DOW TARGET VARIABLE FUND LLC, N-1A, 1998-09-25

DOW TARGET VARIABLE FUND LLC
N-1A, 1998-09-25

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<PAGE> 1
File No. 333-__________
File No. 811-__________

FORM N-1A

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. ____ [ ]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. ____ [ ]

DOW TARGET VARIABLE FUND LLC
(Exact Name of Registrant)

One Financial Way
Montgomery, Ohio 45242
(Address of Principal Executive Office)
(513) 794-6316
(Registrant's Telephone Number)

Ronald L. Benedict, Secretary
Dow Target Variable Fund LLC
P.O. Box 237
Cincinnati, Ohio 45201
(Name and Address of Agent for Service)

Notice to:
W. Randolph Thompson, Of Counsel
Jones & Blouch L.L.P.
Suite 405 West
1025 Thomas Jefferson Street, NW
Washington, DC 20007

Approximate Date of Public Offering: As soon as practicable after the effective
date of this registration statement.

It is proposed that this filing will become effective (check appropriate box):

____ immediately upon filing pursuant to paragraph (b)
____ on (date) pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(1)
____ on (date) pursuant to paragraph (a)(1)
____ 75 days after filing pursuant to paragraph (a)(2)
____ on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Title of Securities Being Registered: Membership interests in Dow Target
Variable Fund LLC

The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

<PAGE> 2

Prospectus

[Date]

DOW TARGET VARIABLE FUND LLC

One Financial Way
Montgomery, Ohio 45242

(513) 794-6100

The Dow Target Variable Fund LLC is an open-end investment company. It consists
of twelve non-diversified portfolios of the common stocks of the ten companies
in the Dow Jones Industrial Average(SM) (the "Dow") having the highest dividend
yield as of the close of business on or about the last business day prior to the
beginning of each portfolio's annual term. These ten companies are popularly
known as the "Dogs of the Dow."

The Fund's objective is to provide above-average total return through both
capital appreciation and dividend income. The Fund may or may not achieve that
objective. The ten stocks held in each portfolio of the Fund are not expected to
reflect the entire Dow index. The prices of Fund interests are not intended to
track movements of the Dow. The Dow consists of thirty stocks selected by Dow
Jones & Company, Inc. (publishers of The Wall Street Journal) as representing
American industry and the broader domestic stock market.

The Fund is a limited liability company created under Ohio law. Its interests
are owned entirely by variable annuity separate accounts of The Ohio National
Life Insurance Company ("ONLI"). Fund interests are not offered directly to the
public. Fund interests are purchased by ONLI's separate accounts as an
investment option for their variable annuity contracts.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE> 3

INVESTMENT STRATEGY

The Fund has 12 non-diversified portfolios. Each one is named after a different
month (January Portfolio, February Portfolio, etc.) On or about the first
business day of each month, the portfolio named for that month invests
substantially all its assets in the 10 Dogs of the Dow stocks as determined at
the close of the previous business day. Fund management then sets the
proportionate relationships among the 10 stocks in that portfolio for the next
12 months. For example, the stocks held in the January portfolio are maintained
in their same relative proportions until the end of December. Those in the
February portfolio are held until the end of the next January and so on. At the
end of a portfolio's twelfth month, the portfolio is re-balanced with a new mix
of 10 Dogs of the Dow stocks.

All purchases of Fund interests (variable annuity separate accounts) during any
month are invested in that month's portfolio. After that month ends, you may not
make further purchases of that month's portfolio interests until the
corresponding month in later years. Any additional Fund purchases after the
first business day of a portfolio's month will duplicate, as nearly as is
practicable, the original proportionate relationships among the 10 stocks. Since
the prices of each of the 10 stocks change nearly every day, the ratio of the
price of each stock to the total price of the entire group of 10 also changes
daily. However, the proportion of stocks represented in a portfolio will not
change materially.

The investments of portfolio securities are, to the extent practicable,
purchased in substantially equal dollar amounts for each of the 10 companies. It
is generally not possible for management to purchase round lots (usually 100
shares) of the 10 stocks in amounts that will precisely duplicate the prescribed
mix. Also, it usually is impossible for a portfolio to be 100% invested in the
prescribed mix of 10 stocks at any time. To the extent a portfolio is not fully
invested, the interests of variable annuity owners may be diluted and total
return may not directly track the investment results of the 10 stocks. To
minimize this effect, Fund management will try, as much as practicable, to
maintain a minimum cash position at all times. Normally, the only cash items
held by a portfolio are amounts expected to be deducted as expenses and amounts
too small to purchase additional round lots of the Dogs of the Dow stocks.

RISKS

Investing in the ten Dogs of the Dow stocks amounts to a moderately contrarian
strategy. While these ten stocks represent large established companies
recognized as industry leaders, they are currently out of favor relative to the
twenty other Dow stocks. While the relatively high dividends paid by these
companies may account for a substantial portion of a portfolio's total return,
there is no guarantee that the companies will meet their expected dividend
distributions throughout the 12-month term of a portfolio, nor can there be any
assurance that the stocks will appreciate in price during the 12-month term.

2
<PAGE> 4

The Dogs of the Dow strategy selects the ten stocks by formula without
considering why some companies might currently be out of favor with investors.
Thus, a company experiencing financial difficulties or business reverses will
represent 10% of a portfolio if, as of the beginning of the portfolio's 12-month
term, it is among the ten Dow stocks having the highest current dividend yields.
In addition to factors affecting the prices for each of the individual stocks,
all ten are subject to general market and economic trends that might negatively
impact a portfolio's total return. The mix of stocks will not be changed during
a 12-month term in order to take advantage of changing market conditions.

Being limited to ten stocks each, the portfolios are not diversified. This can
expose each portfolio to potentially greater market fluctuations than might be
experienced by a diversified fund. Variable annuity owners, in light of their
own financial situations and goals, should consider other additional funding
options in order to diversify the allocations of their contract assets.

FUND ORGANIZATION

The Fund is organized as an Ohio limited liability company. Its Board of
Managers is responsible for the Fund's overall management and direction. The
Board elects the Fund's officers. The Board approves all significant agreements
including those with the investment adviser, sub-adviser, custodian and fund
accounting agent. Board members are elected by owners of Fund interests.

Under Ohio law, a limited liability company does not issue shares of stock.
Instead, ownership rights are contained in "membership interests". Each Fund
interest represents an undivided interest in the ten stocks held in a Fund
portfolio. The Fund is not offered directly to the public. The only direct owner
of the Fund's interests is ONLI through its separate accounts. Those of ONLI's
variable annuity owners who have contract values allocated to any of the Fund's
portfolios have indirect beneficial rights in the Fund's interests.

All Fund interests have equal voting rights. However, only interests of a
particular portfolio are entitled to vote on matters affecting only that
portfolio.

Each issued and outstanding Fund interest is entitled to one vote and to
participate equally in dividends and distributions declared by its corresponding
portfolio, and in the net assets of the portfolio remaining upon liquidation or
dissolution after outstanding liabilities are satisfied. The interests of each
portfolio, when issued, are fully paid and non-assessable. They have no
pre-emptive, conversion, cumulative dividend or similar rights. They are freely
transferable. Fund interests do not have cumulative rights. This means that
owners of more than half of the Fund's interests voting for election of Managers
can elect all the Managers if they so choose. Then, the remaining interest
owners would not be able to elect any Managers.

3
<PAGE> 5

Fund interests held in connection with any separate account are vested by ONLI
in accordance with instructions received from the owners of variable annuity
contracts issued in connection with each of those separate accounts. Any other
Fund interests will be voted in proportion to the instructions received from all
variable annuity owners.

FUND MANAGEMENT

The Fund's day-to-day investment management is the responsibility of its
investment adviser, Ohio National Investments, Inc. (the "Adviser"). The Adviser
is an Ohio corporation. It is a wholly-owned subsidiary of ONLI and its address
is the same as those of the Fund and ONLI.

For managing the Fund's assets, the Adviser receives a monthly management fee
based on the Fund's total net assets. This fee is calculated daily and is at the
annual rate of 0.60% of total net assets.

In addition to the fee paid to the Adviser, the Fund incurs other miscellaneous
expenses for legal and accounting services, registration and filing fees,
custodial services and shareholder services.

The Adviser contracts with First Trust Advisors L.P. to serve as sub-adviser to
the Fund. First Trust manages the Fund's assets under the Adviser's supervision.
First Trust, an investment adviser to financial institutions, is located at 1001
Warrenville Road in Lisle, Illinois.

First Trust has been granted a license by Dow Jones & Company, Inc. to use
certain copyright, trademark and proprietary rights and trade secrets of Dow
Jones. The Fund and ONLI have entered into agreements with First Trust giving
the Fund and ONLI permission to use and refer to the Dow Jones marks and rights
in connection with the Fund and ONLI's separate accounts.

For the service and rights provided by First Trust, the Adviser pays First Trust
a monthly sub-advisory fee based on the Fund's total net assets. This fee is
calculated daily and is at the annual rate of 0.35% of the Fund's total net
assets.

The Fund's transfer agent and accounting agent is American Data Services, Inc.,
150 Motor Parkway, Hauppauge, New York. The Fund's custodian is Star Bank, 425
Walnut Street, Cincinnati, Ohio.

THE DOW JONES INDUSTRIAL AVERAGE (SM)

The Dow was first published in The Wall Street Journal in 1896. Initially
consisting of just 12 stocks, it expanded to 20 stocks in 1916 and to its
present size of 30 stocks in 1928. The stocks are chosen by the editors of The
Wall Street Journal as representative of the broad stock market and of American
industry. The companies are major factors in their industries and their stocks
are widely held by individuals and institutional investors. Changes in the
components of the Dow are made entirely by the editors of The Wall Street
Journal without consultation with the companies, the stock exchange or any
official agency. For the sake of continuity, changes are made rarely. Most
substitutions have been the result of mergers, but from time to time, changes

4
<PAGE> 6

may be made to achieve a better representation. The components of the Dow may be
changed at any time, for any reason. Any changes in the components of the Dow
made after the stock selection date will not cause a change in the identify of
the ten stocks included in the Trust. The following is a list of the companies
which currently comprise the Dow.

<TABLE>
<S> <C>
AT&T Corporation Hewlett-Packard Co.
Allied Signal International Business Machines Corporation
Aluminum Company of America International Paper Company
American Express Company Johnson & Johnson
Boeing Company McDonald's Corporation
Caterpillar Inc. Merck & Company, Inc.
Chevron Corporation Minnesota Mining & Manufacturing Company
Coca-Cola Company J.P. Morgan & Company, Inc.
Walt Disney Company Philip Morris Companies, Inc.
E.I. duPont de Nemours & Company Procter & Gamble Company
Eastman Kodak Company Sears, Roebuck & Company
Exxon Corporation Travelers Group, Inc.
General Electric Company Union Carbide Corporation
General Motors Corporation United Technologies Corporation
Goodyear Tire & Rubber Company Wal-Mart Stores, Inc.
</TABLE>

The Fund is not sponsored, endorsed, sold or promoted by Dow Jones. Dow Jones
makes no representation or warranty, express or implied, to the Fund's unit
owners or any member of the public regarding the advisability of purchasing the
Fund. Dow Jones' only relationship to the Fund, ONLI, the Adviser or First Trust
is the licensing of certain copyrights, trademarks, servicemarks and service
names of Dow Jones. Dow Jones has no obligation to take the needs of ONLI, the
Adviser, First Trust or variable annuity owners into consideration in
determining, composing or calculating the Dow. Dow Jones is not responsible for
and has not participated in the determination of the terms and conditions of the
Fund, including the pricing of Fund interests or the amount payable under
variable contracts. Dow Jones has no obligation or liability in connection with
the administration or marketing of the Fund or any variable annuity contracts.

DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE DOW
JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED THEREIN AND DOW JONES SHALL
HAVE NO LIABILITY FOR ANY ERRORS, OMISSION, OR INTERRUPTIONS THEREIN. DOW JONES
MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND,
ONLI, THE ADVISER, FIRST TRUST OR VARIABLE ANNUITY OWNERS OR ANY OTHER PERSON OR
ENTITY FROM THE USE OF THE DOW JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED
THEREIN. DOW JONES MAKES NO EXPRESS OR IMPLIED WARRANTIES AND EXPRESSLY
DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO THE DOW JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.

5
<PAGE> 7

TOTAL RETURN HISTORY OF THE DOGS OF THE DOW

The following table compares the annual total returns of the Dogs of the Dow
(the ten highest dividend yielding stocks among the thirty Dow companies) and
the annual total returns of the Dow for each of the last 25 calendar years. The
ten highest yielding dividend stocks for each year were selected as of the
beginning of each year.

This table is presented for comparison purposes only. The total returns shown
are no indication of returns that might be expected in the future. The table
does not reflect the Fund's charges and expenses which diminish the Fund's
actual returns. (See "Charges and Expenses""). The Fund will not be 100%
invested at all times, nor is it possible for it to perfectly maintain its
prescribed relative weightings of the ten stocks at all times throughout a
portfolio's term.

Based on the above annual returns, the average annual total returns for the 25
year period were 18.44% for the ten Dogs of the Dow and 13.08% for the thirty
Dow stocks. There can be no assurance that future returns will continue to
follow this pattern. In any event, the Fund's actual returns will be less than
those of the ten selected stocks because of the Fund's expenses.

6
<PAGE> 8

PERFORMANCE DATA

From time to time, ONLI or its affiliates may advertise historical total returns
of variable contract subaccounts based on the returns of the Fund's portfolios
(adjusted for contract charges and expenses). These figures will be calculated
according to standardized methods prescribed by the SEC. The Fund's total
returns may be compared to returns on the Dow for comparable periods in such
advertising. Historical returns are not predictive of future performance.

ONLI or its affiliates may also advertise average annual total return or other
performance data for the Fund in non-standard formats. Any such information will
be accompanied by standardized performance data.

PRICING OF FUND INTERESTS

Fund interests are sold to ONLI's variable annuity separate accounts without a
sales charge. They may be redeemed at their net asset value next computed after
the Fund receives a purchase or redemption order. The value of Fund interests is
based on the market value of the stocks and any other cash or securities owned
by each portfolio. This determination is made as of 4:00 p.m. Eastern time on
each business day on which an order for purchase or redemption is received and
there is enough trading in portfolio securities to materially affect the current
net asset value of Fund interests. The net asset value of each portfolio is
computed by dividing the value of that portfolio's securities plus any cash or
other assets, less the portfolio's liabilities, by the number of portfolio
interests outstanding.

FUND DIVIDENDS AND DISTRIBUTIONS

Dividends representing net investment income are normally distributed quarterly.
Any net realized capital gains are normally distributed annually. However, the
Board may declare dividends more often. Dividends and distributions are
automatically reinvested in additional interests in the respective portfolios at
net asset value without a sales charge.

TAXES

The Fund is a limited liability company with all of its interests owned by a
single entity (ONLI). Accordingly, the Fund is taxed as part of the operations
of ONLI and is not taxed separately. Under current tax law, interest, dividend
income and capital gains of the Fund are not currently taxable when left to
accumulate within a variable annuity contract.

THE YEAR 2000 ISSUE

The Fund and the Adviser have considered the impact of "Year 2000" issues on the
Fund. The Fund and its service providers have developed remedial plans for their
computer systems and applications. Conversion activities are presently in
process and on schedule. Conversion testing and implementation are expected to
be completed by December 31, 1998. The Fund has been

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<PAGE> 9

assured by the suppliers of services that their systems will be Year 2000
compliant by December 31, 1998. ONLI's internal auditors intend to independently
test all internal systems affecting the Fund to verify their compliance early in
1999. Ongoing assurance will also be sought from the suppliers of services to
the Fund.

The failure of the Fund, ONLI, or suppliers of services to the Fund to achieve
complete and timely compliance could impair the operation of the Fund and the
achievement of its objectives. While it is believed that each entity is
diligently pursuing a well-conceived remedial plan, there can be no certainty of
complete success. Further, it is possible that the Fund could be adversely
affected by the noncompliance of third parties beyond the knowledge or control
of the Fund, ONLI or direct providers of services.

8
<PAGE> 10

[BACK COVER PAGE]

The Statement of Additional Information ("SAI") includes additional information
about the Fund. The SAI is incorporated herein by reference.

After the Fund completes its initial fiscal periods, additional information
about the Fund's investments will be available in the Fund's annual and
semi-annual reports to members. In the Fund's annual report, you will find a
discussion of the market conditions and how the Fund's investment strategy
significantly affected the Fund's performance during the year.

The SAI and (when available) the Fund's annual and semi-annual reports are
available, without charge, upon request. To receive them, call or write the Fund
at 1-800-578-8078, One Financial Way, Montgomery, Ohio 45242

Information about the Fund can also be reviewed and copied at the Public
Reference Room of the Securities and Exchange Commission in Washington, D.C.
Information about the SEC's Public Reference Room is available at
1-800-SEC-0330. Reports and other information are also available in the SEC's
internet site at http://www.sec.gov. Copies of this information may be
obtained, upon payment of a duplicating fee, by writing the Public Reference
Section of the SEC, Washington, D.C. 20549-6009.

