<PAGE>
------------------------------------------
OFFIT VIF-HIGH YIELD FUND
OFFIT VIF-EMERGING MARKETS FUND
DJG VALUE EQUITY FUND
OFFIT VIF-U.S. SMALL CAP FUND
OFFIT VIF-TOTAL RETURN FUND
OFFIT VIF-U.S. GOVERNMENT SECURITIES FUND
------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1999
THE OFFIT VARIABLE INSURANCE FUND, INC.
<PAGE>
PRESIDENT'S LETTER
- --------------------------------------------------------------------------------
Dear Policyholders:
We are pleased to present you with the December 31, 1999 Annual Report for The
OFFIT Variable Insurance Fund, Inc. As of that date the Funds' investment
portfolios have assets in excess of $80 million, an increase of $25 million over
year-end 1998.
The specific results of the respective Funds, along with an investment and
market commentary from each portfolio manager, are part of this Annual Report.
As always, we have tried to make each market commentary informative, and I hope
that you will find them helpful.
On September 1, 1999 OFFITBANK Holdings, Inc. consummated its merger with the
Wachovia Corporation. Since then OFFITBANK has been functioning as a distinct
operating subsidiary of Wachovia, and on October 22, 1999 Morris joined the
Board of the Wachovia Corporation and Wachovia Bank, N.A. From our perspective,
we are particularly pleased by the positive effects of the merger. Wachovia has
been unqualified in its support of OFFITBANK and our clients. We have been
working very closely with the Wachovia family in order to develop additional
resources and expanded wealth management services to more effectively meet the
needs of our clients.
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
January 19, 2000
<PAGE>
OFFIT
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
The challenging market conditions that began in the summer of 1998 continued to
have an impact throughout all of 1999. The Fund's net investment return for the
second half of 1999 was a disappointing -1.2%, bringing the full year return to
- -0.29%. The December 31, 1999 net asset value of $9.50 after the $.05 year-end
distribution was 9% lower than the $10.40 prior year value. The net assets of
the Fund at year-end were $48.2 million. Reflective of the higher market yields
and lower prices, the 30-day SEC yield increased to 9.32% at year-end from 8.26%
at June 30, 1999.
The high yield market and the Fund fulfilled one of its primary investment goals
during 1999 by adding substantial value over investment grade fixed income
returns. However, 1999 results were unsatisfactory in many respects. We had more
credit problems than should be expected given the higher quality focus of the
portfolio. Credit deterioration, that historically would have resulted in only
modest losses, too often turned into a pricing free fall because of the
diminished liquidity for credits that have disappointed. The market is demanding
increasingly higher yields for out of favor credits and industries.
Throughout 1999, higher quality high yield holdings which are more sensitive to
interest rates than the broad market were under pressure as well. The rewards
for credit upgrades were often nonexistent due to the significant backup in
interest rates during the year. While spreads for solid double B credits are
relatively unchanged in the range of 275 to 300 basis points, absolute yields
have increased to the 9 1/2% area from below 8% a year ago. The average high
yield bond now yields nearly 11%.
Defaults and credit problems should have less of an impact on the market going
forward. Today's yields and spreads reflect the expectation that the default
rate will stay above the historic averages. Most of the price erosion for
deteriorating credits has occurred well in advance of the actual default. With
approximately 12% of the high yield market trading at yield spreads in excess of
1000 basis points, a large number of future defaults is built into today's bond
prices.
The default rate for the domestic high yield market climbed above 4% in 1999 for
the first time since 1991. The number of companies and the dollar volume of
defaults were a record due to the increased size of the market. The default rate
should stabilize and decline modestly in the coming year. The energy industry,
which contributed a large number of 1999 defaults, has turned around with the
recent doubling oil prices. And the long-term care industry, of which we are too
painfully aware, also appears to have bottomed.
After two consecutive years of sub-coupon returns, the high yield market appears
to offer total return potential in excess of the current coupon. The price of
the average bond is trading at a substantial discount to par and the average
yield is well above levels seen for the last five years. The market has digested
a large increase in problem credits and substantial new issue supply while there
has been virtually no positive mutual fund inflows. The liquidity that has
pressured pricing downward can also move prices upward should new money come
into the market.
The new money purchaser of high yield securities continues to be CBO's. Buying
by CBO's has provided substantial liquidity to the broad market as dealer
trading liquidity has become focused on a narrower list of issues. During 1999,
CBO issuance increased to an estimated $50 billion. We would expect CBO issuance
to continue to provide a cushion against dramatic spread widening.
The Fund is well positioned to benefit when the high yield market strengthens.
During the second half of 1999, we began to consolidate the number of issues in
the portfolio. We sold a large number of our smaller, less liquid positions when
the market allowed us to exit at favorable prices. We also sold some issues
trading at investment grade spreads including former core holdings Lenfest
Communications, Jones Cable, and Host Marriott Travel Plaza. We added to some of
our core higher quality holdings at lower prices. Additionally, we added a
number of large, liquid, high-quality telecom credits to the portfolio including
Global Crossing and Williams Communications.
We continue to focus on the better quality sectors of the high yield market and
have made a conscious effort to maintain portfolio quality. As of year-end,
approximately 50% of the holdings in the Fund are rated Ba3 or better by Moody's
or BB- or better by Standard and Poor's. Additionally, 76% of the holdings are
rated at least B1 or B+. Many of the lower rated or unrated holdings are senior
in the capital structure, including our largest holding, Eurotunnel bank debt.
The Fund remains well diversified with over 120 issues. We continue to believe
that better quality high yield credits will outperform fixed income alternatives
over time.
Stephen T. Shapiro
January 19, 2000
<PAGE>
OFFIT
VIF - HIGH YIELD FUND
- --------------------------------------------------------------------------------
The following graph represents the total return based on a $10,000 investment
made in the OFFIT VIF-High Yield Fund at the trading commencement date of April
1, 1996 and held through December 31, 1999 against the performance of the
Merrill Lynch High Yield "BB" 5-6.99 Year and the 5 Year Treasury over the same
period.
<TABLE>
<CAPTION>
4/1/96 6/30/96 12/31/96 6/30/97 12/31/97 6/30/98 12/31/98 6/30/99 12/31/99
-------- ------- --------- --------- --------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OFFIT VIF-High Yield
Fund 10,000 10,164 11,131 11,723 12,461 12,993 13,003 13,123 12,694
Merrill Lynch High Yield
"BB" 10,000 10,095 10,808 11,359 12,041 12,531 12,721 12,907 13,037
5 Year Treasury 10,000 9,973 10,384 10,626 11,218 11,601 12,319 12,022 12,005
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------- ----------------------------- --------------------------
Since Inception
Total Return One Year (April 1, 1996)
------------ -------- ----------------
<S> <C> <C>
OFFIT VIF-High Yield Fund* (0.29%) 7.17%
Merrill Lynch Yield "BB" 5-6.99 Year 2.48% 7.33%
5 Year Treasury (2.54%) 4.99%
-------------------------------------------------- ----------------------------- --------------------------
</TABLE>
* Assumes reinvestment of all dividends and distributions. The total return may
reflect the waiver of a portion of the Fund's advisory or administrative fees
for certain periods since inception date. In such instances, and without waiver
of fees, total return would have been lower.
Performance data quoted represents past performance and is not predictive of
future performance. Investment return and principal value will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance data quoted does not include charges imposed in
connection with variable insurance and annuity contracts, and if such charges
were included, performance numbers would have been lower. Indices shown for
comparative purposes only, and are not available for investment.
<PAGE>
<TABLE>
<CAPTION>
OFFIT
VIF-HIGH YIELD FUND
- --------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (90.0%)
AUTOMOTIVE (3.7%)
Exide Corp. Sr Notes, 10.00%, 04/15/05 $ 150,000 $ 145,500
Exide Holding Europe S.A., 9.125%, 04/15/04 (144A) 500,000 (a)(1) 250,393
Federal-Mogul Corp. Notes, 7.875%, 07/01/10 500,000 448,470
Hayes Lemmerz International Inc. Sr Sub Notes, 9.125%, 07/15/07 500,000 488,750
Lear Corp. Sr Notes, 8.11%, 05/15/09 (144A) 500,000 (1) 471,565
---------------
1,804,678
---------------
BROADCAST/MEDIA (3.5%)
Echostar Corp. Sr Note, 9.25%, 02/01/06 500,000 503,750
Hollinger International Publishing Sr Sub Notes, 9.25%, 03/15/07 250,000 248,750
Lamar Media Corp. Sr Sub Notes, 9.625%, 12/01/06 500,000 516,250
Outdoor Systems Inc. Sr Sub Notes, 9.375%, 10/15/06 250,000 263,125
Sun Media Corp. Sr Sub Notes, 9.50%, 05/15/07 155,000 153,837
---------------
1,685,712
---------------
CABLE (5.6%)
Adelphia Communications Corp. Sr Notes, 9.375%, 11/15/09 500,000 490,000
Adelphia Communications Corp. Sr Notes, 9.875%, 03/01/07 200,000 203,000
Century Communications Corp. Sr Notes, 8.875%, 01/15/07 400,000 387,000
CSC Holdings Inc. Sr Notes, 9.25%, 11/01/05 300,000 306,750
NTL Inc. Sr Notes, 0/9.75%, 04/01/08 500,000 (2) 350,000
Olympus Communications L.P. Sr Notes, 10.625%, 11/15/06 300,000 312,000
Telewest Communications PLC Sr Discount Debs., 9.625%, 10/01/06 250,000 255,000
Telewest Communications PLC Sr Discount Debs., 0/11.00%, 10/01/07 400,000 (2) 374,000
---------------
2,677,750
---------------
CHEMICAL (4.7%)
Borden Chemicals & Plastics Sr Notes, 9.50%, 05/01/05 500,000 465,000
Huntsman ICI Chemicals Sr Sub Notes, 10.125%, 07/01/09 500,000 (b) 531,272
ISP Holdings Inc. Sr Notes, 9.00%, 10/15/03 300,000 294,750
Lyondell Chemical Co. Sr Secured Notes, 9.625%, 05/01/07 500,000 512,500
Polymer Group, 8.75%, 03/01/08 300,000 288,000
Terra Industries Inc. Sr Notes, 10.50%, 06/15/05 250,000 180,000
---------------
2,271,522
---------------
CONSUMER GROUPS (5.9%)
Ameriserve Food Co. Sr Notes, 8.875%, 10/15/06 500,000 290,000
Chiquita Brands International Inc. Sr Notes, 10.25%, 11/01/06 850,000 629,000
Fedders N.A. Sr Sub Notes, 9.375%, 08/15/07 200,000 198,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
OFFIT
VIF-HIGH YIELD FUND
- --------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
CONSUMER GROUPS (CONTINUED)
Fisher Scientific International Inc. Sr Sub Notes, 9.00%, 02/01/08 $ 500,000 $ 478,750
Fleming Companies Inc. Sr Notes, 10.625%, 12/15/01 500,000 510,000
Fruit of The Loom Sr Notes, 8.875%, 04/15/06 500,000 (4) 20,000
Playtex Products Inc. Sr Notes, 8.875%, 07/15/04 250,000 249,375
Revlon Consumer Products Sr Sub Notes, 8.625%, 02/01/08 250,000 127,500
United Artists Theatre Pass Through Certificates, 9.30%, 07/01/15 466,829 326,780
---------------
2,829,405
---------------
FINANCIAL SERVICES/INSURANCE (2.7%)
Amresco Inc. Sr Sub Notes, 9.875%, 03/15/05 500,000 315,000
