OFFITBANK VARIABLE INSURANCE FUND INC, 485BPOS, 1999-04-30

OFFITBANK VARIABLE INSURANCE FUND INC
485BPOS, 1999-04-30

Previous: CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT, 485BPOS, 1999-04-30

Next: BUILDING MATERIALS CORP OF AMERICA, S-4/A, 1999-04-30

Registration Nos. 33-81748
811-8640

As filed via EDGAR with the Securities and Exchange Commission on April 30, 1999

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

----------

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No.
Post-Effective Amendment No. 14

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 15

(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:

|X| immediately upon filing pursuant to paragraph (b)
|_| on (date) pursuant to paragraph (b)
|_| on (date) pursuant to paragraph (a)(i)
|_| 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

<PAGE>

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 nine 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 30, 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.

<PAGE>

TABLE OF CONTENTS

FUND DESCRIPTION

A look at goals, strategies,
risks and financial history Investment Objective 3
Principal Investment Strategies 3
Principal Risk Factors 3
Prior Performance 4
Financial Highlights 5
Investment Objective and Principal
Strategies 6
Additional Strategies 7
Risks of Investing in the Fund 8

MANAGEMENT OF THE FUND

Details on the management
and operations of the Fund Investment Adviser 18
Service Provider Chart 20

SHAREHOLDER INFORMATION

Policies and instructions for
opening, maintaining and Pricing of Fund Shares 21
closing an account in the Purchase of Fund Shares 22
Fund Redemption of Fund Shares 22
Shareholder Services 22
Dividends and Distributions 22
Taxes 23
Shareholder Communications 23
Performance Information 24

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

FOR MORE INFORMATION see back cover

<PAGE>

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 rated below investment grade, offering potential returns
that are sufficiently high to justify the greater investment risks. Securities
offering the high yield that the Fund seeks are generally found in mature
cyclical or depressed industries and highly leveraged companies. The Fund also
invests in senior securities and securities with an operating history of more
than one year (though the Fund may invest in securities with a shorter operating
history). The Fund may invest in debt securities of any maturity and the
interest rates on such securities may be fixed or floating.

PRINCIPAL RISK FACTORS

o Investors may lose money.

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

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 than are higher rated
securities 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 is subject to interest rate risk. Rising interest rates cause the
prices of debt securities to decrease and falling rates cause the prices
of debt securities to increase. Securities with longer maturities can be
more sensitive to interest rate changes. In effect, the longer the
maturity of a security, the greater the impact a change in interest rates
could have on the security's price.

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.

For more detail on the principal risks summarized here, please see "Risks of
Investing in the Fund" herein.

<PAGE>

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
<PAGE>

future. The returns shown do not reflect separate account charges for the
Accounts and if those had been included, performance would have been lower.

[GRAPHIC OMITTED]

[The following table was depicted as a bar graph in the printed material.]

Performance Years

1997 1998

Annual Total Return 11.93% 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% 9.36%

* Commenced operations on April 1, 1996.

<PAGE>

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 Company's Annual Report dated
December 31, 1998, which is available without charge upon request. The financial
statements for the Fund for periods prior to December 31, 1998 were audited by
PricewaterhouseCoopers LLP, whose report expressed an unqualified opinion on
those statements.

<PAGE>

<TABLE>
<CAPTION>
FOR THE NINE FOR THE FOR THE PERIOD
MONTHS ENDED YEAR ENDED APRIL 1, 1996* THROUGH
DECEMBER 31, 1998 MARCH 31, 1998 MARCH 31, 1997
- ----------------------------------------------------------------------------------- -----------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.00 $ 10.37 $ 10.00(d)
---------- ---------- ----------
Net investment income 0.65 0.86 0.78
Net realized and unrealized gains (loss) (0.53) 0.63 0.37
---------- ---------- ----------
Total income from investment operations 0.12 1.49 1.15
---------- ---------- ----------

LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.65) (0.86) (0.78)
Excess of net investment income (0.02)
Net realized gains (0.05) 0.00 --
---------- ---------- ----------
Total dividends and distributions (0.72) (0.86) (0.78)
---------- ---------- ----------

Net change in net asset value per share (0.60) 0.63 0.37
---------- ---------- ----------

NET ASSET VALUE, END OF PERIOD $ 10.40 $ 11.00 $ 10.37
========== ========== ==========

TOTAL RETURN (A) 1.15% (b) 14.84% 11.90% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 44,354 $ 31,675 $ 25,114
Ratios to average net assets:
Expenses** 1.15% (c) 1.15% 1.15% (c)
Net investment income 8.25% (c) 7.98% 7.45% (c)

PORTFOLIO TURNOVER RATE 14% (b) 32% 4% (b)
</TABLE>

* Commencement of operations.

** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratio would have been higher.

(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.

(b) Not annualized.

(d) Initial offering price.

<PAGE>

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

The Fund's primary investment objective is high current income. 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 or predecessors have been
operating in their current form generally for more than one year, though the
Fund may invest in securities of issuers having less than one year of operation.
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 maturity
and duration and the interest rates on such securities may be fixed or floating.

<PAGE>

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.
See "Risks of Investing in the Fund-High Yield, High Risk Debt Securities."

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. The Adviser's choice to employ a temporary
defensive investment strategy may prevent the Fund from achieving its investment
objective.

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.

ADDITIONAL STRATEGIES

The Fund's secondary objective is capital appreciation. The Fund seeks to
achieve its objective by investing under normal circumstances, in fixed income
securities that are judged by the Adviser to be more creditworthy than generally
perceived in the marketplace or issued by once creditworthy companies that are
now considered a high risk investment generally due to changing industry
conditions, a change in company capitalization or a reduction of earning power.
In addition, the Fund seeks capital appreciation opportunities in those special
situations in which an issuer's senior securities sell at a substantial discount
in relation to their liquidation value, or in which the creditworthiness of an
issuer is believed, in the judgement of the Adviser, to be improving.

The adviser also attempts to identify securities in which the asset values
ultimately supporting the credit are sufficient so that attractive returns are
achievable in the event of bankruptcy, reorganization or liquidation of the
issuer. Some of the Fund's securities may be obtained as a result of the
issuer's reorganization or may be non-performing, in default or arrears. The
Adviser will obtain such securities in cases where it believes that capital
appreciation may be possible.

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

<PAGE>

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.

RISKS OF INVESTING IN THE FUND

GENERAL

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
<PAGE>

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.

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, 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.

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.

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.
<PAGE>

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.

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.

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.
<PAGE>

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.

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.

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
<PAGE>

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, 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

<PAGE>

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.

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.

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.

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.

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.

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.
<PAGE>

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.

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.

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.

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

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.

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.

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.

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 current economic conditions, 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
<PAGE>

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.

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.

In addition, problems processing year 2000 data could also have adverse effects
on the computer systems of the issuers or entities that comprise the Fund's
portfolio securities. If such issuers or entities are unable to properly address
the year 2000 problem, then it could have an adverse effect on the operations of
such issuers, which, in turn, could result in a drop in market value for the
securities and a loss for the Fund. This problem may exist to a greater degree
with respect to investments by the Fund in the securities of non-U.S. issuers.
Generally, non-U.S. issuers have not devoted the resources necessary to properly
address the year 2000 problem. Therefore, the problems noted above for domestic
issuers of securities held by the Fund is likely to be exacerbated for the
securities of non-U.S. issuers.

MANAGEMENT OF THE FUND

INVESTMENT ADVISER
<PAGE>

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 $10.8 billion in assets and
serves as investment adviser to twenty 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. Mr. Shapiro has managed the Fund since its inception on April 1, 1996.

The advisory fee paid by the Fund, as a percentage of average net assets, for
the period April 1, 1998 to December 31, 1998, after waivers and reimbursements,
was .66%.

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

<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
--------------------------------

<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) Friday, December 31, 1999
Martin Luther King, Jr. Day Monday, January 17, 2000
Presidents' Day Monday, February 15, 2000

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.
<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
<PAGE>

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.

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.
<PAGE>

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 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.
<PAGE>

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.

<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
<PAGE>

commercial paper:

"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

<PAGE>

to investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.

"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.

<PAGE>

"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" - 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.

<PAGE>

"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 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
<PAGE>

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 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

<PAGE>

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 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.

<PAGE>

"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.

"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.

<PAGE>

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"). The Fund may be unable or limited in its ability to
engage in Hedging and Other Strategic Transactions by certain factors, including
current economic conditions.

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
<PAGE>

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 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"
<PAGE>

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, 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.
<PAGE>

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

The Fund may trade financial futures contracts or purchase or sell put and
call options on those contracts as a hedge against anticipated interest rate,
currency or market changes, for duration management and for permissible
non-hedging purposes. Futures contracts are generally bought and sold on the
commodities exchanges on which they are listed with payment of initial and
variation margin as described below. The sale of a futures contract creates a
firm obligation by the Fund, as seller, to deliver to the buyer the specific
type of financial instrument called for 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.

<PAGE>

The segregation requirements with respect to futures contracts and options
thereon are described below under "Use of Segregated and Other Special
Accounts."
<PAGE>

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. 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

<PAGE>

(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 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
<PAGE>

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.

Provided the contract so permits, the Fund will usually enter into
interest rate swaps on a net basis, that is, the two payments streams are netted
out in a cash settlement on the payment date or dates specified in the
instrument, with the Fund receiving or paying, as the case may be, only the net
amount of the two payments. Inasmuch as these swaps, caps, floors, collars and
other similar derivatives are entered into for good faith hedging or other
non-speculative 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
<PAGE>

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 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

<PAGE>

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

When conducted outside the United States, Hedging and Other Strategic
Transactions may not be regulated as rigorously as in the United States, may not
involve a clearing mechanism and related guarantees, and will be subject to the
risk of governmental actions 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.
<PAGE>

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 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.

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.

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFICERS AND DIRECTORS INVESTMENT ADVISERS
Morris W. Offit OFFITBANK
Chairman of the Board, President and 520 Madison Avenue
Director New York, NY 10022-4213

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)
- --------------------------------------------------------------------------------

<PAGE>

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

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFITBANK VIF - EMERGING MARKETS FUND

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

PROSPECTUS

APRIL 30, 1999

<PAGE>

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 6
Investment Objective and Principal
Strategies 7
Additional Strategies 9
Risks of Investing in the Fund 10

Details on the management MANAGEMENT OF THE FUND
and operations of the Fund Investment Adviser 20
Service Provider Chart 22

Policies and instructions SHAREHOLDER INFORMATION
for opening, maintaining and Pricing of Fund Shares 23
closing an account in the Purchase of Fund Shares 24
Fund Redemption of Fund Shares 24
Dividends and Distributions 24
Taxes 25
Shareholder Communications 25
Performance Information 26

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

FOR MORE INFORMATION see back cover

<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. securities. An emerging market country is a country that is
considered to be an emerging or developing country by 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). The Fund attempts
to benefit from investment opportunities deriving from long-term improvement in
economic and political conditions, and other positive developments and trends in
emerging markets countries. In addition, the Fund may invest in Brady Bonds,
zero coupon securities, Pay-in-kind bonds and discount obligations. The Fund may
invest in debt securities of any maturity and the interest rates on such
securities may be fixed or floating.

PRINCIPAL RISK FACTORS

O Investors may lose money.

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 exchange 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 is subject to interest rate risk. Rising interest rates cause the
prices of debt securities to decrease and falling rates cause the
<PAGE>

prices of debt securities to increase. Securities with longer maturities
can be more sensitive to interest rate changes. In effect, the longer the
maturity of a security, the greater the impact a change in interest rates
could have on the security's price.

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.

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

For more detail on the principal risks summarized here, please see "Risks of
Investing in the Fund" below.herein.

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. The
returns shown do not reflect separate charges for the Accounts and if those had
been included, performance would have been lower. Past performance is not
necessarily an indicator of how the Fund will perform in the future.

[GRAPHIC OMITTED]

[The following table was depicted as a bar graph in the printed material.]

Performance Year

1997 1998

Annual Total Return 8.14% (16.24%)
<PAGE>

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).

<PAGE>

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 Fund Objective") and a
composite index of 50% J. P. Morgan Emerging Markets Bond Index + 50% J. P.
Morgan Latin America Eurobond Index (the "Composite 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%) 2.88%
Composite Index (8.51%) 5.37%

* Commenced operations on August 28, 1996.

** On March 18, 1999, the Board of Directors of the Company ratified a change
of the Fund's benchmark from the Composite Index to the Lipper Emerging
Market Index since the Lipper Emerging Market Index more closely resembles
the Fund's portfolio composition and investment style.

<PAGE>

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'sCompany's Annual Report
dated December 31, 1998, which is available without charge upon request. The
financial statements for the Fund for periods prior to December 31, 1998 were
audited by PricewaterhouseCoopers LLP, whose report expressed an unqualified
opinion on those statements.

<PAGE>

<TABLE>
<CAPTION>
FOR THE
FOR THE NINE PERIOD AUGUST
MONTHS ENDED FOR THE YEAR 28, 1996*
DECEMBER 31, ENDED THROUGH
1998 MARCH 31, 1998 MARCH 31, 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.55 $ 10.30 $ 10.00(d)
--------- --------- ---------
Net investment income 0.66 0.86 0.48
Net realized and unrealized gains (loss) (2.79) 0.27 0.34
--------- --------- ---------
Total income (loss) from investment operations (2.13) 1.13 0.82
--------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.66) (0.86) (0.48)
Excess of net investment income (0.07) (0.02) --
Net realized gains (0.09) -- (0.04)
--------- --------- ---------
Total dividends and distributions (0.82) (0.88) (0.52)
--------- --------- ---------
Net change in net asset value per share (2.95) 0.25 0.30
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 7.60 $ 10.55 $ 10.30
========= ========= =========
TOTAL RETURN (A) (20.36%)(b) 11.26% 8.29%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 5,575 $ 5,780 $ 4,346
Ratios to average net assets:
Expenses ** 1.50%(c) 1.50% 1.50%(c)
Net investment income 10.38%(c) 8.27% 8.04%(c)
Portfolio turnover rate 100%(b) 53% 96%(b)
</TABLE>

* Commencement of operations.

** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratio would have been higher.

(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.

(b) Not annualized.

(d) Initial offering price.

<PAGE>

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

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 or other currencies
(including currencies of emerging market countries which may be indexed to
<PAGE>

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 in "Brady Bonds," which are debt securities issued or guaranteed by
foreign governments in exchange for existing external commercial bank
indebtedness under a plan announced by former U.S. Treasury Secretary Nicholas
F. Brady in 1989. To date, Brady Bonds have been issued by the governments of
fifteen countries, the largest proportion having been issued by Argentina,
Brazil, Mexico and Venezuela. Brady Bonds have been issued only recently, and
accordingly, they do not have a long payment history. Brady Bonds may be
collateralized or uncollateralized, are issued in various currencies (primarily
the U.S. dollar) and are actively traded in the over-the-counter secondary
market.

The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least six months of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at that time and is adjusted at regular
intervals thereafter. Brady Bonds which have been issued to date are rated BB or
B by S&P or Ba or B by Moody's or, in cases in which a rating by S&P or Moody's
has not been assigned, are generally considered by the Adviser to be of
comparable quality.

The Fund may invest in zero coupon securities and debt securities acquired at a
discount. A substantial portion of the Fund's sovereign debt securities may be
acquired at a discount. These investments involve special risk considerations.
Zero coupon securities are debt securities that pay no cash income but are sold
at substantial discounts from their value at maturity. The entire return of a
zero coupon security consists of the amortization of discount. The Fund also may
purchase pay-in-kind bonds. Pay-in-kind bonds pay all or a portion of their
interest in the form of debt or equity securities. The Fund may receive payments
from pay-in-kind bonds in the form of

<PAGE>

debt or equity securities. The Fund may receive payments from pay-in-kind bonds
in the form of both debt and equity securities provided that such equity
securities do not cause the Fund to exceed its respective investment limitation
in equity securities. Zero coupon securities and pay-in-kind bonds may be issued
by a wide variety of corporate and governmental issuers.

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. dollars. The Adviser's choice to employ a temporary
defensive investment strategy may prevent the Fund from achieving its investment
objective.

ADDITIONAL STRATEGIES

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 derived from the Fund's activities
in emerging market debt markets. The equity securities purchased by the Fund may
include American Depositary Receipts, European Depositary Receipts and interests
in investment companies.

<PAGE>

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 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

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.

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
<PAGE>

significantly greater than with investment grade securities because such
securities generally are unsecured and frequently are subordinated to the prior
payment of senior indebtedness.

affect the ability of a sovereign obligor to obtain sufficient foreign exchange
to service its external debt.

SECURITIES OF NON-U.S. ISSUERS

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.

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.

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.

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.

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
<PAGE>

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.

HEDGING AND OTHER STRATEGIC TRANSACTIONS

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.

CONCENTRATION
<PAGE>

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.

NON-DIVERSIFIED FUNDS

YEAR 2000

MANAGEMENT OF THE FUND
<PAGE>

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, after waivers and reimbursements,
was .19%.

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

<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 | Serves as custodian of the assets
investment activities. | 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
--------------------
Number of Outstanding Shares

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
<PAGE>

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.

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

PERFORMANCE INFORMATION

<PAGE>

APPENDIX A

COMMERCIAL PAPER RATINGS

commercial paper:

"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 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-3" - Debt possesses satisfactory liquidity and other protection factors
qualify issues as
<PAGE>

to investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.

"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.
<PAGE>

"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.

"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.
<PAGE>

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

construction or elimination of basis of condition.

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:

events.

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.
<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.

<PAGE>

APPENDIX B

HEDGING AND OTHER STRATEGIC TRANSACTIONS

GENERAL CHARACTERISTICS OF OPTIONS

Over-the-counter ("OTC") options are purchased from or sold to securities
dealers, financial institutions or other parties (collectively referred to as
"Counterparties"
<PAGE>

GENERAL CHARACTERISTICS OF FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

The segregation requirements with respect to futures contracts and options
thereon are described below under "Use of Segregated and Other Special
Accounts."

<PAGE>

OPTIONS ON SECURITIES INDICES AND OTHER FINANCIAL INDICES

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.

COMBINED TRANSACTIONS

SWAPS, CAPS, FLOORS AND COLLARS

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
<PAGE>

EURODOLLAR INSTRUMENTS

RISK FACTORS

Currency hedging involves some of the same risks and considerations as
other
<PAGE>

RISKS OF HEDGING AND OTHER STRATEGIC TRANSACTIONS OUTSIDE THE UNITED STATES

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFICERS AND DIRECTORS INVESTMENT ADVISERS
Morris W. Offit OFFITBANK
Chairman of the Board, President and 520 Madison Avenue
Director New York, NY 10022-4213

Edward J. Landau David J. Greene & Company, LLC
Director 599 Lexington Avenue
New York, NY 10022
The Very Reverend James Parks Morton (OFFITBANK VIF-DJG Value Equity Fund)
Director
SUB-ADVISER
Dr. Wallace Mathai-Davis Rockefeller & Co., Inc.
Secretary and Treasurer 30 Rockefeller Plaza
New York, NY 10112
Gary M. Gardner (OFFITBANK VIF-U.S. Small Cap Fund)
Assistant Secretary
DISTRIBUTOR
David C. Lebisky OFFIT Funds Distributor, Inc.
Assistant Secretary Four Falls Corporate Center, 6th Floor
West Conshohocken, PA 19428-2961
Stephen Brent Wells
Assistant Treasurer CUSTODIANS
The Chase Manhattan Bank
David D. Marky 4 MetroTech Center, 18th Floor
Assistant Treasurer Brooklyn, NY 11245
(OFFITBANK VIF-Emerging Markets Fund)
Vincent M. Rella
Assistant Treasurer The Bank of New York
90 Washington Street
Stephen M. Wynne New York, NY 10286
Assistant Treasurer (all other OFFITBANK VIF Funds)

INVESTMENT ADVISER 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)
- --------------------------------------------------------------------------------
<PAGE>

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 30, 1999

<PAGE>

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

Investment Objective and Principal
Strategies 6

Risks of Investing in the Fund 7

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

<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 Investors may lose money.

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.

For more detail on the principal risks summarized here, please see "Risks of
Investing in the Fund" herein.

PRIOR PERFORMANCE

ANNUAL TOTAL RETURN

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

shown does not reflect separate account charges for the Accounts and
if those had been included, performance would have been lower.

<PAGE>

[The following table was depicted as a bar chart in the printed material.]

Annual Total Return

1998
----
-4.31%

Performance Year

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).

<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% 34.04%

* Commenced operations on April 11, 1997.

<PAGE>

FINANCIAL HIGHLIGHTS

<PAGE>

FOR THE NINE FOR THE PERIOD
MONTHS ENDED APRIL 11, 1997* THROUGH
DECEMBER 31, 1998 MARCH 31, 1998
- --------------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE:

NET ASSET VALUE, BEGINNING
OF PERIOD $ 14.94 $ 10.00(d)
------- -------

Net investment income 0.05 0.02
Net realized and unrealized
gains (loss) (2.16) 4.92
------- -------
Total income from investment
operations (2.11) 4.94
------- -------

Less dividends and distributions
from:
Net investment income (0.03) --
Net realized gains (0.89) --
------- -------
Total dividends and distributions (0.92) --
------- -------

Net change in net asset value
per share (3.03) 4.94
------- -------

NET ASSET VALUE, END OF PERIOD $ 11.91 $ 14.94
======= =======

TOTAL RETURN (A) (14.75%)(b) 49.40%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period
(in thousands) $ 2,164 $ 2,018
Ratios to average net assets:
Expenses** 1.25%(c) 125%(c)
Net investment income 0.29%(c) 0.16%(c)
PORTFOLIO TURNOVER RATE 21%(b) 33%(b)

* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratio would have been higher.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) Initial offering price.

<PAGE>

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

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 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.

<PAGE>

RISKS OF INVESTING IN THE FUND

GENERAL

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.

<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

<PAGE>

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.

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.

<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
|
OFFITBANK | 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
--------------------------------
Number of Outstanding Shares

New Year's Day (observed) Friday, December 31, 1999
Martin Luther King, Jr. Day Monday, January 17, 2000
Presidents' Day Monday, February 15, 2000

<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 and distribute dividends of substantially all of its net
investment income as

<PAGE>

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.

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

<PAGE>

PERFORMANCE INFORMATION

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFICERS AND DIRECTORS INVESTMENT ADVISERS
Morris W. Offit OFFITBANK
Chairman of the Board, President 520 Madison Avenue
and Director New York, NY 10022-4213

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:

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

- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------

<PAGE>

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

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFITBANK VIF - U.S. SMALL CAP FUND

PROSPECTUS

APRIL 30, 1999

<PAGE>

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

Investment Objective and Principal
Strategies 6

Risks of Investing in the Fund 8

Details on the management MANAGEMENT OF THE FUND
and operations of the Fund. Investment Adviser 15

Service Provider Chart 17

Policies and instructions for SHAREHOLDER INFORMATION
opening, maintaining and Pricing of Fund Shares 18
closing an account in the Purchase of Fund Shares 19
Fund. Redemption of Fund Shares 19
Shareholder Services 19
Dividends and Distributions 19
Taxes 20
Shareholder Communications 20
Performance Information 21

Appendix A: Hedging and Other Strategic
Transactions A-1

FOR MORE INFORMATION see back cover

<PAGE>

OFFITBANK VIF - U.S. SMALL CAP FUND

INVESTMENT OBJECTIVE

The Fund's investment objective is to achieve capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

The Fund will seek to achieve its objective by investing primarily in a
diversified portfolio of securities of smaller companies located in the United
States. At least 65% of the Fund's portfolio will consist of securities of
smaller companies with a market value of $1 billion or less at the time of
purchase, although the Fund may also invest in any company, entity or vehicle
that conforms to its investment objective, including investments such as
warrants and convertible debt securities. Up to 10% of the Fund's portfolio may
be in companies located outside the United States. The Fund intends to invest
primarily in publicly-held companies.

PRINCIPAL RISK FACTORS

o Investors may lose money.

o The Fund will invest in smaller issuers which are more volatile than
investments in issuers with a market value greater than $1 billion. Small
capitalization issuers are not as diversified in their business activities
as issuers with market values greater than $1 billion and are more
susceptible to changes in the business cycle.

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

For more detail on the principal risks summarized here, please see "Risks of
Investing in the Fund" herein.

PRIOR PERFORMANCE

ANNUAL TOTAL RETURN

shown does not reflect separate charges for the Accounts and if
those had been included, performance would have been lower.

<PAGE>

[The following table was depicted as a bar chart in the printed material.]

Annual Total Return

1998
----
-1.83%

Performance Year

Since inception (April 11, 1997), the highest calendar quarter total return for
the Fund was 18.85% (quarter ended September 30, 1997) and the lowest calendar
quarter total return was (21.68%) (quarter ended September 30, 1998).

<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 Russell 2000 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* (1.83%) 13.56%

Russell 2000 Index (2.55%) 13.81%

* Commenced operations on April 11, 1997.

<PAGE>

FINANCIAL HIGHLIGHTS

<PAGE>

NET ASSET VALUE, BEGINNING
OF PERIOD $ 14.14 $ 10.00(d)
-------- --------

Net investment (loss) (0.08) (0.08)
Net realized and unrealized
gains (loss) (1.50) 4.22
-------- --------
Total income (loss) from
investment operations (1.58) 4.14
-------- --------

Less dividends and distributions
from:
Net investment income -- --
Net realized gains (1.22) --
-------- --------
Total dividends and distributions (1.22) --
-------- --------

Net change in net asset
value per share (2.80) 4.14
-------- --------

NET ASSET VALUE, END OF PERIOD $ 11.34 $ 14.14
======== ========

TOTAL RETURN (A) (11.95%)(b) 41.40%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period
(in thousands) $ 1,218 $ 1,394
Ratios to average net assets:
Expenses** 1.50%(c) 1.50%(c)
Net investment income (.92%)(c) (.74%)(c)

PORTFOLIO TURNOVER RATE 39%(b) 51%(b)

<PAGE>

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

The investment objective of the Fund is to achieve capital appreciation. The
Fund will seek to achieve its objective by investing primarily in a diversified
portfolio of securities of smaller publicly-held companies located in the United
States. At least 65% of the Fund's portfolio will consists of securities of
smaller companies with a market value of $1 billion or less at the time of
purchase, although the Fund may also invest in any company, entity or vehicle
that conforms to its investment objective, including investments such as
convertible debt securities and warrants. Up to 10% of the Fund's portfolio may
be in companies located outside the United States. In analyzing convertible debt
securities, management will consider both the yield on the convertible security
and the potential capital appreciation that is offered by the underlying common
stock. 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 policy, the Company would not materially change the
investment objective of the Fund without notifying shareholders.

The Fund will invest primarily in publicly-held companies which are expected to
meet most of the following criteria: the company should have a market position
in a fast growing segment of the economy, good management, preferably a leading
position in its business, superior financial returns (i.e., primarily return on
assets and invested capital) with ability to self-finance, and a reasonable
market valuation. While the Fund will not generally invest in start-ups, it may
invest in stock of companies' initial public securities offerings and companies
having only a few years' operating history.

In addition to investments expected to meet the preceding criteria, the Fund may
also invest in companies which have undervalued assets and in special
situations. Special situations might include private placements, fixed-income
securities, cyclically depressed companies or take-over candidates.

The Fund will have a diversified portfolio. It will not ordinarily acquire more
than 5% of its assets in the equity securities of any single issuer, although
the holding of higher equity percentages will be considered under some
circumstances. In furthering its objective, the Fund may also engage in indirect
investments as discussed below, including investments in mutual funds, funds
directed by other investment advisers or other pooled vehicles, (although
management does not currently intend to invest in mutual funds). Such
investments will not exceed 10% of the portfolio. In the case of mutual funds,
funds directed by other investment advisers or other pooled vehicles, such
investments may be subject to management fees including performance fees which
will be reflected in the net asset value of such securities. The Fund's
management may alter the proportion of the portfolio invested for defensive
purposes in order to respond to market conditions.

Trading policy (as opposed to investment policy) is determined by market
conditions and is not constrained by tax considerations.

The convertible securities that may be held by the Fund include any corporate
debt security or

<PAGE>

preferred stock that may be converted into underlying shares of common stock and
include both traditional convertible securities and synthetic convertible
securities. The common stock underlying convertible securities may be issued by
a different entity than the issuer of the convertible securities. Convertible
securities entitle the holder to receive interest payments paid on corporate
debt securities or the dividend preference on a preferred stock until such time
as the convertible security matures or is redeemed or until the holder elects to
exercise the conversion privilege.

The Fund believes that the characteristics of convertible securities make them
appropriate investments for an investment company seeking capital appreciation.
These characteristics include the potential for capital appreciation as the
value of the underlying common stock increases and decreased risks of decline in
value relative to the underlying common stock due to their fixed income nature.

Under normal circumstances, the Fund may invest up to 10% of its assets in
other types of securities including equity securities and nonconvertible debt
securities of U.S. and non-U.S. issuers.

<PAGE>

RISKS OF INVESTING IN THE FUND

GENERAL

There can be no assurance that the investment methodology employed will satisfy
the Fund's objective of capital appreciation. The Fund believes that investments
that meet its objective potentially offer above average return, but they are
higher risk investments and are expected to fluctuate more widely in price than
the general market. An investor should be aware that investment in small
capitalization issuers may be more volatile than investments in issuers with
market capitalizations greater than $1 billion due to the lack of
diversification in the business activities, limited product lines, markets or
financial resources, and correspondingly greater susceptibility to changes in
the business cycle of small capitalization issuers. Smaller capitalization
stocks as a group may not respond to general market rallies or downturns as much
as other types of equity securities. This investment policy involves the risks
that the changes or trends identified by management will not occur or will not
be as significant as projected and that, even if the changes or trends develop,
the particular issues held by the Fund will not benefit as anticipated from such
changes or trends.

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 management changes or labor
relations. The objective 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
objective.

SECURITIES OF SMALL COMPANIES

Investments in common stocks in general are subject to market, economic and
business risks that will cause their price to fluctuate over time. While
securities of small market value companies may offer greater opportunity for
capital appreciation than the securities of larger companies, investment in
smaller companies presents greater risks than investment in larger, more
established companies. Historically, small market value stocks have been more
volatile in price than larger market value stocks. Among the reasons for the
greater price volatility of small market value stocks are the lower degree of
liquidity in the markets for such stocks, and the potentially greater
sensitivity of such small companies to changes in or failure of management and
changes in competitive, business, industry and economic conditions. Besides
exhibiting greater volatility, small company stocks may, to a degree, fluctuate
independently of larger company stocks. Small company stocks may decline in
price as large company stocks rise, or rise in price as large company stocks
decline. Investors should therefore expect that the price of the Fund's shares
will be more volatile than the shares of a fund that invests in larger
capitalization stocks. Additionally, while the markets in securities of small
companies have

<PAGE>

grown rapidly in recent years, such securities may trade less frequently and in
smaller volume than more widely held securities. The values of these securities
may fluctuate more sharply than those of other securities, and the Fund may
experience some difficulty in establishing or closing out positions in these
securities at prevailing market prices. There may be less publicly available
information about the issuers of these securities or less market interest in
such securities than in the case of larger companies, and it may take a longer
period of time for the prices of such securities to reflect the full value of
their issuers' underlying earnings potential or assets. The Fund should not be
considered suitable for investors who are unable or unwilling to assume the
risks of loss associated with such an investment program, nor should investment
in the Fund be considered a balanced or complete investment program.

SECURITIES OF NON-U.S. ISSUERS

The Fund may invest up to 10% of its total assets 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.

<PAGE>

could lose its entire investment in the country involved.

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.

<PAGE>

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.

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.

<PAGE>

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.

Many companies traded on securities markets in foreign countries are smaller 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.

Non-U.S. Subcustodians. Rules adopted under the 1940 Act permit the Fund, to
maintain its

<PAGE>

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.

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.

HEDGING AND OTHER STRATEGIC TRANSACTIONS

<PAGE>

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 a portfolio management
strategy, cross currency hedges. The Fund also may enter into forward foreign
currency contracts and options transactions to hedge in connection with
currency. 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 A to this Prospectus.

The Fund may (if and to the extent so authorized) enter into currency
transactions. 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 (collectively, these transactions are
referred to in this Prospectus as "Hedging and other Strategic Transactions").

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 currency exchange rate fluctuations. 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, Management's ability to predict pertinent market
movements, which cannot be assured. These skills are different from those needed
to select the Fund's securities.

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 A. Risks
associated with Hedging and Other Strategic Transactions are also described in
Appendix A to this Prospectus.

<PAGE>

YEAR 2000

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

THE SUB-ADVISER AND PORTFOLIO MANAGER

The Sub-Adviser, Rockefeller & Co., Inc., has been retained to provide
sub-advisory services to the Fund pursuant to an agreement between Rockefeller &
Co. and OFFITBANK (the "Sub-Advisory Agreement"). Pursuant to the Sub-Advisory
Agreement, and subject to the overall supervision of OFFITBANK, Rockefeller &
Co. provides the Fund with investment advisory services, including portfolio
management. The Sub-Adviser, which is registered as an investment adviser under
the Investment Advisers Act of 1940, is a private investment advisory and
management firm established by the Rockefeller Family to serve its own needs and
those of a small number of other persons and institutions. The Sub-Adviser
currently manages

<PAGE>

approximately $4.4 billion in assets. The Sub-Adviser, with offices at 30
Rockefeller Plaza, New York, New York 10112, is an indirect, wholly-owned
subsidiary of the Rockefeller Family Trust.

The Sub-Adviser places the orders for the purchase and sale of portfolio
securities and options transactions for the Fund. In doing so, the Sub-Adviser
seeks to obtain the best combination of price and execution, which involves a
number of judgmental factors.

Rockefeller & Co., Inc. utilizes a team approach with respect to the
management of this portfolio. As such, the day to day portfolio management
of the Fund is the responsibility of members of the Rockefeller & Co., Inc.
U.S. Small Cap Group and certain other members of the Rockefeller & Co., Inc.
Investment Staff.

The Sub-Advisory Agreement provides that OFFITBANK, and not the Fund will pay
Rockefeller & Co. monthly compensation based on the average daily net assets of
the Fund at an annual rate of 1.00%. For the period April 1, 1998 to December
31, 1998 the fee was waived by Rockefeller & Co.

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

<PAGE>

OFFITBANK VIF-U.S. SMALL CAP 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
Asset | dividends and processing of
Management | buy and sell requests.
| -----------------------------
------------------------------- |
INVESTMENT ADVISER |
|
OFFITBANK | ------------------------------------
520 Madison Avenue | CUSTODIAN
New York, NY 10022-4213 |
| The Bank of New York
Manages the Fund's business and -----| ("BONY")
investment activities. | 90 Washington Street
------------------------------- | New York, NY 10286
| |
------------------------------- | Serves as custodian of the assets
SUB-ADVISER | of the Fund. The custodian settles
| all portfolio trades and collects
Rockefeller & Co., Inc. | most of the valuation data required
30 Rockefeller Plaza | for calculating the Fund's net asset
New York, NY 10112 | 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
----------------------------
Number of Outstanding Shares

New Year's Day (observed) Friday, December 31, 1999
Martin Luther King, Jr. Day Monday, January 17, 2000
Presidents' Day Monday, February 15, 2000

<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 and distribute dividends of substantially all of its net
investment income as

<PAGE>

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.

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

<PAGE>

PERFORMANCE INFORMATION

<PAGE>

APPENDIX A

HEDGING AND OTHER STRATEGIC TRANSACTIONS

GENERAL CHARACTERISTICS OF OPTIONS

<PAGE>

Over-the-counter ("OTC") options are purchased from or sold to securities
dealers, financial institutions or other parties (collectively referred to as
"Counterparties"

<PAGE>

GENERAL CHARACTERISTICS OF FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

<PAGE>

The segregation requirements with respect to futures contracts and options
thereon are described below under "Use of Segregated and Other Special
Accounts."

<PAGE>

OPTIONS ON SECURITIES INDICES AND OTHER FINANCIAL INDICES

CURRENCY TRANSACTIONS

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

<PAGE>

COMBINED TRANSACTIONS

SWAPS, CAPS, FLOORS AND COLLARS

<PAGE>

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

<PAGE>

EURODOLLAR INSTRUMENTS

RISK FACTORS

Currency hedging involves some of the same risks and considerations as
other

<PAGE>

RISKS OF HEDGING AND OTHER STRATEGIC TRANSACTIONS OUTSIDE THE UNITED STATES

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFICERS AND DIRECTORS INVESTMENT ADVISERS
Morris W. Offit OFFITBANK
Chairman of the Board, President 520 Madison Avenue
and Director New York, NY 10022-4213

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:

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

- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------

<PAGE>

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

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFITBANK VIF - TOTAL RETURN FUND

PROSPECTUS

APRIL 30, 1999

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
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

Description of the Underlying Funds in which the
Total Return Fund May Invest 4
Financial Highlights 10
Investment Objective and Principal Strategies 15
Risks of Investing in the Fund 17

Details on the management MANAGEMENT OF THE FUND
and operations of the Fund. Investment Adviser 28
Service Provider Chart 29

Policies and instructions for SHAREHOLDER INFORMATION
opening, maintaining and Pricing of Fund Shares 30
closing an account in the Purchase of Fund Shares 31
Fund. Redemption of Fund Shares 31
Shareholder Services 31
Dividends and Distributions 31
Taxes 32
Shareholder Communications 32
Performance Information 33

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

FOR MORE INFORMATION see back cover
</TABLE>
<PAGE>

OFFITBANK VIF - TOTAL RETURN FUND

INVESTMENT OBJECTIVE

The Fund's investment objective is to maximize total return from a combination
of capital appreciation and current income.

PRINCIPAL INVESTMENT STRATEGIES

The Fund will seek to achieve its investment objective by investing primarily in
a broad portfolio of fixed-income securities having varying maturities. The
Adviser may invest the Fund's assets based on the Adviser's analysis of current
economic and market conditions and the relative risks and opportunities present
in the following market segments: U.S. Government Securities, foreign sovereign
and supranational debt obligations, including obligations of emerging market and
developing countries, and debt instruments, convertible securities and preferred
stocks of domestic and foreign corporations, including high yield securities.
Portfolio holdings will be concentrated from time to time in areas of the fixed
income markets which the Adviser believes to be relatively undervalued. The Fund
may pursue the investment objective through investing directly in the markets
and securities described in this Prospectus, or indirectly through investing in
the following investment portfolios of the OFFITBANK Investment Fund, Inc. and
the Company: 1) the OFFITBANK U.S. Government Securities Fund (the "U.S.
Government Securities Fund"); 2) the OFFITBANK Mortgage Securities Fund (the
"Mortgage Securities Fund"); 3) the OFFITBANK VIF-High Yield Fund (the "High
Yield Fund"); and 4) the OFFITBANK VIF-Emerging Markets Fund (the "Emerging
Markets Fund" and collectively with the Total Return Fund, U.S. Government
Securities Fund, Mortgage Securities Fund and High Yield Fund, the "Funds" and
each individually, a "Fund").

