<PAGE>
---------------------
OFFIT VIF - HIGH YIELD FUND
OFFIT VIF - EMERGING MARKETS BOND FUND
DJG VALUE EQUITY FUND
OFFIT VIF - U.S. SMALL CAP FUND
OFFIT VIF - TOTAL RETURN FUND
OFFIT VIF - U.S. GOVERNMENT SECURITIES FUND
---------------------
SEMI - ANNUAL REPORT
JUNE 30, 2000
THE OFFIT VARIABLE INSURANCE FUND, INC.
<PAGE>
PRESIDENT'S LETTER
--------------------------------------------------------------------------------
Dear Policyholders:
We are pleased to present you with the June 30, 2000 Semi-Annual Report for The
OFFIT Variable Insurance Fund, Inc. As of that date the Funds' investment
portfolios have assets in excess of $93 million, an increase of $13 million over
year-end 1999.
The specific results of the respective Funds, along with an investment and
market commentary from each portfolio manager, are part of this Semi-Annual
Report. As always, we have tried to make each market commentary informative, and
I hope that you will find them helpful.
We greatly value your participation in our Funds. Let us know of your interests
and concerns as we continue to try to serve you better. If you have any
questions, please do not hesitate to call.
Sincerely,
/s/ Wallace Mathai-Davis
Wallace Mathai-Davis
July 25, 2000
<PAGE>
OFFIT
VIF - HIGH YIELD FUND
--------------------------------------------------------------------------------
The high yield market continued to face a challenging environment throughout the
first half of the year 2000. The Fund's net investment return for the six months
ending June 30, 2000 after all fees and expenses was 0.16%. The June 30, 2000
net asset value price of $9.12 was 4.0% lower than the $9.50 NAV at the end of
1999. The net assets of the Fund at June 30, 2000 were $48.1 million. Reflective
of the higher market yields and lower prices, the 30-day SEC yield increased to
9.76% from 9.32% at year-end.
Conditions in the high yield market remain far from ideal, yet there are signs
of life that may well lead to a more balanced high yield environment. Over the
past 24 months, the high yield market has suffered from rising interest rates,
higher defaults, and outflows from mutual funds that have pressured prices.
Currently, double-B high yield bonds are trading at spreads of 350 to 450 basis
points over comparable Treasurys for absolute yields of 10 - 11%. General market
spreads are now approximately 600 basis points. These spreads and yields are the
highest seen over the past nine years.
High yield issuers have been in an environment of tighter credit for nearly two
years. The new issue market is effectively closed to all but the largest and
strongest companies. Structural changes in the bank loan market have pressured
weaker credits. Defaults of high yield issues are running slightly higher than
the 4% rate of 1999. Although difficult credit conditions may continue for some
time, we do not expect defaults to rise much above the 5% to 6% level before
declining on a cyclical basis.
Today's yields and spreads reflect the expectation that the default rate will
stay above the historic averages. Expectations of future problems are built into
current market prices. Excluding securities that have already defaulted, over
19% of the high yield market is now quoted at spreads of 1,000 basis points or
more to Treasurys, 14% is quoted at yields greater than 20%, and 11% of the
market is priced at fifty cents or less on the dollar.
The high yield market has absorbed a tremendous amount of both fundamental and
technical pressure over the last two years. Although the present state of the
market may continue for a while, high yield has recently begun to show signs of
improvement. After a sustained period of continuous mutual fund outflows, June
posted the first positive monthly inflow since November 1999. Fund managers
appear to have built cash reserves to meet potential outflows and a recent
pick-up in CBO issuance is adding money to the market. With little visible
supply and a limited secondary market, prices have begun to stabilize and move
upward from their recent lows. Demand should continue to fill-in in an
environment of stable or declining interest rates.
The Fund is well positioned to benefit as the high yield market strengthens. We
continued to consolidate the number of issues in the portfolio. Smaller less
liquid positions were sold when the market allowed at favorable prices and new
positions were added including Crown Castle, United Pan-European Communications
and Sinclair Broadcasting.
Several noteworthy developments occurred during the first half of the year which
affected the portfolio. The paging sector, which had been long out of favor with
investors, rebounded on news of strategic investments, favorable merger activity
and renewed optimism on future wireless product growth. We took this opportunity
to sell the Paging Network position. Oil refining credits such as Clark Refining
were boosted by stronger margins amid solid gasoline demand. On the negative
credit side, the steel industry suffered from concerns of over-supply brought on
by steel imports and the auto parts sector was hurt by slower after market
sales.
<PAGE>
OFFIT
VIF - HIGH YIELD FUND
--------------------------------------------------------------------------------
Our focus remains on the better quality sectors of the high yield market and we
have made a conscious effort to maintain portfolio quality. Approximately 43% of
the holdings in the Fund are rated either Ba3 or better by Moody's or BB- or
better by Standard & Poor's. Additionally, 64% of the holdings are rated at
least B1 or B+. Many of the lower rated or unrated holdings are senior in their
capital structure, including our largest holding, Eurotunnel bank debt. The Fund
remains very well diversified with over 110 issues.
We continue to believe that better quality high yield credits will outperform
fixed income alternatives over time. The bonds of fundamentally sound credits
have turned around after every cyclical decline in the high yield market. There
is every reason to believe that they will do so again.
Stephen T. Shapiro
July 25, 2000
<PAGE>
OFFIT
VIF - HIGH YIELD FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (91.6%)
AUTOMOTIVE (3.3%)
Exide Corp. Sr Notes, 10.00%, 04/15/05 $ 400,000 $ 358,000
Federal-Mogul Corp. Notes, 7.875%, 07/01/10 500,000 332,500
Hayes Lemmerz International Inc. Sr Sub Notes, 9.125%, 07/15/07 500,000 447,500
Lear Corp. Sr Notes, 8.11%, 05/15/09 500,000 455,370
---------------------
1,593,370
---------------------
BROADCAST/MEDIA (3.9%)
Echostar Corp. Sr Notes, 9.25%, 02/01/06 500,000 485,000
Hollinger International Publishing Sr Sub Notes, 8.625%, 03/15/05 250,000 246,250
Lamar Media Corp. Sr. Sub Notes, 9.625%, 12/01/06 500,000 501,250
Sinclair Broadcast Group Inc. Sr Sub Notes, 10.00%, 09/30/05 500,000 479,375
Sun Media Corp. Sr Sub Notes, 9.50%, 05/15/07 155,000 150,350
---------------------
1,862,225
---------------------
CABLE (7.7%)
Adelphia Communications Corp. Sr Notes, 9.375%, 11/15/09 500,000 460,000
Adelphia Communications Corp. Sr Notes, 9.875%, 03/01/07 200,000 191,500
Century Communications Corp. Sr Notes, 8.875%, 01/15/07 400,000 369,000
Charter Communications Holdings LLC Sr Notes, 8.625%, 04/01/09 600,000 529,500
CSC Holdings Inc. Sr Notes, 9.25%, 11/01/05 300,000 300,000
NTL Inc. Sr Notes, 0/9.75%, 04/01/08 800,000 (2) 500,000
Olympus Communications L.P. Sr Notes, 10.625%, 11/15/06 300,000 297,000
Telewest Communications PLC Sr Discount Debs., 0/11.00%, 10/01/07 400,000 (2) 382,500
Telewest Communications PLC Sr Discount Debs., 9.625%, 10/01/06 250,000 238,125
United Pan-Europe Communications Sr Notes, 11.50%, 02/01/10 500,000 445,000
---------------------
3,712,625
---------------------
CHEMICAL (4.4%)
Borden Chemicals & Plastics Sr Notes, 9.50%, 05/01/05 500,000 450,000
Huntsman ICI Chemicals Sr Sub Notes, 10.125%, 07/01/09 500,000 492,500
ISP Holdings Inc. Sr Notes, 9.00%, 10/15/03 300,000 277,500
Lyondell Chemical Co. Sr Secured Notes, 9.625%, 05/01/07 500,000 495,000
Polymer Group Sr Notes, 8.75%, 03/01/08 300,000 252,000
Terra Industries Inc. Sr Notes, 10.50%, 06/15/05 250,000 160,000
---------------------
2,127,000
---------------------
CONSUMER GROUPS (4.2%)
Chiquita Brands International Inc. Sr Notes, 10.25%, 11/01/06 850,000 663,000
Fisher Scientific International Inc. Sr Sub Notes, 9.00%, 02/01/08 500,000 463,750
Fleming Companies Inc. Sr Notes, 10.625%, 12/15/01 500,000 495,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFIT
VIF - HIGH YIELD FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
CONSUMER GROUPS (CONTINUED)
Fruit of The Loom Sr Notes, 8.875%, 04/15/06 $ 500,000 (5) $ 32,500
Playtex Products Inc. Sr Notes, 8.875%, 07/15/04 250,000 242,500
Revlon Consumer Products Sr Sub Notes, 8.625%, 02/01/08 250,000 126,250
---------------------
2,023,000
---------------------
FINANCIAL SERVICES/INSURANCE (2.3%)
Amresco Inc. Sr Sub Notes, 9.875%, 03/15/05 500,000 245,000
Presidential Life Corp. Sr Notes, 7.875%, 02/15/09 350,000 325,185
Reliance Group Holdings Inc. Sr Sub Notes, 9.75%, 11/15/03 350,000 101,500
Willis Corroon Corp. Sr Sub Notes, 9.00%, 02/01/09 500,000 418,750
---------------------
1,090,435
---------------------
FOREST & PAPER PRODUCTS (2.7%)
Doman Industries Ltd. Sr Notes, 8.75%, 03/15/04 200,000 158,000
Repap New Brunswick First Priority Sr Secured Notes, 9.00%, 06/01/04 600,000 576,000
Stone Container Corp. Sr Secured Notes, 10.75%, 10/01/02 300,000 304,500
Stone Container Corp. Sr Sub Debs., 12.25%, 04/01/02 250,000 253,125
---------------------
1,291,625
---------------------
GENERAL INDUSTRIES/MANUFACTURING (4.6%)
Allied Waste North America Sr Notes, 7.625%, 01/01/06 500,000 435,000
Galey & Lord Inc. Sr Sub Notes, 9.125%, 03/01/08 200,000 89,000
Nortek Inc. Sr Notes, 9.25%, 03/15/07 600,000 561,000
Pillowtex Corp. Sr Sub Notes, 9.00%, 12/15/07 300,000 105,000
United Rentals Inc. Sr Sub Notes, 9.00%, 04/01/09 400,000 354,000
Westpoint Stevens Inc. Sr Notes, 7.875%, 06/15/08 300,000 238,500
Williams Scotsman Inc. Sr Notes, 9.875%, 06/01/07 500,000 450,000
---------------------
2,232,500
---------------------
HEALTH CARE (3.4%)
Columbia/HCA Healthcare Medium Term Notes, 6.91%, 06/15/05 300,000 272,862
Columbia/HCA Healthcare Notes, 8.85%, 01/01/07 300,000 295,554
Extendicare Health Services Sr Sub Notes, 9.35%, 12/15/07 250,000 105,000
Integrated Health Services Inc. Sr Sub Notes, 9.50%, 09/15/07 400,000 (5) 5,000
