fund resulting from securities markets or currency exchange
rate fluctuations, to protect the Fund's unrealized gains in the value of its
securities, to facilitate the sale of those securities for investment purposes,
to manage the effective maturity or duration of the Fund's securities or to
establish a position in the derivatives markets as a temporary substitute for
purchasing or selling particular securities. The Fund may use any or all types
of Hedging and Other Strategic Transactions which it is authorized to use at any
time; no particular strategy will dictate the use of one type of transaction
rather than another, as use of any authorized Hedging and Other Strategic
Transactions will be a function of numerous variables, including market
conditions. The ability of the Fund to utilize Hedging and Other Strategic
Transactions successfully will depend on, in addition to the factors described
above, the Adviser's ability to predict pertinent market movements, which cannot
be assured. These skills are different from those needed to select the Fund's
securities. The Fund is not a "commodity pool" (i.e., a pooled investment
vehicle which trades in commodity futures contracts and options thereon and the
operator of which is registered with the Commodity Futures Trading Commission
(the "CFTC")) and Hedging and Other Strategic Transactions involving futures
contracts and options on futures contracts will be purchased, sold or entered
into only for bona fide hedging, and non-hedging purposes to the extent
permitted by CFTC regulations; provided that the Fund may enter into futures
contracts or options thereon for purposes other than bona fide hedging if
immediately thereafter, the sum of the amount of its initial margin and premiums
on open contracts would not exceed 5% of the liquidation value of the Fund's
portfolio; provided further, than in the case of an option that is in-the-money
at the time of the purchase, the in-the-money amount may be excluded in
calculating the 5% limitation. The use of certain Hedging and Other Strategic
Transactions will require that the Fund segregate cash, U.S. government
securities or other liquid high grade debt obligations to the extent the Fund's
obligations are not otherwise "covered" through ownership of the underlying
security, financial instrument or currency.

16
<PAGE>

To the extent the Fund conducts Hedging and Other Strategic Transactions outside
the United States, such transactions may be subject to political, economic and
legal risks that are distinct from domestic transactions. Such risks are similar
to those applicable to investment in foreign securities described under
"Securities of Non-U.S. Issuers" above.

The Fund will not be obligated to pursue any of the Hedging and Other Strategic
Transactions strategies and the Fund makes no representation as to the
availability of these techniques at this time or at any time in the future. In
addition, the Fund's ability to pursue certain of these strategies may be
limited by the Commodity Exchange Act, as amended, applicable rules and
regulations of the CFTC thereunder and the federal income tax requirements
applicable to regulated investment companies which are not operated as commodity
pools. To the extent not otherwise restricted by the SEC, the CFTC, the Code or
its investment objectives and policies, the Fund may utilize, without
limitation, Hedging and Other Strategic Transactions.

A detailed discussion of various Hedging and Other Strategic Transactions
including applicable regulations of the CFTC and the requirement to segregate
assets with respect to these transactions appears in Appendix B. Risks
associated with Hedging and Other Strategic Transactions are also described in
Appendix B to this Prospectus.

Concentration

Under normal market conditions, the Fund may invest greater than 25% of its
assets in securities of issuers whose primary business activity is in the
banking industry. As such, an investment in the Fund should be made with an
understanding of the characteristics of the banking industry and the risks that
such an investment may entail. Banks are subject to extensive government
regulations that may limit both the amounts and types of loans and other
financial commitments that may be made and the interest rates and fees that may
be charged. The profitability of this industry is largely dependent upon the
availability and cost of capital funds for the purpose of financing lending
operations under prevailing money market conditions. Also, general economic
conditions play an important part in the operations of this industry and
exposure to credit losses arising from financial difficulties of borrowers might
affect a bank's ability to meet its obligations. Investors should also be aware
that securities of foreign banks and foreign branches of U.S. banks may involve
investment risks in addition to those relating to domestic obligations. For a
discussion of additional risks, see "Securities of Non-U.S. Issuers" above.

Non-Diversified Funds

The Fund is classified as a "non-diversified" fund under the 1940 Act, which
means that the Fund is not limited by the 1940 Act in the proportion of its
assets that may be invested in the obligations of a single issuer. Thus, the
Fund may invest a greater proportion of its assets in the securities of a
smaller number of issuers and, as a result, will be subject to greater risk of
loss with respect to its portfolio securities as compared to a diversified Fund.
The Fund, however, intends to comply with the diversification requirements
imposed by the Code with respect to segregated asset accounts underlying
variable products under section 817(h) of the Code and to regulated investment
companies under Subchapter M of the Code.

17
<PAGE>

Year 2000

Like other mutual funds, the Fund could be adversely affected if the computer
systems used by the Company's service providers, including shareholder servicing
agents, do not properly process and calculate date-related information. The
Company's service providers are taking the measures necessary to provide
reasonable assurance to the Company that their systems will be able to process
year 2000 data. However, there can be no assurance that these measures will be
adequate to avoid a service disruption or any adverse impact on the Fund or its
shareholders.

MANAGEMENT OF THE FUND

Investment Adviser

The Fund's investment adviser is OFFITBANK, whose principal address is 520
Madison Avenue, New York, New York 10022 (the "Adviser" or "OFFITBANK").
OFFITBANK manages the Fund's business and investment activities, subject to the
authority of the Company's Board of Directors. OFFITBANK's principal business is
providing discretionary investment management services to high net worth
individuals and family groups, foundations, endowments and corporations.
OFFITBANK specializes in global fixed income asset management and offers its
clients a complete range of investments in the major capital markets of the
world. OFFITBANK currently manages approximately $10.2 billion in assets and
serves as investment adviser to twenty-one registered investment company
portfolios.

Stephen T. Shapiro serves as the portfolio manager for the Fund. Mr. Shapiro
is a Managing Director of OFFITBANK and has been associated with OFFITBANK
since 1983.

The advisory fee paid by the Fund, as a percentage of average net assets, for
the period April 1, 1998 to December 31, 1998 was ___.

The following chart shows the Company's other service providers and includes
their addresses and principal activities.

18
<PAGE>

OFFITBANK VIF-HIGH YIELD FUND

------------
SHAREHOLDERS
------------
|
Distribution and |
Shareholder -----------------------|--------------------
Services | | |
| | |
------------------------------------ | -----------------------------
|
PRINCIPAL DISTRIBUTOR | TRANSFER AGENT
|
OFFIT FUNDS DISTRIBUTOR, INC. | PFPC INC.
|
FOUR FALLS CORPORATE CENTER, 6TH FL. | 400 BELLEVUE PARKWAY
-----|------
WEST CONSHOHOCKEN, PA 19428-2961 | WILMINGTON, DE 19809
|
|
Distributes the Fund's shares. | Handles shareholder services,
| including recordkeeping and
------------------------------------ | statements, distribution of
| dividends and processing
| of buy and sell requests.
|
| -----------------------------
|
Asset |
Management |
|
------------------------------------ | -----------------------------
|
INVESTMENT ADVISER | CUSTODIAN
|
OFFITBANK | THE BANK OF NEW YORK
|
520 MADISON AVENUE | ("BONY")
-----|
NEW YORK, NY 10022-4213 | 90 WASHINGTON STREET
|
| NEW YORK, NY 10286
Manages the Fund's business and |
investment activities. | Serves as custodian of the
| assets of the Fund. The
------------------------------------ | custodian settles all
| portfolio trades and collects
| most of the valuation data
| required for calculating the
| Fund's net asset value
| ("NAV").
|
| -----------------------------
| |
Fund | |
Operations | |
| |
------------------------------------ | |
| |
ADMINISTRATOR AND | |
FUND ACCOUNTING AGENT | |
| |
PFPC INC. | |
| |
400 BELLEVUE PARKWAY -----|-----------------------
|
WILMINGTON, DE 19809 |
|
Provides facilities, equipment and |
personnel to carry out administrative |
services related to the Fund and |
calculates the Fund's NAV, dividends |
and distributions. |
|
------------------------------------ |
|
--------------------------------
BOARD OF DIRECTORS
Supervises the Fund's activities
--------------------------------

</TABLE>

19
<PAGE>

SHAREHOLDER INFORMATION

Pricing of Fund Shares

Shares of the Fund are priced at their net asset value ("NAV"). The NAV of the
Fund is calculated as follows:

Value of Assets
NAV = - Value of Liabilities
------------------------------
Number of Outstanding Shares

The Fund's NAV is calculated once daily at 4:00 p.m. Eastern Time, Monday
through Friday each day the New York Stock Exchange (the "Exchange") is open.
The Fund will effect purchases or redemptions of Fund shares at the next NAV
calculated after receipt of your order or request in proper form. Fund shares
will not be priced on the following days the Exchange is closed:

Good Friday Friday, April 2, 1999
Memorial Day (observed) Monday, May 31, 1999
Independence Day (observed) Monday, July 5, 1999
Labor Day Monday, September 6, 1999
Thanksgiving Day Thursday, November 25, 1999
Christmas Day (observed) Friday, December 24, 1999
New Year's Day (observed)
Martin Luther King, Jr. Day
Presidents' Day

Foreign and domestic equity securities held by the Fund are valued using the
closing price or the last sale price on the exchange or in the principal
over-the-counter market where they are traded. If the last sale price is
unavailable, the last available quote or last bid price is normally used. Debt
securities held by the Fund generally are valued based on quoted bid prices.
Short term debt investments having maturities of 60 days or less are amortized
to maturity based on their cost, and if applicable, adjusted for foreign
exchange translation. If market quotations are unavailable or if an event occurs
after the close of an exchange that is expected to materially affect the value
of a security held by the Fund, securities and other assets will be valued at
fair value as determined in good faith by the Adviser according to procedures
adopted by the Company's Board of Directors.

If the Fund holds foreign equity securities, the calculation of the Fund's NAV
will not occur at the same time as the determination of the value of the foreign
equity securities in the Fund's portfolio, since these securities are traded on
foreign exchanges. Additionally, if the foreign equity securities held by the
Fund trade on days when the Fund does not price its shares, the NAV of the
Fund's shares may change when shareholders will not be able to purchase or
redeem the Fund's shares.

20
<PAGE>

Purchase of Fund Shares

Shares of the Fund are offered on a continuous basis directly by OFFIT Funds
Distributor, Inc. (the "Distributor"), the Fund's Principal Underwriter, to the
Accounts without any sales or other charge, at the Fund's NAV on each day on
which the Exchange is open for business. The Company will effect orders to
purchase or redeem shares of the Fund, that are based on premium payments,
surrender and transfer requests and any other transaction requests from Contract
and Policy Owners, annuitants and beneficiaries, at the Fund's NAV per share
next computed after the Account receives such transaction request. Any orders to
purchase or redeem Fund shares that are not based on actions by Contract or
Policy Owners, annuitants, and beneficiaries will be effected at the Fund's NAV
per share next computed after the order is received by the Distributor. The Fund
reserves the right to suspend the sale of the Fund's shares in response to
conditions in the securities markets or for other reasons.

Individuals may not place orders directly with the Fund. Please refer to the
appropriate Account Prospectus of the Participating Company for more information
on the purchase of Fund shares.

Redemption of Fund Shares

An Account may redeem all or any portion of the shares of the Fund in its
account at any time at the NAV per share of the Fund calculated in the manner
described above. Shares redeemed are entitled to earn dividends, if any, up to
and including the day redemption is effected. There is no redemption charge.
Payment of the redemption price will normally be made within seven days after
receipt of such tender for redemption.

The right of redemption may be suspended or the date of payment may be postponed
for any period during which the Exchange is closed (other than customary weekend
and holiday closings) or during which the SEC determines that trading thereon is
restricted, or for any period during which an emergency (as determined by the
SEC) exists as a result of which disposal by the Fund of securities is not
reasonably practicable or as a result of which it is not reasonably practicable
for the Company fairly to determine the value of the Fund's net assets, or for
such other periods as the SEC may by order permit for the protection of security
holders of the Company.