PRINCIPAL RISK FACTORS

o Investors may lose money.

o The Fund's portfolio holdings will be concentrated in areas of the fixed
income market which the Fund believes to be relatively undervalued.
Concentration in any area intensifies the risks to the Fund related to
such area.

o The Fund may invest all or a portion of its assets in securities which 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 may invest in international securities. International investing
is subject to special risks, including, but not limited to, currency
exchange rate volatility, political, social or
<PAGE>

economic instability, and differences in taxation, auditing and other financial
practices.

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

o In managing the Fund's assets, the Adviser may invest without limitation
in other OFFITBANK Funds. To the extent such a strategy is used, the Fund
will be subject to the risks related to such Funds.

For more detail on the principal risks summarized here, please see "Risks of
Investing in the Fund" herein.

PRIOR PERFORMANCE

The prior performance for the Fund is unavailable since the Fund has been
operating for less than a full calendar year (from July 1, 1998 to present).

DESCRIPTION OF THE UNDERLYING FUNDS IN WHICH THE TOTAL RETURN
FUND MAY INVEST

OFFITBANK U.S. GOVERNMENT SECURITIES FUND

INVESTMENT OBJECTIVE

The Fund's investment objective is to seek current income.

PRINCIPAL INVESTMENT STRATEGIES

The Fund seeks to achieve its investment objective by investing, under normal
circumstances, at least 80% of its total assets in U.S. Government Securities.
In addition, the Fund may invest up to 20% of its total assets in other fixed
income securities rated AAA by Standard & Poor's Rating Group or Duff & Phelps
Credit Rating Co., or Aaa by Moody's Investors Services, Inc., or securities
deemed to be of comparable quality by the Adviser, including: debt obligations
issued or guaranteed by foreign national, provincial, state, municipal or other
governments with taxing
<PAGE>

authority or by the agencies or instrumentalities of Australia, Canada, Denmark,
France, Germany, Japan, New Zealand and the United Kingdom, debt obligations of
supranational entities; non-U.S. dollar denominated debt obligations of the U.S.
Government; and corporate obligations including asset-backed securities.
Investment decisions are based on a continual evaluation of the supply and
demand for capital, the current and future shape of the yield curve, underlying
trends in the direction of interest rates and relative value among market
sectors. The Fund is not limited with regard to the maturities of the securities
in which it may invest.

PRINCIPAL RISK FACTORS

o Investors may lose money.

o The 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 the securities of a small number of issuers.
This makes the Fund more susceptible to the risks associated with these
particular issuers, or to a single economic, political or regulatory
occurrence.

o The Fund is subject to prepayment risk, which is the risk that a debt
security may be paid off and proceeds must be reinvested earlier than
anticipated. Depending on market conditions, the new investments may or
may not carry the same interest rates.

For further information on the investment objective, principal investment
strategies and risks associated with the Fund, please see the prospectus of the
OFFITBANK Investment Fund, Inc. dated April 30, 1999.

OFFITBANK MORTGAGE SECURITIES FUND

INVESTMENT OBJECTIVE

The Fund's investment objective is to maximize total return from a combination
of investment income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES
<PAGE>

The Fund seeks to achieve its investment objective by investing at least 80% of
its total assets in a portfolio of investment grade or comparable
mortgage-related securities issued by U.S. entities. The Fund will invest
primarily in mortgage-related securities representing interests in residential
property, adjustable rate and derivative multiclass mortgage securities and
collateralized mortgage obligations issued by U.S. entities. Up to 20% of the
Fund's assets may be invested in investment grade or comparable fixed income
securities of U.S. and non-U.S. issuers, including mortgage related securities
of issuers in Canada, the United Kingdom, Denmark or other countries which may
develop mortgage securities markets in the future. The Fund is not limited with
regard to the maturities of the securities in which it may invest.

PRINCIPAL RISK FACTORS

o Investors may lose money.

o A substantial portion of the securities purchased by the Fund may be
mortgage-backed and/or asset-backed securities, the value of which may be
sensitive to interest rate changes.

o Under normal circumstances at least 80% of the Fund's net assets will be
invested in mortgage related securities issued by U.S. entities, which are
inversely affected by changes in interest rates (increasing in value
during periods of declining interest rates and decreasing in value during
periods of increasing interest rates).

o The NAV of the Fund will change with changes in the market value of its
portfolio positions.

o Stripped mortgage securities or derivative multiclass mortgage securities
have greater volatility than other types of mortgage securities and are
extremely sensitive to changes in interest rates and prepayments.

<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.
<PAGE>

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. An emerging market country is a country that is considered to be an
emerging or developing country by the World Bank of the International Finance
Corporation, or is determined by the Adviser to have per capita gross domestic
product below $7,500 (in l994 dollars). The Fund attempts to benefit from
investment opportunities deriving from long-term improvement in economic and
political conditions, and other positive developments and trends in emerging
markets countries. In addition, the Fund may invest in Brady Bonds, zero coupon
securities, Pay- in-kind bonds, and discount obligations. The Fund may invest in
debt securities of any maturity and the interest rates on such securities may be
fixed or floating.

PRINCIPAL RISK FACTORS

o Investors may lose money.

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 exchange-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 prices. 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 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
<PAGE>

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.

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

OFFITBANK VIF - HIGH YIELD FUND

INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES

PRINCIPAL RISK FACTORS

o Investors may lose money.

o The NAV of the Fund will change with changes in the market value of its
portfolio positions.

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 than higher rated
securities and are subject to significant changes in prices. 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.

<PAGE>

a change in interest rates could have on the security's price.

o The Fund is a "non-diversified" mutual fund. This permits the Fund to
invest more 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 a single economic, political or
regulatory occurrence.

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand the Fund's
financial performance for the periods presented. The tables also set forth
certain information with respect to the investment results of the U.S.
Government Securities, Mortgage Securities, VIF-High Yield and VIF-Emerging
Market Funds. 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 Funds (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 Funds' financial statements, is included in
the Company's Annual Report dated December 31, 1998 and the Annual Report of the
OFFITBANK Investment Fund, Inc. dated December 31, 1998, which are available
without charge upon request.

<PAGE>

The financial statements for the Funds for periods prior to December 31, 1998
were audited by PricewaterhouseCoopers LLP, whose reports expressed an
unqualified opinion on those statements.

OFFITBANK VIF - TOTAL RETURN FUND

FOR THE PERIOD JUNE 30, 1998*
THROUGH DECEMBER 31, 1998
- -------------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00(d)
---------

Net investment income 0.25
Net realized and unrealized loss (0.08)
---------
Total income from investment operations 0.17
---------

Net change in net asset value per share 0.17
---------
NET ASSET VALUE, END OF PERIOD $ 10.17
=========
TOTAL RETURN (A) $ 1.70%(b)

RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $1,001
Ratios to average net assets:
Expenses** 0.80%(c)
Net investment income 5.35%(c)
PORTFOLIO TURNOVER RATE 58%(b)

<PAGE>

OFFITBANK U.S. GOVERNMENT SECURITIES FUND
SELECT SHARES(D)
----------------

FOR THE PERIOD
JULY 1, 1997*
FOR THE YEAR ENDED THROUGH
DECEMBER 31, 1998 DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.17 $ 10.00(e)
----------- ----------

INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.50 0.27
Net realized and unrealized gains 0.48 0.19
----------- ----------
Total income from investment operations 0.98 0.46
----------- ----------

LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.50) (0.27)
Excess of net investment income -- (0.01)
Net realized gains (0.19) (0.01)
----------- ----------
Total dividends and distributions (0.69) (0.29)
----------- ----------
Net change in net asset value per share 0.29 0.17
----------- ----------
NET ASSET VALUE, END OF PERIOD $ 10.46 $ 10.17
=========== ==========
TOTAL RETURN (A) 9.82% 4.71%(b)

RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 39,359 $ 3,955
Ratios to average net assets:
Expenses** 0.50% 0.50%(c)
Net investment income 4.59% 5.32%(c)
PORTFOLIO TURNOVER RATE 423% 153%
</TABLE>

<PAGE>

OFFITBANK U.S. GOVERNMENT SECURITIES FUND
SELECT SHARES(D)
----------------

INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.58 0.29
Net realized and unrealized gains 0.14 0.22
----------- -----------
Total income from investment operations 0.72 0.51
----------- -----------

LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.58) (0.29)
Excess of net investment income (0.01) (0.01)
Net realized gains (0.02) (0.04)
----------- -----------
Total dividends and distributions (0.61) (0.34)
----------- -----------
Net change in net asset value per share 0.11 0.17
----------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.28 $ 10.17
=========== ===========
TOTAL RETURN (A) 7.26% 5.10%(b)

RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 54,461 $ 17,037
Ratios to average net assets:
Expenses** 0.50% 0.50%(c)
Net investment income 5.72% 5.77%(c)
PORTFOLIO TURNOVER RATE 78% 81%
</TABLE>

<PAGE>

OFFITBANK VIF - Emerging Markets Fund
-------------------------------------

FOR THE NINE FOR THE PERIOD
MONTHS ENDED FOR THE YEAR AUGUST 28,
DECEMBER 31, ENDED 1996* THROUGH
1998 MARCH 31, 1998 MARCH 31, 1997
=================================================================================================
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:

NET ASSET VALUE, BEGINNING OF PERIOD $ 10.55 $ 10.30 $ 10.00(d)
--------- --------- ---------
Net investment income 0.66 0.86 0.48

Net realized and unrealized gains (loss) (2.79) 0.27 0.34
--------- --------- ---------

Total income (loss) from investment
operations (2.13) 1.13 0.82
--------- --------- ---------

LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.66) (0.86) (0.48)

Excess of net investment income (0.07) (0.02) --

Net realized gains (0.09) -- (0.04)
--------- --------- ---------

Total dividends and distributions (0.82) (0.88) (0.52)
--------- --------- ---------

Net change in net asset value per share (2.95) 0.25 0.30
--------- --------- ---------

NET ASSET VALUE, END OF PERIOD $ 7.60 $ 10.55 $ 10.30
========= ========= =========
TOTAL RETURN (A) (20.36%)(b) 11.26% 8.29%(b)

RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $5,575 $5,780 $4,346

Ratios to average net assets:
Expenses ** 1.50%(c) 1.50% 1.50%(c)

Net investment income 10.38%(c) 8.27% 8.04%(c)

Portfolio turnover rate 100%(b) 53% 96%(b)
</TABLE>

<PAGE>

OFFITBANK VIF - HIGH YIELD FUND
-------------------------------

FOR THE
FOR THE NINE YEAR ENDED FOR THE PERIOD
MONTHS ENDED MARCH 31, APRIL 1, 1996* THROUGH
DECEMBER 31, 1998 1998 MARCH 31, 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:

NET ASSET VALUE, BEGINNING OF PERIOD $ 11.00 $ 10.37 $ 10.00(d)
---------- ---------- ----------
Net investment income 0.65 0.86 0.78
Net realized and unrealized gains (loss) (0.53) 0.63 0.37
---------- ---------- ----------
Total income from investment operations 0.12 1.49 1.15
---------- ---------- ----------

Net change in net asset value per share (0.60) 0.63 0.37
---------- ---------- ----------

NET ASSET VALUE, END OF PERIOD $ 10.40 $ 11.00 $ 10.37
========== ========== ==========

TOTAL RETURN (A) 1.15%(b) 14.84% 11.90%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $44,354 $31,675 $25,114
Ratios to average net assets:
Expenses** 1.15%(c) 1.15% 1.15%(c)
Net investment income 8.25%(c) 7.98% 7.45%(c)

PORTFOLIO TURNOVER RATE 14%(b) 32% 4%(b)
</TABLE>

<PAGE>

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

The investment objective of the Fund is to maximize total return from a
combination of capital appreciation and current income. The Fund will seek to
achieve its objective by investing primarily in a diversified portfolio of
fixed-income securities of varying maturities and by giving OFFITBANK (the
"Adviser") broad discretion to invest the Fund's assets among certain segments
of the fixed-income market that the Adviser believes will best contribute to
achieving the Fund's objective. At any point in time, the Adviser will invest
the Fund's assets based on the Adviser's analysis of current economic and market
conditions and the relative risks and opportunities present in the following
market segments: securities of the U.S. Government, its agencies and
instrumentalities, mortgage-backed and asset-backed securities, foreign
sovereign and multi-national debt obligations, including obligations of emerging
market and developing countries, debt instruments, convertible securities and
preferred stocks of domestic and foreign corporations, including high yield
securities, and local- currency denominated fixed income securities of issuers
located in developed and emerging markets. The Fund may also invest in the
securities of the other investment portfolios of the Company or investment
companies managed by the Adviser. The Fund may invest directly in the markets
and securities described in this prospectus, or indirectly through investing in
the U.S. Government Securities Fund, the Mortgage Securities Fund, the High
Yield Fund and the Emerging Markets Fund series of the Company (the "underlying
funds"). In allocating Fund assets among different investments, the Adviser will
attempt to diversify its portfolio by investing directly in the various
securities noted above. In order to increase its diversification of assets, the
Adviser may invest portions of Fund assets in underlying funds that invest in
the securities that the Adviser believes will allow the Fund to achieve its
objective. To the extent that the Fund invests in the underlying funds, Contract
or Policy Owners will be exposed to the fees of those underlying funds. The
investment objective of the Fund may not be changed except by a vote of a
majority of the Fund's outstanding voting securities, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). The investment
policies of the Fund may, unless otherwise specifically stated, be changed by
the Company without a vote of the shareholders.

In evaluating proposed investments for the Fund, the Adviser will seek to
enhance the total return on the Fund's portfolio through the active management
of: (1) portfolio duration; (2) allocation of investments among the various
sectors of the fixed income market; (3) yield curve positioning; and (4)
currency exposure. The Adviser will seek to maximize the Fund's total return in
terms of U.S. dollars. The Adviser intends to base its investment decisions for
the Fund on the continual evaluation of various factors, including: (1) the
supply and demand for capital in various capital markets; (2) the shape of the
global yield curve; (3) "bottom up" credit analysis of particular issuers, which
involves research focused on individual issuers rather than on broad economic
trends; (4) relative value between and within global capital markets; and (5)
yield spreads among domestic high grade, non-dollar and high yield sectors.
Portfolio holdings will be concentrated in areas of the fixed income market
which the Adviser believes to be relatively undervalued. In evaluating markets,
the Adviser will consider such factors as the condition and growth potential of
various economies and securities markets, currency and taxation factors
(including the applicability and rate of withholding taxes) and other pertinent
financial, social, national and political factors. There can be no assurance
that the Fund will achieve its investment objective.

The "total return" sought by the Fund will consist of interest from underlying
securities, capital appreciation reflected in increases in the value of
portfolio securities or from the purchase and sale of securities, and use of
futures and options, or gains from favorable changes in foreign
<PAGE>

currency exchange rates. Under normal market conditions, the Fund will invest
its assets in a variety of markets and instruments, including securities of
other investment companies, securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, investment grade fixed income
securities (including asset-backed and mortgage backed securities), high yield
securities and international fixed income securities.

The Fund may invest in any country where the Adviser sees potential for total
return. In making international fixed income securities investments, the Adviser
may consider, among other things, the relative growth and inflation rates of
different countries. The Adviser may also consider expected changes in foreign
currency exchange rates, including the prospects for central bank intervention,
in determining the anticipated returns of securities denominated in foreign
currencies. The Adviser may further evaluate, among other things, foreign yield
curves and regulatory and political factors, including the fiscal and monetary
policies of such countries.

The Fund expects to primarily invest in income-producing securities, together
with certain futures, options and foreign currency contracts and other
investments described below. The Fund may also invest in lower quality fixed
income securities. Investments in these high yield, high risk debt securities
are considered to be speculative and involve comparatively greater risks,
including price volatility and the risk of default in the timely payment of
interest and principal, than investment grade securities or securities of
comparable value. 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 has established no rating criteria for the debt securities in which it
may invest and such securities may not be rated at all for creditworthiness.
Securities rated in the medium to lower rating categories of nationally
recognized statistical rating organizations and unrated securities of comparable
quality are predominantly speculative with respect to the capacity to pay
interest and repay principal in accordance with the terms of the security and
generally involve a greater volatility of price and risk of default than
securities in higher rating categories. See "Risks of Investing in the Fund -
High Yield, High Risk Debt Securities." In purchasing such securities, the Fund
will rely on the Adviser's judgment, analysis and experience in evaluating the
creditworthiness of an issuer of such securities. The Adviser will take into
consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, its operating history, the
quality of the issuer's management and regulatory matters. The Fund does not
intend to purchase debt securities that are in default or which the Adviser
believes will be in default. See Appendix A to this Prospectus for a description
of ratings of Standard & Poor's Ratings Group ("S&P"), Moody's Investors
Services, Inc. ("Moody's") and Duff & Phelps Credit Ratings Co. ("D&P").

<PAGE>

RISKS OF INVESTING IN THE FUND

GENERAL

The Fund's NAV and the NAV of any underlying fund in which the Fund may invest
will fluctuate, reflecting fluctuations in the market value of its portfolio
positions and its net currency exposure. In addition, to the extent that the
Fund holds shares of the underlying Funds, the Fund will be subject to the same
risks as those Funds. The value of the securities held by a 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 management changes or labor relations. The objective 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 objective.

SECURITIES OF NON-U.S. ISSUERS

Most of the assets of the Emerging Markets Fund will be invested in the
securities of non-U.S. issuers. Each of the U.S. Government Securities, Mortgage
Securities, High Yield and Total Return 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 Funds 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 Funds invest and adversely affect the value of a
Fund's assets.

Individual foreign economies in general and those of emerging market countries
in particular,
<PAGE>

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
Funds, and on market conditions, prices and yields of securities in a Fund's
portfolio. There may be the possibility of nationalization or expropriation of
assets, or future confiscatory levels of taxation affecting the Funds. In the
event of nationalization, expropriation or other confiscation, a 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 Funds 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 Funds. 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 Funds 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 Funds.

The Funds 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 Funds of any restrictions on investments. If, because of
restrictions on repatriation or conversion, a 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 each Fund may invest a portion and the Emerging
Markets Fund may invest a substantial 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
<PAGE>

value of a Fund's holdings of securities denominated in such currency and,
therefore, will cause an overall decline in the value of that Fund's NAV and any
net investment income and capital gains to be distributed in U.S. dollars to
shareholders of the Fund.

Although each Fund values its assets daily in terms of U.S. dollars, the Funds
do not intend to convert their holdings of foreign currencies into U.S. dollars
on a daily basis. The Funds 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 a
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 Funds, 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 Funds will be valued in euros. This
will not affect the investment value of the Funds 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 Funds' 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.

resistance to some of the more stringent terms. Therefore, it is unclear whether
complete economic and monetary convergence will be attained as planned.

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 Funds. 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 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 a Fund's ability to acquire or dispose of
securities at the price and time it wishes to do so.

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 a 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 a Fund are uninvested and
therefore no return is earned. The inability of a Fund to make intended security
purchases due to settlement problems could cause a Fund to miss attractive
investment opportunities. The inability to dispose of a portfolio security due
to settlement problems could result either in losses to a 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 each 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 Funds, in which event a 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
a 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 Funds to a risk of loss. Less information may be
available to the Funds than with respect to investments in the United States
and, in certain of these countries, less information may be available to the
Funds 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.

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.

HIGH YIELD, HIGH RISK DEBT SECURITIES

General. The Funds, except the U.S. Government Securities and Mortgage
Securities Funds, may invest all or substantially all of their respective 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 Funds 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 a Fund with a commensurate effect on the value of
its shares. Therefore, an investment in any Fund should not be considered as a
complete investment program for all investors.

obtain accurate market quotations for purposes of valuing securities and
calculating NAV. If a 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 that 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 each Fund's ability to sell securities
at fair value. In addition, the Funds may invest up to 15% of their respective
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 a Fund's portfolio may become illiquid and the proportion of that Fund's
assets invested in illiquid securities may increase.

Many fixed income securities, including certain U.S. corporate fixed income
securities in which the Funds 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, a Fund may have to
replace the called security with a lower yielding security, resulting in a
decreased rate of return for the Fund.

Sovereign Debt Securities. Investing in sovereign debt securities will expose
the Funds 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
<PAGE>

economic and political conditions within the relevant country. Emerging and
developing countries such as those in which the Funds 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.

As a result of the foregoing, a governmental obligor may default on its
obligations. If such a default occurs, the Funds 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.

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 Funds 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.

HEDGING AND OTHER STRATEGIC TRANSACTIONS

Each 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, each 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. Each 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 each Fund's assets that may
be used in connection with the investment strategies described below are set out
in Appendix B to this Prospectus.

Each 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"). Each Fund's interest rate transactions may take the form of
swaps, caps, floors and collars, and each 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 a Fund resulting from securities markets or currency exchange rate
fluctuations, to protect a 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 a Fund's securities or to
establish a
<PAGE>

position in the derivatives markets as a temporary substitute for purchasing or
selling particular securities. Each 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
a 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 a Fund's securities. No Fund is 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 each 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 each 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.

To the extent the Funds conduct 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 Funds will not be obligated to pursue any of the Hedging and Other Strategic
Transactions strategies and the Funds make no representation as to the
availability of these techniques at this time or at any time in the future. In
addition, a Fund's ability to pursue certain of these strategies may be limited
by current economic conditions, 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, a Fund may
utilize, without limitation, Hedging and Other Strategic Transactions.

INTEREST RATE FLUCTUATIONS AND CREDIT RISK

The performance of the Funds, especially the U.S. Government Securities Fund,
depends in part
<PAGE>

on interest rate changes. As interest rates increase, the value of the fixed
income securities held by the Funds tend to decrease. This effect will be more
pronounced with respect to investments by the Funds in mortgage-related
securities, the value of which are more sensitive to interest rate changes.
There is no restriction on the maturity of the portfolios of the Funds or any
individual portfolio security, and to the extent each Fund invests in securities
with longer maturities, the volatility of the Fund in response to changes in
interest rates can be expected to be greater than if the Fund had invested in
comparable securities with shorter maturities. The performance of the Funds will
also depend on the quality of its investments. While U.S. Government securities
generally are of high quality, government securities that are not backed by the
full faith and credit of the U.S. Treasury may be affected by changes in the
creditworthiness of the agency that issued them. Guarantees of principal and
interest on obligations that may be purchased by the Funds are not guarantees of
the market value of such obligations, nor do they extend to the value of shares
of the Funds. Other fixed-income securities in which the Funds may invest, while
of investment-grade quality, may be of lesser credit quality than U.S.
Government securities.

CONCENTRATION

Under normal market conditions, the Emerging Markets Fund may invest greater
than 25% of its assets in securities of issuers whose primary business activity
is in the banking industry. 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

Each Fund is classified as a "non-diversified" fund under the 1940 Act, which
means that the Funds are not limited by the 1940 Act in the proportion of their
respective assets that may be invested in the obligations of a single issuer.
Thus, a 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 Funds, however, intend 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.

YEAR 2000

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

Jack D. Burks serves as the portfolio manager for the Fund. Mr. Burks is a
Managing Director of OFFITBANK and has been associated with OFFITBANK since
1985.

The advisory fee paid by the Fund, as a percentage of average net assets, for
the period June 30, 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.
<PAGE>

OFFITBANK VIF-TOTAL RETURN FUND

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
-------------------------------
Number of Outstanding Shares

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
<PAGE>

annually 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.

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

PERFORMANCE INFORMATION

APPENDIX A

COMMERCIAL PAPER RATINGS

commercial paper:

"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.

"D-3" - Debt possesses satisfactory liquidity and other protection factors
qualify issues as
<PAGE>

to investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.

"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.
<PAGE>

"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.

"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.
<PAGE>

"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 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:

construction or elimination of basis of condition.

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:

events.

MUNICIPAL NOTE RATINGS

"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.
<PAGE>

APPENDIX B

HEDGING AND OTHER STRATEGIC TRANSACTIONS

GENERAL CHARACTERISTICS OF OPTIONS

Over-the-counter ("OTC") options are purchased from or sold to securities
dealers, financial institutions or other parties (collectively referred to as
"Counterparties"
<PAGE>

GENERAL CHARACTERISTICS OF FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

The segregation requirements with respect to futures contracts and options
thereon are described below under "Use of Segregated and Other Special
Accounts."
<PAGE>

OPTIONS ON SECURITIES INDICES AND OTHER FINANCIAL INDICES

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.

COMBINED TRANSACTIONS

SWAPS, CAPS, FLOORS AND COLLARS

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
<PAGE>

EURODOLLAR INSTRUMENTS

RISK FACTORS

Currency hedging involves some of the same risks and considerations as
other
<PAGE>

RISKS OF HEDGING AND OTHER STRATEGIC TRANSACTIONS OUTSIDE THE UNITED STATES

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFICERS AND DIRECTORS INVESTMENT ADVISERS
Morris W. Offit OFFITBANK
Chairman of the Board, President and 520 Madison Avenue
Director New York, NY 10022-4213

INVESTMENT ADVISER 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:

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)
- --------------------------------------------------------------------------------
<PAGE>

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

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFITBANK VIF - U.S. GOVERNMENT SECURITIES FUND

PROSPECTUS

APRIL 30, 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 3
Financial Highlights 4
Investment Objective and Principal
Strategies 5
Risks of Investing in the Fund 7

Details on the management MANAGEMENT OF THE FUND
and operations of the Fund. Investment Adviser 16
Service Provider Chart 17

Appendix A: Hedging and Other Strategic
Transactions A-1

FOR MORE INFORMATION see back cover
<PAGE>

OFFITBANK VIF - U.S. GOVERNMENT SECURITIES FUND

INVESTMENT OBJECTIVE

The Fund's investment objective is to seek current income consistent with
preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES

The Fund seeks to achieve its investment objective through the active management
of portfolio duration and sector allocation and by investing, under normal
circumstances, at least 80% of its total assets in U.S. Government Obligations
(as defined in this Prospectus). In addition, the Fund may invest up to 20% of
its total assets in other high quality fixed income securities including, but
not limited to, mortgage-backed and asset-backed securities and sovereign
obligations of Australia, Canada, Denmark, France, Germany, Japan, New Zealand
and the United Kingdom. Investment decisions are based on a continual evaluation
of the supply and demand for capital, the current and future shape of the yield
curve, underlying trends in the direction of interest rates and relative value
among market sectors. The Fund is not limited with regard to the maturities of
the securities in which it may invest.

PRINCIPAL RISK FACTORS

o Investors may lose money.

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

For more detail on the principal risks summarized here, please see "Risks of
Investing in the Fund" herein.

PRIOR PERFORMANCE
<PAGE>

The prior performance for the Fund is unavailable since the Fund has been
operating for less than a full calendar year (from August 24, 1998 to present).

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the period presented. This information reflects
financial results for a single Fund share. The total return in the table
represents 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 Company's Annual Report dated
April 26, 1999, which is available without charge upon request.

<PAGE>

FOR THE PERIOD AUGUST 24, 1998*
THROUGH DECEMBER 31, 1998
- --------------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
--------

Net investment income --
Net realized gains 0.23
--------
Total income from investment operations 0.23
--------

NET ASSET VALUE, END OF PERIOD $ 10.23
========

TOTAL RETURN (A) 2.30%(b)

RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 0
Ratios to average net assets:
Expenses** 0.60%(c)
Net investment income 4.04%(c)
Portfolio turnover rate 107%(b)

* During 1998, the Fund's operations were limited to the period August 24,
1998, the date shares were first issued, and September 23, 1998, the date
on which the shares then outstanding were redeemed. Subsequent to period
end on March 31, 1999, shares were sold to the public and the Fund
recommenced operations.
** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratio would have been higher.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.

<PAGE>

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

The Fund's investment objective is to seek current income consistent with
preservation of capital. The Fund seeks to achieve its objective by investing,
under normal circumstances, at least 80% of its total assets in U.S. Government
obligations. In addition, the Fund may invest up to 20% of its total assets in
other high quality fixed income securities including, but not limited to,
mortgage-backed and asset-backed securities, sovereign obligations of Australia,
Canada, Denmark, France, Germany, Japan, New Zealand and the United Kingdom. Any
fund investments denominated in any foreign currency will be hedged against
fluctuations in value versus the U.S. dollar. The investment objectives 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 shareholder approval. There is no assurance that the Fund will
achieve its investment objective.

Obligations of the U.S. Government in which the Fund may invest are in two broad
categories and include the following: (1) direct obligations of the U.S.
Treasury, which differ only in their interest rates, maturities and times of
issuance, including U.S. Treasury Bills (maturities of one year or less), U.S.
Treasury Notes (maturities of one to ten years), and U.S. Treasury Bonds
(generally, maturities greater than ten years); and (2) obligations issued or
guaranteed by the agencies or instrumentalities of the U.S. Government which are
supported by: (a) the full faith and credit of the U.S. Government (e.g.,
Government National Mortgage Association ("GNMA") Certificates, see below); (b)
the right of the issuer to borrow an amount limited to a specific amount of
credit from the U.S. Government; (c) the credit of the instrumentality (e.g.,
bonds issued by the Federal National Mortgage Association ("FNMA")); or (d) the
discretionary authority of the U.S. Government to purchase certain obligations
of U.S. Government agencies or instrumentalities (collectively, "Government
Securities").

The agencies and instrumentalities that issue Government Securities include,
among others, Federal Land Banks, Farmers Home Administration, Central Bank for
Cooperatives, Federal Intermediate Credit Banks, Federal Farm Credit Banks,
Student Loan Marketing Association and U.S. Maritime Administration.

Securities issued by the U.S. Government differ with respect to maturity and
mode of payment. The modes of payment are coupon paying and capital
appreciation. Coupon paying bonds and notes pay a periodic interest payment,
usually semi-annually, and a final principal payment at maturity. Capital
appreciation bonds and Treasury bills accrue a daily amount of interest income,
and pay a stated face amount at maturity. Most U.S. Government capital
appreciation bonds were created as a result of the separation of coupon paying
bonds into distinct securities representing the periodic coupon payments and the
final principal payments. This is referred to as "stripping." The separate
securities representing a specific payment to be made by the U.S. Government on
a specific date are also called "zero coupon bonds." Current federal tax law
requires the Fund to accrue as income daily a portion of the original issue
discount at which each zero coupon bond was purchased. Amortization of this
discount has the effect of increasing the Fund's income, although it receives no
actual cash payments. The Fund distributes this income to its shareholders as
income dividends and such income is reflected in the Fund's quoted yield.

At any given time, there is a relationship between the yield of the U.S.
Government obligation and its maturity. This is called the "yield curve." Since
Government Securities are assumed to
<PAGE>

have negligible credit risk, the main determinant of yield differential between
individual securities is maturity. When the yield curve is such that longer
maturities correspond to higher yields, the yield curve has a positive slope and
is referred to as a "normal" yield curve. At certain times shorter maturities
have high yields and the yield curve is said to be "inverted." Even when the
yield curve is "normal" (i.e. has a positive slope), the relationship between
yield and maturity for some Government Stripped Securities is such that yields
increase with maturity up to some point, and then after peaking, decline so that
the longest maturities are not the highest yielding. This is called a "humped"
curve. The highest yielding point on the yield curve for such securities is
referred to as the "stripper's hump."

U.S. Government securities of the type in which the Fund may invest have
historically involved little risk of principal if held to maturity. The
Government's guarantee of the securities in the Fund, however, does not
guarantee the net asset value of the shares of the fund. There are market risks
inherent in all investments in securities and the value of an investment in the
fund will fluctuate over time. Normally, the value of the Fund's investments
varies inversely with changes in interest rates. For example, as interest rates
rise, the value of the Fund's investments will tend to decline and as interest
rates fall, the value of the Fund's investments will tend to increase. Because
of these factors, the Fund's share value and yield are not guaranteed and will
fluctuate. The magnitude of these fluctuations generally will be greater when
the average maturity of the Fund's portfolio securities is of a longer duration.

The Fund is not limited to the maturities of the securities in which it may
invest. Debt securities with longer maturities generally tend to produce higher
yields and are subject to greater market fluctuation as a result of changes in
interest rates than debt securities with shorter maturities.

The Advisor seeks an enhanced fixed income return through the active management
of portfolio duration and sector allocation. Investment decisions are based on a
continual evaluation of the supply and demand for capital, the current and
future shape of the yield curve, underlying trends in the direction of interest
rates and relative value among market sectors. The selection of individual
investment reflects the Advisor's view of relative value within and among market
sectors. The Advisor manages duration and maturity to take advantage of interest
rates and yield curve trends. A minimum of 80% of the Fund's total assets will
be invested in Government Securities.

Up to 20% of the Fund's total assets may be allocated to other fixed income
securities, each of which will be rated AAA by S&P or Aaa by Moody's, or will be
deemed of comparable quality by the Adviser, including: debt obligations issued
or guaranteed by foreign national, provincial, state, municipal or other
governments with taxing authority or by their agencies or instrumentalities of
Australia, Canada, Denmark, France, Germany, Japan, New Zealand and the United
Kingdom; debt obligations of supranational entities; non-U.S. dollar denominated
debt obligations of the U.S. Government; and corporate obligations including
asset-backed securities. Any Fund investment denominated in a foreign currency
will be hedged against fluctuations in value versus the U.S. dollar.

The obligations of foreign governmental entities, including supranational
issuers, have various kinds of government support. Obligations of foreign
governmental entities include obligations, issued or guaranteed by national,
provincial, state or other governments with taxing power or by their agencies.
These obligations may or may not be supported by the full faith and credit of a
foreign government. Supranational entities include international organizations
designated or
<PAGE>

supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Steel and Coal Community, the Asian
Development Bank and the Inter-American Development Bank. The governmental
agencies, or "stockholders," usually make initial capital contributions to the
supranational entity and in many cases are committed to make additional capital
contributions, if the supranational entity is unable to repay its borrowings.
Each supranational entity's lending activities are limited to a percentage of
its total capital (including "callable capital" contributed by members at the
entity's call), reserves and net income.

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 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
objective.

INTEREST RATE FLUCTUATIONS AND CREDIT RISK
<PAGE>

The performance of the Fund depends in part on interest rate changes. As
interest rates increase, the value of the fixed income securities held by the
Fund tends to decrease. This effect will be more pronounced with respect to
investments by the Fund in mortgage-related securities, the value of which are
more sensitive to interest rate changes. There is no restriction on the maturity
of the Fund's portfolio or any individual portfolio security, and to the extent
the Fund invests in securities with longer maturities, the volatility of the
Fund in response to changes in interest rates can be expected to be greater than
if the Fund had invested in comparable securities with shorter maturities. The
performance of the Fund will also depend on the quality of its investments.
While U.S. Government securities generally are of high quality, government
securities that are not backed by the full faith and credit of the U.S. Treasury
may be affected by changes in the creditworthiness of the agency that issued
them. Guarantees of principal and interest on obligations that may be purchased
by the Fund are not guarantees of the market value of such obligations, nor do
they extend to the value of shares of the Fund. Other fixed-income securities in
which the Fund may invest, while of investment-grade quality, may be of lesser
credit quality than U.S. Government securities.

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 countries,
that issue these 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.

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.

SECURITIES OF NON-U.S. ISSUERS

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.

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.

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.

Market Characteristics; Differences in Securities Markets. The securities
markets in many of the countries in which the Fund may invest 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.

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.

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.

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, 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 A to this
Prospectus.

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.

<PAGE>

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 A. Risks
associated with Hedging and Other Strategic Transactions are also described in
Appendix A to this Prospectus.

YEAR 2000

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

PORTFOLIO MANAGER. Jack D. Burks will serve as the portfolio manager for the
Fund. Mr. Burks is a Managing Director of the Adviser and has been associated
with the Adviser since 1985.

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

OFFITBANK VIF-U.S. GOVERNMENT SECURITIES FUND

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
----------------------
Number of Outstanding Shares

New Year's Day (observed) Friday, December 31, 1999
Martin Luther King, Jr. Day Monday, January 17, 2000
Presidents' Day Monday, February 15, 2000

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
<PAGE>

annually 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.

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

PERFORMANCE INFORMATION

APPENDIX A

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"). The Fund may be unable or limited in its ability to
engage in Hedging and Other Strategic transactions by certain factors, including
current economic conditions.

GENERAL CHARACTERISTICS OF OPTIONS

Over-the-counter ("OTC") options are purchased from or sold to securities
dealers, financial institutions or other parties (collectively referred to as
"Counterparties"
<PAGE>

GENERAL CHARACTERISTICS OF FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

The segregation requirements with respect to futures contracts and options
thereon are described below under "Use of Segregated and Other Special
Accounts."
<PAGE>

OPTIONS ON SECURITIES INDICES AND OTHER FINANCIAL INDICES

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

<PAGE>

COMBINED TRANSACTIONS

SWAPS, CAPS, FLOORS AND COLLARS

<PAGE>

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

<PAGE>

EURODOLLAR INSTRUMENTS

RISK FACTORS

Currency hedging involves some of the same risks and considerations as
other

<PAGE>

RISKS OF HEDGING AND OTHER STRATEGIC TRANSACTIONS OUTSIDE THE UNITED STATES

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFICERS AND DIRECTORS INVESTMENT ADVISERS
Morris W. Offit OFFITBANK
Chairman of the Board, President 520 Madison Avenue
and Director New York, NY 10022-4213

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:

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)
- --------------------------------------------------------------------------------

<PAGE>

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

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFITBANK VIF - MORTGAGE SECURITIES FUND

PROSPECTUS

APRIL 30, 1999

<PAGE>

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 4
Investment Objective and Principal
Strategies 4
Additional Strategies 7
Risks of Investing in the Fund 7

Details on the management MANAGEMENT OF THE FUND
and operations of the Fund. Investment Adviser 17
Service Provider Chart 18

Policies and instructions for SHAREHOLDER INFORMATION
opening, maintaining and Pricing of Fund Shares 19
closing an account in the Purchase of Fund Shares 20
Fund. Redemption of Fund Shares 20
Shareholder Services 20
Dividends and Distributions 20
Taxes 21
Shareholder Communications 21
Performance Information 22

Appendix A: Hedging and Other Strategic
Transactions A-1

FOR MORE INFORMATION see back cover

<PAGE>

OFFITBANK VIF - MORTGAGE SECURITIES FUND

INVESTMENT OBJECTIVE

The Fund's investment objective is to maximize total return from a combination
of investment income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

The Fund will seek to achieve its objective by investing at least 80% of its
total assets in investment grade or comparable mortgage-related securities
issued by the U.S. government, its agencies and instrumentalities, by private
entities in the U.S., and by foreign governments and governmental and private
entities. The Fund will invest primarily in mortgage-related securities
representing interests in residential property, adjustable rate and derivative
multiclass mortgage securities and collateralized mortgage obligations issued by
U.S. entities. The Fund may invest up to 20% of its total assets in U.S.
Government securities and investment grade or comparable fixed income securities
of foreign issuers. The Fund is not limited with regard to the maturities of the
securities in which it may invest.