Medaphis Corp. Sr Notes, 9.50%, 02/15/05 200,000 150,000
Sun Healthcare Group Inc. Sr Sub Notes, 9.50%, 07/01/07 500,000 (5) 10,000
Tenet Healthcare Corp. Sr Sub Notes, 8.625%, 01/15/07 850,000 813,875
---------------------
1,652,291
---------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFIT
VIF - HIGH YIELD FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
HOTELS & GAMING (10.3%)
Felcor Suites L.P. Sr Notes, 7.375%, 10/01/04 $ 500,000 $ 455,000
Felcor Suites L.P. Sr Notes, 7.625%, 10/01/07 320,000 278,400
Harrahs Operating Co. Inc. Sr Sub Notes, 7.875%, 12/15/05 500,000 470,000
HMH Properties Sr Notes, 7.875%, 08/01/08 600,000 539,250
Hollywood Park Operating Inc. Sr Sub Notes, 9.50%, 08/01/07 300,000 298,500
International Game Technology Sr Notes, 8.375%, 05/15/09 500,000 478,750
John Q. Hammons Hotels L.P. First Mtg. Notes, 8.875%, 02/15/04 550,000 482,625
John Q. Hammons Hotels L.P. First Mtg. Notes, 9.75%, 10/01/05 200,000 175,000
Meristar Hospitality Corp. Sr Sub Notes, 8.75%, 08/15/07 200,000 182,500
Park Place Entertainment Sr Sub Notes, 7.875%, 12/15/05 500,000 471,875
Prime Hospitality Corp. First Mtg. Notes, 9.25%, 01/15/06 250,000 245,000
Prime Hospitality Corp. Sr Sub Notes, 9.75%, 04/01/07 250,000 242,500
Sun International Hotels Ltd. Sr Sub Notes, 9.00%, 03/15/07 400,000 370,000
Trump Atlantic City First Mtg. Notes, 11.25%, 05/01/06 350,000 248,500
---------------------
4,937,900
---------------------
METALS & MINING (6.4%)
AK Steel Corp. Sr Notes, 9.125%, 12/15/06 400,000 384,000
Centaur Mining Exploration Sr Secured Notes, 11.00%, 12/01/07 250,000 200,000
Freeport McMoran C&G Debs., 7.20%, 11/15/26 300,000 207,000
Glencore Nickel Pty Ltd. Sr Secured Bonds, 9.00%, 12/01/14 400,000 332,000
Great Central Mines Ltd. Sr Notes, 8.875%, 04/01/08 500,000 430,000
Kaiser Aluminum & Chemical Corp. Sr Notes, 10.875%, 10/15/06 175,000 167,562
LTV Corp. Sr Notes, 8.20%, 09/15/07 500,000 370,000
National Steel Corp. First Mtg. Bonds, 8.375%, 08/01/06 598,000 514,280
P&L Coal Holdings, 8.875%, 05/15/08 500,000 473,750
---------------------
3,078,592
---------------------
OIL/GAS (7.0%)
Clark R&M Inc. Sr Notes, 8.625%, 08/15/08 400,000 314,000
Ferrellgas Partner L.P. Sr Notes, 9.375%, 06/15/06 425,000 410,125
Giant Industries Services Inc. Sr Sub Notes, 9.00%, 09/01/07 400,000 367,000
Gulf Canada Resources Ltd. Sr Sub Debs., 9.25%, 01/15/04 400,000 403,668
KCS Energy Inc. Sr Notes, 11.00%, 01/15/03 725,000 (5) 590,875
Newpark Resources Inc. Sr Sub Notes, 8.625%, 12/15/07 500,000 432,500
Nuevo Energy Co. Sr Sub Notes, 9.50%, 06/01/08 400,000 394,000
Trico Marine Services Sr Notes, 8.50%, 08/01/05 500,000 470,000
---------------------
3,382,168
---------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFIT
VIF - HIGH YIELD FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
REAL ESTATE (7.3%)
CB Richard Ellis Sr Sub Notes, 8.875%, 06/01/06 $ 500,000 $ 427,500
Forest City Enterprises Sr Notes, 8.50%, 03/15/08 300,000 271,500
Lennar Corp. Sr Notes, 7.625%, 03/01/09 500,000 437,500
LNR Property Corp. Sr Sub Notes 9.375%, 03/15/08 500,000 435,000
MDC Holdings Inc. Sr Notes, 8.375%, 02/01/08 500,000 442,500
Rockefeller Center Properties Sr Notes, 11.00%, 12/31/00 670,000 (3) 579,550
Tanger Properties L.P. Sr Notes, 7.875%, 10/24/04 500,000 460,995
Toll Corp, 8.00%, 05/01/09 500,000 440,000
---------------------
3,494,545
---------------------
RETAIL (2.0%)
Nine West Group Inc. Sr Notes, 8.375%, 08/15/05 250,000 251,360
Travelcenters of America Inc. Sr Sub Notes, 10.25%, 04/01/07 400,000 403,000
Zale Corp. Sr Notes, 8.50%, 10/01/07 300,000 282,000
---------------------
936,360
---------------------
TELECOMMUNICATIONS-WIRELESS (5.0%)
Crown Castle International Corp. Sr Discount Notes 0/10.625%, 11/15/07 500,000 (2) 371,250
Nextel Communications Sr Discount Notes, 0/9.75%, 10/31/07 300,000 (2) 223,500
Nextel Communications Sr Discount Notes, 0/10.65%, 09/15/07 350,000 (2) 274,750
Orange PLC Sr Notes, 8.75%, 06/01/06 500,000 500,000
Price Communications Wireless Sr Notes, 9.125%, 12/15/06 500,000 505,000
Rogers Cantel Inc. Sr Sub Notes, 8.80%, 10/01/07 500,000 497,500
---------------------
2,372,000
---------------------
TELECOMMUNICATIONS-WIRELINE (7.7%)
Alaska Communications Sr Sub Notes, 9.375%, 05/15/09 500,000 462,500
Flag Limited Sr Notes, 8.25%, 01/30/08 500,000 445,000
Global Crossing Holdings Ltd. Sr Notes, 9.125%, 11/15/06 600,000 577,500
Intermedia Communucations Sr Discount Notes, 0/11.25%, 07/15/07 600,000 (2) 474,000
Level 3 Communications Sr Notes, 9.125%, 05/01/08 500,000 448,750
Metromedia Fiber Network Sr Notes, 10.00%, 12/15/09 500,000 490,000
Nextlink Communication Sr Notes, 10.75%, 06/01/09 350,000 336,000
Williams Communications Group Inc. Sr Notes, 10.875%, 10/01/09 500,000 487,500
---------------------
3,721,250
---------------------
TRANSPORTATION (6.9%)
Eletson Holdings Inc. First Pfd. Mtg. Notes, 9.25%, 11/15/03 500,000 465,000
Eurotunnel Finance Tier 1, 5.28%, 01/15/12 10,000,000 (a) (4) 1,147,167
Eurotunnel Finance Tier 2, 5.28%, 12/31/18 10,000,000 (a) (4) 1,015,645
Piedmont Aviation Inc. Equipment Trust Certificates, 9.80%, 05/08/04 261,000 255,780
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFIT
VIF - HIGH YIELD FUND
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
TRANSPORTATION (CONTINUED)
Stena AB Sr Notes, 8.75%, 06/15/07 $ 500,000 $ 437,500
---------------------
3,321,092
---------------------
UTILITIES (2.5%)
AES Corp. Sr Sub Notes, 8.50%, 11/01/07 250,000 228,125
AES Eastern Energy Pass Through Certificates, 9.00%, 01/02/17 (144A) 500,000 (1) 490,105
Caithness Coso Funding Corp. Sr Secured Notes, 9.05%, 12/15/09 500,000 487,500
---------------------
1,205,730
---------------------
TOTAL CORPORATE BONDS (COST $50,084,846) 44,034,708
---------------------
PREFERRED STOCK (1.2%)
HEALTH CARE (1.2%)
Fresenius Medical Care Capital Trust Pfd., 9.00%, 12/01/06 600,000 582,000
---------------------
TOTAL PREFERRED STOCK (COST $619,500) 582,000
---------------------
REPURCHASE AGREEMENT (5.2%)
Bank of New York Repurchase Agreement, 6.125%, 07/03/00
(dated 06/30/00; proceeds $2,473,862, collateralized by
$2,550,00 U.S. Treasury Notes, 5.875%, due 11/15/05,
valued at $2,524,500). 2,472,600 2,472,600
---------------------
TOTAL REPURCHASE AGREEMENT (COST $2,472,600) 2,472,600
---------------------
TOTAL INVESTMENTS (COST $53,176,946) -- 98.0% 47,089,308
OTHER ASSETS IN EXCESS OF LIABILITIES 2.0% 964,986
---------------------
TOTAL NET ASSETS -- 100.0% $ 48,054,294
=====================
</TABLE>
----------------------------------------------------------------------
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 199,274
Gross unrealized depreciation (6,286,912)
------------------
Net unrealized depreciation $ (6,087,638)
==================
</TABLE>
Principal denominated in the following currency:
(a) French Franc
(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) Zero Coupon Bond.
(4) Illiquid Security.
(5) Security in default.
The accompanying notes are an integral part of the financial statements
<PAGE>
OFFIT
VIF - EMERGING MARKETS BOND FUND
--------------------------------------------------------------------------------
For the quarter ending June 30, 2000, the OFFIT VIF-Emerging Markets Bond Fund
had a negative total return of 1.41%. Year-to-date through quarter end, the Fund
had a positive total return of 4.31%. As of July 25, and following Mexico's
recent presidential election, the Fund had a positive year-to-date total return
in excess of 7%. As of June 30, 2000, the Fund had a 30-day SEC yield of 12.60%
and a current yield of 11.76%. The average duration of the Fund was
approximately 4.03 years and the net asset value per share was $8.35.
The Fund remains 100% invested in US dollar-denominated bonds -- 78% in
corporate bonds, with the remainder in government bonds across the Emerging
Markets. At quarter end, core country allocations were as follows: Brazil, 38%;
Mexico, 37%; and Argentina, 22%. Cash and accrued interest represent the
remaining 3%.
During the second quarter, the U.S. financial markets continued to be the
principal driver of sentiment throughout the global capital markets. However, as
we approached the end of the quarter, the market began to increasingly accept a
soft landing for the U.S. economy as the most probable scenario. This implies
that the U.S. financial markets are less likely to face a significant correction
and has resulted in a reassertion of individual market fundamentals away from
the U.S. and a willingness on the part of investors to once again embrace more
risk.
The Fund will continue its strategy of focusing on US dollar-denominated
corporate bonds with solid credit fundamentals within Latin America -- where we
continue to identify the greatest risk-adjusted return opportunities. As a
complement to this core strategy, we will continue to explore investment
opportunities in other emerging markets outside the region where we recognize
compelling value. Our investment philosophy remains one of capitalizing on
improving credit fundamentals over a medium-term horizon.
Our continued unwillingness to speculate on countries with highly uncertain
economic prospects led us to underperform the Lipper Emerging Markets Debt Fund
Universe, which had a year-to-date return through June 30 of 6.45%. The top
performing countries which boosted these returns for the market in June and
their returns were: Ukraine +17%; Russia +12% (+50% year-to-date); Ecuador +8%;
Bulgaria +7%; and Ivory Coast +7%. The average one-month return volatility for
these countries, however, was 22% -- compared to the Fund's one-month return
volatility of 8%. Russian bonds are back in favor, having gained 50% since the
beginning of this year, and now trade only 225 basis points over comparable
Brazilian sovereign bonds.
We reiterate that we do not follow an index strategy, but rather, we look for
absolute risk-adjusted value in the countries that we believe have improving
fundamentals and in businesses that have strong management and sound business
franchises -- as we have throughout the market cycles of the last eight years.
At the close of the second quarter, the Mexican elections became the most
important driver in our markets. Our latest commentary is posted on our Website,
www.offitbank.com.
As always, should you have any questions regarding the Fund or our investment
strategy, please do not hesitate to call.
