<PAGE>
------------------------------------------
OFFITBANK VIF-HIGH YIELD FUND
OFFITBANK VIF-EMERGING MARKETS FUND
DJG VALUE EQUITY FUND
OFFITBANK VIF-U.S. SMALL CAP FUND
OFFITBANK VIF-TOTAL RETURN FUND
OFFITBANK VIF-U.S. GOVERNMENT SECURITIES FUND
------------------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 1999
THE
OFFITBANK
VARIABLE INSURANCE FUND, INC.
<PAGE>
PRESIDENT'S LETTER
- --------------------------------------------------------------------------------
Dear Policyholder:
We are very pleased to present you with the June 30, 1999 Semi-Annual Report for
The OFFITBANK Variable Insurance Fund, Inc. As of that date the Funds'
portfolios have assets in excess of $77 million, an increase of almost $22
million since year-end.
The specific results of the respective Funds, along with an investment and
market commentary from each portfolio manager, are part of this Semi-Annual
Report. As always, we have tried to make each market commentary informative, and
I hope that you will find them helpful.
OFFITBANK Holdings, Inc., the sole shareholder of OFFITBANK, recently entered
into a definitive agreement to merge OFFITBANK with the Wachovia Corporation.
OFFITBANK will continue to operate under its own name as a distinct Wachovia
company, providing wealth management services in precisely the same manner as it
has for fifteen years. Wachovia is one of the leading banks in the United
States, with a notable presence in the Southeast and a national and
international client base. It is an institution with a pristine reputation for
integrity and commitment to their clients.
The merger of OFFITBANK with Wachovia will provide our clients the benefit of a
broader base of resources and products, as well as the long-term continuity
which is critical in providing trust and estate services. Let me personally
assure you that OFFITBANK will retain its identity following this merger. The
integrity of our investment processes, the character of our professional and
administrative staff, and, most significantly, our personalized relationship
with our clients will continue to be the highest priorities of our firm as a
Wachovia company. The commitment of Wachovia to OFFITBANK will only strengthen
our capacities to serve our clients more comprehensively and effectively.
We greatly value your participation in our Funds. Let us know of your interests
and concerns as we continue to try to serve you better. If you have any
questions, please do not hesitate to call.
Sincerely,
/s/ Morris W. Offit
Morris W. Offit
July 15, 1999
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
VIF - HIGH YIELD FUND
JUNE 30, 1999
- --------------------------------------------------------------------------------
High yield materially outperformed investment grade fixed income for the first
half of 1999. High yield returns were positive, despite higher interest rates,
heavy issuance and an increase in the number of defaults. The Fund's net
investment return for the first half of 1999 after all fees and expenses was
.94%. The June 30, 1999 NAV price of $10.08 was 3.1% lower than the $10.40 NAV
at the beginning of the year. As of June 30, 1999, the Fund had a 30 day SEC
yield of 8.26%. The Fund continued to grow during the first half of 1999 as net
assets increased to $49.3 million from $44.3 million on December 31, 1998.
After rising 60 basis points in the first quarter, intermediate Treasury yields
rose an additional 55 basis points during the second quarter. As is typical
during periods of rising interest rates, high yield outperformed Treasuries.
Also, as is typical in a rising rate environment, lower quality less interest
sensitive high yield performed best. Lower tier returns are helped by the
cushioning effect of the higher coupons, while higher quality high yield
securities are more sensitive to movements in interest rates.
Broad market high yield spreads have tightened 100 basis points this year
entirely due to the rise in interest rates. However, they are still 100 basis
points wider than a year ago. Today solid double B credits may be purchased at
spreads of 275 to 300 basis points, the same spread at which low double B or
high single B credits were trading a year ago. In addition, due to the backup in
interest rates, today's absolute yields of 8 3/4% to 9% for higher quality
credits are similar to lower quality yields of a year ago.
Current spreads discount further increases in the default rate and incremental
credit problems for the high yield market. Market spreads may stay wider than in
the last few years as high yield credit fundamentals are showing further signs
of deterioration. For the past four quarters, credit downgrades have exceeded
credit upgrades and the market has experienced rising default rates. Domestic
default rates are now approaching their long-term average of approximately 3.3%.
We do not expect the default rate to rise excessively from current levels.
The current increases in credit problems can be partially attributed to the
large number of lower quality new issues brought to market in the last few
years. As we have previously noted, it usually takes a lower tier credit about
two years or so from a new bond offering to experience a credit problem. While
we have taken great care in constructing and monitoring the portfolio, we will
not be immune to the occasional credit disappointment. Another factor that has
influenced market spreads is reduced dealer activity. While liquidity is
markedly improved from year end, it still remains softer than a year ago.
Dealers remain reluctant to commit capital and the market is putting an above
average liquidity premium on high yield. Large better quality credits continue
to command a premium to the broad market.
During the first six months, the technicals of the high yield market were mixed,
as supply remained relatively heavy and demand, as measured by mutual fund
flows, weakened. New issue volume was a healthy $63 billion year to date while
mutual fund flows totaled only $6 billion. In the second quarter, visible demand
fell far behind supply as net mutual fund flows turned negative. However, demand
from new buyers was sufficient that the market was able to absorb the new supply
without any severe dislocations.
The primary new money purchaser of new high yield issues appears to be CBO's.
CBO's or collateralized bond obligations are structured financings originated
and managed by large financial institutions in conjunction with broker-dealers.
A well-diversified portfolio of high yield bonds is used as collateral for a
tiered offering of investment grade debt, subordinated debt and equity. Leverage
ranges from 5 to 1 debt to equity to as much as 12 to 1, depending on the
structure of the CBO. CBO issuance has increased to an estimated $20 billion
this year and has helped provide a cushion against high yield spread widening by
immediately creating demand whenever spreads widen. CBO participation has also
helped increase demand for single B and higher yielding credits.
We are very bullish on the upper tier of the high yield market and believe the
sector offers compelling relative value within high yield and other fixed income
sectors. The large flow of new issues over the past few years has increased the
2
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
VIF - HIGH YIELD FUND (continued)
JUNE 30, 1999
- --------------------------------------------------------------------------------
number of better quality credits for consideration. Recently, new issue quality
has improved with less issuance from the lowest quality sectors. As a result, we
are finding more better quality credits at attractive spreads than we have seen
in the last few years. The market has a lot of room to tighten when interest
rates stabilize or the technicals turn more positive. Supply-demand imbalances
tend to be self-correcting over time.
During the first half, we were able to add to our quality holdings at more
attractive yields. Several positions were increased including HMH Properties and
Allied Waste at lower prices and higher yields versus earlier in the year. New
positions were established in Lear Corp. and Lyondell Chemical Co. These are
solid double B companies with significant market presence and strong cash flows.
Also, the Fund increased its holdings of bank debt. High yield bank debt
provides added protection by being senior in the capital structure while paying
floating rate spreads of approximately 300 basis points over Libor. Positions in
the senior tiers of Eurotunnel were increased and are now the largest holding of
the Fund.
Several noteworthy developments occurred during the first half which affected
the portfolio. The telecommunications and international cable sectors continue
to benefit from strong fundamentals and favorable merger activity. Nextel
Communications, NTL Inc., and Telewest Communications were all beneficiaries of
the positive trends.
On the negative credit side, the Fund's exposure to the healthcare and paging
industry dampened performance. Changes in Medicare reimbursement is having a
much greater impact than previously believed with severe consequences for the
long-term care industry. The paging industry has been suffering from a marked
slowdown in unit growth and stagnant pricing.
Several corporate actions affected the portfolio during the first half of 1999.
A large number of holdings including Echostar Communications, J Ray McDermott
and Comcast Cellular announced tenders for their debt securities at investment
grade spreads. Additionally, Armco Inc. and Presidential Life were called.
During the first half of 1999, 6 issues totaling approximately $2.5 million were
either tendered or called. Over the past twelve months approximately 9.2% of
average net assets of the Fund have been either tendered or called.
We continue to focus on the better quality segment of the high yield market. As
of quarter end approximately 52% of the holdings in the Fund are rated either
Ba3 or better by Moody's or BB- or better by Standard & Poor's. Additionally,
75% of the holdings are rated at least B1 or B+. Bank debt now totals
approximately 2.8% of the Fund. The Fund is very well diversified with over 127
issues. We continue to believe that better quality high yield credits will
outperform fixed income alternatives over time.
Stephen T. Shapiro
July 15, 1999
3
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-HIGH YIELD FUND
- ----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (95.2%)
<S> <C> <C>
AUTOMOTIVE (3.8%)
Exide Corp. Sr Notes, 10.00%, 04/15/05 $ 150,000 $ 150,750
Exide Holding Europe S.A. (144A), 9.125%, 04/15/04 500,000 (a)(1) 268,253
Federal-Mogul Corp. Notes, 7.875%, 07/01/10 500,000 470,095
Hayes Wheels International Inc. Sr Sub Notes, 9.125%, 07/15/07 500,000 505,000
Lear Corp. Sr Notes (144A), 8.11%, 05/15/09 500,000 (1) 483,475
---------------
1,877,573
---------------
BROADCAST/MEDIA (4.9%)
Big Flower Press Sr Sub Notes, 8.875%, 07/01/07 530,000 498,200
Echostar DBS Corp. Sr Notes (144A), 9.25%, 02/01/06 500,000 (1) 510,000
Heritage Media Corp. Sr Sub Notes, 8.75%, 02/15/06 200,000 206,000
Hollinger International Publishing Sr Sub Notes, 8.625%, 03/15/05 250,000 255,000
Lamar Advertising Co. Sr Sub Notes, 9.625%, 12/01/06 500,000 510,000
Outdoor Systems Inc. Sr Sub Notes, 9.375%, 10/15/06 250,000 265,937
Sun Media Corp. Sr Sub Notes, 9.50%, 05/15/07 155,000 160,425
---------------
2,405,562
---------------
CABLE (6.8%)
Adelphia Communications Corp. Sr Notes, 9.875%, 03/01/07 200,000 209,000
Century Communications Corp. Sr Notes, 8.875%, 01/15/07 400,000 399,000
CSC Holdings Inc. Sr Notes, 9.25%, 11/01/05 300,000 309,000
Jones Intercable Inc. Sr Sub Debs., 10.50%, 03/01/08 500,000 535,000
Lenfest Communications Inc. Sr Notes, 8.375%, 11/01/05 300,000 315,375
NTL Inc. Sr Notes, 0/9.75%, 04/01/08 500,000 (2) 342,500
Olympus Communications L.P. Sr Notes, 10.625%, 11/15/06 300,000 328,500
Rogers Cablesystems Ltd. Sr Secured 2nd Priority Notes, 9.625%, 08/01/02 300,000 312,000
Telewest Communications PLC Debs., 9.625%, 10/01/06 250,000 258,125