PRINCIPAL RISK FACTORS

o Investors may lose money.

o A substantial portion of the securities purchased by the Fund may be
mortgage-backed and/or asset-backed securities, the value of which may be
sensitive to interest rate changes.

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

<PAGE>

For more detail on the principal risks summarized here, please see "Risks of
Investing in the Fund" herein.

PRIOR PERFORMANCE

No prior performance is available as the Fund has not yet commenced investment
operations.

FINANCIAL HIGHLIGHTS

The OFFITBANK VIF - Mortgage Securities Fund had not commenced investment
operations as of April 30, 1999, therefore no financial highlights information
is available.

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

The investment objective of the Fund is to maximize total return from a
combination of current income and capital appreciation. The Fund seeks to
achieve this investment objective by investing at least 80% of the value of its
assets in a diversified portfolio of investment grade or comparable
mortgage-related securities. 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 policy, the Company 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.

Mortgage-related securities are securities that, directly or indirectly,
represent participations in, or are secured by and payable from, loans secured
by residential or commercial property. Mortgage-related securities include
mortgage pass-through securities, adjustable rate mortgage securities,
collateralized mortgage obligations and stripped mortgage-backed securities.
These mortgage-related securities include derivative mortgage securities.

The Fund's primary emphasis will be on mortgage-related securities representing
interests in residential property. Residential mortgage-related securities in
the U.S. fall into three categories: (1) those issued or guaranteed by the U.S.
Government or one of its agencies or instrumentalities, such as GNMA, FNMA and
Federal Home Loan Mortgage Corporation ("FHLMC"); (2) those issued by
non-governmental issuers that represent interests in, or are collateralized by,
mortgage-related securities issued or guaranteed by the U.S. Government or one
of its agencies or instrumentalities; and (3) those issued by non-governmental
issuers that represent an interest in, or are collateralized by, whole mortgage
loans or mortgage-related securities without a government guarantee but usually
with over-collateralization or some other form of private credit enhancement.
Non-governmental issuers referred to in (2) and (3) above include originators of
and investors in mortgage loans, including savings and loan associations,
mortgage bankers,

<PAGE>

commercial banks, investment banks and special purpose subsidiaries of the
foregoing.

The residential mortgage pass-through securities in which the Fund will invest
provide for the pass-through to investors of their pro-rata share of monthly
payments (including any prepayments) made by the individual borrowers on the
pooled mortgage loans, net of any fees paid to the guarantor of such securities
and the servicer of the underlying mortgage loans. The Fund invests both in U.S.
Government pass-through securities issued by GNMA, FNMA and FHLMC, and in
pass-through securities issued by non-governmental issuers. Each of GNMA, FNMA
and FHLMC guarantee timely distributions of interest to certificate holders.
GNMA and FNMA guarantee timely distributions of scheduled principal. FHLMC
generally guarantees only ultimate collection of principal of the underlying
mortgage loans.

The Fund may also invest in adjustable rate mortgage securities ("ARMS"). ARMS
are pass-through mortgage securities collateralized by residential mortgages
with interest rates that are adjusted from time to time. The adjustments usually
are determined in accordance with a predetermined interest rate index and may be
subject to certain limits. While the values of ARMS, like other debt securities,
generally vary inversely with changes in market interest rates (increasing in
value during periods of declining interest rates and decreasing in value during
periods of increasing interest rates), the values of ARMS should generally be
more resistant to price swings than other debt securities because the interest
rates of ARMS move with market interest rates. The adjustable rate feature of
ARMS will not, however, eliminate fluctuations in the prices of ARMS,
particularly during periods of extreme fluctuations in interest rates. Also,
since many adjustable rate mortgages only reset on an annual basis, it can be
expected that the prices of ARMS will fluctuate to the extent that changes in
prevailing interest rates are not immediately reflected in the interest rates
payable on the underlying adjustable rate mortgages.

The Fund may invest in collateralized mortgage obligations ("CMOs") issued by
the U.S. entities. CMOs are debt obligations collateralized by mortgage loans or
mortgage pass-through securities. CMOs may be collateralized by GNMA, FNMA or
Freddie Mac Certificates, but also may be collateralized by whole loans or
private pass-throughs (such collateral collectively hereinafter referred to as
"Mortgage Assets"). Multiclass pass-through securities are interests in a trust
composed of Mortgage Assets. Unless the context indicates otherwise, all
references herein to CMOs include multiclass pass-through securities. Payments
of principal and of interest on the Mortgage Assets, and any reinvestment income
thereon, provide the funds to pay debt service on the CMOs or make scheduled
distributions on the multiclass pass-through securities. CMOs may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators
of, or investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose
subsidiaries of the foregoing.

<PAGE>

several classes of a series of a CMO in innumerable ways. In one structure,
payments of principal, including any principal prepayments, on the Mortgage
Assets are applied to the classes of a CMO in the order of their respective
stated maturities or final distribution dates, so that no payment of principal
will be made on any class of CMOs until all other classes having an earlier
stated maturity or final distribution date have been paid in full. The Fund has
no present intention to invest in CMO residuals.

The Fund may also invest in, among others, parallel pay CMOs and Planned
Amortization Class CMOs ("PAC Bonds"). Parallel pay CMOs are structured to
provide payments of principal on each payment date to more than one class. These
simultaneous payments are taken into account in calculating the stated maturity
date or final distribution date of each class, which, as with other CMO
structures, must be retired by its stated maturity date or a final distribution
date but may be retired earlier. PAC Bonds are a type of CMO tranche or series
designated to provide relatively predictable payment of principal provided that
among other things, the actual prepayment experience on the underlying mortgage
loans falls within a predefined range. If the actual prepayment experience on
the underlying mortgage loans is at a rate faster or slower than the predefined
range or if deviations from other assumptions occur, principal payments on the
PAC Bond may be earlier or later than predicted. Because of these features, PAC
Bonds generally are less subject to the risks of prepayment than are other types
of mortgage-related securities.

The Fund may purchase stripped mortgage securities which are derivative
multiclass mortgage securities. Stripped mortgage securities may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators
of, or investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose
subsidiaries of the foregoing. Stripped mortgage securities have greater
volatility than other types of mortgage securities. Although stripped mortgage
securities are purchased and sold by institutional investors through several
investment banking firms acting as brokers or dealers, the market for such
securities has not yet been fully developed. Accordingly, stripped mortgage
securities are generally illiquid and to such extent, together with any other
illiquid investments, will be subject to the Fund's applicable restriction on
investments in illiquid securities. Stripped mortgage securities are structured
with two or more classes of securities that receive different proportions of the
interest and principal distributions on a pool of mortgage assets. A common type
of stripped mortgage security will have at least one class receiving only a
small portion of the interest and a larger portion of the principal from the
mortgage assets, while the other class will receive primarily interest and only
a small portion of the principal. In the most extreme case, one class will
receive all of the interest ("IO" or interest-only class), while the other class
will receive all of the principal ("PO" or principal only class). The yield to
maturity on IOs, POs and other mortgage securities that are purchased at a
substantial premium or discount generally are extremely sensitive not only to
changes in prevailing interest rates but also to the rate of principal payments
(including prepayments) on the related underlying mortgage assets, and a rapid
rate of principal payments may have a material adverse effect on such
securities' yield to maturity. If the underlying mortgage assets experience
greater than anticipated prepayments of principal, the Fund may fail to fully
recoup its initial investment in these securities even if the securities have
received the highest rating by a nationally recognized statistical rating
organization.

In addition to the stripped mortgage securities described above, the Fund may
invest in similar securities such as Super POs and Levered IOs which are more
volatile than POs and IOs. Risks associated with instruments such as Super POs
are similar in nature to those risks related to

<PAGE>

investments in POs. Risks connected with Levered IOs are similar in nature to
those associated with IOs. The Fund may also invest in other similar instruments
developed in the future that are deemed consistent with its investment
objective, policies and restrictions. POs may generate taxable income from the
current accrual of original issue discount, without a corresponding distribution
of cash to the Fund.

Up to 20% of the Fund's total assets may be invested in investment grade or
comparable fixed income securities, including mortgage-related securities of
issuers located in Canada, the United Kingdom, Denmark or other countries which
may develop a mortgage securities market. Any Fund investment denominated in a
foreign currency will be hedged against fluctuations in value versus the U.S.
dollar.

ADDITIONAL STRATEGIES

The Fund may also invest in commercial mortgage-related securities, which are
generally multi-class debt or pass-through securities backed by a mortgage loan
or pool of mortgage loans secured by commercial property, such as industrial and
warehouse properties, office buildings, retail space and shopping malls,
multifamily properties and cooperative apartments, hotels and motels, nursing
homes, hospitals and senior living centers. The commercial loans underlying
these securities are generally not amortizing or not fully amortizing. At their
maturity date, repayment of the remaining principal balance or "balloon" is due
and is repaid through the attainment of an additional loan or the sale of the
property. Unlike most single family residential mortgages, commercial real
property loans often contain provisions which substantially reduce the
likelihood that such securities will be prepaid.

The market for commercial mortgage-related securities developed more recently
and in terms of total outstanding principal amount of issues is relatively small
compared to the market for residential mortgage-related securities. Many of the
risks of investing in commercial mortgage-related securities reflect the risks
of investing in real estate securing the underlying mortgage loans. These risks
reflect the effect of local and other economic conditions such as real estate
markets, the ability of tenants to make loan payments, and the ability of a
property to attract and retain tenants. Commercial mortgage-related securities
may be less liquid and exhibit greater price volatility than other types of
mortgage-related securities.

<PAGE>

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 management changes or labor
relations. The objective 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
objective.

MORTGAGE SECURITIES

The investment characteristics of mortgage-related securities differ from
traditional debt securities. These differences can result in significantly
greater price and yield volatility than is the case with traditional fixed
income securities. The major differences typically include more frequent
interest and principal payments, usually monthly, the adjustability of interest
rates, and the possibility that prepayments of principal may be made at any
time. Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors. During periods of
declining interest rates, prepayment rates can be expected to accelerate. Under
certain interest rate and prepayment rate scenarios, the Fund may fail to recoup
fully its investment in mortgage-backed securities (and incur capital losses)
notwithstanding a direct or indirect governmental or agency guarantee. In
general, changes in the rate of prepayments on a mortgage-related security will
change that security's market value and its yield to maturity. When interest
rates fall, high prepayments could force the Fund to reinvest principal at a
time when investment opportunities are not attractive. Thus, mortgage-backed
securities may not be an effective means for the Fund to lock in long-term
interest rates. Conversely, during periods when interest rates rise, slow
prepayments could cause the average life of the security to lengthen and the
value to decline more than anticipated. However, during periods of rising
interest rates, principal repayments by mortgage-backed securities allows the
Fund to reinvest at increased interest rates.

Mortgage-related securities issued by private issuers in the U.S. may entail
greater risk than mortgage-related securities that are guaranteed by the U.S.
Government, its agencies or instrumentalities. Privately-issued mortgage
securities are issued by private originators of, or investors in, mortgage
loans, including mortgage bankers, commercial banks, investment banks, savings
and loan associations and special purpose subsidiaries of the foregoing. Since
privately-

<PAGE>

issued mortgage certificates are not guaranteed by an entity having the credit
status of GNMA or FHLMC, such securities generally are structured with one or
more types of credit enhancement. Such credit support falls into two categories:
(1) liquidity protection; and (2) protection against losses resulting from
ultimate default by an obligor on the underlying assets. Liquidity protection
refers to the provision of advances, generally by the entity administering the
pool of assets, to ensure that the pass-through of payments due on the
underlying pool occurs in a timely fashion. Protection against losses resulting
from ultimate default enhances the likelihood of ultimate payment of the
obligations on at least a portion of the assets in the pool. Such protection may
be provided through guarantees, insurance policies or letters of credit obtained
by the issuer or sponsor from third parties, through various means of
structuring the transaction or through a combination of such approaches.

The ratings of mortgage securities for which third-party credit enhancement
provides liquidity protection or protection against losses from default are
generally dependent upon the continued creditworthiness of the provider of the
credit enhancement. The ratings of such securities could be subject to reduction
in the event of deterioration in the creditworthiness of the credit enhancement
provider even in cases where the delinquency and loss experience on the
underlying pool of assets is better than expected.

Examples of credit support arising out of the structure of the transaction
include "senior-subordinated securities" (multiple class securities with one or
more classes subordinate to other classes as to the payment of principal thereof
and interest thereon, with the result that defaults on the underlying assets are
borne first by the holders of the subordinated class), creation of "reserve
funds" (where cash or investments sometimes funded from a portion of the
payments on the underlying assets are held in reserve against future losses) and
"over-collateralization" (where the scheduled payments of, or the principal
amount of, the underlying assets exceed those required to make payment of the
securities and pay any servicing or other fees). The degree of credit support
provided for each issue is generally based on historical information with
respect to the level of credit risk associated with the underlying assets.
Delinquency or loss in excess of that which is anticipated could adversely
affect the return on an investment in such security.

SECURITIES OF NON-U.S. ISSUERS

<PAGE>

(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.

<PAGE>

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.

<PAGE>

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.

<PAGE>

and ask prices may exist in such markets.

<PAGE>

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.

HEDGING AND OTHER STRATEGIC TRANSACTIONS

<PAGE>

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.

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 A. Risks
associated with Hedging and Other Strategic Transactions are also described in
Appendix A to this Prospectus.

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

<PAGE>

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.

YEAR 2000

In addition, problems processing year 2000 data could also have adverse effects
on the computer systems of the issuers or entities that comprise the Fund's
portfolio securities. If such issuers or entities are unable to properly address
the year 2000 problem, then it could have an adverse effect on the operations of
such issuer, which, in turn, could result in a drop in market value for the
securities and a loss for the Fund. This problem may exist to a greater degree
with respect to investments by the Fund in the securities of non-U.S. issuers.
Generally, non-U.S. issuers have not devoted the resources necessary to properly
address the year 2000 problem. Therefore, the problems noted above for domestic
issuers of securities held by the Fund is likely to be exacerbated for the
securities of non-U.S. issuers.

<PAGE>

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

Jack D. Burks will serve as the portfolio manager for the Fund. Mr. Burks is
a Managing Director of OFFITBANK and has been associated with OFFITBANK since
1985.

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

<PAGE>

OFFITBANK VIF-MORTGAGE SECURITIES FUND

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
----------------------------
Number of Outstanding Shares

New Year's Day (observed) Friday, December 31, 1999
Martin Luther King, Jr. Day Monday, January 17, 2000
Presidents' Day Monday, February 15, 2000

<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 and distribute dividends of substantially all of its net
investment income

<PAGE>

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.

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

<PAGE>

PERFORMANCE INFORMATION

<PAGE>

APPENDIX A

HEDGING AND OTHER STRATEGIC TRANSACTIONS

GENERAL CHARACTERISTICS OF OPTIONS

<PAGE>

Over-the-counter ("OTC") options are purchased from or sold to securities
dealers, financial institutions or other parties (collectively referred to as
"Counterparties"

<PAGE>

GENERAL CHARACTERISTICS OF FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

<PAGE>

The segregation requirements with respect to futures contracts and options
thereon are described below under "Use of Segregated and Other Special
Accounts."

<PAGE>

OPTIONS ON SECURITIES INDICES AND OTHER FINANCIAL INDICES

CURRENCY TRANSACTIONS

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

<PAGE>

COMBINED TRANSACTIONS

SWAPS, CAPS, FLOORS AND COLLARS

<PAGE>

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

<PAGE>

EURODOLLAR INSTRUMENTS

RISK FACTORS

Currency hedging involves some of the same risks and considerations as
other

<PAGE>

RISKS OF HEDGING AND OTHER STRATEGIC TRANSACTIONS OUTSIDE THE UNITED STATES

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFICERS AND DIRECTORS INVESTMENT ADVISERS
Morris W. Offit OFFITBANK
Chairman of the Board, President and 520 Madison Avenue
Director New York, NY 10022-4213

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:

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

- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------

<PAGE>

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

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFITBANK VIF - LATIN AMERICA EQUITY FUND

PROSPECTUS

APRIL 30, 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 4
Investment Objective and Principal Strategies 4
Additional Strategies 5
Risks of Investing in the Fund 7

Details on the management MANAGEMENT OF THE FUND
and operations of the Fund. Investment Adviser 17
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
<PAGE>

OFFITBANK VIF - LATIN AMERICA EQUITY FUND

INVESTMENT OBJECTIVES

The Fund's primary investment objective is capital appreciation. Current income
is a secondary objective of the Fund.

PRINCIPAL INVESTMENT STRATEGIES

THE FUND WILL SEEK TO ACHIEVE ITS OBJECTIVE BY INVESTING PRIMARILY IN EQUITY
SECURITIES (INCLUDING DEPOSITARY RECEIPTS AND DEPOSITARY SHARES) OF LATIN
AMERICAN ISSUERS. UNDER NORMAL CIRCUMSTANCES, THE FUND WILL INVEST AT LEAST 80%
OF ITS TOTAL ASSETS IN EQUITY SECURITIES OF LATIN AMERICAN ISSUERS (AS DEFINED
IN THIS PROSPECTUS). THE FUND'S INVESTMENTS MAY BE DENOMINATED IN ANY CURRENCY,
INCLUDING U.S. DOLLARS. ALL OR A PORTION OF THE DEBT SECURITIES IN WHICH THE
FUND MAY INVEST MAY BE UNRATED OR RATED BELOW INVESTMENT grade. The Fund employs
a "top down" equity strategy pursuant to which it analyzes broad economic trends
and selects investments that it believes will benefit from those trends. stock
selection is designed to identify companies in high growth industries that are
attractively valued based on their future earnings potential.

PRINCIPAL RISK FACTORS

o Investors may lose money.

o There is no limit on the amount of the Fund's total assets that may be
invested in non-U.S. dollar-denominated securities. International
investing is subject to special risks, including, but not limited to,
currency exchange 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 is not limited with respect to the proportion of its total assets
that may be invested in the securities of issuers located in any one Latin
American country. Concentration in any one country intensifies the
international investing risks related to such country.

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

<PAGE>

o Since the Fund attempts to benefit from investment opportunities
resultingderived from long-term improvement in economic and political
conditions, and other positive trends and developments in Latin American
countries, it is intended for long-term investors. You should consider
your ability to buy and hold this Fund for the long-term.

For more detail on the principal risks summarized here, please see "Risks of
Investing in the Fund" herein.

PRIOR PERFORMANCE

No prior performance is available as the Fund has not yet commenced investment
operations.

FINANCIAL HIGHLIGHTS

The OFFITBANK VIF-Latin America Equity Fund had not commenced investment
operations as of April 30, 1999, therefore no financial highlights information
is available.

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

The Fund's primary investment objective is capital appreciation. The Fund will
seek to achieve its objective by investing, under normal market conditions, at
least 80% of its total assets in equity securities of Latin American issuers, as
defined below. 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 policy, the Company would not materially change the
investment objective of the Fund without shareholder approval. There can be no
assurance that the Fund will achieve its investment objectives.

The Fund is actively managed to seek to benefit from investment opportunities
derived from long-term improving economic and political conditions and other
positive trends and developments in Latin American countries. The Fund employs a
"top down" equity strategy pursuant to which it analyzes broad economic trends
and selects investments that it believes will benefit from those trends. Stock
selection is designed to identify companies in high growth industries that are
attractively valued based on their future earnings potential. Accordingly, the
Fund is intended for long-term investors and should not be considered as a
vehicle for trading purposes. OFFITBANK (the "Adviser") believes that 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
Latin American countries.

For purposes of this Prospectus, Latin American issuers are: (i) companies
organized under the laws of a Latin American country; (ii) companies whose
securities are principally traded in Latin American countries; (iii)
subsidiaries of companies described in clause (i) or (ii) above that issue debt
securities guaranteed by, or securities payable with (or convertible into) the
stock of companies described in clause (i) or (ii); (iv) companies that derive
at least 50% of their revenues
<PAGE>

from either goods produced or services performed in Latin America or sales made
in Latin America; and (v) the government of any Latin American country and its
agencies and instrumentalities and any public sector entity fully or partly
owned by any such government, agency or instrumentality. For purposes of this
Prospectus, "Latin America" currently consists of the countries of Argentina,
the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, the
Dominican Republic, Ecuador, El Salvador, French Guiana, Guatemala, Guyana,
Haiti, Honduras, Jamaica, Mexico, the Netherlands Antilles, Nicaragua, Panama,
Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and Venezuela.

The Fund may invest in American Depositary Receipts ("ADRs") or other similar
types of receipts or other similar securities, such as American Depositary
Shares and Global Depositary Shares, convertible into securities of foreign
issuers. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued by a U.S. bank or trust company evidencing ownership of the
underlying securities. Generally, ADRs in registered form are designed for use
in U.S. securities markets. As a result of the absence of established securities
markets and publicly owned corporations in certain foreign countries as well as
restrictions on direct investment by foreign entities, the Fund may be able to
invest in such countries solely or primarily through ADRs or similar securities
and government approved investment vehicles. The Adviser expects the Fund, to
the extent of its investment in ADRs, will invest predominantly in ADRs
sponsored by the underlying issuers. The Fund, however, may invest in
unsponsored ADRs. Issuers of the stock of unsponsored ADRs are not obligated to
disclose material information in the United States and, therefore, there may not
be a correlation between such information and the market value of such ADRs.

The Fund's assets will be allocated among the countries in Latin America in
accordance with the Adviser's judgment as to where the best investment
opportunities exist. The Fund is not limited with respect to the proportion of
its total assets that may be invested in the securities of issuers located in
any one Latin American country.

In selecting equity investments for the Fund, the Adviser seeks to identify and
invest in companies it believes offer potential for long-term capital
appreciation. In evaluating prospective investments, the Adviser will utilize
internal financial, economic and credit analysis resources as well as
information obtained from other sources. In selecting industries and companies
for investment, the Adviser will consider factors such as overall growth
prospects, competitive position in domestic and export markets, technology,
research and development, productivity, labor costs, raw material costs and
sources, profit margins, return on investment, capital resources, government
regulation and management.

<PAGE>

The Adviser's choice to employ a temporary defensive investment strategy may
prevent the Fund from achieving its investment objective.

ADDITIONAL STRATEGIES

The Fund may invest in certain state sponsored programs. For example, the
governments of some Latin American countries, to varying degrees, have been
engaged in programs of selling part or all of their stakes in government-owned
or government-controlled enterprises ("privatizations"). The Adviser believes
that privatizations may offer investors opportunities for significant capital
appreciation and intends to invest assets of the Fund in privatizations in
appropriate circumstances. The ability of foreign persons, such as the Fund, to
participate in privatizations in certain Latin American countries may be limited
by local law, or the terms on which the Fund may be permitted to participate may
be less advantageous than those for local investors. There can be no assurance
that privatization programs will continue or be successful.

The Fund seeks to provide current income as a secondary objective. Up to 20% of
the total assets of the Fund may be invested at any one time in debt securities
(including convertible debt securities, Brady Bonds and Pay-in-kind bonds) of
Latin American issuers. In selecting particular debt securities for the Fund,
the Adviser intends to consider the same factors as for the OFFITBANK VIF
Emerging Markets Fund. For example, factors such as liquidity, price volatility,
tax implications, interest rate sensitivity, foreign currency exchange risks,
counterparty risks and technical market considerations. All or a substantial
amount of debt securities in which the Fund may invest will be high yield, high
risk debt securities which are unrated and comparable in quality to debt
securities rated below investment grade (i.e., rated BB or lower by S&P and D&P,
or Ba or lower by 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 are
considered to be speculative and involve comparatively greater risks, including
price volatility and the risk of default in the timely payment of interest and
principal, than investment grade securities or securities of comparable value.
Such investments may be non-performing securities or securities in default when
purchased. See "Risks of Investing in the Fund - High Yield, High Risk Debt
Securities."

The Fund may invest in "Brady Bonds," which are debt securities issued or
guaranteed by foreign governments in exchange for existing external commercial
bank indebtedness under a plan announced by former U.S. Treasury Secretary
Nicholas F. Brady in 1989. To date, Brady Bonds have been issued by the
governments of fifteen countries, the largest proportion having been issued by
Argentina, Brazil, Mexico and Venezuela. Brady Bonds have been issued only
recently, and accordingly, they do not have a long payment history. Brady Bonds
may be collateralized or uncollateralized, are issued in various currencies
(primarily the U.S. dollar) and are actively traded in the over-the-counter
secondary market.

The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate

<PAGE>

discount bonds, are collateralized in full as to principal by U.S. Treasury zero
coupon bonds having the same maturity as the bonds. Interest payments on such
bonds generally are collateralized by cash or securities in an amount that, in
the case of fixed rate bonds, is equal to at least six months of rolling
interest payments or, in the case of floating rate bonds, initially is equal to
at least one year's rolling interest payments based on the applicable interest
rate at that time and is adjusted at regular intervals thereafter. Brady Bonds
which have been issued to date are rated BB or B by S&P or Ba or B by Moody's
or, in cases in which a rating by S&P or Moody's has not been assigned, are
generally considered by the Adviser to be of comparable quality.

The Fund may invest in Pay-in-kind bonds. Pay-in-kind bonds pay all or a portion
of their interest in the form of debt or equity securities. The Fund may receive
payments from Pay-in-kind bonds in the form of both debt and equity securities
provided that such debt securities do not cause the Fund to exceed its
respective investment limitation in debt securities. Pay-in-kind bonds may be
issued by a wide variety of corporate and governmental issuers.

Pay-in-kind bonds are subject to greater price fluctuations in response to
changes in interest rates than are ordinary interest-paying debt securities with
similar maturities. The value of Pay-in-kind bonds appreciates more during
periods of declining interest rates and depreciates more during periods of
rising interest rates than does the value of ordinary interest-bearing debt
securities with similar maturities. Under current federal income tax law, the
Fund is required to accrue as income each year the value of securities received
in respect of pay-in-kind bonds and a portion of the original issue discount
with respect to zero coupon securities and other securities issued at a discount
to the stated redemption price. In addition, the Fund will elect similar
treatment for any market discount with respect to debt securities acquired at a
discount. Accordingly, the Fund may have to dispose of portfolio securities
under disadvantageous circumstances in order to generate current cash to satisfy
certain distribution requirements. See "Taxes."

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 management changes or labor
relations. The objective 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
objective.

The Fund is generally managed in a style similar to other open-end investment
companies which
<PAGE>

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.

SECURITIES OF NON-U.S. ISSUERS

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.

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
<PAGE>

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.

("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.

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.

HIGH YIELD, HIGH RISK DEBT SECURITIES

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.

description of such ratings.

<PAGE>

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.

HEDGING AND OTHER STRATEGIC TRANSACTIONS

The Fund may be authorized to use a variety of investment strategies described
below to hedge
<PAGE>

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.

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
<PAGE>

to the extent the Fund's obligations are not otherwise "covered" through
ownership of the underlying security, financial instrument or currency.

<PAGE>

CONCENTRATION

The Fund is not limited with respect to the proportion of its total assets that
may be invested in the securities of issuers located in any one Latin American
country. As such, an investment in the Fund should be made with an understanding
of the characteristics of the Latin American markets and the risks that such an
investment may entail. Investors should be aware that securities of foreign
issuers 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

YEAR 2000

<PAGE>

exacerbated for the securities of non-U.S. issuers.

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

Richard M. Johnston will serve as the portfolio manager for the Fund. Mr.
Johnston is a Managing Director of the Adviser and has been director of Latin
American Investments since 1992.

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

OFFITBANK VIF-LATIN AMERICA 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
|
OFFITBANK | The Chase Manhattan Bank
520 Madison Avenue -----| 4 MetroTech Center
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
--------------------------------

<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

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
<PAGE>

annually. 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.

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

PERFORMANCE INFORMATION

<PAGE>

APPENDIX A

COMMERCIAL PAPER RATINGS

commercial paper:

"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 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-3" - Debt possesses satisfactory liquidity and other protection factors
qualify issues as
<PAGE>

to investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.

"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.
<PAGE>

"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.

"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.
<PAGE>

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

construction or elimination of basis of condition.

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:

<PAGE>

events.

MUNICIPAL NOTE RATINGS

"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.
<PAGE>

APPENDIX B

HEDGING AND OTHER STRATEGIC TRANSACTIONS

GENERAL CHARACTERISTICS OF OPTIONS

Over-the-counter ("OTC") options are purchased from or sold to securities
dealers, financial institutions or other parties (collectively referred to as
"Counterparties"
<PAGE>

GENERAL CHARACTERISTICS OF FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

The segregation requirements with respect to futures contracts and options
thereon are described below under "Use of Segregated and Other Special
Accounts."
<PAGE>

OPTIONS ON SECURITIES INDICES AND OTHER FINANCIAL INDICES

CURRENCY TRANSACTIONS

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
<PAGE>

COMBINED TRANSACTIONS

SWAPS, CAPS, FLOORS AND COLLARS

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
<PAGE>

EURODOLLAR INSTRUMENTS

RISK FACTORS

Currency hedging involves some of the same risks and considerations as
other
<PAGE>

RISKS OF HEDGING AND OTHER STRATEGIC TRANSACTIONS OUTSIDE THE UNITED STATES

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFICERS AND DIRECTORS INVESTMENT ADVISERS
Morris W. Offit OFFITBANK
Chairman of the Board, President 520 Madison Avenue
and Director New York, NY 10022-4213

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:

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

- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------
<PAGE>

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

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFITBANK VIF - GLOBAL CONVERTIBLE FUND

PROSPECTUS

APRIL 30, 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............................4
Investment Objective and Principal Strategies...4
Risks of Investing in the Fund..................6

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
<PAGE>

OFFITBANK VIF - GLOBAL CONVERTIBLE FUND

INVESTMENT OBJECTIVE

The Fund's investment objective is to maximize total return from a combination
of capital appreciation and investment income.

PRINCIPAL INVESTMENT STRATEGIES

The Fund will seek to achieve its objective by investing primarily in an
internationally diversified portfolio of convertible debt securities,
convertible preferred stocks and "synthetic" convertible securities consisting
of a combination of debt securities or preferred stock and warrants or options.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in traditional convertible securities and may invest up to 35% of its
total assets in synthetic convertible securities. In evaluating investments, the
Adviser will consider factors such as the growth potential of various economies
and securities markets, currency and taxation factors, and financial, social,
national and political factors. The Fund's investments may be denominated in any
currency, including U.S. dollars. All or a portion of the Fund's total assets
may be invested in below investment grade debt securities.

PRINCIPAL RISK FACTORS

o Investors may lose money.

o Under normal circumstances, at least 65% of the Fund's total assets will
be invested in traditional convertible securities and up to 35% of the
Fund's total assets may be invested in "synthetic" convertible securities.
Investment by the Fund in such securities involves interest rate risk
because the value of a convertible security is influenced by changes in
interest rates and market risk because the conversion value of a
convertible security is influenced by changes in the market price of the
underlying stock.

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

o The Fund may invest all or a substantial portion of its total assets in
securities which 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 Because the Fund's investments may be denominated in currencies other than
the U.S. dollar, investors may be subject to currency risks. For example,
Fund investors may suffer losses when currency exchange rates fluctuate.
In addition, Fund investors may suffer losses when significant
devaluations occur in non-U.S. currencies.

For more detail on the principal risks summarized here, please see "Risks of
Investing in the Fund" herein.

<PAGE>

PRIOR PERFORMANCE

No prior performance is available as the Fund has not yet commenced investment
operations.

FINANCIAL HIGHLIGHTS

The OFFITBANK VIF - Global Convertible Fund had not commenced investment
operations as of April 30, 1999, therefore no financial highlights information
is available.

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

The investment objective of the Fund is to maximize total return from a
combination of capital appreciation and investment income. The Fund will seek to
achieve its objective by investing primarily in an internationally diversified
portfolio of convertible debt securities, convertible preferred stocks and
"synthetic" convertible securities consisting of a combination of debt
securities or preferred stock and warrants or options. Under normal
circumstances, the Fund will invest at least 65% of its total assets in
traditional convertible securities and may invest up to 35% of its total assets
in synthetic convertible securities. The Fund's investments may be denominated
in any currency, including U.S. dollars. All or a portion of the Fund's total
assets may be invested in below investment grade debt securities. 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
policy, the Company 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.

In evaluating proposed investments the Adviser will seek to maximize the total
return on the Fund's portfolio in terms of U.S. dollars. In this regard, the
Adviser will consider factors that relate both to various securities markets and
to specific securities traded in those markets. In evaluating markets, the
Adviser will consider such factors as the condition and growth potential of
various economies and securities markets, currency and taxation factors
(including the applicability and rate of withholding taxes) and other pertinent
financial, social, national and political factors. In analyzing convertible
securities, the Adviser will consider both the yield on the convertible security
and the potential capital appreciation that is offered by the underlying common
stock. There can be no assurance that the Fund will achieve its investment
objective.

The convertible securities to be held by the Fund include any corporate debt
security or preferred stock that may be converted into underlying shares of
common stock and include both traditional convertible securities and synthetic
convertible securities. The common stock underlying convertible securities may
be issued by a different entity than the issuer of the convertible securities.
Convertible securities entitle the holder to receive interest payments paid on
corporate debt securities or the dividend preference on a preferred stock until
such time as the convertible security matures or is redeemed or until the holder
elects to exercise the conversion privilege. "Synthetic" convertible securities,
as such term is used herein, are created by combining separate securities which
possess the two principal characteristics of a true convertible security, fixed
income and the right to acquire equity securities. See "Risks of Investing in
the Fund - Convertible Securities" below for additional information concerning
traditional convertible

<PAGE>

securities and synthetic convertible securities eligible for purchase by the
Fund.

The Fund believes that the characteristics of convertible securities make them
appropriate investments for an investment company seeking a high total return
from capital appreciation and investment income. These characteristics include
the potential for capital appreciation as the value of the underlying common
stock increases, the relatively high yield received from dividend or interest
payments as compared to common stock dividends and decreased risks of decline in
value relative to the underlying common stock due to their fixed income nature.
As a result of the conversion feature, however, the interest rate or dividend
preference on a convertible security is generally less than would be the case if
the securities were issued in nonconvertible form.

Although the Fund may invest in securities denominated in any currency that are
convertible into common stocks of companies located throughout the world, it is
expected that a majority of its assets will be invested in securities
denominated in U.S. dollars, currencies of Pacific Basin countries and
currencies of Western European countries and convertible into equity securities
of United States, Pacific Basin or Western European corporations. To the extent
the Fund acquires synthetic convertible securities, it is expected that the debt
securities or preferred stock will principally be denominated in U.S. dollars,
Pacific Basin currencies or Western European currencies and the warrants or
options will principally be exercisable to purchase equity securities of U.S.,
Pacific Basin or Western European issuers.

Under normal circumstances, the Fund may invest up to 20% of its total assets in
other types of securities including equity securities and nonconvertible debt
securities of U.S. and non-U.S. issuers.

The Fund has established no rating criteria for the debt securities in which it
may invest and such securities may not be rated at all for creditworthiness.
Securities rated in the medium to lower rating categories of nationally
recognized statistical rating organizations and unrated securities of comparable
quality are predominantly speculative with respect to the capacity to pay
interest and repay principal in accordance with the terms of the security and
generally involve a greater volatility of price and risk of default than
securities in higher rating categories. See "Risks of Investing in the Fund -
High Yield, High Risk Debt Securities." In purchasing such securities, the Fund
will rely on the Adviser's judgment, analysis and experience in evaluating the
creditworthiness of an issuer of such securities. The Adviser will take into
consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, its operating history, the
quality of the issuer's management and regulatory matters. The Fund does not
intend to purchase debt securities that are in default or which the Adviser
believes will be in default. See Appendix A to this Prospectus for a description
of ratings of Standard & Poor's Ratings Group ("S&P"), Moody's Investors
Service, Inc. ("Moody's") and Duff & Phelps Credit Rating Co. ("D&P").

<PAGE>

the Fund from achieving its investment objective.

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 management changes or labor
relations. The objective 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
objective.

CONVERTIBLE SECURITIES

General. Under normal market circumstances, the Fund will invest at least 65% of
its total assets in traditional convertible securities and "synthetic"
convertible securities. Set forth below is additional information concerning
traditional convertible securities and "synthetic" convertible securities.

Convertible securities are issued and traded in a number of securities markets.
For the past several years, the principal markets have been the United States,
the Euromarket and Japan. Issuers during this period have included major
corporations domiciled in the United States, Japan, France, Switzerland, Canada
and the United Kingdom. Since the Fund will invest a substantial portion of its
assets in the U.S. market and the Euromarket where convertible bonds have been
primarily denominated in U.S. dollars, it is expected that ordinarily a
substantial portion of the convertible securities held by the Fund will be
denominated in U.S. dollars. However, the underlying equity securities typically
will be quoted in the currency of the country where the issuer is domiciled.
With respect to convertible securities denominated in a currency different from
that of the underlying equity securities, the conversion price may be based on a
fixed exchange rate established at the time the security is issued. As a result,
fluctuations in the exchange rate between the currency in which the debt
security is denominated and the currency in which the share price is quoted will
affect the value of the convertible security. The Fund may enter into foreign
currency hedging transactions in which they may seek to reduce the impact of
such fluctuations. Apart from currency considerations, the value of convertible
securities is influenced by both the yield of non-convertible securities of
comparable issuers and by the value of the underlying common stock. The value of
a convertible security viewed without regard to its conversion feature (i.e.,
strictly on the basis of its yield) is sometimes referred to as its
<PAGE>

"investment value." To the extent there are changes in interest rates or yields
of similar non-convertible securities, the investment value of the convertible
security typically will fluctuate. However, at the same time, the value of the
convertible security will be influenced by its "conversion value," which is the
market value of the underlying common stock that would be obtained if the
convertible security were converted. Conversion value fluctuates directly with
the price of the underlying common stock. If, because of a low price of the
underlying common stock, the conversion value is below the investment value of
the convertible security, the price of the convertible security is governed
principally by its investment value.