Presidential Life Corp. Sr Notes, 7.875%, 02/15/09 350,000 326,959
Reliance Group Holdings Inc. Sr Sub Notes, 9.75%, 11/15/03 350,000 259,000
Willis Corroon Corp. Sr Sub Notes, 9.00%, 02/01/09 500,000 416,250
---------------
1,317,209
---------------
FOREST & PAPER PRODUCTS (2.7%)
Doman Industries Limited Sr Notes, 8.75%, 03/15/04 200,000 170,000
Repap New Brunswick First Priority Sr Secured Notes, 9.00%, 06/01/04 600,000 585,000
Stone Container Corp. Sr Secured Notes, 10.75%, 10/01/02 300,000 308,625
Stone Container Corp. Sr Sub Debs., 12.25%, 04/01/02 250,000 250,625
---------------
1,314,250
---------------
GENERAL INDUSTRIES/MANUFACTURING (4.9%)
Allied Waste North America Sr Notes, 7.625%, 01/01/06 500,000 450,000
Galey & Lord Inc. Sr Sub Notes, 9.125%, 03/01/08 200,000 48,000
Nortek Inc. Sr Notes, 9.25%, 03/15/07 600,000 583,500
Pillowtex Corp., 9.00%, 12/15/07 300,000 129,000
United Rentals Inc., 9.00%, 04/01/09 400,000 376,000
Westpoint Stevens Inc. Sr Notes, 7.875%, 06/15/08 300,000 268,500
Williams Scotsman Inc. Sr Notes, 9.875%, 06/01/07 500,000 485,000
---------------
2,340,000
---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
OFFIT
VIF-HIGH YIELD FUND
- --------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
HEALTH CARE (3.7%)
Columbia/HCA Healthcare Notes, 6.91%, 06/15/05 $ 300,000 $ 271,584
Columbia/HCA Healthcare Medium Term Notes, 8.85%, 01/01/07 300,000 298,539
Extendicare Health Services Sr Sub Notes, 9.35%, 12/15/07 250,000 167,500
Integrated Health Services Inc. Sr Sub Notes, 9.50%, 09/15/07 400,000 (4) 30,000
Medaphis Corp. Sr Notes, 9.50%, 02/15/05 200,000 155,000
Sun Healthcare Group Inc. Sr Sub Notes, 9.50%, 07/01/07 500,000 (4) 60,000
Tenet Healthcare Corp. Sr Sub Notes, 8.625%, 01/15/07 850,000 818,125
---------------
1,800,748
---------------
HOTELS & GAMING (8.0%)
Felcor Suites L.P. Sr Notes, 7.625%, 10/01/07 320,000 287,200
HMH Properties Sr Notes, 7.875%, 08/01/08 600,000 540,000
Hollywood Park Operating Inc. Sr Sub Notes, 9.50%, 08/01/07 300,000 299,250
International Game Technology Sr Notes, 8.375%, 05/15/09 500,000 483,750
John Q. Hammons Hotels L.P. First Mtg. Notes, 8.875%, 02/15/04 550,000 497,750
John Q. Hammons Hotels L.P. First Mtg. Notes, 9.75%, 10/01/05 200,000 184,000
Meristar Hospitality Corp. Sr Sub Notes, 8.75%, 08/15/07 200,000 184,000
Park Place Entertainment Sr Sub Notes, 7.875%, 12/15/05 300,000 285,750
Prime Hospitality Corp. First Mtg. Notes, 9.25%, 01/15/06 250,000 252,500
Prime Hospitality Corp. Sr Sub Notes, 9.75%, 04/01/07 250,000 242,500
Sun International Hotels Ltd. Sr Sub Notes, 9.00%, 03/15/07 300,000 287,250
Trump Atlantic City First Mtg. Notes, 11.25%, 05/01/06 350,000 287,000
---------------
3,830,950
---------------
METALS & MINING (7.3%)
AK Steel Corp. Sr Notes, 9.125%, 12/15/06 400,000 405,000
Centaur Mining Exploration Sr Secured Notes, 11.00%, 12/01/07 250,000 247,500
Freeport McMoran C&G Debs., 7.20%, 11/15/26 300,000 225,000
Glencore Nickel Pty Ltd. Sr Secured Bonds, 9.00%, 12/01/14 250,000 215,000
Great Central Mines Ltd. Sr Notes, 8.875%, 04/01/08 500,000 461,250
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
OFFIT
VIF-HIGH YIELD FUND
- --------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
METALS & MINING (CONTINUED)
Inland Steel Co. First Mortgage, 7.90%, 01/15/07 $ 300,000 $ 273,000
Kaiser Aluminum & Chemical Corp. Sr Notes, 10.875%, 10/15/06 175,000 175,437
LTV Corp. Sr Notes, 8.20%, 09/15/07 500,000 457,500
National Steel Corp. First Mtg. Bonds, 8.375%, 08/01/06 598,000 562,120
P&L Coal Holdings, 8.875%, 05/15/08 500,000 488,750
---------------
3,510,557
---------------
OIL/GAS (6.9%)
Clark R&M Inc. Sr Notes, 8.625%, 08/15/08 400,000 260,000
Ferrellgas Partner L.P. Sr Notes, 9.375%, 06/15/06 525,000 514,500
Giant Industries Services Inc. Sr Sub Notes, 9.00%, 09/01/07 400,000 370,000
Gulf Canada Resources Ltd. Sr Sub Debs., 9.25%, 01/15/04 300,000 299,949
KCS Energy Inc. Sr Notes, 11.00%, 01/15/03 725,000 (4) 572,750
Newpark Resources Inc. Sr Sub Notes, 8.625%, 12/15/07 500,000 465,000
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
---------------
3,346,199
---------------
REAL ESTATE (7.5%)
CB Richard Ellis Sr Sub Notes, 8.875%, 06/01/06 500,000 445,000
Forest City Enterprises Sr Notes, 8.50%, 03/15/08 300,000 279,000
Lennar Corp Sr Notes, 7.625%, 03/01/09 500,000 452,040
LNR Property Corp., 9.375%, 03/15/08 500,000 470,000
MDC Holdings Inc. Sr Notes, 8.375%, 02/01/08 500,000 460,000
Rockefeller Center Properties Sr Notes, 0.00%, 12/31/00 670,000 562,800
Tanger Properties L.P. Sr Notes, 7.875%, 10/24/04 500,000 462,125
Toll Corp, 8.00%, 05/01/09 500,000 458,750
---------------
3,589,715
---------------
RETAIL (2.3%)
Nine West Group Inc. Sr Notes, 8.375%, 08/15/05 250,000 249,070
Petro Stopping Centers Sr Notes, 10.50%, 02/01/07 200,000 185,500
Travelcenters of America Inc. Sr Sub Notes, 10.25%, 04/01/07 400,000 398,000
Zale Corp. Sr Notes, 8.50%, 10/01/07 300,000 291,000
---------------
1,123,570
---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
OFFIT
VIF-HIGH YIELD FUND
- --------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
TELECOMMUNICATIONS-WIRELESS (5.6%)
Nextel Communications Sr Discount Notes, 0/9.75%, 10/31/07 $ 300,000 (2) $ 216,750
Nextel Communications Sr Discount Notes, 0/10.65%, 09/15/07 350,000 (2) 264,250
Orange PLC Sr Notes, 8.75%, 06/01/06 500,000 525,000
Orange PLC Sr Notes, 8.00%, 08/01/08 500,000 502,500
Paging Network Sr Sub Notes, 10.125%, 08/01/07 500,000 155,000
Price Communications Wireless Sr Notes, 9.125%, 12/15/06 500,000 510,000
Rogers Cantel Inc. Sr Sub Notes, 8.80%, 10/01/07 500,000 505,000
---------------
2,678,500
---------------
TELECOMMUNICATIONS-WIRELINE (6.7%)
Alaska Communications Sr Sub Notes, 9.375%, 05/15/09 500,000 483,750
Flag Limited Sr Notes, 8.25%, 01/30/08 500,000 460,000
Global Crossing Holdings Ltd. Sr Notes, 9.125%, 11/15/06 (144A) 350,000 (1) 346,063
Intermedia Communications Sr Discount Notes, 0/11.25%, 07/15/07 600,000 (2) 444,000
Level 3 Communications Sr Notes, 9.125%, 05/01/08 500,000 473,125
Metromedia Fiber Network Sr Notes, 10.00%, 12/15/09 500,000 510,000
Williams Communications Group Inc. Sr Notes, 10.875%, 10/01/09 500,000 523,750
---------------
3,240,688
---------------
TRANSPORTATION (5.2%)
Eletson Holdings Inc. First Pfd. Mtg. Notes, 9.25%, 11/15/03 500,000 460,000
Eurotunnel Finance Tier 1, 5.28%, 01/15/12 10,000,000 (c)(3) 1,243,668
Navigator Gas Transport First Priority Ship Mtg. Notes, 10.50%, 06/30/07 (144A) 250,000 (1) 115,000
Piedmont Aviation Inc. Equipment Trust Certificates, 9.80%, 05/08/04 261,000 272,093
Stena AB Sr Notes, 8.75%, 06/15/07 500,000 410,000
---------------
2,500,761
---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
OFFIT
VIF-HIGH YIELD FUND
- --------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
UTILITIES (3.1%)
AES Corp. Sr Sub Notes, 8.50%, 11/01/07 $ 250,000 $ 233,125
AES Eastern Energy Pass Through Certs., 9.00%, 01/02/17 (144A) 500,000 (1) 477,500
Caithness Coso Fund Corp. Sr Secured Notes, 9.05%, 12/15/09 500,000 497,500
Calpine Corp. Sr Notes, 10.50%, 05/15/06 285,000 302,100
---------------
1,510,225
---------------
TOTAL CORPORATE BONDS (COST $48,567,705) 43,372,439
---------------
PREFERRED STOCK (1.2%)
HEALTH CARE (1.2%)
Fresenius Medical Care Capital Trust Pfd., 9.00%, 12/01/06 600,000 588,000
---------------
TOTAL PREFERRED STOCK (COST $619,500) 588,000
---------------
REPURCHASE AGREEMENT (6.8%)
Bank of New York Repurchase Agreement, 4.00%, 01/03/00 (dated 12/31/99;
proceeds $3,258,486, collateralized by $3,315,000 U.S. Treasury
Notes, 5.875%, due 10/31/01, valued at $3,327,431) 3,257,400 3,257,400
---------------
TOTAL REPURCHASE AGREEMENT (COST $3,257,400) 3,257,400
---------------
TOTAL INVESTMENTS (COST $52,444,605) (+) -- 98.0% 47,217,839
OTHER ASSETS IN EXCESS OF LIABILITIES 2.0% 982,312
---------------
TOTAL NET ASSETS -- 100.0% $ 48,200,151
===============
---------------------------------------------------------------------
+ Represents cost for federal income tax purposes and differs from value by net unrealized depreciation of securities as follows:
Unrealized appreciation $ 162,524
Unrealized depreciation (5,389,290)
------------
Net unrealized depreciation $ (5,226,766)
============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
OFFIT
VIF-HIGH YIELD FUND
- --------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
Principal denominated in the following currencies:
(a) Deutsche Mark
(b) European Currency Unit
(c) 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) Illiquid security.
(4) Security in default.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
OFFIT
VIF - EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
The year-to-date total return of the OFFIT VIF-Emerging Markets Fund through
December 31, 1999 was 25.19%. For the quarter ending December 31, 1999, the Fund
had a total return of 10.82%. For the same periods the Lipper Emerging Markets
Debt Fund Objective's total return was 24.40% and 12.30%, respectively. As of
December 31, 1999, the Fund had a 30-day SEC yield of 12.2%, a current yield of
10.5%, an average duration of approximately 3.6 years, and a net asset value per
share of $8.46.
Today, the Fund remains invested solely in US dollar-denominated bonds, of which
approximately 72% were invested in Latin American corporate bonds and the
remainder in government bonds from the region. At year end, the country
allocations across Latin America are approximately as follows: Brazil, 44%;
Mexico, 26%; and Argentina, 23%. Cash and accrued interest represent the
remaining 7%. We believe that OFFITBANK's strategy of focusing on well
researched, US dollar-denominated corporate debt has been the primary factor
contributing to our outperformance over the Lipper Emerging Markets Debt Fund
Objective average for the year.
Emerging markets bonds had a strong total return performance in the fourth
quarter of 1999, as the markets became less concerned with Y2K issues and
focused instead on improving global macroeconomic conditions that favor emerging
markets, and Latin America in particular. Emerging markets bond spreads
tightened by approximately 325 basis points during 1999 -- 275 basis points of
the tightening occurred in the fourth quarter -- as growth gradually resumed and
commodity prices stabilized. GDP growth across the primary markets in Latin
America contracted by 0.5% for 1999, but was already rebounding by the fourth
quarter. In contrast, 2000's forecasted average growth in the region is
approximately 3.5% to 4.5%.
In the near term, the Fund's current and SEC yields of 10.5% and 12.2%,
respectively, provide a significant cushion to a moderate increase in interest
rates in the US, Japan and the European Union.
The Fund's investment strategy remains to be invested predominantly in US
dollar-denominated, corporate bonds within Latin America with the flexibility of
investing in broader global emerging markets as compelling fundamentally sound
opportunities present themselves.
Richard M. Johnston Richard C. Madigan
January 19, 2000
<PAGE>
OFFIT
VIF - EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
The following graph represents the total return based on a $10,000 investment
made in the OFFIT VIF-Emerging Markets Fund at the trading commencement date of
August 28, 1996 and held through December 31, 1999 against the performance of
the J.P. Morgan Emerging Markets Bond Index+, J.P. Morgan Latin America Eurobond
Index and Lipper Emerging Markets Debt Fund Objective over the same period. In
addition, the graph below includes a composite of the return of such indices
which we believe provides a comparison to the overall performance of the various
asset classes in which the Fund invest.