Dow Target Variable Fund LLC, Investment Company Act File no. 811-__________.

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<PAGE> 11

DOW TARGET VARIABLE FUND LLC

One Financial Way
Montgomery, Ohio 45242
Telephone 513-794-6100
Statement of Additional Information ("SAI")
[Date]

This SAI is not a prospectus. Please read it in conjunction with the prospectus
for Target Variable Fund LLC (the "Fund") dated _____________________. To get a
free copy of the Fund's prospectus, write or call the Fund at the above address.

Table of Contents

<TABLE>
<S> <C>
The Fund.....................................................................................................Page 2

Investment Policies..........................................................................................Page 2
Fundamental Policies......................................................................................Page 3
Repurchase Agreements.....................................................................................Page 3

Fund Management..............................................................................................Page 4

Investment Advisory and Other Services.......................................................................Page 6

Brokerage Allocation.........................................................................................Page 7

Purchase and Redemption of Fund Interests....................................................................Page 8

Taxation of the Fund........................................................................................ Page 9

Fund Performance.............................................................................................Page 9
Total Return.............................................................................................Page 10

Legal Counsel...............................................................................................Page 10

Financial Statements........................................................................................Page 11
</TABLE>

Page 1
<PAGE> 12

THE FUND

The Fund is a non-diversified, open-end management investment company. It
currently consists of 12 distinct portfolios, each corresponding to a calendar
month.

The Fund was organized under Ohio law as a limited liability company in
September, 1998. The Fund presently sells its interests only to separate
accounts of The Ohio National Life Insurance Company ("ONLI") as a funding
option to support certain benefits under variable annuity contracts issued by
ONLI. In the future, Fund interests may be used for other purposes. However,
without a change in applicable law, Fund interests will not be sold directly to
the public.

The investment and reinvestment of Fund assets is overseen by the Fund's
investment adviser, Ohio National Investments, Inc. (the "Adviser"). The
principal business address of the Fund, ONLI and the Adviser is One Financial
Way, Montgomery, Ohio 45242. The investment and reinvestment of Fund assets is
managed by First Trust Advisors L.P. First Trust's principal business address is
1001 Warrenville Road, Suite 300, Lisle, Illinois 60532.

INVESTMENT POLICIES

The prospectus describes the Fund's investment strategy and objectives. The Fund
is non-diversified. Each portfolio will, at the beginning of that portfolio's
annual term, strive to invest approximately 10% of its total net assets in each
of the ten companies in the Dow Jones Industrial Average(sm) (the "Dow") having
the highest dividend yield as of the close of business on the last business day
before the portfolio's term begins. These ten companies are popularly known as
the "Dogs of the Dow." There can be no assurance that a portfolio will not
invest more than 10% of its net assets in the stock or other securities of any
single company. The Fund may, without limits as to percent of assets, purchase
U.S. government securities or short-term debt securities (a) pending the orderly
purchase of the 10 Dogs of the Dow stocks or (b) for temporary defensive
purposes.

The following fundamental policies may not be changed without the affirmative
vote of the majority of the outstanding voting securities of the Fund (or of a
particular portfolio, if appropriate). The Investment Company Act of 1940
defines a majority vote as the vote of the lesser of (i) 67% of the Fund
interests represented at a meeting at which more that 50% of the outstanding
interests are represented or (ii) more than 50% of the outstanding voting
interests. With respect to the submission of a change in an investment policy to
the holders of outstanding voting interests of a particular portfolio, such
matter shall be deemed to have been effectively acted upon with respect to such
portfolio if a majority of the outstanding voting interests of such portfolio
vote for the approval of such matter, notwithstanding that (1) such matter has
not been approved by the holders of a majority of the outstanding voting
interests of any other portfolio affected by such matter, and (2) such matter
has not been approved by the vote of a majority of the outstanding voting Fund
interests.

Page 2
<PAGE> 13

Fundamental Policies:

1. The Fund may not issue senior securities.

2. The Fund will not borrow money, except for temporary or emergency purposes,
from banks. The aggregate amount borrowed shall not exceed 5% of the value of a
portfolio's assets. In the case of any borrowing, a portfolio may pledge,
mortgage or hypothecate up to 5% of its assets.

3. The Fund will not underwrite the securities of other issuers except to the
extent the Fund may be considered an underwriter under the Securities Act of
1933 when selling portfolio securities.

4. The Fund will not purchase or sell real estate or interests therein.

5. The Fund will not lend money or other assets to other persons in excess of 5%
of a portfolio's total assets, except (a) by entering into repurchase agreements
or the purchase of other assets consistent with the Fund's objectives or (b) by
loaning portfolio securities if collateral values are continuously maintained at
no less than 100% by daily marking to market.

Repurchase Agreements

Under a repurchase agreement, a portfolio purchases a security and obtains a
simultaneous commitment from the seller (a member bank of the Federal Reserve
System or a government securities dealer recognized by the Federal Reserve
Board) to repurchase the security at a mutually agreed upon price and date. It
may also be viewed as a loan of money by the portfolio to the seller. The resale
price is normally in excess of the purchase price and reflects an agreed upon
market rate. The rate is effective for the period of time the portfolio is
invested in the agreement and unrelated to the coupon rate on the purchased
security. The period of these repurchase agreements will usually be short, from
overnight to one week, and at no time will a portfolio invest in repurchase
agreements for more than one year. These transactions afford an opportunity for
a portfolio to earn a return on temporarily available cash. Although repurchase
agreements carry certain risks not associated with direct investments in
securities, the Fund intends to enter into repurchase agreements only with
financial institutions believed by the Adviser to present minimal credit risks
in accordance with criteria established by the Fund's Board. The Adviser will
review and monitor the creditworthiness of such institutions under the Board's
general supervision. The Fund will only enter into repurchase agreements
pursuant to a master repurchase agreement that provides that all transactions be
fully collateralized and that the collateral be in the actual or constructive
possession of the Fund. The agreement must also provide that the Fund will
always receive as collateral securities whose market value, including accrued
interest, will be a least equal to 100% of the dollar amount invested by a
portfolio in each agreement, and the portfolio will make payment for such
securities only upon physical delivery or evidence of book entry transfer to the
account of the custodian. If the seller were to default, the portfolio might
incur a loss if the value of the collateral securing the repurchase agreement
declines and may incur disposition costs in connection with liquidating the
collateral. In addition, if

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<PAGE> 14

bankruptcy proceedings are commenced with respect to the seller of the security,
realization upon the collateral by the portfolio may be delayed or limited and a
loss may be incurred if the collateral securing the repurchase agreement
declines in value during the bankruptcy proceedings.

FUND MANAGEMENT

The Board of Managers and the officers of the Fund, together with a brief
summary of their principal occupations during the past five years, are listed
below:

<TABLE>
<CAPTION>
Principal Occupation during past
Name and address Positions with the Fund five years
- ---------------- ----------------------- ---------------------------------
<S> <C> <C>
Ronald L. Benedict* Secretary and Manager Corporate Vice President, Counsel and
One Financial Way Secretary, ONLI; Secretary of the
Montgomery, Ohio Adviser

George E. Castrucci Manager Retired; formerly President and Chairman
8355 Old Stable Rd. Chief Operating Officer of Great and
Cincinnati, Ohio American Communications Co. and Chief
Executive Officer of Great American
Broadcasting Co.; Director of Benchmark
Savings Bank; Director of Baldwin Piano
& Organ Co.

Ross Love Manager President & CEO, Blue Chip Director,
615 Windings Way Broadcasting Ltd.; Trustee, Health
Cincinnati, Ohio Partnership Alliance of Greater
Cincinnati; for a Drug Free America
(Chairman of African-American Task
Force); Advisory Board, Syracuse
University School of Management;
Director, Association of National
Advertisers; Until 1996 was Vice
President of Advertising, Procter &
Gamble Co.
</TABLE>

Page 4
<PAGE> 15

<TABLE>
<CAPTION>
Principal Occupation during past
Name and address Positions with the Fund five years
- ---------------- ----------------------- ---------------------------------
<S> <C> <C>
John J. Palmer* President and Manager Senior Vice President, Strategic
One Financial Way Initiatives, ONLI; Prior to March,
Montgomery, Ohio 1997, was Senior Vice President of
Life Insurance Company of Virginia

George M. Vredeveld Manager Professor of Economics, University
University of Cincinnati of Cincinnati; Director of Center
P.O. Box 210223 for Economic Education; Private
Cincinnati, Ohio Consultant; Director of Benchmark
Savings Bank

Thomas A. Barefield Vice President Senior Vice President, Institutional
One Financial Way Sales, ONLI; Prior to November,
Montgomery, Ohio 1997, was Senior Vice President of
Life Insurance Company of Virginia

Michael A. Boedeker Vice President Vice President, Fixed Income
One Financial Way Securities, ONLI; Vice President and
Montgomery, Ohio Director of the Adviser

Joseph P. Brom Vice President Vice President, Investments, ONLI;
One Financial Way President and Director of the Adviser
Montgomery, Ohio

Stephen T. Williams Vice President Vice President, Equity Securities,
One Financial Way ONLI; Vice President and Director of
Montgomery, Ohio the Adviser

Dennis R. Taney Treasurer Mutual Funds Financial Operations,
One Financial Way ONLI; Treasurer of the Adviser
Montgomery, Ohio
</TABLE>

*Indicates Managers who are "Interested Persons" as defined by the Investment
Company Act of 1940, as amended.

All Managers and officers of the Fund hold similar positions as directors and/or
officers with Ohio National Fund, Inc. ("ONF") and ONE Fund, Inc. ("ONE Fund"),
diversified mutual funds sponsored by ONLI and managed by the Adviser.

Page 5
<PAGE> 16

Compensation of Board of Managers

Managers who are not affiliated with the Adviser, ONLI or First Trust were
compensated as follows in 1997:

<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation From
Manager From the Fund Fund Complex**
- ------- ---------------------- -----------------------
<S> <C> <C>
George E. Castrucci None $15,000
Ross Love None 12,150
George M. Vredeveld None 15,000
</TABLE>

**The "Fund Complex" consists of the Fund, ONF and ONE Fund.

Managers and officers of the Fund who are affiliated with the Adviser, ONLI or
First Trust receive no compensation from the Fund Complex. The Fund has no
pension, retirement or deferred compensation plan for its Managers or officers.

INVESTMENT ADVISORY AND OTHER SERVICES

The Adviser is an Ohio corporation organized on January 17, 1996 to provide
investment advice and management services to investment companies affiliated
with ONLI. The Adviser is a wholly-owned subsidiary of ONLI. The Adviser uses
ONLI's investment personnel and administrative systems.

The Adviser regularly furnishes to the Fund's Board recommendations with respect
to an investment program consistent with the Fund's investment policies. The
Adviser implements that program by placing orders for the purchase and sale of
securities or by delegating that implementation to First Trust.

The Adviser's services, are provided under an Investment Advisory Agreement with
the Fund. Under the Investment Advisory Agreement, The Adviser provides
personnel, including executive officers for managing the day-to-day affairs of
the Fund. The Adviser also furnishes at its own expense or pays the expenses of
the Fund for clerical and related administrative services (other than those
provided by the custodian agreement with Star Bank and agreements with American
Data Services), office space and other facilities and equipment. The Adviser
also furnishes or pays for all information and services (other than legal
counsel) required for the preparation and amendment of registration statements,
prospectuses, SAIs, financial reports, and proxy solicitation material. The Fund
pays organizational expenses incurred in its operations including, among others,
local income, franchise, issuance or other taxes; certain printing costs,
brokerage commissions on portfolio transactions; custodial and transfer agent
fees; auditing and legal expenses; and expenses related to registration of its
interests and members' meetings.

As compensation for its services, the Adviser receives from the Fund monthly
fees on the basis of the Fund's average daily net assets at the annual rate of
0.60% of each portfolio's net assets.

Page 6
<PAGE> 17

Under the Investment Advisory Agreement, the Fund authorizes the Adviser to
retain sub-advisers, subject to the Board's approval. The Adviser has entered
into a Sub-Advisory Agreement with First Trust to manage the investment and
reinvestment of the Fund's assets, subject to the Adviser's supervision. The
Adviser, ONLI and the Fund have also entered into a Sub-License Agreement with
First Trust under the terms of which the Fund and ONLI are permitted to use and
refer to certain copyright, trademark and proprietary rights and trade secrets
of Dow Jones & Company. As compensation for its services, First Trust receives
from the Adviser monthly fees on the basis of the Fund's average daily net
assets at the annual rate of 0.35% of each portfolio's net assets.

The Investment Advisory Agreement provides that if the total expenses applicable
to any portfolio during any calendar quarter (excluding taxes, brokerage
commissions, interest and the investment advisory fee) exceed 1%, on an
annualized basis, of such portfolio's average daily net asset value, the Adviser
will pay such excess expenses.

Under a Service Agreement among the Fund, the Adviser and ONLI, the latter has
agreed to furnish the Adviser, at cost, such research facilities, services and
personnel as may be needed by the Adviser in connection with its performance
under the Investment Advisory Agreement. The Adviser reimburses ONLI for its
expenses in this regard.

The Investment Advisory, Sub-Advisory and Service Agreements were approved by
the Board of Managers on October 12, 1998 and by the members of the Fund on
__________________________, 1998.

These agreements will continue in force from year to year hereafter, if such
continuance is specifically approved at least annually by a majority of the
Fund's Managers who are not parties to such agreements or interested persons of
any such party, with votes to be cast in person at a meeting called for the
purpose of voting on such continuance, and also by a majority of the Board or by
a majority of the outstanding voting securities of each portfolio voting
separately.

The Investment Advisory, Service, and Sub-Advisory Agreements may be terminated
at any time, without the payment of any penalty, on 60 days' written notice to
the Adviser by the Fund's Board or, as to any portfolio, by a vote of the
majority of the portfolio's outstanding voting securities. The Investment
Advisory Agreement may be terminated by the Adviser on 90 days' written notice
to the Fund. The Service Agreement may be terminated, without penalty, by the
Adviser or ONLI on 90 days' written notice to the Fund and the other party. The
Sub-Advisory Agreement may be terminated, without penalty, by the Adviser or by
First Trust on 90 days' written notice to the Fund and the other party. The
Agreements will automatically terminate in the event of their assignment.

BROKERAGE ALLOCATION

The Adviser or, subject to the Sub-Advisory Agreement, First Trust buys and
sells the Dogs of the Dow stocks and makes other authorized investments for each
portfolio. The Adviser and First Trust select the brokers and dealers to handle
such transactions. It is the

Page 7
<PAGE> 18

intention of the Adviser and of First Trust to place orders for the purchase and
sale of securities with the objective of obtaining the most favorable price
consistent with good brokerage service. The cost of securities transactions for
each portfolio will consist primarily of brokerage commissions or dealer or
underwriter spreads.

In selecting brokers or dealers through whom to effect transactions, the Adviser
and First Trust consider a number of factors including the quality, difficulty
and efficiency of execution, and value of research, statistical, quotation and
valuation services provided. Research services by brokers include advice, either
directly or through publications or writings, as to the value of securities, and
analyses and reports concerning issuers, industries, securities, economic
factors and trends, and portfolio strategy. In making such determination, the
Adviser or First Trust may use a broker whose commission in effecting a
securities transaction is in excess of that of some other broker if the Adviser
or First Trust determines in good faith that the amount of such commission is
reasonable in relation to the value of the research and related services
provided by such broker. In effecting a transaction for one portfolio, a broker
may also offer services of benefit to other portfolios managed by the Adviser or
First Trust, or of benefit to either's affiliates.

Generally, it is not possible to place a dollar value on research and related
services provided by brokers to the Adviser or First Trust. However, receipt of
such services may tend to reduce the expenses of the Adviser or First Trust.
Research, statistical and similar information furnished by brokers may be of
incidental assistance to other clients of the Adviser or First Trust and
conversely, transaction costs paid by other clients of the Adviser or First
Trust may generate information which is beneficial to the Fund.

Consistent with these policies, First Trust may, with the Board's approval and
subject to its review, direct portfolio transactions to be executed by a broker
affiliated with First Trust so long as the commission paid to the affiliated
broker is reasonable and fair compared to the commission that would be charged
by an unaffiliated broker in a comparable transaction.

No company whose stock is held in any portfolio of the Fund, nor any affiliate
thereof, will act as broker or dealer for any portfolio in the purchase or sale
of any security for that portfolio.