To the extent the conversion value of a convertible security increases to a
point that approximates or exceeds its investment value, the price of the
convertible security will be influenced principally by its conversion value. A
convertible security will sell at a premium over the conversion value to the
extent investors place value on the right to acquire the underlying common stock
while holding a fixed income security. The yield and conversion premium of
convertible securities issued in Japan and the Euromarket are frequently
determined at levels that cause the conversion value to affect their market
value more than the securities' investment value. If no capital appreciation
occurs on the underlying common stock, a premium may not be fully recovered.

Holders of convertible securities have a claim on the assets of the issuer prior
to the common stockholders but may be subordinated to similar non-convertible
debt securities of the same issuer. A convertible security may be subject to
redemption at the option of the issuer at a price established in the charter
provision, indenture or other governing instrument pursuant to which the
convertible security was issued. If a convertible security held by the Fund is
called for redemption, the Fund will be required to redeem the security, convert
it into the underlying common stock or sell it to a third party. Certain
convertible debt securities may provide a put option to the holder which
entitles the holder to cause the security to be redeemed by the issuer at a
premium over the stated principal amount of the debt security.

Synthetic Convertible Securities. "Synthetic" convertible securities are created
by combining separate securities that possess the two principal characteristics
of a true convertible security, i.e., fixed income ("fixed-income component")
and the right to acquire equity securities ("convertibility component"). The
fixed-income component is achieved by investing in nonconvertible fixed income
securities such as nonconvertible bonds, preferred stocks and money market
instruments. The convertibility component is achieved by investing in warrants,
exchanges or NASDAQ listed call options or stock index call options granting the
holder the right to purchase a specified quantity of securities within a
specified period of time at a specified price or to receive cash in the case of
stock index options.

A warrant is an instrument issued by a corporation that gives a holder the right
to subscribe to a specified amount of capital stock at a set price for a
specified period of time. Warrants involve the risk that the price of the
security underlying the warrant may not exceed the exercise price of the warrant
and the warrant may expire without any value. See "Hedging and Other Strategic
Transactions" below for a discussion of call options and stock index call
options.

the values of its fixed-income component and its convertibility component. For
this reason, the values of a synthetic convertible security and a traditional
convertible security will respond differently to market fluctuations.

<PAGE>

More flexibility is possible in the assembly of a synthetic convertible security
than in the purchase of a convertible security. Synthetic convertible securities
may be selected where the two components represent one issuer or are issued by a
single issuer, thus making the synthetic convertible security similar to a
traditional convertible security. Alternatively, the character of a synthetic
convertible security allows the combination of components representing distinct
issuers which will be used when the Adviser believes that such a combination
would better promote the Fund's investment objective. A synthetic convertible
security also is a more flexible investment in that its two components may be
purchased or sold separately. For example, the Fund may purchase a warrant for
inclusion in a synthetic convertible security but temporarily hold short-term
investments while postponing the purchase of a corresponding bond pending
development of more favorable market conditions.

A holder of a synthetic convertible security faces the risk of a decline in the
price of the stock or the level of the index involved in the convertibility
component, causing a decline in the value of the call option or warrant. Should
the price of the stock fall below the exercise price and remain there throughout
the exercise period, the entire amount paid for the call option or warrant would
be lost. Since a synthetic convertible security includes the fixed-income
component as well, the holder of a synthetic convertible security also faces the
risk that interest rates will rise, causing a decline in the value of the
fixed-income instrument.

SECURITIES OF NON-U.S. ISSUERS

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.

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
<PAGE>

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.
<PAGE>

security or, if the Fund has entered into a contract to sell the security, could
result in possible liability to the purchaser.

Taxes" in the Statement of Additional Information.
<PAGE>

HIGH YIELD, HIGH RISK DEBT SECURITIES

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.

in negotiating the terms of these arrangements and may therefore have access to
information not available to other market participants.

HEDGING AND OTHER STRATEGIC TRANSACTIONS

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.

NON-DIVERSIFIED FUNDS

YEAR 2000
<PAGE>

In addition, problems processing year 2000 data could also have adverse effects
on the computer systems of the issuers or entities that comprise the Fund's
portfolio securities. If such issuers or entities are unable to properly address
the year 2000 problem, then it could have an adverse effect on the operations of
such issuer, which, in turn, could result in a drop in market value for the
securities and a loss for the Fund. This problem may exist to a greater degree
with respect to investments by the Fund in the securities of non-U.S. issuers.
Generally, non-U.S. issuers have not devoted the resources necessary to properly
address the year 2000 problem. Therefore, the problems noted above for domestic
issuers of securities held by the Fund is likely to be exacerbated for the
securities of non-U.S. issuers.

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

Dr. Wallace Mathai-Davis will serve as the portfolio manager for the Fund. Dr.
Mathai-Davis is a Managing Director of the Adviser and has been associated with
the Adviser since 1986.

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

OFFITBANK VIF-GLOBAL CONVERTIBLE 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
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
--------------------------------

<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

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
<PAGE>

dividends annually. 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.

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

PERFORMANCE INFORMATION

APPENDIX A

COMMERCIAL PAPER RATINGS

commercial paper:

"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 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-3" - Debt possesses satisfactory liquidity and other protection factors
qualify issues as

<PAGE>

to investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.

"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.
<PAGE>

"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.

"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.
<PAGE>

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

construction or elimination of basis of condition.

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:

events.

MUNICIPAL NOTE RATINGS

"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.
<PAGE>

APPENDIX B

HEDGING AND OTHER STRATEGIC TRANSACTIONS

GENERAL CHARACTERISTICS OF OPTIONS

Over-the-counter ("OTC") options are purchased from or sold to securities
dealers, financial institutions or other parties (collectively referred to as
"Counterparties"
<PAGE>

GENERAL CHARACTERISTICS OF FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

The segregation requirements with respect to futures contracts and options
thereon are described below under "Use of Segregated and Other Special
Accounts."
<PAGE>

OPTIONS ON SECURITIES INDICES AND OTHER FINANCIAL INDICES

CURRENCY TRANSACTIONS

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

<PAGE>

COMBINED TRANSACTIONS

SWAPS, CAPS, FLOORS AND COLLARS

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
<PAGE>

EURODOLLAR INSTRUMENTS

RISK FACTORS

Currency hedging involves some of the same risks and considerations as
other
<PAGE>

RISKS OF HEDGING AND OTHER STRATEGIC TRANSACTIONS OUTSIDE THE UNITED STATES

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

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.
<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

OFFICERS AND DIRECTORS INVESTMENT ADVISERS
Morris W. Offit OFFITBANK
Chairman of the Board, President 520 Madison Avenue
and Director New York, NY 10022-4213

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:

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

- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------
<PAGE>

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

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

400 Bellevue Parkway
Wilmington, Delaware 19809
(800) 618-9510

STATEMENT OF ADDITIONAL INFORMATION

April 30, 1999

The OFFITBANK Variable Insurance Fund, Inc. (the "Company") is a no load mutual
fund consisting of nine portfolios whose shares are available to participating
life insurance companies ("Participating Companies") and their separate accounts
("Accounts") to fund benefits under variable annuity contracts ("Contracts") and
variable life insurance policies ("Policies") issued by the Participating
Companies. The portfolios are OFFITBANK VIF - DJG Value Equity Fund (the "Value
Equity Fund"), OFFITBANK VIF-U.S. Government Securities Fund ("U.S. Government
Fund"), OFFITBANK VIF-U.S. Small Cap Fund ("U.S. Small Cap Fund"), OFFITBANK
VIF-High Yield Fund ("High Yield Fund"), OFFITBANK VIF-Emerging Markets Fund
("Emerging Markets Fund"), OFFITBANK VIF-Global Convertible Fund ("Global
Convertible Fund"), OFFITBANK VIF-Total Return Fund, OFFITBANK VIF-Latin America
Equity Fund and OFFITBANK VIF-Mortgage Securities Fund.

This Statement of Additional Information ("SAI") provides information about the
Company applicable to each of the following portfolios: Value Equity Fund, U.S.
Government Fund, U.S. Small Cap Fund, High Yield Fund, Emerging Markets Fund and
Global Convertible Fund (individually, a "Fund" and collectively, the "Funds").
This information is in addition to the information that is contained in the
Funds' Prospectuses, each dated April 30, 1999. The U.S. Small Cap Fund, U.S.
Government Fund, High Yield Fund, Emerging Markets Fund and Global Convertible
Fund are advised by OFFITBANK. OFFITBANK has retained Rockefeller & Co., Inc.
("Rockefeller & Co.") as Sub-Adviser to the U.S. Small Cap Fund. The Value
Equity Fund is advised by David J. Greene & Company, LLC ("DJ Greene"). As used
herein, the term "Adviser" shall mean, with respect to each Fund, the entity
responsible for portfolio management.

This SAI is not a prospectus. The Funds' Prospectuses may be obtained, without
charge, by calling the Company toll-free at (800) 618-9510 or by writing to the
Company at 400 Bellevue Parkway, Wilmington, Delaware 19809. This SAI should be
read in conjunction with the Funds' Prospectuses each dated April 30, 1999 and
the Company's Annual Report dated December 31, 1998, which is hereby
incorporated by reference.

<PAGE>

TABLE OF CONTENTS

PAGE

ORGANIZATION AND CLASSIFICATION 3

NON-PRIMARY INVESTMENT STRATEGIES AND RELATED RISKS 3

FUNDAMENTAL INVESTMENT POLICIES 17

NON-FUNDAMENTAL INVESTMENT POLICIES 18

MANAGEMENT OF THE COMPANY 19

INVESTMENT ADVISER 22

DISTRIBUTOR 25

ADMINISTRATION, FUND ACCOUNTING, TRANSFER AGENCY AND CUSTODY SERVICES 25

COUNSEL 28

<PAGE>

INDEPENDENT ACCOUNTANTS 28

PORTFOLIO TRANSACTIONS 28

PURCHASE OF SHARES 30

REDEMPTION OF SHARES 30

PERFORMANCE CALCULATIONS 30

ADDITIONAL INFORMATION CONCERNING TAXES 33

GENERAL INFORMATION 34

FINANCIAL STATEMENTS 37

<PAGE>

ORGANIZATION AND CLASSIFICATION

The Company is a non-diversified open-end, management investment company
organized as a Maryland corporation on July 1, 1994.

NON-PRIMARY INVESTMENT STRATEGIES AND RELATED RISKS

Information concerning each Fund's investment objective is set forth in each
Fund's Prospectus under the heading "Additional Information on the Fund
Investment Objective and Policies." There can be no assurance that any Fund will
achieve its objective. The principal features of each Fund's investment program
and the primary risks associated with that program are discussed in the
Prospectus. The following discussion of investment policies supplements the
discussion of investment objectives and policies set forth in each Fund's
Prospectus.

REPURCHASE AGREEMENTS

If and to the extent authorized to do so, each Fund may enter into repurchase
agreements. A repurchase agreement is a transaction in which the seller of a
security commits itself at the time of the sale to repurchase that security from
the buyer at a mutually agreed upon time and price. The Funds will enter into
repurchase agreements only with dealers, domestic banks or recognized financial
institutions which, in the opinion of OFFITBANK, David J. Greene & Company, LLC,
or Rockefeller & Co., Inc., as the case may be, based on guidelines established
by the Company's Board of Directors, present minimal credit risks. The relevant
Adviser will monitor the value of the securities underlying the repurchase
agreement at the time the transaction is entered into and at all times during
the term of the repurchase agreement to ensure that the value of the securities
always exceeds the repurchase price plus accrued interest. In the event of
default by the seller under the repurchase agreement, each Fund may incur costs
and experience time delays in connection with the disposition of the underlying
securities.

REVERSE REPURCHASE AGREEMENTS

If and to the extent authorized to do so, each Fund may enter into reverse
repurchase agreements. A reverse repurchase agreement is a borrowing transaction
in which a Fund transfers possession of a security to another party, such as a
bank or broker/dealer, in return for cash, and agrees to repurchase the security
in the future at an agreed upon price, which includes an interest component.
Whenever a Fund enters into a reverse repurchase agreement as described in the
Prospectus, it will place in a segregated custodian account liquid assets having
a value equal to the repurchase price (including accrued interest) and will
subsequently monitor the account to ensure such equivalent value is maintained.
Reverse repurchase agreements are considered to be borrowings by a Fund under
the Investment Company Act of 1940, as amended (the "1940 Act").

<PAGE>

BRADY BONDS

The High Yield, Emerging Markets and Global Convertible Funds may invest in
"Brady Bonds", which are debt securities issued or guaranteed by foreign
governments in exchange for existing external commercial bank indebtedness under
a plan announced by former U.S. Treasury Secretary Nicholas F. Brady in 1989. To
date, Brady Bonds have been issued by the governments of fifteen countries, the
largest proportion having been issued by Argentina, Brazil, Mexico and
Venezuela. Brady Bonds have been issued only recently, and accordingly, they do
not have a long payment history. Brady Bonds may be collateralized or
uncollateralized, are issued in various currencies (primarily the U.S. dollar)
and are actively traded in the over-the-counter secondary market.

Each Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least six months of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at that time and is adjusted at regular
intervals thereafter. Brady Bonds which have been issued to date are rated BB or
B by S&P or Ba or B by Moody's or, in cases in which a rating by S&P or Moody's
has not been assigned, are generally considered by the Adviser to be of
comparable quality.

LOAN PARTICIPATIONS AND ASSIGNMENTS

The High Yield, Emerging Markets and Global Convertible Funds may invest in
fixed and floating rate loans ("Loans") arranged through private negotiations
between a domestic or foreign entity and one or more financial institutions
("Lenders"). The majority of the Funds' investments in Loans in Latin America
and other emerging markets are expected to be in the form of participations
("Participations") in Loans and assignments ("Assignments") of portions of Loans
from third parties. Participations typically will result in a Fund having a
contractual relationship only with the Lender, not with the borrower. Such Fund
will have the right to receive payments of principal, interest and any fees to
which it is entitled only from the Lender selling the Participation and only
upon receipt by the Lender of the payments from the borrower. In connection with
purchasing Participations, a Fund generally will have no right to enforce
compliance by the borrower with the terms of the loan agreement relating to the
loan ("Loan Agreement"), nor any rights of set-off against the borrower, and
such Fund may not directly benefit from any collateral supporting the Loan in
which it has purchased the Participation. As a result, a Fund will assume the
credit risk of both the borrower and the Lender that is selling the
Participation. In the event of the insolvency of the Lender selling a
Participation, a Fund may be treated as a general creditor of the Lender and may
not benefit from any set-off between the Lender and the borrower. A Fund will
acquire Participations only if the Lender interpositioned between the Fund and
the borrower is determined by the Adviser to be creditworthy. Creditworthiness
will be judged based on the same credit analysis performed by the Adviser

<PAGE>

when purchasing marketable securities. When a Fund purchases Assignments from
Lenders, that Fund will acquire direct rights against the borrower on the Loan.
However, since assignments are arranged through private negotiations between
potential assignees and potential assignors, the rights and obligations acquired
by a Fund as the purchaser of an Assignment may differ from, and be more limited
than, those held by the assigning Lender.

A Fund may have difficulty disposing of Assignments and Participations. The
liquidity of such securities is limited and it is anticipated that such
securities could be sold only to a limited number of institutional investors.
The lack of a liquid secondary market could have an adverse impact on the value
of such securities and on a Fund's ability to dispose of particular Assignments
or Participations when necessary to meet a Fund's liquidity needs or in response
to a specific economic event, such as a deterioration in the creditworthiness of
the borrower. The lack of a liquid secondary market for Assignments and
Participations also may make it more difficult for a Fund to assign a value to
those securities for purposes of valuing such Fund's portfolio and calculating
its net asset value. Each Fund currently treats investments in Participations
and Assignments as illiquid for purposes of its limitation on investments in
illiquid securities. See "Illiquid Securities" below. However, each Fund may
revise its policy in the future based upon further review of the liquidity of
Assignments and Participations. Any determination to treat an Assignment or
Participation as liquid would be made based on procedures adopted by the Board
of Directors.

DOLLAR ROLL TRANSACTIONS

In order to enhance portfolio returns and manage prepayment risks, if and to the
extent authorized to do so, each Fund may engage in dollar roll transactions
with respect to mortgage securities issued by GNMA, FNMA and FHLMC. In a dollar
roll transaction, a Fund sells a mortgage security held in the portfolio to a
financial institution such as a bank or broker-dealer, and simultaneously agrees
to repurchase a substantially similar security (same type, coupon and maturity)
from the institution at a later date at an agreed upon price. The mortgage
securities that are repurchased will bear the same interest rate as those sold,
but generally will be collateralized by different pools of mortgages with
different prepayment histories. During the period between the sale and
repurchase, a Fund will not be entitled to receive interest and principal
payments on the securities sold. Proceeds of the sale will be invested in
short-term instruments, and the income from these investments, together with any
additional fee income received on the sale, could generate income for a Fund
exceeding the yield on the sold security. When a Fund enters into a dollar roll
transaction, cash or liquid securities of the Fund, in a dollar amount
sufficient to make payment for the obligations to be repurchased, are segregated
with its custodian at the trade date. These securities are marked to market
daily and are maintained until the transaction is settled.

STRUCTURED PRODUCTS

The High Yield, Emerging Markets and Global Convertible Funds may invest in
interests in entities organized and operated solely for the purpose of
restructuring the investment characteristics of certain debt obligations. This
type of restructuring involves the deposit with or

<PAGE>

purchase by an entity, such as a corporation or trust, of specified instruments
(such as commercial bank loans or Brady Bonds) and the issuance by that entity
of one or more classes of securities ("structured products") backed by, or
representing interests in, the underlying instruments. The cash flow on the
underlying instruments may be apportioned among the newly issued structured
products to create securities with different investment characteristics such as
varying maturities, payment priorities and interest rate provisions, and the
extent of the payments made with respect to structured products is dependent on
the extent of the cash flow on the underlying instruments. The Funds may invest
in structured products which represent derived investment positions based on
relationships among different markets or asset classes.

The Funds may also invest in other types of structured products, including among
others, inverse floaters, spread trades and notes linked by a formula to the
price of an underlying instrument or currency. Inverse floaters have coupon
rates that vary inversely at a multiple of a designated floating rate (which
typically is determined by reference to an index rate, but may also be
determined through a dutch auction or a remarketing agent) (the "reference
rate"). As an example, inverse floaters may constitute a class of collateralized
mortgage obligations with a coupon rate that moves inversely to a designated
index, such as LIBOR (London Interbank Offered Rate) or the Cost of Funds Index.
Any rise in the reference rate of an inverse floater (as a consequence of an
increase in interest rates) causes a drop in the coupon rate while any drop in
the reference rate of an inverse floater causes an increase in the coupon rate.
A spread trade is an investment position relating to a difference in the prices
or interest rates of two securities or currencies where the value of the
investment position is determined by movements in the difference between the
prices or interest rates, as the case may be, of the respective securities or
currencies. When the Funds invest in notes linked to the price of an underlying
instrument or currency, the price of the underlying security or the exchange
rate of the currency is determined by a multiple (based on a formula) of the
price of such underlying security or exchange rate of such currency. Because
they are linked to their underlying markets or securities, investments in
structured products generally are subject to greater volatility than an
investment directly in the underlying market or security. Total return on the
structured product is derived by linking return to one or more characteristics
of the underlying instrument. Although a Fund's purchase of structured products
would have a similar economic effect to that of borrowing against the underlying
securities, the purchase will not be deemed to be leverage for purposes of the
limitations placed on the extent of the Fund's assets that may be used for
borrowing and other leveraging activities.

Certain issuers of structured products may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, a Fund's investment in these
structured products may be limited by the restrictions contained in the 1940
Act. See "Other Investment Companies" below. Structured products are typically
sold in private placement transactions, and there currently is no active trading
market for structured products. As a result, certain structured products in
which the Fund invests may be deemed illiquid and subject to the 15% limitation
described below under "Illiquid Securities."

<PAGE>

ASSET-BACKED SECURITIES

If and to the extent authorized to do so, each Fund may invest in Asset-Backed
Securities. Asset-backed securities are generally issued as pass through
certificates, which represent undivided fractional ownership interests in the
underlying pool of assets, or as debt instruments, and are generally issued as
the debt of a special purpose entity organized solely for the purpose of owning
such assets and issuing such debt. Asset-backed securities are often backed by a
pool of assets representing the obligations of a number of different parties.
Payments of principal and interest may be guaranteed up to certain amounts and
for a certain time period by a letter of credit or other enhancement issued by a
financial institution unaffiliated with the entities issuing the securities.
Assets which, to date, have been used to back asset-backed securities include
motor vehicle installment sales contracts or installment loans secured by motor
vehicles, and receivables from revolving credit (credit card) agreements.

Asset-backed securities present certain risks which are, generally, related to
limited interests, if any, in related collateral. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. Most issuers of automobile receivables permit the services to
retain possession of the underlying obligations. If the servicer were to sell
these obligations to another party, there is a risk that the purchaser would
acquire an interest superior to that of the holders of the related automobile
receivables. In addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the trustee for
the holders of the automobile receivables may not have a proper security
interest in all of the obligations backing such receivables. Therefore, there is
the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on these securities. If the letter of
credit is exhausted, holders of asset-backed securities may also experience
delays in payments or losses if the full amounts due on underlying sales
contracts are not realized. Because asset-backed securities are relatively new,
the market experience in these securities is limited and the market's ability to
sustain liquidity through all phases of the market cycle has not been tested.

Credit Support. Asset-backed securities often contain elements of credit support
to lessen the effect of the potential failure by obligors to make timely
payments on underlying assets. Credit support falls into two categories: (1)
liquidity protection and (2) protection against losses resulting from ultimate
default by an obligor on the underlying asset. Liquidity protection ensures that
the pass through of payments due on the installment sales contracts and
installment loans which comprise the underlying pool occurs in a timely fashion.
Protection against losses resulting from ultimate default enhances the
likelihood of ultimate payment of the obligations on at least a portion of the
assets in the pool. Such protection may be provided through guarantees,
insurance policies or letters of credit obtained by the issuer or sponsor from
third parties, through various means of structuring the transaction or through a
combination of such approaches. The Funds will not pay any additional fee for
such credit support. The existence of credit support may increase the market
price of the security.

<PAGE>

U.S. MUNICIPAL SECURITIES

With respect to the High Yield Fund, in circumstances where the Adviser
determines that investment in U.S. dollar-denominated municipal obligations
would facilitate the Fund's ability to accomplish its investment objectives, the
Fund may invest in such obligations, including municipal bonds issued at a
discount.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

Each Fund, with the exception of the Value Equity Fund may purchase or sell
forward foreign currency exchange contracts ("forward contracts") as part of its
portfolio investment strategy. A forward contract is an obligation to purchase
or sell a specific currency for an agreed price at a future date which is
individually negotiated and privately traded by currency traders and their
customers. A Fund may enter into a forward contract, for example, when it enters
into a contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of the security
("transaction hedge"). Additionally, for example, when a Fund believes that a
foreign currency may suffer a substantial decline against the U.S. dollar, it
may enter into a forward sale contract to sell an amount of that foreign
currency approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency. Conversely, when a Fund
believes that the U.S. dollar may suffer a substantial decline against foreign
currency, it may enter into a forward purchase contract to buy that foreign
currency for a fixed dollar amount ("position hedge"). In this situation, a Fund
may, in the alternative, enter into a forward contract to sell a different
foreign currency for a fixed U.S. dollar amount where such Fund believes that
the U.S. dollar value of the currency to be sold pursuant to the forward
contract will fall whenever there is a decline in the U.S. dollar value of the
currency in which portfolio securities of the Fund are denominated
("cross-hedge"). That Fund's custodian will then place cash not available for
investment or U.S. government securities or other high quality debt securities
in a segregated account having a value equal to the aggregate amount of that
Fund's commitments under forward contracts entered into with respect to position
hedges, cross-hedges and transaction hedges, to the extent they do not already
own the security subject to the transaction hedge. If the value of the
securities placed in a segregated account declines, additional cash or
securities will be placed in the account on a daily basis so that the value of
the account will equal the amount of the Fund's commitments with respect to such
contracts. As an alternative to maintaining all or part of the segregated
account, the Fund may purchase a call option permitting such Fund to purchase
the amount of foreign currency being hedged by a forward sale contract at a
price no higher than the forward contract price or the Fund may purchase a put
option permitting the Fund to sell the amount of foreign currency subject to a
forward purchase contract at a price as high or higher than the forward contract
price. Unanticipated changes in currency prices may result in poorer overall
performance for a Fund than if it had not entered into such contracts. If the
party with which a Fund enters into a forward contract becomes insolvent or
breaches its obligation under the contract, then that Fund may lose the ability
to purchase or sell a currency as desired.

<PAGE>

MORTGAGE-RELATED SECURITIES

Each Fund, with the exception of the Value Equity and U.S. Small Cap Funds may
invest in mortgage-related securities, consistent with their respective
investment objectives and policies, that provide funds for mortgage loans made
to residential homeowners. These include securities which represent interests in
pools of mortgage loans made by lenders such as savings and loan institutions,
mortgage bankers, commercial banks and others. Pools of mortgage loans are
assembled for sale to investors (such as the Fund) by various governmental,
government-related and private organizations. Interests in pools of
mortgage-related securities differ from other forms of debt securities, which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. Instead, these
securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their residential mortgage
loans, net of any fees paid to the issuer or guarantor of such securities.
Prepayments are caused by repayments of principal resulting from the sale of the
underlying residential property, refinancing or foreclosure, net of fees or
costs which may be incurred.

Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may
in addition be the originators of the underlying mortgage loans as well as the
guarantors of the mortgage-related securities. Pools created by such
non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government guarantees of payments in such pools. However, timely payment of
interest and/or principal of these pools is supported by various forms of
insurance or guarantees, including individual loan, title, pool or hazard
insurance. There can be no assurance that the private insurers can meet their
obligations under the policies. A Fund may buy mortgage-related securities
without insurance or guarantees if through an examination of the loan experience
and practices of the poolers the Adviser determines that the securities meet
that Fund's investment criteria. Although the market for such securities is
becoming increasingly liquid, securities issued by certain private organizations
may not be readily marketable.

The Adviser expects that governmental, governmental-related or private entities
may create mortgage loan pools offering pass-through investments in addition to
those described above. The mortgages underlying these securities may be second
mortgages or alternative mortgage instruments, that is, mortgage instruments
whose principal or interest payments may vary or whose terms to maturity may
differ from customary long-term fixed rate mortgages. As new types of
mortgage-related securities are developed and offered to investors, the Adviser
will, consistent with the Fund's investment objective and policies, consider
making investments in such new types of securities. For additional information
regarding mortgage-related securities and the risks associated with investment
in such instruments, see "Mortgage-Backed Securities" below.

<PAGE>

MORTGAGE-BACKED SECURITIES

Collateralized Mortgage Obligations ("CMOs"). If and to the extent authorized to
do so, each Fund may invest in CMOs. CMOs are debt obligations collateralized by
certificates issued by the Government National Mortgage Association, the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation,
but also may be collateralized by whole loans or private pass-through securities
(such collateral collectively referred to as "Mortgage Assets"). Multiclass
pass-through securities are equity interests in a trust composed of Mortgage
Assets. Payments of principal and of interest on the Mortgage Assets, and any
reinvestment income thereon, provide the funds to pay debt service on the CMOs
or make scheduled distributions on the multiclass pass-through securities. CMOs
may be issued by agencies or instrumentalities of the U.S. government, or by
private originators of, or investors in, mortgage loans, including savings and
loan associations, mortgage banks, commercial banks, investment banks and
special purpose subsidiaries of the foregoing.

In a CMO, a series of bonds or certificates is issued in multiple classes. Each
class of CMOs, often referred to as a "tranche", is issued at a specified fixed
or floating coupon rate and has a stated maturity or final distribution date.
Principal prepayments on the Mortgage Assets may cause the CMOs to be retired
substantially earlier than their stated maturities or final distribution dates.
Interest is paid on all classes of the CMOs on a monthly, quarterly or
semi-annual basis. The principal of and interest on the Mortgage Assets may be
allocated among the several classes of a series of a CMO in innumerable ways. In
one structure, for example, payments of principal, including any principal
prepayments, on the Mortgage Assets are applied to the classes of a CMO in order
of their respective stated maturities or final distribution dates, so that no
payment of principal will be made on any class of CMOs until all other classes
having an earlier stated maturity or final distribution date have been paid in
full.

Stripped Mortgage-Backed Securities ("SMBS"). If and to the extent authorized to
do so, each Fund may invest in SMBS. SMBS are derivative multiclass mortgage
securities. SMBS may be issued by agencies or instrumentalities of the U.S.
government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing.

SMBS are structured with two or more classes of securities that receive
different proportions of the interest and principal distributions on a pool of
Mortgage Assets. A common type of SMBS will have at least one class receiving
only a small portion of the principal from the Mortgage Assets, while the other
classes will receive primarily interest and only a small portion of the
principal. In the most extreme case, one class will receive all of the interest
("IO" or interest-only class) while the other class will receive all of the
principal ("PO" or principal-only class). The yield to maturity on an IO class
is extremely sensitive to the rate of principal payments (including prepayments)
on the related underlying Mortgage Assets, and a rapid rate of principal
payments may have a material adverse effect on such securities' yield to
maturity and result in a loss to the investor.

Under the Internal Revenue Code of 1986, as amended, POs may generate taxable
income from

<PAGE>

the current accrual of original issue discount, without a corresponding
distribution of cash to a Fund. In addition, the Staff of the United States
Securities and Exchange Commission (the "SEC") considers privately issued SMBS
to be illiquid securities.

Mortgage-backed and asset-backed securities are generically considered to be
derivative securities.

DEPOSITARY RECEIPTS AND DEPOSITARY SHARES

If and to the extent authorized to do so, each Fund may hold equity securities
of foreign issuers in the form of American Depositary Receipts ("ADRs"),
American Depositary Shares ("ADSs") and European Depositary Receipts ("EDRs"),
or other securities convertible into securities of eligible issuers. These
securities may not necessarily be denominated in the same currency as the
securities for which they may be exchanged. ADRs and ADSs typically are issued
by an American bank or trust company which evidences ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depositary Receipts ("CDRs"), are receipts issued in Europe
typically by foreign banks and trust companies that evidence ownership of either
foreign or domestic securities. Generally, ADRs and ADSs in registered form are
designed for use in United States securities markets and EDRs, and CDRs in
bearer form are designed for use in European securities markets. For purposes of
each Fund's investment policies, each Fund's investments in ADRs, ADSs, EDRs,
and CDRs will be deemed to be investments in the equity securities representing
securities of foreign issuers into which they may be converted. It is expected
that the Funds, to the extent of their investment in ADRs, will invest
predominantly in ADRs sponsored by the underlying issuers. The Funds, however,
may invest in unsponsored ADRs. Issuers of the stock of unsponsored ADRs are not
obligated to disclose material information in the United States and, therefore,
there may not be a correlation between such information and the market value of
such ADRs.

WARRANTS OR RIGHTS

Warrants or rights may be acquired by a Fund in connection with other securities
or separately, and provide the Fund with the right to purchase at a later date
other securities of the issuer at a specific price (the "strike price"). The
strike price of warrants is typically much lower than the current market price
of the underlying securities, yet they are subject to greater price
fluctuations. As a result, warrants may be more volatile instruments than the
underlying securities and may offer greater potential for capital appreciation
as well as capital loss. Warrants or rights acquired by a Fund in units or
attached to securities may be deemed to be without value. The Value Equity Fund
will not purchase any warrant if, as a result of such purchase, 5% or more of
the Fund's total assets would be invested in warrants. Included in that amount,
but not to exceed 2% of the value of the Value Equity Fund's total assets, may
be warrants which are not listed on the New York or American Stock Exchanges.

<PAGE>

SHORT SALES

The Global Convertible Fund may make short sales of securities "against the
box." A short sale is a transaction in which the Fund sells a security it does
not own in anticipation that the market price of that security will decline. In
a short sale "against the box," at the time of sale, the Fund owns or has the
immediate and unconditional right to acquire at no additional cost the identical
security. Short sales against the box are a form of hedging to offset potential
declines in long positions in similar securities.

SECURITIES LOANS, WHEN-ISSUED AND FORWARD COMMITMENT TRANSACTIONS

For the purpose of realizing additional income, if and to the extent authorized
to do so, each Fund may make secured loans of portfolio securities amounting to
not more than 30% of its total assets. Each Fund may make loans which are
short-term (nine months or less) or long-term. Securities loans are made to
broker/dealers or institutional investors pursuant to agreements requiring that
the loans continuously be secured by collateral at least equal at all times to
the value of the securities lent plus any accrued interest, "marked to market"
on a daily basis. The collateral received will consist of cash, U.S. short-term
government securities, bank letters of credit or such other collateral as may be
permitted under each Fund's investment program and by regulatory agencies and
approved by the Company's Board of Directors. While the securities loan is
outstanding, each Fund will continue to receive the equivalent of the interest
or dividends paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. Each Fund has the right
to call each loan and obtain the securities on five business days' notice. To
the extent applicable, each Fund will not have the right to vote equity
securities while they are being lent, but it will call in a loan in anticipation
of any important vote. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights in
the collateral should the borrower fail financially. Loans only will be made to
firms deemed by the Adviser to be of good standing and will not be made unless,
in the judgment of the Adviser, the consideration to be earned from such loans
would justify the risk. Each Fund may also purchase securities on a when-issued
basis or for future delivery, which may increase its overall investment exposure
and involves a risk of loss if the value of the securities declines prior to the
settlement date.

UNITED STATES GOVERNMENT OBLIGATIONS

If and to the extent authorized to do so, each Fund may invest in securities
issued or guaranteed by the U.S. government or by its agencies or
instrumentalities. Such securities in general include a wide variety of U.S.
Treasury obligations consisting of bills, notes and bonds, which principally
differ only in their interest rates, maturities and times of issuance.
Securities issued or guaranteed by U.S. government agencies and
instrumentalities are debt securities issued by agencies or instrumentalities
established or sponsored by the U.S. government.

In addition to the U.S. Treasury obligations described above, each Fund may
invest in separately traded interest components of securities issued or
guaranteed by the U.S. Treasury. The interest

<PAGE>

components of selected securities are traded independently under the Separate
Trading of Registered Interest and Principal of Securities ("STRIPS") program.
Under the STRIPS program, the interest components are individually numbered and
separately issued by the U.S. Treasury at the request of depository financial
institutions, which then trade the component parts independently.

Securities issued or guaranteed by U.S. government agencies and
instrumentalities include obligations that are supported by (1) the full faith
and credit of the U.S. Treasury (e.g., direct pass-through certificates of the
Government National Mortgage Association), (2) the limited authority of the
issuer or guarantor to borrow from the U.S. Treasury (e.g., obligations of
Federal Home Loan Banks) or (3) only the credit of the issuer or guarantor
(e.g., obligations of the Federal Home Loan Mortgage Corporation). In the case
of obligations not backed by the full faith and credit of the U.S. Treasury, the
agency issuing or guaranteeing the obligation is principally responsible for
ultimate repayment.

Agencies and instrumentalities that issue or guarantee debt securities and that
have been established or sponsored by the U.S. government include, in addition
to those identified above, the Bank for Cooperatives, the Export-Import Bank,
the Federal Farm Credit System, the Federal Intermediate Credit Banks, the
Federal Land Banks, the Federal National Mortgage Association and the Student
Loan Marketing Association.

BANK OBLIGATIONS

Bank obligations that may be purchased by a Fund include certificates of
deposit, bankers' acceptances and fixed time deposits. A certificate of deposit
is a short-term negotiable certificate issued by a commercial bank against funds
deposited in the bank and is either interest-bearing or purchased on a discount
basis. A bankers' acceptance is a short-term draft drawn on a commercial bank by
a borrower, usually in connection with an international commercial transaction.
The borrower is liable for payment as is the bank, which unconditionally
guarantees to pay the draft at its face amount on the maturity date. Fixed time
deposits are obligations of branches of U.S. banks or foreign banks which are
payable at a stated maturity date and bear a fixed rate of interest. Although
fixed time deposits do not have a market, there are no contractual restrictions
on the right to transfer a beneficial interest in the deposit to a third party.
The Funds do not consider fixed time deposits illiquid for purposes of the
restriction on investment in illiquid securities.

Banks are subject to extensive governmental 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 funding 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 possible
financial difficulties of borrowers might affect a bank's ability to meet its
obligations. Bank obligations may be general obligations of the parent bank or
may be limited to the issuing branch by the terms of the specific obligations or
by government regulation.

<PAGE>

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 bank obligations. Such investment risks include future
political and economic developments, the possible imposition of foreign
withholding taxes on interest income payable on such securities held by each
Fund, the possible seizure or nationalization of foreign assets and the possible
establishment of exchange controls or other foreign governmental laws or
restrictions which might affect adversely the payment of the principal of and
interest on such securities held by each Fund. In addition, there may be less
publicly-available information about a foreign issuer than about a U.S. issuer,
and foreign issuers may not be subject to the same accounting, auditing and
financial record-keeping standards and requirements as U.S. issuers.

With the exception of the U.S. Small Cap Fund, the Funds will not purchase
securities which the relevant Adviser believes, at the time of purchase, will be
subject to exchange controls or foreign withholding taxes; however, there can be
no assurance that such laws may not become applicable to certain of each Fund's
investments. In the event unforeseen exchange controls or foreign withholding
taxes are imposed with respect to each Fund's investments, the effect may be to
reduce the income received by each Fund on such investments.

CONVERTIBLE SECURITIES

Under normal market circumstances, each Fund may invest in convertible
securities (the U.S. Small Cap Fund will limit its investment to up to 10% of
its total assets in such securities and the U.S. Government Fund may invest only
in convertible securities rated AAA, which is the highest rating category for
corporate or municipal long-term debt given by Standard & Poor's Ratings Group).

Convertible securities are bonds, debentures, notes, preferred stocks or other
securities that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. A convertible security entitles the holder
to receive interest generally paid or accrued on debt or the dividend paid on
preferred stock until the convertible security matures or is redeemed, converted
or exchanged. Convertible securities have several unique investment
characteristics such as: (1) higher yields than common stocks, but lower yields
than comparable nonconvertible securities; (2) a lesser degree of fluctuation in
value than the underlying stock since they have fixed income characteristics;
and (3) the potential for capital appreciation if the market price of the
underlying common stock increases.

<PAGE>

issuer is domiciled. With respect to convertible securities denominated in a
currency different from that of the underlying equity securities, the conversion
price may be based on a fixed exchange rate established at the time the security
is issued. As a result, fluctuations in the exchange rate between the currency
in which the debt security is denominated and the currency in which the share
price is quoted will affect the value of the convertible security. Each Fund may
enter into foreign currency hedging transactions in which they may seek to
reduce the impact of such fluctuations.