Telewest Communications PLC Sr Discount Debs., 0/11.00%, 10/01/07 400,000 (2) 357,000
---------------
3,365,500
---------------
CHEMICAL (4.8%)
Borden Chemicals & Plastics Sr Notes, 9.50%, 05/01/05 500,000 485,000
Huntsman ICI Chemicals Sr Sub Notes (144A), 10.125%, 07/01/09 500,000 (b)(1) 519,501
ISP Holdings Inc. Sr Notes, 9.00%, 10/15/03 300,000 297,750
Lyondell Chemical Co. Sr Secured Notes (144A), 9.625%, 05/01/07 500,000 (1) 520,000
Polymer Group Inc. Sr Sub Notes, 8.75%, 03/01/08 300,000 284,250
Terra Industries Inc. Sr Notes, 10.50%, 06/15/05 250,000 247,500
---------------
2,354,001
---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-HIGH YIELD FUND
- ----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (CONTINUED)
<S> <C> <C>
CONSUMER GROUPS (9.3%)
Ameriserve Food Co. Sr Notes, 8.875%, 10/15/06 $ 500,000 $ 460,000
Chiquita Brands International Inc. Sr Notes, 10.25%, 11/01/06 850,000 862,750
Fedders N.A. Sr Sub Notes, 9.375%, 08/15/07 200,000 202,000
Fisher Scientific International Inc. Sr Sub Notes, 9.00%, 02/01/08 500,000 475,000
Fleming Companies Inc. Sr Notes, 10.625%, 12/15/01 500,000 506,250
Fruit of The Loom Sr Notes (144A), 8.875%, 04/15/06 500,000 (1) 457,500
Host Marriott Travel Plaza Sr Notes, 9.50%, 05/15/05 700,000 721,000
Playtex Products Inc. Sr Notes, 8.875%, 07/15/04 250,000 254,375
Revlon Consumer Products Sr Sub Notes, 8.625%, 02/01/08 250,000 236,250
United Artists Theatre Pass Through Certificates, 9.30%, 07/01/15 472,238 410,847
---------------
4,585,972
---------------
FINANCIAL SERVICES/INSURANCE (2.7%)
Amresco Inc. Sr Sub Notes, 9.875%, 03/15/05 500,000 385,000
Presidential Life Corp. Sr Notes, 7.875%, 02/15/09 350,000 338,845
Veritas Holdings Sr Notes, 9.625%, 12/15/03 126,000 123,480
Willis Corroon Corp. Sr Sub Notes (144A), 9.00%, 02/01/09 500,000 (1) 481,875
---------------
1,329,200
---------------
FOREST & PAPER PRODUCTS (3.3%)
Doman Industries Ltd. Sr Notes, 8.75%, 03/15/04 200,000 124,000
Gaylord Container Corp. Sr Notes, 9.75%, 06/15/07 400,000 381,000
Repap New Brunswick First Priority Sr Secured Notes, 9.00%, 06/01/04 600,000 565,500
Stone Container Corp. Sr Secured Notes, 10.75%, 10/01/02 300,000 311,250
Stone Container Corp. Sr Sub Debs., 12.75%, 04/01/02 250,000 250,625
---------------
1,632,375
---------------
GENERAL INDUSTRIES/MANUFACTURING (6.3%)
Allied Waste North America Sr Sub Notes, 7.625%, 01/01/06 500,000 466,250
Furon Company Sr Sub Notes, 8.125%, 03/01/08 250,000 235,000
Galey & Lord Inc. Sr Sub Notes, 9.125%, 03/01/08 200,000 130,000
Nortek Inc. Sr Notes, 9.25%, 03/15/07 600,000 598,500
Pillowtex Corp. Sr Sub Notes, 9.00%, 12/15/07 300,000 297,000
Sequa Corp. Sr. Notes, 8.75%, 12/15/01 150,000 150,375
Wesco Distribution Inc. Sr Sub Notes, 9.125%, 06/01/08 500,000 483,750
Williams Scotsman Inc. Sr Notes, 9.875%, 06/01/07 750,000 750,000
---------------
3,110,875
---------------
HEALTH CARE (3.2%)
Columbia/HCA Healthcare Notes, 6.91%, 06/15/05 300,000 276,093
Columbia/HCA Healthcare Medium Term Notes, 8.85%, 01/01/07 300,000 299,139
Extendicare Health Services Sr Sub Notes, 9.35%, 12/15/07 250,000 187,500
Integrated Health Services Inc. Sr Sub Notes, 9.50%, 09/15/07 400,000 292,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-HIGH YIELD FUND
- ----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (CONTINUED)
<S> <C> <C>
HEALTH CARE (CONTINUED)
Medaphis Corp. Sr Notes, 9.50%, 02/15/05 $ 200,000 $ 148,000
Sun Healthcare Group Inc. Sr Sub Notes, 9.50%, 07/01/07 500,000 (4) 80,000
Tenet Healthcare Corp. Sr Sub Notes, 8.625%, 01/15/07 300,000 296,250
---------------
1,578,982
---------------
HOTELS & GAMING (7.9%)
Felcor Suites L.P. Sr Notes, 7.625%, 10/01/07 320,000 290,173
HMH Properties Sr Notes, 7.875%, 08/01/08 600,000 553,500
Hollywood Park Operating Inc. Sr Sub Notes, 9.50%, 08/01/07 300,000 298,500
International Game Technology Sr Notes (144A), 8.375%, 05/15/09 500,000 (1) 491,250
John Q. Hammons Hotels L.P. First Mtg. Notes, 8.875%, 02/15/04 550,000 508,750
John Q. Hammons Hotels L.P. First Mtg. Notes, 9.75%, 10/01/05 200,000 190,500
Meristar Hospitality Corp. Sr Sub Notes, 8.75%, 08/15/07 200,000 187,000
Park Place Entertainment Sr Sub Notes, 7.875%, 12/15/05 300,000 285,000
Prime Hospitality Corp. First Mtg. Notes, 9.25%, 01/15/06 250,000 252,500
Prime Hospitality Corp. Sr Sub Notes, 9.75%, 04/01/07 250,000 250,000
Sun International Hotels Ltd. Sr Sub Notes, 9.00%, 03/15/07 300,000 300,000
Trump Atlantic City First Mtg. Notes, 11.25%, 05/01/06 350,000 314,125
---------------
3,921,298
---------------
METALS & MINING (8.9%)
AK Steel Corp. Sr Notes, 9.125%, 12/15/06 400,000 412,000
Armco Inc. Sr Notes, 8.875%, 12/01/08 250,000 255,937
Armco Inc. Sr Notes, 9.00%, 09/15/07 550,000 562,375
Centaur Mining Exploration Sr Secured Notes, 11.00%, 12/01/07 250,000 229,375
Freeport McMoran C&G Debs., 7.20%, 11/15/26 300,000 222,000
Glencore Nickel Pty Ltd. Sr Secured Bonds, 9.00%, 12/01/14 250,000 220,000
Great Central Mines Ltd. Sr Notes, 8.875%, 04/01/08 500,000 473,750
Inland Steel Co. First Mortgage, 7.90%, 01/15/07 300,000 291,750
Kaiser Aluminum & Chemical Corp. Sr Notes, 10.875%, 10/15/06 175,000 182,000
LTV Corp. Sr Notes, 8.20%, 09/15/07 500,000 465,000
National Steel Corp. First Mtg. Bonds, 8.375%, 08/01/06 598,000 586,788
P&L Coal Holdings Sr Sub Notes, 8.875%, 05/15/08 500,000 501,250
---------------
4,402,225
---------------
OIL/GAS (7.1%)
Ferrellgas Partner L.P. Sr Notes, 9.375%, 06/15/06 600,000 588,000
Giant Industries Services Inc. Sr Sub Notes, 9.00%, 09/01/07 400,000 368,000
Gulf Canada Resources Ltd. Sr Sub Debs., 9.25%, 01/15/04 300,000 305,184
KCS Energy Inc. Sr Notes, 11.00%, 01/15/03 725,000 (4) 435,000
Newpark Resources Inc. Sr Sub Notes, 8.625%, 12/15/07 500,000 480,000
Nuevo Energy Co. Sr Sub Notes, 9.50%, 04/15/06 400,000 396,000
Tesoro Petroleum Corp. Sr Sub Notes, 9.00%, 07/01/08 500,000 486,250
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-HIGH YIELD FUND
- ----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (CONTINUED)
<S> <C> <C>
OIL/GAS (CONTINUED)
Trico Marine Services Sr Notes, 8.50%, 08/01/05 $ 500,000 $ 455,000
---------------
3,513,434
---------------
REAL ESTATE & HOME BUILDING (5.2%)
CB Richard Ellis Sr Sub Notes, 8.875%, 06/01/06 500,000 485,000
Forest City Enterprises Sr Notes, 8.50%, 03/15/08 300,000 288,000
Lennar Corp. Sr Notes, 7.625%, 03/01/09 500,000 480,595
Rockefeller Center Properties Sr Notes, 0.00%, 12/31/00 670,000 546,050
Tanger Properties L.P. Sr Notes, 7.875%, 10/24/04 300,000 280,875
Toll Corp, 8.00%, 05/01/09 500,000 482,500
---------------
2,563,020
---------------
RETAIL (2.9%)
Nine West Group Inc. Sr Notes, 8.375%, 08/15/05 250,000 255,000
Petro Stopping Centers Sr Notes, 10.50%, 02/01/07 200,000 210,000
Stater Brothers Sr Notes, 11.00%, 03/01/01 250,000 260,000
Travelcenters of America Inc. Sr Sub Notes, 10.25%, 04/01/07 400,000 400,000
Zale Corp. Sr Notes, 8.50%, 10/01/07 300,000 297,000
---------------
1,422,000
---------------
TELECOMMUNICATIONS-WIRELESS (6.1%)
CCPR Services Inc. Sr Notes, 10.00%, 02/01/07 150,000 160,500
Nextel Communications Sr Discount Notes, 0/9.75%, 10/31/07 300,000 (2) 210,750
Nextel Communications Sr Discount Notes, 0/10.65%, 09/15/07 350,000 (2) 255,500
Orange PLC (144A), 8.75%, 06/01/06 500,000 (1) 498,750
Orange PLC Sr Notes, 8.00%, 08/01/08 500,000 477,500
Paging Network Sr Sub Notes, 10.125%, 08/01/07 500,000 385,000
Price Communications Wireless Sr Notes, 9.125%, 12/15/06 500,000 510,000
Rogers Cantel Inc. Sr Sub Notes, 8.80%, 10/01/07 500,000 498,750
---------------
2,996,750
---------------
TELECOMMUNICATIONS-WIRELINE (2.8%)
Alaska Communications Sr Sub Notes (144A), 9.375%, 05/15/09 500,000 (1) 481,250
Flag Limited Sr Notes, 8.25%, 01/30/08 500,000 470,000
Intermedia Communications Sr Discount Notes, 0/11.25%, 07/15/07 600,000 (2) 432,000
---------------
1,383,250
---------------
TRANSPORTATION (6.1%)
Eletson Holdings Inc. First Pfd. Mtg. Notes, 9.25%, 11/15/03 500,000 475,000
Eurotunnel Finance Tier 1, 5.28%, 01/15/12 10,000,000 (c )(3) 1,304,892
Navigator Gas Transport First Priority Ship Mtg. Notes (144A), 10.50%, 06/30/07 250,000 (1) 130,000
Piedmont Aviation Inc. Equipment Trust Certificates, 9.80%, 05/08/04 261,000 272,093
Stena AB Sr Notes, 8.75%, 06/15/07 500,000 456,250
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-HIGH YIELD FUND
- ----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (CONTINUED)
<S> <C> <C>
TRANSPORTATION (CONTINUED)
United Rentals Inc. Notes (144A), 9.00%, 04/01/09 $ 400,000 (1) $ 393,000
---------------
3,031,235
---------------
UTILITIES (3.1%)
AES Corp. Sr Sub Notes, 8.50%, 11/01/07 250,000 235,000
AES Eastern Energy Pass Through Certs. (144A), 9.00%, 07/02/17 500,000 (1) 495,000
Caithness Coso Fund Corp. Sr Secured Notes (144A), 9.05%, 12/15/09 500,000 (1) 495,000
Calpine Corp. Sr Notes, 10.50%, 05/15/06 285,000 304,950
---------------
1,529,950
---------------
TOTAL CORPORATE BONDS (COST $49,576,085) 47,003,202
---------------
PREFERRED STOCK (1.2%)
HEALTH CARE (1.2%)
Fresenius Medical Care Capital Trust Pfd., 9.00%, 12/01/06 600 606,000
---------------
TOTAL PREFERRED STOCK (COST $619,500) 606,000
---------------
REPURCHASE AGREEMENT (1.6%)
Bank of New York Repurchase Agreement 4.70%, 07/01/99 (dated
06/30/99; proceeds $769,901, collateralized by $790,000 U.S.
Treasury Notes, 6.875%, due 11/15/05, valued at $787,630) 769,800 769,800
---------------
TOTAL REPURCHASE AGREEMENT (COST $769,800) 769,800
---------------
TOTAL INVESTMENTS (COST $50,965,385) (+) -- 98.0% 48,379,002
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.0% 972,659
---------------
TOTAL NET ASSETS -- 100.0% $ 49,351,661
---------------
---------------
----------------------------------------------------------------------------
</TABLE>
+ Represents cost for federal income tax purposes and differs from
value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 424,742
Unrealized depreciation (3,011,125)
----------------
Net unrealized depreciation $ (2,586,383)
----------------
----------------
</TABLE>
a Deutsche Mark
b Euro
c French Franc
1 Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transctions exempt
from registration, normally to qualified institutional buyers.
2 Step-Up Bond.
3 Illiquid Security.
4 Security in default.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND
VIF - EMERGING MARKETS FUND
JUNE 30, 1999
- --------------------------------------------------------------------------------
The year-to-date total return of the OFFITBANK VIF Emerging Markets Fund
through June 30, 1999 was 8.90%. For the quarter ending June 30, 1999, the Fund
generated a total return of 3.47%. As of June 30, 1999, the Fund had a net asset
value per share of US $7.80 and a 30 day SEC yield of 13.78%. The Fund is
invested solely in dollar-denominated bonds, of which 80% are issued by top-tier
Latin American corporations and the remainder are obligations of governments
from the region. As of quarter end the allocation across Latin America is
approximately as follows: Brazil, 51%; Argentina, 19%; and Mexico, 30%.
The second quarter was dominated by two broad themes: The surprisingly sharp
recovery in Brazil; and increasing fears of rising interest rates in the United
States.
I) Despite a traumatic currency devaluation in January, which
resulted in a 45% depreciation of the REAL, Brazil has managed
to contain inflation to well within 8% per annum, and has
moderated the expected economic contraction. This in turn has
stabilized the currency and allowed the monetary authorities
to lower domestic interest rates dramatically.
II) As the quarter drew to a close, concern over U.S. interest
rate increases began to rise, although the Federal Reserve's
decision to raise rates by only 25 basis points and move to a
neutral bias has largely ameliorated these concerns.
Looking ahead to the remainder of the year, we believe that the three countries
in which we are invested -- Brazil, Mexico, and Argentina -- will continue to
offer attractive risk-adjusted returns.