Richard M. Johnston Richard C. Madigan
July 25, 2000
<PAGE>
OFFIT
VIF-EMERGING MARKETS BOND FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (77.9%)
BUILDING MATERIALS (5.4%)
MEXICO (5.4%)
Cemex, 9.66%, 11/29/49 $ 250,000 $ 244,375
Internacional de Ceramica S.A., 9.75%, 08/01/02 225,000 186,750
--------------------
431,125
--------------------
CABLE (6.1%)
ARGENTINA (6.1%)
Cablevision S.A., 12.50%, 03/02/03 230,000 212,750
Cablevision S.A., 13.75%, 05/01/09 300,000 273,000
--------------------
485,750
--------------------
FOOD (3.8%)
ARGENTINA (3.8%)
Mastellone Hermanos S.A., 11.75%, 04/01/08 400,000 300,000
--------------------
INDUSTRIAL (5.6%)
MEXICO (5.6%)
Sanluis Corp. S.A., 8.875%, 03/18/08 250,000 227,500
Vicap S.A., 11.375%, 05/15/07 250,000 217,500
--------------------
445,000
--------------------
MEDIA (8.8%)
BRAZIL (7.7%)
Globo Communicacoes Participacoes, 10.50%, 12/20/06 270,000 231,862
Globo Communicacoes Participacoes, 10.625%, 12/05/08 100,000 84,000
RBS Participacoes S.A., 11.00%, 04/01/07 360,000 296,550
--------------------
612,412
--------------------
MEXICO (1.1%)
TV Azteca S.A. de C.V., 10.125%, 02/15/04 100,000 92,250
--------------------
704,662
--------------------
OIL/GAS (6.3%)
ARGENTINA (2.2%)
Perez Companc S.A., 9.00%, 05/01/06 200,000 175,250
--------------------
BRAZIL (4.1%)
Cia Petrolifera Marlim, 13.125%, 12/17/04 315,000 326,025
--------------------
501,275
--------------------
PACKAGING (3.2%)
MEXICO (3.2%)
Grupo Industrial Durango, 12.00%, 07/15/01 125,000 126,250
Grupo Industrial Durango, 12.625%, 08/01/03 125,000 125,312
--------------------
251,562
--------------------
PETROCHEMICALS (1.8%)
BRAZIL (1.8%)
OPP Petroquimica S.A., 11.00%, 10/29/04 150,000 145,688
--------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
OFFIT
VIF-EMERGING MARKETS BOND FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
RETAIL (10.3%)
ARGENTINA (3.2%)
Disco S.A., 9.875%, 05/15/08 $ 300,000 $ 252,750
--------------------
MEXICO (7.1%)
Grupo Elektra S.A de C.V., 12.00%, 04/01/08 625,000 565,625
--------------------
818,375
--------------------
STEEL (9.9%)
ARGENTINA (1.6%)
Acindar, 11.25%, 02/15/04 200,000 133,000
--------------------
BRAZIL (5.6%)
CSN Iron S.A., 9.125%, 06/01/07 550,000 444,125
--------------------
MEXICO (2.7%)
Hylsa S.A. de C.V., 9.25%, 09/15/07 250,000 212,500
--------------------
789,625
--------------------
TELECOMMUNICATIONS (13.7%)
ARGENTINA (2.3%)
Telefonica de Argentina, 9.125%, 05/07/08 200,000 186,000
--------------------
MEXICO (11.4%)
Alestra S.A. de C.V., 12.625%, 05/15/09 550,000 497,063
Innova, 12.875%, 04/01/07 450,000 414,000
--------------------
911,063
--------------------
1,097,063
--------------------
UTILITIES (3.0%)
BRAZIL (3.0%)
SABESP, 10.00%, 07/28/05 275,000 236,500
--------------------
TOTAL CORPORATE BONDS (COST $6,455,421) 6,206,625
--------------------
FOREIGN GOVERNMENTS (16.5%)
SOVEREIGN DEBT (16.5%)
ARGENTINA (1.8%)
Republic of Argentina, 11.00%, 12/04/05 150,000 142,125
--------------------
BRAZIL (14.7%)
Brazil Brady Capitalization Bond, 8.00%, 04/15/14 240,125 176,492
Republic of Brazil, 11.625%, 04/15/04 750,000 755,625
Republic of Brazil, 12.75%, 01/15/20 250,000 238,438
--------------------
1,170,555
--------------------
TOTAL FOREIGN GOVERNMENTS (COST $1,327,610) 1,312,680
--------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
OFFIT
VIF-EMERGING MARKETS BOND FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MONEY MARKET FUND (3.0%)
Bank of New York Cash Reserve $ 243,936 $ 243,936
--------------------
TOTAL MONEY MARKET FUND (COST $243,936) 243,936
--------------------
TOTAL INVESTMENTS (COST $8,026,967) (+) -- 97.4% 7,763,241
OTHER ASSETS IN EXCESS OF LIABILITIES 2.6% 204,181
--------------------
TOTAL NET ASSETS -- 100.0% $ 7,967,422
====================
</TABLE>
-----------------------------------------------------------
+ Represents cost for federal income tax purposes and differs from value
by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 159,561
Gross unrealized depreciation (423,287)
--------------------
Net unrealized depreciation $ (263,726)
====================
</TABLE>
Country Diversification (as a percentage of Total Investments):
<TABLE>
<S> <C>
Argentina 21.58%
Brazil 37.81%
Mexico 37.47%
United States 3.14%
-------------------
100.00%
===================
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
OFFIT
DJG VALUE EQUITY FUND
--------------------------------------------------------------------------------
After a very strong year in 1999 when the DJG Value Equity Fund gained 23.4%,
the first half of the current year has been disappointing. This is especially
true considering that as the year began the Fund's holdings were selling, in our
opinion, at very attractive valuations. In general, progress in the portfolio
was inhibited by the "mini" bear market in cyclical, industrial and interest
sensitive stocks as investor concerns intensified in the first half regarding
the Federal Reserve's desire to slow the economy with its potentially adverse
impact on corporate profits. Overall, the adverse investment background and the
higher than normal volatility in a number of holdings resulted in an 11.8%
decline in the Fund, for the first half of the year. In comparison, the S&P 500
was off by 0.5%, although ex-technology stocks, the index would have been down
by 3%. The Russell Mid-Cap Value Index also declined.
During the last week of June there were substantial declines in the share prices
of a few of the Fund's holdings, including Dial, Omnicare and Unysis, when they
announced short-term earnings disappointments. During the last day of June, some
extraordinary trading patterns developed in a number of our stocks, causing them
to decline sharply in the last half-hour of trading. Since there was no
fundamental adverse news whatsoever to account for this decline, we believe it
was due solely to technical factors. As a result, the Fund's value declined 3.1%
on June 30th. For the first two trading days in July, the Fund regained more
than three quarters of June 30th's technical decline.
As we enter the second half of the year, we believe that the Fund is chock full
of value. In many of the holdings, improving operations have combined with lower
stock prices to further widen the price-value gap and create even more
attractive risk-reward profiles. Generally, the growing price-value gap in many
industrial companies has resulted in heightened merger and acquisition activity,
and the Fund benefited from this trend. During the second quarter, bids were
made for Shared Medical Systems, Policy Management Systems and Hussman, all at
substantial premiums to market prices. We think that this activity will continue
during the second half of 2000.
During the first six months, some of the Fund's larger positions, namely Aetna,
Foundation Health, Footstar, Hussman, and Shared Medical Systems fared very well
in the half due mainly to special situation developments. In addition, at the
present time, six major investment positions are actively studying
restructuring, reengineering or buy-out proposals, which if effected would
result in substantial appreciation from current prices. These companies are:
Aetna, Comdisco, Dime, Finova, Navistar and Ryder. Based upon our continuing
discussions with each company's management, we believe that there is a high
probability that some action will be taken in each situation to enhance
shareholder value by year-end. In sharp contrast to the prospect of these value
enhancing moves, Navistar, Ryder and Finova were off about 20% or more during
the second quarter as the market has worried about their earning power in a
slowing economy. In addition, during the quarter Comdisco declined by about 40%
from its substantial run-up earlier in the year as investors became disappointed
in management's slowness in capitalizing on two of their e-commerce
subsidiaries: Prism and Ventures. With these companies' basic businesses showing
consistent growth, we have used this period of weakness to add to these
positions.
Our investment strategy going forward is to be patient with those portfolio
companies that are adding economic value to their businesses, despite the
malaise in their stock prices. Further, the decline in the "old economy" stocks
during the quarter has opened up new investment opportunities for us.
Consequently, during the quarter we have added five new ideas to the Fund. These
are: Coca-Cola Enterprises, Eastman Kodak, Georgia Pacific, TJX Companies and
Unisys.
<PAGE>
OFFIT
DJG VALUE EQUITY FUND
--------------------------------------------------------------------------------
In sum, we continue to believe that value stocks, especially those that are
event driven, offer substantial appreciation potential. However, we remain
concerned about the investment background, particularly the over-speculation in
technology stocks and the market's growing narrowness. As a result, we see a
choppy market environment ahead. Barring an extended decline in the market as
the balance of the year unfolds, we expect that some of the extraordinary value
latent in Fund's holdings should surface. Accordingly, we expect to see much
improved investment returns for the full year.
Erwin A. Zeuschner
Portfolio Manager and
Principal of David J. Greene and Company, LLC
July 25, 2000
<PAGE>
OFFIT
DJG VALUE EQUITY FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (88.5%)
AGRICULTURE (2.3%)
IMC Global, Inc. 7,950 $ 103,350
-------------
AUTOMOTIVE (2.6%)
General Motors Corp. 2,000 116,125
-------------
BEVERAGES (4.0%)
Coca-Cola Enterprises Inc. 5,000 81,562
Whitman Corp. 8,000 99,000
-------------
180,562
-------------
BUSINESS EQUIPTMENT & SERVICES (0.4%)
Lanier Worldwide, Inc. 20,000 20,000
-------------
COMPUTER EQUIPMENT (1.9%)
Quantum Corporation-DLT & Storage Systems* 9,000 87,187
-------------
CONSULTING (2.9%)
Comdisco, Inc. 6,000 133,875
-------------
ELECTRONICS (4.6%)
Galileo International, Inc. 10,000 208,750
-------------
FINANCIAL SERVICES (13.3%)
Dime Bancorp, Inc. 12,000 189,000
The FINOVA Group, Inc. 10,000 130,000
Lincoln National Corp. 3,500 126,437
Pittston Brink's Group 11,500 157,406
-------------
602,843
-------------
HEALTH CARE (5.4%)
HEALTHSOUTH Corp.* 22,500 161,719
McKesson HBOC, Inc 4,000 83,750
-------------
245,469
-------------
HOTELS & GAMING (0.8%)
International Game Technology, Inc.* 1,383 36,649
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
OFFIT
DJG VALUE EQUITY FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
INSURANCE (3.5%)
Aetna Inc. 2,500 $ 160,469
-------------
MANUFACTURING (9.5%)
Calgon Carbon Corp. 5,000 38,750
Cytec Industries, Inc. * 2,500 61,719
The Dial Corp. 7,000 72,625
Navistar International Corp. 5,500 170,844
Wabtec Corp. 9,000 89,437
-------------
433,375
-------------
MEDICAL EQUIPMENT AND SUPPLIES (4.3%)
Omnicare, Inc. 15,000 135,938
Varian Medical Systems, Inc. 1,500 58,687
-------------
194,625
-------------
MEDICAL HOSPITAL SERVICES (0.9%)
Foundation Health Systems, Inc. - Class A* 3,000 39,000
-------------
OFFICE SUPPLIES (0.7%)
Wallace Computer Services, Inc. 3,000 29,625
-------------
PACKAGING & CONTAINERS (2.8%)
Pactiv Corp.* 16,000 126,000
-------------
PAPER PRODUCTS (2.3%)
Georgia - Pacific Corp. 4,000 105,000
-------------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES (2.6%)
Eastman Kodak Co. 2,000 119,000
-------------
RETAIL (8.4%)
Footstar, Inc.* 6,500 221,813
HomeBase, Inc.* 5,800 9,063
TJX Companies, Inc. 8,000 150,000
-------------
380,876
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
OFFIT
DJG VALUE EQUITY FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TECHNOLOGY (2.2%)
Unisys Corp.* 7,000 $ 101,938
------------------
TELECOMMUNICATIONS (6.6%)
Telephone & Data Systems, Inc. 2,000 200,500
Verizon Communications 2,000 101,625
------------------
302,125
------------------
TRANSPORTATION (6.5%)
GATX Corp. 4,000 136,000
Ryder System, Inc. 8,500 160,969
------------------
296,969
------------------
TOTAL COMMON STOCKS (COST $4,529,954) 4,023,812
------------------
RIGHTS/WARRANTS (0.0%)
AGRICULTURE (0.0%)
IMC Global Inc., 12/22/00 500 8
------------------
TOTAL RIGHTS/WARRANTS (COST $0) 8
------------------
MONEY MARKET FUND (11.6%)
Bank of New York Cash Reserve $ 525,637 525,637
------------------
TOTAL MONEY MARKET FUND (COST $525,637) 525,637
------------------
TOTAL INVESTMENTS (COST $5,055,591) (+) 100.1% 4,549,457
------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1%) (3,168)
------------------
TOTAL NET ASSETS -- 100.0% $ 4,546,289
------------------
------------------
</TABLE>
-------------------------------------
+ Represents cost for federal income tax purposes and differs from
value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 355,551
Gross unrealized depreciation (861,685)
-----------
Net unrealized depreciation $ (506,134)
-----------
-----------
</TABLE>
* Denotes non-income producing security.
The accompanying notes are an integral part of the financial statements
<PAGE>
OFFIT
VIF - U.S. SMALL CAP FUND
--------------------------------------------------------------------------------
For the second quarter U.S. small capitalization stocks, as represented by the
Russell 2000 Index, were down 3.8% as compared to large capitalization stocks,
as measured by the S&P 500 Index, which were down 2.9% for the same period. All
broad market indexes declined during the period, with the exception of the S&P
600 Small Cap Index, which was up 80 basis points.
The OFFIT VIF-U.S. Small Cap Fund declined 7.3%, net of fees and expenses, for
the quarter. Although somewhat disappointing for the quarter, the Fund continues
to outperform its benchmark for the year to date, returning 11.5% for the six
months versus a return of 3.0% for the Russell 2000 Index.