Shareholder Services

A Contract or Policy Owner investing through an Account may exchange shares of
the Fund for shares of any of the other investment portfolios of the Company on
the basis of their respective NAV.

Dividends and Distributions

The Fund will declare dividends daily and pay the dividends monthly from net
investment income and will distribute its net capital gains, if any, at least
annually. The Fund will inform shareholders of the amount and nature of all such
income or gains.

21
<PAGE>

Any income and capital gains distributions are paid in the form of additional
shares of the Fund.

Taxes

The Fund intends to qualify for taxation as a "regulated investment company"
("RIC") under Subchapter M of the Code. If so qualified, each Fund will not be
subject to federal income taxes with respect to net investment income (i.e., its
investment company taxable income, as that term is defined in the Code,
determined without regard to the deduction for dividends paid) and net capital
gain (i.e., the excess of a Fund's net realized long-term capital gain over its
net realized short-term capital loss), if any, that are distributed to its
shareholders. In addition, the Fund intends to comply with the diversification
requirements of the Code and Treasury Regulations in order to maintain the
tax-deferred status of the Accounts.

Shares of the Fund must be purchased through Policies or Contracts. As a result,
it is anticipated that any dividend or capital gains distribution from the Fund
will be exempt from current taxation if left to accumulate within a Policy or
Contract. The Fund is managed without regard to tax ramifications. Withdrawals
from Contracts or Policies may be subject to ordinary income tax plus a 10%
penalty tax if made before age 59 1/2.

The foregoing discussion of federal income tax consequences is based on tax laws
and regulations in effect on the date of this Prospectus, and is subject to
change by legislative, administrative or judicial action. As the foregoing
discussion is for general information only, a prospective investor should also
review the more detailed discussion of federal income tax considerations that is
contained in the Statement of Additional Information. In addition, each
prospective investor should consult with his own tax adviser as to the tax
consequences of investments in the Fund, including the application of state and
local taxes which may differ from the federal income tax consequences described
above.

THE TAX STATUS OF YOUR INVESTMENT IN THE FUND DEPENDS UPON THE FEATURES OF
YOUR POLICY OR CONTRACT. FOR FURTHER INFORMATION, PLEASE REFER TO THE
ACCOUNT OR POLICY PROSPECTUS.

Shareholder Communications

It is expected that Contract or Policy Owners will receive from the
Participating Companies for which shares of one or more Funds are the investment
vehicle reports that will include, among other things, the Company's unaudited
semi-annual financial statements and year-end financial statements audited by
the Company's independent accountants. Each report will show the investments
owned by the Fund and will provide other information about the Fund and its
operations. It is expected that the Company will pay a portion of the cost of
preparing certain of these reports. Contract and Policy Owners may obtain
information about their investment on any business day by calling toll-free
1-800-618-9510 between 8:15 a.m. and 6:00 p.m., New York time. Specially trained
representatives will answer questions and provide information about Contract and
Policy Owners accounts.

Each Account owning shares of the Fund will vote its shares in accordance with
instructions received from Contract or Policy Owners, annuitants and
beneficiaries. Fund shares held by an Account as to which no instructions have
been received will be voted for or against any proposition, or in abstention, in
the same proportion as the shares of that Account as to which

22
<PAGE>

instructions have been received. Fund shares held by an Account that are not
attributable to Contracts or Policies will also be voted for or against any
proposition in the same proportion as the shares for which voting instructions
are received by the Account. If the Participating Insurance Company determines,
however, that it is permitted to vote any such shares of the Fund in its own
right, it may elect to do so, subject to the then current interpretation of the
1940 Act and the rules thereunder.

Performance Information

From time to time the Fund may advertise certain information about its
performance. The Fund may present standardized and nonstandardized total return
in advertisements or other written material. Standardized total return is
calculated in accordance with the SEC's formula. Nonstandardized total return
differs from the standardized total return only in that it may be related to a
nonstandard period or is presented in the aggregate rather than as an annual
average. In addition, the Fund may make available information as to their
respective "yield" and "effective yield" over a thirty-day period, as calculated
in accordance with the SEC's prescribed formula. The "effective yield" assumes
that the income earned by an investment in the Fund is reinvested, and will
therefore be slightly higher than the yield because of the compounding effect of
this assumed reinvestment.

The performance of the Fund may be quoted and compared to those of other mutual
funds with similar investment objectives and to other relevant indices or to
rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example,
performance information may be compared with data published by Lipper Analytical
Services, Inc. or to unmanaged indices of performance, including, but not
limited to, Value Line Composite, Lehman Brothers Bond, Government Corporate,
Corporate and Aggregate Indices, Merrill Lynch Government & Agency and
Intermediate Agency Indices, Morgan Stanley Capital International Europe,
Australia, Far East Index or Morgan Stanley Capital International World Index.
The performance information may also include evaluations of the Funds published
by nationally recognized ranking services and by various national or local
financial publications, such as Business Week, Forbes, Fortune, Institutional
Investor, Money, The Wall Street Journal, Barron's, Kiplinger's, Morningstar,
Mutual Fund Values, U.S.A. Today or The New York Times or other industry or
financial publications.

Performance information presented for the Fund should not be compared directly
with performance information of other insurance products without taking into
account insurance-related charges and expenses payable under the variable
annuity contract and variable life insurance policy. These charges and expenses
are not reflected in the Fund's performance and would reduce an investor's
return under the annuity contract or life policy.

The Fund's performance information is historical, will fluctuate and should not
be considered as representative of future results. The SEC's formulas for
calculating performance are described under "Performance Information" in the
Statement of Additional Information. Quotations of the Fund's performance will
not reflect charges levied at the Account level.

23
<PAGE>

APPENDIX A

The following is a description of certain ratings of Standard & Poor's
Ratings Group ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff &
Phelps Credit Rating Co. ("D&P") and Fitch Investors Service Inc. ("Fitch") that
are applicable to certain obligations in which the Fund may invest.

Commercial Paper Ratings

A S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days. The
following summarizes the rating categories used by Standard and Poor's for
commercial paper:

"A-1" - Obligations are rated in the highest category indicating that the
obligor's capacity to meet its financial commitment on the obligation is strong.
Within this category, certain obligations are designated with a plus sign (+).
This indicates that the obligor's capacity to meet its financial commitment on
these obligations is extremely strong.

"A-2" - Obligations are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in higher
rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.

"A-3" - Obligations exhibit adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.

"B" - Obligations are regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.

"C" - Obligations are currently vulnerable to nonpayment and are dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation.

"D" - Obligations are in payment default. The "D" rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The "D" rating will be used upon the
filing of a bankruptcy petition or the taking of a similar action if payments on
an obligation are jeopardized.

Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually senior debt obligations not having an original maturity in
excess of one year, unless explicitly noted. The following summarizes the rating
categories used by Moody's for commercial paper:

A-1
<PAGE>

"Prime-1" - Issuers (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. Prime-1 repayment ability
will often be evidenced by many of the following characteristics: leading market
positions in well-established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.

"Prime-2" - Issuers (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

"Prime-3" - Issuers (or supporting institutions) have an acceptable
ability for repayment of senior short-term debt obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.

"Not Prime" - Issuers do not fall within any of the Prime rating
categories.

The three rating categories of D&P for investment grade commercial paper
and short-term debt are "D-1," "D-2" and "D-3." D&Phelps employs three
designations, "D-1+," "D-1" and "D-1-," within the highest rating category. The
following summarizes the rating categories used by Duff & Phelps for commercial
paper:

"D-1+" - Debt possesses the highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.

"D-1" - Debt possesses very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors. Risk
factors are minor.

"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.

"D-2" - Debt possesses good certainty of timely payment. Liquidity factors
and company fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk factors
are small.

"D-3" - Debt possesses satisfactory liquidity and other protection factors
qualify issues as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.

A-2
<PAGE>

"D-4" - Debt possesses speculative investment characteristics. Liquidity
is not sufficient to insure against disruption in debt service. Operating
factors and market access may be subject to a high degree of variation.

"D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.

Fitch short-term ratings apply to debt obligations that have time horizons
of less than 12 months for most obligations, or up to three years for U.S.
public finance securities. The following summarizes the rating categories used
by Fitch for short-term obligations:

"F1" - Securities possess the highest credit quality. This designation
indicates the strongest capacity for timely payment of financial commitments and
may have an added "+" to denote any exceptionally strong credit feature.

"F2" - Securities possess good credit quality. This designation indicates
a satisfactory capacity for timely payment of financial commitments, but the
margin of safety is not as great as in the case of the higher ratings.

"F3" - Securities possess fair credit quality. This designation indicates
that the capacity for timely payment of financial commitments is adequate;
however, near-term adverse changes could result in a reduction to non-investment
grade.

"B" - Securities possess speculative credit quality. This designation
indicates minimal capacity for timely payment of financial commitments, plus
vulnerability to near-term adverse changes in financial and economic conditions.

"C" - Securities possess high default risk. This designation indicates
that default is a real possibility and that the capacity for meeting financial
commitments is solely reliant upon a sustained, favorable business and economic
environment.

"D" - Securities are in actual or imminent payment default.

Corporate and Municipal Long-Term Debt Ratings

The following summarizes the ratings used by S&P for corporate and
municipal debt:

"AAA" - An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.

"AA" - An obligation rated "AA" differs from the highest rated obligations
only in small degree. The obligor's capacity to meet its financial commitment on
the obligation is very strong.

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"A" - An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

"BBB" - An obligation rated "BBB" exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

Obligations rated "BB," "B," "CCC," "CC" and "C" are regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.

"BB" - An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to the obligor's inadequate capacity to meet its financial commitment on the
obligation.

"B" - An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB", but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.

"CCC" - An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial and economic conditions for
the obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.

"CC" - An obligation rated "CC" is currently highly vulnerable to
nonpayment.

"C" - The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on this
obligation are being continued.

"D" - An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The "D" rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.

PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.

"r" - This symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or volatility of
expected returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or

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commodities; obligations exposed to severe prepayment risk - such as
interest-only or principal-only mortgage securities; and obligations with
unusually risky interest terms, such as inverse floaters.

The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:

"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

"Aa" - Bonds are judged to be of high quality by all standards. Together
with the "Aaa" group they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in "Aaa" securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than the "Aaa" securities.

"A" - Bonds possess many favorable investment attributes and are to be
considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

"Baa" - Bonds are considered as medium-grade obligations, (i.e., they are
neither highly protected nor poorly secured). Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these ratings
provide questionable protection of interest and principal ("Ba" indicates
speculative elements; "B" indicates a general lack of characteristics of
desirable investment; "Caa" are of poor standing; "Ca" represents obligations
which are speculative in a high degree; and "C" represents the lowest rated
class of bonds). "Caa," "Ca" and "C" bonds may be in default.

Con. (---) - Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.

Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from "Aa" through "Caa". The modifier 1 indicates that the
obligation ranks in the

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higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of its generic
rating category.

The following summarizes the long-term debt ratings used by D&P for
corporate and municipal long-term debt:

"AAA" - Debt is considered to be of the highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.

"AA" - Debt is considered to be of high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.

"A" - Debt possesses protection factors which are average but adequate.
However, risk factors are more variable in periods of greater economic stress.

"BBB" - Debt possesses below-average protection factors but such
protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.

"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these
ratings is considered to be below investment grade. Although below investment
grade, debt rated "BB" is deemed likely to meet obligations when due. Debt rated
"B" possesses the risk that obligations will not be met when due. Debt rated
"CCC" is well below investment grade and has considerable uncertainty as to
timely payment of principal, interest or preferred dividends. Debt rated "DD" is
a defaulted debt obligation, and the rating "DP" represents preferred stock with
dividend arrearages.

To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major categories.

The following summarizes the ratings used by Fitch for corporate and
municipal bonds:

"AAA" - Bonds considered to be investment grade and of the highest credit
quality. These ratings denote the lowest expectation of credit risk and are
assigned only in case of exceptionally strong capacity for timely payment of
financial commitments. This capacity is highly unlikely to be adversely affected
by foreseeable events.