- - Mexico continues to enjoy solid growth driven by the export sector and
foreign direct investment. Furthermore, Mexico has arranged a US $24 billion
external financing facility in order to boost market confidence since its
financing needs are backstopped through next year's presidential election.
- - In anticipation of the political noise surrounding the upcoming presidential
election in Argentina in October and current economic difficulties stemming
from Brazil's recession, we have reduced the Fund's exposure to Argentine
government bonds. As a result, the Fund's exposure to Argentina is derived
mostly from its investments in companies with credit fundamentals that remain
solid despite the country's temporary economic difficulties.
- - We believe Brazil's better than expected economic performance will continue
and that economic growth will reignite in the second half of this year. In
our opinion, Brazil currently offers some of the best risk-adjusted return
opportunities in all of Emerging Markets.
The Fund's distinctive investment strategy will continue to be invested in
top-tier corporate bonds within Latin America which offer attractive value. Our
credit selection process is based strictly on rigorous credit discipline
focusing on underlying fundamental creditworthiness, as well as the strategic
value of these corporate franchises. These dollar-denominated corporate bonds
currently offer yields-to-maturity ranging from 12-15%.
Richard M. Johnston Wallace Mathai-Davis
July 15, 1999
9
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-EMERGING MARKETS FUND
- -----------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (78.8%)
<S> <C> <C>
AUTOMOTIVE (4.7%)
BRAZIL (4.7%)
Ford Brasil Ltd, 9.25%, 01/22/07 $ 330,000 $ 293,700
---------------
BUILDING MATERIALS (3.7%)
MEXICO (3.7%)
Cemex International Capital L.L.C. (144A), 9.66%, 11/29/49 250,000 (1) 230,000
---------------
CABLE (3.6%)
ARGENTINA (3.6%)
Cablevision S.A., 13.75%, 05/01/09 250,000 226,250
---------------
FOOD (8.8%)
ARGENTINA (4.5%)
Mastellone Hermanos S.A., 11.75%, 04/01/08 400,000 284,000
---------------
BRAZIL (4.3%)
Arisco Products Alimenticios, 10.75%, 05/22/05 330,000 270,600
---------------
554,600
---------------
HOTELS & GAMING (3.8%)
MEXICO (3.8%)
Grupo Posadas S.A. de CV, 10.375%, 02/13/02 250,000 235,120
---------------
INDUSTRIAL (6.8%)
MEXICO (6.8%)
Sanluis Corp. S.A., 8.875%, 03/18/08 250,000 205,000
Vicap S.A., 11.375%, 05/15/07 250,000 222,500
---------------
427,500
---------------
INFRASTRUCTURE (2.1%)
ARGENTINA (2.1%)
Cia Latino Americana, 11.625%, 06/01/04 250,000 130,000
---------------
MANUFACTURING (2.7%)
MEXICO (2.7%)
International de Ceramica S.A., 9.75%, 08/01/02 225,000 168,750
---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-EMERGING MARKETS FUND
- -----------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (CONTINUED)
<S> <C> <C>
MEDIA (7.5%)
BRAZIL (7.5%)
Global Communicacoes Participacoes, 10.50%, 12/20/06 $ 270,000 $ 195,075
Global Communicacoes Participacoes, 10.625%, 12/05/08 100,000 71,000
RBS Participacoes S.A., 11.00%, 04/01/07 300,000 201,000
---------------
467,075
---------------
PACKAGING (3.9%)
MEXICO (3.9%)
Grupo Industrial Durango, 12.00%, 07/15/01 125,000 121,875
Grupo Industrial Durango, 12.625%, 08/01/03 125,000 120,625
---------------
242,500
---------------
RETAIL (3.8%)
ARGENTINA (3.8%)
Disco S.A., 9.875%, 05/15/08 300,000 240,000
---------------
STEEL (10.3%)
ARGENTINA (2.3%)
Acindar, 11.25%, 02/15/04 200,000 146,000
---------------
BRAZIL (4.9%)
CSN Iron S.A., 9.125%, 06/01/07 400,000 305,000
---------------
MEXICO (3.1%)
Hylsa S.A. de CV, 9.25%, 09/15/07 250,000 192,500
---------------
643,500
---------------
TELEPHONE COMMUNICATIONS (4.6%)
MEXICO (4.6%)
Alestra S.A. de CV (144A), 12.625%, 05/15/09 300,000 (1) 285,000
---------------
UTILITIES (12.5%)
BRAZIL (12.5%)
Companhia Energia Minas Gerais, 9.125%, 11/18/04 350,000 308,000
Companhia Paranaense de Energia, 9.75%, 05/02/05 300,000 262,500
SABESP, 10.00%, 07/28/05 275,000 207,625
---------------
778,125
---------------
TOTAL CORPORATE BONDS (COST $5,365,704) 4,922,120
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
11
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-EMERGING MARKETS FUND
- -----------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (CONTINUED)
<S> <C> <C>
FOREIGN GOVERNMENTS (18.2%)
SOVEREIGN DEBT (18.2%)
ARGENTINA (2.2%)
Republic of Argentina, 11.00%, 12/04/05 $ 150,000 $ 138,281
---------------
BRAZIL (16.0%)
Brazil Brady Capitalization Step-Up Bonds, 5.00/8.00%, 04/15/14 233,080 (2) 151,939
Republic of Brazil, 11.625%, 04/15/04 500,000 470,000
Republic of Brazil EI, Floating Rate Notes, 5.875%, 04/15/06 475,000 (3) 375,250
---------------
997,189
---------------
TOTAL FOREIGN GOVERNMENTS (COST $1,207,953) 1,135,470
---------------
TOTAL INVESTMENTS (COST $6,573,657) (+) -- 97.0% 6,057,590
OTHER ASSETS IN EXCESS OF LIABILITIES -- 3.0% 184,997
---------------
TOTAL NET ASSETS -- 100.0% $ 6,242,587
---------------
---------------
----------------------------------------------------------------------------
</TABLE>
+ Represents cost for federal income tax purposes and differs from value
by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 157,036
Unrealized depreciation (673,103)
---------------
Net unrealized depreciation $ (516,067)
---------------
---------------
</TABLE>
(1) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
(2) Step-Up Bond.
(3) Interest rate in effect at June 30, 1999.
Country Diversification (as a percentage of Total Investments):
<TABLE>
<S> <C>
Argentina 19.22%
Brazil 51.37%
Mexico 29.41%
---------------
100.00%
---------------
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
12
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
DJG VALUE EQUITY FUND
JUNE 30, 1999
- --------------------------------------------------------------------------------
When 1999 began, we strongly believed that the DJG Value Equity Fund was
materially undervalued on both an absolute and relative basis. We knew from our
continuing analysis that the stocks the Fund owned were selling at large
discounts from their intrinsic economic valuations where management's strategic
plan would narrow the gap. Accordingly, we felt that given just a level stock
market, we could realize substantial appreciation during 1999, and even more
when investors refocused on value stocks.
We are pleased to report that in the first half of this year, particularly
during the second quarter, we saw a number of workouts in the Fund holdings
coupled with a positive swing in investor sentiment toward value. Consequently,
the Fund gained 20.7%, well above the S&P 500 and substantially ahead of the mid
cap indices. Some of the large drivers were: Sensormatic Electronics, Navistar,
Telephone & Data Systems, Comdisco, Foundation Health Systems and Toys R Us. In
addition, we sold a number of positions at substantial profits, including
Airtouch, Time Warner, and Raychem.
As we enter the second half of the year, we remain concerned about the market
backdrop. Despite some broadening out, the market continues to remain too
narrowly focused on large cap growth and technology stocks where valuations are
extremely high. In addition, speculation continues rampant in Internet related
securities, and, equally disconcerting, many unsophisticated investors are using
Internet brokers to gamble in the stock market. All of this suggests trouble
when the investment environment becomes less friendly.
Notwithstanding the substantial improvement in valuations to date, a number of
the Fund's larger holdings have shown little or no appreciation so far this
year. These are: IMC Global, Pittson Brinks, Everest Reinsurance, Dime Bancorp,
Comsat and Whitman. In our judgment, the investment premises for these companies
remain intact, and we have increased our position during the course of the year.
We expect this group of laggards to add value to the Fund before the year ends.
In addition, we are continuing to add new ideas to the portfolios.
In sum, we remain cautious about the vulnerability of the stock market to
potential adverse events in view of its generally high valuation. In contrast,
the Fund's holdings are priced well below general market valuation benchmarks.
Thus, relative to the market, we view the risk-reward characteristics of the
Fund to be very favorable. On an absolute basis, we believe there remains
considerable appreciation potential, which should produce continued good rates
of return over time.
Erwin Zeuschner
Portfolio Manager and Principal
David J. Greene and Company, LLC
July 15, 1999
13
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
DJG VALUE EQUITY FUND
- --------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (84.0%)
<S> <C> <C>
AGRICULTURE (4.8%)
AGCO Corp. 5,000 $ 56,562
IMC Global Inc. 3,950 69,619
-------------------
126,181
-------------------
AUTOMOTIVE (1.7%)
General Motors Corp. 700 46,200
-------------------
COMPUTERS (3.4%)
BancTec, Inc.* 5,000 89,687
-------------------
CONSULTING SERVICES (6.8%)
Comdisco, Inc. 7,000 179,375
-------------------
ELECTRONICS (4.9%)
Sensormatic Electronics Corp.* 6,000 83,625
Varian Semiconductor Equipment Associates, Inc.* 1,500 25,500
Varian, Inc. 1,500 20,250
-------------------
129,375
-------------------
FINANCIAL SERVICES (1.5%)
Dime Bancorp, Inc. 2,000 40,250
-------------------
HEALTH CARE (2.4%)
McKesson HBOC, Inc. 2,000 64,250
-------------------
HOTELS & GAMING (1.7%)
International Game Technology, Inc.* 2,500 46,250
-------------------
HUMAN RESOURCES (1.7%)
Olsten Corp. 7,000 44,187
-------------------
INDUSTRIAL (2.9%)
Westinghouse Air Brake Co. 3,000 77,812
-------------------
INSURANCE (3.0%)
Aetna Inc. 500 44,719
Everest Reinsurance Holdings, Inc. 1,100 35,888
-------------------
80,607
-------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
DJG VALUE EQUITY FUND
- --------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
MANUFACTURING (7.6%)
Calgon Carbon Corp. 5,000 $ 29,688
Hussmann International, Inc. 3,000 49,688
Navistar International Corp. 1,000 50,000
UNOVA, Inc. 4,500 71,437
-------------------
200,813
-------------------
MEDICAL PRODUCTS & SERVICES (3.1%)
Foundation Health Systems, Inc. - Class A* 3,000 45,000
Varian Medical Systems, Inc. 1,500 37,875
-------------------
82,875
-------------------
METALS & MINING (1.0%)
McMoRan Exploration Co.* 1,135 25,183
-------------------
OFFICE MACHINES (3.0%)
Harris Corp. 2,000 78,375
-------------------
RETAIL (12.5%)
Albertson's, Inc. 1,575 81,211
Footstar, Inc.* 3,500 130,156
HomeBase, Inc.* 5,800 36,613
Toys 'R' Us, Inc.* 4,000 82,750
-------------------
330,730
-------------------
SECURITY SERVICES (3.0%)
Pittston Brink's Group 3,000 80,250
-------------------
TELECOMMUNICATIONS (11.3%)
COMSAT Corp. 2,500 81,250
Telephone & Data Systems, Inc. 3,000 219,188
-------------------
300,438
-------------------
TRANSPORTATION (6.4%)
Ryder System, Inc. 3,500 91,000
GATX Corp. 2,000 76,125
-------------------
-------------------
167,125
-------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
15
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
DJG VALUE EQUITY FUND
- --------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
WHOLESALE DISTRIBUTION (1.3%)
Whitman Corp. 2,000 $ 36,000
-------------------
TOTAL COMMON STOCKS (COST $1,885,546) 2,225,963
-------------------
RIGHTS/WARRANTS (0.0%)
AGRICULTURE (0.0%)
IMC Global Inc. 500 281
-------------------
TOTAL RIGHTS/WARRANTS (COST $0) 281
-------------------
MONEY MARKET FUND (16.1%)
Bank of New York Cash Reserve $ 425,762 425,762
-------------------
TOTAL MONEY MARKET FUND (COST $425,762) 425,762
-------------------
TOTAL INVESTMENTS (COST $2,311,308) (+) -- 100.1% 2,652,006
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1%) (1,258)
-------------------
TOTAL NET ASSETS -- 100.0% $ 2,650,748
-------------------
-------------------
------------------------------------------------
</TABLE>
+ Represents cost for federal income tax purposes and differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 483,287
Unrealized depreciation (142,589)
-------------------
Net unrealized appreciation $ 340,698
-------------------
-------------------
</TABLE>
* Denotes non-income producing security
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
16
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND
VIF - U.S. SMALL CAP FUND
JUNE 30, 1999
- --------------------------------------------------------------------------------
After a less than stellar start in 1999, U.S. small capitalization equities
rebounded strongly in the second quarter. The Russell 2000 Index rose 15.5%
versus a 7.1% gain for the S&P 500 Index, marking the first time small
capitalization equities have outperformed their larger capitalization brethren
since the third quarter of 1997. In spite of the strong second quarter, U.S.
small capitalization equities are still trailing U.S. large capitalization
equities for the year to date. For the six months ending June 30, 1999, the
Russell 2000 Index rose 9.3% while the S&P 500 Index gained 12.4%.