Apart from currency considerations, the value of convertible securities is
influenced by both the yield of non-convertible securities of comparable issuers
and by the value of the underlying common stock. The value of a convertible
security viewed without regard to its conversion feature (i.e., strictly on the
basis of its yield) is sometimes referred to as its "investment value." To the
extent there are changes in interest rates or yields of similar non-convertible
securities, the investment value of the convertible security typically will
fluctuate. However, at the same time, the value of the convertible security will
be influenced by its "conversion value," which is the market value of the
underlying common stock that would be obtained if the convertible security were
converted. Conversion value fluctuates directly with the price of the underlying
common stock. If, because of a low price of the underlying common stock, the
conversion value is below the investment value of the convertible security, the
price of the convertible security is governed principally by its investment
value.

Holders of convertible securities have a claim on the assets of the issuer prior
to the common stockholders but may be subordinated to similar non-convertible
debt securities of the same issuer. The Funds have no current intention of
converting any convertible securities they may own into equity securities or
holding them as an equity investment upon conversion, although they may do so
for temporary purposes. A convertible security may be subject to redemption at
the option of the issuer at a price established in the charter provision,
indenture or other governing instrument pursuant to which the convertible
security was issued. If a convertible security held by a Fund is called for
redemption, the Fund will be required to redeem the security, convert it into
the underlying common stock or sell it to a third party. Certain convertible
debt securities may provide a put option to the holder which entitles the holder
to cause the security to be redeemed by the issuer at a premium over the stated
principal amount of the debt security.

<PAGE>

ZERO COUPON SECURITIES, PAY-IN-KIND BONDS AND DISCOUNT OBLIGATIONS

Each Fund, with the exception of the Value Equity and U.S. Small Cap Funds may
invest in zero coupon securities and pay-in-kind bonds. These investments
involve special risk considerations. Zero coupon securities are debt securities
that pay no cash income but are sold at substantial discounts from their value
at maturity. When a zero coupon security is held to maturity, its entire return,
which consists of the amortization of discount, comes from the difference
between its purchase price and its maturity value. This difference is known at
the time of purchase, so that investors holding zero coupon securities until
maturity know at the time of their investment what the return on their
investment will be. Certain zero coupon securities also are sold at substantial
discounts from their maturity value and provide for the commencement of regular
interest payments at a deferred date. Each Fund also may purchase pay-in-kind
bonds. Pay-in-kind bonds pay all or a portion of their interest in the form of
debt or equity securities. A Fund will only purchase pay-in-kind bonds that pay
all or a portion of their interest in the form of debt securities. Zero coupon
securities and pay-in-kind bonds may be issued by a wide variety of corporate
and governmental issuers.

Zero coupon securities, pay-in-kind bonds and debt securities acquired at a
discount are subject to greater price fluctuations in response to changes in
interest rates than are ordinary interest-paying debt securities with similar
maturities; the value of zero coupon securities and debt securities acquired at
a discount appreciates more during periods of declining interest rates and
depreciates more during periods of rising interest rates. Under current federal
income tax law, each Fund is required to accrue as income each year the value of
securities received in respect of pay-in-kind bonds and a portion of the
original issue discount with respect to zero coupon securities and other
securities issued at a discount to the stated redemption price. In addition,
each Fund will elect similar treatment for any market discount with respect to
debt securities acquired at a discount. Accordingly, the Funds may have to
dispose of portfolio securities under disadvantageous circumstances in order to
generate current cash to satisfy certain distribution requirements.

ILLIQUID SECURITIES

A Fund will not invest more than 15% of the value of its net assets in illiquid
securities, including securities which are not readily marketable, time deposits
and repurchase agreements not terminable within seven days. Illiquid assets are
assets which may not be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which a Fund has valued the
investment. Securities that have readily available market quotations are not
deemed illiquid for purposes of this limitation (irrespective of any legal or
contractual restrictions on resale). Each Fund may purchase securities that are
not registered under the Securities Act of 1933, as amended, but which can be
sold to qualified institutional buyers in accordance with Rule 144A under that
Act ("Rule 144A securities"). Rule 144A securities generally must be sold to
other qualified institutional buyers. If a particular investment in Rule 144A
securities is not determined to be liquid, that investment will be included
within the 15% limitation on investment in illiquid securities. The Adviser will
monitor the liquidity of such restricted securities under the supervision of the
Board of Directors.

<PAGE>

OTHER INVESTMENT COMPANIES AND POOLED VEHICLES

Each Fund reserves the right to invest up to 10% of its total assets in the
securities of other investment companies (including mutual funds, investment
partnerships and other pooled investment vehicles, with respect to the U.S.
Small Cap Fund). Each Fund may not invest more than 5% of its total assets in
the securities of any one investment company or acquire more than 3% of the
voting securities of any other investment company. No Fund intends to invest in
such investment companies unless, in the judgment of the Adviser, the potential
benefits of such investment justify the payment of any premium to net asset
value of the investment company or of any sales charge. A Fund will indirectly
bear its proportionate share of any management fees and other expenses paid by
investment companies in which it invests in addition to the advisory fee paid by
that Fund.

FUTURE DEVELOPMENTS

The Funds may, following notice to their shareholders, take advantage of other
investment practices which are not at present contemplated for use by the Funds
or which currently are not available but which may be developed, to the extent
such investment practices are both consistent with the Funds' investment
objective and legally permissible for the Funds. Such investment practices, if
they arise, may involve risks which exceed those involved in the activities
described above.

FUNDAMENTAL INVESTMENT POLICIES

In addition to the Funds' investment objectives, the following is a list of
restrictions and fundamental investment policies that may not be changed without
the affirmative vote of a majority of the Funds' outstanding shares (as defined
below under "General Information - Capital Stock.") No Fund may:

1) invest 25% or more of the value of its total assets in securities of
issuers in any one industry; provided that there is no limitation with
respect to investment in obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, and provided further that,
with respect to the Emerging Markets Fund, under normal market conditions,
this limitation shall not apply with respect to the purchase of securities
of issuers whose primary business activity is in the banking industry;

2) borrow money (except that they may enter into reverse repurchase
agreements) except from banks for temporary or emergency purposes;
provided, that (a) the amount of such borrowing may not exceed 20% (30%
with respect to the U.S. Small Cap Fund and 25% with respect to the U.S.
Government Fund) of the value of a Fund's total assets and (b) a Fund
(except the U.S. Government Fund) will not purchase portfolio securities
while such outstanding borrowing exceeds 5% of the value of its total
assets;

3) invest an amount equal to 15% or more of the current value of its net
assets in

<PAGE>

investments that are illiquid;

<PAGE>

4) purchase or sell commodities or commodity contracts, except that a Fund
may purchase and sell financial and currency futures contracts and options
thereon, and may purchase and sell currency forward contracts, options on
foreign currencies and may otherwise engage in transactions in foreign
currencies;

5) make loans, except that a Fund may: (a) purchase and hold debt
instruments (including bonds, debentures or other obligations and
certificates of deposit and bankers' acceptances); (b) invest in loans and
participations in accordance with its investment objectives and policies;
(c) make loans of portfolio securities; and (d) enter into repurchase
agreements with respect to portfolio securities;

6) underwrite the securities of other issuers, except to the extent that
the purchase of investments directly from the issuer thereof and later
disposition of such securities in accordance with a Fund's investment
program may be deemed to be an underwriting;

7) purchase real estate or real estate limited partnership interests
(other than securities secured by real estate or interests therein or
securities issued by companies that invest in real estate or interests
therein);

8) purchase more than 3% of the stock of another investment company, or
purchase stock of other investment companies equal to more than 5% of a
Fund's net assets in the case of any one other investment company and 10%
of such net assets in the case of all other investment companies in the
aggregate. This restriction shall not apply to investment company
securities received or acquired by a Fund pursuant to a merger or plan of
reorganization; and

9) issue senior securities.

NON-FUNDAMENTAL INVESTMENT POLICIES

The following are non-fundamental investment policies and may be changed by a
vote of the Company's Board of Directors. No Fund may:

1) purchase securities on margin (except for delayed delivery or when-issued
transactions or such short-term credits as are necessary for the clearance
of transactions, and except for initial and variation margin payments in
connection with the use of options, futures contracts, options thereon or
forward currency contracts; a Fund may also make deposits of margin in
connection with futures and forward contracts and options thereon);

2) sell securities short (except for short positions in a futures contract or
forward contract);

3) invest for the purpose of exercising control over management of any
company;

4) invest directly in interests in oil, gas or other mineral exploration
development programs or mineral leases;

<PAGE>

5) pledge, hypothecate, mortgage or otherwise encumber its assets, except to
secure permitted borrowings;

6) invest in stock or bond futures and/or options on futures unless not more
than 5% of a Fund's total assets are required as deposit to secure
obligations under such futures and/or options on futures contracts,
provided, however, that in the case of an option that is in-the-money at
the time of purchase, the in-the-money amount may be excluded in computing
such 5%; and

7) invest in puts, calls straddles or spreads, except as described in (6)
above.

If a percentage restriction on investment or use of assets set forth above is
adhered to at the time a transaction is effected, later changes in percentages
resulting from changing values will not be considered a violation.

MANAGEMENT OF THE COMPANY

DIRECTORS AND OFFICERS

The business of the Company is managed under the direction of the Board of
Directors. Specifically, the Board of Directors is responsible for oversight of
the Funds by reviewing and approving agreements with the Funds' service
providers, and mandating policies for the Funds' operations. The principal
occupations of the directors and executive officers of the Company (and any
positions held with affiliated persons of the Company) for the past five years
are listed below.

<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION(S) HELD WITH THE FUND PRINCIPAL OCCUPATION(S) PAST 5 YEARS
- --------------------- ------------------------------ ------------------------------------
<S> <C> <C>
Morris W. Offit* Chairman of the Board, President and Director,
OFFITBANK President, OFFITBANK (investment adviser)
520 Madison Avenue and Director (1983-present); two additional
New York, NY 10022 Chairman of the Board,
Age: 62 Years President and Director; and
one additional Director
position with the OFFITBANK
Fund Complex.

Edward J. Landau Director Of Counsel, Wolf, Block Schorr
Wolf, Block Scorr and and Solis-Cohen, LLP
Solis-Cohen LLP (2/1/98-present); Member,
250 Park Avenue Lowenthal, Landau, Fischer &
New York, NY 10177 Bring, P.C. (1960-1/31/98);
Age: 71 Years Director, Revlon Group Inc.,
Revlon Consumer Products
Inc.; Pittsburgh Annealing
Box and Clad Metals Inc.;
one additional Director
position with the OFFITBANK
Fund Complex.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
The Very Reverend James Director President, Interfaith Center
Parks Morton of New York (1/1/98- present);
Interfaith Center of New formerly Dean of Cathedral of
York St. John the Divine
570 Lexington Avenue (1972-1996); one additional
New York, New York 10022 Director position with the
Age: 74 Years OFFITBANK Fund Complex.

Dr. Wallace Mathai-Davis Secretary and Treasurer Managing Director, OFFITBANK
OFFITBANK (investment adviser)
520 Madison Avenue (1986-present); one additional
New York, NY 10022 Officer position with the
Age: 54 Years OFFITBANK Fund Complex.

Stephen Brent Wells Assistant Treasurer Managing Director, OFFITBANK
OFFITBANK (investment adviser) (1994 to
52 Madison Avenue present); one additional
New York, NY 10022 Officer position with the
Age: 54 Years OFFITBANK Fund Complex.

Vincent M. Rella Assistant Treasurer Controller, OFFITBANK
OFFITBANK (investment adviser) (1986 to
5230 Madison Avenue present); one additional
New York, NY 10022 Officer position with the
Age: 46 Years OFFITBANK Fund Complex.

Stephen M. Wynne Assistant Treasurer Chairman of PFPC Trustee &
PFPC Inc. Custodial Services Ltd.
400 Bellevue Parkway (1995-present); Executive Vice
Wilmington, DE 19809 President and Chief Accounting
Age: 44 Years Officer (1993-present) and
Senior Vice President and
Chief Accounting Officer
(1991-1993) of PFPC Inc.;
Executive Vice President
(1993-1995) of PFPC
International; one
additional Officer position
with the OFFITBANK Fund
Complex.

David D. Marky Assistant Treasurer Vice-President and Director of
PFPC Inc. Accounting (1996-present) of
103 Bellevue Parkway PFPC Inc.; Assistant Vice
Wilmington, DE 19809 President and Accounting
Age: 33 Years Conversion Manager
(1992-present) of PFPC Inc;
one additional Officer
position with the OFFITBANK
Fund Complex.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
Gary M. Gardner Assistant Secretary Chief Counsel (1994-present)
PFPC Inc. of PFPC Inc.; Associate
400 Bellevue Parkway General Counsel (1992-1994) of
Wilmington, DE 19809 The Boston Company, Inc.; one
Age: 47 Years additional Officer position
with the OFFITBANK Fund
Complex.

David C. Lebisky Assistant Secretary Administrative Officer
PFPC Inc. (1996-present) of PFPC Inc.;
400 Bellevue Parkway Legal Assistant (1994-1996)
Wilmington, DE 19809 with the law firm of Drinker
Age: 27 years Biddle & Reath; BA Candidate
(1990-1994) LaSalle
University; one additional
Officer position with the
OFFITBANK Fund Complex.
</TABLE>

* "Interested person" of the Fund as defined in the 1940 Act.

The Board of Directors has designated an audit committee to advise the full
Board with respect to accounting, auditing and financial matters affecting the
Company. The Audit Committee is comprised of Mr. Landau and The Very Reverend
Morton and meets periodically.

The Company pays each Director who is not also an officer or affiliated person
an annual fee of $3,000 and a fee of $500 for each Board of Directors and Board
committee meeting attended and are reimbursed for all out-of-pocket expenses
relating to attendance at meetings. Directors who are affiliated with the
Adviser do not receive compensation from the Company but are reimbursed for all
out-of-pocket expenses relating to attendance at meetings.

DIRECTOR COMPENSATION
(FOR THE PERIOD 4/1/98 THROUGH 12/31/98)

TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM
BENEFITS ESTIMATED REGISTRANT AND
AGGREGATE ACCRUED AS ANNUAL FUND COMPLEX*
COMPENSATION PART OF FUND BENEFITS UPON PAID TO
NAME OF PERSON FROM REGISTRANT EXPENSES RETIREMENT DIRECTORS
-------------- --------------- -------- ---------- ---------

Morris W. Offit $0 0 N/A $0

Edward J. Landau $4,250.00 0 N/A $23,000.00

The Very Reverend $4,250.00 0 N/A $23,000.00
James Parks Morton

* For this purpose, the "Fund Complex" consists of The OFFITBANK Variable
Insurance Fund, Inc. and The OFFITBANK Investment Fund, Inc., which are all
the regulated investment companies advised by OFFITBANK.

INVESTMENT ADVISER

<PAGE>

U.S. SMALL CAP FUND, U.S. GOVERNMENT FUND, HIGH YIELD FUND, EMERGING MARKETS
FUND AND GLOBAL CONVERTIBLE FUND

The Company has retained OFFITBANK, a New York State chartered trust company, to
act as its investment adviser (the "Adviser") for the U.S. Small Cap Fund, U.S.
Government Fund, High Yield Fund, Emerging Markets Fund and Global Convertible
Fund. The advisory agreements (the "Advisory Agreements") between the Adviser
and the Company provide that the Adviser shall manage the operations of the
Company, subject to policies established by the Board of Directors of the
Company. Pursuant to the Advisory Agreements, except in the case of the U.S.
Small Cap Fund, the Adviser manages the Company's investment portfolios, directs
purchases and sales of the portfolio securities and reports thereon to the
Company's officers and directors regularly. In addition, the Adviser pays the
compensation of the Company's officers, employees and directors affiliated with
the Adviser. The Company bears all other costs of its operations, including the
compensation of its directors not affiliated with the Adviser.

For its services under the Advisory Agreements, the Adviser receives from each
Fund an advisory fee. The fee is calculated daily and paid monthly at an annual
rate of 1.00% of the U.S. Small Cap Fund's average daily net assets, 0.35% of
the U.S. Government Fund's average daily net assets, 0.85% of the first
$200,000,000 and 0.75% on amounts in excess thereof of the High Yield Fund's
average daily net assets, 0.90% of the first $200,000,000 and 0.80% on amounts
in excess thereof of the Emerging Markets Fund's average daily net assets and
0.90% of the Global Convertible Fund's average daily net assets. The Adviser may
waive all or part of its fee from time to time in order to increase a Fund's net
investment income available for distribution to shareholders.

VALUE EQUITY FUND

David J. Greene & Company, LLC ("DJ Greene") is responsible for managing the
investment portfolio of the Value Equity Fund. DJ Greene is a registered
investment adviser under the 1940 Act and a member of the New York Stock
Exchange. The advisory agreement (the "DJ Greene Agreement") between DJ Greene
and the Company provides that DJ Greene shall manage the investment operations
of the Company, subject to policies established by the Board of Directors of the
Company. Pursuant to the DJ Greene Agreement, DJ Greene manages the Company's
Value Equity Fund, directs purchases and sales of the portfolio securities for
the Value Equity Fund and reports regularly thereon to the Company's officers
and directors. The Company bears all other costs of its operations.

DJ Greene is an investment adviser and broker-dealer registered with the SEC and
the NASD. The Firm is located at 599 Lexington Avenue, New York, N.Y. 10022. As
of December 31, 1998, DJ Greene had investment management authority with respect
to approximately $1.7 billion in assets for pension, profit sharing, endowment
and individual accounts. DJ Greene consists of 15 principals and a staff of 22
professional and support persons, all of whom devote their full time to the
business. DJ Greene specializes in equity management with a value style
orientation.

<PAGE>

For its services under the Advisory Agreement, DJ Greene receives an advisory
fee. The fee is payable monthly at an annual rate of .80% of the Value Equity
Fund's average daily net assets. DJ Greene may waive all or part of its fee from
time to time in order to increase the Value Equity Fund's net investment income
available for distribution to shareholders.

SUB-ADVISER - U.S. SMALL CAP FUND

Rockefeller & Co., Inc. subject to the review and overall supervision of the
Adviser, is responsible for managing the investment portfolio of the U.S.
Small Cap Fund. Rockefeller & Co. is a registered investment adviser under
the Investment Advisers Act of 1940. Its earliest predecessor was
established in the 19th century for the benefit of John D. Rockefeller and
his family. Today, Rockefeller & Co. is a private investment advisory and
management firm that serves the needs of the Rockefeller family and those of
a small number of other persons and institutions. As of December 31, 1998,
Rockefeller & Co. managed approximately $4.4 billion in assets. Rockefeller
& Co., with offices at 30 Rockefeller Plaza, New York, New York 10112, is a
wholly-owned subsidiary of Rockefeller Financial Services, Inc., all of the
voting shares of which are owned by the Rockefeller Family Trust. The
Rockefeller Family Trust was established in 1979, primarily for the benefit
of the grandchildren of John D. Rockefeller, Jr. and their descendants. The
grantors of the trust property are the senior members of the Rockefeller
Family. In 1980, Rockefeller & Co. was registered as an investment adviser
and commenced providing management services to non-Rockefeller Family
clients. Rockefeller & Co. provides comprehensive investment management
services in the global equity and fixed-income markets. It allocates capital
to asset classes with superior investment return potential, commensurate
with the overall financial objectives and risk tolerances of its clients.
Each asset class employed is managed by a specialized investment unit with
dedicated investment and research professionals suited to its particular
asset class or geographic region. Rockefeller & Co. is located in New York
City.

Rockefeller & Co. has been retained to provide sub-advisory services to the U.S.
Small Cap Fund pursuant to an agreement between Rockefeller & Co. and OFFITBANK
(the "Sub-Advisory Agreement"). Pursuant to the Sub-Advisory Agreement,
OFFITBANK has delegated to Rockefeller & Co. the authority and responsibility to
make and execute portfolio investment decisions for the U.S. Small Cap Fund
within the framework of the U.S. Small Cap Fund's investment objectives,
policies and restrictions, and subject to review by OFFITBANK and the Board of
Directors of the Company. The Sub-Advisory Agreement provides that OFFITBANK,
and not the U.S. Small Cap Fund will pay to Rockefeller & Co. monthly
compensation based on the average daily net assets of the U.S. Small Cap Fund at
the annual rate of 1.00%.

The charts below show the investment advisory fees for each Fund for the last
three fiscal years along with any waivers that reduced the investment advisory
fees. The fees shown were paid by the Funds directly to OFFITBANK, except for
fees which were paid to DJ Greene for the Value Equity Fund.

<PAGE>

HIGH YIELD PERIOD FROM APRIL FISCAL YEAR ENDED PERIOD FROM APRIL
- ---------- 1, 1998 THROUGH MARCH 31, 1998 1, 1996* THROUGH
DECEMBER 31, 1998 ----------------- MARCH 31, 1997
----------------- --------------

Fees earned $261,563 $239,489 $76,943

Fees waived $59,096 $77,746 $76,943

Net amount of fees $202,467 $161,743 $0

EMERGING MARKETS PERIOD FROM APRIL FISCAL YEAR ENDED PERIOD FROM AUGUST
- ---------------- 1, 1998 THROUGH MARCH 31, 1998 28, 1996* THROUGH
DECEMBER 31, 1998 ----------------- MARCH 31, 1997
----------------- --------------

Fees earned $39,569 $49,468 $13,449

Fees waived $31,386 $49,468 $13,449

Net amount of fees $8,183 $0 $0

U.S. SMALL CAP PERIOD FROM APRIL PERIOD FROM AUGUST
- -------------- 1, 1998 THROUGH 11, 1997* THROUGH
DECEMBER 31, 1998 MARCH 31, 1998
----------------- --------------

Fees earned $9,323 $10,796

Fees waived $9,323 $10,796

Net amount of fees $0 $0

VALUE EQUITY PERIOD FROM APRIL PERIOD FROM APRIL
- ------------ 1, 1998 THROUGH 11, 1997* THROUGH
DECEMBER 31, 1998 MARCH 31, 1998
----------------- --------------

Fees earned $11,499 $10,934

Fees waived $11,499 $10,934

Net amount of fees $0 $0

* Inception of the Fund.

The Funds will not be required to reimburse any entity for waived fees.

<PAGE>

REGULATORY MATTERS

OFFITBANK is a trust company chartered under the New York Banking Law and is
supervised and examined thereunder by the New York Banking Department. OFFITBANK
is prohibited by its charter from accepting deposits other than deposits arising
directly from its exercise of the fiduciary powers granted under the New York
Banking Law and, accordingly, is not an insured depository institution for
purposes of the Federal Deposit Insurance Act or any other banking law or
regulation.

Banking laws and regulations, as currently interpreted by the New York Banking
Department, prohibit New York State chartered trust companies from controlling,
or distributing the shares of, a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit such trust
companies generally from issuing, underwriting, selling or distributing
securities, but do not prohibit such trust companies from acting as investment
adviser, administrator, transfer agent or custodian to such an investment
company or from purchasing shares of such a company as agent for and upon the
order of a customer. OFFITBANK believes that it may perform the services
described in this Prospectus with respect to the Company without violation of
such laws or regulations. OFFITBANK is not a member of the Federal Reserve
System and is not subject to the Glass-Steagall Act, the Bank Holding Company
Act of 1956 or any other federal banking law or regulation that might affect its
ability to perform such services.

If OFFITBANK, DJ Greene or Rockefeller & Co. were prohibited from performing the
services described in this Prospectus with respect to the Funds, it is expected
that the Company's Board of Directors would recommend to each Fund's
shareholders that they approve new agreements with another entity or entities
qualified to perform such services and selected by the Board of Directors. The
Company does not anticipate that investors would suffer any adverse financial
consequences as a result of these occurrences.

DISTRIBUTOR

OFFIT Funds Distributor, Inc., (the "Distributor"), a wholly-owned subsidiary of
Provident Distributors, Inc., with its principal office at Four Falls Corporate
Center, 6th Floor, West Conshohocken, Pennsylvania 19428-2961, distributes the
shares of the Company. Under a distribution agreement with the Company (the
"Distribution Agreement"), the Distributor is not obligated to sell any specific
amount of shares of the Company. The Distributor, as agent of the Company,
agrees to use its best efforts as sole distributor of the Company's shares.
There is no fee payable under the Distribution Agreement.

ADMINISTRATION, FUND ACCOUNTING, TRANSFER AGENCY AND CUSTODY SERVICES

<PAGE>

N.A. ("Chase") or The Bank of New York ("BONY") in their capacity as custodians
of the Company. PFPC has no role in determining the investment polices of the
Company or which securities are to be purchased or sold by the Funds. The
services provided by PFPC include regulatory compliance, assistance in the
preparation and filing of post-effective amendments to the Company's
registration statement with the Commission, preparation of annual, semi-annual
and other reports to shareholders and the Commission, filing of federal and
state income tax returns, preparation of financial and management reports,
preparation of board meeting materials, preparation and filing of blue sky
registrations and monitoring compliance with the amounts and conditions of each
state's qualification. For the administrative and fund accounting services PFPC
provides to the Company, PFPC is paid an annual fee calculated daily and paid
monthly which is expected to be approximately .125% of net assets. From time to
time, the Administrator may waive all or a portion of its fees.

From January 1, 1997 to June 1, 1998, BISYS Fund Services Limited Partnership
("BISYS") served as the Company's administrator. Prior to January 1, 1997,
Furman Selz served as the Company's administrator. The charts below show the
administrative and fund accounting fees for each Fund for the last three fiscal
years along with any waivers that reduced those fees.

Fees earned $54,659 $74,571 $43,578

Fees waived $11,442 $23,302 $13,578

Net amount of fees $43,217 $51,269 $30,000

Fees earned $19,495 $38,245 $17,241

Fees waived $14,491 $8,245 $2,241

Net amount of fees $5,004 $30,000 $15,000

U.S. SMALL CAP PERIOD FROM APRIL PERIOD FROM APRIL
- -------------- 1, 1998 THROUGH 11, 1997* THROUGH
DECEMBER 31, 1998 MARCH 31, 1998
----------------- --------------

<PAGE>

Fees earned $15,415 $32,304

Fees waived $10,193 $1,619

Net amount of fees $5,222 $30,685

VALUE EQUITY PERIOD FROM APRIL PERIOD FROM APRIL
- ------------ 1, 1998 THROUGH 11, 1997* THROUGH
DECEMBER 31, 1998 MARCH 31, 1998
----------------- --------------

Fees earned $15,781 $32,204

Fees waived $10,596 $2,050

Net amount of fees $5,185 $30,154

* Inception of the Fund.

PFPC also serves as the Company's Transfer Agent and Dividend Disbursing Agent
pursuant to a transfer agency agreement (the "Transfer Agency Agreement") with
the Company. Under the Transfer Agency Agreement, PFPC has agreed, among other
things, to: (1) process shareholder purchase and redemption orders; (2) issue
periodic statements to shareholders; (3) process transfers, exchanges and
dividend payments; and (4) maintain all shareholder records for each account in
the Company. From January 1, 1997 to June 1, 1998, BISYS served as the Company's
transfer agent. Prior to January 1, 1997 Furman Selz served as the Company's
transfer agent.

BONY serves as the Company's custodian, with respect to all Funds, other than
the Emerging Markets Fund, pursuant to a custodian agreement (the "BONY
Custodian Agreement") with the Company. BONY is located at 90 Washington Street,
New York, New York 10286. Under the BONY Custodian Agreement, BONY has agreed
to: (1) maintain a segregated account or accounts in the name of each Fund; (2)
hold and disburse portfolio securities on account of each Fund; (3) collect and
receive all income and other payments and distributions on account of each
Fund's portfolio securities; (4) respond to correspondence relating to its
duties; and (5) make periodic reports to the Company's Board of Directors
concerning the Funds' operations. BONY is authorized under the BONY Custodian
Agreement to select one or more banks or trust companies to serve as
sub-custodian on behalf of the Funds, provided that BONY remains responsible for
the performance of all of its duties under the BONY Custodian Agreement. BONY is
entitled to receive such compensation from the Funds as may be agreed upon from
time to time.

Chase serves as the Company's custodian, with respect to the Emerging Markets
Fund only, pursuant to a custodian agreement (the "Chase Custodian Agreement")
with the Company.

<PAGE>

Chase is located at 4 MetroTech Center, 18th Floor, Brooklyn, New York 11245.
Under the Chase Custodian Agreement, Chase has agreed to: (1) maintain a
segregated account or accounts in the name of each Fund; (2) hold and disburse
portfolio securities on account of each Fund; (3) collect and receive all income
and other payments and distributions on account of each Fund's portfolio
securities; (4) respond to correspondence relating to its duties; and (5) make
periodic reports to the Company's Board of Directors concerning the Funds'
operations. Chase is authorized under the Chase Custodian Agreement to select
one or more banks or trust companies to serve as sub-custodian on behalf of the
Funds, provided that Chase remains responsible for the performance of all of its
duties under the Chase Custodian Agreement.

OTHER INFORMATION CONCERNING FEES AND EXPENSES

All or part of the fees payable by any or all of each of the Funds to the
organizations retained to provide services for each of the Funds may be waived
from time to time in order to increase such Funds' net investment income
available for distribution to shareholders or total return.

Except as otherwise noted, OFFITBANK and PFPC bear all expenses in connection
with the performance of their advisory and administrative services respectively.
The Company bears the expenses incurred in its operations, including: taxes;
interest; fees (including fees paid to its directors who are not affiliated with
the Company); fees payable to the SEC; costs of preparing prospectuses for
regulatory purposes and for distribution to shareholders; advisory and
administration fees; charges of its custodian and transfer agent; certain
insurance costs; auditing and legal expenses; fees of independent pricing
services; costs of shareholders' reports and shareholder meetings, including
proxy statements and related materials; and any extraordinary expenses. The
Company also pays for brokerage fees and commissions, if any, in connection with
the purchase of portfolio securities.

COUNSEL

Kramer Levin Naftalis & Frankel LLP, whose address is 919 Third Avenue, New
York, NY 10022, serves as counsel to the Company.

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, whose address is 1177 Avenue of the Americas, New
York, NY 10036, serves as the independent accountants for the Company. The
independent accountants conduct audits of the Company and assist in the
preparation of the Company's semi-annual and annual reports.

PORTFOLIO TRANSACTIONS

The Company has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Company's Board of Directors, except as stated below, the
Adviser is primarily responsible for the Company's portfolio decisions and the
placing of the Company's portfolio transactions. DJ Greene is

<PAGE>

primarily responsible for the portfolio decisions and the placing of the
portfolio transaction for the Value Equity Fund. Rockefeller & Co., however,
under the supervision of the Adviser, is primarily responsible for the portfolio
decisions and the placing of the portfolio transactions for the U.S. Small Cap
Fund. When selecting dealers to handle the purchase and sale of portfolio
securities, the Adviser, DJ Greene and Rockefeller & Co. look for prompt
execution of the order at a favorable price. Generally, the Adviser, DJ Greene
and Rockefeller & Co. work with recognized dealers in these securities, except
when a better price and execution of the order can be obtained elsewhere.

With respect to the U.S. Government Fund High Yield Fund, Emerging Markets Fund,
Global Convertible Fund and Total Return Fund, portfolio securities normally
will be purchased or sold from or to dealers at a net price, which may include
dealer spreads and underwriting commissions. With respect to the U.S. Small Cap
Fund, Value Equity Fund, purchases and sales of securities on a stock exchange
are effected through brokers who charge a commission. In the over-the-counter
market, securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In placing orders, it
is the policy of the Company to obtain the best results taking into account the
dealer's general execution and operational facilities, the type of transaction
involved and other factors such as the dealer's risk in positioning the
securities involved. While the Adviser, DJ Greene and Rockefeller & Co. each
generally seeks a competitive price in placing its orders, the Company may not
necessarily be paying the lowest price available.

Under the 1940 Act, persons affiliated with the Company are prohibited from
dealing with the Company as a principal in the purchase and sale of securities
unless the transaction is conducted in accordance with procedures established by
the Company's Board of Directors and complies in all other respects with certain
criteria or an exemptive order allowing such transactions is obtained from the
SEC. Affiliated persons of the Company, or affiliated persons of such persons,
may from time to time be selected to execute portfolio transactions for the
Company as agent. Subject to the considerations discussed above and in
accordance with procedures adopted by the Board of Directors, in order for such
an affiliated person to be permitted to effect any portfolio transactions for
the Company, the commissions, fees or other remuneration received by such
affiliated person must be reasonable and fair compared to the commissions, fees
and other remuneration received by other brokers in connection with comparable
transactions. This standard would allow such an affiliated person to receive no
more than the remuneration which would be expected to be received by an
unaffiliated broker in a commensurate arm's-length agency transaction.

Investment decisions for the Company are made independently from those for other
funds and accounts advised or managed by the Adviser, DJ Greene or Rockefeller &
Co., as the case may be. Such other funds and accounts may also invest in the
same securities as the Company. If those funds or accounts are prepared to
invest in, or desire to dispose of, the same security at the same time as the
Company, however, transactions in such securities will be made, insofar as
feasible, for the respective funds and accounts in a manner deemed equitable to
all. In some cases, this procedure may adversely affect the size of the position
obtained for or disposed of by

<PAGE>

the Company or the price paid or received by the Company. In addition, because
of different investment objectives, a particular security may be purchased for
one or more funds or accounts when one or more funds or accounts are selling the
same security. To the extent permitted by law, the Adviser, DJ Greene and
Rockefeller & Co. may aggregate the securities to be sold or purchased for the
Company with those to be sold or purchased for other funds or accounts in order
to obtain best execution.

For the period from April 1, 1998 through December 31, 1998, the High Yield,
Emerging Markets, Value Equity and U.S. Small Cap Funds paid $0, $0, $2,142 and
$1,215, respectively in brokerage commissions. During the period April 1, 1998
through December 31, 1998, certain portfolio transactions for the Value Equity
Fund were executed through the trading desk of DJ Greene. As a percentage of the
Value Equity Fund's aggregate brokerage commissions paid during the period, DJ
Greene received 4.26% of those commissions. As a percentage of the Value Equity
Fund's aggregate dollar amount of transactions involving the payment of
commissions, DJ Greene received 5.31% of that aggregate dollar amount. As a
percentage of total portfolio transactions executed on behalf of the Value
Equity Fund, DJ Greene executed 2.86% of the total portfolio transactions.

PURCHASE OF SHARES

For information pertaining to the manner in which shares of each Fund are
offered to the public, see "Purchase of Fund Shares" in each Fund's Prospectus.
The Company reserves the right, in its sole discretion, to suspend the offering
of shares of each of its Funds and reject purchase orders when, in the judgment
of management, such suspension or rejection is in the best interest of the
Company.

REDEMPTION OF SHARES

The Company may suspend redemption privileges or postpone the date of payment
(1) during any period that the New York Stock Exchange (the "Exchange") or the
bond market is closed, or trading on the Exchange is restricted as determined by
the SEC, (2) during any period when an emergency exists as defined by the rules
of the SEC as a result of which it is not reasonably practicable for a Fund to
dispose of securities owned by it, or fairly to determine the value of its
assets, and (3) for such other periods as the SEC may permit.

Furthermore, if the Board of Directors determines that it is in the best
interests of the remaining shareholders of a Fund, such Fund may pay the
redemption price, in whole or in part, by a distribution in kind.

PERFORMANCE CALCULATIONS

The Company may from time to time quote various performance figures to
illustrate the past performance of each of its Funds. Performance quotations by
investment companies are subject to rules adopted by the SEC, which require the
use of standardized performance quotations or, alternatively, that every
non-standardized performance quotation furnished by a Fund be

<PAGE>

accompanied by certain standardized performance information computed as required
by the SEC. An explanation of the SEC methods for computing performance follows.

TOTAL RETURN

A Fund's average annual total return is determined by finding the average annual
compounded rates of return over 1, 5 and 10 year periods (or, if sooner, the
period since inception of the Fund) that would equate an initial hypothetical
$1,000 investment to its ending redeemable value. The calculation assures that
all dividends and distributions are reinvested when paid. The quotation assumes
the amount was completely redeemed at the end of each 1, 5 and 10 year period
(or, if shorter, the period since inception of the Fund) and the deduction of
all applicable Fund expenses on an annual basis. Average annual total return is
calculated according to the following formula:

P (1+T)^n = ERV

Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the stated period

A Fund may also calculate total return on an aggregate basis which reflects the
cumulative percentage change in value over the measuring period. The formula for
calculating aggregate total return can be expressed as follows:

Aggregate Total Return = [(ERV/P) - 1]

In addition to total return, a Fund may quote performance in terms of a 30-day
yield. The yield figures provided will be calculated according to a formula
prescribed by the SEC and can be expressed as follows:

Yield = 2 [ ((a-b)/cd +1)^6 - 1]

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period (net of reimbursements).

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.

d = the minimum offering price per share on the last day of the
period.

For the purpose of determining the interest earned (variable "a" in the formula)
on debt

<PAGE>

obligations that were purchased by a Fund at a discount or premium, the formula
generally calls for amortization of the discount or premium; the amortization
schedule will be adjusted monthly to reflect changes in the market value of the
debt obligations.

The following tables set forth the average annual total returns for the High
Yield, Emerging Markets, Value Equity and U.S. Small Cap Funds for periods ended
December 31, 1998.

High Yield Fund
---------------

One Year................................................. 4.34%
Since Inception (April 1, 1996).......................... 10.01%

Emerging Markets Fund
---------------------

One Year................................................. (16.24%)
Since Inception (August 28, 1996)........................ (1.76%)

<PAGE>

Value Equity Fund
-----------------

One Year................................................. (4.31%)
Since Inception (April 11, 1997)......................... 14.83%

U.S. Small Cap Fund
-------------------

One Year................................................. (1.83%)
Since Inception (April 11, 1997)......................... 13.56%

The 30-day yield for the High Yield, Emerging Markets, Value Equity and U.S.
Small Cap Funds for the period ended December 31, 1998, was 8.82%, 13.51%, NA
and NA, respectively.

The performance of a Fund may be compared to data prepared by Lipper Analytical
Services, Inc. or other independent services which monitor the performance data
of investment companies, and may be quoted in advertising in terms of their
rankings in each applicable universe. In addition, the Company may use
performance reported in financial and industry publications, including Barron's,
Business Week, Forbes, Fortune, Institutional Investor, Money, Morningstar,
Mutual Fund Values, The Wall Street Journal, The New York Times and U.S.A.
Today.

Performance information presented for each of the Funds 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 Funds' performance and would reduce an investor's
return under the annuity contract or life policy.

ADDITIONAL INFORMATION CONCERNING TAXES

The following is only a summary of certain additional tax considerations that
are not described in the Fund's Prospectuses and generally affect each Fund and
its shareholders. No attempt is made to present a detailed explanation of the
tax treatment of each Fund or its shareholders, and the discussions here and in
the Prospectuses are not intended as substitutes for careful tax planning.