[GRAPH]
<TABLE>
<CAPTION>
8/28/96 12/31/96 6/30/97 12/31/97 6/30/98 12/31/98 6/30/99 12/31/99
------- -------- ------- -------- ------- ---------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OFFIT VIF-Emerging Markets Fund 10,000 10,593 11,464 11,455 11,633 9,595 10,450 12,013
50% J.P. Morgan Emerging Markets Bond Index+
and 50% J.P. Morgan Latin America Eurobond Index 10,000 11,048 12,083 12,378 12,399 11,301 12,169 13,760
J.P. Morgan Emerging Markets Bond Index+ 10,000 11,818 13,032 13,356 13,213 11,440 12,649 14,411
J.P. Morgan Latin America Eurobond Index 10,000 11,009 12,033 12,321 12,505 11,992 12,587 14,126
Lipper Analytical Emerging Market Debt Index 10,000 11,896 13,313 13,563 13,182 10,686 11,727 13,293
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Since Inception
Total Return One Year (August 28, 1996)
------------ -------- ---------------
<S> <C> <C>
OFFIT VIF-Emerging Markets Fund* 25.19% 5.64%
Composite Index: 50% J.P. Morgan Emerging Markets Bond Index+ and
50% J.P. Morgan Latin America Eurobond Index 21.89% 10.02%
J.P. Morgan Emerging Markets Bond Index+ 25.97% 10.12%
J.P. Morgan Latin America Eurobond Index 17.80% 9.92%
Lipper Emerging Markets Debt Fund Objective 24.40% 7.37%
---------------------------------------------------------------------------------------------------------------------
</TABLE>
*Assumes reinvestment of all dividends and distributions. The total return may
reflect the waiver of a portion of the Fund's advisory or administrative fees
for certain periods since inception date. In such instances, and without waiver
of fees, total return would have been lower.
Performance data quoted represents past performance and is not predictive of
future performance. Investment return and principal value will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance data quoted does not include charges imposed in
connection with variable insurance and annuity contracts, and if such charges
were included, performance numbers would have been lower. Indices shown for
comparative purposes only, and are not available for investment.
<PAGE>
<TABLE>
<CAPTION>
OFFIT
VIF-EMERGING MARKETS FUND
------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (72.1%)
BUILDING MATERIALS (5.5%)
MEXICO (5.5%)
Cemex International Capital LLC, 9.66%, 11/29/49 $ 250,000 $ 245,000
Internacional de Ceramica S.A., 9.75%, 08/01/02 225,000 175,500
----------------------
420,500
----------------------
CABLE (3.8%)
ARGENTINA (3.8%)
Cablevision S.A., 13.75%, 05/01/09 300,000 291,750
----------------------
FOOD (8.1%)
ARGENTINA (4.2%)
Mastellone Hermanos S.A., 11.75%, 04/01/08 400,000 320,000
----------------------
BRAZIL (3.9%)
Arisco Produtos Alimenticios, 10.75%, 05/22/05 330,000 301,950
----------------------
621,950
----------------------
HOTELS & GAMING (3.1%)
MEXICO (3.1%)
Grupo Posadas S.A. de C.V., 10.375%, 02/13/02 250,000 235,000
----------------------
INDUSTRIAL (6.9%)
MEXICO (6.9%)
Sanluis Corp. S.A., 8.875%, 03/18/08 250,000 223,125
Vicap S.A., 10.25%, 05/15/02 80,000 77,000
Vicap S.A., 11.375%, 05/15/07 250,000 230,000
----------------------
530,125
----------------------
INFRASTRUCTURE (2.1%)
ARGENTINA (2.1%)
Cia Latino Americana, 11.625%, 06/01/04 250,000 160,000
----------------------
MEDIA (7.4%)
BRAZIL (7.4%)
Globo Communicacoes Participacoes, 10.50%, 12/20/06
270,000 233,550
Globo Communicacoes Participacoes, 10.625%, 12/05/08 100,000 84,875
RBS Participacoes S.A., 11.00%, 04/01/07 300,000 254,250
----------------------
572,675
----------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
OFFIT
VIF-EMERGING MARKETS FUND
------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
OIL AND GAS (4.7%)
BRAZIL (4.7%)
Cia Petrolifera Marlim, 13.125%, 12/17/04 $ 350,000 $ 360,500
----------------------
PACKAGING (3.2%)
MEXICO (3.2%)
Grupo Industrial Durango, 12.00%, 07/15/01 125,000 124,850
Grupo Industrial Durango, 12.625%, 08/01/03 125,000 124,062
----------------------
248,912
----------------------
PETROCHEMICALS (1.7%)
BRAZIL (1.7%)
OPP Petroquimica S.A., 11.00%, 10/29/04 150,000 132,000
----------------------
RETAIL (3.4%)
ARGENTINA (3.4%)
Disco S.A., 9.875%, 05/15/08 300,000 261,750
----------------------
STEEL (9.2%)
ARGENTINA (2.0%)
Acindar, 11.25%, 02/15/04 200,000 154,000
----------------------
BRAZIL (4.3%)
CSN Iron S.A., 9.125%, 06/01/07 400,000 333,500
----------------------
MEXICO (2.9%)
Hylsa S.A. de C.V., 9.25%, 09/15/07 250,000 221,250
----------------------
708,750
----------------------
TELECOMMUNICATIONS (6.2%)
ARGENTINA (2.3%)
Telefonica de Argentina, 9.125%, 05/07/08 200,000 173,500
----------------------
MEXICO (3.9%)
Alestra S.A. de C.V., 12.625%, 05/15/09 300,000 301,500
----------------------
475,000
----------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
OFFIT
VIF-EMERGING MARKETS FUND
------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
UTILITIES (6.8%)
BRAZIL (6.8%)
COPEL, 9.75%, 05/02/05 $ 300,000 $ 286,500
SABESP, 10.00%, 07/28/05 275,000 233,750
----------------------
520,250
----------------------
TOTAL CORPORATE BONDS (COST $5,633,676) 5,539,162
----------------------
FOREIGN GOVERNMENTS (18.7%)
SOVEREIGN DEBT (18.7%)
ARGENTINA (4.5%)
Republic of Argentina, 11.00%, 12/04/05 150,000 146,025
Republic of Argentina, Brady Floating Rate Bond, 6.8125%, 03/31/05 220,000 (2) 198,946
----------------------
344,971
----------------------
BRAZIL (14.2%)
Brazil Brady Capitalization Bonds, 5.00/8.00%, 04/15/14 236,576 (1) 176,545
Republic of Brazil, 11.625%, 04/15/04 500,000 499,750
Republic of Brazil EI, Floating Rate Notes, 6.938%, 470,000 (2) 412,143
04/15/06
----------------------
1,088,438
----------------------
TOTAL FOREIGN GOVERNMENTS (COST $1,415,136) 1,433,409
----------------------
REPURCHASE AGREEMENT (7.1%)
Bank of New York Repurchase Agreement 4.00%, 01/03/00 (dated 12/31/99;
proceeds $548,283, collateralized by $550,000 U.S. Treasury Notes 5.875%
due 10/31/01, valued at $557,478) 548,100 548,100
----------------------
TOTAL REPURCHASE AGREEMENT (COST $548,100) 548,100
----------------------
TOTAL INVESTMENTS (COST $7,596,912) (+) -- 97.9% 7,520,671
OTHER ASSETS IN EXCESS OF LIABILITIES 2.1% 164,875
----------------------
TOTAL NET ASSETS -- 100.0% $ 7,685,546
----------------------
----------------------
--------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
OFFIT
VIF-EMERGING MARKETS FUND
------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
------------------------------------------------------------------------------------------------------------------------------
<S> <C>
+ Represents cost for federal income tax purposes and differs from
value by net unrealized depreciation of securities as follows:
Unrealized appreciation $ 257,212
Unrealized depreciation (357,798)
--------------------
Net unrealized depreciation $ (100,586)
--------------------
--------------------
(1) Step-Up bond.
(2) Interest rate in effect at December 31, 1999.
Country Diversification (as a percentage of Total Investments):
Argentina 22.68%
Brazil 44.00%
Mexico 26.03%
United States 7.29%
--------------------
100.00%
--------------------
--------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
OFFIT
DJG VALUE EQUITY FUND
- --------------------------------------------------------------------------------
The investing year of 1999 was filled with many crosscurrents. Technology and
internet stocks boomed while most other stocks lagged. The NASDAQ index was up
an astounding 86% while the increasingly technology-oriented S&P 500 gained over
20%. Notwithstanding the impressive gains in the reported indices, about 50% of
the S&P 500 stocks were actually down for the year. In fact, the 432
non-technology stocks in the S&P 500 gained only about 1% during 1999. At
year-end, the valuation discrepancy between growth and technology stocks versus
most other sectors of the market, is extreme and the widest in our recollection
by far.
Against this backdrop, we had a volatile, but positive investing year. Value
stocks came to life during the second quarter and we showed very strong
investment gains as the first half ended. The third quarter saw a general market
correction with all equity indices off, and we gave back a large portion of our
second quarter gains. Our portfolios recovered nicely during the latter part of
the fourth quarter. For the year, the DJG Value Equity Fund gained 23.4%. That
gain compared very favorably with the Russell Mid-Cap Value Index, which
declined slightly for the year, and with value investors generally.
We are delighted with the strong performance of several of our core portfolio
holdings, but disappointed that a number of our stocks lagged for the year. In
our judgment, 1999's underperformers are very depressed at current prices and
have the potential for adding considerable value to the Fund portfolio going
forward.
As we enter the new Millennium, we remain frustrated with the extreme
segmentation of the market, the mania for technology and internet stocks and the
general speculation by the public as evidenced by day trading over the Internet.
We believe that this situation cannot continue unabated. With the general
economy sound, a good case can be made for renewed interest developing in value
stocks which have been very much neglected over the past two years. In this
regard, the stocks we own are priced at very attractive levels and are selling
at substantial discounts from intrinsic value. We believe that they possess
catalysts or strategic plans that will help to bring about appreciation and a
narrowing of the price/value gap. Importantly, this substantial under-valuation
should help to contain risk when an inevitable adjustment takes place in the
over-speculative sectors of the market.
Regardless of how the market measures the values inherent in our holdings over
the short term, we are confident that those franchise values will continue to
grow, and eventually should be better reflected. The issue is one of timing -
not "whether" but "when". We are encouraged by the potential in the portfolio,
and expect to further appreciate clients' capital during the New Year.
Erwin A. Zeuschner
Portfolio Manager and
Principal of David J. Greene and Company, LLC
January 19, 2000
<PAGE>
OFFIT
DJG VALUE EQUITY FUND
- --------------------------------------------------------------------------------
The following graph represents the total return based on a $10,000 investment
made in the DJG Value Equity Fund at the trading commencement date of April 11,
1997 and held through December 31, 1999 as well as the performance of the S&P
500 Stock Index over the same period.
[GRAPH]
<TABLE>
<CAPTION>
4/11/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
------- ------- ------- -------- ------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DJG Value Equity Fund 10,000 11,510 13,261 13,311 14,941 14,180 11,657 12,737 13,036 15,378 14,127 15,712
S&P 500 Stock Index 10,000 11,745 12,624 12,986 14,797 15,285 13,768 16,698 17,529 18,765 17,593 20,211
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Since Inception
Total Return One Year (April 11, 1997)
------------ -------- --------------
<S> <C> <C>
DJG Value Equity Fund* 23.37% 18.06%
S&P 500 Stock Index 21.04% 29.50%
-------------------------------------------------------------------------------------------------
</TABLE>
*Assumes reinvestment of all dividends and distributions. The total return may
reflect the waiver of a portion of the Fund's advisory or administrative fees
for certain periods since inception date. In such instances, and without waiver
of fees, total return would have been lower.
Performance data quoted represents past performance and is not predictive of
future performance. Investment return and principal value will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance data quoted does not include charges imposed in
connection with variable insurance and annuity contracts, and if such charges
were included, performance numbers would have been lower. Indices shown for
comparative purposes only, and are not available for investment.