Although the Fund's overall performance was disappointing, there were a few
bright spots that should be noted. After a particularly rough time for
healthcare stocks in the portfolio last year, it appears that our patience is
being rewarded. ADAC Labs appears to have turned the corner and once again sales
and earnings are showing strong growth. ADAC is up 60% for the quarter and 124%
for the year. Sunrise Assisted Living, another disappointment from last year,
has also begun to turn its operations around. The stock has returned 17% for the
quarter and 34% year-to-date. Overall, stock selection within the healthcare
sector contributed positively to the Fund's performance. Utility stocks, after a
particularly strong first quarter, topped the list of worst performing sectors
this quarter. Both our overweighted position, as well as stock selection,
contributed negatively to the Fund's performance for the period. Two of the
Fund's best performing stocks in 1999, Echostar and Primus Telecommunications,
were two of the biggest disappointments in the quarter, losing 48% and 24%,
respectively. As always, the performance in the technology sector was mixed.
Mentor Graphics rebounded from the Y2K malaise that struck most software stocks
in 1999 and was up 51% for the quarter. Concerns about where we are in the
semiconductor cycle drove Amkor Technology down 42% for the quarter. Stock
selection within the sector did help but overall the performance of the Fund was
negatively impacted. As of June 30, 2000, technology and consumer stocks
represented a little less than 50% of the total portfolio. One buyout was
announced during the quarter: Buffets which is being taken private by its
current management.
We added two new companies to the portfolio during the quarter: 1) FactSet
Research Systems, a provider of online integrated database services providing
financial information and analytics for investment managers/bankers and other
financial professionals and 2) Cost Plus, a specialty retailer of casual home
furnishings and entertaining products operating 103 stores primarily in the
Western United States.
The year thus far can be summed up on one word ... volatile. After posting its
best month ever in February (up 16.4%), the Russell 2000 Index declined 6% over
the next three months, and then ended the second quarter with a return of nearly
9% in June. All in all, the Russell 2000 Index has been in positive territory
only two months, thus far, this year. In the second quarter the Russell 2000
Growth Index fell 7.5% as compared to a gain of 1.3% for the Value Index. In
June, growth rallied to return nearly 13% versus a 2.6% gain for the Value
Index.
As we said in our year-end letter, we were slightly cautious going into the New
Year and that view has not changed. We took the opportunity of the strength of
the market in March, trimming some of our larger technology positions and taking
some profits off the table. Although, in hindsight this was not enough to avoid
the continued downslide experienced by the Fund in June and which has continued
into July. The Fund continues to be overweighted in the technology sector as we
still believe this where the greatest opportunities lie, particularly in small
capitalization equities. We are trying to maintain our discipline of not paying
up for stocks, or chasing those equities that run up, and being opportunistic
buyers of those companies whose stocks we believe have been taken down
excessively. While we have
<PAGE>
OFFIT
VIF - U.S. SMALL CAP FUND
--------------------------------------------------------------------------------
taken profits off the table, we have not rushed in to redeploy the resulting
cash and presently have a 10% cash allocation. In spite of the difficult quarter
and what is turning out to be a challenging summer, we continue to believe that
over a long period of time, investors in small capitalization stocks will be
rewarded for their patience.
Rockefeller & Co.
July 25, 2000
<PAGE>
OFFIT
VIF - U.S. SMALL CAP FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (92.1%)
AUTOMOBILE PARTS (1.3%)
Exide Corp. 4,940 $ 39,520
------------------
BANKING (3.9%)
Alaska Pacific Bancshares, Inc. 4,750 46,906
Cohoes Bancorp, Inc. 1,800 24,750
PBOC Holdings, Inc.* 3,000 25,500
Virginia Capital Bancshares, Inc. 1,500 22,875
------------------
120,031
------------------
BUILDING/CONSTRUCTION (1.2%)
Dal-Tile International, Inc.* 4,365 37,102
------------------
COMMERCIAL SERVICES (9.6%)
F.Y.I., Inc.* 2,750 92,641
Iron Mountain, Inc.* 2,055 67,430
On Assignment, Inc.* 4,460 136,030
------------------
296,101
------------------
COMPUTERS (13.5%)
Computer Associates International, Inc. 1,262 64,599
Computer Task Group, Inc. 3,780 19,136
eXcelon Corporation* 6,220 49,371
Kronos, Inc.* 2,277 59,202
SAGA SYSTEMS, Inc.* 4,250 52,859
Sykes Enterprises, Inc.* 5,100 65,662
Wind River Systems * 2,787 105,558
------------------
416,387
------------------
DATA PROCESSING (7.8%)
FactSet Research Systems, Inc. 3,390 97,462
Information Resources, Inc.* 3,320 13,072
Network Appliance, Inc.* 1,620 130,410
------------------
240,944
------------------
ELECTRICAL EQUIPMENT (2.1%)
WESCO International, Inc.* 6,562 62,749
------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
OFFIT
VIF - U.S. SMALL CAP FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
ELECTRONICS (12.3%)
Amkor Technology, Inc.* 2,400 $ 84,750
Littelfuse, Inc. * 2,250 110,250
Mentor Graphics Corp.* 4,580 91,027
Microsemi Corp.* 2,740 92,989
------------------
379,016
------------------
FINANCIAL SERVICES (5.8%)
Bay View Capital Corp. 1,237 12,138
DVI, Inc.* 3,620 57,920
Financial Federal Corp.* 1,902 33,047
The BISYS Group, Inc.* 950 58,425
Warwick Community Bancorp, Inc. 1,400 16,625
------------------
178,155
------------------
HEALTH SERVICES/HEALTHCARE (10.7%)
ADAC Laboratories 4,760 114,240
Healthcare Services Group, Inc. 2,825 12,713
MedQuist, Inc. * 3,000 102,000
Sunrise Assisted Living, Inc.* 5,380 99,530
------------------
328,483
------------------
HOME FURNISHINGS (1.8%)
Applica Inc. 4,850 54,866
Cost Plus, Inc. * 30 861
------------------
55,727
------------------
MEDICAL EQUIPMENT AND SUPPLIES (1.9%)
ResMed, Inc.* 1,860 49,755
Trex Medical Corp.* 3,430 6,860
------------------
56,615
------------------
OIL & GAS EXPLORATION (5.6%)
Newpark Resources, Inc.* 7,890 74,462
Range Resources Corp.* 5,610 17,531
Rio Alto Exploration Ltd.* 4,300 (a) 78,648
------------------
170,641
------------------
RETAIL (1.6%)
Buffets, Inc.* 3,920 49,735
------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
OFFIT
VIF - U.S. SMALL CAP FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
SERVICES - ADVERTISING (2.4%)
Getty Images, Inc.* 2,000 $ 74,125
----------------
TECHNOLOGY (4.4%)
Artesyn Technologies, Inc.* 3,900 108,469
Telescan, Inc.* 3,700 27,056
----------------
135,525
----------------
TELECOMMUNICATIONS (6.2%)
EchoStar Communications Corp.- Class A* 2,400 79,463
Primus Telecommunications Group, Inc.* 2,723 67,735
RSL Communications, Ltd.- Class A* 3,840 43,920
----------------
191,118
----------------
TOTAL COMMON STOCKS (COST $2,287,793) 2,831,974
----------------
MONEY MARKET FUND (8.2%)
Bank of New York Cash Reserve $ 250,454 250,454
----------------
TOTAL MONEY MARKET FUND (COST $250,454) 250,454
----------------
TOTAL INVESTMENTS (COST $2,538,247) (+) 100.3% 3,082,428
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3%) (7,863)
----------------
TOTAL NET ASSETS -- 100.0% $ 3,074,565
----------------
----------------
</TABLE>
--------------------------------------------------------
+ Represents cost for federal income tax purposes and differs from
value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 860,678
Gross unrealized depreciation (316,497)
-----------
Net unrealized depreciation $ (544,181)
-----------
-----------
</TABLE>
Principal denominated in the following currency:
(a) Canadian Dollar
* Denotes non-income producing security.
The accompanying notes are an integral part of the financial statements
<PAGE>
OFFIT
VIF - TOTAL RETURN FUND
--------------------------------------------------------------------------------
The total return of the VIF-Total Return Fund was 2.71% in the first half of
2000. This compares with a return of 3.99% for the Lehman Aggregate Bond Index.
As of June 30, 2000 the Fund's net asset value was $9.84 and the 30-day SEC
yield was 6.13%. The investments in the Fund are 37% U.S. Treasurys, 18% U.S.
Agency securities, 11% Mortgage pass-thrus, 5.3% Investment-grade Corporates,
21% OFFIT High Yield Fund and 3% OFFIT Emerging Markets Bond Fund. The average
maturity is 9.18 years with a 5.06 year effective duration. The benchmark
maturity is 8.79 years with a 4.91 year effective duration.
We have maintained a duration longer than the benchmark throughout the first
half of this year. This expectation that interest rates would move lower
reflects the view that the inverted Treasury yield curve (yields are lower as
maturity lengthens) would slow the economy. Earlier this year, many felt that
the inverted curve was much more a statement of diminished Treasury supply than
market expectation of future growth. While there is some credence to this
argument, it fails to hold when the inversion includes the 2 to 5 year part of
the curve.
What makes the curve inversion such a compelling argument for a slower economy
is that it links to the economy through its impact on credit extension. From the
standpoint of interest arbitrage, as the Fed tightens and the curve inverts,
banks and other lending institutions find margins squeezed. With less profit
from lending and more predictable returns from short-term securities, lenders
are more cautious when extending credit. The tie between the curve, bank
lending, and the economy was clearly evident during the 1990-91 recession.
During this time, the Fed was successfully able to induce bank lending by
engineering a steeply positive curve - which was stimulating factor for several
years. As with any Fed endeavor, the transmission of policy works first, and
fastest, through its effect on investor psychology. Before the curve actually
curtails lending, the curve signals expectations of a softer economy. This alone
reduces the confidence of borrowers and lenders.
Throughout the second quarter, the yield curve inverted further and Treasury
bond yields have trended lower. The inversion continued because the Federal
Reserve maintained its expected resolve and tightened policy even as equity
values weakened. More to the point, evidence of the inverted curve's impact on
credit extension emerged. Indeed, the second quarter marked an important
transition for the economy. Tighter monetary policy, in concert with the
inverted yield curve, was finally able to decelerate growth towards a pace less
likely to ignite inflationary pressures.
Based on recent economic data, however, it is not yet clear whether the spring
slowdown is the onset of still slower growth or a brief pause in the expansion.
The Federal Reserve kept to its policy bias in mid-May by raising the Federal
funds rate 50 basis points to 6.5%. In late June, the Fed reaffirmed its bias to
tighten, but in reaction to the mixed economic signals held off from another
rate hike. From our perspective, the economy will continue to slow because the
inverted curve has started the process of reducing the appetite for debt.
Within the fixed-income markets, intermediate maturity bonds have responded most
favorably to the current environment. An inverted curve (yields are lower as
maturity lengthens) is especially constructive for 5-to-7 year maturities
because these yields reflect much of the perceived near-term inflation risk. As
the negative curve slows the expansion of credit, the inflation premium is
likewise reduced. By quarter end, short and intermediate interest rates were
lower but the yield curve was still negative. This reflects an expectation for
more subdued growth and a Fed that keeps the funds rate in the 6.5%-7.0% range,
at least through year-end. Another aspect of the anticipatory nature of capital
markets is that, through much of this year, there has been a tiering of credit
in corporate bonds. Now that the expected credit problems
<PAGE>
OFFIT
VIF - TOTAL RETURN FUND
--------------------------------------------------------------------------------
are being realized, credit spreads are stabilizing and have even narrowed
somewhat from the extraordinary levels reached in late May.
The high yield market benefited from the growing market consensus that credit
risk has been adequately discounted, and finished the quarter on a strong note.
Good investor inflow helped to generate improved returns in high yield, as
investors recognized the overcompensation for potential default rates. At
present, BB Corporates are yielding 430 basis points more than like maturity
Treasurys, compared with 400 basis points at the end of the first quarter.