Each Fund intends to qualify as a "regulated investment company" ("RIC") under
the Internal Revenue Code of 1986, as amended (the "Code"). If so qualified, a
Fund will not be subject to federal income tax on its investment company taxable
income and net capital gains to the extent that such investment company taxable
income and net capital gains are distributed in each taxable year to the
separate accounts of insurance companies that hold its shares. In addition, if a
Fund distributes annually to the separate accounts its ordinary income and
capital gain net income, in the manner prescribed in the Code, it also will not
be subject to the 4% federal excise tax otherwise applicable to a RIC on any of
its income or gains. Distributions of net investment income and net short-term
capital gains will be treated as ordinary income and distributions of net
long-term capital gains will be treated as long-term capital gain in the hands
of the insurance companies. Under current tax law, capital gains or dividends
from a Fund are not currently

<PAGE>

taxable when left to accumulate within a variable annuity contact or variable
life insurance policy.

Section 817(h) of the Code requires that investments of a segregated asset
account of an insurance company be "adequately diversified", in accordance with
Treasury Regulations promulgated thereunder, in order for the holders of the
variable annuity contracts or variable life insurance policies investing in the
account to receive the tax-deferred or tax-free treatment generally afforded
holders of annuities or life insurance policies under the Code. The Department
of the Treasury has issued Regulations under section 817(h) which, among other
things, provide the manner in which a segregated asset account will treat
investments in a RIC for purposes of the applicable diversification
requirements. Under the Regulations, if a RIC satisfies certain conditions, that
RIC will not be treated as a single investment for these purposes, but rather
the segregated asset account will be treated as owning its proportionate share
of each of the assets of the RIC. Each Fund plans to satisfy these conditions at
all times so that each segregated asset account of a life insurance company
investing in the Funds will be treated as adequately diversified under the Code
and Regulations.

For information concerning the federal income tax consequences to the holders of
variable annuity contracts and variable life insurance policies, such holders
should consult the prospectuses used in connection with the issuance of the
particular contract or policy.

<PAGE>

GENERAL INFORMATION

CAPITAL STOCK

All shares of the Company have equal voting rights and will be voted in the
aggregate, and not by class, except where voting by class is required by law. As
used in this Statement of Additional Information, the term "majority", when
referring to the approvals to be obtained from shareholders in connection with
general matters affecting the Company and all Funds, means the vote of the
lesser of (i) 67% or more of the Company's shares represented at a meeting if
the holders of more than 50% of the outstanding shares are present in person or
by proxy or (ii) more than 50% of the Company's outstanding shares. The term
"majority", when referring to the approvals to be obtained from shareholders in
connection with matters affecting any single Fund (e.g., approval of Advisory
Agreements), means the vote of the lesser of (i) 67% or more of the shares of
the Fund represented at a meeting if the holders of more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (ii) more
than 50% of the outstanding shares of the Fund. Shareholders are entitled to one
vote for each full share held and fractional votes for fractional shares held.

Each share of a Fund of the Company is entitled to such dividends and
distributions out of the income earned on the assets belonging to that Fund as
are declared in the discretion of the Company's Board of Directors. In the event
of the liquidation or dissolution of the Company, shares of a Fund are entitled
to receive the assets allocable to that Fund which are available for
distribution, and a proportionate distribution, based upon the relative net
assets of the Funds, of any general assets not belonging to a Fund which are
available for distribution.

Shareholders are not entitled to any preemptive rights. All shares, when issued,
will be fully paid, non-accessible, fully transferable and redeemable at the
option of the holder.

OTHER INFORMATION

The Prospectus and this Statement of Additional Information do not contain all
the information included in the Registration Statement filed with the SEC under
the Securities Act of 1933 with respect to the securities offered by the
Prospectus. Certain portions of the Registration Statement have been omitted
from the Prospectus and this Statement of Additional Information pursuant to the
rules and regulations of the SEC. The Registration Statement including the
exhibits filed therewith may be examined at the office of the SEC in Washington,
D.C.

Statements contained in the Prospectus or in this Statement of Additional
Information as to the contents of any contract or other document referred to are
not necessarily complete, and, in each instance, reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement of which the Prospectus and this Statement of Additional Information
form a part, each such statement being qualified in all respects by such
reference.

<PAGE>

As of March 31, 1999, the Directors and officers of the Company in the aggregate
owned less than 1% of the outstanding shares of any of the Portfolios. Also, as
of that date, the shareholders listed below owned of record more than 5% of the
following Portfolios:

DJG VALUE EQUITY FUND SHARES OWNED PERCENTAGE
- --------------------- ------------ ----------

Security Equity Life Insurance Co. 181,291.555 100% (1)
84 Business Park Drive
Armonk, NY 10504-1711

U.S. SMALL CAP FUND SHARES OWNED PERCENTAGE
- ------------------- ------------ ----------

Security Equity Life Insurance Co. 107,153.726 100% (1)
84 Business Park Drive
Armonk, NY 10504-1711

HIGH YIELD FUND SHARES OWNED PERCENTAGE
- --------------- ------------ ----------

Select Reserve Variable Annuities 3,107,921.576 69.09% (1)
c/o American General Life Insurance Co.
P.O. Box 1591
Houston, TX 77251-1591

Security Equity Life Insurance Co. 1,350,281.904 30.02% (1)
84 Business Park Drive
Armonk, NY 10504-1711

<PAGE>

EMERGING MARKETS FUND SHARES OWNED PERCENTAGE
- --------------------- ------------ ----------

Select Reserve Variable Annuities 654,391.008 86.93% (1)
c/o American General Life Insurance Co.
P.O. Box 1591
Houston, TX 77251-1591

Security Equity Life Insurance Co. 94,420.118 12.54%
84 Business Park Drive
Armonk, NY 10504-1711

- -------------
(1) May be deemed to "control" the Fund as that term is defined under the 1940
Act.

FINANCIAL STATEMENTS

The audited financial statements for the Company and the notes thereto appearing
in the most current fiscal year Annual Report to Shareholders are incorporated
in this Statement of Additional Information by reference. No other parts of the
Annual Report are incorporated by reference herein. The financial statements
included in the Annual Report have been audited by the Company's independent
accountants, PricewaterhouseCoopers LLP, whose report thereon dated February 22,
1999, is also incorporated by reference. Such financial statements have been
incorporated herein in reliance upon such report given upon their authority as
experts in accounting and auditing. Additional copies of the Annual Report may
be obtained at no charge by telephoning the Company at the telephone number
appearing on the front page of this Statement of Additional Information.

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

400 Bellevue Parkway
Wilmington, Delaware 19809
(800) 618-9510

STATEMENT OF ADDITIONAL INFORMATION

April 30, 1999

The OFFITBANK Variable Insurance Fund, Inc. (the "Company") is a no load mutual
fund consisting of nine portfolios whose shares are available to participating
life insurance companies ("Participating Companies") and their separate accounts
("Accounts") to fund benefits under variable annuity contracts ("Contracts") and
variable life insurance policies ("Policies") issued by the Participating
Companies. The portfolios are OFFITBANK VIF-High Yield Fund, OFFITBANK
VIF-Emerging Markets Fund, OFFITBANK - DJG Value Equity Fund, OFFITBANK VIF-U.S.
Government Securities Fund, OFFITBANK VIF-U.S. Small Cap Fund, OFFITBANK
VIF-Global Convertible Fund Income Fund, OFFITBANK VIF-Total Return Fund,
OFFITBANK VIF-Latin America Equity Fund (the "Latin America Equity Fund") and
OFFITBANK VIF-Mortgage Securities Fund (the "Mortgage Securities Fund"). This
Statement of Additional Information ("SAI") provides information about the
Company applicable to the following portfolios: the Latin America Equity Fund
and Mortgage Securities Fund (individually, a "Fund", and collectively, the
"Funds"). This information is in addition to the information that is contained
in the Funds' Prospectuses, each dated April 30, 1999.

This SAI is not a prospectus. The Funds' Prospectuses may be obtained, without
charge, by calling the Company toll free at (800) 618-9510 or by writing to the
Company at 400 Bellevue Parkway, Wilmington, DE 19809. This SAI should be read
in conjunction with the Funds' Prospectuses each dated April 30, 1999 and the
Company's Annual Report dated December 31,
1998, which is hereby incorporated by reference.

<PAGE>

TABLE OF CONTENTS

PAGE
----
ORGANIZATION AND CLASSIFICATION 3
NON-PRIMARY INVESTMENT STRATEGIES AND RELATED RISKS 3
FUNDAMENTAL INVESTMENT POLICIES 13
NON-FUNDAMENTAL INVESTMENT POLICIES 14
MANAGEMENT OF THE COMPANY 15
INVESTMENT ADVISER 17
DISTRIBUTOR 18
ADMINISTRATION, FUND ACCOUNTING, TRANSFER AGENCY AND CUSTODY SERVICES 18
COUNSEL 19
INDEPENDENT ACCOUNTANTS 19
PORTFOLIO TRANSACTIONS 19
PURCHASE OF SHARES 20
REDEMPTION OF SHARES 20
PERFORMANCE CALCULATIONS 20
ADDITIONAL INFORMATION CONCERNING TAXES 21
GENERAL INFORMATION 22

<PAGE>

ORGANIZATION AND CLASSIFICATION

The Company is a non-diversified open-end, management investment company
organized as a Maryland corporation on July 1, 1994.

NON-PRIMARY INVESTMENT STRATEGIES AND RELATED RISKS

REPURCHASE AGREEMENTS

If and to the extent authorized to do so, each Fund may enter into repurchase
agreements. A repurchase agreement is a transaction in which the seller of a
security commits itself at the time of the sale to repurchase that security from
the buyer at a mutually agreed upon time and price. A Fund will enter into
repurchase agreements only with dealers, domestic banks or recognized financial
institutions which, in the opinion of the investment adviser of the Fund (the
"Adviser") based on guidelines established by the Company's Board of Directors,
present minimal credit risks. The Adviser to each Fund will monitor the value of
the securities underlying the repurchase agreement at the time the transaction
is entered into and at all times during the term of the repurchase agreement to
ensure that the value of the securities always exceeds the repurchase price plus
accrued interest. In the event of default by the seller under the repurchase
agreement, a Fund may incur costs and experience time delays in connection with
the disposition of the underlying securities.

REVERSE REPURCHASE AGREEMENTS

If and to the extent authorized to do so, each Fund may enter into reverse
repurchase agreements. A reverse repurchase agreement is a borrowing transaction
in which a Fund transfers possession of a security to another party, such as a
bank or broker/dealer, in return for cash, and agrees to repurchase the security
in the future at an agreed upon price, which includes an interest component.
Whenever a Fund enters into reverse repurchase agreements as described in the
Prospectus, it will place in a segregated custodian account liquid assets having
a value equal to the repurchase price (including accrued interest) and will
subsequently monitor the account to ensure such equivalent value is maintained.
Reverse repurchase agreements are considered to be borrowings by the Fund under
the Investment Company Act of 1940, as amended (the "1940 Act"). Reverse
repurchase agreements involve the risk that the market value of the securities
sold by a Fund may decline below the price at which the Fund is obligated to
repurchase the securities.

BRADY BONDS

The Latin America Equity Fund may invest in "Brady Bonds", which are debt
securities issued or guaranteed by foreign governments in exchange for existing
external commercial bank indebtedness under a plan announced by former U.S.
Treasury Secretary Nicholas F. Brady in 1989. To date, Brady Bonds have been
issued by the governments of fifteen countries, the largest proportion having
been issued by Argentina, Brazil, Mexico and Venezuela. Brady Bonds have been
issued only recently, and accordingly, they do not have a long payment history.
Brady Bonds may be collateralized or uncollateralized, are issued in various
currencies (primarily the U.S. dollar) and are actively traded in the
over-the-counter secondary market.

<PAGE>

equal to at least six months of rolling interest payments or, in the case of
floating rate bonds, initially is equal to at least one year's rolling interest
payments based on the applicable interest rate at that time and is adjusted at
regular intervals thereafter. Brady Bonds which have been issued to date are
rated BB or B by S&P or Ba or B by Moody's or, in cases in which a rating by S&P
or Moody's has not been assigned, are generally considered by the Adviser to be
of comparable quality.

LOAN PARTICIPATIONS AND ASSIGNMENTS

The Latin America Equity and Mortgage Securities Funds may invest in fixed and
floating rate loans ("Loans") arranged through private negotiations between a
domestic or foreign entity and one or more financial institutions ("Lenders").
The majority of the Funds' investments in Loans in Latin America and other
emerging markets are expected to be in the form of participations
("Participations") in Loans and assignments ("Assignments") of portions of Loans
from third parties. Participations typically will result in a Fund having a
contractual relationship only with the Lender, not with the borrower. Such Fund
will have the right to receive payments of principal, interest and any fees to
which it is entitled only from the Lender selling the Participation and only
upon receipt by the Lender of the payments from the borrower. In connection with
purchasing Participations, a Fund generally will have no right to enforce
compliance by the borrower with the terms of the loan agreement relating to the
loan ("Loan Agreement"), nor any rights of set-off against the borrower, and
such Fund may not directly benefit from any collateral supporting the Loan in
which it has purchased the Participation. As a result, a Fund will assume the
credit risk of both the borrower and the Lender that is selling the
Participation. In the event of the insolvency of the Lender selling a
Participation, a Fund may be treated as a general creditor of the Lender and may
not benefit from any set-off between the Lender and the borrower. A Fund will
acquire Participations only if the Lender interpositioned between the Fund and
the borrower is determined by the Adviser to be creditworthy. Creditworthiness
will be judged based on the same credit analysis performed by the Adviser when
purchasing marketable securities. When a Fund purchases Assignments from
Lenders, that Fund will acquire direct rights against the borrower on the Loan.
However, since assignments are arranged through private negotiations between
potential assignees and potential assignors, the rights and obligations acquired
by a Fund as the purchaser of an Assignment may differ from, and be more limited
than, those held by the assigning Lender.

DOLLAR ROLL TRANSACTIONS

If and to the extent authorized to do so, in order to enhance portfolio returns
and manage prepayment risks, each Fund may engage in dollar roll transactions
with respect to mortgage securities issued by GNMA, FNMA and FHLMC. In a dollar
roll transaction, a Fund sells a mortgage security held in the portfolio to a
financial institution such as a bank or broker-dealer, and simultaneously agrees
to repurchase a substantially similar security (same type, coupon and maturity)
from the institution at a later date at an agreed upon price. The mortgage
securities that are repurchased will bear the same interest rate as those sold,
but generally will be collateralized by different pools of mortgages with
different prepayment histories. During the period between the sale and
repurchase, a Fund will not be entitled to receive interest and principal
payments on the securities sold. Proceeds of the sale will be invested in
short-term instruments, and the income from these investments, together with any
additional fee income received on the sale, could generate income for a Fund
exceeding the yield on the sold security. When a Fund enters into a

<PAGE>

dollar roll transaction, cash or liquid securities of the Fund, in a dollar
amount sufficient to make payment for the obligations to be repurchased, are
segregated with its custodian at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled.

STRUCTURED PRODUCTS

The Latin America Equity and Mortgage Securities Funds may invest in interests
in entities organized and operated solely for the purpose of restructuring the
investment characteristics of certain debt obligations. This type of
restructuring involves the deposit with or purchase by an entity, such as a
corporation or trust, of specified instruments (such as commercial bank loans or
Brady Bonds) and the issuance by that entity of one or more classes of
securities ("structured products") backed by, or representing interests in, the
underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued structured products to create securities with
different investment characteristics such as varying maturities, payment
priorities and interest rate provisions, and the extent of the payments made
with respect to structured products is dependent on the extent of the cash flow
on the underlying instruments. The Funds may invest in structured products which
represent derived investment positions based on relationships among different
markets or asset classes.

ASSET-BACKED SECURITIES

If and to the extent authorized to do so, each Fund may invest in asset-backed
securities. Asset-backed securities are generally issued as pass through
certificates, which represent undivided fractional ownership interests in the
underlying pool of assets, or as debt instruments, and are generally issued as
the debt of a special purpose entity organized solely for the purpose of owning
such assets and issuing such debt. Asset-backed securities are often backed by a
pool of assets representing the obligations of a number of different parties.
Payments of principal and interest may be guaranteed up to certain amounts and
for a certain time period by a letter of credit or other

<PAGE>

enhancement issued by a financial institution unaffiliated with the entities
issuing the securities. Assets which, to date, have been used to back
asset-backed securities include motor vehicle installment sales contracts or
installment loans secured by motor vehicles, and receivables from revolving
credit (credit card) agreements.

Credit Support. Asset-backed securities often contain elements of credit support
to lessen the effect of the potential failure by obligors to make timely
payments on underlying assets. Credit support falls into two categories: (1)
liquidity protection; and (2) protection against losses resulting from ultimate
default by an obligor on the underlying asset. Liquidity protection ensures that
the pass through of payments due on the installment sales contracts and
installment loans which comprise the underlying pool occurs in a timely fashion.
Protection against losses resulting from ultimate default enhances the
likelihood of ultimate payment of the obligations on at least a portion of the
assets in the pool. Such protection may be provided through guarantees,
insurance policies or letters of credit obtained by the issuer or sponsor from
third parties, through various means of structuring the transaction or through a
combination of such approaches. A Fund will not pay any additional fee for such
credit support. The existence of credit support may increase the market price of
the security.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

Each Fund may purchase or sell forward foreign currency exchange contracts
("forward contracts") as part of its portfolio investment strategy. A forward
contract is an obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and privately traded by
currency traders and their customers. A Fund may enter into a forward contract,
for example, when it enters into a contract for the purchase or sale of a
security denominated in a foreign currency in order to "lock in" the U.S. dollar
price of the security ("transaction hedge"). Additionally, for example, when a
Fund believes that a foreign currency may suffer a substantial decline against
the U.S. dollar, it may enter into a forward sale contract to sell an amount of
that foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. Conversely, when a
Fund believes that the U.S. dollar may suffer a substantial decline against
foreign currency, it may enter into a forward purchase contract to buy that
foreign currency for a fixed dollar amount ("position hedge"). In this
situation, a Fund may, in the alternative, enter into a forward contract to sell
a different foreign currency for a fixed U.S. dollar amount where such Fund
believes that the U.S. dollar value of the currency to be sold pursuant to the
forward contract will fall whenever there is a decline in the U.S. dollar value
of the currency in which portfolio securities of the Fund are denominated
("cross-hedge"). That Fund's custodian will then place cash not available for
investment or U.S. government securities or other high quality debt securities
in a segregated account having a value equal to the aggregate amount of that
Fund's commitments under forward contracts entered into with respect to position
hedges, cross-hedges and transaction hedges, to the extent they do not already
own the security subject to the transaction hedge. If the value of the
securities placed in a segregated account declines, additional cash or
securities will be placed in the account on a daily basis so that the value of
the account will equal the amount of the Fund's commitments with respect to such
contracts. As an alternative to maintaining all or part of the segregated
account, the Fund may purchase a call option permitting such Fund to

<PAGE>

purchase the amount of foreign currency being hedged by a forward sale contract
at a price no higher than the forward contract price or the Fund may purchase a
put option permitting the Fund to sell the amount of foreign currency subject to
a forward purchase contract at a price as high or higher than the forward
contract price. Unanticipated changes in currency prices may result in poorer
overall performance for a Fund than if it had not entered into such contracts.
If the party with which a Fund enters into a forward contract becomes insolvent
or breaches its obligation under the contract, then that Fund may lose the
ability to purchase or sell a currency as desired.

MORTGAGE-RELATED SECURITIES

The Latin America Equity and Mortgage Securities Funds may invest in
mortgage-related securities, consistent with their respective investment
objectives and policies, that provide funds for mortgage loans made to
residential homeowners. These include securities which represent interests in
pools of mortgage loans made by lenders such as savings and loan institutions,
mortgage bankers, commercial banks and others. Pools of mortgage loans are
assembled for sale to investors (such as the Fund) by various governmental,
government-related and private organizations. Interests in pools of
mortgage-related securities differ from other forms of debt securities, which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. Instead, these
securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their residential mortgage
loans, net of any fees paid to the issuer or guarantor of such securities.
Prepayments are caused by repayments of principal resulting from the sale of the
underlying residential property, refinancing or foreclosure, net of fees or
costs which may be incurred.

MORTGAGE-BACKED SECURITIES

If and to the extent authorized to do so, each Fund may invest in
mortgage-backed securities. Mortgage-backed securities are securities that
represent participations in, or are secured by and payable from, loans secured
by real property.

<PAGE>

Loan Mortgage Corporation, but also may be collateralized by whole loans or
private pass-through securities (such collateral collectively referred to as
"Mortgage Assets"). Multiclass pass-through securities are equity interests in a
trust composed of Mortgage Assets. Payments of principal and of interest on the
Mortgage Assets, and any reinvestment income thereon, provide the funds to pay
debt service on the CMOs or make scheduled distributions on the multiclass
pass-through securities. CMOs may be issued by agencies or instrumentalities of
the U.S. government, or by private originators of, or investors in, mortgage
loans, including savings and loan associations, mortgage banks, commercial
banks, investment banks and special purpose subsidiaries of the foregoing.

Stripped Mortgage-Backed Securities ("SMBS"). SMBS are derivative multiclass
mortgage securities. SMBS may be issued by agencies or instrumentalities of the
U.S. government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing.

Mortgage-backed and asset-backed securities are generically considered to be
derivative securities.

U.S. GOVERNMENT SECURITIES

The Mortgage Securities Fund may invest in obligations issued or guaranteed by
the U.S. Government or its agencies or instrumentalities. Obligations of certain
agencies and instrumentalities of the U.S. Government, such as the Government
National Mortgage Association and the Export-Import Bank of the United States,
are supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal National Mortgage Association are supported by the right of
the issuer to borrow from the Treasury; others, such as those of the Student
Loan Marketing Association, are supported by the discretionary authority of the
U.S. Government to purchase the agency's obligations; still others, such as
those of the Federal Farm Credit Banks or the Federal Home Loan Mortgage
Corporation, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government will provide financial support
to U.S. Government-sponsored agencies or instrumentalities if it is not
obligated to do so by law. The Fund will invest in the obligations of such
agencies or instrumentalities only when the Adviser believes that the credit
risk with respect thereto is minimal.

INVESTMENT GRADE FIXED-INCOME SECURITIES

The Mortgage Securities Fund may invest up to 20% of its total assets in
investment grade or comparable fixed income securities of foreign issuers. Such
investments may include mortgage related securities that are not U.S.

<PAGE>

Government Securities, asset backed securities and fixed income securities that
are rated Baa or higher by Moody's or BBB or higher by S&P or that are of
comparable quality in the opinion of the Adviser. Fixed-income securities rated
Baa by Moody's or BBB by S&P are considered investment grade obligations which
lack outstanding investment characteristics and may have speculative
characteristics as well.

The ratings of fixed income securities by Moody's and S&P are a generally
accepted barometer of credit risk. They are, however, subject to certain
limitations from an investor's standpoint. The rating of an issuer is heavily
weighted by past developments and dues 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.

DEPOSITORY RECEIPTS AND DEPOSITORY SHARES

If and to the extent authorized to do so, each Fund may hold equity securities
of foreign issuers in the form of American Depository Receipts ("ADRs"),
American Depository Shares ("ADSs") and European Depository Receipts ("EDRs"),
or other securities convertible into securities of eligible issuers. These
securities may not necessarily be denominated in the same currency as the
securities for which they may be exchanged. ADRs and ADSs typically are issued
by an American bank or trust company which evidences ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depository Receipts ("CDRs"), are receipts issued in Europe
typically by foreign banks and trust companies that evidence ownership of either
foreign or domestic securities. Generally, ADRs and ADSs in registered form are
designed for use in United States securities markets and EDRs, and CDRs in
bearer form are designed for use in European securities markets. For purposes of
a Fund's investment policies, such Fund's investments in ADRs, ADSs, EDRs, and
CDRs will be deemed to be investments in the equity securities representing
securities of foreign issuers into which they may be converted. It is expected
that the Funds, to the extent of their investment in ADRs, will invest
predominantly in ADRs sponsored by the underlying issuers. The Funds, however,
may invest in unsponsored ADRs. Issuers of the stock of unsponsored ADRs are not
obligated to disclose material information in the United States and, therefore,
there may not be a correlation between such information and the market value of
such ADRs.

WARRANTS OR RIGHTS

If and to the extent authorized to do so, warrants or rights may be acquired by
each Fund in connection with other securities or separately, and provide the
Fund with the right to purchase at a later date other securities of the issuer
at a specific price (the "strike price"). The strike price of warrants typically
is much lower than the current market price of the underlying securities, yet
they are subject to greater price fluctuations. As a result, warrants may be
more volatile investments then the underlying securities and may offer greater
potential for capital appreciation as well as capital loss. Warrants or rights
acquired by a Fund in units or attached to securities will be deemed to be
without value for purpose of this restriction. These limits are not fundamental
policies of the Funds and may be changed by the Company's Board of Directors
without shareholder approval.

SECURITIES LOANS, WHEN-ISSUED AND FORWARD COMMITMENT TRANSACTIONS

For the purpose of realizing additional income, the Funds may make secured loans
of portfolio securities amounting to not more than 30% of each Fund's total
assets. Securities loans are made to broker/dealers or institutional investors
pursuant to agreements requiring that the loans continuously be secured by
collateral at least equal at all times to the value of the securities lent plus
any accrued interest, "marked to market" on a daily basis. The collateral
received will consist of cash, U.S. short-term government securities, bank
letters of credit or such other collateral as may be permitted under the Fund's
investment program and by regulatory agencies and approved by the Company's
Board of Directors. While the securities loan is outstanding, the Fund will
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower. The Fund has a right to call each loan
and obtain the securities on five business days' notice. To the extent
applicable, the Fund will not have the right to vote equity securities while
they are being lent, but it will call in a loan in anticipation of any important
vote. The risks in lending portfolio securities, as with other extensions of
secured credit, consist of possible delay in receiving additional collateral or
in the recovery of the

<PAGE>

securities or possible loss of rights in the collateral should the borrower fail
financially. Loans only will be made to firms deemed by the Adviser to be of
good standing and will not be made unless, in the judgment of the Adviser, the
consideration to be earned from such loans would justify the risk. Each Fund may
also purchase securities on a when-issued basis or for future delivery, which
may increase its overall investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement date.

UNITED STATES GOVERNMENT OBLIGATIONS

In addition to the U.S. Treasury obligations described above, a Fund may invest
in separately traded interest components of securities issued or guaranteed by
the U.S. Treasury. The interest components of selected securities are traded
independently under the Separate Trading of Registered Interest and Principal of
Securities ("STRIPS") program. Under the STRIPS program, the interest components
are individually numbered and separately issued by the U.S. Treasury at the
request of depository financial institutions, which then trade the component
parts independently.

BANK OBLIGATIONS

Subject to the investment limitations described in the Prospectus, bank
obligations that may be purchased by a Fund include certificates of deposit,
bankers' acceptances and fixed time deposits. A certificate of deposit is a
short-term negotiable certificate issued by a commercial bank against funds
deposited in the bank and is either interest-bearing or purchased on a discount
basis. A banker's acceptance is a short-term draft drawn on a commercial bank by
a borrower, usually in connection with an international commercial transaction.
The borrower is liable for payment as is the bank, which unconditionally
guarantees to pay the draft at its face amount on the maturity date. Fixed time
deposits are obligations of branches of U.S. banks or foreign banks which are
payable at a stated maturity date and bear a fixed rate of interest. Although
fixed time deposits do not have a market, there are no contractual restrictions
on the right to transfer a beneficial interest in the deposit to a third party.
The Funds do not consider fixed time deposits illiquid for purposes of the
restriction on investment in illiquid securities.

<PAGE>

parent bank or may be limited to the issuing branch by the terms of the specific
obligations or by government regulation.

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 bank obligations. Such investment risks include future
political and economic developments, the possible imposition of foreign
withholding taxes on interest income payable on such securities held by a Fund,
the possible seizure or nationalization of foreign assets and the possible
establishment of exchange controls or other foreign governmental laws or
restrictions which might affect adversely the payment of the principal of and
interest on such securities held by the Fund. In addition, there may be less
publicly-available information about a foreign issuer than about a U.S. issuer,
and foreign issuers may not be subject to the same accounting, auditing and
financial record-keeping standards and requirements as U.S. issuers.

A Fund will not purchase securities which the Adviser to the Fund believes, at
the time of purchase, will be subject to exchange controls or foreign
withholding taxes; however, there can be no assurance that such laws may not
become applicable to certain of the Fund's investments. In the event unforeseen
exchange controls or foreign withholding taxes are imposed with respect to a
Fund's investments, the effect may be to reduce the income received by the Fund
on such investments.

CONVERTIBLE SECURITIES

If and to the extent authorized to do so, each Fund may invest in traditional
convertible securities and synthetic convertible securities, with the exception
that the CVO Greater China Fund will not invest in synthetic convertible
securities. Set forth below is additional information concerning traditional
convertible securities and "synthetic" convertible securities.

Convertible securities are issued and traded in a number of securities markets.
It is expected that ordinarily a substantial portion of the convertible
securities held by the Fund will be denominated in U.S. dollars. However, the
underlying equity securities typically will be quoted in the currency of the
country where the issuer is domiciled. With respect to convertible securities
denominated in a currency different from that of the underlying equity
securities, the conversion price may be based on a fixed exchange rate
established at the time the security is issued. As a result, fluctuations in the
exchange rate between the currency in which the debt security is denominated and
the currency in which the share price is quoted will affect the value of the
convertible security. The Fund may enter into foreign currency hedging
transactions in which they may seek to reduce the impact of such fluctuations.

Holders of convertible securities have a claim on the assets of the issuer prior
to the common stockholders but may be subordinated to similar non-convertible
debt securities of the same issuer. A convertible security may be subject to
redemption at the option of the issuer at a price established in the charter
provision, indenture or other governing instrument pursuant to which the
convertible security was issued. If a convertible security held by the Fund is
<PAGE>

called for redemption, the Fund will be required to redeem the security, convert
it into the underlying common stock or sell it to a third party. Certain
convertible debt securities may provide a put option to the holder which
entitles the holder to cause the security to be redeemed by the issuer at a
premium over the stated principal amount of the debt security.

SYNTHETIC CONVERTIBLE SECURITIES

"Synthetic" convertible securities are created by combining separate securities
that possess the two principal characteristics of a true convertible security,
i.e., fixed income ("fixed-income component") and the right to acquire equity
securities ("convertibility component"). The fixed-income component is achieved
by investing in nonconvertible fixed income securities such as nonconvertible
bonds, preferred stocks and money market instruments. The convertibility
component is achieved by investing in warrants, exchanges or NASDAQ listed call
options or stock index call options granting the holder the right to purchase a
specified quantity of securities within a specified period of time at a
specified price or to receive cash in the case of stock index options.

A synthetic convertible security differs from a traditional convertible security
in several respects. Unlike a traditional convertible security, which is a
single security having a unitary market value, a synthetic convertible security
is comprised of two or more separate securities, each with its own market value.
Therefore, the "market value" of a synthetic convertible security is the sum of
the values of its fixed-income component and its convertibility component. For
this reason, the values of a synthetic convertible security and a traditional
convertible security will respond differently to market fluctuations.

ZERO COUPON SECURITIES, PAY-IN-KIND BONDS AND DISCOUNT OBLIGATIONS

The Latin America Equity and Mortgage Securities Funds may invest in zero coupon
securities and pay-in-kind bonds. These investments involve special risk
considerations. Zero coupon securities are debt securities that pay no cash
income but are sold at substantial discounts from their value at maturity. When
a zero coupon security is held to maturity, its entire return, which consists of
the amortization of discount, comes from the difference between its purchase
price and its maturity value. This difference is known at the time of purchase,
so that investors holding zero coupon securities until maturity know at the time
of their investment what the return on their investment will be. Certain zero
coupon securities also are sold at substantial discounts from their maturity
value and provide for the commencement of regular interest payments at a
deferred date. Each Fund also may purchase pay-in-kind bonds. Pay-in-kind bonds
pay all or a portion of their interest in the form of debt or equity securities.
A Fund will only purchase pay-in-kind bonds that pay all or a portion of their
interest in the form of debt securities. Zero coupon securities and pay-in-kind
bonds may be issued by a wide variety of corporate and governmental issuers.

<PAGE>

ILLIQUID SECURITIES

OTHER INVESTMENT COMPANIES AND POOLED VEHICLES

Each Fund reserves the right to invest up to 10% of its total assets in the
securities of other investment companies. Each Fund may not invest more than 5%
of its total assets in the securities of any one investment company or acquire
more than 3% of the voting securities of any other investment company. No Fund
intends to invest in such investment companies unless, in the judgment of the
Adviser, the potential benefits of such investment justify the payment of any
premium to net asset value of the investment company or of any sales charge. A
Fund will indirectly bear its proportionate share of any management fees and
other expenses paid by investment companies in which it invests in addition to
the advisory fee paid by that Fund.

SHORT SALES

The Funds may make short sales of securities "against the box." A short sale is
a transaction in which the Fund sells a security it does not own in anticipation
that the market price of that security will decline. In a short sale "against
the box," at the time of sale, the Fund owns or has the immediate and
unconditional right to acquire at no additional cost the identical security.
Short sales against the box are a form of hedging to offset potential declines
in long positions in similar securities.

BORROWING

Each Fund is authorized to borrow money from banks for temporary or emergency
purposes, denominated in any currency in an amount up to 10% of its total assets
(including the amount borrowed).

FUTURE DEVELOPMENTS

<PAGE>

for the Funds. Such investment practices, if they arise, may involve risks which
exceed those involved in the activities described above.

FUNDAMENTAL INVESTMENT POLICIES

1) invest 25% or more of the value of its total assets in securities of
issuers in any one industry (the electric, gas and telephone
industries being treated as separate industries for the purpose of
this restriction, with respect to the CVO Greater China Fund)
provided that there is no limitation with respect to investment in
obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities;

2) borrow money (except that they may enter into reverse repurchase
agreements) except from banks for temporary or emergency purposes,
provided, that (a) the amount of such borrowing may not exceed 20%
of the value of a Fund's total assets and (b) a Fund will not
purchase portfolio securities while such outstanding borrowing
exceeds 5% of the value of its total assets;

3) invest an amount equal to 15% or more of the current value of its
net assets in investments that are illiquid;

4) purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial and currency futures contracts
and options thereon, and may purchase and sell currency forward
contracts, options on foreign currencies and may otherwise engage in
transactions in foreign currencies;

5) make loans, except that the Fund may: (a) purchase and hold debt
instruments (including bonds, debentures or other obligations and
certificates of deposit and bankers' acceptances); (b) invest in
loans and participations in accordance with its investment
objectives and policies; (c) make loans of portfolio securities; and
(d) enter into repurchase agreements with respect to portfolio
securities;

6) underwrite the securities of other issuers, except to the extent
that the purchase of investments directly from the issuer thereof
and later disposition of such securities in accordance with the
Fund's investment program may be deemed to be an underwriting;

7) purchase real estate or real estate limited partnership interests
(other than securities secured by real estate or interests therein
or securities issued by companies that invest in real estate or
interests therein);

8) purchase more than 3% of the stock of another investment company, or
purchase stock of other investment companies equal to more than 5%
of the Fund's net assets in the case of any one other investment
company and 10% of such net assets in the case of all other
investment companies in the aggregate. This restriction shall not
apply to investment company securities received or acquired by the
Fund pursuant to a merger or plan of reorganization; and

9) issue senior securities.

NON-FUNDAMENTAL INVESTMENT POLICIES

The following are non-fundamental investment policies and may be changed by a
vote of the Company's Board of Directors. No Fund may:

1) purchase securities on margin (except for delayed delivery or
when-issued transactions or such short-term credits as are necessary
for the clearance of transactions, and except for initial and
variation margin payments in connection with the use of options,
futures contracts, options thereon or forward currency

<PAGE>

contracts; the Fund may also make deposits of margin in connection
with futures and forward contracts and options thereon);

2) sell securities short (except for short positions in a futures
contract or forward contract or short positions in stocks owned by
the Fund);

3) invest for the purpose of exercising control over management of any
company;

4) invest directly in interests in oil, gas or other mineral
exploration development programs or mineral leases;

5) pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure permitted borrowings;

6) invest in stock or bond futures and/or options on futures unless not
more than 5% of the Fund's total assets are required as deposit to
secure obligations under such futures and/or options on futures
contracts, provided, however, that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be
excluded in computing such 5%; and

7) invest in puts, calls straddles or spreads, except as described in
(6) above.

MANAGEMENT OF THE COMPANY

DIRECTORS AND OFFICERS

<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
The Very Rev. James Parks Director President, Interfaith Center
Morton of New York (1/1/98- present);
Interfaith Center of New formerly Dean of Cathedral of
York St. John the Divine
570 Lexington Avenue (1972-1996); one additional
New York, New York 10022 Director position with the
Age: 74 Years OFFITBANK Fund Complex.

Gary M. Gardner Assistant Secretary Chief Counsel (1994-present)
PFPC Inc. of PFPC Inc.; Associate
400 Bellevue Parkway General Counsel (1992-1994) of
Wilmington, DE 19809 The Boston Company, Inc.; one
Age: 47 Years additional Officer position
with the OFFITBANK Fund
Complex.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
David C. Lebisky Assistant Secretary Administrative Officer
PFPC Inc. (1996-present) of PFPC Inc.;
400 Bellevue Parkway Legal Assistant (1994-1996)
Wilmington, DE 19809 with the law firm of Drinker
Age: 27 years Biddle & Reath; BA Candidate
(1990-1994) LaSalle
University; one additional
Officer position with the
OFFITBANK Fund Complex.
</TABLE>

- -----------------
* "Interested person" as defined in the 1940 Act.

The Company pays each Director who is not also an officer or affiliated person
an annual fee of $3,000 and a fee of $500 for each Board of Directors and Board
committee meeting attended and reimburses such Director for all out-of-pocket
expenses relating to attendance at meetings. Directors who are affiliated with
the Adviser do not receive compensation from the Company but are reimbursed for
all out-of-pocket expenses relating to attendance at meetings.

DIRECTOR COMPENSATION
(FOR THE PERIOD 4/1/98 THROUGH 12/31/98)

TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM
BENEFITS ESTIMATED REGISTRANT AND
AGGREGATE ACCRUED AS ANNUAL FUND COMPLEX*
COMPENSATION PART OF FUND BENEFITS UPON PAID TO
NAME OF PERSON FROM REGISTRANT EXPENSES RETIREMENT DIRECTORS
- -------------- --------------- -------- ---------- ---------

Morris W. Offit $0 0 N/A $0

Edward J. Landau $4,250.00 0 N/A $23,000.00

The Very Reverend $4,250.00 0 N/A $23,000.00
James Parks Morton

* For this purpose, the "Fund Complex" consists of The OFFITBANK Variable
Insurance Fund, Inc. and The OFFITBANK Investment Fund, Inc., which are
all the regulated investment companies advised by OFFITBANK.