<PAGE>
<TABLE>
<CAPTION>
OFFIT
DJG VALUE EQUITY FUND
-------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (87.7%)
AGRICULTURE (3.0%)
IMC Global, Inc. 7,950 $ 130,181
---------------------
AUTOMOTIVE (3.4%)
General Motors Corp. 2,000 145,375
---------------------
COMPUTER EQUIPMENT (2.1%)
Quantum Corporation-DLT & Storage Systems* 6,000 90,750
---------------------
COMPUTER SOFTWARE (2.4%)
Policy Management Systems Corp.* 4,000 102,250
---------------------
CONSULTING (6.4%)
Comdisco, Inc. 7,500 279,375
---------------------
DATA PROCESSING (5.8%)
Sterling Software, Inc.* 8,000 252,000
---------------------
ELECTRONICS (3.9%)
Galileo International, Inc. 4,000 119,750
Sensormatic Electronics Corp.* 3,000 52,313
---------------------
172,063
---------------------
FINANCIAL SERVICES (5.4%)
Dime Bancorp, Inc. 6,000 90,750
The FINOVA Group, Inc. 4,000 142,000
---------------------
232,750
---------------------
HEALTH CARE (3.2%)
HEALTHSOUTH Rehabilitation Corp.* 17,500 94,063
McKesson HBOC, Inc. 2,000 45,125
---------------------
139,188
---------------------
HOTELS & GAMING (1.2%)
International Game Technology, Inc. * 2,500 50,781
---------------------
HUMAN RESOURCES (1.8%)
Olsten Corp. 7,000 79,188
---------------------
INDUSTRIAL (1.2%)
Westinghouse Air Brake Co. 3,000 53,250
---------------------
THE ACCCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
<PAGE>
<CAPTION>
OFFIT
DJG VALUE EQUITY FUND
-------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
INSURANCE (4.7%)
Aetna, Inc. 2,500 $ 139,531
Everest Reinsurance Holdings, Inc. 3,000 66,938
---------------------
206,469
---------------------
MANUFACTURING (9.6%)
Calgon Carbon Corp. 5,000 29,688
Hussman International, Inc. 6,000 90,375
Navistar International Corp. * 4,500 213,188
UNOVA, Inc.* 4,500 58,500
Whitman Corp. 2,000 26,875
---------------------
418,626
---------------------
MEDICAL EQUIPMENT AND SUPPLIES (5.2%)
Omnicare, Inc. 15,000 180,000
Varian Medical Systems, Inc.* 1,500 44,719
---------------------
224,719
---------------------
MEDICAL HOSPITAL SERVICES (0.7%)
Foundation Health Systems, Inc. - Class A* 3,000 29,813
---------------------
OFFICE EQUIPMENT AND SUPPLIES (2.0%)
Lanier Worldwide, Inc. 10,000 38,750
Wallace Computer Services, Inc. 3,000 49,871
---------------------
88,621
---------------------
PACKAGING & CONTAINERS (3.2%)
Pactiv Corp.* 13,300 141,313
---------------------
RETAIL (7.3%)
Footstar, Inc.* 3,500 106,750
HomeBase, Inc.* 5,800 17,763
Rite Aid Corp. 7,000 78,313
Toys 'R' Us, Inc.* 8,000 114,500
---------------------
317,326
---------------------
SECURITY SERVICES (3.0%)
Pittston Brink's Group 6,000 132,000
---------------------
TELECOMMUNICATIONS (8.7%)
Telephone & Data Systems, Inc. 3,000 378,000
---------------------
THE ACCCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
<PAGE>
<CAPTION>
OFFIT
DJG VALUE EQUITY FUND
-------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TRANSPORTATION (3.5%)
GATX Corp. 2,000 $ 67,500
Ryder System Inc. 3,500 85,531
---------------------
153,031
---------------------
TOTAL COMMON STOCKS (COST $3,555,674) 3,817,069
---------------------
RIGHTS/WARRANTS (0.0%)
AGRICULTURE (0.0%)
IMC Global, Inc., 12/22/00 500 47
---------------------
TOTAL RIGHTS/WARRANTS (COST $0) 47
---------------------
MONEY MARKET FUND (12.4%)
Bank of New York Cash Reserve $ 539,915 539,915
---------------------
TOTAL MONEY MARKET FUND (COST $539,915) 539,915
---------------------
TOTAL INVESTMENTS (COST $4,095,589) (+) -- 100.1% 4,357,031
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1%) (5,467)
---------------------
TOTAL NET ASSETS -- 100.0% $ 4,351,564
---------------------
---------------------
-----------
+ Represents cost for federal income tax purposes and differs from value by net unrealized appreciation of securities as follows:
Unrealized appreciation $ 776,443
Unrealized depreciation (515,001)
--------------------
Net unrealized appreciation $ 261,442
--------------------
--------------------
</TABLE>
* Denotes non-income producing security
THE ACCCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
<PAGE>
OFFIT
VIF-U.S. Small Cap Fund
-------------------------------------------------------------------------------
After trailing large capitalization stocks for most of 1999, U.S. small
capitalization stocks rebounded strongly in December. For the first time since
1994 the Russell 2000 Index finished the year, albeit barely, ahead of the S&P
500 Index. For the year ended December 31, 1999 the Russell 2000 Index was up
21.3% versus a return of 21.0% for the S&P 500 Index. For the quarter U.S. small
capitalization stocks, as represented by the Russell 2000 Index, significantly
outperformed large capitalization stocks, returning 18.4% versus 14.9% for the
S&P 500 Index.
We are pleased to report that the OFFIT VIF-U.S. Small Cap Fund returned 38.7%
for the quarter net of fees and expenses. For the year, the Fund outperformed
its benchmark, rising 54.0% net of fees while the Russell 2000 Index rose 21.3%.
In the Fund the technology sector had the highest positive contribution to the
return as the overweight position and our stock selection positively contributed
to the Fund's overall performance. Network Appliance, Object Design and
Integrated Systems were particularly strong performers. Stock selection within
the utilities sector (EchoStar and Primus Telecommunications) and in the
consumer discretionary sector (Getty Images and Windmere-Durable Holdings) added
collectively to the portfolio's total return. Stock selection in the financial
services sector boosted the portfolio's overall return. Our underweight position
added to relative outperformance as this sector underperformed the overall
index. The biggest detractor from the Fund's total return was the portfolio's
underweight of producer durables as that sector performed well for the year. The
Fund remains heavily weighted in technology and consumer discretionary stocks.
As of December 31, 1999, these two sectors represented more than 60% of the
total portfolio. The Fund finished the year with seven announced mergers or
buyouts. These contributed significantly to the OFFIT VIF U.S. Small Cap Fund's
outperformance this year.
We added three new stocks to the portfolio during the quarter:1) Artesyn
Technologies designs, develops, manufactures and markets power conversion
products for electronic equipment, 2) FYI, Inc. a single source provider of
document and information outsourcing solutions to the healthcare, law, banking,
insurance, retailing, manufacturing and government industries, and 3) ResMed, a
leading designer, manufacturer and distributor of medical equipment for treating
and diagnosing sleep disorder breathing (SDB).
The turnaround at year-end in small capitalization stocks was somewhat
surprising considering that at the end of the third quarter the Russell 2000
Index trailed the S&P 500 Index by nearly 300 basis points. It is important to
note, however, that the strong performance during the last two months of the
year was very much a technology rally. Technology dominated the fourth quarter
index return as this sector gained nearly 65%, and for the year over 100%. Just
as important to note is the dichotomy in returns between growth and value. The
Russell 2000 Growth Index finished 1999 up 43%, while the Russell 2000 Value's
return was a negative 1.5%. This was the largest spread between these two in the
history of the Russell 2000 Index.
Despite U.S. small capitalization stocks' strong performance this past year, we
are slightly cautious going into the year 2000. The economic environment is
quite different from last year, as the Federal Reserve has been raising interest
rates, and is expected to raise them once again in February. A rising interest
rate environment generally bodes poorly for the relative performance of small
capitalization stocks. Valuations, especially among technology stocks, are
stretched, initial public offerings are coming to the market at a frenzied pace,
and companies with short trading histories are being rewarded with high market
capitalizations without having to produce revenue, much less earnings.
Nevertheless, we continue to believe that there is value in small capitalization
stocks and that patience will be rewarded over the long term.
Rockefeller & Co.
January 19, 2000
<PAGE>
OFFIT
VIF - U.S. SMALL CAP FUND
- --------------------------------------------------------------------------------
The following graph represents the total return based on a $10,000 investment
made in the OFFIT VIF- U.S. Small Cap Fund at the trading commencement date of
April 11, 1997 and held through December 31, 1999 as well as the performance of
the Russell 2000 Index over the same period.
[GRAPH]
<TABLE>
<CAPTION>
4/11/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
------- ------- ------- -------- ------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OFFIT VIF-U.S.
Small Cap Fund 10,000 11,090 13,180 12,681 14,141 13,680 10,715 12,449 12,229 14,843 13,921 19,173
Russell 2000 Index 10,000 11,516 13,230 12,787 14,073 13,417 10,714 12,462 11,786 13,618 12,757 15,111
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Since Inception
Total Return One Year (April 11, 1997)
------------ -------- ---------------
<S> <C> <C>
OFFIT VIF-U.S. Small Cap Fund* 54.00% 27.01%
Russell 2000 Index 21.26% 16.38%
-------------------------------------------------------------------------------------------------
</TABLE>
*Assumes reinvestment of all dividends and distributions. The total return may
reflect the waiver of a portion of the Fund's advisory or administrative fees
for certain periods since inception date. In such instances, and without waiver
of fees, total return would have been lower.
Performance data quoted represents past performance and is not predictive of
future performance. Investment return and principal value will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance data quoted does not include charges imposed in
connection with variable insurance and annuity contracts, and if such charges
were included, performance numbers would have been lower. Indices shown for
comparative purposes only, and are not available for investment. Small Cap Funds
typically carry additional risk since smaller companies generally have a higher
risk of failure.
<PAGE>>
<TABLE>
<CAPTION>
OFFIT
VIF-U.S. SMALL CAP FUND
--------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (92.1%)
AUTOMOBILE PARTS (1.4%)
Exide Corp. 3,190 $ 26,517
---------------------
BANKING (3.2%)
Cohoes Bancorp, Inc. 1,800 18,112
PBOC Holdings, Inc.* 2,000 18,875
Virginia Capital Bancshares, Inc. 1,500 24,188
---------------------
61,175
---------------------
BUILDING/CONSTRUCTION (1.1%)
Dal-Tile International, Inc.* 2,165 21,921
---------------------
COMMERCIAL SERVICES (4.0%)
F.Y.I., Inc.* 800 27,200
Iron Mountain, Inc.* 1,255 49,337
---------------------
76,537
---------------------
COMPUTERS (17.7%)
Computer Task Group, Inc. 3,300 48,881
Integrated Systems, Inc.* 3,030 101,694
Kronos, Inc.* 1,327 79,620
Saga Systems, Inc.* 1,450 28,909
Sykes Enterprises, Inc.* 1,850 81,169
---------------------
340,273
---------------------
DATA PROCESSING (13.9%)
Information Resources, Inc.* 2,030 18,778
Network Appliance, Inc.* 1,260 104,659
Object Design, Inc.* 6,220 90,190
Sterling Software, Inc.* 1,740 54,810
---------------------
268,437
---------------------
ELECTRICAL EQUIPMENT (2.1%)
Wesco International, Inc.* 4,562 40,488
---------------------
ELECTRONICS (8.5%)
Amkor Technology, Inc.* 3,600 101,700
Mentor Graphics Corp.* 3,580 47,211
Microsemi Corp.* 1,740 15,443
---------------------
164,354
---------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
OFFIT
VIF-U.S. SMALL CAP FUND
--------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES (7.8%)
Bay View Capital Corp. 1,237 $ 17,550
The BISYS Group, Inc.* 750 48,938
DVI, Inc.* 1,820 27,641
Financial Federal Corp.* 1,502 34,264
Imperial Credit Industries, Inc.* 1,000 6,250
Warwick Community Bancorp, Inc. 1,400 15,225
---------------------
149,868
---------------------
HEALTH SERVICES/HEALTHCARE (4.7%)
ADAC Laboratories 2,920 31,390
Healthcare Services Group, Inc. 2,825 19,775
Sunrise Assisted Living, Inc.* 2,880 39,600
---------------------
90,765
---------------------
MANUFACTURING (2.5%)
Windmere-Durable Holdings, Inc. 2,850 48,450
---------------------
MEDICAL EQUIPMENT AND SUPPLIES (0.8%)
ResMed, Inc.* 80 3,340
Trex Medical Corp.* 4,300 12,094
---------------------
15,434
---------------------
OIL & GAS EXPLORATION (2.9%)
Newpark Resources, Inc.* 3,200 19,600
Range Resources Corp.* 3,110 9,913
Rio Alto Exploration Ltd.* 1,900 26,851
---------------------
56,364
---------------------
RETAIL (1.3%)
Buffets, Inc.* 2,420 24,200
---------------------
SERVICES - ADVERTISING (5.1%)
Getty Images, Inc.* 2,000 97,750
---------------------
TECHNOLOGY (3.0%)
Artesyn Technologies, Inc.* 1,450 30,450
Telescan, Inc.* 1,100 27,156
---------------------
57,606
---------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
OFFIT
VIF-U.S. SMALL CAP FUND
--------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS (12.1%)
EchoStar Communications Corp.- Class A* 1,200 $ 117,000
Primus Telecommunications Group, Inc.* 2,123 81,205
RSL Communications, Ltd.- Class A* 2,040 34,935
---------------------
233,140
---------------------
TOTAL COMMON STOCKS (COST $1,243,784) 1,773,279
---------------------
MONEY MARKET FUND (7.5%)
Bank of New York Cash Reserve $ 14,215 144,215
---------------------
TOTAL MONEY MARKET FUND (COST $144,215) 144,215
---------------------
TOTAL INVESTMENTS (COST $1,387,999) (+)-- 99.6% 1,917,494
OTHER ASSETS IN EXCESS OF LIABILITIES 0.4% 8,215
---------------------
TOTAL NET ASSETS -- 100.0% $ 1,925,709
---------------------
---------------------
-------------------------------------------------------
+ Represents cost for federal income tax purposes and differs from
value by net unrealized appreciation of securities as follows:
Unrealized appreciation $ 736,316
Unrealized depreciation (206,821)
-------------
Net unrealized appreciation $ 529,495
-------------
-------------
* Denotes non-income producing security.