We are pleased to report that The OFFITBANK VIF U.S. Small Cap Fund rose 21.4%
for the quarter, net of fees and expenses, and 19.2% for the year to date
through June 30, 1999, providing very strong performance on both an absolute and
relative basis. The Russell 2000 Index for the same time periods rose only 15.5%
and 9.3%, respectively.
The portfolio was, and continues to be, overweighted relative to the Russell
2000 Index in the technology, health care and utility sectors. This, along with
our stock selection, added to the portfolio's outperformance. Health care was
the best performing sector for the Fund during the quarter, rising almost 44%.
The portfolio's technology holdings rose 16% but lagged the Russell 2000 Index's
technology sector which returned 21%. The ten best performing stocks* for the
quarter represented all industries/sectors across the board -- among these were
Echostar (utilities) which was up 88%, Unilab (health care) +87%, Kronos
(technology) +85% and BancTec (financial services) +46%.
We added four new companies to the portfolio during the second quarter. Two of
them, Newpark Resources and Computer Task Group, have been held previously at
much higher prices. Computer Task Group, an IT consulting firm, has seen its top
line growth slow as customers delay the implementation of new software solutions
until Y2K issues have been resolved. Computer Task Group consciously kept Y2K
business to less than 15% of their total revenue, declining to build up
resources for business they expected to be short lived. Newpark Resources, an
oil services company, has suffered along with others in the oil industry as
depressed oil and gas prices have severely affected business. Now, with oil
prices up significantly over the last couple of months, we expect to see an
improvement in the share price. Sunrise Assisted Living, a new purchase, is one
of the largest providers of assisted living facilities in the U.S. Although
growing at greater than 25%, the stock is down significantly from its high.
Several companies in the industry have faltered and Sunrise's stock has been
taken down in sympathy. As Sunrise continues to post good earnings, we expect to
see it distinguish itself from others in the industry. WESCO International,
Inc., a leading North American distributor of electrical products and other
industrial MRO (maintenance, repair, and operating) products and procurement
outsourcing services, was also purchased. WESCO is well positioned to increase
its leading market share of the fragmented and rapidly consolidating electrical
products distribution market.
Earlier this year, a tender offer was made for one of our holdings, Platinum
Technology. Because many of the companies had valuations that were so
compelling, we expected to see a number of similar transactions occurring in the
near future. This has come to fruition. In late May, Unilab announced its
intention to merge with a private investment company. Our shares are being
bought out at $5.85, a 20% premium to the price prior to its announcement and
225% above our average cost of $1.80. In April, Welsh, Carson, Anderson & Stowe,
a private investment firm, announced its offer of $18.50 for all BancTec shares,
a premium of 42% over its then current price. We expect both deals to close over
the next few months. In June we received the proceeds from AT&T's buyout of
Vanguard Cellular. We received both AT&T stock and cash in the transaction.
Although we will not be keeping the AT&T stock, it was still held in the
portfolio at quarter end.
Interest in U.S. small capitalization stocks has picked up. In June, for the
first time in over a year, fund flows into aggressive small capitalization
mutual funds were positive -- although in July this number again turned
negative. In spite of relative valuations for U.S. small capitalization stocks
which remain at near-record lows, investor interest in this asset class remains
less than enthusiastic. We continue to believe that there remains real value in
small capitalization equities.
Rockefeller & Co.
July 15, 1999
- --------------------------------------
* Ranked according to weighted return.
17
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-U.S. SMALL CAP FUND
- -----------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (92.7%)
<S> <C> <C>
AUTOMOBILE PARTS (2.4%)
Exide Corp. 2,410 $ 35,547
---------------
BANKING (4.3%)
Cohoes Bancorp, Inc. 1,800 21,600
PBOC Holdings, Inc.* 2,000 20,000
Virginia Capital Bancshares, Inc. 1,500 22,875
---------------
64,475
---------------
BUILDING/CONSTRUCTION (1.7%)
Dal-Tile International, Inc.* 2,165 24,627
---------------
COMMERCIAL SERVICES (2.4%)
Iron Mountain, Inc.* 1,255 35,924
---------------
COMPUTERS (12.3%)
BancTec, Inc.* 1,458 26,153
Computer Task Group, Inc. 170 2,898
Integrated Systems, Inc.* 2,860 33,605
Kronos, Inc.* 1,327 60,378
Sykes Enterprises, Inc.* 1,850 61,744
---------------
184,778
---------------
DATA PROCESSING (7.7%)
Information Resources, Inc.* 2,030 17,762
Network Appliance, Inc.* 730 40,789
Object Design, Inc.* 6,220 24,102
Sterling Software, Inc.* 1,240 33,092
---------------
115,745
---------------
ELECTRICAL EQUIPMENT (1.6%)
Wesco International, Inc.* 1,182 24,231
---------------
ELECTRONICS (7.8%)
Amkor Technology, Inc.* 5,300 54,325
Mentor Graphics Corp.* 3,580 45,869
Microsemi Corp.* 1,740 16,313
---------------
116,507
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
18
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-U.S. SMALL CAP FUND
- -----------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
FINANCIAL SERVICES (10.6%)
The BISYS Group, Inc.* 750 $ 43,875
DVI, Inc.* 1,820 31,168
Financial Federal Corp.* 1,502 33,044
Franchise Mortgage Acceptance Co.* 3,000 26,250
Imperial Credit Industries, Inc.* 1,000 7,094
Warwick Community Bancorp, Inc. 1,400 17,850
---------------
159,281
---------------
HEALTH SERVICES/HEALTHCARE (11.2%)
ADAC Laboratories 1,320 9,570
Healthcare Services Group, Inc. 2,825 27,544
Sunrise Assisted Living, Inc.* 790 27,551
Trex Medical Corp.* 4,300 25,800
Unilab Corp.* 13,000 78,000
---------------
168,465
---------------
MANUFACTURING (2.1%)
Windmere-Durable Holdings, Inc. 1,900 32,063
---------------
OIL & GAS EXPLORATION (3.8%)
Newpark Resources, Inc.* 1,000 8,875
Range Resources Corp. 3,110 19,049
Rio Alto Exploration Ltd.* 1,900 (a) 28,114
---------------
56,038
---------------
RETAIL (1.9%)
Buffets, Inc.* 2,420 27,830
---------------
SAFETY SERVICES (1.4%)
Rural/Metro Corp.* 2,200 21,175
---------------
SERVICES - ADVERTISING (2.5%)
Getty Images, Inc.* 2,000 37,750
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
19
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-U.S. SMALL CAP FUND
- -----------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
TECHNOLOGY (4.3%)
Nielsen Media Research, Inc. 1,800 $ 52,650
Telescan, Inc.* 500 12,156
---------------
64,806
---------------
TELECOMMUNICATIONS (14.7%)
Billing Concepts Corp.* 2,500 27,969
EchoStar Communications Corp.- Class A* 650 99,734
Pacific Gateway Exchange, Inc.* 510 14,854
Primus Telecommunications Group, Inc.* 2,123 47,635
RSL Communications, Ltd.- Class A* 1,540 29,741
---------------
219,933
---------------
TOTAL COMMON STOCKS (COST $1,175,585) 1,389,175
---------------
MONEY MARKET FUND (7.5%)
Bank of New York Cash Reserve $ 111,744 111,744
---------------
TOTAL MONEY MARKET FUND (COST $111,744) 111,744
---------------
TOTAL INVESTMENTS (COST $1,287,329) (+) -- 100.2% 1,500,919
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2%) (3,249)
---------------
TOTAL NET ASSETS -- 100.0% $ 1,497,670
---------------
---------------
-------------------------------------------------------
</TABLE>
+ Represents cost for federal income tax purposes and differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 395,903
Unrealized depreciation (182,313)
---------------
Net unrealized appreciation $ 213,590
---------------
---------------
</TABLE>
* Denotes non-income producing security.
(a) Canadian Dollar.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
20
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND
VIF - TOTAL RETURN FUND
JUNE 30, 1999
- --------------------------------------------------------------------------------
The total return of the VIF Total Return Fund was (1.87%) for the first six
months of 1999. This compares with a return of (1.37%) for the Lehman Aggregate
Bond Index. The Fund's 30 day SEC yield at quarter end was 5.59%.
The investments in the Fund are 38% U.S. Treasurys, 22% Mortgage Pass-Thru
Securities, 32% High Yield Corporates, and 8% Cash Equivalents. The average
maturity of the Fund is approximately 6.1 years and the duration is 4.4 years.
Looking forward, we believe that the Federal Reserve will remain committed to
domestic price stability and that this will limit increases in bond yields from
current levels. Also, as discussed in our June Research Note, FED POLICY FOCUS:
DOMESTIC OR Global?, we believe that current bond yields sufficiently discount
higher rates in the future so as to make the market attractive.
While we expect Fed actions to cushion the current bear market in bonds, we are
not yet prepared to significantly increase portfolio sensitivity to changes in
interest rates. The U.S. economy remains solid while Japan and Germany are
showing tentative signs of recovery. Should global economic growth strengthen
appreciably, interest rates could rise in this country, even in the absence of
inflation.
In sum, we view interest rate risk as now being balanced. Therefore, the
duration of the portfolio is neutral to the market.
Jack D. Burks
July 15, 1999
21
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-TOTAL RETURN FUND
- ------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION (7.1%)
Federal Home Loan Mortgage Corporation, Gold Pool #E70611, 6.00%, $ 89,627 $ 86,518
06/01/13 ----------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION (COST $88,961) 86,518
----------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (7.8%)
Federal National Mortgage Association, Gold Pool # 479157, 6.00%, 98,460 95,045
01/01/14 ----------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION (COST $98,779) 95,045
----------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (6.3%)
Government National Mortgage Association, Pool #474218, 6.00%, 05/15/13 79,480 76,797
----------------
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (COST $79,588) 76,797
----------------
MUTUAL FUND (30.8%)
OFFITBANK VIF-High Yield Fund 37,183 374,803
----------------
TOTAL MUTUAL FUND (COST $398,855) 374,803
----------------
U.S. TREASURY NOTES (37.3%)
Notes, 5.875%, 11/15/05 175,000 174,462
Notes, 6.50%, 10/15/06 270,000 278,640
----------------
TOTAL U.S. TREASURY NOTES (COST $478,495) 453,102
----------------
MONEY MARKET FUND (7.6%)
Bank of New York Cash Reserve 92,921 92,921
----------------
TOTAL MONEY MARKET FUND (COST $92,921) 92,921
----------------
TOTAL INVESTMENTS (COST $1,237,599)(+) -- 96.9% 1,179,186
OTHER ASSETS IN EXCESS OF LIABILITIES -- 3.1% 37,291
----------------
TOTAL NET ASSETS -- 100.0% $ 1,216,477
----------------
----------------
-------------------------------------------------------
</TABLE>
+ Represents cost for federal income tax purposes and differs from value
by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ -
Unrealized depreciation (58,413)
----------------
Net unrealized depreciation $ (58,413)
----------------
----------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
22
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND
VIF - U.S. GOVERNMENT SECURITIES FUND
JUNE 30, 1999
- --------------------------------------------------------------------------------
The total return of the VIF U.S. Government Securities Fund has been (1.10%)
since the inception on April 1, 1999. This compares with a return of (1.10%) for
the Merrill Lynch 5 Year Treasury Index. The Fund's 30 day SEC yield at quarter
end was 5.45%.
The investments in the Fund are in U.S. Treasury and U.S. Agency securities. The
average maturity of the Fund is approximately 5.3 years and the duration is 4.1
years.
Looking forward, we believe that the Federal Reserve will remain committed to
domestic price stability and that this will limit increases in bond yields from
current levels. Also, as discussed in our June Research Note, FED POLICY FOCUS:
DOMESTIC OR GLOBAL?, we believe that current bond yields sufficiently discount
higher rates in the future so as to make the market attractive.
While we expect Fed actions to cushion the current bear market in bonds, we are
not yet prepared to significantly increase portfolio sensitivity to changes in
interest rates. The U.S. economy remains solid while Japan and Germany are
showing tentative signs of recovery. Should global economic growth strengthen
appreciably, interest rates could rise in this country, even in the absence of
inflation.
In sum, we view interest rate risk as now being balanced. Therefore, the
duration of the portfolio is neutral to the market.