INVESTMENT ADVISER

OFFITBANK, a New York State chartered trust company, acts as investment adviser
(the "Adviser") to OFFITBANK VIF-Latin America Equity Fund and OFFITBANK
VIF-Mortgage Securities Fund. The advisory agreement (the "Advisory Agreement")
between the Adviser and the Funds provides that the Adviser shall manage the
operations of the Funds, subject to policy established by the Board of Directors
of the Company. Pursuant to the Advisory Agreement, the Adviser manages the
Funds' investment portfolios, directs purchases and sales of the portfolio
securities and reports thereon to the Company's officers and directors
regularly. In addition, the Adviser pays the compensation of the Company's
officers, employees and directors affiliated with the Adviser. The Company bears
all other costs of its operations, including the compensation of its directors
not affiliated with the

<PAGE>

Adviser.

For its services under the Advisory Agreement, the Adviser receives from each
Fund an advisory fee. The fee is calculated daily and paid monthly at an annual
rate of .90% of the Latin America Equity Fund's average daily net assets and
.40% of the Mortgage Securities Fund's average daily net assets. The Adviser may
waive all or part of its fee from time to time in order to increase a Fund's net
investment income available for distribution to shareholders. The Fund will not
be required to reimburse the Adviser for any advisory fees waived.

REGULATORY MATTERS

If the Adviser were prohibited from performing the services described in any
Prospectus with respect to any Fund, it is expected that the Company's Board of
Directors would recommend to such Fund's shareholders that they approve new
agreements with another entity or entities qualified to perform such services
and selected by the Board of Directors. The Company does not anticipate that
investors would suffer any adverse financial consequences as a result of these
occurrences.

DISTRIBUTOR

ADMINISTRATION, FUND ACCOUNTING, TRANSFER AGENCY AND CUSTODY SERVICES

PFPC Inc. ("PFPC") performs administrative and fund accounting services for the
Company, and is responsible for certain clerical, record keeping and bookkeeping
services, except those performed by OFFITBANK or by The Bank of New York
("BONY") in its capacity as custodian of the Company. PFPC has no role in
determining the investment policies of the Company or which securities are to be
purchased or sold by the Funds. The services provided by PFPC as Administrator
include regulatory compliance, assistance in the preparation and filing of
post-effective amendments to the Company's registration statement with the
Commission, preparation of annual, semi-annual and other reports to shareholders
and the Commission, filing of federal and state income tax returns, preparation
of financial and management reports, preparation of board meeting materials,
preparation and filing of blue sky registrations and monitoring compliance with
the amounts and conditions of each state's qualification. For

<PAGE>

the administrative and fund accounting services PFPC provides to the Company,
PFPC is paid an annual fee calculated daily and paid monthly which is expected
to approximate .125% of net assets. From time to time, the Administrator may
waive all or a portion of its fees.

In addition to the services provided by PFPC to the Fund as Administrator, PFPC
also provides transfer agency and dividend disbursing services to the Fund
pursuant to a separate agreement.

BONY serves as the Company's custodian pursuant to a custodian agreement (the
"Custodian Agreement") with the Company. BONY is located at 90 Washington
Street, New York, New York 10286. Under the Custodian Agreement, BONY has agreed
to: (1) maintain a segregated account or accounts in the name of each Fund; (2)
hold and disburse portfolio securities on account of each Fund; (3) collect and
receive all income and other payments and distributions on account of each
Fund's portfolio securities; (4) respond to correspondence relating to its
duties; and (5) make periodic reports to the Company's Board of Directors
concerning each Fund's operations. The Custodian is authorized under the
Custodian Agreement to select one or more banks or trust companies to serve as
sub-custodian on behalf of a Fund, provided that the Custodian remains
responsible for the performance of all of its duties under the Custodian
Agreement. The Custodian is entitled to receive such compensation from each Fund
as may be agreed upon from time to time.

COUNSEL

Kramer Levin Naftalis & Frankel LLP, whose address is 919 Third Avenue, New
York, NY 10022, serves as counsel to the Company.

INDEPENDENT ACCOUNTANTS

OTHER INFORMATION CONCERNING FEES AND EXPENSES

All or part of the fees payable by each Fund to the organizations retained to
provide services for the Fund may be waived from time to time in order to
increase the Fund's net investment income available for distribution to
shareholders.

Except as otherwise noted, OFFITBANK and PFPC pay all expenses in connection
with the performance of their advisory and administrative services respectively.
The Company bears the expenses incurred in its operations, including: taxes;
interest; fees (including fees paid to its directors who are not affiliated with
the Company); fees payable to the SEC; costs of preparing prospectuses for
regulatory purposes and for distribution; advisory and administration fees;
charges of its custodian and transfer agent; certain insurance costs; auditing
and legal expenses; fees of independent pricing services; costs of shareholders'
reports and shareholder meetings, including proxy statements and related
materials; and any extraordinary expenses. The Company also pays for brokerage
fees and commissions, if any, in connection with the purchase of portfolio
securities.

PORTFOLIO TRANSACTIONS

The Company has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policy established
by the Company's Board of Directors, the Adviser is primarily responsible for
the Company's portfolio decisions and the placing of the Company's portfolio
transactions. When selecting brokers and dealers to handle the purchase and sale
of portfolio securities, the Adviser looks for prompt execution of the order at
a favorable price. Generally, the Adviser works with recognized dealers in these
securities, except when a better price and execution of the order can be
obtained elsewhere.

<PAGE>

Portfolio securities normally will be purchased or sold from or to dealers
serving as market makers for the securities at a net price, which may include
dealer spreads and underwriting commissions. Purchases and sales of securities
on a stock exchange are effected through brokers who charge a commission. In the
over-the-counter market securities are generally traded on a "net" basis with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
placing orders, it is the policy of the Company to obtain the best results
taking into account the dealer's general execution and operational facilities,
the type of transaction involved and other factors such as the dealer's risk in
positioning the securities involved. While the Adviser generally seeks a
competitive price in placing its orders, the Company may not necessarily be
paying the lowest price available.

Under the 1940 Act, persons affiliated with the Company are prohibited from
dealing with the Company as a principal in the purchase and sale of securities
unless the transaction is conducted in accordance with procedures established by
the Company's Board of Directors and complies in all other respects with certain
criteria or an exemptive order allowing such transactions is obtained from the
SEC. Affiliated persons of the Company, or affiliated persons of such persons,
may from time to time be selected to execute portfolio transactions for the
Company as agent. Subject to the considerations discussed above and in
accordance with procedures expected to be adopted by the Board of Directors, in
order for such an affiliated person to be permitted to effect any portfolio
transactions for the Company, the commissions, fees or other remuneration
received by such affiliated person must be reasonable and fair compared to the
commissions, fees and other remuneration received by other brokers in connection
with comparable transactions. This standard would allow such an affiliated
person to receive no more than the remuneration which would be expected to be
received by an unaffiliated broker in a commensurate arm's-length agency
transaction.

Investment decisions for the Company are made independently from those for other
funds and accounts advised or managed by the Adviser. Such other funds and
accounts may also invest in the same securities as the Company. If those funds
or accounts are prepared to invest in, or desire to dispose of, the same
security at the same time as the Company, however, transactions in such
securities will be made, insofar as feasible, for the respective funds and
accounts in a manner deemed equitable to all. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by the
Company or the price paid or received by the Company. In addition, because of
different investment objectives, a particular security may be purchased for one
or more funds or accounts when one or more funds or accounts are selling the
same security. To the extent permitted by law, the Adviser may aggregate the
securities to be sold or purchased for the Company with those to be sold or
purchased for other funds or accounts in order to obtain best execution.

PURCHASE OF SHARES

For information pertaining to the manner in which shares of each Fund are
offered to the public, see "Purchase of Fund Shares" in each Fund's Prospectus.
The Company reserves the right, in its sole discretion, to suspend the offering
of shares of its Funds and reject purchase orders when, in the judgment of
management, such suspension or rejection is in the best interest of the Company.

REDEMPTION OF SHARES

The Company may suspend redemption privileges or postpone the date of payment
(1) during any period that the New York Stock Exchange (the "Exchange") or the
bond market is closed, or trading on the Exchange is restricted as determined by
the SEC, (2) during any period when an emergency exists as defined by the rules
of the SEC as a result of which it is not reasonably practicable for the Fund to
dispose of securities owned by it, or fairly to determine the value of its
assets, and (3) for such other periods as the SEC may permit.

Furthermore, if the Board of Directors determines that it is in the best
interests of the remaining shareholders of the Fund, such Fund may pay the
redemption price, in whole or in part, by a distribution in kind.

PERFORMANCE CALCULATIONS

<PAGE>

The Company may from time to time quote various performance figures to
illustrate the past performance of its Funds. Performance quotations by
investment companies are subject to rules adopted by the SEC, which require the
use of standardized performance quotations or, alternatively, that every
non-standardized performance quotation furnished by the Fund be accompanied by
certain standardized performance information computed as required by the SEC. An
explanation of the SEC methods for computing performance follows.

TOTAL RETURN

<PAGE>

P (1+T)^n = ERV

Aggregate Total Return = [(ERV)/P - 1]

In addition to total return, each Fund may quote performance in terms of a
30-day yield. The yield figures provided will be calculated according to a
formula prescribed by the SEC and can be expressed as follows:

Yield = 2 [((a-b)/cd +1)^6 - 1]

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period (net of reimbursements).

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.

d = the minimum offering price per share on the last day of the
period.

For the purpose of determining the interest earned (variable "a" in the formula)
on debt obligations that were purchased by a Fund at a discount or premium, the
formula generally calls for amortization of the discount or premium; the
amortization schedule will be adjusted monthly to reflect changes in the market
value of the debt obligations.

Performance information presented for a 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.

ADDITIONAL INFORMATION CONCERNING TAXES

The following is only a summary of certain additional tax considerations that
are not described in the Funds' Prospectuses and generally affect each Fund and
its shareholders. No attempt is made to present a detailed explanation of the
tax treatment of a Fund or its shareholders, and the discussions here and in the
Prospectuses are not intended as substitutes for careful tax planning.

Each Fund intends to qualify as a "regulated investment company" ("RIC") under
the Internal Revenue Code of

<PAGE>

1986, as amended (the "Code"). If so qualified, a Fund will not be subject to
federal income tax on its investment company taxable income and net capital
gains to the extent that such investment company taxable income and net capital
gains are distributed in each taxable year to the separate accounts of insurance
companies that hold its shares. In addition, if a Fund distributes annually to
the separate accounts its ordinary income and capital gain net income, in the
manner prescribed in the Code, it also will not be subject to the 4% federal
excise tax otherwise applicable to a RIC on any of its income or gains.
Distributions of net investment income and net short-term capital gains will be
treated as ordinary income and distributions of net long-term capital gains will
be treated as long-term capital gain in the hands of the insurance companies.
Under current tax law, capital gains or dividends from a Fund are not currently
taxable when left to accumulate within a variable annuity contract or variable
life insurance policy.

Section 817(h) of the Code requires that investments of a segregated asset
account of an insurance company be "adequately diversified", in accordance with
Treasury Regulations promulgated thereunder, in order for the holders of the
variable annuity contracts or variable life insurance policies investing in the
account to receive the tax-deferred or tax-free treatment generally afforded
holders of annuities or life insurance policies under the Code. The Department
of the Treasury has issued Regulations under section 817(h) which, among other
things, provide the manner in which a segregated asset account will treat
investments in a RIC for purposes of the applicable diversification
requirements. Under the Regulations, if a RIC satisfies certain conditions, that
RIC will not be treated as a single investment for these purposes, but rather
the segregated asset account will be treated as owning its proportionate share
of each of the assets of the RIC. Each Fund plans to satisfy these conditions at
all times so that each segregated asset account of a life insurance company
investing in the Fund will be treated as adequately diversified under the Code
and Regulations.

For information concerning the federal income tax consequences to the holders of
variable annuity contracts and variable life insurance policies, such holders
should consult the prospectus used in connection with the issuance of the
particular contract or policy.

FOREIGN TAX CREDITS

Dividends, interest and gains received by a Fund from foreign sources may give
rise to withholding and other taxes imposed by foreign countries. If a Fund
qualifies as a regulated investment company, if certain distribution
requirements are satisfied and if more than 50% of the value of the Fund's total
assets at the close of any taxable year consists of stocks or securities of
foreign corporations, the Fund may make an election for U.S. Federal income tax
purposes, to treat any foreign country's income or withholding taxes paid by the
Fund that can be treated as taxes on income under U.S. income tax principles, as
paid by its shareholders. In the absence of such an election, the Fund would
deduct such foreign taxes in computing the amount of its distributable income.

GENERAL INFORMATION

CAPITAL STOCK

Each share of any Fund of the Company is entitled to such dividends and
distributions out of the income earned on

<PAGE>

the assets belonging to that Fund as are declared in the discretion of the
Company's Board of Directors. In the event of the liquidation or dissolution of
the Company, shares of each Fund are entitled to receive the assets allocable to
that Fund which are available for distribution, and a proportionate
distribution, based upon the relative net assets of the Fund, of any general
assets not belonging to the Fund which are available for distribution.

Shareholders are not entitled to any preemptive rights. All shares, when issued,
will be fully paid, non-accessible, fully transferable and redeemable at the
option of the holder.

OTHER INFORMATION

The Prospectuses and this Statement of Additional Information do not contain all
the information included in the Registration Statement filed with the SEC under
the Securities Act of 1933 with respect to the securities offered by the
Prospectuses. Certain portions of the Registration Statement have been omitted
from the Prospectuses and this Statement of Additional Information pursuant to
the rules and regulations of the SEC. The Registration Statement including the
exhibits filed therewith may be examined at the office of the SEC in Washington,
D.C.

Statements contained in the Prospectuses or in this Statement of Additional
Information as to the contents of any contract or other document referred to are
not necessarily complete, and, in each instance, reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement of which the Prospectuses and this Statement of Additional Information
form a part, each such statement being qualified in all respects by such
reference.

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

400 Bellevue Parkway
Wilmington, Delaware 19809
(800) 618-9510

STATEMENT OF ADDITIONAL INFORMATION

April 30, 1999

The OFFITBANK Variable Insurance Fund, Inc. (the "Company") is a no load mutual
fund consisting of nine portfolios whose shares are available to participating
life insurance companies ("Participating Companies") and their separate accounts
("Accounts") to fund benefits under variable annuity contracts ("Contracts") and
variable life insurance policies ("Policies") issued by the Participating
Companies. The portfolios are OFFITBANK VIF-High Yield Fund, OFFITBANK
VIF-Emerging Markets Fund, DJG Value Equity Fund, OFFITBANK VIF-U.S. Government
Securities Fund, OFFITBANK VIF-U.S. Small Cap Fund, OFFITBANK VIF-Global
Convertible Fund Income Fund, OFFITBANK VIF-Total Return Fund, OFFTIBANK
VIF-Latin America Equity Fund and OFFITBANK VIF Mortgage Securities Fund. This
Statement of Additional Information ("SAI") provides information about the
Company applicable to the OFFITBANK VIF-Total Return Fund ( the "Fund"). This
information is in addition to the information that is contained in the Fund's
Prospectus dated April 30, 1999.

This SAI is not a prospectus. The Fund's Prospectus may be obtained, without
charge, by calling the Company toll-free at (800) 618-9510 or by writing to the
Company at 400 Bellevue Parkway, Wilmington, DE 19809. The SAI should be read in
conjunction with the Fund's Prospectus dated April 30, 1999 and the Company's
Annual Report dated December 31, 1998, which is hereby incorporated by
reference.

<PAGE>

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

TABLE OF CONTENTS

PAGE
----

ORGANIZATION AND CLASSIFICATION 3
NON-PRIMARY INVESTMENT STRATEGIES AND RELATED RISKS 3
FUNDAMENTAL INVESTMENT POLICIES 16
NON-FUNDAMENTAL INVESTMENT POLICIES 17
MANAGEMENT OF THE COMPANY 19
INVESTMENT ADVISER 21
DISTRIBUTOR 22

ADMINISTRATION, FUND ACCOUNTING, TRANSFER AGENCY AND
CUSTODY SERVICES 23

COUNSEL 24
INDEPENDENT ACCOUNTANTS 24
PORTFOLIO TRANSACTIONS 24
PURCHASE OF SHARES 25
REDEMPTION OF SHARES 25
PERFORMANCE CALCULATIONS 26
ADDITIONAL INFORMATION CONCERNING TAXES 27
GENERAL INFORMATION 28
FINANCIAL STATEMENTS 29

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

<PAGE>

ORGANIZATION AND CLASSIFICATION

The Company is a non-diversified open-end, management investment company
organized as a Maryland corporation on July 1, 1994.

NON-PRIMARY INVESTMENT STRATEGIES AND RELATED RISKS

The Fund may invest directly in the markets and securities described in the
prospectus, or indirectly through investing in the other investment portfolios
of the OFFITBANK Investment Fund, Inc. and the Company, including the OFFITBANK
U.S. Government Securities Fund (the "U.S. Government Securities Fund"), the
OFFITBANK Mortgage Securities Fund (the "Mortgage Securities Fund"), the
OFFITBANK VIF-High Yield Fund (the "High Yield Fund") and the OFFITBANK
VIF-Emerging Markets Fund (the "Emerging Markets Fund") (collectively, the
"Funds" and each individually, a "Fund"). The following discussion of investment
policies supplements the discussion of investment objectives and policies set
forth in each Fund's Prospectus.

REPURCHASE AGREEMENTS

Each Fund may enter into repurchase agreements. A repurchase agreement is a
transaction in which the seller of a security commits itself at the time of the
sale to repurchase that security from the buyer at a mutually agreed upon time
and price. The Funds will enter into repurchase agreements only with dealers,
domestic banks or recognized financial institutions which, in the opinion of
OFFITBANK (the "Adviser") based on guidelines established by the Company's Board
of Directors, present minimal credit risks. The Adviser will monitor the value
of the securities underlying the repurchase agreement at the time the
transaction is entered into and at all times during the term of the repurchase
agreement to ensure that the value of the securities always exceeds the
repurchase price plus accrued interest. In the event of default by the seller
under the repurchase agreement, the Fund may incur costs and experience time
delays in connection with the disposition of the underlying securities.

REVERSE REPURCHASE AGREEMENTS

Each Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer, in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. Whenever the Funds enter into reverse
repurchase agreements as described in the Prospectus, they will place in a
segregated custodian account liquid assets having a value equal to the
repurchase price (including accrued interest) and will subsequently monitor the
account to ensure such equivalent value is maintained. Reverse repurchase
agreements are considered to be borrowings by the Funds under the Investment
Company Act of 1940, as amended (the "1940 Act").

BRADY BONDS

<PAGE>

Each Fund, except the U.S. Government Securities and Mortgage Securities funds,
may invest in "Brady Bonds," which are debt securities issued or guaranteed by
foreign governments in exchange for existing external commercial bank
indebtedness under a plan announced by former U.S. Treasury Secretary Nicholas
F. Brady in 1989. To date, Brady Bonds have been issued by the governments of
fifteen countries, the largest proportion having been issued by Argentina,
Brazil, Mexico and Venezuela. Brady Bonds have been issued only recently, and
accordingly, they do not have a long payment history. Brady Bonds may be
collateralized or uncollateralized, are issued in various currencies (primarily
the U.S. dollar) and are actively traded in the over-the-counter secondary
market.

The Funds may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least six months of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at that time and is adjusted at regular
intervals thereafter. Brady Bonds which have been issued to date are rated BB or
B by S&P or Ba or B by Moody's or, in cases in which a rating by S&P or Moody's
has not been assigned, are generally considered by the Adviser to be of
comparable quality.

LOAN PARTICIPATIONS AND ASSIGNMENTS

Each Fund, except the U.S. Government Securities and Mortgage Securities Funds,
may invest in fixed and floating rate loans ("Loans") arranged through private
negotiations between a domestic or foreign entity and one or more financial
institutions ("Lenders"). The majority of the Funds' investments in Loans in
Latin America and other emerging markets are expected to be in the form of
participations ("Participations") in Loans and assignments ("Assignments") of
portions of Loans from third parties. Participations typically will result in a
Fund having a contractual relationship only with the Lender, not with the
borrower. Such Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In connection with purchasing Participations, a Fund generally will
have no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the loan ("Loan Agreement"), nor any rights of set-off
against the borrower, and such Fund may not directly benefit from any collateral
supporting the Loan in which it has purchased the Participation. As a result, a
Fund will assume the credit risk of both the borrower and the Lender that is
selling the Participation. In the event of the insolvency of the Lender selling
a Participation, a Fund may be treated as a general creditor of the Lender and
may not benefit from any set-off between the Lender and the borrower. A Fund
will acquire Participations only if the Lender interpositioned between the Fund
and the borrower is determined by the Adviser to be creditworthy.
Creditworthiness will be judged based on the same credit analysis performed by
the Adviser when purchasing marketable securities. When a Fund purchases
Assignments from Lenders, that

<PAGE>

Fund will acquire direct rights against the borrower on the Loan. However, since
assignments are arranged through private negotiations between potential
assignees and potential assignors, the rights and obligations acquired by a Fund
as the purchaser of an Assignment may differ from, and be more limited than,
those held by the assigning Lender.

STRUCTURED PRODUCTS

Each Fund may invest in interests in entities organized and operated solely for
the purpose of restructuring the investment characteristics of certain debt
obligations. This type of restructuring involves the deposit with or purchase by
an entity, such as a corporation or trust, of specified instruments (such as
commercial bank loans or Brady Bonds) and the issuance by that entity of one or
more classes of securities ("structured products") backed by, or representing
interests in, the underlying instruments. The cash flow on the underlying
instruments may be apportioned among the newly issued structured products to
create securities with different investment characteristics such as varying
maturities, payment priorities and interest rate provisions, and the extent of
the payments made with respect to structured products is dependent on the extent
of the cash flow on the underlying instruments. The Funds may invest in
structured products which represent derived investment positions based on
relationships among different markets or asset classes.

<PAGE>

investment position relating to a difference in the prices or interest rates of
two securities or currencies where the value of the investment position is
determined by movements in the difference between the prices or interest rates,
as the case may be, of the respective securities or currencies. When the Funds
invest in notes linked to the price of an underlying instrument or currency, the
price of the underlying security or the exchange rate of the currency is
determined by a multiple (based on a formula) of the price of such underlying
security or exchange rate of such currency. Because they are linked to their
underlying markets or securities, investments in structured products generally
are subject to greater volatility than an investment directly in the underlying
market or security. Total return on the structured product is derived by linking
return to one or more characteristics of the underlying instrument. Although a
Fund's purchase of structured products would have a similar economic effect to
that of borrowing against the underlying securities, the purchase will not be
deemed to be leverage for purposes of the limitations placed on the extent of
the Fund's assets that may be used for borrowing and other leveraging
activities.

DOLLAR ROLL TRANSACTIONS

In order to enhance portfolio returns and manage prepayment risks, a Fund may
engage in dollar roll transactions with respect to mortgage securities issued by
GNMA, FNMA and FHLMC. In a dollar roll transaction, the Fund sells a mortgage
security held in the portfolio to a financial institution such as a bank or
broker-dealer, and simultaneously agrees to repurchase a substantially similar
security (same type, coupon and maturity) from the institution at a later date
at an agreed upon price. The mortgage securities that are repurchased will bear
the same interest rate as those sold, but generally will be collateralized by
different pools of mortgages with different prepayment histories. During the
period between the sale and repurchase, the Fund will not be entitled to receive
interest and principal payments on the securities sold. Proceeds of the sale
will be invested in short-term instruments, and the income from these
investments, together with any additional fee income received on the sale, could
generate income for the Fund exceeding the yield on the sold security. When the
Fund enters into a dollar roll transaction, cash or liquid securities of the
Fund, in a dollar amount sufficient to make payment for the obligations to be
repurchased, are segregated with its custodian at the trade date. These
securities are marked to market daily and are maintained until the transaction
is settled.

ASSET-BACKED SECURITIES

The Funds may invest in asset-backed securities in accordance with their
respective investment objectives and policies. Asset-backed securities are
generally issued as pass through certificates,

<PAGE>

which represent undivided fractional ownership interests in the underlying pool
of assets, or as debt instruments, and are generally issued as the debt of a
special purpose entity organized solely for the purpose of owning such assets
and issuing such debt. Asset-backed securities are often backed by a pool of
assets representing the obligations of a number of different parties. Payments
of principal and interest may be guaranteed up to certain amounts and for a
certain time period by a letter of credit or other enhancement issued by a
financial institution unaffiliated with the entities issuing the securities.
Assets which, to date, have been used to back asset-backed securities include
motor vehicle installment sales contracts or installment loans secured by motor
vehicles, and receivables from revolving credit (credit card) agreements.

Credit Support. Asset-backed securities often contain elements of credit support
to lessen the effect of the potential failure by obligors to make timely
payments on underlying assets. Credit support falls into two categories: (1)
liquidity protection; and (2) protection against losses resulting from ultimate
default by an obligor on the underlying asset. Liquidity protection ensures that
the pass through of payments due on the installment sales contracts and
installment loans which comprise the underlying pool occurs in a timely fashion.
Protection against losses resulting from ultimate default enhances the
likelihood of ultimate payment of the obligations on at least a portion of the
assets in the pool. Such protection may be provided through guarantees,
insurance policies or letters of credit obtained by the issuer or sponsor from
third parties, through various means of structuring the transaction or through a
combination of such approaches. The Funds will not pay any additional fee for
such credit support. The existence of credit support may increase the market
price of the security.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

<PAGE>

negotiated and privately traded by currency traders and their customers. A Fund
may enter into a forward contract, for example, when it enters into a contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of the security ("transaction hedge").
Additionally, for example, when a Fund believes that a foreign currency may
suffer a substantial decline against the U.S. dollar, it may enter into a
forward sale contract to sell an amount of that foreign currency approximating
the value of some or all of the Fund's portfolio securities denominated in such
foreign currency. Conversely, when a Fund believes that the U.S. dollar may
suffer a substantial decline against foreign currency, it may enter into a
forward purchase contract to buy that foreign currency for a fixed dollar amount
("position hedge"). In this situation, a Fund may, in the alternative, enter
into a forward contract to sell a different foreign currency for a fixed U.S.
dollar amount where such Fund believes that the U.S. dollar value of the
currency to be sold pursuant to the forward contract will fall whenever there is
a decline in the U.S. dollar value of the currency in which portfolio securities
of the Fund are denominated ("cross-hedge"). That Fund's custodian will then
place cash not available for investment or U.S. government securities or other
high quality debt securities in a segregated account having a value equal to the
aggregate amount of that Fund's commitments under forward contracts entered into
with respect to position hedges, cross-hedges and transaction hedges, to the
extent they do not already own the security subject to the transaction hedge. If
the value of the securities placed in a segregated account declines, additional
cash or securities will be placed in the account on a daily basis so that the
value of the account will equal the amount of the Fund's commitments with
respect to such contracts. As an alternative to maintaining all or part of the
segregated account, the Fund may purchase a call option permitting such Fund to
purchase the amount of foreign currency being hedged by a forward sale contract
at a price no higher than the forward contract price or the Fund may purchase a
put option permitting the Fund to sell the amount of foreign currency subject to
a forward purchase contract at a price as high or higher than the forward
contract price. Unanticipated changes in currency prices may result in poorer
overall performance for a Fund than if it had not entered into such contracts.
If the party with which a Fund enters into a forward contract becomes insolvent
or breaches its obligation under the contract, then that Fund may lose the
ability to purchase or sell a currency as desired.

MORTGAGE-RELATED SECURITIES

The Funds may invest in mortgage-related securities, consistent with their
respective investment objectives and policies, that provide funds for mortgage
loans made to residential homeowners. These include securities which represent
interests in pools of mortgage loans made by lenders such as savings and loan
institutions, mortgage bankers, commercial banks and others. Pools of mortgage
loans are assembled for sale to investors (such as the Fund) by various
governmental, government-related and private organizations. Interests in pools
of mortgage-related securities differ from other forms of debt securities, which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. Instead, these
securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their residential mortgage
loans, net of any fees paid to the issuer or guarantor of such securities.
Prepayments are caused by repayments of principal resulting from the sale of the
underlying residential property, refinancing or foreclosure, net of fees or
costs

<PAGE>

which may be incurred.

MORTGAGE-BACKED SECURITIES

Collateralized Mortgage Obligations ("CMOs"). CMOs are debt obligations
collateralized by certificates issued by the Government National Mortgage
Association, the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation, but also may be collateralized by whole loans or private
pass-through securities (such collateral collectively referred to as "Mortgage
Assets"). Multiclass pass-through securities are equity interests in a trust
composed of Mortgage Assets. Payments of principal and of interest on the
Mortgage Assets, and any reinvestment income thereon, provide the funds to pay
debt service on the CMOs or make scheduled distributions on the multiclass
pass-through securities. CMOs may be issued by agencies or instrumentalities of
the U.S. government, or by private originators of, or investors in, mortgage
loans, including savings and loan associations, mortgage banks, commercial
banks, investment banks and special purpose subsidiaries of the foregoing.

<PAGE>

cause the CMOs to be retired substantially earlier than their stated maturities
or final distribution dates. Interest is paid on all classes of the CMOs on a
monthly, quarterly or semi-annual basis. The principal of and interest on the
Mortgage Assets may be allocated among the several classes of a series of a CMO
in innumerable ways. In one structure, for example, payments of principal,
including any principal prepayments, on the Mortgage Assets are applied to the
classes of a CMO in order of their respective stated maturities or final
distribution dates, so that no payment of principal will be made on any class of
CMOs until all other classes having an earlier stated maturity or final
distribution date have been paid in full.

Under the Internal Revenue Code of 1986, as amended, POs may generate taxable
income from the current accrual of original issue discount, without a
corresponding distribution of cash to a Fund. In addition, the Staff of the
United States Securities and Exchange Commission (the "SEC") considers privately
issued SMBS to be illiquid securities.

Mortgage-backed and asset-backed securities are generically considered to be
derivative securities.

<PAGE>

DEPOSITARY RECEIPTS AND DEPOSITARY SHARES

The Funds, except the U.S. Government Securities and Mortgage Securities Funds,
may hold equity securities of foreign issuers in the form of American Depositary
Receipts ("ADRs"), American Depositary Shares ("ADSs") and European Depositary
Receipts ("EDRs"), or other securities convertible into securities of eligible
issuers. These securities may not necessarily be denominated in the same
currency as the securities for which they may be exchanged. ADRs and ADSs
typically are issued by an American bank or trust company which evidences
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depositary Receipts ("CDRs"), are
receipts issued in Europe typically by foreign banks and trust companies that
evidence ownership of either foreign or domestic securities. Generally, ADRs and
ADSs in registered form are designed for use in United States securities markets
and EDRs, and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.

WARRANTS OR RIGHTS

Warrants or rights may be acquired by Funds, except the U.S. Government
Securities and Mortgage Securities Funds, in connection with other securities or
separately, and provide the Fund with the right to purchase at a later date
other securities of the issuer at a specific price (the "strike price"). The
strike price of warrants is typically much lower than the current market price
of the underlying securities, yet they are subject to greater price
fluctuations. As a result, warrants may be more volatile instruments than the
underlying securities and my offer greater potential for capital appreciation as
well as capital loss. Warrants or rights acquired by a Fund in units or attached
to securities will be deemed to be without value for purpose of this
restriction. These limits are not fundamental policies of the Funds and may be
changed by the Company's Board of Directors without shareholder approval.

SECURITIES LOANS, WHEN-ISSUED AND FORWARD COMMITMENT TRANSACTIONS

For the purpose of realizing additional income, a Fund may make secured loans of
portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The collateral received will
consist of cash, U.S. short-term government securities, bank letters of credit
or such other collateral as may be permitted under the Fund's investment program
and by regulatory agencies and approved by the Company's Board of Directors.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
A Fund has a right to call each loan and obtain the securities on five business
days' notice. To the extent applicable, the Funds will not have the right to
vote equity securities while they are being lent, but it will call in a loan in
anticipation of any important vote. The risks in lending portfolio securities,
as with other extensions of secured credit, consist of possible delay in
receiving

<PAGE>

additional collateral or in the recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially. Loans only will
be made to firms deemed by the Adviser to be of good standing and will not be
made unless, in the judgment of the Adviser, the consideration to be earned from
such loans would justify the risk. The Funds may also purchase securities on a
when-issued basis or for future delivery, which may increase its overall
investment exposure and involves a risk of loss if the value of the securities
declines prior to the settlement date.

UNITED STATES GOVERNMENT OBLIGATIONS

Each Fund will invest in securities issued or guaranteed by the U.S. government
or by its agencies or instrumentalities. Such securities in general include a
wide variety of U.S. Treasury obligations consisting of bills, notes and bonds,
which principally differ only in their interest rates, maturities and times of
issuance. Securities issued or guaranteed by U.S. government agencies and
instrumentalities are debt securities issued by agencies or instrumentalities
established or sponsored by the U.S.
government.

In addition to the U.S. Treasury obligations described above, the Funds may
invest in separately traded interest components of securities issued or
guaranteed by the U.S. Treasury. The interest components of selected securities
are traded independently under the Separate Trading of Registered Interest and
Principal of Securities ("STRIPS") program. Under the STRIPS program, the
interest components are individually numbered and separately issued by the U.S.
Treasury at the request of depository financial institutions, which then trade
the component parts independently.

BANK OBLIGATIONS

As stated in the Prospectus, bank obligations that may be purchased by the Funds
include certificates of deposit, bankers' acceptances and fixed time deposits. A
certificate of deposit is a short-term negotiable certificate issued by a
commercial bank against funds deposited in the bank

<PAGE>

and is either interest-bearing or purchased on a discount basis. A banker's
acceptance is a short-term draft drawn on a commercial bank by a borrower,
usually in connection with an international commercial transaction. The borrower
is liable for payment as is the bank, which unconditionally guarantees to pay
the draft at its face amount on the maturity date. Fixed time deposits are
obligations of branches of U.S. banks or foreign banks which are payable at a
stated maturity date and bear a fixed rate of interest. Although fixed time
deposits do not have a market, there are no contractual restrictions on the
right to transfer a beneficial interest in the deposit to a third party. The
Funds do not consider fixed time deposits illiquid for purposes of the
restriction on investment in illiquid securities.

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 bank obligations. Such investment risks include future
political and economic developments, the possible imposition of foreign
withholding taxes on interest income payable on such securities held by a Fund,
the possible seizure or nationalization of foreign assets and the possible
establishment of exchange controls or other foreign governmental laws or
restrictions which might affect adversely the payment of the principal of and
interest on such securities held by a Fund. In addition, there may be less
publicly-available information about a foreign issuer than about a U.S. issuer,
and foreign issuers may not be subject to the same accounting, auditing and
financial record-keeping standards and requirements as U.S. issuers.

The Funds will not purchase securities which the Adviser believes, at the time
of purchase, will be subject to exchange controls or foreign withholding taxes;
however, there can be no assurance that such laws may not become applicable to
certain of the Funds' investments. In the event unforeseen exchange controls or
foreign withholding taxes are imposed with respect to the Funds' investments,
the effect may be to reduce the income received by the Funds on such
investments.

ZERO COUPON SECURITIES, PAY-IN-KIND BONDS AND DISCOUNT OBLIGATIONS

Each Fund may invest in zero coupon securities and pay-in-kind bonds. These
investments involve special risk considerations. Zero coupon securities are debt
securities that pay no cash income but are sold at substantial discounts from
their value at maturity. When a zero coupon security is held to maturity, its
entire return, which consists of the amortization of discount, comes from the
difference between its purchase price and its maturity value. This difference is

<PAGE>

known at the time of purchase, so that investors holding zero coupon securities
until maturity know at the time of their investment what the return on their
investment will be. Certain zero coupon securities also are sold at substantial
discounts from their maturity value and provide for the commencement of regular
interest payments at a deferred date. Each Fund also may purchase pay-in-kind
bonds. Pay-in-kind bonds pay all or a portion of their interest in the form of
debt or equity securities. A Fund will only purchase pay-in-kind bonds that pay
all or a portion of their interest in the form of debt securities. Zero coupon
securities and pay-in-kind bonds may be issued by a wide variety of corporate
and governmental issuers.

OTHER INVESTMENT COMPANIES

Pursuant to an exemptive order from the SEC, the Fund may purchase shares of any
existing or future series of the Company. The Fund currently intends to invest
all or a portion of its assets in shares of the underlying funds only.
Allocations of the Fund's assets among underlying funds will be made in
accordance with the Fund's investment objective. The underlying funds in which
the Fund may presently invest along with their respective investment objectives
are listed below:

(1) OFFITBANK U.S. GOVERNMENT SECURITIES FUND: The investment objective of
the U.S. Government Securities Fund is to seek current income. The Fund
seeks to achieve its objective by investing, under normal circumstances,
at least 80% of its total assets in U.S. Government Securities. In
addition, the Fund may invest up to 20% of its total assets in other fixed
income securities rated AAA by Standard & Poor's Ratings Group or Duff &
Phelps Credit Rating Co., or Aaa by Moody's Investors Services, Inc., or
securities deemed to be of comparable quality by the Adviser.

(2) OFFITBANK MORTGAGE SECURITIES FUND: The investment objective of the
Mortgage Securities Fund is to maximize total return from a combination of
investment income and capital appreciation. The Fund seeks to achieve its
objective by investing at least 80% of its total assets in investment
grade or comparable mortgage-related securities issued by U.S. entities.
Up to 20% of the Fund's total assets may be invested in investment grade
or comparable fixed income securities of U.S. and non-U.S. issuers,
including mortgage related securities of issuers in Canada, the United
Kingdom, Denmark or other countries which may develop mortgage securities
markets in the future.

(3) OFFITBANK VIF-HIGH YIELD FUND: The High Yield Fund seeks high current
income with capital appreciation as a secondary objective. The Fund
invests, under normal circumstances, 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.

(4) OFFITBANK VIF-EMERGING MARKETS FUND: The Emerging Markets Fund seeks
to provide investors with a competitive total return by focusing on
current yield and opportunities for capital appreciation primarily by
investing 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.