</TABLE>
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 (2.18%) for calendar 1999.
This compares with a return of (0.83%) for the Lehman Aggregate Bond Index. As
of December 31, 1999, the Fund's net asset value was $9.58 and the 30-day SEC
yield was 6.07%.
The investments in the Fund are 41% U.S. Treasurys, 20% Mortgage Pass-Thru
Securities, 34% High Yield Corporates, and 5% Cash Equivalents. The average
maturity of the Fund is approximately 6.2 years and the duration 4.5 years.
Investors continue to focus on U.S. economic strength and an improving global
economy. While we respect the inflation pressures that can develop in a fully
employed economy, we also do not underestimate the deflationary forces that have
become imbedded in the global economy. Ultimately, however, a Federal Reserve
that remains committed to price stability is the guarantee that inflation will
be contained.
The higher levels of current yields are also reason for optimism on the
prospects for the fixed income markets. First, these levels have built in the
majority of a worst-case scenario as several additional Fed tightenings are
fully discounted. In addition, yields of some 6.5% on intermediate Treasurys
have restored a reasonable income cushion that was lacking when these rates were
below 4% in the fall of 1998.
With these factors in mind, an anti-inflationary Federal Reserve policy and
reasonable current yields, our strategy is to be fully invested in the
intermediate sector of the Treasury and Agency markets.
Jack D. Burks
January 19, 2000
<PAGE>
OFFIT
VIF - TOTAL RETURN FUND
- --------------------------------------------------------------------------------
The following graph represents the total return based on a $10,000 investment
made in the OFFIT VIF-Total Return Fund at the trading commencement date of June
30, 1998 and held through December 31, 1999 as well as the performance of the
Lehman Aggregate Bond Index over the same period.
[GRAPH]
<TABLE>
<CAPTION>
6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFIT VIF-Total Return Fund 10,000 10,090 10,170 10,100 9,979 9,939 9,927
Lehman Aggregate Fund Index 10,000 10,423 10,458 10,405 10,313 10,384 10,371
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Since Inception
Total Return One Year (June 30, 1998)
------------ -------- ---------------
<S> <C> <C>
OFFIT VIF-Total Return Fund* (2.18%) (0.49%)
Lehman Aggregate Bond Index (0.83%) 2.46%
-------------------------------------------------------------------------------------------------------
</TABLE>
*Assumes reinvestment of all dividends and distributions. The total return may
reflect the waiver of a portion of the Fund's advisory or administrative fees
for certain periods since inception date. In such instances, and without waiver
of fees, total return would have been lower.
Performance data quoted represents past performance and is not predictive of
future performance. Investment return and principal value will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance data quoted does not include charges imposed in
connection with variable insurance and annuity contracts, and if such charges
were included, performance numbers would have been lower. Indices shown for
comparative purposes only, and are not available for investment.
<PAGE>
<TABLE>
<CAPTION>
OFFIT
VIF-TOTAL RETURN FUND
-----------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31,1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION (10.0%)
Federal Home Loan Mortgage Corporation, Gold Pool #E70611, 6.00%, $ 86,072 $ 81,769
06/01/13
---------------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION (COST $85,450) 81,769
---------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (8.5%)
Government National Mortgage Association, Pool #474218, 6.00%, 73,410 69,533
05/15/13
---------------------
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (COST $73,757) 69,533
---------------------
MUTUAL FUND (32.1%)
OFFIT VIF-High Yield Fund 27,621 (1) 262,398
---------------------
TOTAL MUTUAL FUND (COST $293,214) 262,398
---------------------
U.S. TREASURY NOTES (38.7%)
5.875%, 11/15/05 100,000 97,062
6.50%, 10/15/06 220,000 219,357
---------------------
TOTAL U.S. TREASURY NOTES (COST $343,992) 316,419
---------------------
MONEY MARKET FUND (4.5%)
Bank of New York Cash Reserve 36,482 36,482
---------------------
TOTAL MONEY MARKET FUND (COST $36,482) 36,482
---------------------
TOTAL INVESTMENTS (COST $832,895) (+) -- 93.8% 766,601
OTHER ASSETS IN EXCESS OF LIABILITIES 6.2% 50,983
---------------------
TOTAL NET ASSETS -- 100.0% $ 817,584
---------------------
---------------------
---------------------------------------------------------
+ Represents cost for federal income tax purposes and differs from value by net unrealized
depreciation of securities as follows:
Unrealized appreciation $ -
Unrealized depreciation (66,857)
--------------------
Net unrealized depreciation $ (66,857)
--------------------
--------------------
</TABLE>
(1) Represents an investment in an affiliate.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
OFFIT
VIF - U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
The total return of the VIF U.S. Government Securities Fund was -0.60% since its
recommencement on April 1, 1999. This compares with a return of -1.23% for the
Merrill Lynch 5 Year Treasury Index. As of December 31, 1999, the Fund's net
asset value was $9.94 and the 30-day SEC yield was 5.59%.
The investments in the Fund are in U.S. Treasury and U.S. Agency securities. The
average maturity of the Fund is approximately 5.3 years and the duration 4.0
years.
Investors continue to focus on U.S. economic strength and an improving global
economy. While we respect the inflation pressures that can develop in a fully
employed economy, we also do not underestimate the deflationary forces that have
become imbedded in the global economy. Ultimately, however, a Federal Reserve
that remains committed to price stability is the guarantee that inflation will
be contained.
The higher levels of current yields are also reason for optimism on the
prospects for the fixed income markets. First, these levels have built in the
majority of a worst-case scenario as several additional Fed tightenings are
fully discounted. In addition, yields of some 6.5% on intermediate Treasurys
have restored a reasonable income cushion that was lacking when these rates were
below 4% in the fall of 1998.
With these factors in mind, an anti-inflationary Federal Reserve policy and
reasonable current yields, our strategy is to be fully invested in the
intermediate sector of the Treasury and Agency markets.
Jack D. Burks
January 19, 2000
<PAGE>
OFFIT
VIF-U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
The following graph represents the total return based on a $10,000 investment
made in the VIF-OFFIT U.S. Government Securities Fund at the trading
commencement date of August 24, 1998 through September 25, 1998** and for the
period from April 1, 1999 (recommencement of operations) and held through
December 31, 1999 as well as the performance of the Merrill Lynch 5 Year U.S.
Treasury Index over the same period. Past performance is not predictive of
future performance.
[GRAPH]
<TABLE>
<CAPTION>
8/24/98 9/25/99 4/1/99 6/30/99 9/30/99 12/31/99
------- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
OFFIT U.S. Government Securties Fund 10,000 10,000 10,000 9,890 9,980 9,940
Merrill Lynch 5 year U.S. Treasury Index 10,000 10,000 10,000 9,890 9,973 9,877
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
April 1, 1999 -
Total Return December 31, 1999**
------------ -------------------
<S> <C>
OFFIT VIF-U.S. Government Securities Fund* (0.60%)
Merrill Lynch 5 Year U.S. Treasury Index (1.23%)
----------------------------------------------------------------------------------------
</TABLE>
*The total return may reflect the waiver of a portion of the Fund's advisory or
administrative fees for certain periods since the inception date. Without waiver
of fees, total return would have been lower.
**The VIF-U.S. Government Securities Fund commenced operations on August 24,
1998. The last remaining shares were redeemed on September 25, 1998. During this
period the Fund's total return was 2.30% compared to the Merrill Lynch 5 Year
U.S. Treasury Index return of 3.23%
Performance data quoted represents past performance and is not predictive of
future performance. Investment return and principal value will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance data quoted does not include charges imposed in
connection with variable insurance and annuity contracts, and if such charges
were included, performance numbers would have been lower. Indices shown for
comparative purposes only, and are not available for investment.
<PAGE>
<TABLE>
<CAPTION>
OFFIT
VIF-U.S. GOVERNMENT SECURITIES FUND
----------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION (14.4%)
Federal Home Loan Mortgage Corp., 5.00%, 02/15/01 $ 875,000 $ 861,844
Federal Home Loan Mortgage Corp., 5.75%, 07/15/03 870,000 842,761
Federal Home Loan Mortgage Corp., 5.00%, 01/15/04 850,000 796,220
---------------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION (COST $2,543,636) 2,500,825
---------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (14.4%)
Federal National Mortgage Association, 5.625%, 865,000 857,085
03/15/01
Federal National Mortgage Association, 5.75%, 04/15/03 875,000 850,259
Federal National Mortgage Association, 5.125%, 02/13/04 845,000 794,620
---------------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION (COST $2,540,855) 2,501,964
---------------------
U.S. TREASURY NOTES (68.8%)
Inflation Indexed Notes, 3.875%, 01/15/09 800,000 792,696
5.375%, 02/15/01 1,480,000 1,467,849
7.00%, 07/15/06 3,295,000 3,374,108
6.50%, 10/15/06 3,295,000 3,285,373
6.125%, 08/15/07 3,070,000 2,994,103
---------------------
TOTAL U.S. TREASURY NOTES (COST $12,336,958) 11,914,129
---------------------
MONEY MARKET FUND (0.4%)
Bank of New York Cash Reserve 73,224 73,224
---------------------
TOTAL MONEY MARKET FUND (COST $73,224) 73,224
---------------------
TOTAL INVESTMENTS (COST $17,494,673) (+) -- 98.0% 16,990,142
OTHER ASSETS IN EXCESS OF LIABILITIES 2.0% 342,149
---------------------
TOTAL NET ASSETS -- 100.0% $ 17,332,291
---------------------
---------------------
-------------------------------------------------------
+ Represents cost for federal income tax purposes and differs from
value by net unrealized depreciation of securities as follows:
Unrealized appreciation $ 0
Unrealized depreciation (537,825)
--------------------
Net unrealized depreciation $ (537,825)
--------------------
--------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31,1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF VIF DJG
HIGH EMERGING VALUE
YIELD FUND MARKETS FUND EQUITY FUND
------------ ------------ -------------
<S> <C> <C> <C>
ASSETS:
Investments, at market value (1) .................................. $ 47,217,839 $ 7,520,671 $ 4,357,031
Interest and dividends receivable ................................. 980,297 161,778 2,837
Deferred organization expenses .................................... 17,122 22,941 4,010
Unrealized appreciation on open forward currency contracts (Note 2) 67,613 - -
Prepaid expenses and other assets ................................. 1,623 245 104
------------ ------------ ------------
Total Assets............................................. 48,284,494 7,705,635 4,363,982
------------ ------------ ------------
LIABILITIES:
Payable for capital shares redeemed ............................... 1,106 - -
Investment advisory fees payable .................................. 28,225 2,786 904
Professional fees payable ......................................... 31,679 13,458 9,538
Custody fees ...................................................... 2,250 1,602 98
Administration fees payable ....................................... 3,826 - -
Transfer agent fees payable ....................................... 755 777 756
Fund accounting fees payable ...................................... 1,250 - -
Other payables and accrued expenses ............................... 15,252 1,466 1,122
------------ ------------ ------------
Total Liabilities........................................... 84,343 20,089 12,418
------------ ------------ ------------
NET ASSETS ........................................................ $ 48,200,151 $ 7,685,546 $ 4,351,564
------------ ------------ ------------
------------ ------------ ------------
NET ASSETS CONSIST OF:
Shares of capital stock, $0.001 par value per share ............ $ 5,076 $ 908 $ 304
Additional paid-in capital...................................... 53,246,530 8,987,613 3,720,110
Accumulated undistributed net investment income ................ 165,112 9,780 10,701
Accumulated undistributed net realized gains (loss) on
investments and foreign currency transactions ............. (54,523) (1,236,514) 359,007
Net unrealized appreciation (depreciation) of investment
and foreign currency transactions ......................... (5,162,044) (76,241) 261,442
------------ ------------ ------------
NET ASSETS ........................................................ $ 48,200,151 $ 7,685,546 $ 4,351,564
------------ ------------ ------------
------------ ------------ ------------
SHARES OF CAPITAL STOCK OUTSTANDING ............................... 5,076,169 908,175 304,285
------------ ------------ ------------
------------ ------------ ------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE) ......... $ 9.50 $ 8.46 $ 14.30
------------ ------------ ------------
------------ ------------ ------------
(1) Investments at cost............................................ $ 52,444,605 $ 7,596,912 $ 4,095,589
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31,1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF VIF VIF U.S.