Emerging markets in Latin America also firmed late in the second quarter as
investors saw Argentina and Brazil weather this year's 100 basis point increase
in the Federal funds rate and a volatile U.S. equity market. In the past, this
U.S. market environment would have created outsized negative market volatility
in Latin America. Another indication of progress was the presidential election
in Mexico. The democratic result underscores the positive changes that have
upgraded Mexican debt to investment grade status. The OFFIT Emerging Markets
Bond Fund had a 30-day SEC yield of 13.95% on June 30, compared with 11.29% at
the end of the first quarter.
Looking forward, the ongoing potential for more Fed tightening in combination
with a sustained inversion of the yield curve will hold back credit creation and
the equity market. This, in turn, will check any nascent inflation risk. It is a
favorable environment for bonds, especially in the 5-to-7 year maturity range,
whose yields reflect much of the perceived near-term inflation risk. Therefore,
we maintain our view that interest rates will continue to trend lower. As such,
the Fund will keep its modestly longer benchmark.
In light of Chairman Greenspan's recent testimony, there is a greater likelihood
that the Fund will increase its holdings of non-Treasury debt. The mid-year
policy outlook outlined by the Fed Chairman contained an important policy shift.
While we believe the near-term potential for a rate hike is more balanced than
the market seems to believe, Greenspan is more accepting of a higher rate of
economic growth moving forward. It was generally accepted that he wanted to
drive growth below 3% in order to create sufficient slack in the economy and, as
a result, reduce inflationary pressure. It is now apparent that he believes the
productivity gains are structural rather than cyclical and that 3.5%-4.0% real
growth without raising unemployment will achieve the central bank goal. This
environment, still favorable to bonds as economic momentum continues to slow,
should also now reduce some of the scarcity bid in Treasurys and, in turn, make
non-Treasury issues such as Agencies, corporates, high yield, and emerging
market debt more attractive.
Steven Blitz
July 25, 2000
<PAGE>
OFFIT
VIF - TOTAL RETURN FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (5.4%)
FINANCIAL SERVICES (2.8%)
Associates Corp., 6.375%, 10/15/02 $ 50,000 $ 48,959
----------------
TELECOMMUNICATIONS (2.6%)
Deutsche Telekom International Finance, 8.00%, 06/15/10 45,000 45,364
----------------
TOTAL CORPORATE BONDS (COST $94,225) 94,323
----------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (13.7%)
Federal Home Loan Mortgage Corp., 6.625%, 09/15/09 170,000 163,948
Federal Home Loan Mortgage Corp., Gold Pool #E70611, 6.00%, 06/01/13 81,999 77,719
----------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION (COST $244,241) 241,667
----------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (8.8%)
Federal National Mortgage Assoc., 5.75%, 04/15/03 160,000 155,039
----------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION (COST $154,900) 155,039
----------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (6.2%)
Government National Mortgage Assoc., 8.00%, 01/15/30 48,301 48,814
Government National Mortgage Assoc., Pool# 434295, 6.50%, 04/15/29 64,177 60,908
----------------
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (COST $109,344) 109,722
----------------
MUTUAL FUNDS (23.4%)
OFFIT VIF-Emerging Markets Bond Fund 6,071 (1) 50,691
OFFIT VIF-High Yield Fund 39,566 (1) 360,842
----------------
TOTAL MUTUAL FUNDS (COST $456,945) 411,533
----------------
U.S. TREASURY NOTES (36.7%)
Notes, 5.375%, 02/15/01 65,000 64,574
Notes, 5.50%, 05/15/09 170,000 162,563
Notes, 5.625%, 05/15/08 270,000 260,381
Notes, 7.25%, 05/15/16 145,000 159,545
----------------
TOTAL U.S. TREASURY NOTES (COST $631,169) 647,063
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFIT
VIF - TOTAL RETURN FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MONEY MARKET FUND (2.9%)
Bank of New York Cash Reserve $ 51,980 $ 51,980
----------------
TOTAL MONEY MARKET FUND (COST $51,980) 51,980
----------------
TOTAL INVESTMENTS (COST $1,742,804)(+) 97.1% 1,711,327
OTHERS ASSETS IN EXCESS OF LIABILITIES 2.9% 50,225
----------------
TOTAL NET ASSETS --100.00% $ 1,761,555
----------------
----------------
</TABLE>
+ Represents cost for federal income tax purposes and differs from
value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 17,845
Gross unrealized depreciation (49,322)
-----------
Net unrealized depreciation $ (31,477)
-----------
-----------
</TABLE>
(1) Represents an investment in an affiliate.
The accompanying notes are an integral part of the statements.
<PAGE>
OFFIT
VIF - U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------------------------------------
The total return of the VIF-U.S. Government Securities Fund was 3.72% in the
first half of 2000. This compares with a return of 3.78% for the Merrill Lynch
Five-Year Treasury Index. As of June 30, 2000 the Fund's net asset value was
$10.31 and the 30-day SEC yield was 5.70%. The Fund holds a mix of commercial
paper, U.S. Treasurys and U.S. Agency securities. The average maturity of the
Fund is 5.35 years with a 4.27 year effective duration. The benchmark maturity
is 4.87 years with a 4.08 year effective duration.
We have maintained a duration longer than the benchmark throughout the first
half of this year. Our expectation that interest rates would move lower reflects
the view that the inverted Treasury yield curve (yields are lower as maturity
lengthens) would slow the economy. Earlier this year, many felt that the
inverted curve was much more a statement of diminished Treasury supply than
market expectation of future growth. While there is some credence to this
argument, it fails to hold when the inversion includes the 2 to 5 year part of
the curve.
What makes the curve inversion such a compelling argument for a slower economy
is that it links to the economy through its impact on credit extension. From the
standpoint of interest arbitrage, as the Fed tightens and the curve inverts,
banks and other lending institutions find margins squeezed. With less profit
from lending and more predictable returns from short-term securities, lenders
are more cautious when extending credit. The tie between the curve, bank
lending, and the economy was clearly evident during the 1990-91 recession.
During this time, the Fed was successfully able to induce bank lending by
engineering a steeply positive curve - which was stimulating factor for several
years. As with any Fed endeavor, the transmission of policy works first, and
fastest, through its effect on investor psychology. Before the curve actually
curtails lending, the curve signals expectations of a softer economy. This alone
reduces the confidence of borrowers and lenders.
Throughout the second quarter, the yield curve inverted further and Treasury
bond yields have trended lower. The inversion continued because the Federal
Reserve maintained its expected resolve and tightened policy even as equity
values weakened. More to the point, evidence of the inverted curve's impact on
credit extension emerged. Indeed, the second quarter marked an important
transition for the economy. Tighter monetary policy, in concert with the
inverted yield curve, was finally able to decelerate growth towards a pace less
likely to ignite inflationary pressures.
Based on recent economic data, however, it is not yet clear whether the spring
slowdown is the onset of still slower growth or a brief pause in the expansion.
The Federal Reserve kept to its policy bias in mid-May by raising the Federal
funds rate 50 basis points to 6.5%. In late June, the Fed reaffirmed its bias to
tighten, but in reaction to the mixed economic signals held off from another
rate hike. From our perspective, the economy will continue to slow because the
inverted curve has started the process of reducing the appetite for debt.
Looking forward, the ongoing potential for more Fed tightening in combination
with a sustained inversion of the yield curve will hold back credit creation and
the equity market. This, in turn, will check any nascent inflation risk. It is a
favorable environment for bonds, especially in the 5-to-7 year maturity range,
whose yields reflect much of the perceived near-term inflation risk. Therefore,
we maintain our view that interest rates will continue to trend lower. As such,
the Fund will keep its modestly longer benchmark.
<PAGE>
OFFIT
VIF - U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------------------------------------
contained an important policy shift. While we believe the near-term potential
for a rate hike is more balanced than the market seems to believe, Greenspan is
more accepting of a higher rate of economic growth moving forward. It was
generally accepted that he wanted to drive growth below 3% in order to create
sufficient slack in the economy and, as a result, reduce inflationary pressure.
It is now apparent that he believes the productivity gains are structural rather
than cyclical and that 3.5%-4.0% real growth without raising unemployment will
achieve the central bank goal. This environment, still favorable to bonds as
economic momentum continues to slow, should also now reduce some of the scarcity
bid in Treasurys and, in turn, make non-Treasury issues such as Agencies more
attractive.
Steven Blitz
July 25, 2000
<PAGE>
OFFIT
VIF - U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AGENCY OBLIGATION (2.1%)
FEDERAL AGENCY (2.1%)
Tennessee Valley Authority, 5.375%, 11/13/08 $ 640,000 $ 568,391
------------------
TOTAL AGENCY OBLIGATION (COST $566,231) 568,391
------------------
CORPORATE BONDS (6.2%)
BANKING (3.6%)
Asian Development Bank, 7.50%, 05/31/05 1,000,000 1,016,085
------------------
FINANCIAL SERVICES (2.6%)
General Electric Capital Corp., 7.00%, 03/01/02 720,000 717,860
------------------
TOTAL CORPORATE BONDS (COST $1,731,346) 1,733,945
------------------
FEDERAL HOME LOAN BANK (5.4%)
Federal Home Loan Bank, 7.25%, 05/13/05 1,500,000 1,513,187
------------------
TOTAL FEDERAL HOME LOAN BANK (COST $1,506,204) 1,513,187
------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (15.2%)
Federal Home Loan Mortgage Corp., 5.75%, 04/15/08 1,660,000 1,522,064
Federal Home Loan Mortgage Corp., 5.75%, 03/15/09 3,000,000 2,723,838
------------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION (COST $4,233,648) 4,245,902
------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (8.6%)
Federal National Mortgage Assoc., 7.125%, 02/15/05 2,400,000 2,408,314
------------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION (COST $2,397,542) 2,408,314
------------------
U.S. TREASURY NOTES (54.2%)
Inflation Indexed Notes, 3.875%, 01/15/09 1,200,000 1,234,332
Notes, 5.625%, 05/15/08 4,610,000 4,445,769
Notes, 6.75%, 05/15/05 9,245,000 9,461,684
------------------
TOTAL U.S. TREASURY NOTES (COST $14,907,548) 15,141,785
------------------
COMMERCIAL PAPER (7.2%)
Consolidated Edison Inc., 6.88%, 07/03/00 2,000,000 1,999,235
------------------
TOTAL COMMERCIAL PAPER (COST $1,999,235) 1,999,235
------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
OFFIT
VIF - U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2000
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MONEY MARKET FUND (0.2%)
Bank of New York Cash Reserve $ 61,694 $ 61,694
------------------
TOTAL MONEY MARKET FUND (COST $61,694) 61,694
------------------
TOTAL INVESTMENTS (COST $27,403,448)(+) -- 99.1% 27,672,453
OTHER ASSETS IN EXCESS OF LIABILITIES 0.9% 263,355
------------------
TOTAL NET ASSETS -- 100.0% $ 27,935,808
==================
</TABLE>
-------------------------------------------------------
+ Represents cost for federal income tax purposes and differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 270,515
Gross unrealized depreciation (1,510)
==================
Net unrealized appreciation $ 269,005
==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF- VIF- DJG
HIGH EMERGING MARKETS VALUE
YIELD FUND BOND FUND EQUITY FUND
---------------- ---------------- ---------------
<S> <C> <C> <C>
ASSETS:
Investments, at market value (1)........................................ $ 47,089,308 $ 7,763,241 $ 4,549,457
Interest and dividends receivable ...................................... 954,840 206,457 6,090
Receivable for investment securities sold ............................. 117,000 - -
Receivable for capital share sold ...................................... 3,760 - -
Deferred organization expenses.......................................... 10,289 16,039 3,131
Prepaid expenses and other assets....................................... 3,580 609 319
---------------- ---------------- ---------------
Total Assets.................................................. 48,178,777 7,986,346 4,558,997
---------------- ---------------- ---------------
LIABILITIES:
Investment advisory fees payable........................................ 27,518 5,648 3,174
Professional fees payable............................................... 37,847 7,923 5,451
Custody fees............................................................ 3,425 982 119
Administration fees payable............................................. 3,709 - -
Transfer agent fees payable............................................. 3,152 2,968 3,057
Fund accounting fees payable............................................ 1,250 - -
Unrealized depreciation on open forward currency contracts (Note 2)..... 33,312 - -
Other payables and accrued expenses..................................... 14,270 1,403 907
---------------- ---------------- ---------------
Total Liabilities................................................ 124,483 18,924 12,708
---------------- ---------------- ---------------
NET ASSETS.............................................................. $ 48,054,294 $ 7,967,422 $ 4,546,289
================ ================ ===============
NET ASSETS CONSIST OF:
Shares of capital stock, $0.001 par value per share.................. $ 5,270 $ 954 $ 361
Additional paid-in capital........................................... 55,000,790 9,377,643 4,471,828
Accumulated undistributed net investment income...................... 149,810 9,780 27,052
Accumulated undistributed net realized gains (loss) on
investments and foreign currency transactions................... (981,069) (1,157,229) 553,182
Net unrealized depreciation of investment
and foreign currency transactions............................... (6,120,507) (263,726) (506,134)
================ ================ ===============
NET ASSETS.............................................................. $ 48,054,294 $ 7,967,422 $ 4,546,289
================ ================ ===============
SHARES OF CAPITAL STOCK OUTSTANDING..................................... 5,270,287 954,394 360,580
================ ================ ===============
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE)............... $ 9.12 $ 8.35 $ 12.61
================ ================ ===============
(1) Investments at cost................................................. $ 53,176,946 $ 8,026,967 $ 5,055,591
================ ================ ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
JUNE 30, 2000
--------------------------------------------------------------------------------
<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)................................. $ 3,082,428 $ 1,711,327 $ 27,672,453
Receivable from advisor.......................................... - 6,260 -
Receivable for investment securities sold........................ 157 45,610 -
Interest and dividends receivable................................ 1,191 17,003 314,097
Deferred organization expenses................................... 3,131 33,820 -
Prepaid expenses and other assets................................ 160 31 1,549
-------------- --------------- -------------------
Total Assets................................................ 3,087,067 1,814,051 27,988,099
-------------- --------------- -------------------
LIABILITIES:
Payable for investment securities redeemed....................... - - 12,902
Investment advisory fees payable................................. 2,498 - 6,508
Investment purchases payable..................................... - 45,482 -
Professional fees payable........................................ 4,096 3,379 22,817
Custody fees..................................................... 1,481 23 326
Administration fees payable...................................... - - 2,163
Transfer agent fees payable...................................... 3,293 3,117 3,103
Other payables and accrued expenses.............................. 1,134 495 4,472
-------------- --------------- -------------------
Total Liabilities........................................ 12,502 52,496 52,291
-------------- --------------- -------------------
NET ASSETS....................................................... $ 3,074,565 $ 1,761,555 $ 27,935,808
============== =============== ===================
NET ASSETS CONSIST OF:
Shares of capital stock, $0.001 par value per share........... $ 160 $ 179 $ 2,709
Additional paid-in capital.................................... 1,975,641 1,737,810 26,940,240
Accumulated undistributed net investment income (loss)........ (12,445) 115,495 1,369,230
Accumulated undistributed net realized gains (loss) on
investments and foreign currency transactions.............. 567,028 (60,452) (645,376)