"AA" - Bonds considered to be investment grade and of very high credit
quality. These ratings denote a very low expectation of credit risk and indicate
very strong capacity for timely payment of financial commitments. This capacity
is not significantly vulnerable to foreseeable events.

"A" - Bonds considered to be investment grade and of high credit quality.
These ratings denote a low expectation of credit risk and indicate strong
capacity for timely payment of

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financial commitments. This capacity may, nevertheless, be more vulnerable to
changes in circumstances or in economic conditions than is the case for higher
ratings.

"BBB" - Bonds considered to be investment grade and of good credit
quality. These ratings denote that there is currently a low expectation of
credit risk. The capacity for timely payment of financial commitments is
considered adequate, but adverse changes in circumstances and in economic
conditions are more likely to impair this capacity.

"BB" - Bonds considered to be speculative. These ratings indicate that
there is a possibility of credit risk developing, particularly as the result of
adverse economic changes over time; however, business or financial alternatives
may be available to allow financial commitments to be met. Securities rated in
this category are not investment grade.

"B" - Bonds are considered highly speculative. These ratings indicate that
significant credit risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and economic
environment.

"CCC", "CC", "C" - Bonds have high default risk. Default is a real
possibility, and capacity for meeting financial commitments is solely reliant
upon sustained, favorable business or economic developments. "CC" ratings
indicate that default of some kind appears probable, and "C" ratings signal
imminent default.

"DDD," "DD" and "D" - Bonds are in default. Securities are not meeting
obligations and are extremely speculative. "DDD" designates the highest
potential for recovery of amounts outstanding on any securities involved and "D"
represents the lowest potential for recovery.

To provide more detailed indications of credit quality, the Fitch IBCA
ratings from and including "AA" to "B" may be modified by the addition of a plus
(+) or minus (-) sign to show relative standing within these major rating
categories.

Municipal Note Ratings

A S&P rating reflects the liquidity concerns and market access risks
unique to notes due in three years or less. The following summarizes the ratings
used by Standard & Poor's Ratings Group for municipal notes:

"SP-1" - The issuers of these municipal notes exhibit a strong capacity to
pay principal and interest. Those issues determined to possess very strong
characteristics are given a plus (+) designation.

"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest, with some vulnerability to adverse
financial and economic changes over the term of the notes.

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"SP-3" - The issuers of these municipal notes exhibit speculative capacity
to pay principal and interest.

Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:

"MIG-1"/"VMIG-1" - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.

"MIG-2"/"VMIG-2" - This designation denotes high quality, with margins of
protection that are ample although not so large as in the preceding group.

"MIG-3"/"VMIG-3" - This designation denotes favorable quality, with all
security elements accounted for but lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.

"MIG-4"/"VMIG-4" - This designation denotes adequate quality. Protection
commonly regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.

"SG" - This designation denotes speculative quality. Debt instruments in
this category lack of margins of protection.

Fitch and D&P use the short-term ratings described under Commercial Paper
Ratings for municipal notes.

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APPENDIX B

HEDGING AND OTHER STRATEGIC TRANSACTIONS

The Fund may be authorized to use a variety of investment strategies to
hedge various market risks (such as interest rates, currency exchange rates and
broad or specific market movements), to manage the effective maturity or
duration of debt instruments held by the Fund, or, with respect to certain
strategies, to seek to increase the Fund's income or gain (such investment
strategies and transactions are referred to herein as "Hedging and Other
Strategic Transactions").

A detailed discussion of Hedging and Other Strategic Transactions follows
below. The Fund is not obligated, however, to pursue any of such strategies and
the Fund makes no representation as to the availability of these techniques at
this time or at any time in the future. In addition, the Fund's ability to
pursue certain of these strategies may be limited by the Commodity Exchange Act,
as amended, applicable rules and regulations of the Commodity Futures Trading
Commission ("CFTC") thereunder and the federal income tax requirements
applicable to regulated investment companies which are not operated as commodity
pools. To the extent not otherwise restricted by the Securities and Exchange
Commission (the "SEC"), the CFTC, the Code or its investment objectives and
policies, the Fund may utilize, without limitation, Hedging and Other Strategic
Transactions. See "Additional Information Concerning Taxes" in the Statement of
Additional Information.

General Characteristics of Options

Put options and call options typically have similar structural
characteristics and operational mechanics regardless of the underlying
instrument on which they are purchased or sold. Thus, the following general
discussion relates to each of the particular types of options discussed in
greater detail below. In addition, many Hedging and Other Strategic Transactions
involving options require segregation of Fund assets in special accounts, as
described below under "Use of Segregated and Other Special Accounts."

A put option gives the purchaser of the option, upon payment of a premium,
the right to sell, and the writer the obligation to buy, the underlying
security, commodity, index, currency or other instrument at the exercise price.
The Fund's purchase of a put option on a security, for example, might be
designed to protect its holdings in the underlying instrument (or, in some
cases, a similar instrument) against a substantial decline in the market value
of such instrument by giving the Fund the right to sell the instrument at the
option exercise price. A call option, upon payment of a premium, gives the
purchaser of the option the right to buy, and the seller the obligation to sell,
the underlying instrument at the exercise price. The Fund's purchase of a call
option on a security, financial futures contract, index, currency or other
instrument might be intended to protect the Fund against an increase in the
price of the underlying instrument that it intends to purchase in the future by
fixing the price at which it may purchase the instrument. An "American" style
put or call option may be exercised at any time during the option period,
whereas a "European" style put or call option may be exercised only upon
expiration or during a

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fixed period prior to expiration. Exchange-listed options are issued by a
regulated intermediary such as the Options Clearing Corporation ("OCC"), which
guarantees the performance of the obligations of the parties to the options. The
discussion below uses the OCC as an example, but is also applicable to other
similar financial intermediaries.

OCC-issued and exchange-listed options, with certain exceptions, generally
settle by physical delivery of the underlying security or currency, although in
the future, cash settlement may become available. Index options and Eurodollar
instruments (which are described below under "Eurodollar Instruments") are cash
settled for the net amount, if any, by which the option is "in-the-money" (that
is, the amount by which the value of the underlying instrument exceeds, in the
case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

The Fund's inability to close out its position as a purchaser or seller of
an OCC-issued or exchange-listed put or call option is dependent, in part, upon
the liquidity of the particular option market. Among the possible reasons for
the absence of a liquid option market on an exchange are: (1) insufficient
trading interest in certain options; (2) restrictions on transactions imposed by
an exchange; (3) trading halts, suspensions or other restrictions imposed with
respect to particular classes or series of options or underlying securities,
including reaching daily price limits; (4) interruption of the normal operations
of the OCC or an exchange; (5) inadequacy of the facilities of an exchange or
the OCC to handle current trading volume; or (6) a decision by one or more
exchanges to discontinue the trading of options (or a particular class or series
of options), in which event the relevant market for that option on that exchange
would cease to exist, although any such outstanding options on that exchange
would continue to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours
during which the underlying financial instruments are traded. To the extent that
the option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that would not be reflected in the corresponding option
markets.

Over-the-counter ("OTC") options are purchased from or sold to securities
dealers, financial institutions or other parties (collectively referred to as
"Counterparties" and individually referred to as a "Counterparty") through a
direct bilateral agreement with the Counterparty. In contrast to exchange-listed
options, which generally have standardized terms and performance mechanics, all
of the terms of an OTC option, including such terms as method of settlement,
term, exercise price, premium, guarantees and security, are determined by
negotiation of the parties. It is anticipated that the Fund will generally only
enter into OTC options that have cash settlement provisions, although it will
not be required to do so.

Unless the parties provide for it, no central clearing or guarantee
function is involved in an OTC option. As a result, if a Counterparty fails to
make or take delivery of the security,

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currency or other instrument underlying an OTC option it has entered into with
the Fund or fails to make a cash settlement payment due in accordance with the
terms of that option, the Fund will lose any premium it paid for the option as
well as any anticipated benefit of the transaction. Thus, the Adviser must
assess the creditworthiness of each such Counterparty or any guarantor or credit
enhancement of the Counterparty's credit to determine the likelihood that the
terms of the OTC option will be met. The Fund will enter into OTC option
transactions only with U.S. government securities dealers recognized by the
Federal Reserve Bank of New York as "primary dealers," or broker-dealers,
domestic or foreign banks, or other financial institutions that are deemed
creditworthy by the Adviser. In the absence of a change in the current position
of the staff of the SEC, OTC options purchased by the Fund and the amount of the
Fund's obligation pursuant to an OTC option sold by the Fund (the cost of the
sell-back plus the in-the-money amount, if any) or the value of the assets held
to cover such options will be deemed illiquid.

If the Fund sells a call option, the premium that it receives may serve as
a partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments held by the Fund or will
increase the Fund's income. Similarly, the sale of put options can also provide
Fund gains.

The Fund may purchase and sell call options on securities and on
Eurodollar instruments that are traded on U.S. and foreign securities exchanges
and in the OTC markets, and on securities indices, currencies and futures
contracts. All calls sold by the Fund must be "covered," that is, the Fund must
own the securities subject to the call, must own an offsetting option on a
futures position, or must otherwise meet the asset segregation requirements
described below for so long as the call is outstanding. Even though the Fund
will receive the option premium to help protect it against loss, a call sold by
the Fund will expose the Fund during the term of the option to possible loss of
opportunity to realize appreciation in the market price of the underlying
security or instrument and may require the Fund to hold a security or instrument
that it might otherwise have sold.

The Fund reserves the right to purchase or sell options on instruments and
indices which may be developed in the future to the extent consistent with
applicable law, the Fund's investment objective and the restrictions set forth
herein.

If and to the extent authorized to do so, the Fund may purchase and sell
put options on securities (whether or not it holds the securities in its
portfolio) and on securities indices, currencies and futures contracts. In
selling put options, the Fund faces the risk that it may be required to buy the
underlying security at a disadvantageous price above the market price.

General Characteristics of Futures Contracts and Options on Futures
Contracts

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in the contract at a specific future time for a specified price (or, with
respect to certain instruments, the net cash amount). Options on futures
contracts are similar to options on securities except that an option on a
futures contract gives the purchaser the right, in return for the premium paid,
to assume a position in a futures contract and obligates the seller to deliver
that position.

The Fund's use of financial futures contracts and options thereon will in
all cases be consistent with applicable regulatory requirements and in
particular the rules and regulations of the CFTC and generally will be entered
into only for bona fide hedging, risk management (including duration management)
or other permissible non-hedging purposes. Maintaining a futures contract or
selling an option on a futures contract will typically require the Fund to
deposit with a financial intermediary, as security for its obligations, an
amount of cash or other specified assets ("initial margin") that initially is
from 1% to 10% of the face amount of the contract (but may be higher in some
circumstances). Additional cash or assets ("variation margin") may be required
to be deposited thereafter daily as the mark-to-market value of the futures
contract fluctuates. The purchase of an option on a financial futures contract
involves payment of a premium for the option without any further obligation on
the part of the Fund. If the Fund exercises an option on a futures contract it
will be obligated to post initial margin (and potentially variation margin) for
the resulting futures position just as it would for any futures position.
Futures contracts and options thereon are generally settled by entering into an
offsetting transaction, but no assurance can be given that a position can be
offset prior to settlement or that delivery will occur.

The Fund will not enter into a futures contract or option thereon for
purposes other than bona fide hedging if, immediately thereafter, the sum of the
amount of its initial margin and premiums required to maintain permissible
non-hedging positions in futures contracts and options thereon would exceed 5%
of the liquidation value of the Fund's net assets; however, in the case of an
option that is in-the-money at the time of the purchase, the in-the-money amount
may be excluded in calculating the 5% limitation. The segregation requirements
with respect to futures contracts and options thereon are described below under
"Use of Segregated and Other Special Accounts."