U.S. SMALL TOTAL RETURN GOVERNMENT
CAP FUND FUND SECURITIES FUND
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments, at market value (1) .......................... $ 1,917,494 $ 766,601 $ 16,990,142
Receivable from Adviser ................................... 15,893 17,562 -
Interest and dividends receivable ......................... 468 4,756 368,865
Deferred organization expenses ............................ 4,010 39,447 -
Prepaid expenses and other assets.......................... 55 19 433
------------ ------------ ------------
Total Assets ......................................... 1,937,920 828,385 17,359,440
------------ ------------ ------------
LIABILITIES:
Investment advisory fees payable........................... - - 1,207
Professional fees payable ................................. 9,173 9,050 20,675
Custody fees .............................................. 1,041 42 500
Transfer agent fees payable................................ 769 818 771
Other payables and accrued expenses ....................... 1,228 891 3,996
------------ ------------ ------------
Total Liabilities ................................. 12,211 10,801 27,149
------------ ------------ ------------
NET ASSETS ................................................ $ 1,925,709 $ 817,584 $ 17,332,291
------------ ------------ ------------
------------ ------------ ------------
NET ASSETS CONSIST OF:
Shares of capital stock, $0.001 par value per share .... $ 112 $ 85 $ 1,743
Additional paid-in capital ............................. 1,201,358 843,845 17,395,691
Accumulated undistributed net investment income ........ - 67,152 596,687
Accumulated undistributed net realized gains (loss) on
investments and foreign currency transactions ....... 194,744 (27,204) (157,299)
Net unrealized appreciation (depreciation) of investment
and foreign currency transactions ................... 529,495 (66,294) (504,531)
------------ ------------ ------------
NET ASSETS ................................................ $ 1,925,709 $ 817,584 $ 17,332,291
------------ ------------ ------------
------------ ------------ ------------
SHARES OF CAPITAL STOCK OUTSTANDING ....................... 111,936 85,375 1,743,230
------------ ------------ ------------
------------ ------------ ------------
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE PER SHARE).. $ 17.20 $ 9.58 $ 9.94
------------ ------------ ------------
------------ ------------ ------------
(1) Investments at cost ................................... $ 1,387,999 $ 832,895 $ 17,494,673
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF VIF DJG
HIGH EMERGING VALUE
YIELD FUND MARKETS FUND EQUITY FUND
----------- ---------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest ............................................................. $ 4,389,379 $ 826,390 $ -
Dividends ............................................................ - - 47,954
----------- ----------- -----------
Total investment income ....................................... 4,389,379 826,390 47,954
----------- ----------- -----------
EXPENSES:
Advisory ............................................................. 398,179 54,643 25,095
Professional ......................................................... 76,250 38,780 25,909
Administration ....................................................... 58,556 7,589 3,921
Transfer agent ....................................................... 18,000 18,000 18,000
Fund accounting ...................................................... 15,000 15,000 15,000
Amortization of organization expenses ................................ 14,484 14,477 1,870
Custody .............................................................. 13,850 2,610 431
Trustees ............................................................. 10,412 1,338 551
Miscellaneous ........................................................ 57,078 4,867 2,991
----------- ----------- -----------
Total expenses before waivers/reimbursements .................. 661,809 157,304 93,768
Less expenses waived/reimbursed ............................... (123,876) (66,454) (54,645)
----------- ----------- -----------
Net expenses ............................................ 537,933 90,850 39,123
----------- ----------- -----------
Net Investment Income ................................................ 3,851,446 735,540 8,831
----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSS) ON INVESTMENTS:
Net realized gains (loss) on investment transactions ............. (53,399) 124,237 359,007
Net realized gains on foreign currency transactions .............. 178,642 - -
Net change in unrealized appreciation (depreciation) of investment
transactions ................................................ (4,253,727) 554,180 163,169
Net change in unrealized appreciation of foreign currency
transactions ................................................ 63,403 - -
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS (LOSS) ON INVESTMENTS .............. (4,065,081) 678,417 522,176
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......... $ (213,635) $ 1,413,957 $ 531,007
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
STATEMENT OF OPERATIONS (CONTINUED)
FOR THE PERIOD ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF VIF VIF U.S.
U.S. SMALL TOTAL RETURN GOVERNMENT
CAP FUND FUND* SECURITIES
FUND
----------- --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest ............................................................ $ - $ 67,152 $ 666,482
Dividends ........................................................... 4,267 - -
--------- --------- ---------
Total Investment Income ........................................ 4,267 67,152 666,482
--------- --------- ---------
EXPENSES:
Advisory ............................................................ 13,907 8,555 41,092
Professional ........................................................ 24,923 22,436 40,267
Administration ...................................................... 1,738 1,337 14,676
Transfer agent ...................................................... 18,000 18,000 13,500
Fund accounting ..................................................... 15,000 15,000 11,250
Amortization of organization expenses ............................... 1,870 11,286 -
Custody ............................................................. 6,684 138 2,036
Trustees............................................................. 293 260 2,142
Miscellaneous ....................................................... 3,641 1,378 6,855
--------- --------- ---------
Total expenses before waivers/reimbursements ................... 86,056 78,390 131,818
Less expenses waived/reimbursed ................................ (65,209) (69,836) (62,023)
--------- --------- ---------
Net expenses ................................................ 20,847 8,554 69,795
--------- --------- ---------
Net Investment Income (loss) ........................................ (16,580) 58,598 596,687
--------- --------- ---------
REALIZED AND UNREALIZED GAINS (LOSS) ON INVESTMENTS:
Net realized gains (loss) on investment transactions ............. 217,733 (27,204) (157,299)
Net change in unrealized appreciation (depreciation) of investment
transactions .................................................. 470,593 (57,058) (504,531)
--------- --------- ---------
NET REALIZED AND UNREALIZED GAINS (LOSS) ON INVESTMENTS ............. 688,326 (84,262) (661,830)
--------- --------- ---------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......... $ 671,746 $ (25,664) $ (65,143)
--------- --------- ---------
--------- --------- ---------
</TABLE>
* Includes dividend income, realized and unrealized loss of $28,939, $(12,035)
and $(30,816), respectively from an investment in OFFIT VIF-High Yield Fund,
an affiliated Fund.
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 YEAR FOR THE NINE FOR THE YEAR
ENDED MONTHS ENDED ENDED
DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1998
---------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................... $ 3,851,446 $ 2,539,442 $ 2,248,457
Net realized gains on investment and foreign currency
transactions......................................... 125,243 223,896 199,824
Net change in unrealized appreciation (depreciation)
of investments and foreign currency transactions .... (4,190,324) (2,312,290) 1,342,036
------------ ------------ ------------
Net increase (decrease) in net assets resulting from
operations........................................... (213,635) 451,048 3,790,317
------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................................... (3,851,446) (2,539,442) (2,248,457)
Excess of net investment income ......................... (26,460) (42,172) -
Net realized gains ...................................... (228,073) (199,784) -
------------ ------------ ------------
Total dividends and distributions to shareholders .... (4,105,979) (2,781,398) (2,248,457)
------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued ............................. 6,179,148 18,295,737 6,518,774
Dividends reinvested .................................... 4,093,318 2,989,391 2,040,697
Cost of shares redeemed ................................. (2,106,815) (6,275,630) (3,540,505)
------------ ------------ ------------
Net increase in net assets from capital
share transactions ................................ 8,165,651 15,009,498 5,018,966
------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS ............................... 3,846,037 12,679,148 6,560,826
NET ASSETS:
Beginning of period ..................................... 44,354,114 31,674,966 25,114,140
------------ ------------ ------------
End of period* .......................................... $ 48,200,151 $ 44,354,114 $ 31,674,966
------------ ------------ ------------
------------ ------------ ------------
* (Including undistributed net investment income.) ........ $ 165,112 $ 44,930 $ 42,172
</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 FUND
-----------------------------------------
FOR THE YEAR FOR THE NINE FOR THE YEAR
ENDED MONTHS ENDED ENDED
DECEMBER 31, DECEMBER 31, MARCH 31,
1999 1998 1998
----------- ----------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ............................................ $ 735,540 $ 456,371 $ 454,983
Net realized gains (loss) on investment transactions ............. 124,237 (1,370,776) 64,003
Net change in unrealized appreciation (depreciation) of investment
transactions ................................................. 554,180 (750,669) 69,906
----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations 1,413,957 (1,665,074) 588,892
----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................................ (735,540) (456,371) (454,983)
Excess of net investment income .................................. - (41,459) (10,015)
Net realized gains ............................................... - (52,829) -
----------- ----------- -----------
Total dividends and distributions to shareholders ............. (735,540) (550,659) (464,998)
----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued ...................................... 740,901 3,688,615 1,004,183
Dividends reinvested ............................................. 733,292 673,517 338,633
Cost of shares redeemed .......................................... (41,702) (2,351,293) (32,780)
----------- ----------- -----------
Net increase in net assets from capital
share transactions ......................................... 1,432,491 2,010,839 1,310,036
----------- ----------- -----------
Total increase (decrease) in net assets ............................. 2,110,908 (204,894) 1,433,930
NET ASSETS:
Beginning of period .............................................. 5,574,638 5,779,532 4,345,602
----------- ----------- -----------
End of period* ................................................... $ 7,685,546 $ 5,574,638 $ 5,779,532
----------- ----------- -----------
----------- ----------- -----------
* (Including undistributed net investment/income distributions in
excess of net investment income.) .............................. $ 9,780 $ (17) $ 33,147
</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 YEAR FOR THE NINE FOR THE PERIOD
ENDED MONTHS ENDED APRIL 11, 1997**
DECEMBER 31, DECEMBER 31, THROUGH
1999 1998 MARCH 1, 1998
----------- ----------- ---------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ............................................ $ 8,831 $ 4,233 $ 2,137
Net realized gains on investment transactions .................... 359,007 110,871 120,079
Net change in unrealized appreciation (depreciation) of investment
transactions ................................................. 163,169 (343,779) 442,052
----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations 531,007 (228,675) 564,268
----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................................ (5,649) (3,898) -
Net realized gains ............................................... (110,871) (120,079) -
----------- ----------- -----------
Total dividends and distributions to shareholders ............. (116,520) (123,977) -
----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued ...................................... 1,682,025 390,383 1,472,103
Dividends reinvested ............................................. 116,520 123,977 -
Cost of shares redeemed .......................................... (25,846) (15,213) (18,488)
----------- ----------- -----------
Net increase in net assets from capital
share transactions ......................................... 1,772,699 499,147 1,453,615
----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS ........................................ 2,187,186 146,495 2,017,883
NET ASSETS:
Beginning of period .............................................. 2,164,378 2,017,883 -
----------- ----------- -----------
End of period* ................................................... $ 4,351,564 $ 2,164,378 $ 2,017,883
----------- ----------- -----------
----------- ----------- -----------
* (Including undistributed net investment income.) $ 10,701 $ 5,649 $ 3,898
** Commencement of operations.
</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 YEAR FOR THE NINE FOR THE PERIOD
ENDED MONTHS ENDED APRIL 11, 1997*
DECEMBER 31, DECEMBER 31, THROUGH
1999 1998 MARCH 1, 1998
----------- ----------- ---------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net loss ......................................................... $ (16,580) $ (8,448) $ (8,068)
Net realized gains on investment transactions .................... 217,733 19,891 125,730
Net change in unrealized appreciation (depreciation) of investment
transactions ................................................. 470,593 (178,262) 237,164
----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations 671,746 (166,819) 354,826
----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................................ - - -
Net realized gains ............................................... (29,037) (119,956) -
----------- ----------- -----------
Total dividends and distributions to shareholders ............. (29,037) (119,956) -
----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued ...................................... 48,966 - 1,054,094
Dividends reinvested ............................................. 29,037 119,956 -
Cost of shares redeemed .......................................... (12,848) (9,616) (14,640)
----------- ----------- -----------
Net increase in net assets from capital
share transactions ......................................... 65,155 110,340 1,039,454
----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS ............................. 707,864 (176,435) 1,394,280
NET ASSETS:
Beginning of period .............................................. 1,217,845 1,394,280 -
----------- ----------- -----------
End of period .................................................... $ 1,925,709 $ 1,217,845 $ 1,394,280
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
* Commencement of operations.