PURCHASE AND REDEMPTION OF FUND INTERESTS

Fund interests are sold without a sales charge and may be redeemed at their net
asset value next computed after a purchase or redemption order is received by
the Fund. Depending upon the net asset values at that time, the amount paid upon
redemption may be more or less than the cost of the interests redeemed. Payment
for interests redeemed will be made as soon as possible, but in any event within
seven days after evidence of ownership of the interests is tendered to the Fund.
However, the Fund may suspend the right of redemption or postpone the date of
payment beyond seven days during any period when (a) trading on the New York
Stock Exchange is restricted, as determined by the Securities and Exchange
Commission, or such Exchange is closed for other than weekends and holidays; (b)
an emergency exists, as determined by the Commission, as a result of which
disposal by the Fund of securities owned by it is not reasonably practicable, or
it is not reasonably practicable for the Fund fairly to determine the value of
its net assets; or (c) the Commission by order so permits for the protection of
security holders of the Fund.

Page 8
<PAGE> 19

Interests of one portfolio may be exchanged for interests of another portfolio
of the Fund on the basis of the relative net asset value next computed after an
exchange order is received by the Fund.

The net asset value of the Fund's interests is determined on each day on which
an order for purchase or redemption of the Fund's interests is received and
there is a sufficient degree of trading in portfolio securities that the current
net asset value of its interests might be materially affected. Such
determination is made as of 4 p.m. Eastern time on each business day. "Business
day" means each weekday (Monday through Friday) except for the following
holidays: New Years Day, Presidents Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas. The net asset value of each
portfolio is computed by dividing the value of the securities in that portfolio
plus any cash or other assets less all liabilities of the portfolio, by the
number of interests outstanding for that portfolio.

Securities which are held in a portfolio and listed on a securities exchange are
valued at the last sale price or, if there has been no sale that day, at the
last bid price reported as of 4 p.m. Eastern time. Over-the-counter securities
are valued at the last bid price as of 4 p.m. Eastern time. Short-term debt
securities with remaining maturities of 60 days or less are valued at amortized
cost.

TAXATION OF THE FUND

The Fund is not a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). The Fund nonetheless
does not pay federal income tax on its interest, dividend income or capital
gains. As a limited liability company whose interests are sold only to ONLI, the
Fund is disregarded as an entity for purposes of federal income taxation. ONLI,
through its variable annuity separate accounts, is treated as owning the assets
of the portfolios directly and its tax obligations thereon are computed pursuant
to Subchapter L of the Code (which governs the taxation of insurance companies).
Under current tax law, interest, dividend income and capital gains of the Fund
are not taxable to the Fund, and are not currently taxable to ONLI or to
contract owners, when left to accumulate within a variable annuity contract. Tax
disclosure relating to the variable annuity contracts that offer the Fund as an
investment alternative is contained in prospectuses for those contracts.

FUND PERFORMANCE

The Fund, or broker-dealers offering variable annuities in which the Fund is
available, may distribute sales literature comparing the percentage change in
net asset value per Fund interest for any of its portfolios against the Dow
Jones Industrial Average, the Standard & Poor's 500 Stock Index, the Consumer
Price Index or other investment companies having investment strategies similar
to the Fund. These comparisons may include graphs, charts, tables or examples.
The average annual total return and cumulative total returns for each portfolio
may also be advertised.

Page 9
<PAGE> 20

The Fund may also advertise the performance ratings or rankings assigned to its
portfolios by various statistical services, including Morningstar, Inc. and
Lipper Analytical Services, Inc., or as they appear in various publications
including The Wall Street Journal, Investors Business Daily, The New York Times,
Barron's, Forbes, Fortune, Business Week, Financial Services Week, Financial
World, Kiplinger's Personal Finance and Money Magazine.

Total Return

Total returns quoted in advertising reflect all aspects of a portfolio's
investment return, including the effects of reinvesting dividends and capital
gain distributions as well as changes in the portfolio's net asset value per
Fund interest over the period shown. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment in a portfolio over a stated period, and then calculating the
annually compounded percentage rate that would have produced the same result had
the rate of growth or decline been constant over that period. While average
annual returns are a convenient means of comparing investment alternatives, no
portfolio will experience a constant rate of growth or decline over time.

The average annual compounded rate of return for a portfolio over a given period
is found by equating the initial amount invested to the ending redeemable value
using the following formula:
n
P(1+T) =ERV

where: P = a hypothetical initial payment of $1,000.
T = the average annual total return,
n = the number of years, and
ERV = the ending redeemable value of a hypothetical $1,000
beginning-of-period payment at the end of the period
(or fractional portion thereof).

In addition to average annual total returns, advertising may reflect cumulative
total returns that simply reflect the change in value of an investment in a
portfolio over a period. This may be expressed as either a percentage change,
from the beginning to the end of the period, or the end-of-period dollar value
of an initial hypothetical investment.

LEGAL COUNSEL

Messrs. Jones & Blouch L.L.P., Washington, D.C., have passed on matters
pertaining to the federal securities laws and Ronald L. Benedict, Esq.,
Secretary of the Fund and Corporate Vice President, Counsel and Secretary of
ONLI, has passed on all other legal matters relating to the legality of the Fund
interests described in the prospectus and this SAI.

Page 10
<PAGE> 21

FINANCIAL STATEMENTS

No financial statements for the Fund are included in the prospectus or in this
SAI because the Fund had not commenced operations as of the effective date of
the prospectus and SAI.

Page 11
<PAGE> 22

PART C: OTHER INFORMATION

Exhibits:
- ---------

(a) Articles of Organization of the registrant

(b) Operating Agreement of the registrant (To be filed by pre-effective
amendment)

(d) Investment Advisory Agreement between the registrant and Ohio National
Investments, Inc.

(d)(1) Sub-Advisory Agreement between Ohio National Investments, Inc. and
First Trust Advisors L.P.

(g) Custody Agreement between the registrant and Star Bank, NA

(h) Sublicense Agreement among the registrant, First Trust Advisors L.P.
and Dow Jones & Company, Inc. (To be filed by pre-effective amendment)

(h)(1) Fund Accounting Service Agreement between the registrant and American
Data Services, Inc.

(h)(2) Transfer Agency and Service Agreement between the registrant and
American Data Services, Inc.

(h)(3) Master Repurchase Agreement between the registrant and Star Bank, NA

(h)(4) Service Agreement among the registrant, Ohio National Investments, Inc.
and The Ohio National Life Insurance Company

(h)(5) Joint Insured Agreement among the registrant, Ohio National Fund, Inc.,
ONE Fund, Inc. and Ohio National Investments, Inc.

(i) Opinion and consent of Ronald L. Benedict, Esq.

(l) Investment letter for the initial subscription of membership interests
of the registrant (To be filed by pre-effective amendment)

<PAGE> 23

Persons Controlled by or Under Common Control with the Fund

The registrant is an affiliate of The Ohio National Life Insurance Company
("ONLI"). The diagram below lists all persons under common control with the
registrant. ONLI is a wholly-owned subsidiary of Ohio National Financial
Services, Inc. ("ONFS"), which in turn is a wholly-owned subsidiary of Ohio
National Mutual Holdings, Inc. ("ONMH"). ONMH is a mutual insurance holding
company all of the voting securities of which are owned by the participating
policyholders of ONLI. ONLI owns 100% of the voting securities of all its
subsidiaries, including the registrant's investment adviser, Ohio National
Investments, Inc. (the "Adviser"), except for five directors' qualifying shares
of Ohio National Life Assurance Corporation ("ONLAC"). As of September 15, 1998,
ONLI (through its separate accounts) owned 91.6% of the voting securities of
Ohio National Fund, Inc. ("ONF"). The remaining 8.4% of the voting securities of
ONF were owned by ONLAC (through its separate account). On September 15, 1998,
ONLI owned 37.3% of the voting securities of ONE Fund, Inc.

OHIO NATIONAL MUTUAL HOLDINGS, INC.
A MUTUAL INSURANCE HOLDING COMPANY INCORPORATED UNDER THE LAWS OF OHIO

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

OHIO NATIONAL FINANCIAL SERVICES, INC.
AN INTERMEDIATE INSURANCE HOLDING COMPANY INCORPORATED UNDER THE LAWS OF OHIO

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
THE OHIO NATIONAL LIFE INSURANCE COMPANY/CINCINNATI
A STOCK LIFE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF OHIO
- --------------------------------------------------------------------------------
<S> <C>
- ------------------------------- -----------------------------
ENTERPRISE PARK, INC. OHIO NATIONAL EQUITIES INC.

A GEORGIA CORPORATION A BROKER/DEALER
REAL ESTATE DEVELOPMENT COMPANY CAPITALIZED BY ONLI @ $30,000
CAPITALIZED BY ONLI $50,000
- ------------------------------- --------------------------------
Pres. & Dir. M. Stohler Chm. & Dir. D. O'Maley

V.P. & Dir. J. Brom Pres. & Dir. J. Palmer

Secy. & Dir. J. Fischer VP & Dir. T. Backus

Treas. & Dir. D. Taney VP & Dir. J. Miller

Sr. VP T. Barefield

Secretary & Dir. R. Benedict

Treasurer B. Turner

Compliance Officer J. Dunn

Asst. Secy. M. Haverkamp
- ------------------------------- --------------------------------
</TABLE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
THE OHIO NATIONAL LIFE INSURANCE COMPANY/CINCINNATI
A STOCK LIFE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF OHIO
- -------------------------------------------------------------------------------------------------------------------

S E P A R A T E A C C O U N T S
--------------------------------
A B C D E F
--------------------------------

<S> <C> <C>
- ------------------------------- ------------------------------ -------------------------------------
OHIO NATIONAL INVESTMENTS, INC. THE O.N. EQUITY SALES COMPANY OHIO NATIONAL LIFE
ASSURANCE CORPORATION
AN INVESTMENT ADVISER AN OHIO CORPORATION AN OHIO CORPORATION
CAPITALIZED BY ONLI @ $10,000 A BROKER/DEALER A STOCK LIFE INSURANCE COMPANY
CAPITALIZED BY ONLI @ $790,000 CAPITALIZED BY ONLI @ $32,000,000
INCORPORATED UNDER THE LAWS OF OHIO
- ------------------------------- ------------------------------ ------------------------------------
Chm. & Dir. D. O'Maley Chm./Pres/.CEO & Dir. D. O'Maley
Pres. & Dir. J. Brom Sr. VP & Dir. R. Dolan
Pres. & Dir. J. Palmer Sr. VP & Dir. J. Palmer
VP & Dir. M. Boedeker Sr. VP & Dir. S. Summers
V.P. & Dir. M. Haverkamp Sr. VP & Dir. J. Brom
VP & Dir. M. Stohler Sr. VP T. Barefield
Secy. & Dir. R. Benedict Sr. Vice Pres. D. Cook
VP & Dir. S. Williams Sr. Vice Pres. G. Smith
Director B. DiTommaso Vice Pres. & Treas. R. Broodwell
Treasurer D. Taney Vice President M. Boedeker
Treasurer B. Turner Vice President R. DiTommaso
Secretary R. Benedict Vice President T. Backus
Compliance Director J. Dunn Vice President G. Pearson
VP K. Hanson Vice President M. Stohler
VP D. Hundley Vice Pres. J. Houser
VP J. Martin VP & Secy. R. Benedict
Asst. Secy. J. Fischer
Asst. Actuary K. Flischel
- ------------------------------- ------------------------------ ------------------------------------
SEPARATE ACCOUNT
------------------------------------
R
---
</TABLE>

<TABLE>
<CAPTION>
<= Advisor to Advisor to =>
--------------------------------------------------------
<S> <C> <C>
- ------------------ -------------------------------- --------------------------------
ONE FUND, INC. O.N. INVESTMENT MANAGEMENT CO. OHIO NATIONAL FUND

A MARYLAND CORPORATION AN OHIO CORPORATION A MARYLAND CORPORATION
AN OPEN END DIVERSIFIED A FINANCIAL ADVISORY SERVICE AN OPEN END DIVERSIFIED
MANAGEMENT INVESTMENT COMPANY CAPITALIZED BY ONESCO @ $145,000 MANAGEMENT INVESTMENT COMPANY
- ----------------------------- -------------------------------- --------------------------------
Pres. & Dir. J. Palmer Pres. & Dir. J. Palmer Pres. & Dir. J. Palmer
Vice. Pres. M. Boedeker Vice President M. Boedeker
Vice Pres. J. Brom VP & Dir. G. Smith Vice President J. Brom
Vice Pres. T. Barefield Vice President S. Williams
Vice Pres. S. Williams Treasurer D. Taney
Treasurer D. Taney Secy. & Dir. R. Benedict
Secy. & Dir. R. Benedict Treasurer D. Taney Director R. Love
Director R. Love Director G. Castrucci
Director G. Castrucci Secretary M. Haverkamp Director G. Vredeveld
Director G. Vredeveld Sr. VP T. Barefield
- --------------------------------- -------------------------------- ---------------------------------
</TABLE>

Indemnification

Under the terms of the Operating Agreement, no Manager or officer of the
registrant is liable, responsible or accountable in damages or otherwise to the
registrant or its members for any action taken on behalf of the registrant
within the scope of the authority of the Board of Managers or such officer, or
reasonably believed by such person to be within the scope of his or her
authority, or for any omission, unless such act or omission was performed or
omitted fraudulently or in bad faith or constituted gross negligence, or wanton
and willful misconduct. The registrant has agreed, under the terms of its
Operating Agreement, to reimburse, indemnify, defend and hold harmless each
Manager and officer from and against any loss, expense, damage or injury
suffered or sustained by the registrant or its members by reason of any acts or
omissions arising out of such person's activities on behalf of the registrant,
including, without limitation, any judgment, award, settlement, reasonable
attorneys' fees and other costs and expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim, but excluding
loss, expense, damage or injury caused or resulting from any acts or omissions
performed or omitted fraudulently or in bad faith or which constitute gross
negligence or wanton and willful misconduct.

Business and Other Connections of the Investment Adviser

The Adviser is engaged in providing investment management services to the
registrant and to ONF and ONE Fund. The Adviser has not engaged in any other
business of a substantial nature during the last two years. The names of each
director and officer of the Adviser and the business of a substantial nature
during the last two years are as follows:

<PAGE> 24

<TABLE>
<CAPTION>
Position with Business of a Substantial
Name the Adviser Nature During Past Two Years
- ---- ------------- ----------------------------
<S> <C> <C>
Joseph P. Brom Director and Senior Vice President and Chief Investment Officer of
President ONMH, ONFS, ONLI and ONLAC; Director of ONLI and ONLAC;
Vice President of Registrant; Vice President of ONF and
ONE Fund

Michael A. Boedeker Director and Vice President, Fixed Income Securities of ONLI and
Vice President ONLAC; Vice President of Registrant; Vice President of
ONF and ONE Fund

Michael D. Stohler Director and Vice President, Mortgages and Real Estate of ONLI and
Vice President ONLAC

Stephen T. Williams Director and Vice President of Equity Securities of ONLI and ONLAC;
Vice President Vice President of Registrant; Vice President of ONF and
ONE Fund

Keith O. Hanson Vice President Portfolio Manager and Investment Officer of ONLI

R. Douglas Hundley Vice President Portfolio Manager and Investment Officer of ONLI

Jed R. Martin Vice President Portfolio Manager and Investment Officer of ONLI

Ronald L. Benedict Secretary Corporate Vice President, Counsel and Secretary of ONLI
and ONLAC; Manager and Secretary of Registrant; Director
and Secretary of ONF and ONE Fund; Director and Secretary
of Ohio National Equities, Inc.; Secretary of ONMH and
ONFS

Dennis R. Taney Treasurer Mutual Fund Financial Operations Director of ONLI;
Treasurer of Registrant; Treasurer of ONF and ONE Fund
</TABLE>

Principal Underwriters

None

<PAGE> 25

Location of Accounts and Records

The books and records required under Section 31(a) and Rules thereunder are
maintained and in the possession of the following persons:

(a) Journals and other records of original entry:

Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202

and

American Data Services, Inc. ("ADS")
150 Motor Parkway, Suite 109
Hauppauge, New York 11788

(b) General and auxiliary ledgers:

ADS

(d) Corporate charter (Articles of Organization), Operating Agreement and
Minute Books:

Ronald L. Benedict, Secretary
Dow Target Variable Fund LLC
One Financial Way
Montgomery, Ohio 45242

(e) Records of brokerage orders:

The Adviser

(f) Records of other portfolio transactions:

The Adviser

(g) Records of options:

The Adviser

<PAGE> 26

(h) Records of trial balances:

ADS and the Adviser

(i) Quarterly records of allocation of brokerage orders and commissions:

The Adviser

(j) Records identifying persons or group authorizing portfolio transactions:

The Adviser

(k) Files of advisory materials

The Adviser

Management Services

Not applicable

Undertakings

Not applicable

<PAGE> 27

Signatures

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, duly authorized, in the City of
Montgomery and State of Ohio on the 23rd day of September, 1998.