Options on Securities Indices and Other Financial Indices

The Fund may purchase and sell call and put options on securities indices
and other financial indices. In so doing, the Fund can achieve many of the same
objectives it would achieve through the sale or purchase of options on
individual securities or other instruments. Options on securities indices and
other financial indices are similar to options on a security or other instrument
except that, rather than settling by physical delivery of the underlying
instrument, options on indices settle by cash settlement; that is, an option on
an index gives the holder the right to receive, upon exercise of the option, an
amount of cash if the closing level of the index upon which the option is based
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option (except if, in the case of an OTC option, physical
delivery is specified). This amount of cash is equal to the excess of the
closing price of the index over the exercise price of the option, which also may
be multiplied by a formula value. The seller of the option is obligated, in
return for the premium received, to make delivery of this amount.

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The gain or loss on an option on an index depends on price movements in the
instruments comprising the market, market segment, industry or other composite
on which the underlying index is based, rather than price movements in
individual securities, as is the case with respect to options on securities.

Currency Transactions

The Fund may engage in currency transactions with Counterparties to hedge
the value of portfolio securities denominated in particular currencies against
fluctuations in relative value. Currency transactions include currency forward
contracts, exchange-listed currency futures contracts and options thereon,
exchange- listed and OTC options on currencies, and currency swaps. A forward
currency contract involves a privately negotiated obligation to purchase or sell
(with delivery generally required) a specific currency at a future date, which
may be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. A currency swap is an
agreement to exchange cash flows based on the notional difference among two or
more currencies and operates similarly to an interest rate swap, which is
described below under "Swaps, Caps, Floors and Collars." The Fund may enter into
currency transactions only with Counterparties that are deemed creditworthy by
the Adviser.

The Fund's dealings in forward currency contracts and other currency
transactions such as futures contracts, options, options on futures contracts
and swaps will be limited to hedging and other non-speculative purposes,
including transaction hedging and position hedging. Transaction hedging is
entering into a currency transaction with respect to specific assets or
liabilities of the Fund, which will generally arise in connection with the
purchase or sale of the Fund's portfolio securities or the receipt of income
from them. Position hedging is entering into a currency transaction with respect
to portfolio securities positions denominated or generally quoted in that
currency. The Fund will not enter into a transaction to hedge currency exposure
to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held by the Fund that
are denominated or generally quoted in or currently convertible into the
currency, other than with respect to proxy hedging as described below.

The Fund may cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to increase or decline
in value relative to other currencies to which the Fund has or in which the Fund
expects to have exposure. To reduce the effect of currency fluctuations on the
value of existing or anticipated holdings of its securities, the Fund may also
engage in proxy hedging. Proxy hedging is often used when the currency to which
the Fund's holdings is exposed is difficult to hedge generally or difficult to
hedge against the dollar. Proxy hedging entails entering into a forward contract
to sell a currency, the changes in the value of which are generally considered
to be linked to a currency or currencies in which some or all of the Fund's
securities are or are expected to be denominated, and to buy dollars. The amount
of the contract would not exceed the market value of the Fund's securities
denominated in linked currencies.

Currency transactions are subject to risks different from other portfolio
transactions, as discussed below under "Risk Factors." If the Fund enters into a
currency hedging transaction, the

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Fund will comply with the asset segregation requirements described below under
"Use of Segregated and Other Special Accounts."

Combined Transactions

The Fund may enter into multiple transactions, including multiple options
transactions, multiple futures transactions, multiple currency transactions
(including forward currency contracts), multiple interest rate transactions and
any combination of futures, options, currency and interest rate transactions as
part of a single or combined strategy when, in the judgment of the Adviser, it
is in the best interests of the Fund to do so. A combined transaction will
usually contain elements of risk that are present in each of its component
transactions. Although combined transactions will normally be entered into by
the Fund based on the Adviser's judgment that the combined strategies will
reduce risk or otherwise more effectively achieve the desired portfolio
management goal, it is possible that the combination will instead increase the
risks or hinder achievement of the portfolio management objective.

Swaps, Caps, Floors and Collars

The Fund may enter into interest rate, currency and index swaps and the
purchase or sale of related caps, floors and collars. The Fund will enter into
these transactions primarily to seek to preserve a return or spread on a
particular investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
date. The Fund will use these transactions for non-speculative purposes and will
not sell interest rate caps or floors if it does not own securities or other
instruments providing the income the Fund may be obligated to pay. Interest rate
swaps involve the exchange by the Fund with another party of their respective
commitments to pay or receive interest (for example, an exchange of floating
rate payments for fixed rate payments with respect to a notional amount of
principal). A currency swap is an agreement to exchange cash flows on a notional
amount based on changes in the values of the reference indices. An index swap is
an agreement to exchange cash flows on a notional principal amount based on
changes in the values of the reference index. The purchase of a cap entitles the
purchaser to receive payments on a notional principal amount from the party
selling the cap to the extent that a specified index exceeds a predetermined
interest rate. The purchase of an interest rate floor entitles the purchaser to
receive payments of interest on a notional principal amount from the party
selling the interest rate floor to the extent that a specified index falls below
a predetermined interest rate or amount. The purchase of a floor entitles the
purchaser to receive payments on a notional principal amount from the party
selling the floor to the extent that a specific index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return with a predetermined range of interest
rates or values.

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purposes, they do not constitute senior securities under the Investment Company
Act of 1940, as amended and, thus, will not be treated as being subject to the
Fund's borrowing restrictions. The Fund will not enter into any swap, cap,
floor, collar or other derivative transaction unless the Counterparty is deemed
creditworthy by the Adviser. If a Counterparty defaults, the Fund may have
contractual remedies pursuant to the agreements related to the transaction. The
swap market has grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps, floors and collars are more recent innovations for
which standardized documentation has not yet been fully developed and, for that
reason, they are less liquid than swaps.

The liquidity of swap agreements will be determined by the Adviser based
on various factors, including: (1) the frequency of trades and quotations; (2)
the number of dealers and prospective purchasers in the marketplace; (3) dealer
undertakings to make a market; (4) the nature of the security (including any
demand or tender features); and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). Such determination will govern whether a swap will
be deemed within the 15% restriction on investments in securities that are not
readily marketable.

The Fund will maintain cash and appropriate liquid assets in a segregated
custodial account to cover its current obligations under swap agreements. If the
Fund enters into a swap agreement on a net basis, it will segregate assets with
a daily value at least equal to the excess, if any, of the Fund's accrued
obligations under the swap agreement over the accrued amount the Fund is
entitled to receive under the agreement. If the Fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value equal
to the full amount of the Fund's accrued obligations under the agreement. See
"Use of Segregated and Other Special Accounts."

Eurodollar Instruments

The Fund may make investments in Eurodollar instruments, which are
typically dollar-denominated futures contracts or options on those contracts
that are linked to the London Interbank Offered Rate ("LIBOR"), although foreign
currency denominated instruments are available from time to time. Eurodollar
futures contracts enable purchasers to obtain a fixed rate for the lending of
funds and sellers to obtain a fixed rate for borrowings. The Fund might use
Eurodollar futures contracts and options thereon to hedge against changes in
LIBOR, to which many interest rate swaps and fixed income instruments are
linked.

Risk Factors

Hedging and Other Strategic Transactions have special risks associated
with them, including possible default by the Counterparty to the transaction,
illiquidity and, to the extent the Adviser's view as to certain market movements
is incorrect, the risk that the use of the Hedging and Other Strategic
Transactions could result in losses greater than if they had not been used. Use
of put and call options could result in losses to the Fund, force the sale or
purchase of portfolio securities at inopportune times or for prices higher than
(in the case of put options) or

B-7
<PAGE>

lower than (in the case of call options) current market values, or cause the
Fund to hold a security it might otherwise sell.

The use of futures and options transactions entails certain special risks.
In particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related securities position of the
Fund could create the possibility that losses on the hedging instrument are
greater than gains in the value of the Fund's position. In addition, futures and
options markets could be illiquid in some circumstances and certain
over-the-counter options could have no markets. As a result, in certain markets,
the Fund might not be able to close out a transaction without incurring
substantial losses. Although the Fund's use of futures and options transactions
for hedging should tend to minimize the risk of loss due to a decline in the
value of the hedged position, at the same time it will tend to limit any
potential gain to the Fund that might result from an increase in value of the
position. Finally, the daily variation margin requirements for futures contracts
create a greater ongoing potential financial risk than would purchases of
options, in which case the exposure is limited to the cost of the initial
premium.

Currency hedging involves some of the same risks and considerations as
other transactions with similar instruments. Currency transactions can result in
losses to the Fund if the currency being hedged fluctuates in value to a degree
or in a direction that is not anticipated. Further, the risk exists that the
perceived linkage between various currencies may not be present or may not be
present during the particular time that a Fund is engaging in proxy hedging.
Currency transactions are also subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to the
issuing governments and influences economic planning and policy, purchases and
sales of currency and related instruments can be adversely affected by
government exchange controls, limitations or restrictions on repatriation of
currency, and manipulations or exchange restrictions imposed by governments.
These forms of governmental actions can result in losses to the Fund if it is
unable to deliver or receive currency or monies in settlement of obligations and
could also cause hedges it has entered into to be rendered useless, resulting in
full currency exposure as well as incurring transaction costs. Buyers and
sellers of currency futures contracts are subject to the same risks that apply
to the use of futures contracts generally. Further, settlement of a currency
futures contract for the purchase of most currencies must occur at a bank based
in the issuing nation. Trading options on currency futures contracts is
relatively new, and the ability to establish and close out positions on these
options is subject to the maintenance of a liquid market that may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.

Losses resulting from the use of Hedging and Other Strategic Transactions
will reduce the Fund's net asset value, and possibly income, and the losses can
be greater than if Hedging and Other Strategic Transactions had not been used.

Risks of Hedging and Other Strategic Transactions Outside the United
States

B-8
<PAGE>

affecting trading in, or the prices of, foreign securities, currencies and other
instruments. The value of positions taken as part of non-U.S. Hedging and
Derivatives also could be adversely affected by: (1) other complex foreign
political, legal and economic factors; (2) lesser availability of data on which
to make trading decisions than in the United States; (3) delays in the Fund's
ability to act upon economic events occurring in foreign markets during
non-business hours in the United States; (4) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States; and (5) lower trading volume and liquidity.

Use of Segregated and Other Special Accounts

Use of many Hedging and Other Strategic Transactions by the Fund will
require, among other things, that the Fund segregate cash or other liquid assets
with its custodian, or a designated sub-custodian, to the extent the Fund's
obligations are not otherwise "covered" through ownership of the underlying
security, financial instrument or currency. In general, either the full amount
of any obligation by the Fund to pay or deliver securities or assets must be
covered at all times by the securities, instruments or currency required to be
delivered, or, subject to any regulatory restrictions, an amount of cash or
liquid assets at least equal to the current amount of the obligation must be
segregated with the custodian or sub-custodian. The segregated assets cannot be
sold or transferred unless equivalent assets are substituted in their place or
it is no longer necessary to segregate them. A call option on securities written
by the Fund, for example, will require the Fund to hold the securities subject
to the call (or securities convertible into the needed securities without
additional consideration) or to segregate liquid assets sufficient to purchase
and deliver the securities if the call is exercised. A call option sold by the
Fund on an index will require the Fund to own portfolio securities that
correlate with the index or to segregate liquid assets equal to the excess of
the index value over the exercise price on a current basis. A put option on
securities written by the Fund will require the Fund to segregate liquid assets
equal to the exercise price. Except when the Fund enters into a forward contract
in connection with the purchase or sale of a security denominated in a foreign
currency or for other non-speculative purposes, which requires no segregation, a
currency contract that obligates the Fund to buy or sell a foreign currency will
generally require the Fund to hold an amount of that currency, liquid securities
denominated in that currency equal to the Fund's obligations or to segregate
liquid assets equal to the amount of the Fund's obligations.