Net unrealized appreciation (depreciation) of investment
and foreign currency transactions.......................... 544,181 (31,477) 269,005
-------------- --------------- -------------------
NET ASSETS....................................................... $ 3,074,565 $ 1,761,555 $ 27,935,808
============== =============== ===================
SHARES OF CAPITAL STOCK OUTSTANDING.............................. 160,349 179,109 2,708,557
============== =============== ===================
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE)........ $ 19.17 $ 9.84 $ 10.31
============== =============== ===================
(1) Investments at cost.......................................... $ 2,538,247 $ 1,742,804 $ 27,403,448
============== =============== ===================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF- DJG VIF-
HIGH EMERGING MARKETS VALUE
YIELD FUND BOND FUND EQUITY FUND
------------------ ----------------- -----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest........................................................ $ 2,238,714 $ 492,469 $ -
Dividends....................................................... - - 46,162
------------------ ----------------- -----------------
Total investment income.................................. 2,238,714 492,469 46,162
------------------ ----------------- -----------------
EXPENSES:
Advisory ....................................................... 198,209 34,864 19,098
Professional ................................................... 39,033 6,669 3,984
Administration ................................................ 29,148 4,842 2,984
Transfer agent ................................................. 9,000 9,000 9,000
Fund accounting ................................................ 7,500 7,500 7,500
Amortization of organization expenses........................... 6,833 6,902 879
Custody ........................................................ 6,714 1,527 280
Trustees........................................................ 5,163 768 431
Miscellaneous .................................................. 20,369 1,642 1,327
------------------ ----------------- -----------------
Total expenses before waivers/reimbursements............. 321,969 73,714 45,483
Less expenses waived/reimbursed.......................... (53,803) (16,903) (15,672)
------------------ ----------------- -----------------
Net expenses....................................... 268,166 56,811 29,811
------------------ ----------------- -----------------
Net Investment Income........................................... 1,970,548 435,658 16,351
------------------ ----------------- -----------------
REALIZED AND UNREALIZED GAINS (LOSS) ON INVESTMENTS:
Net realized gains (loss) on investment transactions........ (913,626) 79,285 194,175
Net realized loss on foreign currency transactions.......... (12,920) - -
Net change in unrealized depreciation of investment
transactions........................................... (860,872) (187,485) (767,576)
Net change in unrealized depreciation of foreign currency
transactions........................................... (97,591) - -
------------------ ----------------- -----------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS................. (1,885,009) (108,200) (573,401)
------------------ ----------------- -----------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..... $ 85,539 $ 327,458 $ (557,050)
================== ================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED) (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
<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................................................ $ - $ 36,944 $ 851,557
Dividends............................................... 10,055 17,724 * -
--------------- -------------- -----------------
Total Investment Income............................ 10,055 54,668 851,557
--------------- -------------- -----------------
EXPENSES:
Advisory................................................ 15,000 6,325 46,081
Professional............................................ 2,278 1,248 17,498
Administration.......................................... 1,875 988 16,458
Transfer agent.......................................... 9,000 9,000 9,000
Fund accounting......................................... 7,500 7,500 7,500
Amortization of organization expenses................... 879 5,627 -
Custody................................................. 3,103 35 1,491
Trustees................................................ 225 138 2,231
Miscellaneous........................................... 1,685 846 4,263
--------------- -------------- -----------------
Total expenses before waivers/reimbursements....... 41,545 31,707 104,522
Less expenses waived/reimbursed.................... (19,045) (25,382) (25,508)
--------------- -------------- -----------------
Net expenses.................................... 22,500 6,325 79,014
--------------- -------------- -----------------
Net Investment Income (loss)............................ (12,445) 48,343 772,543
--------------- -------------- -----------------
REALIZED AND UNREALIZED GAINS (LOSS) ON INVESTMENTS:
Net realized gains (loss) on investment transactions. 372,284 (33,248) (488,077)
Net change in unrealized appreciation of investment
transactions...................................... 14,686 34,817 * 773,536
--------------- -------------- -----------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS........ 386,970 1,569 285,459
--------------- -------------- -----------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 374,525 $ 49,912 $ 1,058,002
=============== ============== =================
</TABLE>
* Includes interest income and unrealized loss of $17,724 and $(45,411),
respectively from an investment in OFFIT VIF-High Yield Fund and OFFIT
VIF-Emerging Markets Bond Fund, affiliated Funds.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF - HIGH YIELD FUND
-------------------------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 2000 ENDED
(UNAUDITED) DECEMBER 31, 1999
---------------------- ----------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income........................................................ $ 1,970,548 $ 3,851,446
Net realized gains (loss) on investment and foreign currency transactions ... (926,546) 125,243
Net change in unrealized depreciation of investments and
foreign currency transactions............................................. (958,463) (4,190,324)
---------------------- ----------------------
Net increase (decrease) in net assets resulting from operations ............ 85,539 (213,635)
---------------------- ----------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................................................ (1,970,548) (3,851,446)
Excess of net investment income.............................................. (15,302) (26,460)
Net realized gains .......................................................... - (228,073)
---------------------- ----------------------
Total dividends and distributions to shareholders......................... (1,985,850) (4,105,979)
---------------------- ----------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued.................................................. 2,522,392 6,179,148
Dividends reinvested......................................................... 1,985,850 4,093,318
Cost of shares redeemed...................................................... (2,753,788) (2,106,815)
---------------------- ----------------------
Net increase in net assets from capital
share transactions..................................................... 1,754,454 8,165,651
---------------------- ----------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................................... (145,857) 3,846,037
NET ASSETS:
Beginning of period.......................................................... 48,200,151 44,354,114
---------------------- ----------------------
End of period *.............................................................. $ 48,054,294 $ 48,200,151
====================== ======================
* (Including undistributed net investment income)............................. $ 149,810 $ 165,112
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF - EMERGING MARKETS BOND FUND
----------------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 2000 ENDED
(UNAUDITED) DECEMBER 31, 1999
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.................................................. $ 435,658 $ 735,540
Net realized gains on investment transactions.......................... 79,285 124,237
Net change in unrealized appreciation (depreciation) of investment
transactions....................................................... (187,485) 554,180
------------------ ------------------
Net increase in net assets resulting from operations.................. 327,458 1,413,957
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................................. (435,658) (735,540)
------------------ ------------------
Total dividends and distributions to shareholders................... (435,658) (735,540)
------------------ ------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued............................................ 147,920 740,901
Dividends reinvested................................................... 435,712 733,292
Cost of shares redeemed................................................ (193,556) (41,702)
------------------ ------------------
Net increase in net assets from capital
share transactions............................................... 390,076 1,432,491
------------------ ------------------
TOTAL INCREASE IN NET ASSETS.............................................. 281,876 2,110,908
NET ASSETS:
Beginning of period.................................................... 7,685,546 5,574,638
------------------ ------------------
End of period *........................................................ $ 7,967,422 $ 7,685,546
================== ==================
* (Including undistributed net investment income)....................... $ 9,780 $ 9,780
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DJG VALUE EQUITY FUND
----------------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 2000 ENDED
(UNAUDITED) DECEMBER 31, 1999
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................................. $ 16,351 $ 8,831
Net realized gains on investment transactions ......................... 194,175 359,007
Net change in unrealized appreciation (depreciation) of investment
transactions....................................................... (767,576) 163,169
------------------ ------------------
Net increase (decrease) in net assets resulting from operations....... (557,050) 531,007
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................................. - (5,649)
Net realized gains .................................................... - (110,871)
------------------ ------------------
Total dividends and distributions to shareholders................... - (116,520)
------------------ ------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued............................................ 788,904 1,682,025
Dividends reinvested................................................... - 116,520
Cost of shares redeemed................................................ (37,129) (25,846)
------------------ ------------------
Net increase in net assets from capital
share transactions............................................... 751,775 1,772,699
------------------ ------------------
TOTAL INCREASE IN NET ASSETS.............................................. 194,725 2,187,186
NET ASSETS:
Beginning of period.................................................... 4,351,564 2,164,378
------------------ ------------------
End of period *........................................................ $ 4,546,289 $ 4,351,564
================== ==================
* (Including undistributed net investment income)....................... $ 27,052 $ 10,701
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF - U.S. SMALL CAP FUND
----------------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 2000 ENDED
(UNAUDITED) DECEMBER 31, 1999
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net loss .............................................................. $ (12,445) $ (16,580)
Net realized gains on investment transactions ......................... 372,284 217,733
Net change in unrealized appreciation of investment
transactions ...................................................... 14,686 470,593
------------------ ------------------
Net increase in net assets resulting from operations ................. 374,525 671,746
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains .................................................... - (29,037)
------------------ ------------------
Total dividends and distributions to shareholders .................. - (29,037)
------------------ ------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued ........................................... 796,095 48,966
Dividends reinvested .................................................. - 29,037
Cost of shares redeemed ............................................... (21,764) (12,848)
------------------ ------------------
Net increase in net assets from capital
share transactions .............................................. 774,331 65,155
------------------ ------------------
TOTAL INCREASE IN NET ASSETS ............................................. 1,148,856 707,864
NET ASSETS:
Beginning of period ................................................... 1,925,709 1,217,845
------------------ ------------------
End of period ......................................................... $ 3,074,565 $ 1,925,709
================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF - TOTAL RETURN FUND
----------------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 2000 ENDED
(UNAUDITED) DECEMBER 31, 1999
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................................. $ 48,343 $ 58,598
Net realized loss on investment transactions .......................... (33,248) (27,204)
Net change in unrealized appreciation (depreciation)
of investment transactions ........................................... 34,817 (57,058)
------------------ ------------------
Net increase (decrease) in net assets resulting from operations ...... 49,912 (25,664)
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................................................. - (28,216)
Net realized gains .................................................... - (2,035)
------------------ ------------------
Total dividends and distributions to shareholders .................. - (30,251)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued ........................................... 900,900 1,253,500
Dividends Reinvested .................................................. - 30,251
Cost of shares redeemed ............................................... (6,841) (1,411,140)
------------------ ------------------
Net increase (decrease) in net assets from capital
share transactions .............................................. 894,059 (127,389)
------------------ ------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .................................. 943,971 (183,304)
NET ASSETS:
Beginning of period ................................................... 817,584 1,000,888
------------------ ------------------
End of Period * ....................................................... $ 1,761,555 $ 817,584
================== ==================
* (Including undistributed net investment income) ...................... $ 115,495 $ 67,152
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF - U.S. GOVERNMENT SECURITIES FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE PERIOD
ENDED APRIL 1, 1999 *
JUNE 30, 2000 THROUGH
(UNAUDITED) DECEMBER 31, 1999
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................................. $ 772,543 $ 596,687
Net realized loss on investment transactions .......................... (488,077) (157,299)
Net change in unrealized appreciation (depreciation)
of investment transactions ........................................... 773,536 (504,531)
------------------ ------------------
Net increase (decrease) in net assets resulting from operations ...... 1,058,002 (65,143)
------------------ ------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued ........................................... 10,112,961 17,553,952
Dividends Reinvested .................................................. - -
Cost of shares redeemed ............................................... (567,446) (156,518)
------------------ ------------------
Net increase in net assets from capital
share transactions .............................................. 9,545,515 17,397,434
------------------ ------------------
TOTAL INCREASE IN NET ASSETS ............................................. 10,603,517 17,332,291
NET ASSETS:
Beginning of period ................................................... 17,332,291 -
------------------ ------------------
End of Period ** ...................................................... $ 27,935,808 $ 17,332,291
================== ==================
** (Including undistributed net investment income) ..................... $ 1,369,230 $ 596,687
</TABLE>
* The OFFIT VIF-U.S. Government Securities Fund commenced operations on
August 24, 1998. The last remaining shares outstanding were redeemed on
September 25, 1998. The Fund recommenced operations on April 1, 1999.