DOW TARGET VARIABLE FUND LLC

By /s/ JOHN J. PALMER
-------------------------
John J. Palmer, President

Attest /s/ RONALD L. BENEDICT
-----------------------------
Ronald L. Benedict, Secretary

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ JOHN J. PALMER President and Manager September 23, 1998
------------------ (Principal Executive Officer)
John J. Palmer

/s/ DENNIS R. TANEY Treasurer (Principal Financial September 23, 1998
------------------- and Accounting Officer)
Dennis R. Taney

/s/ RONALD L. BENEDICT Manager September 23, 1998
----------------------
Ronald L. Benedict

/s/ GEORGE E. CASTRUCCI Manager September 23, 1998
-----------------------
George E. Castrucci

/s/ ROSS LOVE Manager September 23, 1998
-------------
Ross Love

/s/ GEORGE M. VREDEVELD Manager September 23, 1998
-----------------------
George M. Vredeveld
</TABLE>

<PAGE> 28

Exhibit Index

Exhibit Description
- ------- -----------

(a) Articles of Organization of the registrant

(d) Investment Advisory Agreement between the registrant and Ohio
National Investments, Inc.

(d)(1) Sub-Advisory Agreement between Ohio National Investments, Inc.
and First Trust Advisors L.P.

(g) Custody Agreement between the registrant and Star Bank, NA

(h)(1) Fund Accounting Service Agreement between the registrant and
American Data Services, Inc.

(h)(2) Transfer Agency and Service Agreement between the registrant
and American Data Services, Inc.

(h)(3) Master Repurchase Agreement between the registrant and Star
Bank, NA

(h)(4) Service Agreement among the registrant, Ohio National
Investments, Inc. and The Ohio National Life Insurance Company

(h)(5) Joint Insured Agreement among the registrant, Ohio National
Fund, Inc., ONE Fund, Inc. and Ohio National Investments, Inc.

(i) Opinion and consent of Ronald L. Benedict, Esq.

<PAGE> 1

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

Exhibit (a)

ARTICLES OF ORGANIZATION

(Under Section 1705.04 of the Ohio Revised Code)
Limited Liability Company

The undersigned, desiring to form a limited liability company, under
Chapter 1705 of the Ohio Revised Code, do hereby state the following:

FIRST: The name of said limited liability company shall be
Dow Target Variable Fund LLC.
-----------------------------

SECOND:This limited liability company shall exist for a period of Perpetual.
-------------

THIRD: The address to which interested persons may direct requests for copies of
any operating agreements and any by laws of this limited liability company is:

One Financial Way
Montgomery, Ohio 45242

Attention: Ronald L. Benedict

[ ] Please check this box if additional provisions are attached hereto

Provisions attached hereto are incorporated herein and made a part of
these articles of organization.

FOURTH: PURPOSE (OPTIONAL) To operate and carry on the business of an investment
company registered under the Investment Company Act of 1940, as amended, and to
exercise all the powers necessary and appropriate to the conduct of that
business.

IN WITNESS WHEREOF, we have hereunto subscribed our names, this 18th day of
September, 1998.

Signed: The Ohio National Life Insurance Company

By: /s/ JOHN J. PALMER
-------------------------------------
John J. Palmer, Senior Vice President

<PAGE> 2

ORIGINAL APPOINTMENT OF AGENT
(for limited liability company)

The undersigned, being at least a majority of the members of Dow Target
Variable Fund LLC, hereby appoint Ronald L. Benedict to be the agent upon whom
any process, notice or demand required or permitted by statute to be served upon
the limited liability company may be served. The complete address of the agent
is:

One Financial Way
Montgomery, Ohio 45242

The Ohio National Life Insurance Company

By: /s/ JOHN J. PALMER
------------------
John J. Palmer

ACCEPTANCE OF APPOINTMENT

The undersigned, named herein as the statutory agent for Dow Target Variable
Fund LLC, hereby acknowledges and accepts the appointment of agent for said
limited liability company.

/s/ RONALD L. BENEDICT
----------------------
Agent's Signature

<PAGE> 1

Exhibit (d)

INVESTMENT ADVISORY AGREEMENT

AGREEMENT made as of this twelfth day of October, 1998, by and between DOW
TARGET VARIABLE FUND LLC, an Ohio limited liability company (hereinafter called
the "Fund") and OHIO NATIONAL INVESTMENTS, INC., an Ohio corporation
(hereinafter called the "Adviser").

WHEREAS, the Fund and the Adviser wish to enter into an Agreement setting forth
the terms upon which the Adviser will perform certain services for the Fund;

NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:

1. APPOINTMENT OF ADVISER

The Fund hereby appoints the Adviser to manage the investment and reinvestment
of the assets of the Fund and to perform the other services herein set forth,
subject to the supervision of the Board of Managers of the Fund, for the period
and on the terms herein set forth. The Adviser hereby accepts such appointment
and agrees during such period, to render the services and to assume the
obligations herein set forth for the compensation herein provided. Any
investment program undertaken by the Adviser pursuant to this Agreement and any
other activities undertaken by the Adviser on behalf of the Fund shall at all
times be subject to any directives of the Fund's Board of Managers, any duly
constituted committee thereof or any officer of the Fund acting pursuant to like
authority.

2. DUTIES OF ADVISER

In carrying out its obligations to manage the investment and reinvestment of the
assets of the Fund, the Adviser shall:

(a) obtain and evaluate pertinent statistical and financial data and other
information relevant to the investment policies of the Fund, affecting the
individual companies the securities of which are included in the Fund's
investment portfolios or are under consideration for inclusion therein;

(b) take such steps as are necessary to implement the investment programs
approved by the Fund's Board of Managers by purchase and sale of securities,
including the placing of orders for such purchase and sale; and

(c) regularly report to the Fund's Board of Managers with respect to
implementation of the approved investment program and the Adviser's activities
in connection with the administration of the Fund.

<PAGE> 2

3. USE OF SUB-ADVISERS

In providing the services and assuming the obligations set forth herein, in
connection with any investment portfolios of the Fund, the Adviser may at its
expense employ one or more Sub-Advisers, or may enter into such service
agreements as the Adviser deems appropriate in connection with the performance
of its duties and obligations hereunder. Reference herein to the duties and
responsibilities of the Adviser shall include any Sub-Adviser employed by the
Adviser to the extent the Adviser shall delegate such duties and
responsibilities to any such Sub-Adviser. Any agreement between the Adviser and
a Sub-Adviser shall be subject to the approval of the Fund, its Board of
Managers, and the owners of interests issued by any portfolio affected thereby,
as required by the Investment Company Act of 1940, as amended (the "1940 Act"),
and any such Sub-Adviser shall at all times be subject to the direction of the
Board of Managers of the Fund or any officer of the Fund acting pursuant to the
Board's authority. Furthermore, the Adviser shall perform ongoing due diligence
oversight of any such Sub-Adviser in order to assure continuing quality of
performance by said Sub-Adviser.

4. TO BE FURNISHED BY THE ADVISER

In addition to performing the obligations set forth in paragraph 2 hereof, the
Adviser shall furnish at its own expense or pay the expenses of the Fund for the
following:

(a) office space in the offices of the Adviser or in such other place as may be
agreed upon from time to time, and all necessary office facilities and
equipment;

(b) necessary executive and other personnel for managing the affairs of the
Fund, including personnel to perform clerical, accounting and other office
functions (exclusive of those related to and to be performed under contract for
custodial, bookkeeping, transfer and dividend disbursing agency services by any
bank or other agents selected to perform such services); and

(c) all information and services, other than services of counsel, required in
connection with the preparation of registration statements, prospectuses and
statements of additional information, including amendments and revisions
thereto; all annual, semi-annual and periodic reports; and notices and proxy
solicitation material furnished to shareholders of the Fund or regulatory
authorities.

5. ITEMS NOT REQUIRED TO BE FURNISHED BY THE ADVISER

Nothing in paragraph 4 hereof shall require the Adviser to bear, or to reimburse
the Fund for:

(a) any of the costs of printing and mailing the items referred to in
subparagraph (c) of paragraph 4;

2
<PAGE> 3

(b) the costs of preparation, printing and mailing disclosure documents required
by regulatory authorities;

(d) registration, filing and other fees in connection with requirements of
regulatory authorities;

(e) the charges and expenses of any custodian appointed by the Fund for
custodial services;

(f) charges and expenses of independent accountants retained by the Fund;

(g) charges and expenses of any transfer, bookkeeping and dividend disbursing
agent appointed by the Fund;

(h) brokers' commissions and issue and transfer taxes chargeable to the Fund in
connection with securities transactions to which the Fund is a party;

(i) taxes and fees payable by the Fund to federal, state or other governmental
agencies;

(j) the cost of membership interest certificates, if any, representing interests
of the Fund;

(k) legal fees and expenses in connection with the affairs of the Fund,
including registering and qualifying its interests with regulatory authorities;
and

(l) expenses of members' and Managers' meetings.

6. RELATED SERVICES

(a) The services of the Adviser to the Fund hereunder are not to be deemed
exclusive and the Adviser shall be free to render similar services to others so
long as its services hereunder are not impaired or interfered with thereby.

(b) To better enable it to fulfill its obligations hereunder, the Adviser has
entered into a service agreement with The Ohio National Life Insurance Company,
to which the Fund is also a party, under which The Ohio National Life Insurance
Company has agreed to furnish certain personnel and facilities to the Adviser on
a cost reimbursement basis.

(c) The Adviser and any persons performing executive, administrative or trading
functions for the Fund, whose services were made available to the Fund by the
Adviser, are specifically authorized to allocate brokerage business to firms
that provide such

3
<PAGE> 4

services or facilities and to cause the Fund to pay a member of a securities
exchange, or any other securities broker, an amount of commission for effecting
a securities transaction in excess of the amount another member of an exchange
or broker would have charged for effecting that transaction, if the Adviser or
such person determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services, as
such services are defined in Section 28(e) of the Securities Exchange Act of
1934 (the "1934 Act"), provided by such member or broker, viewed in terms of
either that particular transaction or the overall responsibilities of the
Adviser with respect to any accounts as to which the Adviser exercises
investment discretion, as that term is defined in Section 3(a)(35) of the 1934
Act.

7. COMPENSATION OF ADVISER

(a) Each investment portfolio of the Fund shall pay the Adviser, as full
compensation for all services rendered and all facilities furnished hereunder, a
fee computed separately for each portfolio of the Fund at the annual rate of
0.60% of the current value of the total net assets of each portfolio of the Fund
or, as to any portfolios added to the Fund after the date first above written,
on any additional Schedules hereto, which rates shall be based on the current
value of the respective portfolio's average total net assets.

(b) Fees shall be payable at such intervals, not more frequently than monthly
and not less frequently than quarterly, as the Board of Managers of the Fund may
from time to time determine and specify in writing to the Adviser. The fees
shall be calculated on the basis of the average of all valuations of the net
assets of each respective portfolio, made as of the time each business day that
the Board of Managers has set for valuing the current net assets of the Fund,
during the period for which the fees are paid.

8. REIMBURSEMENT OF EXCESS EXPENSES

If in any calendar quarter the total of all ordinary business expenses
applicable to any investment portfolio (excluding the fee payable under
paragraph 7 above to the Adviser, taxes, portfolio brokerage commissions and
interest) should exceed one percent of the average net assets of such investment
portfolio as computed above in paragraph 7, the Adviser shall pay such excess.
For the purposes of this paragraph the term "calendar quarter" shall include the
portion of any calendar quarter which shall have lapsed at the date of
termination of this agreement and the expense limitation shall be that part of
1% proportional to the portion of a full calendar quarter lapsed.

9. INTERESTED PERSONS OF THE FUND AND THE ADVISER

It is understood that Managers, officers, agents and members of the Fund are or
may be interested in the Adviser as directors, officers, shareholders, or
otherwise, that directors, officers, agents and shareholders of the Adviser are
or may be interested in the Fund as Managers, officers, members or otherwise,
that the Adviser may be interested in the Fund and that the existence of any
such dual interest shall not affect the validity hereof or of

4
<PAGE> 5

any transactions hereunder except as otherwise provided in the Articles of
Organization of the Fund, the Articles of Incorporation of the Adviser, or by
specific provision of applicable law.

10. LIABILITIES OF ADVISER

Neither the Adviser nor any of its directors, officers or employees, nor any
person performing executive, administrative or trading functions shall be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates, except for loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its, his or her duties on behalf of the Fund or from reckless
disregard by the Adviser or any such person of the Adviser's duties under this
Agreement. Without limiting the generality of the foregoing, neither the Adviser
nor any such person shall be deemed to have acted unlawfully or to have breached
any duty to the Fund under state or federal law in effect at the date of the
enactment of Section 28(e) of the 1934 Act solely by reason of having caused the
Fund to pay a member of any securities exchange, or any other securities broker
or dealer, an amount of commission for effecting a securities transaction in
excess of the commission another member of a securities exchange, or another
securities broker or dealer, would have charged for effecting that transaction
if the Adviser or such other person determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such member, broker or dealer, viewed in terms of either
that particular transaction or the overall responsibilities of the Adviser with
respect to any accounts to which the Adviser exercises investment discretion.

11. DURATION, TERMINATION AND AMENDMENT

(a) This Agreement shall become effective as to any portfolio upon its approval
for such portfolio by the Board of Managers of the Fund and the owners of the
class of membership interests designated for that portfolio. This Agreement will
continue in effect for a period more than two years from the date of its
effectiveness as to any portfolio only so long as such continuance is
specifically approved at least annually either by the Board of Managers of the
Fund or by the vote of a majority of the outstanding voting securities of the
portfolio, provided that in either event such continuance shall also be approved
by the vote of a majority of the Managers of the Fund who are not interested
persons (as defined in the 1940 Act) of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval. The
required owner's approval of this Agreement or of any continuance of this
Agreement shall be effective with respect to a portfolio if a majority of the
outstanding voting securities of the class (as defined in Rule 18f-2(h) under
the 1940 Act) of membership interests of the portfolio votes to approve the
Agreement or its continuance, notwithstanding that this Agreement or its
continuance may not have been approved by a majority of the outstanding voting
securities of the entire Fund.

5
<PAGE> 6

(b) If the owners of membership interests of any portfolio fail to approve any
continuance of this Agreement, the Adviser will continue to act as investment
adviser with respect to that portfolio pending the required approval of this
Agreement or its continuance, or of a new contract with the Adviser or a
different investment adviser or other definitive action; provided, that the
compensation received by the Adviser in respect of that portfolio during such
period will be no more than the Adviser's actual costs incurred in furnishing
investment advisory and management services to such portfolio or the amount it
would have received under this Agreement, whichever is less.

(c) This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Managers of the Fund or, with respect to any portfolio,
by the vote of a majority of the outstanding voting securities of that portfolio
on 60 days' written notice to the Adviser, or by the Adviser, on 90 days'
written notice to the Fund. This Agreement will automatically terminate in the
event of its assignment (as defined in the 1940 Act).

(d) This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each affected portfolio and by the vote of a majority of the
Managers of the Fund who are not interested persons of any party to this
Agreement cast in person at a meeting called for the purpose of voting on such
approval.

12. NOTICES AND GOVERNING LAW

(a) Any notice under the Agreement shall be in writing, addressed and delivered
or mailed postage prepaid to the other party at such address as the other party
may designate for the receipt of notices. Until further notice to the other
party it is agreed that the address of the Fund and that of the Adviser for this
purpose shall be One Financial Way, Montgomery, Ohio 45242.

(b) This Agreement shall be governed by the law of Ohio.

IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to be
executed by their duly authorized officers, in Montgomery, Ohio, as of the date
first above written.

DOW TARGET VARIABLE FUND LLC OHIO NATIONAL INVESTMENTS, INC.

By By
------------------------- -------------------------
John J. Palmer, President Joseph P. Brom, President

<PAGE> 1

Exhibit (d)(1)

SUB-ADVISORY AGREEMENT

This Agreement is made as of the twelfth day of October, 1998 by and between
OHIO NATIONAL INVESTMENTS, INC., an Ohio corporation (the "Adviser"), and FIRST
TRUST ADVISORS L.P., an Illinois limited partnership (the "Sub-Adviser").

WHEREAS, DOW TARGET VARIABLE FUND LLC (the "Fund"), is an Ohio limited liability
company that is registered under the Investment Company Act of 1940, as amended,
(together with the regulations promulgated pursuant thereto, the "1940 Act");
and

WHEREAS, the Adviser is a registered investment adviser under the Investment
Advisers Act of 1940, as amended, (together with the regulations promulgated
pursuant thereto, the "Advisers Act"); and

WHEREAS, the Adviser has been appointed as investment adviser to the Fund in
accordance with the 1940 Act and the Advisers Act; and

WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Advisers Act and engages in the business of providing investment advisory
services; and

WHEREAS, the Fund has authorized the Adviser to appoint the Sub-Adviser, subject
to the requirements of the 1940 Act and the Advisers Act, as a sub-adviser on
the terms and conditions set forth below;

NOW, THEREFORE, IT IS HEREBY AGREED as follows:

SECTION 1. Investment Advisory Services

(a) The Adviser hereby retains the Sub-Adviser, and the Sub-Adviser hereby
accepts engagement by the Adviser, to supervise and manage on a
fully-discretionary basis the cash, securities and other assets of the Fund that
the Adviser shall from time to time place under the supervision of the
Sub-Adviser.