OTC options entered into by the Fund, including those on securities,
currency, financial instruments or indices, and OCC-issued and exchange-listed
index options will generally provide for cash settlement, although the Fund will
not be required to do so. As a result, when the Fund sells these instruments it
will segregate an amount of assets equal to its obligations under the options.
OCC-issued and exchange-listed options sold by the Fund other than those
described above generally settle with physical delivery, and the Fund will
segregate an amount of assets equal to the full value of the option. OTC options
settling with physical delivery or with an election of either physical delivery
or cash settlement will be treated the same as other options settling with
physical delivery.

In the case of a futures contract or an option on a futures contract, the
Fund must deposit initial margin and, in some instances, daily variation margin
in addition to segregating assets

B-9
<PAGE>

sufficient to meet its obligations to purchase or provide securities or
currencies, or to pay the amount owed at the expiration of an index-based
futures contract. These assets may consist of cash, cash equivalents or other
liquid assets. The Fund will accrue the net amount of the excess, if any, of its
obligations relating to swaps over its entitlements with respect to each swap on
a daily basis and will segregate with its custodian, or designated
sub-custodian, an amount of cash or liquid assets having an aggregate value
equal to at least the accrued excess. Caps, floors and collars require
segregation of assets with a value equal to the Fund's net obligation, if any.

Hedging and Other Strategic Transactions may be covered by means other
than those described above when consistent with applicable regulatory policies.
The Fund may also enter into offsetting transactions so that its combined
position, coupled with any segregated assets, equals its net outstanding
obligation in related options and Hedging and Other Strategic Transactions. The
Fund could purchase a put option, for example, if the strike price of that
option is the same or higher than the strike price of a put option sold by the
Fund. Moreover, instead of segregating assets if it holds a futures contracts or
forward contract, the Fund could purchase a put option on the same futures
contract or forward contract with a strike price as high or higher than the
price of the contract held. Other Hedging and Other Strategic Transactions may
also be offset in combinations. If the offsetting transaction terminates at the
time of or after the primary transaction, no segregation is required, but if it
terminates prior to that time, assets equal to any remaining obligation would
need to be segregated.

B-10
<PAGE>

The OFFITBANK Variable Insurance Fund, Inc.

Officers and Directors
Morris W. Offit
Chairman of the Board, President and
Director

Edward J. Landau
Director

The Very Reverend James Parks Morton
Director

Dr. Wallace Mathai-Davis
Secretary and Treasurer

Gary M. Gardner
Assistant Secretary

David C. Lebisky
Assistant Secretary

Stephen Brent Wells
Assistant Treasurer

David D. Marky
Assistant Treasurer

Vincent M. Rella
Assistant Treasurer

Stephen M. Wynne
Assistant Treasurer

Investment Adviser

Investment Advisers
OFFITBANK
520 Madison Avenue
New York, NY 10022-4213

David J. Greene & Company, LLC
599 Lexington Avenue
New York, NY 10022
(OFFITBANK VIF-DJG Value Equity
Fund)

Sub-Adviser
Rockefeller & Co., Inc.
30 Rockefeller Plaza
New York, NY 10112
(OFFITBANK VIF-U.S. Small Cap Fund)

Distributor
OFFIT Funds Distributor, Inc.
Four Falls Corporate Center, 6th
Floor
West Conshohocken, PA 19428-2961

Custodians
The Chase Manhattan Bank
4 MetroTech Center, 18th Floor
Brooklyn, NY 11245
(OFFITBANK VIF-Emerging Markets
Fund)

The Bank of New York
90 Washington Street
New York, NY 10286
(all other OFFITBANK VIF Funds)

Legal Counsel
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022

Administrator; Transfer and
Dividend
Disbursing Agent
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809

Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
<PAGE>

FOR MORE INFORMATION

FOR INVESTORS WHO WANT MORE INFORMATION ON THE COMPANY, THE FOLLOWING DOCUMENTS
ARE AVAILABLE FREE UPON REQUEST:

Annual/Semi-Annual Reports: Contain performance data and information on
portfolio holdings for the Company's most recently completed fiscal year or half
year and, on an annual basis, a statement from portfolio management and the
auditor's report.

Statement of Additional Information (SAI): Contains more detailed information
about the Company's policies, investment restrictions, risks and business
structure. This prospectus incorporates the SAI by reference.

Copies of these documents and answers to questions about the Company may be
obtained without charge by contacting:

THE OFFITBANK VARIABLE INSURANCE FUND, INC.
P.O. Box 8701
Wilmington, Delaware 19899
1-800-618-9510

Information about the Company (including the SAI) can be viewed and copied at
the Public Reference Room of the Securities and Exchange Commission (the "SEC")
in Washington, D.C. Copies of this information may be obtained, upon payment of
a duplicating fee, by writing the Public Reference Room of the SEC, Washington,
D.C., 20549-6009. Information on the operation of the Public Reference Room may
be obtained by calling the SEC at 1-800-SEC-0330. Reports and other information
about the Company may be viewed on-screen or downloaded from the SEC's Internet
site at http://www.sec.gov.

- --------------------------------------------------------------------------------
FOR MORE INFORMATION ON OPENING A NEW ACCOUNT, MAKING
CHANGES TO EXISTING ACCOUNTS, PURCHASING, EXCHANGING OR REDEEMING
SHARES, OR OTHER INVESTOR SERVICES, PLEASE CALL:

1-800-618-9510
Monday through Friday
8:15 a.m. to 6:00 p.m. (EST)
- --------------------------------------------------------------------------------

The Company's Investment Company Act File number is 811-08640.
<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFITBANK VIF - Emerging Markets Fund

PROSPECTUS

APRIL __, 1999

TABLE OF CONTENTS

A look at goals, strategies, FUND DESCRIPTION
risks and financial history. Investment Objective........................3
Principal Investment Strategies.............3
Principal Risk Factors......................3
Prior Performance...........................4
Financial Highlights........................5
Additional Information on the Fund..........6
Risks of Investing in the Fund..............7

Details on the management MANAGEMENT OF THE FUND
and operations of the Fund. Investment Adviser.........................18
Service Provider Chart.....................19

Appendix A: Ratings......................A-1
Appendix B: Hedging and Other Strategic
Transactions............................B-1

FOR MORE INFORMATION...........see back cover

2
<PAGE>

OFFITBANK VIF - EMERGING MARKETS FUND

Investment Objective

The Fund's investment objective is to provide investors with a competitive total
return by focusing on current yield and opportunities for capital appreciation.

Principal Investment Strategies

The Fund invests primarily in corporate and sovereign debt securities of
emerging market countries. Under normal circumstances, the Fund will invest at
least 80% of its total assets in debt instruments denominated in any currency,
including U.S. dollars, but may invest up to 20% of its total assets in equity
securities.

Principal Risk Factors

o Most of the Fund's assets will be invested in the securities of non-U.S.
issuers. International investing is subject to special risks, including,
but not limited to, currency exhange rate volatility, political, social or
economic instability, and differences in taxation, auditing and other
financial practices. These types of risks may lead to greater losses in
emerging markets.

o The Fund will invest at least 25% of its total assets in the securities of
issuers whose primary activity is in the banking industry. Concentration
in any one industry intensifies the investing risks related to such
industry.

o All or a substantial portion of the securities purchased by the Fund may
be lower rated or unrated debt securities (i.e., high yield, high risk
debt securities). High yield, high risk debt securities have a higher risk
of default in the payment of interest and principal and are subject to
significant changes in price. Investment by the Fund in such securities
involves a high degree of credit risk and such securities are regarded as
speculative by the major rating agencies.

o The Fund's yield will change with changes in interest rates.

o The net asset value ("NAV") of the Fund will change with changes in the
market value of its portfolio positions.

o Since the Fund attempts to benefit from investment opportunities deriving
from long-term improvement in economic and political conditions, and other
positive trends and

3
<PAGE>

developments in emerging market countries, it is intended for long-term
investors. You should consider your ability to buy and hold this Fund for
the long-term.

Because investing in the Fund involves certain risks, you could lose money. For
further information on the risks associated with the Fund, please see "Risks of
Investing in the Fund" below.

PRIOR PERFORMANCE

Annual Total Returns

The bar chart below shows the annual total returns for the Fund for the last two
calendar years. The bar chart provides some indication of the risks of investing
in the Fund by showing changes in the Fund's performance from year to year. Past
performance is not necessarily an indicator of how the Fund will perform in the
future.

[INSERT BAR CHARTS]

1997 - 8.14%
1998 - (16.24%)

Since inception (August 28, 1996), the highest calendar quarter total return for
the Fund was 16.71% (quarter ended December 30, 1998) and the lowest calendar
quarter total return was (29.33%) (quarter ended September 30, 1998).

Average Annual Total Returns - Comparison

The table below shows how the Fund's average annual total returns for the past
one calendar year and since inception, compare with the Lipper Analytical
Emerging Market Debt Index (the "Lipper Emerging Market Index") for the same
periods. The table, like the bar chart, provides some indication of the risks of
investing in the Fund by showing how the Fund's average annual total returns for
1 year and since inception compare with that of a broad measure of market
performance. Past performance is not necessarily an indicator of how the Fund
will perform in the future.

Average Annual Total Returns
----------------------------
1 Year Since Inception
------ ---------------

Fund Shares*........................ (16.24%) (1.76%)
Lipper Emerging Market Index........ (21.21%) Not applicable

* Commenced operations on August 28, 1996.

4
<PAGE>

FINANCIAL HIGHLIGHTS

[INSERT FINANCIAL HIGHLIGHTS]

5
<PAGE>

ADDITIONAL INFORMATION ON THE FUND

Investment Objective and Policies

The investment objective of the Fund is to provide a competitive total
investment return by focusing on current yield and opportunities for capital
appreciation. The Fund will seek to achieve its objective by investing primarily
in corporate and sovereign debt instruments of emerging market countries. Under
normal circumstances, the Fund will invest at least 80% of its total assets in
debt instruments, but may invest up to 20% of its total assets in equity
securities. As used in this Prospectus, an "emerging market country" is any
country that is considered to be an emerging or developing country by the
International Bank for Reconstruction and Development (the "World Bank") or the
International Finance Corporation, or is determined by the Adviser to have per
capita gross domestic product below $7,500 (in 1994 dollars). Under normal
circumstances, the Fund will invest at least 25% of its total assets in
securities of issuers whose primary business activity is in the banking
industry. The Fund will not invest 25% or more of its total assets in
obligations issued by any one country, its agencies, instrumentalities or
political subdivisions. See "Risks of Investing in the Fund - Concentration."

The Fund seeks to benefit from investment opportunities deriving from long-term
improving economic and political conditions, and other positive trends and
developments in emerging market countries. Accordingly, the Fund is intended
primarily for long-term investors and should not be considered as a vehicle for
trading purposes. The continuation of a long-term international trend
encouraging greater market orientation and economic growth may result in local
or international political, economic or financial developments that could
benefit the capital markets in emerging market countries.

An "emerging market country" debt instrument or equity security, as used in this
Prospectus, means an instrument or security: (1) of an issuer organized or with
more than 50% of its business activities in such emerging market country; (2)
denominated in such country's currency or with a primary trading market in such
emerging market country; (3) of a company which derives at least 50% of its
gross revenues from goods produced, sales made, services performed or
investments in such emerging market country; or (4) issued or guaranteed by the
government of such emerging market country, its agencies, political subdivisions
or instrumentalities, or the central bank of such country. Determinations as to
eligibility will be made by the Adviser based on publicly available information
and inquiries made to companies. See "Risk of Investing in the Fund - Securities
of Non-U.S. Issuers," below for a discussion of the nature of publicly available
information for non-U.S.
companies.