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS
VIF- HIGH YIELD FUND
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEAR FOR THE NINE FOR THE APRIL 1, 1996*
JUNE 30, 2000 ENDED MONTHS ENDED YEAR ENDED THROUGH
(UNAUDITED) DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998 MARCH 31, 1997
----------------------------------------------------------- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.50 $ 10.40 $ 11.00 $ 10.37 $ 10.00(d)
--------- --------- --------- --------- ---------
Net investment income 0.39 0.82 0.65 0.86 0.78
Net realized and unrealized gains (loss) (0.38) (0.85) (0.53) 0.63 0.37
--------- --------- --------- --------- ---------
Total income (loss) from investment
operations 0.01 (0.03) 0.12 1.49 1.15
--------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.39) (0.82) (0.65) (0.86) (0.78)
Excess of net investment income - (0.01) (0.02) - -
Net realized gains - (0.04) (0.05) - -
--------- --------- --------- --------- ---------
Total dividends and distributions (0.39) (0.87) (0.72) (0.86) (0.78)
--------- --------- --------- --------- ---------
Net change in net asset value per share (0.38) (0.90) (0.60) 0.63 0.37
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.12 $ 9.50 $ 10.40 $ 11.00 $ 10.37
========= ========= ========= ========= =========
TOTAL RETURN (a) 0.16%(b) (0.29%) 1.15%(b) 14.84% 11.90%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 48,054 $ 48,200 $ 44,354 $ 31,675 $ 25,114
Ratios to average net assets:
Expenses** 1.15%(c) 1.15% 1.15%(c) 1.15% 1.15%(c)
Net investment income 8.45%(c) 8.24% 8.25%(c) 7.98% 7.45%(c)
PORTFOLIO TURNOVER RATE 7% 19% 14% 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.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF - EMERGING MARKETS BOND FUND
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEAR FOR THE NINE FOR THE AUGUST 28, 1996*
JUNE 30, 2000 ENDED MONTHS ENDED YEAR ENDED THROUGH
(UNAUDITED) DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998 MARCH 31, 1997
----------------------------------------------------------- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.46 $ 7.60 $ 10.55 $ 10.30 $ 10.00(d)
--------- --------- --------- --------- ---------
Net investment income 0.47 0.94 0.66 0.86 0.48
Net realized and unrealized gains (loss) (0.11) 0.86 (2.79) 0.27 0.34
--------- --------- --------- --------- ---------
Total income (loss) from investment
operations 0.36 1.80 (2.13) 1.13 0.82
--------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.47) (0.94) (0.66) (0.86) (0.48)
Excess of net investment income - - (0.07) (0.02) -
Net realized gains - - (0.09) - (0.04)
--------- --------- --------- --------- ---------
Total dividends and distributions (0.47) (0.94) (0.82) (0.88) (0.52)
--------- --------- --------- --------- ---------
Net change in net asset value per share (0.11) 0.86 (2.95) 0.25 0.30
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 8.35 $ 8.46 $ 7.60 $ 10.55 $ 10.30
========= ========= ========= ========= =========
TOTAL RETURN (a) 4.31%(b) 25.19% (20.36%)(b) 11.26% 8.29%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 7,967 $ 7,686 $ 5,575 $ 5,780 $ 4,346
Ratios to average net assets:
Expenses** 1.46%(c) 1.50% 1.50%(c) 1.50% 1.50%(c)
Net investment income 11.25%(c) 12.11% 10.38%(c) 8.27% 8.04%(c)
PORTFOLIO TURNOVER RATE 23% 71% 100% 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.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
DJG VALUE EQUITY FUND
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEAR FOR THE NINE APRIL 11, 1997*
JUNE 30, 2000 ENDED MONTHS ENDED THROUGH
(UNAUDITED) DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998
----------------------------------------------------------- ------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.30 $ 11.91 $ 14.94 $ 10.00(d)
--------- --------- --------- ---------
Net investment income 0.04 0.02 0.05 0.02
Net realized and unrealized gains (loss) (1.73) 2.76 (2.16) 4.92
--------- --------- --------- ---------
Total income (loss) from investment
operations (1.69) 2.78 (2.11) 4.94
--------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income - (0.02) (0.03) -
Net realized gains - (0.37) (0.89) -
--------- --------- --------- ---------
Total dividends and distributions - (0.39) (0.92) -
--------- --------- --------- ---------
Net change in net asset value per share (1.69) 2.39 (3.03) 4.94
--------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 12.61 $ 14.30 $ 11.91 $ 14.94
========= ========= ========= =========
TOTAL RETURN (a) (11.82%)(b) 23.37% (14.75%)(b) 49.40%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 4,546 $ 4,352 $ 2,164 $ 2,018
Ratios to average net assets:
Expenses** 1.25%(c) 1.25% 1.25%(c) 1.25%(c)
Net investment income 0.68%(c) 0.28% 0.29%(c) 0.16%(c)
PORTFOLIO TURNOVER RATE 25% 39% 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.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF - U.S. SMALL CAP FUND
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR FOR THE NINE FOR THE PERIOD
ENDED JUNE 30, 2000 ENDED MONTHS ENDED APRIL 11, 1997* THROUGH
(UNAUDITED) DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.20 $ 11.34 $ 14.14 $ 10.00 (d)
------------------- ------------------ ------------------ --------------------
Net investment loss (0.08) (0.15) (0.08) (0.08)
Net realized and unrealized gains (loss) 2.05 6.27 (1.50) 4.22
------------------- ------------------ ------------------ --------------------
Total income (loss) from investment
operations 1.97 6.12 (1.58) 4.14
------------------- ------------------ ------------------ --------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net realized gains - (0.26) (1.22) -
------------------- ------------------ ------------------ --------------------
Total dividends and distributions - (0.26) (1.22) -
------------------- ------------------ ------------------ --------------------
Net change in net asset value per share 1.97 5.86 (2.80) 4.14
------------------- ------------------ ------------------ --------------------
NET ASSET VALUE, END OF PERIOD $ 19.17 $ 17.20 $ 11.34 $ 14.14
------------------- ------------------ ------------------ --------------------
------------------- ------------------ ------------------ --------------------
TOTAL RETURN (a) 11.45% (b) 54.00% (11.95%)(b) 41.40% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 3,075 $ 1,926 $ 1,218 $ 1,394
RATIOS TO AVERAGE NET ASSETS:
Expenses** 1.50% (c) 1.50% 1.50% (c) 1.50% (c)
Net investment loss (0.83%)(c) (1.19%) (0.92%)(c) (0.74%)(c)
Portfolio turnover rate 23% 31% 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
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF - TOTAL RETURN FUND
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR FOR THE PERIOD
ENDED JUNE 30, 2000 ENDED JUNE 30, 1998* THROUGH
(UNAUDITED) DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------------------------------------------------------------- ------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.58 $ 10.17 $ 10.00 (d)
------------------ -------------------- --------------------
Net investment income (0.14) 0.74 0.25
Net realized and unrealized loss 0.40 (0.97) (0.08)
------------------ -------------------- --------------------
Total income (loss) from investment operations 0.26 (0.23) 0.17
------------------ -------------------- --------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income - (0.34) -
Net realized gains - (0.02) -
------------------ -------------------- --------------------
Total dividends and distributions - (0.36) -
------------------ -------------------- --------------------
Net change in net asset value per share 0.26 (0.59) 0.17
------------------ -------------------- --------------------
NET ASSET VALUE, END OF PERIOD $ 9.84 $ 9.58 $ 10.17
------------------ -------------------- --------------------
------------------ -------------------- --------------------
TOTAL RETURN (a) 2.71% (b) (2.18%) 1.70% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 1,762 $ 818 $ 1,001
Ratios to average net assets:
Expenses** 0.80% (c) 0.80% 0.80% (c)
Net investment income 6.11% (c) 5.48% 5.35% (c)
PORTFOLIO TURNOVER RATE 62% 81% 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
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF - U.S. GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE PERIOD FOR THE PERIOD
ENDED JUNE 30, 2000 APRIL 1, 1999** THROUGH AUGUST 24, 1998* THROUGH
(UNAUDITED) DECEMBER 31, 1999 SEPTEMBER 25, 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.94 $ 10.00 $ 10.00 (d)
------------------ ------------------ ---------------------
Net investment income 0.16 0.34 -
Net realized and unrealized gains (loss) 0.21 (0.40) 0.23
------------------ ------------------ ---------------------
Total income (loss) from investment operations 0.37 (0.06) 0.23
------------------ ------------------ ---------------------
Net change in net asset value per share 0.37 (0.06) 0.23
------------------ ------------------ ---------------------
NET ASSET VALUE, END OF PERIOD $ 10.31 $ 9.94 $ 10.23
------------------ ------------------ ---------------------
------------------ ------------------ ---------------------
TOTAL RETURN (a) 3.72% (b) (0.60%)(b) 2.30% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 27,936 $ 17,332 $ -
RATIOS TO AVERAGE NET ASSETS:
Expenses*** 0.60% (c) 0.60% (c) 0.60% (c)
Net investment income 5.87% (c) 5.08% (c) 4.04% (c)
PORTFOLIO TURNOVER RATE 213% 130% 107%
</TABLE>
* Commencement of operations.
** The OFFIT VIF - U.S. Government Fund commenced operations on August 24,
1998. The last remaining outstanding shares were redeemed on September
25, 1998. The Fund recommenced operations on April 1, 1999, at an NAV
of $10.00.
*** During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred,
the ratio would have been higher.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) Initial offering price
The accompanying notes are an integral part of the financial statements
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1 -- ORGANIZATION
The OFFIT Variable Insurance Fund, Inc. (the "Company", formerly The OFFITBANK
Variable Insurance Fund, Inc.) 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 nine separately managed funds, of which
six, OFFIT VIF-High Yield Fund (VIF-High Yield Fund), OFFIT VIF-Emerging Markets
Bond Fund (VIF-Emerging Markets Bond Fund), DJG Value Equity Fund, OFFIT
VIF-U.S. Small Cap Fund (VIF-U.S. Small Cap Fund), OFFIT VIF-Total Return Fund
(VIF-Total Return Fund) and OFFIT VIF-U.S. Government Securities Fund (VIF-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 Bond 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 Bond 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 Bond 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 Bond, VIF-U.S.