(b) All activities by the Sub-Adviser on behalf of the Adviser and the Fund
shall be in accordance with the investment objectives, policies and restrictions
set forth in the 1940 Act and in the Fund's prospectus and statement of
additional information, as amended from time to time (together, the
"Prospectus") and as interpreted from time to time by the Board of Managers of
the Fund and by the Adviser. All activities of the Sub-Adviser on behalf of the
Adviser and the Fund shall also be subject to the due diligence oversight and
direction of the Adviser.

(c) Subject to the supervision of the Adviser, the Sub-Adviser shall have the
sole and exclusive responsibility to select members of securities exchanges,
brokers and dealers for the execution of transactions of the Fund and, when
applicable, shall negotiate commissions in connection therewith. All such
selections shall be made in accordance with the Fund's policies and restrictions
regarding brokerage allocation set forth in the Prospectus.

(d) In carrying out its obligations to manage the investments and reinvestments
of the assets of the Fund, the Sub-Adviser shall:

<PAGE> 2

(1) obtain and evaluate pertinent statistical, financial and other information
affecting the individual companies the securities of which are included in the
Fund or are under consideration for inclusion therein; (2) formulate and
implement a continuous investment program for the Fund consistent with its
investment objectives and related investment policies and restrictions as set
forth in the Prospectus; and (3) take such steps as are necessary to implement
the aforementioned investment program by placing orders for the purchase and
sale of securities.

(e) In connection with the purchase and sale of securities of the Fund, the
Sub-Adviser shall arrange for the transmission to the Adviser and the Fund's
custodian on a daily basis such confirmation, trade tickets and other documents
as may be necessary to enable them to perform their administrative
responsibilities with respect to the Fund. With respect to Fund securities to be
purchased or sold through the Depository Trust Company, the Sub-Adviser shall
arrange for the automatic transmission of the I.D. confirmation of the trade to
the Fund's custodian.

(f) In connection with the placement of orders for the execution of the Fund's
securities transactions, the Sub-Adviser shall create and maintain all necessary
records of the Fund as are required of an investment adviser of a registered
investment company including, but not limited to, records required by the 1940
Act and the Advisers Act. All such records pertaining to the Fund shall be the
property of the Fund and shall be available for inspection and use by the
Securities and Exchange Commission, any other regulatory authority having
jurisdiction, the Fund, the Adviser or any person retained by the Fund or the
Adviser. Where applicable, such records shall be maintained by the Sub-Adviser
for the period and in the place required by Rule 31a-2 under the 1940 Act.

(g) The Sub-Adviser shall render such reports to the Adviser and/or to the Board
of Managers of the Fund concerning the investment activity and composition of
the Fund in such form and at such intervals as the Adviser or the Board may from
time to time reasonably require.

(h) In acting under this Agreement, the Sub-Adviser shall be an independent
contractor and not an agent of the Adviser or the Fund.

SECTION 2. Expenses

(a) The Sub-Adviser shall assume and pay all of its own costs and expenses,
including those for furnishing such office space, office equipment, office
personnel and office services as the Sub-Adviser may require in the performance
of its duties under this Agreement.

(b) The Fund shall bear all expenses of its organization and registration, and
the Fund and Adviser shall bear all of their respective expenses of their
operations and businesses not expressly assumed or agreed to be paid by the
Sub-Adviser under this Agreement. In particular, but without limiting the
generality of the foregoing, the Fund shall pay any fees due to the Adviser, all
interest, taxes, governmental charges or duties, fees, brokerage and commissions
of every kind arising hereunder or in connection herewith, expenses of
transactions with owners of the Fund's membership interests, expenses of
offering interests in the Fund for sale, insurance, association membership dues,
all charges of custodians (including fees as custodian and for keeping books,
performing portfolio valuations and rendering other services to the Fund),
independent auditors and legal counsel, expenses of preparing, printing and
distributing all prospectuses, proxy material, reports and notices to owners of
the Fund, and all other costs incident to the Fund's existence.

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<PAGE> 3

SECTION 3. Use of Services of Others

The Sub-Adviser may (at its expense except as set forth in Section 2 hereof)
employ, retain or otherwise avail itself of the services or facilities of other
persons or organizations for the purpose of providing the Sub-Adviser with such
statistical or factual information, as the Sub-Adviser may deem necessary,
appropriate or convenient for the discharge of the Sub-Adviser's obligations
hereunder or otherwise helpful to the Fund.

SECTION 4. Sub-Advisory Fees

In consideration of the Sub-Adviser's services to the Fund hereunder, the
Sub-Adviser shall be entitled to a sub-advisory fee, payable monthly, at the
annual rate of 0.35% of the average daily net assets of each portfolio of the
Fund during the month preceding each payment (the "Sub-Advisory Fee"). The
Sub-Advisory Fee shall be accrued for each calendar day and the sum of the daily
Sub-Advisory Fee accruals shall be paid monthly to the Sub-Adviser on or before
the fifth business day of the next succeeding month. The daily fee accruals will
be computed on the basis of the valuations of the total net assets of the Fund's
portfolios as of the close of business each day. The Sub-Advisory Fee shall be
payable solely by the Adviser, and the Fund shall not be liable to the
Sub-Adviser for any unpaid Sub-Advisory Fee.

SECTION 5. Limitation of Liability of Sub-Adviser

(a) The Sub-Adviser shall be liable for losses resulting from its own acts or
omissions caused by the Sub-Adviser's willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or its reckless disregard
of its duties under this Agreement, and nothing herein shall protect the
Sub-Adviser against any such liability to the owners of the Fund or to the
Adviser. The Sub-Adviser shall not be liable to the Fund or to any owner of the
Fund or to the Adviser for any claim or loss arising out of any investment or
other act or omission in the performance of the Sub-Adviser's duties under this
Agreement, or for any loss or damage resulting from the imposition by any
government of exchange control restrictions which might affect the liquidity of
the Fund's assets maintained with custodians or securities depositories, or for
any tax of any kind, including without limitation any statutory, governmental,
state, local or municipal imposition, duty, contribution or levy imposed by any
government or governmental agency upon or with respect to such assets or income
earned with respect thereto (collectively "Taxation").

(b) In the event the Sub-Adviser is assessed any taxation in respect of the
assets, income or activities of the Fund, the Adviser and the Fund jointly will
indemnify the Sub-Adviser for all such amounts wherever imposed, together with
all penalties, charges, costs and interest relating thereto and all
expenditures, including reasonable attorney's fees, incurred by the Sub-Adviser
in connection with the defense or settlement of any such assessment. The
Sub-Adviser shall undertake and control the defense or settlement of any such
assessment, including the selection of counsel or other professional advisers,
provided that the selection of such counsel and advisers and the settlement of
any assessment shall be subject to the approval of the Adviser and the Fund,
which approvals shall not be unreasonably withheld. The Adviser and the Fund
shall have the right to retain separate counsel and assume the defense or
settlement on behalf of the Adviser and the Fund, as the case may be, of any
such assessment if representation of the Adviser and the Fund by counsel
selected by the Sub-Adviser would be inappropriate due to actual or potential
conflicts of interest.

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<PAGE> 4

SECTION 6. Services to Other Clients and the Fund

(a) Subject to compliance with the 1940 Act, nothing contained in this Agreement
shall be deemed to prohibit the Sub-Adviser or any of its affiliated persons
from acting, and being separately compensated for acting, in one or more
capacities on behalf of the Fund. The Adviser and the Fund understand that the
Sub-Adviser may act as investment manager or in other capacities on behalf of
other customers including entities registered under the 1940 Act. While
information, recommendations and actions which the Sub-Adviser supplies to and
does on behalf of the Fund shall in the Sub-Adviser's judgment be appropriate
under the circumstances in light of the investment objectives and policies of
the Fund, as set forth in the Prospectus delivered to the Sub-Adviser from time
to time, it is understood and agreed that they may be different from the
information, recommendations and actions the Sub-Adviser or its affiliated
persons supply to or do on behalf of other clients. The Sub-Adviser and its
affiliated persons shall supply information, recommendations and any other
services to the Fund and to any other client in an impartial and fair manner in
order to seek good results for all clients involved. As used herein, the term
"affiliated person" shall have the meaning assigned to it in the 1940 Act.

(b) On occasions when the Sub-Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other customers, the
Sub-Adviser may, to the extent permitted by applicable law, aggregate the
securities to be so sold or purchased in order to obtain the best execution or
lower brokerage commissions, if any. The Sub-Adviser may also on occasion
purchase or sell a particular security for one or more customers in different
amounts. On either occasion, and to the extent permitted by applicable law and
regulations, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Sub-Adviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other customers.

(c) The Sub-Adviser agrees to use the same skill and care in providing services
to the Fund as it uses in providing services to other similar accounts for which
it has investment responsibility. The Sub-Adviser will conform with all
applicable rules and regulations of the Securities and Exchange Commission.

SECTION 7. Reports to the Sub-Adviser

The Adviser shall furnish to the Sub-Adviser the Prospectus, proxy statements,
reports and other information relating to the business and affairs of the Fund
as the Sub-Adviser may, at any time or from time to time, reasonably require in
order to discharge the Sub-Adviser's duties under this Agreement.

SECTION 8. Term of Agreement

Provided that this Agreement shall have first been approved by the Board of
Managers of the Fund, including a majority of the members thereof who are not
interested persons (as defined in the 1940 Act) of either party, by a vote cast
in person at a meeting called for the purpose of voting such approval, then this
Agreement shall be effective on the date hereof. Unless earlier terminated as
hereinafter provided, this Agreement shall continue in effect for an initial
term ending September 30, 2000. Thereafter, this Agreement shall continue in
effect from year to year, subject to approval annually by the Board of Managers
of the Fund or by vote of a majority of the voting securities of the Fund and
also, in either event, by the vote, cast in person at a meeting called for the
purpose of voting on such approval, of a majority of the Managers of the Fund
who are not parties to this Agreement or interested persons (as defined in the
1940 Act) of any such person.

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<PAGE> 5

SECTION 9. Termination of Agreement; Assignment

(a) This Agreement may be terminated by either party hereto without the payment
of any penalty, upon 90 days' prior notice in writing to the other party and to
the Fund, or upon 60 days' written notice by the Fund to the two parties;
provided, that in the case of termination by the Fund such action shall have
been authorized by resolution of a majority of the Board of Managers of the Fund
or by vote of a majority of the voting securities of the Fund. In addition, this
Agreement shall terminate upon the later of (1) the termination of the Adviser's
agreement to provide investment advisory services to the Fund or (2) notice to
the Sub-Adviser that the Adviser's agreement to provide investment advisory
services to the Fund has terminated.

(b) This Agreement shall automatically terminate in the event of its assignment
(as defined in the 1940 Act).

SECTION 10. Notices

(a) The Sub-Adviser agrees to promptly notify the Adviser of the occurrence of
any of the following events: (1) any change in any of the Sub-Adviser's officers
or any portfolio manager who is providing advisory services pursuant to this
agreement; (2) the Sub-Adviser fails to be registered as an investment adviser
under the Advisers Act or under the laws of any jurisdiction in which the
Sub-Adviser is required to be registered as an investment adviser in order to
perform its obligations under this Agreement; (3) the Sub-Adviser is the subject
of any action, suit, proceeding, inquiry or investigation at law or in equity,
before or by any court, public board or body, involving the affairs of the Fund;
or (4) any change in control of the Sub-Adviser.

(b) Any notice given hereunder shall be in writing and may be served by being
sent by telex, facsimile or other electronic transmission or sent by registered
mail or by courier to the address set forth below for the party for which it is
intended. A notice served by mail shall be deemed to have been served seven days
after mailing and in the case of telex, facsimile or other electronic
transmission twelve hours after dispatch thereof. Addresses for notice may be
changed by written notice to the other party.

If to the Adviser:

Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201
Fax No. (513) 794-4506

With a copy to:

Joseph P. Brom, President
Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201

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<PAGE> 6

If to the Sub-Adviser:

Ronald McAlister, President
First Trust Advisors, L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
Fax No. (630) 241-8610

With a copy to:

Scott Jardine
Senior Vice President & General Counsel
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532

SECTION 11. Governing Law

This Agreement shall be governed by and subject to the requirements of the laws
of the State of Ohio without reference to the choice of law provisions thereof.

SECTION 12. Applicable Provisions of Law

The Agreement shall be subject to all applicable provisions of law, including,
without limitation, the applicable provisions of the 1940 Act, and to the extent
that any provisions herein contained conflict with any such applicable
provisions of law, the latter shall control.

SECTION 13. Counterparts

This Agreement may be entered into in any number of counterparts, each of which
when so executed and delivered shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.

IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of
the day and year first above written.

OHIO NATIONAL INVESTMENTS, INC.

By:
----------------
Joseph P. Brom
President

FIRST TRUST ADVISORS L.P.

By:
----------------
Ronald McAlister
President

6
<PAGE> 7

Accepted and Agreed:

DOW TARGET VARIABLE FUND, LLC

By:
-------------------------
John J. Palmer, President

<PAGE> 1

Exhibit (g)

CUSTODY AGREEMENT

This agreement (the "Agreement") is entered into as of the 12th
day of October, 1998, by and between Dow Target Variable Fund LLC (the
"Company"), an open-end management investment company organized under the laws
of the State of Ohio and having its office at One Financial Way, Montgomery,
Ohio 45242 acting for and on behalf of its various investment portfolios (the
"Funds"), which are operated and maintained by the Company for the benefit of
the owners of interests of each Fund, and Star Bank, N.A. (the "Custodian"), a
national banking association having its principal office and place of business
at Star Bank Center, 425 Walnut Street, Cincinnati, Ohio 45202.
WHEREAS, the Company and the Custodian desire to enter into
this Agreement to provide for the custody and safekeeping of the assets of the
Funds as required by the Investment Company Act of 1940, as amended (the "Act").
WHEREAS, the Company hereby appoints the Custodian as
custodian of all the Funds' securities and moneys at any time owned by the Funds
during the term of this Agreement (the "Fund Assets'").
WHEREAS, the Custodian hereby accepts such appointment as Custodian and
agrees to perform the duties thereof as hereinafter set forth.
THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Company and the Custodian agree as follows:

ARTICLE I

Definitions

The following words and phrases, when used in this Agreement, unless
the context otherwise requires, shall have the following meanings:
Authorized Person - the President, Secretary, Treasurer, or Vice
President of the Company, or any other person, whether or not any such person is
an officer or employee of the Company, duly authorized by the Board Of Managers
of the Company to give Oral Instructions and Written Instructions on behalf of
the Funds, and listed in the Certificate annexed hereto as Appendix A, or such
other Certificate as may be received by the Custodian from time to time.
Book-Entry System - the Federal Reserve Bank book-entry system for
United States Treasury securities and federal agency securities.
Depository - The Depository Trust Company ("DTC"), a limited purpose
trust company, its successor(s) and its nominee(s), or any other person or
clearing agent.
Dividend and Transfer Agent - the dividend and transfer agent
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Company.
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the

<PAGE> 2

Federal Deposit Insurance Corporation, and short-term corporate obligations
where the purchase and sale of such securities normally require settlement in
federal funds or their equivalent on the same day as such purchase and sale, all
of which mature in not more than thirteen (13) months.
Officers - the President, Secretary, Treasurer and Vice Presidents of
the Company listed in the Certificate annexed hereto as Appendix A, or such
other Certificate as may be received by the Custodian from time to time.
Oral Instructions - verbal instructions received by the
Custodian from an Authorized Person (or from a person that the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions in such a manner that such Written Instructions are
received by the Custodian on the business day immediately following receipt of
such Oral Instructions.
Prospectus - the Company's then currently effective prospectus and
Statement of Additional Information, as filed with the Securities and Exchange
Commission and effective from time to time.
Security or Securities - Money Market Securities, common stock,
preferred stock, options, financial futures, bonds, notes, debentures, corporate
debt securities, mortgages, and any certificates, receipts, warrants, or other
instruments representing rights to receive, purchase, or subscribe for the same
or evidencing or representing any other rights or interest therein, or any
property or assets.
Written Instructions - communication received in writing by the
Custodian from an Authorized Person.

ARTICLE II

Documents and Notices to be Furnished by the Company

A The following documents, including any amendments thereto, will be
provided contemporaneously with the execution of the Agreement, to the Custodian
by the Company:
1. A copy of the Articles of Organization of the Company, as amended
and supplemented, certified by the Secretary.
2. A copy of the Operating Agreement of the Company , as amended,
certified by the Secretary.
3. A copy of the resolution of the Board Of Managers of the Company
appointing the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the Company setting
forth the names and signatures of the Officers.
B. The Company agrees to notify the Custodian in writing of the
appointment of any Dividend and Transfer Agent.