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 VIF - U.S. GOVERNMENT SECURITIES FUND
----------------------------------- ---------------------------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
FOR THE YEAR JUNE 30, 1998** APRIL 1, 1999*** AUGUST 24, 1998**
ENDED THROUGH THROUGH THROUGH
DECEMBER 31, 1999 DECEMBER 31,1998 DECEMBER 31, 1999 SEPTEMBER 25, 1998
----------------- ---------------- ------------------ --------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ............................. $ 58,598 $ 24,546 $ 596,687 $ 250
Net realized gains (loss) on investment
transactions ...................................... (27,204) 2,035 (157,299) 1,556
Net change in unrealized depreciation of
investment transactions ........................... (57,058) (9,236) (504,531) --
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ........................ (25,664) 17,345 (65,143) 1,806
------------ ------------ ------------ ------------
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 ....................... 1,253,500 1,034,053 17,553,952 149,895
Dividends reinvested .............................. 30,251 -- -- --
Cost of shares redeemed ........................... (1,411,140) (50,510) (156,518) (151,701)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from
capital share transactions ..................... (127,389) 983,543 17,397,434 (1,806)
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .............. (183,304) 1,000,888 17,332,291 --
NET ASSETS:
Beginning of period ............................... 1,000,888 -- --
------------ ------------ ------------ ------------
End of Period* .................................... $ 817,584 $ 1,000,888 $ 17,332,291 $ --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
* (Including undistributed net investment income.) ... $ 67,152 $ 28,216 $ 596,687 $ --
</TABLE>
** Commencement of operations.
*** 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 PERIOD
FOR THE YEAR FOR THE NINE FOR THE APRIL 1, 1996*
ENDED MONTHS ENDED YEAR ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998 MARCH 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINING OF PERIOD $ 10.40 $ 11.00 $ 10.37 $ 10.00 (d)
---------- ---------- ---------- ----------
Net investment income 0.82 0.65 0.86 0.78
Net realized and unrealized gains (loss) (0.85) (0.53) 0.63 0.37
---------- ---------- ---------- ----------
Total income (loss) from investment operations (0.03) 0.12 1.49 1.15
---------- ---------- ---------- ----------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (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 (0.87) (0.72) (0.86) (0.78)
---------- ---------- ---------- ----------
Net change in net asset value per share (0.90) (0.60) 0.63 0.37
---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 9.50 $ 10.40 $ 11.00 $ 10.37
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
TOTAL RETURN (a) (0.29%) 1.15% (b) 14.84% 11.90% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 48,200 $ 44,354 $ 31,675 $ 25,114
Ratios to average net assets:
Expenses** 1.15% 1.15% (c) 1.15% 1.15% (c)
Net investment income 8.24% 8.25% (c) 7.98% 7.45% (c)
PORTFOIIO TURNOVER RATE 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) Initital offering price.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANICAL STATEMENTS.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF-EMERGING MARKETS FUND
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE NINE FOR THE AUGUST 28, 1996*
ENDED MONTHS ENDED YEAR ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998 MARCH 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINING OF PERIOD $ 7.60 $ 10.55 $ 10.30 $ 10.00 (d)
---------- ---------- ---------- ----------
Net investment income 0.94 0.66 0.86 0.48
Net realized and unrealized gains (loss) 0.86 (2.79) 0.27 0.34
---------- ---------- ---------- ----------
Total income (loss) from investment operations 1.80 (2.13) 1.13 0.82
---------- ---------- ---------- ----------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (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 (0.94) (0.82) (0.88) (0.52)
---------- ---------- ---------- ----------
Net change in net asset value per share 0.86 (2.95) 0.25 0.30
---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 8.46 $ 7.60 $ 10.55 $ 10.30
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
TOTAL RETURN (a) 25.19% (20.36%) (b) 11.26% 8.29% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 7,686 $ 5,575 $ 5,780 $ 4,346
Ratios to average net assets:
Expenses** 1.50% 1.50% (c) 1.50% 1.50% (c)
Net investment income 12.11% 10.38% (c) 8.27% 8.04% (c)
PORTFOIIO TURNOVER RATE 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) Initital offering price.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANICAL STATEMENTS.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
DJG VALUE EQUITY FUND
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE NINE APRIL 11, 1997*
ENDED MONTHS ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINING OF PERIOD $ 11.91 $ 14.94 $ 10.00 (d)
--------- --------- ---------
Net investment income 0.02 0.05 0.02
Net realized and unrealized gains (loss) 2.76 (2.16) 4.92
--------- --------- ---------
Total income (loss) from investment operations 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 2.39 (3.03) 4.94
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 14.30 $ 11.91 $ 14.94
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (a) 23.37% (14.75%)(b) 49.40% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 4,352 $ 2,164 $ 2,018
Ratios to average net assets:
Expenses** 1.25% 1.25% (c) 1.25% (c)
Net investment income 0.28% 0.29% (c) 0.16% (c)
PORTFOIIO TURNOVER RATE 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) Initital offering price.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANICAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
THE OFFIT VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF - U.S. SMALL CAP FUND
FOR THE YEAR FOR THE NINE FOR THE PERIOD
ENDED MONTHS ENDED APRIL 11, 1997* THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.34 $ 14.14 $ 10.00 (d)
------------ ------------ ------------
Net investment loss (0.15) (0.08) (0.08)
Net realized and unrealized gains (loss) 6.27 (1.50) 4.22
------------ ------------ ------------
Total income (loss) from investment operations 6.12 (1.58) 4.14
------------ ------------ ------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income -- -- --
Net realized gains (0.26) (1.22) --
------------ ------------ ------------
Total dividends and distributions (0.26) (1.22) --
------------ ------------ ------------
Net change in net asset value per share 5.86 (2.80) 4.14
------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 17.20 $ 11.34 $ 14.14
------------ ------------ ------------
------------ ------------ ------------
TOTAL RETURN (a) 54.00% (11.95%)(b) 41.40% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 1,926 $ 1,218 $ 1,394
Ratios to average net assets:
Expenses** 1.50% 1.50%(c) 1.50% (c)
Net investment loss (1.19%) (0.92%)(c) (0.74%)(c)
PORTFOLIO TURNOVER RATE 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>
<TABLE>
<CAPTION>
THE OFFIT VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF - TOTAL RETURN FUND
FOR THE YEAR FOR THE PERIOD
ENDED JUNE 30, 1998* THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.17 $ 10.00 (d)
------------ ------------
Net investment income 0.74 0.25
Net realized and unrealized loss (0.97) (0.08)
------------ ------------
Total income (loss) from investment operations (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 (0.59) 0.17
------------ ------------
NET ASSET VALUE, END OF PERIOD $ 9.58 $ 10.17
------------ ------------
------------ ------------
TOTAL RETURN (a) (2.18%) 1.70% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 818 $ 1,001
Ratios to average net assets:
Expenses** 0.80% 0.80% (c)
Net investment income 5.48% 5.35% (c)
PORTFOLIO TURNOVER RATE 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>
<TABLE>
<CAPTION>
THE OFFIT VARIABLE INSURANCE FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
VIF - U.S. GOVERNMENT SECURITIES FUND
FOR THE PERIOD FOR THE PERIOD
APRIL 1, 1999 THROUGH AUGUST 24, 1998* THROUGH
DECEMBER 31, 1999** SEPTEMBER 25, 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $ 10.00 (d)
------------ ------------
Net investment income 0.34 --
Net realized and unrealized gains (loss) (0.40) 0.23
------------ ------------
Total income (loss) from investment operations (0.06) 0.23
------------ ------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income -- --
Excess of net investment income -- --
Net realized gains -- --
------------ ------------
Total dividends and distributions -- --
------------ ------------
Net change in net asset value per share (0.06) 0.23
------------ ------------
NET ASSET VALUE, END OF PERIOD $ 9.94 $ 10.23
------------ ------------
------------ ------------
TOTAL RETURN (a) (0.60%) (b) 2.30% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 17,332 $ --
Ratios to average net assets:
Expenses*** 0.60% (c) 0.60% (c)
Net investment income 5.08% (c) 4.04% (c)
PORTFOLIO TURNOVER RATE 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 redeemeded 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
- --------------------------------------------------------------------------------
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
Fund (VIF-Emerging Markets 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 Fund August 28, 1996
DJG Value Equity Fund April 11, 1997
VIF-U.S. Small Cap Fund April 11, 1997
VIF-Total Return Fund June 30, 1998
VIF-U.S. Government Securities Fund August 24, 1998
The VIF-High Yield Fund, VIF-Emerging Markets Fund, VIF-Total Return Fund and
VIF-U.S. Government Securities Fund operate as non-diversified, open-end
management investment companies. The DJG Value Equity Fund and VIF-U.S.
Small Cap Fund operate as diversified, open-end management investment companies.
The VIF-High Yield Fund seeks to provide investors with a high level of current
income by investing primarily in high yield, high-risk corporate debt securities
and sovereign debt obligations. The VIF-Emerging Markets Fund seeks to provide
investors with a competitive total investment return by focusing on current
yield and opportunities for capital appreciation primarily by investing in
corporate and sovereign debt securities of emerging market countries. The DJG
Value Equity Fund seeks to achieve its objectives of long-term appreciation and
preservation of capital by researching and investing in equity securities priced
at a discount to their intrinsic values. The VIF-U.S. Small Cap Fund invests
primarily in a diversified portfolio of securities of smaller companies located
in the United States to achieve its investment objective of capital
appreciation. The VIF-Total Return Fund invests primarily in a portfolio of
fixed income securities of varying maturities. The VIF-U.S. Government
Securities Fund objective is to seek current income consistent with preservation
of capital.
OFFITBANK serves as the VIF-High Yield, VIF-Emerging Markets, VIF-U.S. Small
Cap, VIF-Total Return and VIF-U.S. Government Funds' investment adviser. David
J. Greene and Company 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 approximates market value, and, if applicable,
adjusted for foreign exchange translation. Securities for which market
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
quotations are not readily available are valued at fair value determined in good
faith by or under the direction of the Company's Board of Directors. Securities
may be valued by independent pricing services, approved by the Company's Board
of Directors, which use prices provided by market-makers or estimates of market
value obtained from yield data relating to instruments or securities with
similar characteristics.
SECURITIES TRANSACTIONS AND RELATED INCOME:
The Funds record security transactions on a trade date basis. Interest income,
including accretion of discount and amortization of premium, is accrued daily.
Dividend income is recognized on the ex-dividend date. Realized gains and losses
from security transactions are recorded on the identified cost basis.
EXPENSES:
The Company accounts separately for the assets, liabilities and operations of
each Fund. Direct expenses of a Fund are charged to that Fund, while general
Company expenses are allocated among the Company's respective portfolios based
on relative net assets.
ORGANIZATIONAL EXPENSES:
Costs incurred in connection with the organization and initial registration of
the Funds have been deferred and are being amortized on a straight-line basis
over a sixty-month period beginning with each of the Fund's commencement of
operations.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from the VIF-High Yield Fund's net investment income, if any, are
declared daily and paid monthly. Dividends from the VIF-Emerging Markets Fund's
net investment income, if any, are declared daily and paid quarterly. Dividends
from the DJG Value Equity, VIF-U.S. Small Cap, VIF-Total Return and VIF-U.S.
Government Securities Funds' net investment income, if any, are declared and
paid annually. Net realized gains on portfolio securities, if any, are
distributed at least annually by each Fund. However, to the extent net realized
gains can be offset by capital loss carryovers, such gains will not be
distributed. Distributions are recorded by the Funds on the ex-dividend date.
The amount of distributions from net investment income and net realized gains
are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the composition of net assets based on their federal tax-basis treatment;
temporary differences do not require reclassification. Distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as distributions in
excess of net investment income or distributions in excess of net realized
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of capital.
As of December 31, 1999, the following reclassifications have been made to
increase (decrease) such accounts with offsetting adjustments made to
paid-in-capital:
<TABLE>
<CAPTION>
Accumulated Accumulated
Undistributed Net Realized
Net Investment Gain/(loss) on
Income Investments
------ -----------
<S> <C> <C>
VIF-High Yield Fund $ 188,814 $ (179,766)
VIF-Emerging Markets Fund 9,797 -
DJG Value Equity Fund 1,870 -
VIF-U.S. Small Cap Fund 16,580 (13,318)
VIF-Total Return Fund 8,554 -
</TABLE>
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES:
It is the Funds' policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute timely all
of their net investment company taxable income and net capital gains to
shareholders. Therefore, no federal income tax provision is required.
Capital and currency losses incurred within the Funds' fiscal year but after
October 31 are deemed to arise on the first business day of the following fiscal
year for tax purposes. The following Funds have incurred and will elect to defer
capital losses as follows:
<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 Fund Return Fund Securities Fund
- ------------------- ----------------- ------------------ ----------------- -------------------------
<S> <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.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 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 December
31, 1999 are recorded for financial reporting purposes as unrealized gains and
losses by the Funds.
At December 31, 1999, there were no outstanding forward currency contracts for
the VIF-Emerging Markets, DJG Value Equity, VIF-U.S. Small Cap Fund, VIF-Total
Return and VIF-U.S. Government Securities Funds. The table below indicates the
VIF-High Yield Fund's outstanding forward currency contract positions at
December 31, 1999:
<TABLE>
<CAPTION>
VALUE ON VALUE AT
CONTRACT MATURITY ORIGINATION DECEMBER 31, UNREALIZED
CURRENCY AMOUNTS DATE DATE 1999 APPRECIATION
--------------- ---------------- ------------- ----------------- ---------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Sell DEM (522,000) 02/09/00 $(278,945) $(269,712) $9,233
Sell EUR (502,000) 02/09/00 (524,545) (507,204) 17,341
Sell FRF (7,743,000) 02/09/00 (1,233,885) (1,192,846) 41,039
--------------------
--------------------
Net unrealized appreciation on forward positions.......................................................... $67,613
--------------------
--------------------
Currency Abbreviations:
DEM - German Deutsche Mark
EUR - European Currency Unit
FRF - French Franc
</TABLE>
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 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.