Jack D. Burks
July 15, 1999
23
<PAGE>
<TABLE>
<CAPTION>
OFFITBANK
VIF-U.S. GOVERNMENT SECURITIES FUND
- ---------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
June 30, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL HOME LOAN BANK (4.9%)
Federal Home Loan Bank, Discount Notes, 4.60%, 07/01/99 $ 800,000 $ 800,000
----------------
TOTAL FEDERAL HOME LOAN BANK (COST $800,000) 800,000
----------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (9.9%)
Federal Home Loan Mortgage Corp., 5.00%, 02/15/01 1,645,000 1,627,789
----------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION (COST $1,635,481) 1,627,789
----------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (9.8%)
Federal National Mortgage Association, 5.625%, 03/15/01 1,620,000 1,617,377
----------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION (COST $1,628,233) 1,617,377
----------------
U.S. TREASURY NOTES (73.8%)
Inflation Indexed Notes, 3.875%, 01/15/09 800,000 801,608
Notes, 5.75%, 10/31/02 800,000 800,407
Notes, 5.75%, 04/30/03 900,000 898,696
Notes, 5.875%, 11/15/05 3,160,000 3,150,294
Notes, 6.25%, 02/15/07 755,000 769,108
Notes, 7.00%, 07/15/06 2,380,000 2,520,429
Notes, 6.50%, 10/15/06 3,085,000 3,183,720
----------------
TOTAL U.S. TREASURY NOTES (COST $12,353,105) 12,124,262
----------------
MONEY MARKET FUND (0.2%)
Bank of New York Cash Reserve 36,941 36,941
----------------
TOTAL MONEY MARKET FUND (COST $36,941) 36,941
----------------
TOTAL INVESTMENTS (COST $16,453,760)(+) -- 98.6% 16,206,369
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.4% 227,699
----------------
TOTAL NET ASSETS -- 100.0% $ 16,434,068
----------------
----------------
</TABLE>
+ Represents cost for federal income tax purposes and differs from value by net
unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 1,885
Unrealized depreciation (249,276)
----------------
Net unrealized depreciation $ (247,391)
----------------
----------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
24
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
VIF VIF DJG
HIGH EMERGING VALUE
YIELD FUND MARKETS FUND EQUITY FUND
---------------- ---------------- ----------------
<S> <C> <C> <C>
Assets:
Investments, at market value (1).................................. $ 48,379,002 $ 6,057,590 $ 2,652,006
Cash............................................................... - 29,072 -
Receivable from adviser............................................ - - 4,675
Interest and dividends receivable ................................. 998,643 160,028 1,718
Receivable for investment securities sold.......................... - 434,290 -
Deferred organization expenses..................................... 24,363 30,189 4,945
Unrealized appreciation on open forward currency contracts (Note 2) 34,028 - -
Prepaid expenses and other assets.................................. 1,410 22 123
---------------- ---------------- ----------------
Total Assets............................................. 49,437,446 6,711,191 2,663,467
---------------- ---------------- ----------------
LIABILITIES:
Payable for investment securities purchased........................ - 445,382 -
Investment advisory fees payable................................... 27,097 - -
Professional fees payable.......................................... 41,936 17,935 9,652
Administration fees payable........................................ 3,817 - -
Transfer agent fees payable........................................ 2,470 2,463 2,346
Fund accounting fees payable....................................... 1,250 - -
Other payables and accrued expenses................................ 9,215 2,824 721
---------------- ---------------- ----------------
Total Liabilities........................................... 85,785 468,604 12,719
---------------- ---------------- ----------------
NET ASSETS......................................................... $ 49,351,661 $ 6,242,587 $ 2,650,748
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Net Assets consist of:
Shares of capital stock, $0.001 par value per share............. $ 4,897 $ 800 $ 184
Additional paid-in capital...................................... 51,627,649 8,100,124 1,987,683
Distributions in excess of net investment income................ - (17) -
Accumulated undistributed net investment income................. 2,758 - 6,437
Accumulated undistributed net realized gains (loss) on
investments and foreign currency transactions.............. 269,298 (1,342,253) 315,746
Net unrealized appreciation (depreciation) of investment
and foreign currency transactions.......................... (2,552,941) (516,067) 340,698
---------------- ---------------- ----------------
NET ASSETS......................................................... $ 49,351,661 $ 6,242,587 $ 2,650,748
---------------- ---------------- ----------------
---------------- ---------------- ----------------
SHARES OF CAPITAL STOCK OUTSTANDING................................ 4,897,064 800,208 184,312
---------------- ---------------- ----------------
---------------- ---------------- ----------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE).......... $ 10.08 $ 7.80 $ 14.38
---------------- ---------------- ----------------
---------------- ---------------- ----------------
(1) Investments at cost............................................ $ 50,965,385 $ 6,573,657 $ 2,311,308
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
25
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)(CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
VIF VIF VIF U.S.
U.S. SMALL TOTAL RETURN GOVERNMENT
CAP FUND FUND SECURITIES FUND
---------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS:
Investments, at market value (1)................................... $ 1,500,919 $ 1,179,186 $ 16,206,369
Receivable from adviser............................................ 8,040 - -
Interest and dividends receivable.................................. 397 8,877 250,228
Deferred organization expenses..................................... 4,945 45,136 -
Prepaid expenses and other assets.................................. 87 - 121
---------------- ---------------- ----------------
Total Assets.................................................. 1,514,388 1,233,199 16,456,718
---------------- ---------------- ----------------
LIABILITIES:
Payable for investment securities purchased........................ 3,415 - -
Investment advisory fees payable................................... - 2,698 3,634
Payable for capital shares redeemed................................ - - 8,656
Professional fees payable.......................................... 9,143 11,097 9,097
Transfer agent fees payable........................................ 2,372 2,292 1,263
Other payables and accrued expenses................................ 1,788 635 -
---------------- ---------------- ----------------
Total Liabilities.......................................... 16,718 16,722 22,650
---------------- ---------------- ----------------
NET ASSETS......................................................... $ 1,497,670 $ 1,216,477 $ 16,434,068
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Net Assets consist of:
Shares of capital stock, $0.001 par value per share............. $ 111 $ 122 $ 1,662
Additional paid-in capital...................................... 1,182,622 1,217,789 16,587,289
Accumulated undistributed net investment income (loss).......... (7,540) 60,788 151,995
Accumulated undistributed net realized gains (loss) on
investments and foreign currency transactions................ 108,887 (3,809) (59,487)
Net unrealized appreciation (depreciation) of investment
and foreign currency transactions............................ 213,590 (58,413) (247,391)
---------------- ---------------- ----------------
NET ASSETS......................................................... $ 1,497,670 $ 1,216,477 $ 16,434,068
---------------- ---------------- ----------------
---------------- ---------------- ----------------
SHARES OF CAPITAL STOCK OUTSTANDING................................ 110,760 121,910 1,661,636
---------------- ---------------- ----------------
---------------- ---------------- ----------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE).......... $ 13.52 $ 9.98 $ 9.89
---------------- ---------------- ----------------
---------------- ---------------- ----------------
(1) Investments at cost............................................ $ 1,287,329 $ 1,237,599 $ 16,453,760
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
26
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS - (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
VIF VIF DJG
HIGH EMERGING VALUE
YIELD FUND MARKETS FUND EQUITY FUND
---------------- ---------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest........................................................... $ 2,157,482 $ 390,711 $ -
Dividends.......................................................... 1,429 - 15,215
---------------- ---------------- ----------------
Total investment income..................................... 2,158,911 390,711 15,215
---------------- ---------------- ----------------
EXPENSES:
Advisory .......................................................... 196,246 25,397 9,233
Administration ................................................... 28,901 3,533 1,445
Amortization of organization expenses.............................. 7,244 7,229 936
Custody ........................................................... 6,655 2,170 133
Fund accounting ................................................... 7,500 7,500 7,500
Professional ...................................................... 46,259 18,600 11,126
Transfer agent .................................................... 9,696 9,591 9,469
Miscellaneous ..................................................... 28,578 3,145 1,938
---------------- ---------------- ----------------
Total expenses before waivers/reimbursements................ 331,079 77,165 41,780
Less expenses waived/reimbursed............................. (65,570) (34,836) (27,353)
---------------- ---------------- ----------------
Net expenses.......................................... 265,509 42,329 14,427
---------------- ---------------- ----------------
NET INVESTMENT INCOME.............................................. 1,893,402 348,382 788
---------------- ---------------- ----------------
REALIZED AND UNREALIZED GAINS (LOSS) ON INVESTMENTS:
Net realized gains on investment and foreign currency
transactions................................................ 41,225 18,498 204,875
Net change in unrealized appreciation (depreciation) of
investment and foreign currency transactions................ (1,581,221) 114,354 242,425
---------------- ---------------- ----------------
NET REALIZED AND UNREALIZED GAINS (LOSS) ON INVESTMENTS............ (1,539,996) 132,852 447,300
---------------- ---------------- ----------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $ 353,406 $ 481,234 $ 448,088
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
27
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS - (UNAUDITED)(CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
VIF VIF VIF U.S.
U.S. SMALL TOTAL RETURN GOVERNMENT
CAP FUND FUND SECURITIES FUND
---------------- ---------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest........................................................... $ 990 $ 36,567 $ 165,553
Dividends.......................................................... 804 945 5,082
---------------- ---------------- ----------------
Total Investment Income....................................... 1,794 37,512 170,635
---------------- ---------------- ----------------
EXPENSES:
Advisory........................................................... 6,222 4,941 10,872
Administration..................................................... 779 772 3,883
Amortization of organization expenses.............................. 936 5,597 -
Custody............................................................ 3,159 57 191
Fund accounting.................................................... 7,500 7,500 3,750
Professional....................................................... 10,498 10,128 12,188
Transfer agent..................................................... 9,486 9,137 4,500
Miscellaneous...................................................... 1,910 705 1,442
---------------- ---------------- ----------------
Total expenses before waivers/reimbursements.................. 40,490 38,837 36,826
Less expenses waived/reimbursed............................... (31,156) (33,897) (18,186)
---------------- ---------------- ----------------
Net expenses............................................... 9,334 4,940 18,640
---------------- ---------------- ----------------
NET INVESTMENT INCOME (LOSS)....................................... (7,540) 32,572 151,995
---------------- ---------------- ----------------
REALIZED AND UNREALIZED GAINS (LOSS) ON INVESTMENTS:
Net realized gains (loss) on investment and foreign currency
transactions 89,521 (5,844) (59,487)
Net change in unrealized appreciation (depreciation) of
investment and foreign currency transactions................. 154,688 (49,177) (247,391)
---------------- ---------------- ----------------
NET REALIZED AND UNREALIZED GAINS (LOSS) ON INVESTMENTS............ 244,209 (55,021) (306,878)
---------------- ---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........ $ 236,669 $ (22,449) $ (154,883)
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
28
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
VIF - HIGH YIELD FUND
--------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE NINE
JUNE 30, 1999 MONTHS ENDED
(UNAUDITED) 12/31/98
--------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income......................................................... $ 1,893,402 $ 2,539,442
Net realized gains (loss) on investment and foreign currency transactions .... 41,225 223,896
Net change in unrealized appreciation (depreciation) of investments and
foreign currency transactions ............................................. (1,581,221) (2,312,290)
----------------------- -----------------------
Net increase (decrease) in net assets resulting from operations ............. 353,406 451,048
----------------------- -----------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........................................................ (1,893,402) (2,539,442)
Excess of net investment income .............................................. - (42,172)
Net realized gains ........................................................... - (199,784)
----------------------- -----------------------
Total dividends and distributions to shareholders ......................... (1,893,402) (2,781,398)
----------------------- -----------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued .................................................. 4,840,470 18,295,737
Dividends reinvested ......................................................... 1,880,742 2,989,391
Cost of shares redeemed ...................................................... (183,669) (6,275,630)
----------------------- -----------------------
Net increase in net assets from capital share transactions ................ 6,537,543 15,009,498
----------------------- -----------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ......................................... 4,997,547 12,679,148
NET ASSETS:
Beginning of period .......................................................... 44,354,114 31,674,966
----------------------- -----------------------
End of Period ................................................................ $ 49,351,661 $ 44,354,114
----------------------- -----------------------
----------------------- -----------------------
</TABLE>
<TABLE>
<CAPTION>
VIF - EMERGING MARKETS FUND
--------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE NINE
JUNE 30, 1999 MONTHS ENDED
(UNAUDITED) 12/31/98
--------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income........................................................ $ 348,382 $ 456,371
Net realized gains (loss) on investment and foreign currency transactions ... 18,498 (1,370,776)
Net change in unrealized appreciation (depreciation) of investments and
foreign currency transactions ............................................ 114,354 (750,669)
----------------------- -----------------------
Net increase (decrease) in net assets resulting from operations ............ 481,234 (1,665,074)
----------------------- -----------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ....................................................... (348,382) (456,371)
Excess of net investment income ............................................. - (41,459)
Net realized gains .......................................................... - (52,829)
----------------------- -----------------------
Total dividends and distributions to shareholders ........................ (348,382) (550,659)
----------------------- -----------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued ................................................. 217,981 3,688,615
Dividends reinvested ........................................................ 346,134 673,517
Cost of shares redeemed ..................................................... (29,018) (2,351,293)
----------------------- -----------------------
Net increase in net assets from capital share transactions ............... 535,097 2,010,839
----------------------- -----------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ........................................ 667,949 (204,894)
NET ASSETS:
Beginning of period ......................................................... 5,574,638 5,779,532
----------------------- -----------------------
End of Period ............................................................... $ 6,242,587 $ 5,574,638
----------------------- -----------------------
----------------------- -----------------------
</TABLE>
<TABLE>
<CAPTION>
DJG VALUE EQUITY FUND
--------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE NINE
JUNE 30, 1999 MONTHS ENDED
(UNAUDITED) 12/31/98