The Fund reserves the right to invest up to 10% of its total assets in the
securities of investment companies other than the underlying funds
("unaffiliated funds"). The Fund may not invest more than 5% of its total assets
in the securities of any one unaffiliated fund or acquire more than 3% of the
voting securities of any unaffiliated fund. The Fund does not intend to invest
in unaffiliated funds unless, in the judgment of the Adviser, the potential
benefits of such investment justify the payment of any premium to net asset
value of the unaffiliated fund or any sales charge. The Fund will indirectly
bear its proportionate share of any management fees and other expenses paid by
unaffiliated funds in which it invests in addition to the advisory fee paid by
the Fund.

Each Fund may each invest up to 10% of their respective total assets in the
securities of other investment companies. The Funds may not invest more than 5%
of their respective total assets in the securities of any one investment company
or acquire more than 3% of the voting securities of any other investment
company. The Funds do not intend to invest in other investment companies unless,
in the judgment of the Adviser, the potential benefits of such investment
justify the payment of any premium to net asset value of the investment company
or any sales charge. Each Fund will indirectly bear its proportionate share of
any management fees and other expenses paid by investment companies in which it
invests in addition to the advisory fee paid by the Fund.

CONVERTIBLE SECURITIES

The Fund and Emerging Markets Fund may invest in convertible securities, which
are bonds, debentures, notes, preferred stocks or other securities that may be
converted into or exchanged for a prescribed amount of common stock of the same
or a different issuer within a particular period of time at a specified price or
formula. A convertible security entitles the holder to receive interest
generally paid or accrued on debt or the dividend paid on preferred stock until
the convertible security matures or is redeemed, converted or exchanged.
Convertible securities have several unique investment characteristics such as
(1) higher yields than common stocks, but lower yields than comparable
nonconvertible securities, (2) a lesser degree of fluctuation in value than the
underlying stock since they have fixed income characteristics, and (3) the
potential for capital appreciation if the market price of the underlying common
stock increases.

The Funds have no current intention of converting any convertible securities
they may own into equity securities or holding them as an equity investment upon
conversion, although they may do so for temporary purposes. A convertible
security might be subject to redemption at the option

<PAGE>

of the issuer at a price established in the convertible security's governing
instrument. If a convertible security held by a Fund is called for redemption,
such Fund may be required to permit the issuer to redeem the security, convert
it into the underlying common stock or sell it to a third party.

U.S. MUNICIPAL SECURITIES

In circumstances where the Adviser determines that investment in U.S.
dollar-denominated municipal obligations would facilitate the Fund's ability to
accomplish its investment objectives, the Fund may invest in such obligations,
including municipal bonds issued at a discount.

ILLIQUID SECURITIES

FUTURE DEVELOPMENTS

FUNDAMENTAL INVESTMENT POLICIES

<PAGE>

2) borrow money (except that they may enter into reverse repurchase
agreements) except from banks for temporary or emergency purposes;
provided, that (a) the amount of such borrowing may not exceed 20% of the
value of a Fund's total assets and (b) a Fund will not purchase portfolio
securities while such outstanding borrowing exceeds 5% of the value of its
total assets;

3) invest an amount equal to 15% or more of the current value of its net
assets in investments that are illiquid;

9) issue senior securities.

NON-FUNDAMENTAL INVESTMENT POLICIES

The following are non-fundamental investment policies and may be changed by a
vote of the Company's Board of Directors. No Fund may:

1) purchase securities on margin (except for delayed delivery or
when-issued transactions or

<PAGE>

such short-term credits as are necessary for the clearance of
transactions, and except for initial and variation margin payments in
connection with the use of options, futures contracts, options thereon or
forward currency contracts; a Fund may also make deposits of margin in
connection with futures and forward contracts and options thereon);

2) sell securities short (except for short positions in a futures contract
or forward contract);

3) invest for the purpose of exercising control over management of any
company;

4) invest directly in interests in oil, gas or other mineral exploration
development programs or mineral leases;

5) pledge, hypothecate, mortgage or otherwise encumber its assets, except
to secure permitted borrowings;

6) invest in stock or bond futures and/or options on futures unless not
more than 5% of a Fund's total assets are required as deposit to secure
obligations under such futures and/or options on futures contracts,
provided, however, that in the case of an option that is in-the-money at
the time of purchase, the in-the-money amount may be excluded in computing
such 5%; and

7) invest in puts, calls straddles or spreads, except as described in (6)
above.

<PAGE>

MANAGEMENT OF THE COMPANY

DIRECTORS AND OFFICERS

The business of the Company is managed under the direction of the Board of
Directors. Specifically, the Board of Directors is responsible for oversight of
the Fund by reviewing and approving agreements with the Fund's service
providers, and mandating policies for the Fund's operations. The principal
occupations of the directors and executive officers of the Company (and any
positions held with affiliated persons of the Company) for the past five years
are listed below.

NAME, ADDRESS AND AGE POSITION(S) HELD WITH THE FUND PRINCIPAL OCCUPATION(S) PAST 5 YEARs
- --------------------- ------------------------------ ------------------------------------
<S> <C> <C>
Morris W. Offit* Chairman of the Board, President and Director,
OFFITBANK President, OFFITBANK (investment adviser)
520 Madison Avenue and Director (1983-present); two additional
New York, NY 10022 Chairman of the Board,
Age: 62 Years President and Director; and
one additional Director
position with the OFFITBANK
Fund Complex.

The Very Reverend James Director President, Interfaith Center
Parks Morton of New York (1/1/98- present);
Interfaith Center of New formerly Dean of Cathedral of
York St. John the Divine
570 Lexington Avenue (1972-1996); one additional
New York, New York 10022 Director position with the
Age: 74 Years OFFITBANK Fund Complex.

<PAGE>

NAME, ADDRESS AND AGE POSITION(S) HELD WITH THE FUND PRINCIPAL OCCUPATION(S) PAST 5 YEARs
- --------------------- ------------------------------ ------------------------------------
<S> <C> <C>
Vincent M. Rella Assistant Treasurer Controller, OFFITBANK (investment
OFFITBANK adviser) (1986 to present); one
5230 Madison Avenue additional Officer position with the
New York, NY 10022 OFFITBANK Fund Complex.
Age: 46 Years

Stephen M. Wynne Assistant Treasurer Chairman of PFPC Trustee & Custodial
PFPC Inc. Services Ltd. (1995-present);
400 Bellevue Parkway Executive Vice President and Chief
Wilmington, DE 19809 Accounting Officer (1993-present)
Age: 44 Years and Senior Vice President and Chief
Accounting Officer (1991-1993) of
PFPC Inc.; Executive Vice President
(1993-1995) of PFPC International; one
additional Officer position with the
OFFITBANK Fund Complex.

David D. Marky Assistant Treasurer Vice-President and Director of
PFPC Inc. Accounting (1996-present) of PFPC
103 Bellevue Parkway Inc.; Assistant Vice President and
Wilmington, DE 19809 Accounting Conversion Manager
Age: 33 Years (1992-present) of PFPC Inc; one
additional Officer position with the
OFFITBANK Fund Complex.

Gary M. Gardner Assistant Secretary Chief Counsel (1994-present) of PFPC
PFPC Inc. Inc.; Associate General Counsel
400 Bellevue Parkway (1992-1994) of The Boston Company,
Wilmington, DE 19809 Inc.; one additional Officer
Age: 47 Years position with the OFFITBANK Fund
Complex.

David C. Lebisky Assistant Secretary Administrative Officer
PFPC Inc. (1996-present) of PFPC Inc.; Legal
400 Bellevue Parkway Assistant (1994-1996) with the law
Wilmington, DE 19809 firm of Drinker Biddle & Reath; BA
Age: 27 years Candidate (1990-1994) LaSalle
University; one additional Officer
position with the OFFITBANK Fund Complex.
</TABLE>

* "Interested person" of the Fund as defined in the 1940 Act.

The Company pays each Director who is not also an officer or affiliated person
an annual fee of $3,000 and a fee of $500 for each Board of Directors and Board
committee meeting attended and reimburses such Director for all out-of-pocket
expenses relating to attendance at meetings. Directors who are affiliated with
the Adviser do not receive compensation from the Company but are reimbursed for
all out-of-pocket expenses relating to attendance at meetings.

<PAGE>

DIRECTOR COMPENSATION
(FOR THE PERIOD 4/1/98 THROUGH 12/31/98)

TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM
BENEFITS ESTIMATED REGISTRANT AND
AGGREGATE ACCRUED AS ANNUAL FUND COMPLEX*
COMPENSATION PART OF FUND BENEFITS UPON PAID TO
NAME OF PERSON FROM REGISTRANT EXPENSES RETIREMENT DIRECTORS
- -------------- --------------- -------- ---------- ---------

Morris W. Offit $0 $0 N/A $0

Edward J. Landau $4,250.00 $0 N/A $23,000.00

The Very Reverend
James Parks Morton $4,250.00 $0 N/A $23,000.0

* For this purpose, the "Fund Complex" consists of The OFFITBANK Variable
Insurance Fund, Inc. and The OFFITBANK Investment Fund, Inc., which are
all the regulated investment companies advised by OFFITBANK.

INVESTMENT ADVISER

The Company has retained OFFITBANK, a New York State chartered trust company, to
act as its investment adviser (the "Adviser"). The advisory agreement (the
"Advisory Agreement") between the Adviser and the Company provides that the
Adviser shall manage the operations of the Company, subject to policy
established by the Board of Directors of the Company. Pursuant to the Advisory
Agreement, the Adviser manages the Company's investment portfolios, directs
purchases and sales of the portfolio securities and reports thereon to the
Company's officers and directors regularly. In addition, the Adviser pays the
compensation of the Company's officers, employees and directors affiliated with
the Adviser. The Company bears all other costs of its operations, including the
compensation of its directors not affiliated with the Adviser.

The Advisory Agreement provides that, as compensation for services, the Adviser
is entitled to receive an advisory fee from the VIF - Total Return Fund,
computed daily and paid monthly, at the annual rate of 0.80% of the Fund's
average daily net assets. The advisory fee paid by the VIF - Total Return Fund
is only with respect to that portion of the Fund's assets invested directly in
stocks, bonds, and other instruments. The Adviser will waive its fee with
respect to the portion of the VIF - Total Return Fund's assets invested in the
underlying funds. To the extent that the VIF - Total Return Fund invests in the
underlying funds, the Fund will indirectly bear a pro rata share of fees and
expenses incurred by the underlying funds and the investment returns of the VIF
- - Total Return Fund will be net of the expenses of the underlying funds.

The investment advisory agreements for the underlying funds provide that, as
compensation for services, the Adviser is entitled to receive from each
underlying fund a monthly fee at the following annual rates based upon the
average daily net assets of the underlying fund: 0.85% for

<PAGE>

the first $200,000,000 of assets and 0.75% for amounts in excess thereof in the
case of the High Yield Fund, 0.90% for the first $200,000,000 of assets and
0.80% for amounts in excess thereof in the case of the Emerging Markets Fund,
and 0.35% of the average daily net assets of the U.S. Government Securities and
Mortgage Securities Funds. The investment advisory fee for each underlying fund
is higher than that paid by most investment companies, but is comparable to that
paid by other investment companies that have strategies focusing on high yield
and international investments.

For the period June 30, 1998 to December 31, 1998 the Adviser earned and waived
fees of $3,670 with respect to the Fund.

REGULATORY MATTERS

If the Adviser were prohibited from performing the services described in this
Prospectus with respect to the Funds, it is expected that the Company's Board of
Directors would recommend to each Fund's shareholders that they approve new
agreements with another entity or entities qualified to perform such services
and selected by the Board of Directors. The Company does not anticipate that
investors would suffer any adverse financial consequences as a result of these
occurrences.

DISTRIBUTOR

OFFIT Funds Distributor, Inc., (the "Distributor"), a wholly-owned subsidiary of
Provident Distributors, Inc. with its principal office Four Falls Corporate
Center, 6th Floor, West Conshohocken, Pennsylvania 19428-2961, distributes the
shares of the Company. Under a

<PAGE>

distribution agreement with the Company (the "Distribution Agreement"), the
Distributor is not obligated to sell any specific amount of shares of the
Company. The Distributor, as agent of the Company, agrees to use its best
efforts as sole distributor of the Company's shares. There is no fee payable
under the Distribution Agreement.

ADMINISTRATION, FUND ACCOUNTING, TRANSFER AGENCY AND CUSTODY SERVICES

PFPC Inc. ("PFPC") performs administrative and fund accounting services for the
Company, and is responsible for certain clerical, record keeping and bookkeeping
services, except those performed by OFFITBANK or by The Bank of New York
("BONY") in its capacity as custodian of the Fund. PFPC has no role in
determining the investment policies of the Company or which securities are to be
purchased or sold by the Funds. The services provided by PFPC as Administrator
include regulatory compliance, assistance in the preparation and filing of
post-effective amendments to the Company's registration statement with the
Commission, preparation of annual, semi-annual and other reports to shareholders
and the Commission, filing of federal and state income tax returns, preparation
of financial and management reports, preparation of board meeting materials,
preparation and filing of blue sky registrations and monitoring compliance with
the amounts and conditions of each state's qualification. For the administrative
and fund accounting services PFPC provides to the Company, PFPC is paid an
annual fee calculated daily and paid monthly which is expected to approximate
.125% of net assets. From time to time, the Administrator may waive all or a
portion of its fees.

For the period June 30, 1998 to December 31, 1998, PFPC earned and waived fees
of $8,115 with respect to the Fund.

In addition to the services provided by PFPC to the Fund as Administrator, PFPC
also provides transfer agency and dividend disbursing services to the Fund
pursuant to a separate agreement.

<PAGE>

OTHER INFORMATION CONCERNING FEES AND EXPENSES

All or part of the fees payable by any or all of the Funds to the organizations
retained to provide services for the Funds may be waived from time to time in
order to increase such Funds' net investment income available for distribution
to shareholders.

COUNSEL

Kramer Levin Naftalis & Frankel LLP, whose address is 919 Third Avenue, New
York, NY 10022, serves as counsel to the Company.

INDEPENDENT ACCOUNTANTS

PORTFOLIO TRANSACTIONS

<PAGE>

although the price of the security usually includes a profit to the dealer. In
placing orders, it is the policy of the Company to obtain the best results
taking into account the dealer's general execution and operational facilities,
the type of transaction involved and other factors such as the dealer's risk in
positioning the securities involved. While the Adviser generally seeks a
competitive price in placing its orders, the Company may not necessarily be
paying the lowest price available.

Under the 1940 Act, persons affiliated with the Company are prohibited from
dealing with the Company as a principal in the purchase and sale of securities
unless the transaction is conducted in accordance with procedures established by
the Company's Board of Directors and complies in all other respects with certain
criteria or an exemptive order allowing such transactions is obtained from the
SEC. Affiliated persons of the Company, or affiliated persons of such persons,
may from time to time be selected to execute portfolio transactions for the
Company as agent. Subject to the considerations discussed above and in
accordance with procedures expected to be adopted by the Board of Directors, in
order for such an affiliated person to be permitted to effect any portfolio
transactions for the Company, the commissions, fees or other remuneration
received by such affiliated person must be reasonable and fair compared to the
commissions, fees and other remuneration received by other brokers in connection
with comparable transactions. This standard would allow such an affiliated
person to receive no more than the remuneration which would be expected to be
received by an unaffiliated broker in a commensurate arm's-length agency
transaction.

For the period June 30, 1998 through December 31, 1998, the Fund paid inno
brokerage commissions.

PURCHASE OF SHARES

For information pertaining to the manner in which shares of the Fund are offered
to the public, see "Purchase of Fund Shares" in the Fund's Prospectus. The
Company reserves the right, in its sole discretion, to suspend the offering of
shares of its Funds and reject purchase orders when, in the judgment of
management, such suspension or rejection is in the best interest of the Company.

<PAGE>

REDEMPTION OF SHARES

PERFORMANCE CALCULATIONS

The Company may from time to time quote various performance figures to
illustrate the past performance of its Funds. Performance quotations by
investment companies are subject to rules adopted by the SEC, which require the
use of standardized performance quotations or, alternatively, that every
non-standardized performance quotation furnished by a Fund be accompanied by
certain standardized performance information computed as required by the SEC. An
explanation of the SEC methods for computing performance follows.

TOTAL RETURN

P (1+T)^n = ERV

Aggregate Total Return = [(ERV) - 1]

<PAGE>

---
P

Yield = 2 [ (a-b +1)^6 - 1]
---
cd

Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the minimum offering price per share on the last day of the
period.

The 30-day yield for the Fund for the period ended December 31, 1998, was 5.10%.

Performance information presented for the Funds 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 Funds' performance and would reduce an investor's
return under the annuity contract or life policy.

ADDITIONAL INFORMATION CONCERNING TAXES

The following is only a summary of certain additional tax considerations that
are not described in the Prospectus and generally affect the Fund and its
shareholders. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussions here and in the
Prospectus are not intended as substitutes for careful tax planning.

The Fund intends to qualify as a "regulated investment company" ("RIC") under
the Internal Revenue Code of 1986, as amended (the "Code"). If so qualified, the
Fund will not be subject to federal income tax on its investment company taxable
income and net capital gains to the extent

<PAGE>

that such investment company taxable income and net capital gains are
distributed in each taxable year to the separate accounts of insurance companies
that hold its shares. In addition, if the Fund distributes annually to the
separate accounts its ordinary income and capital gain net income, in the manner
prescribed in the Code, it also will not be subject to the 4% federal excise tax
otherwise applicable to the RIC on any of its income or gains. Distributions of
net investment income and net short-term capital gains will be treated as
ordinary income and distributions of net long-term capital gains will be treated
as long-term capital gain in the hands of the insurance companies. Under current
tax law, capital gains or dividends from any Funds are not currently taxable
when left to accumulate within a variable annuity contract or variable life
insurance policy.

Section 817(h) of the Code requires that investments of a segregated asset
account of an insurance company be "adequately diversified", in accordance with
Treasury Regulations promulgated thereunder, in order for the holders of the
variable annuity contracts or variable life insurance policies investing in the
account to receive the tax-deferred or tax-free treatment generally afforded
holders of annuities or life insurance policies under the Code. The Department
of the Treasury has issued Regulations under section 817(h) which, among other
things, provide the manner in which a segregated asset account will treat
investments in a RIC for purposes of the applicable diversification
requirements. Under the Regulations, if a RIC satisfies certain conditions, that
RIC will not be treated as a single investment for these purposes, but rather
the segregated asset account will be treated as owning its proportionate share
of each of the assets of the RIC. The Fund plans to satisfy these conditions at
all times so that each segregated asset account of a life insurance company
investing in the Funds will be treated as adequately diversified under the Code
and Regulations.

GENERAL INFORMATION

CAPITAL STOCK

<PAGE>

votes for fractional shares held.

Shareholders are not entitled to any preemptive rights. All shares, when issued,
will be fully paid, non-accessible, fully transferable and redeemable at the
option of the holder.

OTHER INFORMATION

TOTAL RETURN FUND SHARES OWNED PERCENTAGE
- ----------------- ------------ ----------

Select Reserve Variable Annuities
c/o American General Life Insurance Co.
P.O. Box 1591
Houston, TX 77251-1591 125,824.461 100%

<PAGE>

FINANCIAL STATEMENTS

The audited financial statements and the notes thereto for the OFFITBANK U.S.
Government Securities Fund and the OFFITBANK Mortgage Securities Fund
theappearing in the most current fiscal year Annual Report to Shareholders of
the OFFITBANK Investment Fund, Inc. are incorporated in this Statement of
Additional Information by reference.

The audited financial statements and the notes thereto for the OFFITBANK
VIF-Total Return Fund, OFFITBANK VIF-Emerging Markets Fund and the OFFITBANK
VIF-High Yield Fund appearing in the most current Annual Report to Shareholders
of the Company are incorporated in this Statement of Additional Information by
reference. No other parts of the Annual Reports are incorporated by reference
herein. The financial statements included in the Annual Reports have been
audited by the OFFITBANK Investment Fund Inc.'s and the Company's independent
accountants, PricewaterhouseCoopers LLP, whose reports thereon dated February
22, 1999, are also incorporated by reference. Such financial statements have
been incorporated herein in reliance upon such reports given upon their
authority as experts in accounting and auditing. Additional copies of the Annual
Reports may be obtained at no charge by telephoning the Company at the telephone
number appearing on the front page of this Statement of Additional Information.

<PAGE>

PART C
OTHER INFORMATION

Item 23. Exhibits

Exhibit
Number Description
------ -----------

(a.1) -- Registrant's Articles of Incorporation (2)
(a.2) -- Registrant's Articles of Amendment (2)
(b.) -- Registrant's Amended and Restated By-Laws (2)
(c.) -- Form of Specimen Share Certificates (2)
(d.1) -- Advisory Agreement between Registrant and
OFFITBANK (2)
(d.2) -- Investment Advisory Agreement between the Registrant
and David J. Greene and Company (4)
(d.3) -- Investment Management Agreement between OFFITBANK,
the Registrant and Rockefeller & Co. Inc. (4)
(d.4) -- Form of Investment Advisory Agreement between the
Registrant and CVO Greater China Partners, L.P. (8)
(e) -- Distribution Agreement between Registrant and OFFIT
Funds Distributor, Inc. (7)
(f) -- None.
(g.1) -- Form of Custodian Agreement between Registrant and
The Chase Manhattan Bank, N.A. (1)
(g.2) -- Custody Agreement between Registrant and The Bank of
New York (3)
(h.1) -- Administration and Accounting Services Agreement
between Registrant and PFPC Inc. (7)
(h.2) -- Transfer Agency Agreement between Registrant and PFPC
Inc. (7)
(h.3) -- Participation Agreement among OFFITBANK Variable
Insurance Funds, Inc., OFFIT Funds Distributor, Inc.,
OFFITBANK, C.M. Life Insurance Company, Connecticut
Mutual Life Insurance Company and Connecticut Mutual
Financial Services, L.L.C. (2)
(h.4) -- Participation Agreement among OFFITBANK Variable
Insurance Funds, Inc., OFFIT Funds Distributor, Inc.,
OFFITBANK and Security Equity Life Insurance
Company (2)
(i) -- Opinion of Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel (2)

(j.1) -- Consent of Kramer, Levin, Naftalis & Frankel LLP.
(j.2) -- Consent of PricewaterhouseCoopers LLP.

(k) -- None.
(l) -- Purchase Agreement between Registrant and OFFIT Funds
Distributor, Inc. (2)
(m) -- None.

(n) -- Financial Data Schedules

(o) -- None.
- --------------------------------

<PAGE>

(1) Filed as an Exhibit to Registrant's Pre-Effective Amendment No. 1 on
March 6, 1995 and incorporated herein by reference.
(2) Filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 filed
electronically on January 31, 1997, accession number 0000922423-97-000053
and incorporated herein by reference.
(3) Filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 filed
electronically on February 13, 1997, accession number 0000922423-97-000090
and incorporated herein by reference.
(4) Filed as an Exhibit to Registrant's Post-Effective Amendment No. 9 filed
electronically on July 29, 1997, accession number 0000922423-97-000638 and
incorporated herein by reference.
(5) Filed as an Exhibit to Registrant's Post-Effective Amendment No. 10 filed
electronically on October 29, 1997, accession number 0000922423-97-000893
and incorporated herein by reference.
(6) Filed as Exhibit to Registrant's Post-Effective Amendment No. 11 filed
electronically on January 21, 1998, accession number 0000922423-98-000049
and incorporated herein by reference.
(7) Filed as Exhibit to Registrant's Post-Effective Amendment No. 12 filed
electronically on July 29, 1998, accession number 0001047469-98-028641 and
incorporated herein by reference.

Item 24. Persons Controlled by or Under Common Control with Registrant

None.

Item 25. Indemnification

Reference is made to Article VII of Registrant's Articles of Incorporation
(Exhibit (a.1) hereto), Article VIII of Registrant's Amended and Restated
By-Laws (Exhibit (b) hereto) and Paragraph V of the Distribution Agreement
between Registrant and OFFIT Funds Distributor, Inc. (Exhibit (e)
hereto).

Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, Registrant understands that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

<PAGE>

Item 26. Business and Other Connections of Investment Adviser

The Adviser provides a wide range of asset management services to
individuals, institutions and retirement benefit plans.

To the knowledge of Registrant, none of the Directors or executive
officers of the Adviser except those described below, are or have been, at any
time during the past two years, engaged in any other business, profession,
vocation or employment of a substantial nature.

PRINCIPAL OCCUPATION OR
OTHER EMPLOYMENT OF A
POSITION WITH SUBSTANTIAL NATURE
NAME OFFITBANK DURING THE PAST TWO YEARS
---- --------- -------------------------

H. Furlong Baldwin Director Chairman of the Board,
Mercantile Safe Deposit & Mercantile Bankshares
Trust Co.
Two Hopkins Plaza
Baltimore, MD 21201

Morris, W. Offit, C.F.A. Director Chairman of the Board
OFFITBANK OFFITBANK
520 Madison Avenue
New York, N.Y. 10022

Marchese Alessandro Director Private Investor
di Montezemolo
200 Murray Place
Southampton, N.Y. 11969

David I. Margolis Director Chairman of the
Coltec Industries Inc. Executive Committee,
430 Park Avenue Coltec Industries Inc.
New York, N.Y. 10022

Harvey M. Meyerhoff Director Chairman of the Board,
Magna Holdings, Inc. Magna Holdings, Inc.
25 South Charles Street
Suite 2100
Baltimore, M.D. 21201

George Randolph Packard Director U.S. - Japan Foundation
U.S. - Japan Foundation
145 East 32nd Street, 12th Floor
New York, NY 10016

Edward V. Regan Director President, The Jerome
45 Rockefeller Plaza Levy Economics Institute
New York, N.Y. 10111 of Bard College

<PAGE>

B. Lance Sauerteig Director Private Investor
130 Edgehill Road
New Haven, CT 06511

Ricardo Steinbruch Director
Grupo Vichuna
Rua Itacolomi 412
Higilenopolis
Sao Paolo, S.P. Brazil
01239-020

Item 27. Principal Underwriters

(a) In addition to Registrant, OFFIT Funds Distributor, Inc. currently
acts as distributor for The OFFITBANK Investment Fund, Inc.

(b) The information required by this Item 27(b) with respect to each
director, officer or partner of OFFIT Funds Distributor, Inc. is
incorporated by reference to Schedule A of Form BD filed by OFFIT
Funds Distributor, Inc. pursuant to the Securities Exchange Act of
1934 (SEC File No. 8-46960).

Item 28. Location of Accounts and Records

All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended (the "1940
Act"), and the rules thereunder will be maintained at the offices of:

(1) The OFFITBANK Variable Insurance Fund, Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
(records relating to the Company)

(2) OFFITBANK
520 Madison Avenue
New York, New York 10022
(advisory records)

(3) OFFIT Funds Distributor, Inc.
Four Falls Corporate Center
6th Floor
West Conshohocken, Pennsylvania 19428-2961
(records of principal underwriter)

<PAGE>

(4) Rockefeller & Co., Inc.
30 Rockefeller Plaza
New York, New York 10112
(records relating to its functions as investment
subadviser for OFFITBANK VIF-U.S. Small Cap Fund only)

(5) David J. Greene & Company
599 Lexington Avenue
New York, New York 10022
(records relating to its functions as investment
adviser for DJG Value Equity Fund only)

Item 29. Management Services

Not applicable.

Item 30. Undertakings

Registrant hereby undertakes that if it is requested by the holders of at
least 10% of its outstanding shares to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Director, it will do so and
will assist in communications with other shareholders as required by Section 16
(c) of 1940 Act.

The Registrant undertakes to furnish each person to whom a prospectus is
delivered, a copy of the Registrant's latest annual report to shareholders upon
request and without charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Amendment to its
Registration Statement under Rule 485(b) under the Securities Act and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned thereunto duly authorized, in the City of New York, and State
of New York, on the 30th day of April, 1999.

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

By /s/ Morris W. Offit
----------------------------------------
Morris W. Offit, President

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to its Registration Statement has been signed below by the
following persons in the capacities indicated and on the 30th day of
March,April, 1999.

SIGNATURE TITLE
- --------- -----

/s/ Morris W. Offit Director, Chairman of the Board
- ---------------------------- and President
Morris W. Offit (Principal Executive Officer)

Edward J. Landau* Director
- ----------------------------
Edward J. Landau

James Parks Morton* Director
- ----------------------------
The Very Reverend James Parks Morton

/s/ Wallace Mathai-Davis Secretary and Treasurer
- ---------------------------- (Principal Financial and Accounting
Wallace Mathai-Davis
Officer)

<PAGE>

*Attorney-in-Fact pursuant to a power of attorney dated October l7, 1994 and
incorporated by reference from Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form N-1A, filed electronically on
January 3l, l997, accession number 0000922423-97-000053.

<PAGE>

THE OFFITBANK VARIABLE INSURANCE FUND, INC.

EXHIBIT INDEX

EXHIBITS
--------

(j.1) -- Consent of Kramer, Levin, Naftalis & Frankel LLP
(j.2) -- Consent of PricewaterhouseCoopers LLP
(n) -- Financial Data Schedules.

[LETTERHEAD OF KRAMER LEVIN NAFTALIS & FRANKEL LLP]

April 30, 1999

The OFFITBANK Investment Fund, Inc.
400 Bellevue Parkway
Wilmington, DE 19809

Re: Registration Nos. 33-81748 and 811-8640

Gentlemen:

We hereby consent to the reference to our firm as counsel in
Post-Effective Amendment No. 14 to Registration Statement Nos. 33-81748 and
811-8640.

Very truly yours,

/s/ Kramer Levin Naftalis & Frankel LLP

Consent of Independent Accountants

We hereby consent to the incorporation by reference in the Prospectuses and
Statements of Additional Information constituting parts of this Post-Effective
Amendment No. 14 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 22, 1999, relating to the financial
statements and financial highlights appearing in the December 31, 1998 Annual
Report to Shareholders of the OFFITBANK VIF-High Yield Fund, OFFITBANK
VIF-Emerging Markets Fund, DJG Value Equity Fund, OFFITBANK VIF-U.S. Small Cap
Fund, and OFFITBANK VIF-Total Return Fund, our report dated April 26, 1999
relating to the financial statements and financial highlights of the OFFITBANK
VIF-U.S. Government Securities Fund (six of the nine portfolios constituting The
OFFITBANK Variable Insurance, Inc.) and our report dated February 22, 1999
relating to the financial statements and financial highlights of the OFFITBANK
Investment Fund, Inc. which are incorporated by reference into the Registration
Statement. We also consent to the references to us under the headings "Financial
Highlights" in the Prospectuses and under the headings "Independent Accountants"
and "Financial Information" in the Statements of Additional Information.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
April 29, 1999

<ARTICLE> 6
<CIK> 0000927289
<NAME> OFFITBANK VARIABLE INSURANCE FUND, INC.
<SERIES>
<NUMBER> 06
<NAME> VIF-U.S. GOVERNMENT SECURITIES FUND

<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> AUG-24-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 2028
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2028
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2028
<TOTAL-LIABILITIES> 2028
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1556
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 74
<INTEREST-INCOME> 213
<OTHER-INCOME> 0
<EXPENSES-NET> (37)
<NET-INVESTMENT-INCOME> 250
<REALIZED-GAINS-CURRENT> 1556
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1806
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 149895
<NUMBER-OF-SHARES-REDEEMED> (151701)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3992
<AVERAGE-NET-ASSETS> 75197
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> .23
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (10.23)
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000927289
<NAME> OFFITBANK VARIABLE INSURANCE FUND, INC.
<SERIES>
<NUMBER> 05
<NAME> VIF TOTAL RETURN FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUN-30-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 990900
<INVESTMENTS-AT-VALUE> 981664
<RECEIVABLES> 10266
<ASSETS-OTHER> 50733
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1042663
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41775
<TOTAL-LIABILITIES> 41775
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 979873
<SHARES-COMMON-STOCK> 98382
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 28216
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2035
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (9236)
<NET-ASSETS> 1000888
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 28216
<OTHER-INCOME> 0
<EXPENSES-NET> (3670)
<NET-INVESTMENT-INCOME> 24546
<REALIZED-GAINS-CURRENT> 2035
<APPREC-INCREASE-CURRENT> (9236)
<NET-CHANGE-FROM-OPS> 17345
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1034053
<NUMBER-OF-SHARES-REDEEMED> (50510)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1000888
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3670
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 56697
<AVERAGE-NET-ASSETS> 910077
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .25
<PER-SHARE-GAIN-APPREC> (.08)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.17
<EXPENSE-RATIO> .80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000927289
<NAME> OFFITBANK VARIABLE INSURANCE FUND, INC.
<SERIES>
<NUMBER> 02
<NAME> VIF EMERGING MARKETS FUND

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 6056388
<INVESTMENTS-AT-VALUE> 5425967
<RECEIVABLES> 159112
<ASSETS-OTHER> 37418
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5622497
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 47859
<TOTAL-LIABILITIES> 47859
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7565827
<SHARES-COMMON-STOCK> 733165
<SHARES-COMMON-PRIOR> 547786
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (17)
<ACCUMULATED-NET-GAINS> (1360751)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (630421)
<NET-ASSETS> 5574638
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 522322
<OTHER-INCOME> 0
<EXPENSES-NET> (65951)
<NET-INVESTMENT-INCOME> 456371
<REALIZED-GAINS-CURRENT> (1370776)
<APPREC-INCREASE-CURRENT> (750669)
<NET-CHANGE-FROM-OPS> (1665074)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (497830)
<DISTRIBUTIONS-OF-GAINS> (52829)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3688615
<NUMBER-OF-SHARES-REDEEMED> (2351293)
<SHARES-REINVESTED> 673517
<NET-CHANGE-IN-ASSETS> (204894)
<ACCUMULATED-NII-PRIOR> 33147
<ACCUMULATED-GAINS-PRIOR> 52829
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 39569
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 128203
<AVERAGE-NET-ASSETS> 5835459
<PER-SHARE-NAV-BEGIN> 10.55
<PER-SHARE-NII> .66
<PER-SHARE-GAIN-APPREC> (2.79)
<PER-SHARE-DIVIDEND> (.73)
<PER-SHARE-DISTRIBUTIONS> (.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.60
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000927289
<NAME> OFFITBANK VARIABLE INSURANCE FUND, INC.
<SERIES>
<NUMBER> 03
<NAME> VIF DGJ VALUE EQUITY

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 2054467
<INVESTMENTS-AT-VALUE> 2152740
<RECEIVABLES> 28445
<ASSETS-OTHER> 6323
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2187508
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23130
<TOTAL-LIABILITIES> 23130
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1949585
<SHARES-COMMON-STOCK> 181718
<SHARES-COMMON-PRIOR> 135111
<ACCUMULATED-NII-CURRENT> 5649
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 110871
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 98273
<NET-ASSETS> 2164378
<DIVIDEND-INCOME> 13156
<INTEREST-INCOME> 9047
<OTHER-INCOME> 0
<EXPENSES-NET> (17970)
<NET-INVESTMENT-INCOME> 4233
<REALIZED-GAINS-CURRENT> 110871
<APPREC-INCREASE-CURRENT> (343779)
<NET-CHANGE-FROM-OPS> (228675)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3898)
<DISTRIBUTIONS-OF-GAINS> (120079)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 390383
<NUMBER-OF-SHARES-REDEEMED> (15213)
<SHARES-REINVESTED> 123977
<NET-CHANGE-IN-ASSETS> 146495
<ACCUMULATED-NII-PRIOR> 3898
<ACCUMULATED-GAINS-PRIOR> 120079
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11499
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 71138
<AVERAGE-NET-ASSETS> 1907492
<PER-SHARE-NAV-BEGIN> 14.94
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> (2.16)
<PER-SHARE-DIVIDEND> (.03)
<PER-SHARE-DISTRIBUTIONS> (.89)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.91
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000927289
<NAME> OFFITBANK VARIABLE INSURANCE FUND, INC.
<SERIES>
<NUMBER> 04
<NAME> VIF U.S. SMALL CAP FUND

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 1147232
<INVESTMENTS-AT-VALUE> 1206134
<RECEIVABLES> 34493
<ASSETS-OTHER> 6314
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1246941
<PAYABLE-FOR-SECURITIES> 5057
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24039
<TOTAL-LIABILITIES> 29096
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1139577
<SHARES-COMMON-STOCK> 107408
<SHARES-COMMON-PRIOR> 98603
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 19366
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 58902
<NET-ASSETS> 1217845
<DIVIDEND-INCOME> 2253
<INTEREST-INCOME> 3082
<OTHER-INCOME> 0
<EXPENSES-NET> (13783)
<NET-INVESTMENT-INCOME> (8448)
<REALIZED-GAINS-CURRENT> 19891
<APPREC-INCREASE-CURRENT> (178262)
<NET-CHANGE-FROM-OPS> (166819)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (119956)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> (9616)
<SHARES-REINVESTED> 119956
<NET-CHANGE-IN-ASSETS> (176435)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 119423
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9323
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 72083
<AVERAGE-NET-ASSETS> 1219514
<PER-SHARE-NAV-BEGIN> 14.14
<PER-SHARE-NII> (.08)
<PER-SHARE-GAIN-APPREC> (1.50)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.22)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.34
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000927289
<NAME> OFFITBANK VARIABLE INSURANCE FUND, INC.
<SERIES>
<NUMBER> 01
<NAME> VIF HIGH YIELD

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 44377463
<INVESTMENTS-AT-VALUE> 43404424
<RECEIVABLES> 983580
<ASSETS-OTHER> 32970
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 44420974
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 66860
<TOTAL-LIABILITIES> 66860
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45095003
<SHARES-COMMON-STOCK> 4264221
<SHARES-COMMON-PRIOR> 2880068
<ACCUMULATED-NII-CURRENT> 44930
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 185901
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (971720)
<NET-ASSETS> 44354114
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2893226
<OTHER-INCOME> 0
<EXPENSES-NET> (353784)
<NET-INVESTMENT-INCOME> 2539442
<REALIZED-GAINS-CURRENT> 223896
<APPREC-INCREASE-CURRENT> (2312290)
<NET-CHANGE-FROM-OPS> 451048
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2581614)
<DISTRIBUTIONS-OF-GAINS> (199784)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18295737
<NUMBER-OF-SHARES-REDEEMED> (6275630)
<SHARES-REINVESTED> 2989391
<NET-CHANGE-IN-ASSETS> 12679148
<ACCUMULATED-NII-PRIOR> 42172
<ACCUMULATED-GAINS-PRIOR> 199824
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 261563
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 476438
<AVERAGE-NET-ASSETS> 40843062
<PER-SHARE-NAV-BEGIN> 11.00
<PER-SHARE-NII> .65
<PER-SHARE-GAIN-APPREC> (.53)
<PER-SHARE-DIVIDEND> (.67)
<PER-SHARE-DISTRIBUTIONS> (.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.40
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>