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND ACCOUNTING FEE (CONTINUED)
------------------------------
VIF-TOTAL RETURN VIF-U.S. GOVERNMENT
FUND SECURITIES FUND
----------------------- ----------------------------
<S> <C> <C>
GROSS FEE $15,000 $11,250
WAIVER (15,000) (11,250)
----------------------- ----------------------------
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.
<TABLE>
<CAPTION>
TRANSFER AGENT FEE
------------------
VIF-HIGH YIELD VIF-EMERGING MARKETS DJG VALUE EQUITY VIF-U.S. SMALL CAP
FUND FUND FUND FUND
----------------------- ---------------------------- ---------------------- -------------------------
<S> <C> <C> <C> <C>
GROSS FEE $18,000 $18,000 $18,000 $18,000
WAIVER (7,967) (8,228) (8,484) (8,478)
----------------------- ---------------------------- ---------------------- -------------------------
NET FEE $10,033 $9,772 $9,516 $9,522
----------------------- ---------------------------- ---------------------- -------------------------
----------------------- ---------------------------- ---------------------- -------------------------
VIF-TOTAL RETURN VIF-U.S. GOVERNMENT
FUND SECURITIES FUND
----------------------- ----------------------------
GROSS FEE $18,000 $13,500
WAIVER (8,499) (6,493)
----------------------- ----------------------------
NET FEE $9,501 $7,007
----------------------- ----------------------------
----------------------- ----------------------------
</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 Fund, DJG Value Equity Fund,
VIF-U.S. Small Cap Fund, VIF-Total Return and VIF U.S. Government Securities
Fund, respectively. In order to maintain these ratios, for the period ended
December 31, 1999, the Adviser and David J. Greene and Company have waived all
or a portion of their advisory fee and have also agreed to reimburse the
VIF-Emerging Markets, DJG Value Equity Fund, VIF-U.S. Small Cap Fund and
VIF-Total Return Fund. For expenses in the amounts of $814, $5,136, $26,107 and
$36,445, respectively.
NOTE 4 -- SECURITIES TRANSACTIONS
For the period ended December 31, 1999, the cost of purchases and the proceeds
from sales of the Funds' portfolio securities (excluding short-term investments)
were as follows:
<TABLE>
<CAPTION>
Common Stocks
and Corporate Bonds U.S. Government Obligations
------------------- ---------------------------
Purchases Sales Purchases Sales
--------- ----- --------- -----
<S> <C> <C> <C> <C>
VIF-High Yield Fund $17,571,547 $8,453,174 $ - $ -
VIF-Emerging Markets Fund 5,919,514 4,218,287 - -
DJG Value Equity Fund 2,720,091 948,614 - -
VIF-U.S. Small Cap Fund 585,658 413,904 - -
VIF-Total Return Fund 127,842 110,000 648,808 696,711
VIF-U.S. Government Securities Fund - - 38,026,825 20,439,325
</TABLE>
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADVISORY FEE
------------
VIF-HIGH YIELD VIF-EMERGING MARKETS DJG VALUE EQUITY VIF-U.S. SMALL CAP
FUND FUND FUND FUND
----------------------- ---------------------------- ---------------------- -------------------------
<S> <C> <C> <C> <C>
GROSS FEE $398,179 $54,643 $ 25,095 $13,907
WAIVER (101,824) (34,823) (22,104) (13,886)
----------------------- ---------------------------- ---------------------- -------------------------
NET FEE $296,355 $19,820 $ 2,991 $ 21
----------------------- ---------------------------- ---------------------- -------------------------
----------------------- ---------------------------- ---------------------- -------------------------
VIF-TOTAL RETURN VIF-U.S. GOVERNMENT
FUND SECURITIES FUND
----------------------- ----------------------------
GROSS FEE $8,555 $41,092
WAIVER (8,555) (29,604)
----------------------- ----------------------------
NET FEE $ 0 $ 11,488
----------------------- ----------------------------
----------------------- ----------------------------
</TABLE>
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.
<TABLE>
<CAPTION>
ADMINISTRATION FEE
------------------
VIF-HIGH YIELD VIF-EMERGING MARKETS DJG VALUE EQUITY VIF-U.S. SMALL CAP
FUND FUND FUND FUND
----------------------- ---------------------------- ---------------------- -------------------------
<S> <C> <C> <C> <C>
GROSS FEE $58,556 $7,589 $3,921 $1,738
WAIVER (14,085) (7,589) (3,921) (1,738)
----------------------- ---------------------------- ---------------------- -------------------------
NET FEE $44,471 $ 0 $ 0 $ 0
----------------------- ---------------------------- ---------------------- -------------------------
----------------------- ---------------------------- ---------------------- -------------------------
VIF-TOTAL RETURN VIF-U.S. GOVERNMENT
FUND SECURITIES FUND
----------------------- ----------------------------
GROSS FEE $1,337 $14,676
WAIVER (1,337) (14,676)
----------------------- ----------------------------
NET FEE $ 0 $ 0
----------------------- ----------------------------
----------------------- ----------------------------
</TABLE>
PFPC provides the Funds with fund accounting and related services pursuant to a
fund accounting agreement with the Company. For these services PFPC is entitled
a fee of $1,250 per month per Fund plus out of pocket expenses. PFPC waived all
of its fee for Portfolios with less than $30 million in average daily net
assets.
<TABLE>
<CAPTION>
FUND ACCOUNTING FEE
-------------------
VIF-HIGH YIELD VIF-EMERGING MARKETS DJG VALUE EQUITY VIF-U.S. SMALL CAP
FUND FUND FUND FUND
----------------------- ---------------------------- ---------------------- -------------------------
<S> <C> <C> <C> <C>
GROSS FEE $15,000 $15,000 $15,000 $15,000
WAIVER 0 (15,000) (15,000) (15,000)
----------------------- ---------------------------- ---------------------- -------------------------
NET FEE $15,000 $ 0 $ 0 $ 0
----------------------- ---------------------------- ---------------------- -------------------------
----------------------- ---------------------------- ---------------------- -------------------------
</TABLE>
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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
periods ended December 31, 1999 and 1998, respectively, were as follows:
<TABLE>
<CAPTION>
VIF-HIGH YIELD FUND
---------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares issued...................... 608,313 $6,179,148 1,687,147 $18,295,737
Shares reinvested ................ 412,444 4,093,318 282,185 2,989,391
Shares redeemed.................. (208,809) (2,106,815) (585,179) (6,275,630)
---------------- ----------------- --------------- ----------------
Net increase......................... 811,948 $8,165,651 1,384,153 $15,009,498
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
VIF-EMERGING MARKETS FUND
---------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
Shares issued........................ 88,509 $ 740,901 380,449 $3,688,615
Shares reinvested ................... 91,978 733,292 80,312 673,517
Shares redeemed...................... (5,477) (41,702) (275,382) (2,351,293)
---------------- ----------------- --------------- ----------------
Net increase......................... 175,010 $1,432,491 185,379 $2,010,839
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
DJG VALUE EQUITY FUND
---------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
Shares issued........................ 116,368 $1,682,025 38,461 $390,383
Shares reinvested ................... 8,148 116,520 9,350 123,977
Shares redeemed...................... (1,949) (25,846) (1,204) (15,213)
---------------- ----------------- --------------- ----------------
Net increase......................... 122,567 $1,772,699 46,607 $499,147
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
VIF-U.S. SMALL CAP FUND
---------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
Shares issued........................ 3,857 $48,966 - $ -
Shares reinvested ................... 1,688 29,037 9,627 119,956
Shares redeemed...................... (1,017) (12,848) (822) (9,616)
---------------- ----------------- --------------- ----------------
Net increase......................... 4,528 $65,155 8,805 $110,340
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
</TABLE>
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIF-TOTAL RETURN FUND
---------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares issued........................ 125,104 $1,253,500 103,416 $1,034,053
Shares reinvested.................... 3,164 30,251 - -
Shares redeemed...................... (141,275) (1,411,140) (5,034) (50,510)
---------------- ----------------- --------------- ----------------
Net increase (decrease).............. (13,007) $ (127,389) 98,382 $983,543
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
VIF-U.S. GOVERNMENT SECURITIES FUND
---------------------------------------------------------------------------------
PERIOD ENDED PERIOD ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------------------- -------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- --------------- ----------------
Shares issued........................ 1,758,987 $17,553,952 14,826 $149,895
Shares redeemed...................... (15,757) (156,518) (14,826) (151,701)
---------------- ----------------- --------------- ----------------
Net increase (decrease).............. 1,743,230 $17,397,434 0 ($1,806)
---------------- ----------------- --------------- ----------------
---------------- ----------------- --------------- ----------------
</TABLE>
NOTE 6 -- OTHER MATTERS
The VIF-High Yield Fund and the VIF-Emerging Markets Fund invest in obligations
of foreign entities and securities denominated in foreign currencies. Such
investments involve risk not typically involved 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>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
The OFFIT Variable Insurance Fund, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of OFFIT VIF-High Yield Fund, OFFIT
VIF-Emerging Markets Fund, DJG Value Equity Fund, OFFIT VIF-U.S. Small Cap Fund,
OFFIT VIF-Total Return Fund and OFFIT VIF-U.S. Government Securities Fund,
(collectively, the "Funds," each constituting a portfolio of The OFFIT Variable
Insurance Fund, Inc., formerly The OFFITBANK Variable Insurance Fund, Inc.) at
December 31, 1999, and the results of each of their operations, the changes in
each of their net assets and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 16, 2000
<PAGE>
THE OFFIT VARIABLE INSURANCE FUND, INC.
- --------------------------------------------------------------------------------
CHANGE IN INDEPENDENT ACCOUNTANTS (UNAUDITED)
On December 16, 1999, the Board of Directors of the Company elected Ernst &
Young LLP as the independent accountants for the Company for the year ending
December 31, 2000, replacing PricewaterhouseCoopers LLP. The Audit Committee did
not take any separate action on this matter.
PricewaterhouseCoopers LLP's reports on the Company's financial statements for
the years ended December 31, 1998 and 1997 did not contain an adverse opinion or
a disclaimer of opinion, nor were such reports qualified or modified as to
uncertainty, audit scope or accounting principles.
During the years ended December 31, 1998 and 1997, and through December 16,
1999, there were no disagreements with PricewaterhouseCoopers LLP on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of PricewaterhouseCoopers LLP, would have caused it to make
reference to the subject matter of the disagreement in its report on the
financial statements for such years.
REPORT OF SHAREHOLDERS MEETING (UNAUDITED)
The Company held a special meeting of Shareholders on July 30, 1999. The three
matters voted upon by Shareholders and the resulting votes for each matter were
as follows:
1. Approval of a new advisory agreement between OFFITBANK (the "Adviser") and
the Company on behalf of each Fund:
<TABLE>
<CAPTION>
Voting Results*
-------------------------------------------
Against/
For Withheld Abstained
--- -------- ---------
<S> <C> <C> <C>
VIF-High Yield 4,863 - -
VIF-Emerging Markets Fund 773 - -
VIF-U.S. Small Cap Fund 111 - -
VIF Total Return Fund 122 - -
VIF-U.S. Government Securities Fund 1,663 - -
</TABLE>
2. Approval of a new sub-advisory agreement with respect to the OFFIT VIF-U.S.
Small Cap Fund between the Fund and Rockefeller & Co.:
<TABLE>
<CAPTION>
Voting Results*
-------------------------------------------
Against/
For Withheld Abstained
--- -------- ---------
<S> <C> <C> <C>
VIF U.S. Small Cap Fund 111 - -
</TABLE>
3. Election of the following Director:
<TABLE>
<CAPTION>
Voting Results*
-------------------------------------------
Against/
For Withheld Abstained
--- -------- ---------
<S> <C> <C> <C>
Stephen M. Peck 7,532 - -
</TABLE>
* In thousands of shares.
<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
David D. Marky
ASSISTANT TREASURER TRANSFER AND DIVIDEND DISBURSING AGENT
PFPC Inc.
David C. Lebisky 400 Bellevue Parkway
ASSISTANT SECRETARY Wilmington, DE 19809
Gary M. Gardner CUSTODIAN
ASSISTANT SECRETARY The Bank of New York
90 Washington Street, 11th Floor
New York, New York 10286
LEGAL COUNSEL
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
</TABLE>
<PAGE>
This report is submitted for the information of the shareholders of the Funds.
It is not authorized for distribution to prospective investors in the Funds
unless preceded or accompanied by an effective prospectus which includes
information regarding the Funds' objectives and policies, charges, expenses and
other data. Please read the prospectus carefully before you invest or send
money.
THE OFFIT VARIABLE INSURANCE FUND, INC.
400 BELLEVUE PARKWAY, SUITE 108, WILMINGTON, DE 19809
(800) 618-9510