ARTICLE III

Receipt of Fund Assets

A. During the term of this Agreement, the Company will deliver or cause
to be delivered to the Custodian all moneys constituting Fund Assets. The
Custodian shall be entitled to reverse

<PAGE> 3

any deposits made on a Fund's behalf where such deposits have been entered and
moneys are not finally collected within 30 days of the making of such entry.
B. During the term of this Agreement, the Company will deliver or cause
to be delivered to the Custodian all Securities constituting Fund Assets. The
Custodian will not have any duties or responsibilities with respect to such
Securities until actually received by the Custodian.
C. As and when received, the Custodian shall deposit to the respective
accounts of each of the Funds any and all payments for shares of each Fund
issued or sold from time to time as they are received from the Fund's
distributor or Dividend and Transfer Agent or from a Fund itself.

ARTICLE IV

Disbursement of Fund Assets

A. The Company shall furnish to the Custodian a copy of the resolution
of the Board of Managers of the Company, certified by the Company's Secretary,
either (i) setting forth the date of the declaration of any dividend or
distribution in respect of shares of each Fund, the date of payment thereof, the
record date as of which owners of Fund interests entitled to payment shall be
determined, the amount payable per unit to owners of Fund interests of record as
of that date, and the total amount to be paid by the Dividend and Transfer Agent
on the payment date, or (ii) authorizing the declaration of dividends and
distributions in respect of interests of the Fund on a daily or other periodic
basis and authorizing the Custodian to rely on a Certificate setting forth the
date of the declaration of any such dividend or distribution, the date of
payment thereof, the record date as of which owners of Fund interests entitled
to payment shall be determined, the amount payable per interest to owners of
Fund interests of record as of that date, and the total amount to be paid by the
Dividend and Transfer Agent on the payment date.
On the payment date specified in such resolution or Certificate
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
B. Upon receipt of Written Instructions so directing it, the Custodian
shall segregate amounts necessary for the payment of redemption proceeds to be
made by the Dividend and Transfer Agent from moneys held for the accounts of the
Funds so that they are available for such payment.
C. Upon receipt of a Certificate directing payment and setting forth
the name and address of the person to whom such payment is to be made, the
amount of such payment, and the purpose for which payment is to be made, the
Custodian shall disburse amounts as and when directed from the Fund Assets. The
Custodian is authorized to rely on such directions and shall be under no
obligation to inquire as to the propriety of such directions.
D. Upon receipt of a Certificate directing payment, the Custodian shall
disburse moneys from the Fund Assets in payment of the Custodian's fees and
expenses as provided in Article VIII hereof.

ARTICLE V

<PAGE> 4

Custody of Fund Assets

A. The Custodian shall open and maintain a separate bank account or
accounts in the United States in the name of each Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Agreement, and shall
hold all cash received by it from or for the account of each Fund, other than
cash maintained by that Fund in a bank account established and used by the Fund
in accordance with Rule 17f-3 under the Act. Moneys held by the Custodian on
behalf of a Fund may be deposited by the Custodian to its credit as Custodian in
the banking department of the Custodian. Such moneys shall be deposited by the
Custodian in its capacity as such, and shall be withdrawable by the Custodian
only in such capacity.
B. The Custodian shall hold all Securities delivered to it in
safekeeping in a separate account or accounts maintained at Star Bank, N.A. for
the benefit of each respective Fund.
C. All Securities held which are issued or issuable only in bearer
form, shall be held by the Custodian in that form; all other Securities held for
a Fund shall be registered in the name of the Custodian or its nominee. The
Company agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold, or deliver in proper form for transfer, any Securities that
it may hold for the accounts of the Funds and which may, from time to time, be
registered in the name of each Fund.
D. With respect to all Securities held for the Funds, the Custodian
shall on a timely basis (concerning items 1 and 2 below, as defined in the
Custodian's Standards of Service Guide, as amended from time to time, annexed
hereto as Appendix C):
1.) Collect all income due and payable with respect to such
Securities;
2.) Present for payment and collect amounts payable upon all
Securities which may mature or be called, redeemed, or retired, or otherwise
become payable;
3.) Surrender Securities in temporary form for definitive
Securities; and
4.) Execute, as agent, any necessary declarations or
certificates of ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority, including any foreign taxing
authority, now or hereafter in effect.
E. Upon receipt of a Certificate and not otherwise, the Custodian
shall:
1.) Execute and deliver to such persons as may be designated
in such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Funds as beneficial owners of any Securities may be
exercised;
2.) Deliver any Securities in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation, or recapitalization of any trust, or the
exercise of any conversion privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization, or sale of assets of any
trust, and receive and hold under the terms of this Agreement

<PAGE> 5

such certificates of deposit, interim receipts or other instruments or documents
as may be issued to it to evidence such delivery;
4.) Make such transfers or exchanges of Fund Assets and take
such other steps as shall be stated in said Certificate to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Company or one or more Funds; and
5.) Deliver any Securities held for a Fund to the depository
agent for tender or other similar offers.
F. The Custodian shall promptly deliver to the Company all notices,
proxy material and executed but unvoted proxies pertaining to members' meetings
of Securities held by the Funds. The Custodian shall not vote or authorize the
voting of any Securities or give any consent, waiver or approval with respect
thereto unless so directed by a Certificate or Written Instruction.
G. The Custodian shall promptly deliver to the Company all information
received by the Custodian and pertaining to Securities held by the Funds with
respect to tender or exchange offers, calls for redemption or purchase, or
expiration of rights.

ARTICLE VI

Purchase and Sale of Securities

A. Promptly after each purchase of Securities by a Fund, the Company
shall deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, Written Instructions, and (ii) with
respect to each purchase of Money Market Securities, Written Instructions or
Oral Instructions, specifying with respect to each such purchase the:
1.) name of the issuer and the title of the Securities,
2.) principal amount purchased and accrued interest, if any,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable, and
6.) name of the person from whom, or the broker through which,
the purchase was made.

The Custodian shall, against receipt of Securities purchased by or for a Fund,
pay out of the Fund Assets the total amount payable to the person from whom or
the broker through which the purchase was made, provided that the same conforms
to the total amount payable as set forth in such Written Instructions or Oral
Instructions, as the case may be.
B. Promptly after each sale of Securities by a Fund, the Company shall
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, Written Instructions, and (ii) with respect to each
sale of Money Market Securities, Written Instructions or Oral Instructions,
specifying with respect to each such sale the:
1.) name of the issuer and the title of the Securities,
2.) principal amount sold and accrued interest, if any,
3.) date of sale and settlement,
4.) sale price per unit,

<PAGE> 6

5.) total amount receivable, and
6.) name of the person to whom, or the broker through which,
the sale was made.

The Custodian shall deliver the Securities against receipt of the total amount
receivable, provided that the same conforms to the total amount receivable as
set forth in such Written Instructions or Oral Instructions, as the case may be.
C. On contractual settlement date, the account of each Fund will be
charged for all purchased Securities settling on that day, regardless of whether
or not delivery is made. Likewise, on contractual settlement date, proceeds from
the sale of Securities settling that day will be credited to the account of each
Fund, irrespective of delivery.
D. Purchases and sales of Securities effected by the Custodian will be
made on a delivery versus payment basis. The Custodian may, in its sole
discretion, upon receipt of a Certificate, elect to settle a purchase or sale
transaction in some other manner, but only upon receipt of acceptable
indemnification from the Company.
E. The Custodian shall, upon receipt of Written Instructions so
directing it, establish and maintain a segregated account or accounts for and on
behalf of each Fund. Cash and/or Securities may be transferred into such account
or accounts for specific purposes, to-wit:
1.) in accordance with the provision of any agreement among
the Company, the Custodian, and a broker-dealer registered under the Securities
and Exchange Act of 1934, as amended, and also a member of the National
Association of Securities Dealers (NASD) (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance with the
rules of the Options Clearing Corporation and of any registered national
securities exchange, the Commodity Futures Trading Commission, any registered
contract market, or any similar organization or organizations requiring escrow
or other similar arrangements in connection with transactions by the Fund;
2.) for purposes of segregating cash or government securities
in connection with options purchased, sold, or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund;
3.) for the purpose of compliance by the Fund with the
procedures required for reverse repurchase agreements, firm commitment
agreements, standby commitment agreements, and short sales by Act Release No.
10666, or any subsequent release or releases or rule of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies; and
4.) for other corporate purposes, only in the case of this
clause 4 upon receipt of a copy of a resolution of the Board Of Managers of the
Company, certified by its Secretary, setting forth the purposes of such
segregated account.
F. Except as otherwise may be agreed upon by the parties hereto, the
Custodian shall not be required to comply with any Written Instructions to
settle the purchase of any Securities on behalf of a Fund unless there is
sufficient cash in that Fund's account at the time or to settle the sale of any
Securities from the account unless such Securities are in deliverable form.
Notwithstanding the foregoing, if the purchase price of such Securities exceeds
the amount of cash in the account at the time of such purchase, the Custodian
may, in its sole discretion, advance the amount of the difference in order to
settle the purchase of such Securities. The amount of

<PAGE> 7

any such advance shall be deemed a loan from the Custodian to the Fund payable
on demand and bearing interest accruing from the date such loan is made up to
but not including the date such loan is repaid at a rate per annum customarily
charged by the Custodian on similar loans.

ARTICLE VII

Fund Indebtedness

In connection with any borrowings by a Fund, the Fund will cause to be
delivered to the Custodian by a bank or broker requiring Securities as
collateral for such borrowings (including the Custodian if the borrowing is from
the Custodian), a notice or undertaking in the form currently employed by such
bank or broker setting forth the amount of collateral. The Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to each such
borrowing: (a) the name of the bank or broker, (b) the amount and terms of the
borrowing, which may be set forth by incorporating by reference an attached
promissory note duly endorsed by the Company on behalf of the Fund, or a loan
agreement, (c) the date, and time if known, on which the loan is to be entered
into, (d) the date on which the loan becomes due and payable, (e) the total
amount payable to the Fund on the borrowing date, and (f) the description of the
Securities securing the loan, including the name of the issuer, the title and
the number of shares or the principal amount. The Custodian shall deliver on the
borrowing date specified in the Certificate the required collateral against the
lender's delivery of the total loan amount then payable, provided that the same
conforms to that which is described in the Certificate. The Custodian shall
deliver, in the manner directed by the Company, such Securities as additional
collateral, as may be specified in a Certificate, to secure further any
transaction described in this Article VII. The Company shall cause all
Securities released from collateral status to be returned directly to the
Custodian and the Custodian shall receive from time to time such return of
collateral as may be tendered to it.
The Custodian may, at the option of the lender, keep such
collateral in its possession, subject to all rights therein given to the lender
because of the loan. The Custodian may require such reasonable conditions
regarding such collateral and its dealings with third-party lenders as it may
deem appropriate.

ARTICLE VIII

Concerning the Custodian

A. Except as otherwise provided herein, the Custodian shall not be
liable for any loss or damage resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own negligence
or willful misconduct. The Company shall defend, indemnify and hold harmless the
Custodian and its directors, officers, employees and agents with respect to any
loss, claim, liability or cost (including reasonable attorneys' fees) arising or
alleged to arise from or relating to the Company's duties hereunder or any other
action or inaction of the Company or its Managers, officers, employees or
agents, except such as may arise from the negligent action, omission, willful
misconduct or breach of

<PAGE> 8

this Agreement by the Custodian. The provisions under this paragraph shall
survive the termination of this Agreement.
B. Without limiting the generality of the foregoing, the Custodian,
acting in the capacity of Custodian hereunder, shall be under no obligation to
inquire into, and shall not be liable for:
1.) The validity of the issue of any Securities purchased by
or for the account of a Fund, the legality of the purchase thereof, or the
propriety of the amount paid therefor;
2.) The legality of the sale of any Securities by or for the
account of a Fund, or the propriety of the amount for which the same are sold;
3.) The legality of the issue or sale of any interests of a
Fund, or the sufficiency of the amount to be received therefor;
4.) The legality of the redemption of any interests of a Fund,
or the propriety of the amount to be paid therefor;
5.) The legality of the declaration or payment of any dividend
by a Fund in respect of interests of the Fund;
6.) The legality of any borrowing by a Fund on behalf of a
Fund, using Securities as collateral.
C. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to a Fund from any Dividend and
Transfer Agent of the Fund nor to take any action to effect payment or
distribution by any Dividend and Transfer Agent of the Fund of any amount paid
by the Custodian to any Dividend and Transfer Agent of the Fund in accordance
with this Agreement.
D. Notwithstanding Section D of Article V, the Custodian shall not be
under any duty or obligation to take action to effect collection of any amount,
if the Securities upon which such amount is payable are in default, or if
payment is refused after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and (ii) it shall be
assured to its satisfaction (including prepayment thereof) of reimbursement of
its costs and expenses in connection with any such action.
E. The Company acknowledges and hereby authorizes the Custodian to
hold Securities through its various agents described in Appendix B annexed
hereto. The Company hereby represents that such authorization has been duly
approved by the Board Of Managers of the Company as required by the Act. The
Custodian acknowledges that although certain Fund Assets are held by its agents,
the Custodian remains primarily liable for the safekeeping of the Fund Assets.
In addition, the Company acknowledges that the Custodian may appoint
one or more financial institutions, as agent or agents or as
sub-custodian or sub-custodians for the purpose of holding Securities and moneys
at any time owned by the Funds. The Custodian shall not be relieved of any
obligation or liability under this Agreement in connection with the appointment
or activities of such agents or sub-custodians. Any such agent or sub-custodian
shall be qualified to serve as such for assets of investment companies
registered under the Act. Upon request, the Custodian shall promptly forward to
the Company any documents it receives from any agent or sub-custodian appointed
hereunder which may assist trustees of registered investment companies fulfill
their responsibilities under Rule 17f-5 of the Act.
F. The Custodian shall not be under any duty or obligation

<PAGE> 9

to ascertain whether any Securities at any time delivered to or held by it for
the account of a Fund are such as properly may be held by that Fund under the
provisions of the Articles of Organization and the Company's Operating
Agreement.
G. The Custodian shall treat all records and other information relating
to the Funds and Fund Assets as confidential and shall not disclose any such
records or information to any other person unless (i) the Company shall have
consented thereto in writing or (ii) such disclosure is required by law.
H. The Custodian shall be entitled to receive and the Company agrees to
pay to the Custodian such compensation as shall be determined pursuant to
Appendix D attached hereto, or as shall be determined pursuant to amendments to
such Appendix D. The Custodian shall be entitled to charge against any money
held by it for the account of each Fund, the amount of any of its fees, any
loss, damage, liability or expense, including counsel fees related to that Fund.
The expenses which the Custodian may charge against the account of a Fund
include, but are not limited to, the expenses of agents or sub-custodians
incurred in settling transactions involving the purchase and sale of Securities
of that Fund.

<PAGE> 10

I. The Custodian shall be entitled to rely upon any Oral Instructions
and any Written Instructions. The Company agrees to forward to the Custodian
Written Instructions confirming Oral Instructions in such a manner so that such
Written Instructions are received by the Custodian, whether by hand delivery,
facsimile or otherwise, on the same business day on which such Oral Instructions
were given. The Company agrees that the failure of the Custodian to receive such
confirming instructions shall in no way affect the validity of the transactions
or enforceability of the transactions hereby authorized by the Company. The
Company agrees that the Custodian shall incur no liability to the Company for
acting upon Oral Instructions given to the Custodian hereunder concerning such
transactions.
J. The Custodian will (i) set up and maintain proper books of account
and complete records of all transactions in the accounts maintained by the
Custodian hereunder in such manner as will meet the obligations of the Company
under the Act, with particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder and those records are the property of the Company, and (ii)
preserve for the periods prescribed by applicable Federal statute or regulation
all records required to be so preserved. All such books and records shall be the
property of the Company, and shall be open to inspection and audit at reasonable
times and with prior notice by Officers and auditors employed by the Company.
K. The Custodian shall send to the Company any report received on the
systems of internal accounting control of the Custodian, or its agents or
sub-custodians, as the Company may reasonably request from time to time.
L. The Custodian performs only the services of a custodian and shall
have no responsibility for the management, investment or reinvestment of the
Securities from time to time owned by the Funds. The Custodian is not a selling
agent for interests of the Funds and performance of its duties as custodian
shall not be deemed to be a recommendation to the Company's members or others of
interests of the Funds as an investment.
M. The Custodian shall take all reasonable action, that the Company may
from time to time request, to assist the Company in obtaining favorable opinions
from the Company's independent accountants, with respect to the Custodian's
activities hereunder, in connection with the preparation of the Company's Form
N-1A, Form N-SAR, or other reports to the Securities and Exchange Commission.
N. The Company hereby pledges to and grants the Custodian a security
interest in any Fund Assets to secure the payment of any liabilities of the
Company to the Custodian, whether acting in its capacity as Custodian or
otherwise, or on account of money borrowed from the Custodian. This pledge is in
addition to any other pledge of collateral by the Company to the Custodian.