The Fund intends to invest in debt instruments including bonds, notes, bills,
debentures, convertible securities, debt with attached warrants, bank
obligations, short-term paper, loan participations and assignments, trust and
partnership interests, money market instruments and other similar instruments.
Such instruments may be issued or guaranteed by the governments of emerging
market countries, their agencies, instrumentalities or political subdivisions,
international organizations or business entities located in such countries,
including financial institutions, or companies located in emerging market
countries that are subsidiaries of multinational business entities. Such
obligations may be payable in U.S. dollars, Eurocurrencies

6
<PAGE>

or other currencies (including currencies of emerging market countries which may
be indexed to the U.S. dollar). The Adviser will be free to invest in debt
securities of any maturity and duration and the interest rates on such
securities may be fixed or floating. The Fund's debt instruments may or may not
be listed or traded on a securities exchange.

In selecting particular debt instruments for the Fund, the Adviser intends to
consider factors such as liquidity, price volatility, tax implications, interest
rate sensitivity, foreign currency exchange risks, counterparty risks and
technical market considerations. Debt instruments in which the Fund may invest
will not be required to meet a minimum rating standard and a substantial amount
of such instruments are expected to be non-investment grade securities (i.e.,
rated BB or lower by Standard & Poor's Ratings Group ("S&P") or Duff of Phelps
Credit Rating Co. ("D&P"), or Ba or lower by Moody's Investor Service, Inc.
("Moody's"), or if unrated, of comparable quality as determined by the Adviser).
See Appendix A to this Prospectus for a description of ratings of S&P, Moody's
and D&P. Investments in high yield, high risk debt securities involve
comparatively greater risks, including price volatility and the risk of default
in the timely payment of interest and principal, than higher rated securities.
Some of such investments may be non-performing when purchased. See "Risks of
Investing in the Fund - High Yield, High Risk Debt Securities."

The Fund may invest up to 20% of its total assets in common stocks, preferred
stocks, detachable warrants and other equity securities that may or may not be
listed or traded on a recognized securities exchange. The Fund intends that such
investments in equity securities often will be related to the Fund's investments
in debt instruments, such as those equity securities received upon the exercise
of convertible debt instruments or attached warrants, or those equity securities
acquired pursuant to investment opportunities deriving from the Fund's
activities in emerging market debt markets. The equity securities purchased by
the Fund may include American Depository Receipts, European Depository Receipts
and interests in investment companies.

RISKS OF INVESTING IN THE FUND

General

7
<PAGE>

their duration, (ii) changes in the actual and perceived creditworthiness of the
issuers of such securities, (iii) changes in any applicable foreign currency
exchange rates, (iv) social, economic or political factors, (v) factors
affecting the industry in which the issuer operates, such as competition or
technological advances, and (vi) factors affecting the issuer directly, such as
management changes or labor relations. The objectives and policies of the Fund
can be expected to affect the return of the Fund and the degree of market and
financial risk to which the Fund is subject. The investment objective and
policies of the Fund may, unless otherwise specifically stated, be changed by
the Directors of the Company without a vote of the shareholders. As a matter of
policy, the Directors would not materially change the investment objective of
the Fund without shareholder approval. There is no assurance that the Fund will
achieve its investment objective.

High Yield, High Risk Debt Securities

The secondary markets for high yield, high risk corporate and sovereign debt
securities are not as liquid as the secondary markets for higher-rated
securities. The secondary markets for high yield,

8
<PAGE>

high risk debt securities are characterized by relatively few market makers and
participants in the market are mostly institutional investors, including
insurance companies, banks, other financial institutions and mutual funds. In
addition, the trading volume for high yield, high risk debt securities is
generally lower than that for higher-rated securities and the secondary markets
could contract under adverse market or economic conditions independent of any
specific adverse changes in the condition of a particular issuer. These factors
may have an adverse effect on the Fund's ability to dispose of particular
portfolio investments and may limit its ability to obtain accurate market
quotations for purposes of valuing securities and calculating NAV. If the Fund
is not able to obtain precise or accurate market quotations for a particular
security, it will become more difficult for the Company's Board of Directors to
value the Fund's portfolio securities and the Company's Directors may have to
use a greater degree of judgment in making such valuations. Furthermore, adverse
publicity and investor perceptions about lower-rated securities, whether or not
based on fundamental analysis, may tend to decrease the market value and
liquidity of such lower-rated securities. Less liquid secondary markets may also
affect the Fund's ability to sell securities at fair value. In addition, the
Fund may invest up to 15% of its net assets, measured at the time of investment,
in illiquid securities, which may be more difficult to value and to sell at fair
value. If the secondary markets for high yield, high risk debt securities
contract due to adverse economic conditions or for other reasons, certain
previously liquid securities in the Fund's portfolio may become illiquid and the
proportion of the Fund's assets invested in illiquid securities may increase.

9
<PAGE>

Sovereign Debt Securities. Investing in sovereign debt securities will expose
the Fund to the direct or indirect consequences of political, social or economic
changes in the developing and emerging countries, that issue the securities. The
ability and willingness of sovereign obligors in developing and emerging
countries or the governmental authorities that control repayment of their
external debt to pay principal and interest on such debt when due may depend on
general economic and political conditions within the relevant country. Emerging
and developing countries such as those in which the Fund may invest have
historically experienced, and may continue to experience, high rates of
inflation, high interest rates, exchange rate fluctuations, trade difficulties
and extreme poverty and unemployment. Many of these countries are also
characterized by political uncertainty or instability. Additional factors which
may influence the ability or willingness to service debt include, but are not
limited to, a country's cash flow situation, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of its debt
service burden to the economy as a whole, and its government's policy towards
the International Monetary Fund, the World Bank and other international
agencies.

10
<PAGE>

of commercial bank debt will not contest payments to the holders of other
foreign sovereign debt obligations in the event of default under their
commercial bank loan agreements.

Sovereign obligors in developing and emerging countries are among the world's
largest debtors to commercial banks, other governments, international financial
organizations and other financial institutions. These obligors have in the past
experienced substantial difficulties in servicing their external debt
obligations, which led to defaults on certain obligations and the restructuring
of certain indebtedness. Restructuring arrangements have included, among other
things, reducing and rescheduling interest and principal payments by negotiating
new or amended credit agreements or converting outstanding principal and unpaid
interest to Brady Bonds, and obtaining new credit to finance interest payments.
Holders of certain foreign sovereign debt securities may be requested to
participate in the restructuring of such obligations and to extend further loans
to their issuers. There can be no assurance that the Brady Bonds and other
foreign sovereign debt securities in which the Fund may invest will not be
subject to similar defaults or restructuring arrangements which may adversely
affect the value of such investments. Furthermore, certain participants in the
secondary market for such debt may be directly involved in negotiating the terms
of these arrangements and may therefore have access to information not available
to other market participants.

Securities of Non-U.S. Issuers

11
<PAGE>

depreciation, capital reinvestment, resource self-sufficiency, structural
unemployment and balance of payments position. Governments of many of these
countries have exercised and continue to exercise substantial influence over
many aspects of the private sector. In some cases, the government owns or
controls many companies, including some of the largest in the country.
Accordingly, government actions in the future could have a significant effect on
economic conditions in many countries, including emerging market countries,
which could affect private sector companies and the Fund, and on market
conditions, prices and yields of securities in the Fund's portfolio. There may
be the possibility of nationalization or expropriation of assets, or future
confiscatory levels of taxation affecting the Fund. In the event of
nationalization, expropriation or other confiscation, the Fund may not be fairly
compensated for its loss and could lose its entire investment in the country
involved.

12
<PAGE>

Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and you should be aware
of the costs of currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
("spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
sell that currency to the dealer.

Inflation. Many countries have experienced substantial, and in some periods
extremely high and volatile, rates of inflation. Inflation and rapid
fluctuations in inflation rates have had and may

13
<PAGE>

continue to have very negative effects on the economies and securities markets
of these countries and emerging market countries in particular. In an attempt to
control inflation, wage and price controls have been imposed at times in certain
countries.

Market Characteristics; Differences in Securities Markets. The securities
markets in many countries, and in emerging market countries in particular,
generally have substantially less volume than the New York Stock Exchange, and
equity securities of most companies listed on such markets may be less liquid
and more volatile than equity securities of U.S. companies of comparable size.
Some of the stock exchanges outside of the United States and in emerging market
countries, to the extent that established securities markets even exist, are in
the earlier stages of their development. A high proportion of the shares of many
foreign companies may be held by a limited number of persons, which may limit
the number of shares available for investment by the Fund. A limited number of
issuers in most, if not all, of these securities markets may represent a
disproportionately large percentage of market capitalization and trading volume.
In addition, the application of certain Investment Company Act of 1940, as
amended ("1940 Act") provisions may limit the Fund's ability to invest in
certain non-U.S. issuers and to participate in public offerings in these
countries. The limited liquidity of certain non-U.S. securities markets may also
affect the Fund's ability to acquire or dispose of securities at the price and
time it wishes to do so.

14
<PAGE>

intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. The inability to dispose of a
portfolio security due to settlement problems could result either in losses to
the Fund due to subsequent declines in the value of such portfolio security or,
if the Fund has entered into a contract to sell the security, could result in
possible liability to the purchaser.

Non-U.S. Subcustodians. Rules adopted under the 1940 Act permit the Fund, to
maintain its non-U.S. securities and cash in the custody of certain eligible
non-U.S. banks and securities depositories. Certain banks in non-U.S. countries
may not be eligible subcustodians for the Fund, in which event the Fund may be
precluded from purchasing securities in which it would otherwise invest, and
other banks that are eligible subcustodians may be recently organized or
otherwise lack extensive operating experience. At present, custody arrangements
complying with the requirements of the SEC are available in each of the
countries in which the Adviser intends to invest. In certain countries in which
the Fund may make investments, there may be legal restrictions or limitations on
the ability of the Fund to recover assets held in custody by subcustodians in
the event of the bankruptcy of the subcustodian.

15
<PAGE>

Hedging and Other Strategic Transactions

The Fund may be authorized to use a variety of investment strategies described
below to hedge various market risks (such as interest rates, currency exchange
rates and broad or specific market movements), to manage the effective maturity
or duration of debt instruments held by the Fund, or to seek to increase the
Fund's income or gain. Currently, the Fund may use, as portfolio management
strategies, cross currency hedges, interest rate transactions, commodity futures
contracts in the form of futures contracts on securities, securities indices and
foreign currencies, and related options transactions. The Fund also may enter
into forward foreign currency contracts and options transactions to hedge in
connection with currency and interest rate positions and in order to enhance the
Fund's income or gain. Limitations on the portion of the Fund's assets that may
be used in connection with the investment strategies described below are set out
in Appendix B to this Prospectus.

16
<PAGE>

extent permitted by CFTC regulations; provided that the Fund may enter into
futures contracts or options thereon for purposes other than bona fide hedging
if immediately thereafter, the sum of the amount of its initial margin and
premiums on open contracts would not exceed 5% of the liquidation value of the
Fund's portfolio; provided further, than in the case of an option that is
in-the-money at the time of the purchase, the in-the-money amount may be
excluded in calculating the 5% limitation. The use of certain Hedging and Other
Strategic Transactions will require that the Fund segregate cash, U.S.
government securities or other liquid high grade debt obligations to the extent
the Fund's obligations are not otherwise "covered" through ownership of the
underlying security, financial instrument or currency.

Concentration

Under normal market conditions, the Fund will invest at least 25% of its assets
in securities of issuers whose primary business activity is in the banking
industry. As such, an investment in the Fund should be made with an
understanding of the characteristics of the banking industry and the risks that
such an investment may entail. Banks are subject to extensive government
regulations that may limit both the amounts and types of loans and other
financial commitments that may be made and the interest rates and fees that may
be charged. The profitability of this industry is largely dependent upon the
availability and cost of capital funds for the purpose of financing lending
operations under prevailing money market conditions. Also, general economic
conditions play an important part in the operations of this industry and
exposure to credit losses arising from financial difficulties of borrowers might
affect a bank's ability to meet its obligations. Investors should also be aware
that securities of foreign banks and foreign branches of U.S. banks may involve
investment risks in addition to those relating to domestic obligations. For a
discussion of additional risks, see "Securities of Non-U.S. Issuers" above.