--------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss).................................................. $ 788 $ 4,233
Net realized gains on investment and foreign currency transactions .......... 204,875 110,871
Net change in unrealized appreciation (depreciation) of investments and
foreign currency transactions ............................................. 242,425 (343,779)
----------------------- -----------------------
Net increase (decrease) in net assets resulting from operations ............ 448,088 (228,675)
----------------------- -----------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Excess of net investment income .............................................. - (3,898)
Net realized gains ........................................................... - (120,079)
----------------------- -----------------------
Total dividends and distributions to shareholders ......................... - (123,977)
----------------------- -----------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued .................................................. 49,063 390,383
Dividends reinvested ......................................................... - 123,977
Cost of shares redeemed ...................................................... (10,781) (15,213)
----------------------- -----------------------
Net increase in net assets from capital share transactions ................ 38,282 499,147
----------------------- -----------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ......................................... 486,370 146,495
NET ASSETS:
Beginning of period .......................................................... 2,164,378 2,017,883
----------------------- -----------------------
End of Period ................................................................ $ 2,650,748 $ 2,164,378
----------------------- -----------------------
----------------------- -----------------------
</TABLE>
<TABLE>
<CAPTION>
VIF - U.S. SMALL CAP FUND
--------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE NINE
JUNE 30, 1999 MONTHS ENDED
(UNAUDITED) 12/31/98
--------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss).................................................. $ (7,540) $ (8,448)
Net realized gains on investment and foreign currency transactions .......... 89,521 19,891
Net change in unrealized appreciation (depreciation) of investments and
foreign currency transactions ............................................. 154,688 (178,262)
----------------------- -----------------------
Net increase (decrease) in net assets resulting from operations ............ 236,669 (166,819)
----------------------- -----------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Excess of net investment income .............................................. - -
Net realized gains ........................................................... - (119,956)
----------------------- -----------------------
Total dividends and distributions to shareholders ......................... - (119,956)
----------------------- -----------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued .................................................. 48,966 -
Dividends reinvested ......................................................... - 119,956
Cost of shares redeemed ...................................................... (5,810) (9,616)
----------------------- -----------------------
Net increase in net assets from capital share transactions ................ 43,156 110,340
----------------------- -----------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ......................................... 279,825 (176,435)
NET ASSETS:
Beginning of period .......................................................... 1,217,845 1,394,280
----------------------- -----------------------
End of Period ................................................................ $ 1,497,670 $ 1,217,845
----------------------- -----------------------
----------------------- -----------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
29
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
VIF - TOTAL RETURN FUND
--------------------------------------------------
FOR THE SIX FOR THE PERIOD
MONTHS ENDED JUNE 30, 1998*
JUNE 30, 1999 THROUGH
(UNAUDITED) DECEMBER 31,1998
--------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income......................................................... $ 32,572 $ 24,546
Net realized gains (loss) on investment and foreign currency transactions .... (5,844) 2,035
Net change in unrealized depreciation of investments and
foreign currency transactions ............................................. (49,177) (9,236)
----------------------- -----------------------
Net increase (decrease) in net assets resulting from operations ............ (22,449) 17,345
----------------------- -----------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued .................................................. 482,973 1,034,053
Cost of shares redeemed ...................................................... (244,935) (50,510)
----------------------- -----------------------
Net increase (decrease) in net assets from capital
share transactions ..................................................... 238,038 983,543
----------------------- -----------------------
TOTAL INCREASE IN NET ASSETS..................................................... 215,589 1,000,888
NET ASSETS:
Beginning of period .......................................................... 1,000,888 -
----------------------- -----------------------
End of Period ................................................................ $ 1,216,477 $ 1,000,888
----------------------- -----------------------
----------------------- -----------------------
</TABLE>
*Commencement of operations
<TABLE>
<CAPTION>
VIF - U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------
FOR THE SIX FOR THE PERIOD
MONTHS ENDED AUGUST 24, 1998*
JUNE 30, 1999 THROUGH
(UNAUDITED) DECEMBER 31, 1998
--------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income......................................................... $ 151,995 $ 250
Net realized gains (loss) on investment and foreign currency transactions .... (59,487) 1,556
Net change in unrealized depreciation of investments and
foreign currency transactions ............................................. (247,391) -
----------------------- -----------------------
Net increase (decrease) in net assets resulting from operations ............ (154,883) 1,806
----------------------- -----------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued .................................................. 16,624,977 149,895
Cost of shares redeemed ...................................................... (36,026) (151,701)
----------------------- -----------------------
Net increase (decrease) in net assets from capital
share transactions ..................................................... 16,588,951 (1,806)
----------------------- -----------------------
TOTAL INCREASE IN NET ASSETS..................................................... 16,434,068 -
NET ASSETS:
Beginning of period .......................................................... - -
----------------------- -----------------------
End of Period ................................................................ $ 16,434,068 $ -
----------------------- -----------------------
----------------------- -----------------------
</TABLE>
*Commencement of operations
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
30
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC
FINANCIAL HIGHLIGHTS
VIF- HIGH YIELD FUND
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE NINE
JUNE 30, 1999 MONTHS ENDED
(UNAUDITED) DECEMBER 31, 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.40 $ 11.00
---------------- ----------------
Net investment income 0.42 0.65
Net realized and unrealized gains (loss) (0.32) (0.53)
---------------- ----------------
Total income from investment operations 0.10 0.12
---------------- ----------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.42) (0.65)
Excess of net investment income - (0.02)
Net realized gains - (0.05)
---------------- ----------------
Total dividends and distributions (0.42) (0.72)
---------------- ----------------
Net change in net asset value per share (0.32) (0.60)
---------------- ----------------
NET ASSET VALUE, END OF PERIOD $ 10.08 $ 10.40
---------------- ----------------
---------------- ----------------
TOTAL RETURN (a) 0.94% (b) 1.15% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 49,352 $ 44,354
Ratios to average net assets:
Expenses** 1.15% (c) 1.15% (c)
Net investment income 8.19% (c) 8.25% (c)
PORTFOLIO TURNOVER RATE 8% 14%
</TABLE>
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
YEAR ENDED APRIL 1, 1996* THROUGH
MARCH 31, 1998 MARCH 31, 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.37 $ 10.00 (d)
---------------- ----------------
Net investment income 0.86 0.78
Net realized and unrealized gains (loss) 0.63 0.37
---------------- ----------------
Total income from investment operations 1.49 1.15
---------------- ----------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.86) (0.78)
Excess of net investment income - -
Net realized gains - -
---------------- ----------------
Total dividends and distributions (0.86) (0.78)
---------------- ----------------
Net change in net asset value per share 0.63 0.37
---------------- ----------------
NET ASSET VALUE, END OF PERIOD $ 11.00 $ 10.37
---------------- ----------------
---------------- ----------------
TOTAL RETURN (a) 14.84% 11.90% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 31,675 $ 25,114
Ratios to average net assets:
Expenses** 1.15% 1.15% (c)
Net investment income 7.98% 7.45% (c)
PORTFOLIO TURNOVER RATE 32% 4%
</TABLE>
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements
had not occurred, the ratio would have been higher.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) Initial offering price.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
31
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (continued)
VIF - EMERGING MARKETS FUND
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE NINE
JUNE 30, 1999 MONTHS ENDED
(UNAUDITED) DECEMBER 31, 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.60 $ 10.55
---------------- ----------------
Net investment income 0.46 0.66
Net realized and unrealized gains (loss) 0.20 (2.79)
---------------- ----------------
Total income (loss) from investment operations 0.66 (2.13)
---------------- ----------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.46) (0.66)
Excess of net investment income - (0.07)
Net realized gains - (0.09)
---------------- ----------------
Total dividends and distributions (0.46) (0.82)
---------------- ----------------
Net change in net asset value per share 0.20 (2.95)
---------------- ----------------
NET ASSET VALUE, END OF PERIOD $ 7.80 $ 7.60
---------------- ----------------
---------------- ----------------
TOTAL RETURN (a) 8.90% (b) (20.36%)(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) 6,243 $ 5,575
Ratios to average net assets:
Expenses** 1.50% (c) 1.50% (c)
Net investment income 12.33% (c) 10.38% (c)
PORTFOLIO TURNOVER RATE 70% 100%
</TABLE>
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
YEAR ENDED AUGUST 28, 1996* THROUGH
MARCH 31, 1998 MARCH 31, 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.30 $ 10.00 (d)
---------------- ----------------
Net investment income 0.86 0.48
Net realized and unrealized gains (loss) 0.27 0.34
---------------- ----------------
Total income (loss) from investment operations 1.13 0.82
---------------- ----------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.86) (0.48)
Excess of net investment income (0.02) -
Net realized gains - (0.04)
---------------- ----------------
Total dividends and distributions (0.88) (0.52)
---------------- ----------------
Net change in net asset value per share 0.25 0.30
---------------- ----------------
NET ASSET VALUE, END OF PERIOD $ 10.55 $ 10.30
---------------- ----------------
---------------- ----------------
TOTAL RETURN (a) 11.26% 8.29% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 5,780 $ 4,346
Ratios to average net assets:
Expenses** 1.50% 1.50% (c)
Net investment income 8.27% 8.04% (c)
PORTFOLIO TURNOVER RATE 53% 96%
</TABLE>
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such voluntary fee reductions and/or reimbursements had
not occurred, the ratio would have been higher.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) Initial offering price.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
32
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (continued)
DJG VALUE EQUITY FUND
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE NINE FOR THE PERIOD
JUNE 30, 1999 MONTHS ENDED APRIL 11, 1997* THROUGH
(UNAUDITED) DECEMBER 31, 1998 MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.91 $ 14.94 $ 10.00 (d)
----------------- ----------------- -----------------
Net investment income - 0.05 0.02
Net realized and unrealized gains (loss) 2.47 (2.16) 4.92
----------------- ----------------- -----------------
Total income (loss) from investment operations 2.47 (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 2.47 (3.03) 4.94
----------------- ----------------- -----------------
NET ASSET VALUE, END OF PERIOD $ 14.38 $ 11.91 $ 14.94
----------------- ----------------- -----------------
----------------- ----------------- -----------------
TOTAL RETURN (a) 20.74% (b) (14.75%)(b) 49.40% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 2,651 $ 2,164 $ 2,018
Ratios to average net assets:
Expenses** 1.25% (c) 1.25% (c) 1.25% (c)
Net investment income 0.07% (c) 0.29% (c) 0.16% (c)
PORTFOLIO TURNOVER RATE 28% 21% 33%
</TABLE>
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had
not occurred, the ratio would have been higher.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) Initial offering price.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
33
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF - U.S. SMALL CAP FUND
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE NINE FOR THE PERIOD
JUNE 30, 1999 MONTHS ENDED APRIL 11, 1997* THROUGH
(UNAUDITED) DECEMBER 31, 1998 MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.34 $ 14.14 $ 10.00 (d)
----------------- ----------------- -----------------
Net investment loss (0.07) (0.08) (0.08)
Net realized and unrealized gains (loss) 2.25 (1.50) 4.22
----------------- ----------------- -----------------
Total income (loss) from investment operations 2.18 (1.58) 4.14
----------------- ----------------- -----------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net realized gains - (1.22) -
----------------- ----------------- -----------------
Total dividends and distributions - (1.22) -
----------------- ----------------- -----------------
Net change in net asset value per share 2.18 (2.80) 4.14
----------------- ----------------- -----------------
NET ASSET VALUE, END OF PERIOD $ 13.52 $ 11.34 $ 14.14
----------------- ----------------- -----------------
----------------- ----------------- -----------------
TOTAL RETURN (a) 19.22% (b) (11.95%)(b) 41.40% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 1,498 $ 1,218 $ 1,394
Ratios to average net assets:
Expenses** 1.50% (c) 1.50% (c) 1.50% (c)
Net investment loss (0.80%)(c) (0.92%)(c) (0.74%)(c)
PORTFOLIO TURNOVER RATE 23% 39% 51%
</TABLE>
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such voluntary fee reductions and/or reimbursements had
not occurred, the ratio would have been higher.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) Initial offering price.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
34
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF - TOTAL RETURN FUND
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE PERIOD
JUNE 30,1999 JUNE 30, 1998* THROUGH
(UNAUDITED) DECEMBER 31, 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.17 $ 10.00 (d)
------------------ ------------------
Net investment income 0.21 0.25
Net realized and unrealized loss (0.40) (0.08)
------------------ ------------------
Total income (loss) from investment operations (0.19) 0.17
------------------ ------------------
Net change in net asset value per share (0.19) 0.17
------------------ ------------------
NET ASSET VALUE, END OF PERIOD $ 9.98 $ 10.17
------------------ ------------------
------------------ ------------------
TOTAL RETURN (a) (1.87%)(b) 1.70% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 1,216 $ 1,001
Ratios to average net assets:
Expenses** 0.80% (c) 0.80% (c)
Net investment income 6.07% (c) 5.35% (c)
PORTFOLIO TURNOVER RATE 34% 58%
</TABLE>
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such voluntary fee reductions and/or reimbursements had
not occurred, the ratio would have been higher.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) Initial offering price.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
35
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF-U.S. GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 1, 1999 THROUGH FOR THE PERIOD
JUNE 30, 1999* AUGUST 24, 1998 THROUGH
(UNAUDITED) DECEMBER 31, 1998*
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $ 10.00 (d)
------------------ ------------------
Net investment income 0.09 -
Net realized and unrealized gain (loss) (0.20) 0.23
------------------ ------------------
Total income (loss) from investment operations (0.11) 0.23
------------------ ------------------
LESS:
Redemptions - (10.23)
------------------ ------------------
Net change in net asset value per share (0.11) (10.00)
------------------ ------------------
NET ASSET VALUE, END OF PERIOD $ 9.89 $ -
------------------ ------------------
------------------ ------------------
TOTAL RETURN (a) (1.10%)(b) 2.30% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 16,434 $ -
Ratios to average net assets:
Expenses** 0.60% (c) 0.60% (c)
Net investment income 4.89% (c) 4.04% (c)
PORTFOLIO TURNOVER RATE 15% 107%
</TABLE>
* The OFFITBANK VIF - U.S. Government Fund commenced operations on August
24, 1998. The last remaining shares were redeemed on September 25, 1998.