ARTICLE X

Termination

A. Either of the parties hereto may terminate this Agreement for any
reason by giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than ninety (90) days after the date

<PAGE> 11

of giving of such notice. If such notice is given by the Company, it shall be
accompanied by a copy of a resolution of the Board Of Managers of the Company,
certified by the Secretary of the Company, electing to terminate this Agreement
and designating a successor custodian or custodians. In the event such notice is
given by the Custodian, the Company shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of the Board Of Managers of the
Company, certified by the Secretary, designating a successor custodian or
custodians to act on behalf of the Company. In the absence of such designation
by the Company, the Custodian may designate a successor custodian which shall be
a bank or trust company having not less than $100,000,000 aggregate capital,
surplus, and undivided profits. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian, provided that it has received a
notice of acceptance by the successor custodian, shall deliver, on that date,
directly to the successor custodian all Securities and moneys then owned by the
Company and held by it as Custodian. Upon termination of this Agreement, the
Company shall pay to the Custodian on behalf of the Funds such compensation as
may be due as of the date of such termination. The Company agrees on behalf of
the Funds that the Custodian shall be reimbursed for its reasonable costs in
connection with the termination of this Agreement.
B. If a successor custodian is not designated by the Company, or by the
Custodian in accordance with the preceding paragraph, or the designated
successor cannot or will not serve, the Company shall, upon the delivery by the
Custodian to the Funds of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Funds) and moneys then owned
by the Funds, be deemed to be the custodian for the Funds, and the Custodian
shall thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the Book-Entry
System, which cannot be delivered to the Funds, which shall be held by the
Custodian in accordance with this Agreement.

ARTICLE XI

MISCELLANEOUS

A. Appendix A sets forth the names and the signatures of all Authorized
Persons, as certified by the Secretary of the Company. The Company agrees to
furnish to the Custodian a new Appendix A in form similar to the attached
Appendix A, if any present Authorized Person ceases to be an Authorized Person
or if any other or additional Authorized Persons are elected or appointed. Until
such new Appendix A shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the then current Authorized Persons as set forth in the last
delivered Appendix A.
B. No recourse under any obligation of this Agreement or for any claim
based thereon shall be had against any organizer, member, Officer, Manager,
past, present or future as such, of the Company or of any predecessor or
successor, either directly or through the Fund or any such predecessor or
successor, whether by virtue of any constitution, statute or rule of law or
equity, or be the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Agreement and the obligations

<PAGE> 12

thereunder are enforceable solely against the Company, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
organizers, members, Officers, Managers of the Company or of any predecessor or
successor, or any of them as such. To the extent that any such liability exists,
it is hereby expressly waived and released by the Custodian as a condition of,
and as a consideration for, the execution of this Agreement.
C. The obligations set forth in this Agreement as having been made by
the Company have been made by the Board Of Managers, acting as such Directors
for and on behalf of the Funds, pursuant to the authority vested in them under
the laws of the State of Ohio, the Articles of Organization and the Operating
Agreement of the Company. This Agreement has been executed by Officers of the
Company as officers, and not individually, and the obligations contained herein
are not binding upon any of the Managers, Officers, agents or owners of
interests, personally, but bind only the Company.
D. Provisions of the Prospectus and any other documents (including
advertising material) specifically mentioning the Custodian (other than merely
by name and address) shall be reviewed with the Custodian by the Company prior
to publication and/or dissemination or distribution, and shall be subject to the
consent of the Custodian.
E. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at Star
Bank Center, 425 Walnut Street, M. L. 6118, Cincinnati, Ohio 45202, attention
Mutual Fund Custody Department, or at such other place as the Custodian may from
time to time designate in writing.
F. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Company shall be sufficiently given when
delivered to the Fund or on the second business day following the time such
notice is deposited in the U.S. mail postage prepaid and addressed to the
Company at its office at One Financial Way, Montgomery, Ohio 45242 or at such
other place as the Company may from time to time designate in writing.
G. This Agreement, with the exception of the Appendices, may not be
amended or modified in any manner except by a written agreement executed by both
parties with the same formality as this Agreement, and authorized and approved
by a resolution of the Board of Managers of the Company.
H. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Company or by the Custodian, and
no attempted assignment by the Company or the Custodian shall be effective
without the written consent of the other party hereto.
I. This Agreement shall be construed in accordance with the laws of the
State of Ohio.
J. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized as of the day
and year first above written.

<PAGE> 13

ATTEST: Ohio National Fund, Inc.

By:

Title:

ATTEST: Star Bank, N.A.

By:

Title:

APPENDIX A

Authorized Persons Specimen Signatures

President: John J. Palmer

Secretary: Ronald L. Benedict

Treasurer: Dennis R. Taney

Vice President Thomas A. Barefield

Vice President: Joseph P. Brom

Vice President: Michael A. Boedeker

<PAGE> 14

Vice President: Stephen T. Williams

Adviser Employees: B. Douglas Hundley

Jed R. Martin

Keith O. Hanson

Annette Brown

Emily Donham

Transfer Agent/Fund Accountant

Employees:

APPENDIX B

The following agents are employed currently by Star Bank, N.A. for
securities processing and control . . .

The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004

The Federal Reserve Bank
Cincinnati and Cleveland Branches

<PAGE> 15

Bankers Trust Company
16 Wall Street
New York, NY 10005
(For Foreign Securities and certain non-DTC
eligible Securities)

Appendix C

Standards of Service Guide

APPENDIX D

Dow Target Variable Fund LLC

Schedule of Compensation

Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:

I. Market Value Fee
Based upon an annual rate of:
Million
.0004 (4 Basis Points) on First $100
.0003 (3 Basis Points) on First $ 50
.0002 (2 Basis Points) on Next $ 50
.00015 (1.5 Basis Points) on Balance

II. Monthly Minimum Fee-Per Fund
$400.00

III. Out-of-Pocket Expenses
The only out-of-pocket expenses charged to your account will be
shipping fees or transfer fees.

IV. IRA Documents
Per Shareholder/year to hold each IRA Document
$8.00

V. Earnings Credits
On a monthly basis any earnings credits generated from uninvested
custody balances will be applied against any cash management service fees
generated. Earnings credits are based on the average yield on the 91 day U.S.
Treasury Bill for the preceding thirteen weeks less the 10% reserve.

<PAGE> 16

Star Bank, N.A.
Third Party Access Compensation Schedule
Dow Target Variable Fund LLC

Third Party access is available within two (2) weeks and
requires dial-up software which will allow your organization to access their
Star Bank accounts from any location.

Requirements and Expenses: Cost

One time client expense for software $250.00 (waived)
purchased from SEI which includes internal password control and ability to dial
a local IBM Information Systems number (Generally anywhere in the continental
U.S.A.)

Ongoing Expenses:

Telephone Connect Time (local Access only) $0.37/minute

*Long distance rates (if applicable) will be determined pursuant to the
rates charged by client's long distance carrier.

APPENDIX D
Schedule of Compensation Continued

Services Unit Cost ($)
Monthly Cost ($)

D.D.A. Account Maintenance 14.00
Deposits .399
Deposited Items .109
Checks Paid .159
Balance Reporting - P.C. Access 50.00
ACH Transaction .095
ACH Monthly Maintenance 40.00
Controlled Disbursement (1st account) 110.00
Each additional account 25.00
Deposited Items Returned 6.00
International Items Returned 10.00
NSF Returned Checks 25.00
Stop Payments 22.00
Data Transmission per account 110.00
Data Capture* .10
Drafts Cleared .179
Lockbox Maintenance** 55.00

<PAGE> 17

Services Unit Cost ($)
Monthly Cost ($)

Lockbox items Processed
with copy of check .32
without copy of check .26
Checks Printed .20
Positive Pay .06
Issued Items .015
Wires Incoming

Domestic 10.00
International 10.00
Wires Outgoing
Domestic
Repetitive 12.00
Non-Repetitive 13.00
International
Repetitive 35.00
Non-Repetitive 40.00
PC - Initiated Wires:
Domestic
Repetitive 9.00
Non-Repetitive 9.00
International
Repetitive 25.00
Non-Repetitive 25.00

- ----------------------------
*** Uncollected Charge Star Bank Prime Rate as of first of month plus 4%
* Price can vary depending upon what information needs to be captured
** With the use of lockbox, the collected balance in the demand deposit
account will be significantly increased and therefore earnings to offset cash
management service fees will be maximized.
*** Fees for uncollected balances are figured on the monthly average of all
combined accounts.
**** Other available cash management services are priced separately.

<PAGE> 1

Exhibit (h)(1)

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

FUND ACCOUNTING SERVICE AGREEMENT

BETWEEN

DOW TARGET VARIABLE FUND LLC

AND

AMERICAN DATA SERVICES, INC.

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

<PAGE> 2

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

[AMERICAN DATA SERVICES LOGO]

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

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
INDEX
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------

<S> <C>
1. DUTIES OF ADS.........................................................................................4

2. COMPENSATION OF ADS...................................................................................6

3. LIMITATION OF LIABILITY OF ADS........................................................................6

4. REPORTS...............................................................................................6

5. ACTIVITIES OF ADS.....................................................................................7

6. ACCOUNTS AND RECORDS..................................................................................7

7. CONFIDENTIALITY.......................................................................................7

8. DURATION AND TERMINATION OF THIS AGREEMENT............................................................7

9. ASSIGNMENT............................................................................................8

10. NEW YORK LAWS TO APPLY..............................................................................8

11. AMENDMENTS TO THIS AGREEMENT.........................................................................8

12. MERGER OF AGREEMENT..................................................................................8

13. NOTICES..............................................................................................8

SCHEDULE A...............................................................................................9

(A) FUND ACCOUNTING SERVICE FEE:.........................................................................9
FEE INCREASES........................................................................................9
(B) EXPENSES............................................................................................10
(C) SPECIAL REPORTS.....................................................................................10
</TABLE>

2
<PAGE> 3

<TABLE>
<CAPTION>
<S> <C>
(D) SERVICE DEPOSIT.....................................................................................10

SCHEDULE B:.............................................................................................11
</TABLE>

3
<PAGE> 4

FUND ACCOUNTING SERVICE AGREEMENT

AGREEMENT made the 12th day of October, 1998, by and between Dow Target Variable
Fund LLC, an Ohio limited liability company, having its principal office and
place of business at One Financial Way, Montgomery , Ohio 45242 (the "Fund"),
and American Data Services, Inc., a New York corporation having its principal
office and place of business at 150 Motor Parkway, Hauppauge, New York 11788
("ADS").

BACKGROUND

WHEREAS, the Fund is a non-diversified, open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, ADS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and

WHEREAS, the Fund desires to avail itself of the experience, assistance and
facilities of ADS and to have ADS perform for the Fund certain services
appropriate to the operations of the Fund, and ADS is willing to furnish such
services in accordance with the terms hereinafter set forth.

TERMS

NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Fund and ADS hereby agree as follows:

1. DUTIES OF ADS.
ADS will provide the Fund with the necessary office space, communication
facilities and personnel to perform the following services for the Fund:

(a) Timely calculate and transmit to NASDAQ the Fund's daily net asset
value and communicate such value to the Fund and its transfer
agent;

(b) Maintain and keep current all books and records of the Fund as
required by Rule 31a-1 under the 1940 Act, as such rule or any
successor rule may be amended from time to time ("Rule 31a-1"),
that are applicable to the fulfillment of ADS's duties hereunder,
as well as any other documents

4
<PAGE> 5

necessary or advisable for compliance with applicable regulations
as may be mutually agreed to between the Fund and ADS. Without
limiting the generality of the foregoing, ADS will prepare and
maintain the following records upon receipt of information in
proper form from the Fund or its authorized agents:

o Cash receipts journal
o Cash disbursements journal
o Dividend record
o Purchase and sales - portfolio securities journals
o Subscription and redemption journals
o Security ledgers
o Broker ledger
o General ledger
o Daily expense accruals
o Daily income accruals
o Securities and monies borrowed or loaned and collateral
therefore
o Foreign currency journals
o Trial balances

(c) Provide the Fund and its investment adviser with daily portfolio
valuation, net asset value calculation and other standard
operational reports as requested from time to time.

(d) Provide all raw data available from our fund accounting system
(PAIRS) for management's or the administrators preparation of the
following:

1. Semi-annual financial statements;
2. Semi-annual form N-SAR;
3. Annual tax returns;
4. Financial data necessary to update form N-1A;
5. Proxy statement.

(e) Provide facilities to accommodate annual audit and any audits or
examinations conducted by the Securities and Exchange Commission
or any other governmental or quasi-governmental entities with
jurisdiction.

ADS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.

5
<PAGE> 6

2. COMPENSATION OF ADS.
In consideration of the services to be performed by ADS as set forth
herein for each portfolio listed in Schedule B, ADS shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Fund agrees to pay ADS the fees and reimbursement of out-of-pocket expenses as
set forth in the fee schedule attached hereto as Schedule A.

3. LIMITATION OF LIABILITY OF ADS.
(a) ADS shall be held to the exercise of reasonable care in carrying
out the provisions of the Agreement, but shall be liable to the Fund for any
action taken or omitted by it with negligence, bad faith, willful misconduct or
reckless disregard of its duties hereunder. It shall be entitled to rely upon
and may act upon the accounting records and reports generated by the Fund,
advice of the Fund, or of counsel for the Fund and upon statements of the Fund's
independent accountants, and shall be without liability for any action
reasonably taken or omitted pursuant to such records and reports or advice,
provided that such action is not, to the knowledge of ADS, in violation of
applicable federal or state laws or regulations, and provided further that such
action is taken without negligence, bad faith, willful misconduct or reckless
disregard of its duties.

(b) Nothing herein contained shall be construed to protect ADS against
any liability to the Fund or its security holders to which ADS shall otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence in the
performance of its duties on behalf of the Fund, reckless disregard of ADS'
obligations and duties under this Agreement or the willful violation of any
applicable law.

(c) Except as may otherwise be provided by applicable law, neither ADS
nor its stockholders, officers, directors, employees or agents shall be subject
to, and the Fund shall indemnify and hold such persons harmless from and
against, any liability for and any damages, expenses or losses incurred by
reason of the inaccuracy of information furnished to ADS by the Fund or its
authorized agents.

4. REPORTS.
(a) ADS shall not be responsible for the accuracy of any information
furnished to it by the Fund or its authorized agents, and the Fund shall hold
ADS harmless in regard to any liability incurred by reason of the inaccuracy of
such information.

(b) Whenever, in the course of performing its duties under this
Agreement, ADS determines, on the basis of information supplied to ADS by the
Fund or its authorized agents, that a violation of applicable law has occurred
or that, to its knowledge, a possible violation of applicable law may have
occurred or, with the passage of time, would occur, ADS shall promptly notify
the Fund and its counsel of such violation.

6
<PAGE> 7

5. ACTIVITIES OF ADS.
The services of ADS under this Agreement are not to be deemed
exclusive, and ADS shall be free to render similar services to others so long as
its services hereunder are not impaired thereby and the Fund's interests are not
impaired, diminished, compromised or conflicted with thereby.

6. ACCOUNTS AND RECORDS.
The accounts and records maintained by ADS shall be the property of the
Fund, and shall be surrendered to the Fund promptly upon request by the Fund in
the form in which such accounts and records have been maintained or preserved.
ADS agrees to maintain a back-up set of accounts and records of the Fund (which
back-up set shall be updated on at least a weekly basis) at a location other
than that where the original accounts and records are stored. ADS shall assist
the Fund's independent auditors, or, upon approval of the Fund, any regulatory
body, in any requested review of the Fund's accounts and records. ADS shall
preserve the accounts and records as they are required to be maintained and
preserved by Rule 31a-1.

7. CONFIDENTIALITY.
ADS agrees that it will, on behalf of itself and its officers and
employees, treat all transactions contemplated by this Agreement, and all other
information germane thereto, as confidential and not to be disclosed to any
person except as may be authorized by the Fund.

8. DURATION AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective as to each of the Fund's
Portfolios as of the day that Portfolio shall first be funded and the fees
hereunder are guaranteed until December 31, 2001, provided however, that both
parties to this Agreement have the option to terminate the Agreement, without
penalty, upon ninety (90) days prior written notice or as otherwise required by
applicable law.

Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other
reasonable expenses associated with such termination.

7
<PAGE> 8

9. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the prior written consent
of ADS, or by ADS without the prior written consent of the Fund.

10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.

11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.

12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.

13. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):

To the Fund: To ADS:
Dennis R, Taney Michael Miola
Treasurer President
Dow Target Variable Fund LLC American Data Services, Inc.
One Financial Way 150 Motor Parkway, Ste. 109
Cincinnati, Ohio 45242 Hauppauge, New York 11788

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

8
<PAGE> 9

DOW TARGET VARIABLE FUND LLC AMERICAN DATA SERVICES, INC.

By:_________________________ By:________________________
John J. Palmer, President Michael Miola, President

SCHEDULE A

(a) FUND ACCOUNTING SERVICE FEE:

For the services rendered by ADS in its capacity as fund accounting
agent, as specified in Paragraph 1. DUTIES OF ADS, the Fund shall pay ADS,
within ten (10) days after receipt of an invoice from ADS at the beginning of
each month, a fee calculated as follows:

Monthly fund accounting service fees will be based upon the prior month combined
average net assets of the portfolios to be processed for all of the ONE Fund,
Inc., the Ohio National Fund, Inc. and the Dow Target Variable Fund LLC
("Combined Average Net Assets") with no prorating for partial months.