17
<PAGE>

Non-Diversified Funds

Year 2000

MANAGEMENT OF THE FUND

Investment Adviser

Dr. Wallace Mathai-Davis and Richard M. Johnston serve as portfolio managers
of the Fund. Dr. Mathai-Davis is a Managing Director of the Adviser and has
been associated with the Adviser since 1986. Mr. Johnston is a Managing
Director of the Adviser and has been the director of Latin American
investments since 1992. From 1988 to 1992 Mr. Johnston was Vice President,
International Corporate Finance at Salomon Brothers Inc.

The advisory fee paid by the Fund, as a percentage of average net assets, for
the period April 1, 1998 to December 31, 1998 was ___.

The following chart shows the Company's other service providers and includes
their addresses and principal activities.

18
<PAGE>

OFFITBANK VIF-EMERGING MARKETS FUND

------------
SHAREHOLDERS
------------
|
Distribution and |
Shareholder -----------------------|--------------------
Services | | |
| | |
------------------------------------ | -----------------------------
|
PRINCIPAL DISTRIBUTOR | TRANSFER AGENT
|
OFFIT FUNDS DISTRIBUTOR, INC. | PFPC INC.
|
FOUR FALLS CORPORATE CENTER, 6TH FL. | 400 BELLEVUE PARKWAY
-----|------
WEST CONSHOHOCKEN, PA 19428-2961 | WILMINGTON, DE 19809
|
|
Distributes the Fund's shares. | Handles shareholder services,
| including recordkeeping and
------------------------------------ | statements, distribution of
| dividends and processing
| of buy and sell requests.
|
| -----------------------------
|
Asset |
Management |
|
------------------------------------ | -----------------------------
|
INVESTMENT ADVISER | CUSTODIAN
|
OFFITBANK | THE CHASE MANHATTAN BANK
|
520 MADISON AVENUE | 4 METROTECH CENTER, 18TH FLOOR
-----|
NEW YORK, NY 10022-4213 | BROOKLYN, NY 11245
|
Manages the Fund's business and |
investment activities. | Serves as custodian of the
| assets of the Fund. The
------------------------------------ | custodian settles all
| portfolio trades and collects
| most of the valuation data
| required for calculating the
| Fund's net asset
| value ("NAV").
| -----------------------------
| |
Fund | |
Operations | |
| |
------------------------------------ | |
| |
ADMINISTRATOR AND | |
FUND ACCOUNTING AGENT | |
| |
PFPC INC. | |
| |
400 BELLEVUE PARKWAY -----|-----------------------
|
WILMINGTON, DE 19809 |
|
Provides facilities, equipment and |
personnel to carry out administrative |
services related to the Fund and |
calculates the Fund's NAV, dividends |
and distributions. |
|
------------------------------------ |
|
--------------------------------
BOARD OF DIRECTORS
Supervises the Fund's activities
--------------------------------

</TABLE>

19
<PAGE>

SHAREHOLDER INFORMATION

Pricing of Fund Shares

Shares of the Fund are priced at their net asset value ("NAV"). The NAV of the
Fund is calculated as follows:

Value of Assets
NAV = - Value of Liabilities
-------------------------------
Number of Outstanding Shares

20
<PAGE>

Purchase of Fund Shares

Individuals may not place orders directly with the Fund. Please refer to the
appropriate Account Prospectus of the Participating Company for more information
on the purchase of Fund shares.

Redemption of Fund Shares

Shareholder Services

A Contract or Policy Owner investing through an Account may exchange shares of
the Fund for shares of any of the other investment portfolios of the Company on
the basis of their respective NAV.

Dividends and Distributions

The Fund will declare dividends of substantially all of its net investment
income daily and pay dividends quarterly. The Fund distributes, at least
annually, its net capital gains, if any. The Fund will inform shareholders of
the amount and nature of all such income or gains.

21
<PAGE>

Any income and capital gains distributions are paid in the form of additional
shares of the Fund.

Taxes

THE TAX STATUS OF YOUR INVESTMENT IN THE FUND DEPENDS UPON THE FEATURES OF
YOUR POLICY OR CONTRACT. FOR FURTHER INFORMATION, PLEASE REFER TO THE
ACCOUNT OR POLICY PROSPECTUS.

Shareholder Communications

22
<PAGE>

Performance Information

23
<PAGE>

APPENDIX A

Commercial Paper Ratings

A-1
<PAGE>

"Not Prime" - Issuers do not fall within any of the Prime rating
categories.

"D-1" - Debt possesses very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors. Risk
factors are minor.

"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.

A-2
<PAGE>

"D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.

"D" - Securities are in actual or imminent payment default.

Corporate and Municipal Long-Term Debt Ratings

The following summarizes the ratings used by S&P for corporate and
municipal debt:

"AAA" - An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.

"AA" - An obligation rated "AA" differs from the highest rated obligations
only in small degree. The obligor's capacity to meet its financial commitment on
the obligation is very strong.

A-3
<PAGE>

"CC" - An obligation rated "CC" is currently highly vulnerable to
nonpayment.

"C" - The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on this
obligation are being continued.

PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.

A-4
<PAGE>

The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:

Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from "Aa" through "Caa". The modifier 1 indicates that the
obligation ranks in the

A-5
<PAGE>

higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of its generic
rating category.

The following summarizes the long-term debt ratings used by D&P for
corporate and municipal long-term debt:

"AAA" - Debt is considered to be of the highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.

"AA" - Debt is considered to be of high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.

"A" - Debt possesses protection factors which are average but adequate.
However, risk factors are more variable in periods of greater economic stress.

The following summarizes the ratings used by Fitch for corporate and
municipal bonds:

"A" - Bonds considered to be investment grade and of high credit quality.
These ratings denote a low expectation of credit risk and indicate strong
capacity for timely payment of

A-6
<PAGE>

financial commitments. This capacity may, nevertheless, be more vulnerable to
changes in circumstances or in economic conditions than is the case for higher
ratings.

Municipal Note Ratings

"SP-1" - The issuers of these municipal notes exhibit a strong capacity to
pay principal and interest. Those issues determined to possess very strong
characteristics are given a plus (+) designation.

A-7
<PAGE>

"SP-3" - The issuers of these municipal notes exhibit speculative capacity
to pay principal and interest.

"MIG-2"/"VMIG-2" - This designation denotes high quality, with margins of
protection that are ample although not so large as in the preceding group.

"SG" - This designation denotes speculative quality. Debt instruments in
this category lack of margins of protection.

Fitch and D&P use the short-term ratings described under Commercial Paper
Ratings for municipal notes.

A-8
<PAGE>

APPENDIX B

HEDGING AND OTHER STRATEGIC TRANSACTIONS

General Characteristics of Options

B-1
<PAGE>

Unless the parties provide for it, no central clearing or guarantee
function is involved in an OTC option. As a result, if a Counterparty fails to
make or take delivery of the security,

B-2
<PAGE>

General Characteristics of Futures Contracts and Options on Futures
Contracts

B-3
<PAGE>

Options on Securities Indices and Other Financial Indices

B-4
<PAGE>

Currency Transactions

Currency transactions are subject to risks different from other portfolio
transactions, as discussed below under "Risk Factors." If the Fund enters into a
currency hedging transaction, the

B-5
<PAGE>

Fund will comply with the asset segregation requirements described below under
"Use of Segregated and Other Special Accounts."

Combined Transactions

Swaps, Caps, Floors and Collars

B-6
<PAGE>

Eurodollar Instruments

Risk Factors

B-7
<PAGE>

lower than (in the case of call options) current market values, or cause the
Fund to hold a security it might otherwise sell.

Risks of Hedging and Other Strategic Transactions Outside the United
States

B-8
<PAGE>

Use of Segregated and Other Special Accounts

In the case of a futures contract or an option on a futures contract, the
Fund must deposit initial margin and, in some instances, daily variation margin
in addition to segregating assets

B-9
<PAGE>

B-10
<PAGE>

The OFFITBANK Variable Insurance Fund, Inc.

Officers and Directors
Morris W. Offit
Chairman of the Board, President and
Director

Edward J. Landau
Director

The Very Reverend James Parks Morton
Director

Dr. Wallace Mathai-Davis
Secretary and Treasurer

Gary M. Gardner
Assistant Secretary

David C. Lebisky
Assistant Secretary

Stephen Brent Wells
Assistant Treasurer

David D. Marky
Assistant Treasurer

Vincent M. Rella
Assistant Treasurer

Stephen M. Wynne
Assistant Treasurer

Investment Adviser

Investment Advisers
OFFITBANK
520 Madison Avenue
New York, NY 10022-4213

David J. Greene & Company, LLC
599 Lexington Avenue
New York, NY 10022
(OFFITBANK VIF-DJG Value Equity
Fund)

Sub-Adviser
Rockefeller & Co., Inc.
30 Rockefeller Plaza
New York, NY 10112
(OFFITBANK VIF-U.S. Small Cap Fund)

Distributor
OFFIT Funds Distributor, Inc.
Four Falls Corporate Center, 6th
Floor
West Conshohocken, PA 19428-2961

Custodians
The Chase Manhattan Bank
4 MetroTech Center, 18th Floor
Brooklyn, NY 11245
(OFFITBANK VIF-Emerging Markets
Fund)

The Bank of New York
90 Washington Street
New York, NY 10286
(all other OFFITBANK VIF Funds)

Legal Counsel
Kramer Levin Naftalis & Frankel LLLP
919 Third Avenue
New York, NY 10022

Administrator; Transfer and
Dividend
Disbursing Agent
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809

Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
<PAGE>

FOR MORE INFORMATION

FOR INVESTORS WHO WANT MORE INFORMATION ON THE COMPANY, THE FOLLOWING DOCUMENTS
ARE AVAILABLE FREE UPON REQUEST:

Copies of these documents and answers to questions about the Company may be
obtained without charge by contacting:

THE OFFITBANK VARIABLE INSURANCE FUND, INC.
P.O. Box 8701
Wilmington, Delaware 19899
1-800-618-9510

1-800-618-9510
Monday through Friday
8:15 a.m. to 6:00 p.m. (EST)
- --------------------------------------------------------------------------------

The Company's Investment Company Act File number is 811-08640.
<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFITBANK VIF - DJG Value Equity Fund

PROSPECTUS

APRIL __, 1999

TABLE OF CONTENTS

Details on the management MANAGEMENT OF THE FUND
and operations of the Fund. Investment Adviser..........................8
Service Provider Chart.....................10

Policies and instructions for SHAREHOLDER INFORMATION
opening, maintaining and Pricing of Fund Shares.....................11
closing an account in the Purchase of Fund Shares....................12
Fund. Redemption of Fund Shares..................12
Shareholder Services.......................12
Dividends and Distributions................12
Taxes......................................13
Shareholder Communications.................13
Performance Information....................14

FOR MORE INFORMATION...........see back cover

2
<PAGE>

OFFITBANK VIF - DJG VALUE EQUITY FUND

Investment Objectives

The Fund's investment objectives are long-term capital appreciation and
preservation of capital.

Principal Investment Strategies

The Fund will seek to achieve its objectives by researching and investing in
equity securities priced at a discount to their intrinsic values. Capital
appreciation is achieved over time as the price-value gap narrows, often as a
result of a corporate change or the occurrence of a major non-operating event or
combination thereof.

Principal Risk Factors

o At least 65% of the Fund's total assets will be invested in a diversified
portfolio of equity securities, including common stocks, rights and
warrants to subscribe for or purchase common stocks. Because the Fund will
invest primarily in equity securities, the net asset value ("NAV") of the
Fund will change with changes in the market value of its portfolio
positions.

Because investing in the Fund involves certain risks, you could lose money. For
further information on the risks associated with the Fund, please see "Risks of
Investing in the Fund" below.