The fund re-issued shares on April 1, 1999.
** During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred,
the ratios would have been higher.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions
(b) Not annualized.
(c) Annualized.
(d) Initial offering price
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
36
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
NOTE 1 -- ORGANIZATION
The OFFITBANK Variable Insurance Fund, Inc. (the "Company") was incorporated in
Maryland on July 1, 1994. The Company is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"). The Company consists of ten separately
managed funds, of which six, OFFITBANK VIF-High Yield Fund (VIF-High Yield
Fund), OFFITBANK VIF-Emerging Markets Fund (VIF-Emerging Markets Fund), DJG
Value Equity Fund, OFFITBANK VIF-U.S. Small Cap Fund (VIF-U.S. Small Cap Fund),
OFFITBANK VIF-Total Return Fund (VIF-Total Return Fund) and OFFITBANK VIF-U.S.
Government Securities Fund (U.S. Government Securities Fund) (individually, a
"Fund", and collectively, the "Funds") have commenced operations. The Funds have
the following inception dates:
VIF-High Yield Fund April 1, 1996
VIF-Emerging Markets Fund August 28, 1996
DJG Value Equity Fund April 11, 1997
VIF-U.S. Small Cap Fund April 11, 1997
VIF-Total Return Fund June 30, 1998
VIF-U.S. Government Securities Fund August 24, 1998
The VIF-High Yield Fund, VIF-Emerging Markets Fund, VIF-Total Return Fund and
VIF-U.S. Government Securities Fund operate as non-diversified, open-end
management investment companies. The DJG Value Equity Fund and VIF-U.S. Small
Cap Fund operate as diversified, open-end management investment companies.
The VIF-High Yield Fund seeks to provide investors with a high level of current
income by investing primarily in high yield, high-risk corporate debt securities
and sovereign debt obligations. The VIF-Emerging Markets Fund seeks to provide
investors with a competitive total investment return by focusing on current
yield and opportunities for capital appreciation primarily by investing in
corporate and sovereign debt securities of emerging market countries. The DJG
Value Equity Fund seeks to achieve its objectives of long-term appreciation and
preservation of capital by researching and investing in equity securities priced
at a discount to their intrinsic values. The VIF-U.S. Small Cap Fund invests
primarily in a diversified portfolio of securities of smaller companies located
in the United States to achieve its investment objective of capital
appreciation. The VIF-Total Return Fund invests primarily in a portfolio of
fixed income securities of varying maturities. The VIF-U.S. Government
Securities Fund objective is to seek current income consistent with preservation
of capital.
OFFITBANK serves as the VIF-High Yield, VIF-Emerging Markets, VIF-U.S. Small
Cap, VIF-Total Return and VIF-U.S. Government Funds' investment adviser. David
J. Greene and Company serve as the DJG Value Equity Fund's investment adviser.
Rockefeller & Company, Inc. serves as the sub-adviser for the VIF-U.S. Small Cap
Fund. PFPC Inc. ("PFPC"), an indirect wholly owned subsidiary of PNC Bank Corp.,
provides administrative, fund accounting, transfer and dividend disbursing agent
services for the Funds. OFFIT Funds Distributor, Inc. (the "Distributor"),
serves as the distributor of the Funds' shares.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
PORTFOLIO VALUATIONS:
Equity securities held by a Fund are valued at the last reported sales price on
the securities exchange or in the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. Debt securities held by a Fund generally are valued based on quoted bid
prices. Short-term debt investments having maturities of 60 days or less are
valued at amortized cost, which approximates market value, and, if applicable,
adjusted for foreign exchange translation. Securities for which market
37
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
- --------------------------------------------------------------------------------
quotations are not readily available are valued at fair value determined in good
faith by or under the direction of the Company's Board of Directors. Securities
may be valued by independent pricing services, approved by the Company's Board
of Directors, which use prices provided by market-makers or estimates of market
value obtained from yield data relating to instruments or securities with
similar characteristics.
SECURITIES TRANSACTIONS AND RELATED INCOME:
The Funds record security transactions on a trade date basis. Interest income,
including accretion of discount and amortization of premium, is accrued daily.
Dividend income is recognized on the ex-dividend date. Realized gains and losses
from security transactions are recorded on the identified cost basis.
EXPENSES:
The Company accounts separately for the assets, liabilities and operations of
each Fund. Direct expenses of a Fund are charged to that Fund, while general
Company expenses are allocated among the Company's respective portfolios based
on relative net assets.
ORGANIZATIONAL EXPENSES:
Costs incurred in connection with the organization and initial registration of
the Funds have been deferred and are being amortized on a straight-line basis
over a sixty-month period beginning with each of the Fund's commencement of
operations.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from the VIF-High Yield Fund's net investment income, if any, are
declared daily and paid monthly. Dividends from the VIF-Emerging Markets Fund's
net investment income, if any, are declared daily and paid quarterly. Dividends
from the DJG Value Equity, VIF-U.S. Small Cap, VIF-Total Return and VIF-U.S.
Government Securities Funds' net investment income, if any, are declared and
paid annually. Net realized gains on portfolio securities, if any, are
distributed at least annually by each Fund. However, to the extent net realized
gains can be offset by capital loss carryovers, such gains will not be
distributed. Distributions are recorded by the Funds on the ex-dividend date.
The amount of distributions from net investment income and net realized gains
are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the composition of net assets based on their federal tax-basis treatment;
temporary differences do not require reclassification. Distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as distributions in
excess of net investment income or distributions in excess of net realized
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of capital.
FEDERAL INCOME TAXES:
It is the Funds' policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute timely all
of their net investment company taxable income and net capital gains to
shareholders. Therefore, no federal income tax provision is required.
Capital and currency losses incurred within the Funds' fiscal year but after
October 31, are deemed to arise on the first business day of the following
fiscal year for tax purposes. The following Funds have incurred and will elect
to defer capital and currency losses as follows:
38
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL LOSS CURRENCY LOSS
FUND DEFERRED DEFERRED
---------- -------------------- ------------------
<S> <C> <C>
VIF-Emerging Markets Fund $42,703 $17
VIF-U.S. Small Cap Fund 9,679 -
</TABLE>
For federal income tax purposes, the following Fund had capital loss
carryforwards:
<TABLE>
<CAPTION>
FUND CLCF DATE OF EXPIRATION
---------- -------------------- ------------------
<S> <C> <C>
VIF -Emerging Markets $1,318,048 December 31, 2006
</TABLE>
Accordingly, no capital gain distribution is expected to be paid to shareholders
until net gains have been realized in excess of the aggregate of each amount.
FOREIGN CURRENCY TRANSLATION:
The accounting records of the Funds are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars at the current rate of
exchange to determine the value of investments, assets and liabilities.
Purchases and sales of securities, and income and expenses are translated at the
prevailing rate of exchange on the respective dates of such transactions. The
Funds do not isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held. Such fluctuations are included
with the net realized and unrealized gains or losses from investments. However,
the Funds do isolate the effect of fluctuations in foreign exchange rates when
determining the gain or loss upon the sale or maturity of foreign currency
denominated debt obligations pursuant to U.S. federal income tax regulations.
Such amount is categorized as foreign exchange gain or loss for both financial
reporting and income tax reporting purposes.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities and forward currency contracts, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest and foreign withholding amounts actually received
or paid. Net unrealized foreign exchange gains and losses arise from changes in
the value of assets and liabilities other than investments in securities,
resulting from changes in exchange rates.
REPURCHASE AGREEMENTS:
The Funds may purchase instruments from financial institutions, such as banks
and broker-dealers, subject to the seller's agreement to repurchase them at an
agreed upon time and price ("repurchase agreements"). The seller under a
repurchase agreement is required to maintain the value of the securities subject
to the agreement at not less than the repurchase price. Default by the seller
would, however, expose the relevant Funds to possible loss because of adverse
market action or delay in connection with the disposition of the underlying
obligations.
DERIVATIVE INSTRUMENTS:
The Funds may invest in various financial instruments including positions in
forward currency contracts, enter into currency swaps and purchase foreign
currency options. The Funds enter into such contracts for the purposes of
hedging exposure to changes in foreign currency exchange rates on their
portfolio holdings and transactions.
A forward foreign exchange contract is a commitment to sell or buy a foreign
currency at a future date at a negotiated exchange rate. A Fund bears the market
risk, which arises from possible changes in foreign exchange values. Risks may
arise from the potential inability of counterparts to meet the terms of their
contracts and from unanticipated movements in the value of the foreign currency
relative to the U.S. dollar. Forward foreign exchange contracts may involve
market or credit risk in excess of the related amounts reflected on the Fund's
statement of assets and liabilities. The gain or loss from the difference
between the cost of original contracts and the amount realized upon the closing
of such contracts is included
39
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
- --------------------------------------------------------------------------------
in net realized gain on foreign currency transactions. Fluctuations in the value
of forward contracts held at June 30, 1999 are recorded for financial reporting
purposes as unrealized gains and losses by the Funds.
At June 30, 1999, there were no outstanding forward currency contracts for the
VIF-Emerging Markets, DJG Value Equity, VIF-U.S. Small Cap Fund, VIF-Total
Return and VIF-U.S. Government Securities Funds. The table below indicates the
VIF-High Yield Fund's outstanding forward currency contract position at June 30,
1999:
<TABLE>
<CAPTION>
VALUE ON
CONTRACT MATURITY ORIGINATION VALUE AT UNREALIZED
CURRENCY AMOUNTS DATE DATE JUNE 30, 1999 APPRECIATION
--------------- ---------------- ------------- ----------------- ---------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Sell DEM $(508,000) 07/26/99 $(277,005) $(268,550) $8,455
Sell EUR (503,000) 07/26/99 (521,963) (519,902) 2,061
Sell FRF (8,237,500) 07/26/99 (1,321,954) (1,298,442) 23,512
--------------------
Net unrealized appreciation on forward positions.......................................................... $34,028
--------------------
--------------------
Currency Abbreviations:
DEM - German Deutsche Mark ...............................................................................
EUR - Euro ...............................................................................................
FRF - French Franc .......................................................................................
</TABLE>
The VIF-Emerging Markets Fund may also invest in indexed securities whose value
is linked directly to changes in foreign currencies, interest rates and other
financial indices. Indexed securities may be more volatile than the underlying
instrument but the risk of loss is limited to the amount of the original
investment.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES:
The Company has entered into investment advisory agreements (the "Investment
Advisory Agreements") with OFFITBANK (the "Adviser"). Pursuant to the terms of
the Investment Advisory Agreements, the Adviser is entitled to a fee that is
calculated daily and paid monthly based on the average daily net assets of each
Fund, at the annual rate of: 0.85% of the first $200 million of average daily
net assets for the VIF-High Yield Fund and 0.75% of average daily net assets in
excess of $200 million; 0.90% of the first $200 million of average daily net
assets for the VIF-Emerging Markets Fund and 0.80% of average daily net assets
in excess of $200 million; 1.00% of average daily net assets for the VIF-U.S.
Small Cap Fund; 0.80% of average daily net assets for the VIF-Total Return Fund;
0.35% of average daily net assets for the VIF-U.S. Government Securities Fund.