Small Cap, VIF-Total Return and VIF-U.S. Government Funds' investment adviser.
David J. Greene and Company serves as the DJG Value Equity Fund's investment
adviser. Rockefeller & Company, Inc. serves as the sub-adviser for the VIF-U.S.
Small Cap Fund. 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
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
approximates market value, and, if applicable, adjusted for foreign exchange
translation. Investments in registered investment companies are valued at net
asset value. Securities for which market quotations are not readily available
are valued at fair value determined in good faith by or under the direction of
the 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 Bond
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.
As of December 31, 1999, 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 losses as follows:
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Loss
Deferred
------------
<S> <C>
VIF-High Yield Fund $ 8,173
VIF-U.S. Government Securities Fund 2,788
</TABLE>
For federal income tax purposes, the following Funds have capital loss
carry-forwards:
<TABLE>
<CAPTION>
VIF-High VIF-Emerging VIF-Total VIF-U.S. Government
Date of Expiration: Yield Fund Markets Bond Fund Return Fund Securities Fund
------------------- -------------- ------------------- ---------------- ---------------------
<C> <C> <C> <C> <C>
2006..................... $ - $ 1,212,169 $ - $ -
2007..................... 46,350 - 26,641 121,217
------------ ----------------- ------------- ------------------
Total.................... $ 46,350 $ 1,212,169 $ 26,641 $ 121,217
------------ ----------------- ------------- ------------------
------------ ----------------- ------------- ------------------
</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 no 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 counterparties to meet the terms of their
contracts and from unanticipated movements in the value of the foreign currency
relative to the U.S. dollar. Forward foreign exchange contracts may involve
market or
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
--------------------------------------------------------------------------------
credit risk in excess of the related amounts reflected on the Fund's statement
of assets and liabilities. The gain or loss from the difference between the cost
of original contracts and the amount realized upon the closing of such contracts
is included in net realized gain on foreign currency transactions. Fluctuations
in the value of forward contracts held at June 30, 2000 are recorded for
financial reporting purposes as unrealized gains and losses by the Funds.
At June 30, 2000, there were no outstanding forward currency contracts for the
VIF-Emerging Markets Bond, DJG Value Equity, VIF-U.S. Small Cap, VIF-Total
Return and VIF-U.S. Government Securities Funds. The table below indicates the
VIF-High Yield Fund's outstanding forward currency contract positions at June
30, 2000:
<TABLE>
<CAPTION>
VALUE ON VALUE AT UNREALIZED
CONTRACT MATURITY ORIGINATION JUNE 30, APPRECIATION
CURRENCY AMOUNTS DATE DATE 2000 (DEPRECIATION)
---------- --------------- ------------ --------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Buy DEM 478,000 07/11/00 $223,818 $234,444 $10,626
Sell DEM (478,000) 07/11/00 (235,144) (234,444) 700
Sell FRF (14,275,000) 07/11/00 (2,042,933) (2,087,571) (44,638)
--------------
Net unrealized depreciation on forward positions............................... $(33,312)
==============
</TABLE>
Currency Abbreviations:
DEM - German Deutsche Mark
FRF - French Franc
Certain of the Funds 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 Bond 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 BOND FUND FUND FUND
------------------ ---------------------------- -------------------- ----------------------
<S> <C> <C> <C> <C>
GROSS FEE $198,209 $34,864 $ 19,098 $15,000
WAIVER (42,692) (216) (810) (5,515)
------------------ ---------------------------- -------------------- ----------------------
NET FEE $155,517 $34,648 $ 18,288 $ 9,485
================== ============================ ==================== ======================
<CAPTION>
VIF-TOTAL RETURN VIF-U.S. GOVERNMENT
FUND SECURITIES FUND
------------------ ----------------------------
<S> <C> <C>
GROSS FEE $6,325 $46,081
WAIVER (6,325) (9,185)
------------------ ----------------------------
NET FEE $ 0 $36,896
================== ============================
</TABLE>
<PAGE>
THE OFFIT 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. PFPC
waived all of its fee for Portfolios with less than $20 million in average daily
net assets.
ADMINISTRATION FEE
<TABLE>
<CAPTION>
VIF-HIGH YIELD VIF-EMERGING MARKETS DJG VALUE EQUITY VIF-U.S. SMALL CAP
FUND BOND FUND FUND FUND
------------------ ---------------------------- -------------------- ----------------------
<S> <C> <C> <C> <C>
GROSS FEE $29,148 $4,842 $2,984 $1,875
WAIVER (6,995) (4,842) (2,984) (1,875)
------------------ ---------------------------- -------------------- ----------------------
NET FEE $22,153 $ 0 $ 0 $ 0
================== ============================ ==================== ======================
<CAPTION>
VIF-TOTAL RETURN VIF-U.S. GOVERNMENT
FUND SECURITIES FUND
------------------ ----------------------------
<S> <C> <C>
GROSS FEE $988 $16,458
WAIVER (988) (4,545)
------------------ ----------------------------
NET FEE $ 0 $11,913
================== ============================
</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. PFPC waived all
of its fee for Portfolios with less than $30 million in average daily net
assets.
FUND ACCOUNTING FEE
<TABLE>
<CAPTION>
VIF-HIGH YIELD VIF-EMERGING MARKETS DJG VALUE EQUITY VIF-U.S. SMALL CAP
FUND BOND 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 $7,500
WAIVER (7,500) (7,500)
------------------ ----------------------------
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.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
--------------------------------------------------------------------------------
TRANSFER AGENT FEE
<TABLE>
<CAPTION>
VIF-HIGH YIELD VIF-EMERGING MARKETS DJG VALUE EQUITY VIF-U.S. SMALL CAP
FUND BOND FUND FUND FUND
------------------ ---------------------------- -------------------- ----------------------
<S> <C> <C> <C> <C>
GROSS FEE $9,000 $9,000 $9,000 $9,000
WAIVER (4,116) (4,345) (4,378) (4,155)
------------------ ---------------------------- -------------------- ----------------------
NET FEE $4,884 $4,655 $4,622 $4,845
================== ============================ ==================== ======================
<CAPTION>
VIF-TOTAL RETURN VIF-U.S. GOVERNMENT
FUND SECURITIES FUND
------------------ ----------------------------
<S> <C> <C>
GROSS FEE $9,000 $9,000
WAIVER (4,309) (4,278)
------------------ ----------------------------
NET FEE $4,691 $4,722
================== ============================
</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 1.15%, 1.50%, 1.25%, 1.50%, 0.80% and 0.60% for
the VIF-High Yield Fund, VIF-Emerging Markets Bond Fund, DJG Value Equity Fund,
VIF-U.S. Small Cap Fund, VIF-Total Return Fund and VIF U.S. Government
Securities Fund, respectively. In order to maintain these ratios, for the six
months ended June 30, 2000, the Adviser has waived all or a portion of their
advisory fee and has also agreed to reimburse the VIF-Total Return Fund for
expenses in the amount of $6,260.
NOTE 4 -- SECURITIES TRANSACTIONS
For the six months ended June 30, 2000, 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 $5,757,120 $2,805,222 $ - $ -
VIF-Emerging Markets Bond Fund 2,451,963 1,679,829 - -
DJG Value Equity Fund 1,980,788 945,226 - -
VIF-U.S. Small Cap Fund 1,284,332 612,718 - -
VIF-Total Return Fund 305,878 45,075 1,473,988 792,650
VIF-U.S. Government Securities Fund 1,731,246 - 55,661,771 49,039,238
</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, 2000 and the period ended December 31, 1999, respectively,
were as follows:
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF-HIGH YIELD FUND
----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
---------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ----------------- ------------- -------------------
<S> <C> <C> <C> <C>
Shares issued...................... 273,921 $2,522,392 608,313 $6,179,148
Shares reinvested.................. 215,892 1,985,850 412,444 4,093,318
Shares redeemed.................... (295,695) (2,753,788) (208,809) (2,106,815)
------------- ----------------- ------------- -------------------
Net increase....................... 194,118 $1,754,454 811,948 $8,165,651
============= ================= ============= ===================
<CAPTION>
VIF-EMERGING MARKETS BOND FUND
----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
---------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ----------------- ------------- -------------------
<S> <C> <C> <C> <C>
Shares issued...................... 17,721 $147,920 88,509 $740,901
Shares reinvested.................. 51,107 435,712 91,978 733,292
Shares redeemed.................... (22,609) (193,556) (5,477) (41,702)
------------- ----------------- ------------- -------------------
Net increase....................... 46,219 $390,076 175,010 $1,432,491
============= ================= ============= ===================
<CAPTION>
DJG VALUE EQUITY FUND
----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
---------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ----------------- ------------- -------------------
<S> <C> <C> <C> <C>
Shares issued...................... 59,089 $788,904 116,368 $1,682,025
Shares reinvested.................. - - 8,148 116,520
Shares redeemed.................... (2,794) (37,129) (1,949) (25,846)
------------- ----------------- ------------- -------------------
Net increase....................... 56,295 $751,775 122,567 $1,772,699
============= ================= ============= ===================
<CAPTION>
VIF-U.S. SMALL CAP FUND
----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
---------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ----------------- ------------- -------------------
<S> <C> <C> <C> <C>
Shares issued...................... 49,544 $796,095 3,857 $ 48,966
Shares reinvested.................. - - 1,688 29,037
Shares redeemed.................... (1,131) (21,764) (1,017) (12,848)
------------- ----------------- ------------- -------------------
Net increase....................... 48,413 $747,331 4,528 $65,155
============= ================= ============= ===================
<CAPTION>
VIF-TOTAL RETURN FUND
----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
---------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ----------------- ------------- -------------------
<S> <C> <C> <C> <C>
Shares issued...................... 94,446 $900,900 125,104 $1,253,500
Shares reinvested.................. - - 3,164 30,251
Shares redeemed.................... (712) (6,841) (141,275) (1,411,140)
------------- ----------------- ------------- -------------------
Net increase (decrease)............ 93,734 $ 894,059 (13,007) $(127,389)
============= ================= ============= ===================
</TABLE>
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF-U.S. GOVERNMENT SECURITIES FUND
----------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 2000 DECEMBER 31, 1999
---------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ----------------- ------------- -------------------
<S> <C> <C> <C> <C>
Shares issued...................... 1,021,893 $10,112,961 1,758,987 $17,553,952
Shares redeemed.................... (56,566) (567,446) (15,757) (156,518)
------------- ----------------- ------------- -------------------
Net increase....................... 965,327 $9,545,515 1,743,230 $17,397,434
============= ================= ============= ===================
</TABLE>
NOTE 6 -- OTHER MATTERS
The VIF-High Yield Fund and the VIF-Emerging Markets Bond Fund invest in
obligations of foreign entities and securities denominated in foreign
currencies. Such investments involve risk not typically involved with domestic
investments. Such risks include fluctuations in the foreign exchange rates,
inability to convert proceeds into U.S. dollars, application of foreign tax
laws, foreign investment restrictions, less publicly available information about
foreign financial instruments, less liquidity resulting from substantially less
trading volume, more volatile prices and generally less government supervision
of foreign securities markets and issuers.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
------------------------------------------------------------------------------
<TABLE>
<S> <C>
OFFICERS AND DIRECTORS INVESTMENT ADVISER - DJG VALUE EQUITY FUND
David J. Greene & Company
Dr. Wallace Mathai-Davis 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 -VIF- U.S. SMALL CAP FUND
Rockefeller & Company, Inc.
Stephen M. Peck 30 Rockefeller Plaza
DIRECTOR New York, New York 10112
Stephen Brent Wells DISTRIBUTOR
SECRETARY OFFIT Funds Distributor, Inc.
Four Falls Corporate Center, 6th Floor
Vincent M. Rella West Conshohocken, PA 19428-2961
TREASURER
ADMINISTRATOR
Michael S. Kagan PFPC Inc.
ASSISTANT TREASURER 103 Bellevue Parkway
Wilmington, DE 19809
Gary M. Gardner
ASSISTANT SECRETARY TRANSFER AND DIVIDEND DISBURSING AGENT
PFPC Inc.
David C. Lebisky 400 Bellevue Parkway
ASSISTANT SECRETARY Wilmington, DE 19809
CUSTODIAN
The Bank of New York
100 Church Street, 10th Floor
New York, New York 10286
LEGAL COUNSEL
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
</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 OFFIT VARIABLE INSURANCE FUND, INC.
400 BELLEVUE PARKWAY, SUITE 108, WILMINGTON, DE 19809
(800) 618-9510