PRIOR PERFORMANCE

Annual Total Return

The bar chart below shows the annual total return for the Fund for the last
calendar year. Past performance is not necessarily an indicator of how the Fund
will perform in the future.

[INSERT BAR CHARTS]

1998 - (4.31%)

Since inception (April 11, 1997), the highest calendar quarter total return for
the Fund was 15.21% (quarter ended September 30, 1997) and the lowest calendar
quarter total return was (17.80%) (quarter ended September 30, 1998).

3
<PAGE>

Average Annual Total Returns - Comparison

The table below shows how the Fund's average annual total returns for the past
one year and since inception compare with the S&P 500 Stock Index for the same
periods. The table provides some indication of the risks of investing in the
Fund by showing how the Fund's average annual total returns for 1 year and since
inception compare with that of a broad measure of market performance. Past
performance is not necessarily an indicator of how the Fund will perform in the
future.

Average Annual Total Returns
----------------------------
1 Year Since Inception
------ ---------------

Fund Shares*............................... (4.31%) 14.83%

S&P 500 Stock Index........................ 28.58% Not applicable

* Commenced operations on April 11, 1997.

4
<PAGE>

FINANCIAL HIGHLIGHTS

[INSERT FINANCIAL HIGHLIGHTS]

5
<PAGE>

ADDITIONAL INFORMATION ON THE FUND

Investment Objectives and Policies

The investment objectives of the Fund are long-term appreciation and
preservation of capital, which the Fund seeks to achieve by investing in
undervalued securities and in special situations. Capital appreciation is
achieved over time as the price-value gap narrows, often as a result of a
corporate change or the occurrence of a major non-operating event - such as a
major management change, substantial share repurchase, spin-off, split-up,
restructuring, liquidation, acquisition or other catalyst. The Fund attempts to
provide consistent absolute returns as well as outperform the Standard & Poor's
500 Index ("S&P 500") over a market cycle by using a bottom up value-oriented
approach to equity investment that stresses the purchase of securities with cash
flow, reported earnings and asset value at a measured price. The investment
objective and policies of the Fund may, unless otherwise specifically stated, be
changed by the Company without a vote of the shareholders. As a matter of
fundamental policy, the Company would not materially change the investment
objectives of the Fund without notifying shareholders.

The Fund's investment philosophy is centered upon fundamental research with
particular emphasis on event-driven special situations. Valuations are based on
cash flow (defined as earnings plus non-cash charges, less required capital
spending and working capital) rather than reported earnings in order to focus on
underlying economics rather than accounting. Furthermore, the Fund believes that
management's capabilities and motivations with respect to the enhancement of
shareholder value are particularly important in making investment decisions.
Generally, the sale of a security will be based upon factors such as: (1) an
increase in the share price which adequately reflects the original investment
premise; (2) any other significant increase in the market valuation of a stock
relative to its true economic value (a narrowing of the price-value gap); (3)
availability of alternative investments with greater ratios of reward to risk;
and (4) perceived deterioration of the issuer's operations which may adversely
affect the underlying value of the security. Turnover will be influenced by
sound investment practices related to the Fund's objectives, and the need for
funds in the event of redemptions of the Funds shares.

Investments for the Fund will be made by the Adviser on a stock by stock basis
without regard to market timing. The Fund will normally invest at least 65% of
total assets in a diversified portfolio of equity securities, including common
stocks, rights, and warrants to subscribe for or purchase common stocks. The
Fund may purchase listed and unlisted common and preferred stocks, securities of
companies in bankruptcy, fixed income securities which are convertible into
equity securities, as well as write covered call options on such equity
securities. In addition, the Fund may invest in "risk arbitrage positions,"
which include securities that may become exchangeable for cash or other
securities as a result of the issuer being an announced candidate for a merger,
acquisition, restructuring or similar transaction, or securities the issuer of
which has been the subject of a filing on Schedule 13D under the Securities
Exchange Act of 1934. Dividends and interest are not prime considerations in the
purchase of securities but are considered in relation to the total expected
return of the investment. Because the Fund will invest primarily in equity
securities, it will be subject to general conditions prevailing in securities
markets and the net asset value of the Fund's shares will fluctuate with changes
in the

6
<PAGE>

market prices of its portfolio securities. Cash reserves may be invested in
short-term fixed income instruments including money market funds, certificates
of deposit and commercial paper.

RISKS OF INVESTING IN THE FUND

General

The Fund's NAV will fluctuate, reflecting fluctuations in the market value of
its portfolio positions and its net currency exposure. The value of the
securities held by the Fund generally fluctuates, based on, among other things,
(i) interest rate movements, (ii) changes in the actual and perceived
creditworthiness of the issuers of such securities, (iii) social, economic or
political factors, (iv) factors affecting the industry in which the issuer
operates, such as competition or technological advances, and (v) factors
affecting the issuer directly, such as management changes or labor relations.
The objectives and policies of the Fund can be expected to affect the return of
the Fund and the degree of market and financial risk to which the Fund is
subject. There is no assurance that the Fund will achieve its investment
objectives.

Covered Call Options

To assist in the management of its portfolio and to enhance the Fund's
performance, the Fund may engage in the writing (selling) of call option
contracts on securities at such times as may be appropriate. However, options
shall be written solely as "covered" call options, that is, options on
securities that the Fund owns. The Fund will write covered call options on
securities held in the portfolio at the exercise price which would approximate
the price at which the Fund would desire to sell the security. The Fund will not
write covered call options on portfolio securities having an aggregate value in
excess of 20% of the Fund's net assets. A call option gives the purchaser of the
option the right to buy a security from a writer at the exercise price at any
time prior to the expiration of the contract, regardless of the market price of
the security during the option period. The premium paid to the writer is the
consideration for undertaking the obligations under the option contract. The
writer forgoes the opportunity to profit from an increase in the market price of
the underlying security above the exercise price except insofar as the premium
represents a profit.

The Fund will purchase options only to close out a call option position. In
order to close out a position, the Fund will make a "closing purchase
transaction" - the purchase of a call option on the same security with the same
exercise price and expiration date as a call option which it has previously
written. When a security is sold from the Fund's portfolio, the Fund will effect
a closing purchase transaction so as to close out any existing call option on
that security. The Fund will realize a profit or loss from a closing purchase
transaction if the amount paid to purchase a call option is less or more than
the amount received from the sale thereof. There can be no assurance that the
Fund will be able to effect closing purchase transactions at a time when it
desires to do so. To facilitate closing purchase transactions, however, the Fund
will write options only if a secondary market for the options exists on a
national securities exchange.

Securities for the Fund's portfolio will at all times be bought and sold solely
on the basis of investment considerations and appropriateness to the fulfillment
of the Fund's objective.

7
<PAGE>

Risks Associated with Value Investing

The Fund invests in securities that it has determined are undervalued by the
overall market. The risk associated with this method of investing is that the
market will fail to recognize an undervalued security's intrinsic value for an
unexpected length of time or that the Fund's determinations regarding such
security's intrinsic value is found to be incorrect due to unforeseen problems.
Upon the occurrence of such events, the Fund would sustain a loss.

Corporate Reorganizations

The Fund may invest in securities for which a tender or exchange offer has been
made or announced and in securities of companies for which a merger,
consolidation, liquidation or similar reorganization proposal has been announced
if, in the judgement of the Adviser, there is a reasonable prospect of capital
appreciation significantly greater than the added portfolio turnover expenses
inherent in the short term nature of such transactions. The principal risk is
that such offers or proposals may not be consummated within the time and under
the terms contemplated at the time of the investment, in which case, unless such
offers or proposals are replaced by equivalent or increased offers or proposals
which are consummated, the Fund may sustain a loss.

Year 2000

MANAGEMENT OF THE FUND

Investment Adviser

The Fund's investment adviser is David J. Greene & Company, LLC, whose principal
address is 599 Lexington Avenue, New York, New York 10022 (the "Adviser"). The
Adviser manages the Fund's business and investment activities, subject to the
authority of the Company's Board of Directors. The Adviser is an investment
adviser and broker-dealer registered with the SEC and the National Association
of Securities Dealers, Inc. As of December 31, 1998, the Adviser had investment
management authority with respect to approximately $1.7 billion of assets for
pension, profit sharing, endowment and individual accounts. The Adviser consists
of 15 principals and a staff of 22 professional and support persons, all of whom
devote their full time to the business. The Adviser specializes in equity
management with a value style orientation.

Erwin A. Zeuschner is primarily responsible for the daily management of the
Fund. Mr. Zeuschner is principal and Senior Vice President of the Adviser and
has been associated with the Adviser for 19 years as a senior portfolio manager
and head of Investment Management.

8
<PAGE>

Mr. Zeuschner will undertake his responsibilities under guidelines
established by the Adviser's Investment Committee.

The advisory fee paid by the Fund, as a percentage of average net assets, for
the period April 1, 1998 to December 31, 1998 was .80%, which was waived by the
Adviser.

The following chart shows the Company's other service providers and includes
their addresses and principal activities.

9
<PAGE>

OFFITBANK VIF-DJG VALUE EQUITY FUND

------------------------------------
SHAREHOLDERS
------------------------------------
|
Distribution and |
Shareholder ------------------------------
Services | | |
| | |
------------------------------------ | -----------------------------------
PRINCIPAL DISTRIBUTOR | TRANSFER AGENT
|
OFFIT FUNDS DISTRIBUTOR, INC. | PFPC INC.
|
FOUR FALLS CORPORATE CENTER, 6TH FL. | 400 BELLEVUE PARKWAY
|
WEST CONSHOHOCKEN, PA 19428-2961 | WILMINGTON, DE 19809
-----|------
|
Distributes the Fund's shares. | Handles shareholder services,
| including recordkeeping and
| statements, distribution of
| dividends and processing
| of buy and sell requests.
------------------------------------ | -----------------------------------
|
Asset |
Management |
|
------------------------------------ | -----------------------------------
INVESTMENT ADVISER | CUSTODIAN
|
DAVID J. GREENE & COMPANY, LLC | THE BANK OF NEW YORK
|
599 LEXINGTON AVENUE | ("BONY")
|
NEW YORK, NY 10022 | 90 WASHINGTON STREET
| NEW YORK, NY 10286
-----|
|
Manages the Fund's business |
and investment activities. | Serves as custodian of the
| assets of the Fund. The custodian
------------------------------------| settles all portfolio
| trades and collects most
| of the valuation data
| required for calculating
| the Fund's net asset
| value ("NAV").
| -----------------------------------
| |
Fund | |
Operations | |
| |
------------------------------------ | |
ADMINISTRATOR AND | |
FUND ACCOUNTING AGENT | |
| |
PFPC INC. | |
| |
400 BELLEVUE PARKWAY | |
-----|-----------------------
WILMINGTON, DE 19809 |
|
Provides facilities, equipment |
and personnel to carry out |
administrative services related |
to the Fund and calculates the |
Fund's NAV, dividends and |
distributions. |
------------------------------------ |
|
------------------------------------
BOARD OF DIRECTORS
Supervises the Fund's activities
------------------------------------

<PAGE>

SHAREHOLDER INFORMATION

Pricing of Fund Shares

Shares of the Fund are priced at their net asset value ("NAV"). The NAV of the
Fund is calculated as follows:

Value of Assets
NAV = - Value of Liabilities
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Number of Outstanding Shares

11
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Purchase of Fund Shares

Individuals may not place orders directly with the Fund. Please refer to the
appropriate Account Prospectus of the Participating Company for more information
on the purchase of Fund shares.

Redemption of Fund Shares

Shareholder Services

A Contract or Policy Owner investing through an Account may exchange shares of
the Fund for shares of any of the other investment portfolios of the Company on
the basis of their respective NAV.

Dividends and Distributions

The Fund will declare and distribute dividends of substantially all of its net
investment income as well as its net capital gains, if any, at least annually.
The Fund will inform shareholders of the amount and nature of all such income or
gains.