Rockefeller & Company, Inc. serves as sub-adviser for the VIF-U.S. Small Cap
Fund and is entitled to a fee from the Adviser that is calculated daily and
payable monthly at the annual rate of 1.00% of the Fund's average daily net
assets. Pursuant to the terms of its Investment Advisory Agreement, David J.
Greene and Company is entitled to a fee that is calculated daily and payable
monthly at the annual rate of 0.80% of the average daily net assets of the DJG
Value Equity Fund.
ADVISORY FEE
------------
<TABLE>
<CAPTION>
VIF-HIGH YIELD VIF-EMERGING MARKETS DJG VALUE EQUITY VIF-U.S. SMALL CAP
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
GROSS FEE $196,246 $25,397 $ 9,233 $6,222
WAIVER (54,102) (18,525) (9,233) (6,222)
----------------------- ---------------------------- ---------------------- -------------------------
NET FEE $142,144 $ 6,872 $ 0 $ 0
----------------------- ---------------------------- ---------------------- -------------------------
----------------------- ---------------------------- ---------------------- -------------------------
</TABLE>
<TABLE>
<CAPTION>
VIF-TOTAL RETURN VIF-U.S. GOVERNMENT
FUND SECURITIES FUND
<S> <C> <C>
GROSS FEE $4,941 $10,872
WAIVER (4,941) (7,238)
----------------------- ----------------------------
NET FEE $ 0 $ 3,634
----------------------- ----------------------------
----------------------- ----------------------------
</TABLE>
40
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
- --------------------------------------------------------------------------------
PFPC provides the Company with administrative services pursuant to an
administration agreement (the "Administration Agreement"). The services under
the Administration Agreement are subject to the supervision of the Company's
Board of Directors and officers and include the day-to-day administration of
matters related to the corporate existence of the Company, maintenance of its
records, preparation of reports, supervision of the Company's arrangements with
its custodian and assistance in the preparation of the Company's registration
statements under federal and state laws. Pursuant to the Administration
Agreement, the Company pays PFPC a monthly fee for its services at an annual
rate of 0.125% of each Portfolio's first $300 million in average daily net
assets; 0.11% of each Portfolio's next $300 million in average daily net assets;
0.08% of each Portfolio's next $300 million in average daily net assets; 0.05%
of each Portfolio's next $300 million in average daily net assets; and 0.0275%
of each Portfolio's average daily net assets in excess of $1.2 billion.
ADMINISTRATION FEE
------------------
<TABLE>
<CAPTION>
VIF-HIGH YIELD VIF-EMERGING MARKETS DJG VALUE EQUITY VIF-U.S. SMALL CAP
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
GROSS FEE $28,901 $3,533 $1,445 $779
WAIVER (6,968) (3,533) (1,445) (779)
----------------------- ---------------------------- ---------------------- -------------------------
NET FEE $21,933 $ 0 $ 0 $ 0
----------------------- ---------------------------- ---------------------- -------------------------
----------------------- ---------------------------- ---------------------- -------------------------
<CAPTION>
VIF-TOTAL RETURN VIF-U.S. GOVERNMENT
FUND SECURITIES FUND
<S> <C> <C>
GROSS FEE $772 $3,883
WAIVER (772) (3,883)
----------------------- ----------------------------
NET FEE $ 0 $ 0
----------------------- ----------------------------
----------------------- ----------------------------
</TABLE>
PFPC provides the Funds with fund accounting and related services pursuant to a
fund accounting agreement with the Company. For these services PFPC is entitled
a fee of $1,250 per month per Fund plus out of pocket expenses. From time to
time, PFPC may waive all or a portion of its fees.
FUND ACCOUNTING FEE
-------------------
<TABLE>
<CAPTION>
VIF-HIGH YIELD VIF-EMERGING MARKETS DJG VALUE EQUITY VIF-U.S. SMALL CAP
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
GROSS FEE $7,500 $7,500 $7,500 $7,500
WAIVER 0 (7,500) (7,500) (7,500)
----------------------- ---------------------------- ---------------------- -------------------------
NET FEE $7,500 $ 0 $ 0 $ 0
----------------------- ---------------------------- ---------------------- -------------------------
----------------------- ---------------------------- ---------------------- -------------------------
<CAPTION>
VIF-TOTAL RETURN VIF-U.S. GOVERNMENT
FUND SECURITIES FUND
<S> <C> <C>
GROSS FEE $7,500 $3,750
WAIVER (7,500) (3,750)
----------------------- ----------------------------
NET FEE $ 0 $ 0
----------------------- ----------------------------
----------------------- ----------------------------
</TABLE>
PFPC also serves as transfer agent for the Funds and receives reimbursement of
certain expenses plus a fee for related services pursuant to a transfer agency
agreement with the Company. From time to time, PFPC may waive all or a portion
of its fees.
TRANSFER AGENT FEE
------------------
<TABLE>
<CAPTION>
VIF-HIGH YIELD VIF-EMERGING MARKETS DJG VALUE EQUITY VIF-U.S. SMALL CAP
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
GROSS FEE $9,696 $9,591 $9,469 $9,486
WAIVER (4,500) (4,500) (4,500) (4,500)
----------------------- ---------------------------- ---------------------- -------------------------
NET FEE $5,196 $5,091 $4,969 $4,986
----------------------- ---------------------------- ---------------------- -------------------------
----------------------- ---------------------------- ---------------------- -------------------------
</TABLE>
41
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
- --------------------------------------------------------------------------------
TRANSFER AGENT FEE (CONTINUED)
<TABLE>
<CAPTION>
VIF-TOTAL RETURN VIF-U.S. GOVERNMENT
FUND SECURITIES FUND
<S> <C> <C>
GROSS FEE $9,137 $4,500
WAIVER (4,500) (3,315)
----------------------- ----------------------------
NET FEE $4,637 $1,185
----------------------- ----------------------------
----------------------- ----------------------------
</TABLE>
The Company has entered into a distribution agreement (the "Distribution
Agreement') with the Distributor. Under the Distribution Agreement, the
Distributor, as agent of the Company, agrees to use its best efforts as sole
distributor of the Company's shares. The Distribution Agreement provides that
the Company will bear the costs of the registration of its shares with the
Commission and various states and the printing of its prospectuses, statements
of additional information and reports to shareholders. There is no fee payable
under the Distribution Agreement.
OFFITBANK and David J. Greene and Company have voluntarily agreed to limit the
expense ratios for the Funds at 1.50%, 1.25%, 1.50% and 0.80% for the
VIF-Emerging Markets, DJG Value Equity, VIF-U.S. Small Cap Fund and VIF-Total
Return, respectively. In order to maintain these ratios, for the six months
ended June 30, 1999, the Adviser and David J. Greene and Company have waived all
or a portion of their advisory fee and have also agreed to reimburse the
VIF-Emerging Markets, DJG Value Equity Fund, VIF-U.S. Small Cap Fund and
VIF-Total Return Fund for expenses in the amounts of $778, $4,675, $12,155 and
$16,184, respectively.
NOTE 4 -- SECURITIES TRANSACTIONS
For the six months ended June 30, 1999, the cost of purchases and the proceeds
from sales of the Funds' portfolio securities (excluding short-term investments)
were as follows:
<TABLE>
<CAPTION>
Common Stocks
and Corporate Bonds U.S. Government Obligations
------------------- ---------------------------
Purchases Sales Purchases Sales
--------- ----- --------- -----
<S> <C> <C> <C> <C>
VIF-High Yield Fund $12,551,155 $3,567,129 $ - $ -
VIF-Emerging Markets Fund 4,549,529 3,914,787 - -
DJG Value Equity Fund 597,187 550,323 - -
VIF-U.S. Small Cap Fund 299,814 284,470 - -
VIF-Total Return Fund 114,587 - 549,117 375,266
VIF-U.S. Government Securities Fund - - 21,595,531 5,913,046
</TABLE>
NOTE 5 -- CAPITAL SHARE TRANSACTIONS
The Company's Articles of Incorporation permit the Company to issue nine billion
shares (par value $0.001). Transactions in shares of common stock for the six
months ended June 30, 1999 and the period ended December 31, 1998, respectively,
were as follows:
<TABLE>
<CAPTION>
VIF-HIGH YIELD
---------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares issued........................ 467,798 $4,840,470 1,687,147 $18,295,737
Shares reinvested ................... 182,859 1,880,742 282,185 2,989,391
Shares redeemed...................... (17,814) (183,669) (585,179) (6,275,630)
---------------- ----------------- --------------- ----------------
Net increase......................... 632,843 $6,537,543 1,384,153 $15,009,498
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
</TABLE>
42
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF-EMERGING MARKETS
---------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares issued........................ 26,464 $217,981 380,449 $3,688,615
Shares reinvested ................... 44,458 346,134 80,312 673,517
Shares redeemed...................... (3,879) (29,018) (275,382) (2,351,293)
---------------- ----------------- --------------- ----------------
Net increase......................... 67,043 $535,097 185,379 $2,010,839
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
<CAPTION>
DJG VALUE EQUITY
---------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares issued........................ 3,439 $49,063 38,461 $390,383
Shares reinvested ................... - - 9,350 123,977
Shares redeemed...................... (845) (10,781) (1,204) (15,213)
---------------- ----------------- --------------- ----------------
Net increase......................... 2,594 $38,282 46,607 $499,147
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
<CAPTION>
VIF-U.S. SMALL CAP
---------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares issued........................ 3,857 $48,966 - $ -
Shares reinvested ................... - - 9,627 119,956
Shares redeemed...................... (505) (5,810) (822) (9,616)
---------------- ----------------- --------------- ----------------
Net increase......................... 3,352 $43,156 8,805 $110,340
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
<CAPTION>
VIF-TOTAL RETURN
---------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares issued........................ 47,742 $482,973 103,416 $1,034,053
Shares redeemed...................... (24,214) (244,935) (5,034) (50,510)
---------------- ----------------- --------------- ----------------
Net increase......................... 23,528 $238.038 98,382 $983,543
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
<CAPTION>
VIF-U.S. GOVERNMENT
---------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares issued........................ 1,665,278 $16,624,977 14,826 $149,895
Shares redeemed...................... (3,642) (36,026) (14,826) (151,701)
---------------- ----------------- --------------- ----------------
Net increase (decrease).............. 1,661,636 $16,588,951 0 ($1,806)
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
</TABLE>
43
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
- --------------------------------------------------------------------------------
NOTE 6 -- OTHER MATTERS
The VIF-High Yield Fund and the VIF-Emerging Markets Fund invest in obligations
of foreign entities and securities denominated in foreign currencies. Such
investments involve risk not typically involved in domestic investments. Such
risks include fluctuations in the foreign exchange rates, inability to convert
proceeds into U.S. dollars, application of foreign tax laws, foreign investment
restrictions, less publicly available information about foreign financial
instruments, less liquidity resulting from substantially less trading volume,
more volatile prices and generally less government supervision of foreign
securities markets and issuers.
44
<PAGE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OFFICERS AND DIRECTORS INVESTMENT ADVISER - DJG VALUE EQUITY FUND
David J. Greene & Company
Morris W. Offit 599 Lexington Avenue
CHAIRMAN OF THE BOARD, PRESIDENT AND DIRECTOR New York, New York 10022
Edward J. Landau INVESTMENT ADVISER - ALL OTHER VIF FUNDS
DIRECTOR OFFITBANK
520 Madison Avenue
The Very Reverend New York, New York 10022-4213
James Parks Morton
DIRECTOR INVESTMENT SUB-ADVISER - U.S. SMALL CAP FUND
Rockefeller & Company, Inc.
Dr. Wallace Mathai-Davis 30 Rockefeller Plaza
SECRETARY AND TREASURER New York, New York 10112
Stephen Brent Wells DISTRIBUTOR
ASSISTANT TREASURER OFFIT Funds Distributor, Inc.
Four Falls Corporate Center, 6th Floor
Vincent M. Rella West Conshohocken, PA 19428-2961
ASSISTANT TREASURER
ADMINISTRATOR
David D. Marky PFPC Inc.
ASSISTANT TREASURER 103 Bellevue Parkway
Wilmington, DE 19809
David C. Lebisky
ASSISTANT SECRETARY TRANSFER AND DIVIDEND DISBURSING AGENT
PFPC Inc.
Gary M. Gardner 400 Bellevue Parkway
ASSISTANT SECRETARY Wilmington, DE 19809
CUSTODIAN - VIF-EMERGING MARKETS FUND
The Chase Manhattan Bank
3 Metro Tech Center, 6th Floor
Brooklyn, New York 11245
CUSTODIAN - ALL OTHER VIF FUNDS
The Bank of New York
90 Washington Street, 11th Floor
New York, New York 10286
LEGAL COUNSEL
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
</TABLE>
<PAGE>
This report is submitted for the information of the shareholders of the Funds.
It is not authorized for distribution to prospective investors in the Funds
unless preceded or accompanied by an effective prospectus which includes
information regarding the Funds' objectives and policies, charges, expenses and
other data. Please read the prospectus carefully before you invest or send
money.
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
400 BELLEVUE PARKWAY, SUITE 108, WILMINGTON, DE 19809
(800) 618-9510