MONTHLY SERVICE FEE:

o 1/12th of 7.50 basis points on the first $400 million of the Combined
Average Net Assets, plus;
o 1/12th of 4.00 basis points on the next $200 million of the Combined
Average Net Assets, plus;
o 1/12th of 2.00 basis points on all Combined Average Net Assets in excess of
$600 million.

MULTI-CLASS PROCESSING CHARGE

$300 per month will be charged for each additional class of stock per portfolio.

FEE INCREASES

The fees enumerated above will be guaranteed for a period of three years.

9
<PAGE> 10

(b) EXPENSES.

The Fund shall reimburse ADS for any out-of-pocket expenses , exclusive
of salaries, advanced by ADS in connection with but not limited to the printing
or filing of documents for the Fund, travel requested by the Fund, telephone,
quotation services, facsimile transmissions, stationery and supplies, record
storage, postage, and courier charges, incurred in connection with the
performance of its duties hereunder. ADS shall provide the Fund with a monthly
invoice of such expenses and the Fund shall reimburse ADS within fifteen (15)
days after receipt thereof.

All reports and /or analyses requested by the Fund, its auditors, legal
counsel, portfolio manager, or any regulatory agency having jurisdiction over
the Fund, that are not in the normal course of fund accounting activities as
specified in Section 1 of this Agreement shall be subject to an additional
charge, agreed upon in advance, based upon the following rates:

Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $ 45.00/hr.

(d) SERVICE DEPOSIT.

The Fund will remit to ADS upon execution of this Agreement a service
deposit equal to one (1) month's fee under this Agreement, computed in
accordance with fee structure enumerated in (a) above based upon the assets of
the portfolios listed in Schedule B of this Agreement as of the execution date
of this agreement. The Fund will have the option to have the security deposit
applied to the last month's service fee, or applied to any new contract between
the Fund and ADS.

10
<PAGE> 11

SCHEDULE B:

PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:

January Portfolio
February Portfolio
March Portfolio
April Portfolio
May Portfolio
June Portfolio
July Portfolio
August Portfolio
September Portfolio
October Portfolio
November Portfolio
December Portfolio

<PAGE> 1

Exhibit (h)(2)

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

TRANSFER AGENCY AND SERVICE AGREEMENT

BETWEEN

DOW TARGET VARIABLE FUND LLC

AND

AMERICAN DATA SERVICES, INC.

[AMERICAN DATA SERVICES LOGO]

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

<PAGE> 2

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
INDEX
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------

<S> <C>
1. TERMS OF APPOINTMENT; DUTIES OF ADS..................................................................4

2. FEES AND EXPENSES....................................................................................5

3. REPRESENTATIONS AND WARRANTIES OF ADS................................................................6

4. REPRESENTATIONS AND WARRANTIES OF THE FUND...........................................................6

5. INDEMNIFICATION......................................................................................7

6. COVENANTS OF THE FUND AND ADS........................................................................8

7. TERMINATION OF AGREEMENT.............................................................................9

8. ASSIGNMENT...........................................................................................9

9. AMENDMENT...........................................................................................10

10. NEW YORK LAWS TO APPLY.............................................................................10

11. MERGER OF AGREEMENT................................................................................10

12. NOTICES............................................................................................10

FEE SCHEDULE............................................................................................12

(A) ACCOUNT MAINTENANCE CHARGE:.........................................................................12
FEE INCREASES.......................................................................................12
(B) EXPENSES:...........................................................................................12
(C) SPECIAL REPORTS:....................................................................................12
(D) SERVICE DEPOSIT:....................................................................................13

SCHEDULE A..............................................................................................14
</TABLE>

3
<PAGE> 3

TRANSFER AGENCY AND SERVICE AGREEMENT

AGREEMENT made the 12th day of October, 1998, by and between Dow Target Variable
Fund LLC, an Ohio limited liability company having its principal office and
place of business at One Financial Way, Montgomery, Ohio 45242 (the "Fund"), and
American Data Services, Inc., a New York corporation having its principal office
and place of business at 150 Motor Parkway, Hauppauge, New York 11788 ("ADS").

WHEREAS, the Fund desires to appoint ADS as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and ADS desires to accept such appointment;

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

1. TERMS OF APPOINTMENT; DUTIES OF ADS

1.01 Subject to the terms and conditions set forth in this agreement,
the Fund hereby employs and appoints ADS to act, and ADS agrees to act, as its
transfer agent for the Fund's membership interests ("Interests"), dividend
disbursing agent and agent in connection with any accumulation, open-account or
similar plans provided to the owners of the Fund ("Owners") set out in the
currently effective prospectus and statement of additional information
("prospectus") of the Fund.

1.02 ADS agrees that it will perform the following services:

(a) In accordance with procedures established from time to time
by agreement between the Fund and ADS, ADS shall:

I. Receive for acceptance, orders for the purchase of Interests, and promptly
deliver payment and appropriate documentation therefore to the Custodian of
the Fund authorized by the Board of Managers of the Fund (the "Custodian");

II. Pursuant to purchase orders, issue the appropriate number of Interests and
hold such Interests in the appropriate Owners account;

III. Receive for acceptance redemption requests and redemption directions and
deliver the appropriate documentation therefore to the Custodian;

IV. At the appropriate time as and when it receives monies paid to it by the
Custodian with respect to any redemption, pay over or cause to be paid over
in the appropriate manner such monies as instructed by the redeeming
Owners;

4
<PAGE> 4

V. Effect transfers of Interests by the Owners thereof upon receipt of
appropriate instructions;

VI. Prepare and transmit payments for dividends and distributions declared by
the Fund;

VII. Maintain records of account for and advise the Fund and its Owners as to
the foregoing; and

VIII. Record the issuance of Interests of the Fund and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total number of Interests of the Fund
which are authorized, based upon data provided to it by the Fund, and
issued and outstanding. ADS shall also provide the Fund on a regular basis
with the total number of Interests which are authorized and issued and
outstanding and shall have no obligation, when recording the issuance of
Interests, to monitor the issuance of such Interests or to take cognizance
of any laws relating to the issue or sale of such Interests, which
functions shall be the sole responsibility of the Fund.

(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), ADS shall:

i) Perform all of the customary services of a transfer agent, dividend
disbursing agent, including but not limited to: maintaining all Owners
accounts, preparing Owners meeting lists, mailing proxies, receiving and
tabulating proxies, mailing Owners reports and prospectuses to current
Owners, withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and
distributions by federal authorities for all Owners, preparing and mailing
confirmation forms and statements of account to Owners for all purchases
and redemptions of Interests and other confirmable transactions in Owners
accounts, preparing and mailing activity statements for Owners, and
providing Owners services including but not limited to telephonic
transactions, written transactions and information related to Owners
accounts; and (ii) provide a system and reports which will enable the Fund
to monitor the total number of Interests sold in each State.

Procedures applicable to certain of these services may be established
from time to time by agreement between the Fund and ADS.

2. FEES AND EXPENSES

2.01 For performance by ADS pursuant to this Agreement, the Fund agrees
to pay ADS an annual maintenance fee for each Owners account and transaction
fees for each portfolio or class of Interests serviced under this Agreement (See
Schedule A) as set out in the fee schedule attached hereto. Such fees and out-of
pocket expenses and advances

5
<PAGE> 5

identified under Section 2.02 below may be changed from time to time subject to
mutual written agreement between the Fund and ADS.

2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse ADS for out-of-pocket expenses or advances incurred by ADS
for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by ADS at the request or with the consent of the Fund,
will be reimbursed by the Fund.

2.03 The Fund agrees to pay all fees and reimbursable expenses,
including postage for mailing of dividends, proxies, Fund reports and other
mailings to all Owners accounts.

3. REPRESENTATIONS AND WARRANTIES OF ADS

ADS represents and warrants to the Fund that:

3.01 It is a corporation duly organized and existing and in good
standing under the laws of the State of New York.

3.02 It is duly qualified to carry on its business in the State of
New York.

3.03 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.

3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.

3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.

3.06 ADS is duly registered as a transfer agent under the Securities
Act of 1934 and shall continue to be registered throughout the remainder of this
Agreement.

4. REPRESENTATIONS AND WARRANTIES OF THE FUND

The Fund represents and warrants to ADS that;

4.01 It is a limited liability company duly organized and existing and
in good standing under the laws of the State of Ohio.

4.02 It is empowered under applicable laws and by its Articles of
Organization and Operating Agreement to enter into and perform this Agreement.

6
<PAGE> 6

4.03 All company proceedings required by said Articles of Organization
and Operating Agreement have been taken to authorize it to enter into and
perform this Agreement.

4.04 It is an open-end and non-diversified management investment
company registered under the Investment Company Act of 1940.

4.05 A registration statement under the Securities Act of 1933 shall be
effective and will remain effective, and appropriate state securities law
filings as required, have been or will be made and will continue to be made,
with respect to all Interests of the Fund being offered for sale.

5. INDEMNIFICATION

5.01 ADS shall not be responsible for, and the Fund shall indemnify and
hold ADS harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:

(a) All actions of ADS or its agents or subcontractors required to be taken
pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct.

(b) The Fund's refusal or failure to comply with the terms of this Agreement, or
which arise out of the Fund's lack good faith, negligence or willful
misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.

(c) The reliance on or use by ADS or its agents or subcontractors of
information, records and documents which (i) are received by ADS or its
agents or subcontractors and furnished to it by or on behalf of the
Fund, and (ii) have been prepared and/or maintained by the Fund or any
other person or firm on behalf of the Fund.

(d) The reliance on, or the carrying out by ADS or its agents or subcontractors
of any instructions or requests of the Fund.

(e) The offer or sale of Interests in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Interests be registered in such
state or in violation of any stop order or other determination or
ruling by any federal agency or any state with respect to the offer or
sale of such Interests in such state.

5.02 ADS shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or failure or
omission to act by ADS as a result of ADS's lack of good faith, negligence or
willful misconduct.

7
<PAGE> 7

5.03 At any time ADS may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by ADS under this
Agreement, and ADS and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. ADS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided ADS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. ADS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.

5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God or strikes reasonably
beyond its control, or other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.

5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.

5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.

6. COVENANTS OF THE FUND AND ADS

6.01 The Fund shall promptly furnish to ADS a certified copy of the
resolution of the Board of Managers of the Fund authorizing the appointment of
ADS and the execution and delivery of this Agreement.

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<PAGE> 8

6.02 ADS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.

6.03 ADS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, ADS agrees that all such records prepared or maintained by
ADS relating to the services to be performed by ADS hereunder are the property
of the Fund and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Fund on and
in accordance with its request.

6.04 ADS and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.

6.05 In case of any requests or demands for the inspection of the
Owners records of the Fund, ADS will endeavor to notify the Fund and to secure
instructions from an authorized officer of the Fund as to such inspection. ADS
reserves the right, however, to exhibit the Owners records to any person
whenever it is advised by its counsel that it may be held liable for the failure
to exhibit the Owners records to such person, and shall promptly notify the Fund
of any unusual request to inspect or copy the Owners records of the Fund or the
receipt of any other unusual request to inspect, copy or produce the records of
the Fund.

7. TERMINATION OF AGREEMENT

7.01 This Agreement shall become effective as to each of the Fund's
Portfolios as of the day that portfolio shall first be funded and the fees
hereunder are guaranteed until December 31, 2001, provided however, that both
parties to this Agreement have the option to terminate the Agreement, without
penalty, upon ninety (90) days prior written notice or as otherwise required by
applicable law.

7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other
reasonable expenses associated with such termination.

8. ASSIGNMENT

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<PAGE> 9

8.01 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the written consent of the other party.

8.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.

9. AMENDMENT

9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Managers of the Fund.

10. NEW YORK LAWS TO APPLY

10.01 The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect and the applicable provisions of the 1940 Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.

11. MERGER OF AGREEMENT

11.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.

12. NOTICES.

All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):

To the Fund: To ADS:
Dennis R, Taney Michael Miola
Treasurer President
Dow Target Variable Fund LLC American Data Services, Inc.
One Financial Way. 150 Motor Parkway, Ste. 109
Cincinnati, Ohio 45242 Hauppauge, New York 11788

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<PAGE> 10

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

DOW TARGET VARIABLE FUND LLC AMERICAN DATA SERVICES, INC.

By:_________________________ By:________________________
John J. Palmer, President Michael Miola, President

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<PAGE> 11

FEE SCHEDULE

For the services rendered by ADS in its capacity as transfer agent, the
Fund shall pay ADS, within ten (10) days after receipt of an invoice from ADS
for its services rendered, a fee, calculated as a combination of account
maintenance charges and transaction charges as follows:

(a) ACCOUNT MAINTENANCE CHARGE:

The annual account maintenance charge for all portfolios serviced by ADS for the
Fund will be $__________________. This amount will be prorated on a monthly
basis to each portfolio serviced.

FEE INCREASES

The fees enumerated above will be guaranteed for a period of three years from
the date of this Agreement.

(b) EXPENSES:

The Fund shall reimburse ADS for any out-of-pocket expenses, exclusive
of salaries, advanced by ADS in connection with but not limited to the costs for
printing fund documents, (i.e. printing of confirmation forms, Owners
statements, redemption/dividend checks, envelopes, financial statements, proxy
statement, fund prospectus, etc.) proxy solicitation and mailing expenses,
travel requested by the Fund, 800-line costs and fees, stationery and supplies
(related to Fund records), record storage, postage (plus a $0.07 service charge
for all mailings), telex and courier charges incurred in connection with the
performance of its duties hereunder. ADS shall provide the Fund with a monthly
invoice of such expenses and the Fund shall reimburse ADS within fifteen (15)
days after receipt thereof.

All reports and/or analyses requested by the Fund that are not included
in the fee schedule, shall be subject to an additional charge, agreed upon in
advance, based upon the following rates:

Labor:
Senior staff - $150.00/hr.

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<PAGE> 12

Junior staff - $ 75.00/hr.
Computer time - $ 45.00/hr.

(d) SERVICE DEPOSIT:

The Fund will remit to ADS upon execution of this Agreement a service
deposit of equal to one (1) month's Owners service fee. The service deposit
computation will be based either on the total number of Owners accounts (open
and closed) of each portfolio to be serviced or the minimum fee, whichever is
greater, as of the execution date of this Agreement. The Fund will have the
option to have the service deposit applied to the last month's service fee, or
applied to any new contract between the Fund and ADS.

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<PAGE> 13

SCHEDULE A

PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:

<PAGE> 1

Exhibit (h)(3)

STAR BANK, N.A.
MASTER REPURCHASE AGREEMENT

1. APPLICABILITY.
From time to time the parties hereto may enter into transactions in which
Star Bank, N.A., ("Seller") agrees to transfer to the other party to this
Agreement ("Buyer") securities or financial instruments ("Securities") against
the transfer of funds by Buyer, with a simultaneous agreement by Buyer to
transfer to Seller such Securities at a date certain or on demand, against the
transfer of funds by Seller. Each such transaction shall be referred to herein
as a "Transaction" and shall be governed by this Agreement unless otherwise
agreed in writing.

FUNDS HELD PURSUANT TO A TRANSACTION ARE
NOT A DEPOSIT AND THEREFORE ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION.

2. DEFINITIONS.
(a) "Act of Insolvency", with respect to any person, (i) the commencement
by such person as debtor of any case or proceeding under any bankruptcy,
insolvency, reorganization, liquidation, dissolution or similar law, or such
person seeking the appointment of a receiver, trustee, custodian or similar
official for such person or any substantial part of its property, or (ii) the
commencement of any such case or proceeding against such person, or another
seeking such an appointment, which (A) is consented to or not timely contested
by such person, (B) results in the entry of an order for relief, such an
appointment or the entry of an order having a similar effect, or (C) is not
dismissed within 30 days;
(b) "Additional Purchased Securities", securities provided by Seller to
Buyer pursuant to Paragraph 4 hereof;
(c) "Buyer's Margin Amount", with respect to any Transaction as of any
date, an amount equal to 100% of the Purchased Securities;
(d) "Confirmation", the meaning specified in Paragraph 3(b) hereof;
(e) "Income", with respect to any Security at any time, any principal
thereof then payable and all interest;
(f) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;
(g) "Margin Excess", the meaning specified in Paragraph 4 (b) hereof;
(h) "Market Value", with respect to any Securities as of any date, the
price for such Securities on such date obtained from a generally recognized
source or the most recent closing bid quotation from such a source, plus accrued
Income to the extent not included therein (other than any Income credited or
paid to, or applied to the obligations of, Seller pursuant to Paragraph 5
hereof) as of such date;
(i) "Price Differential", with respect to any Transaction hereunder as of
any date, the aggregate amount obtained by daily application of the Pricing Rate
for such Transaction to the Purchase Price for such Transaction on a 360 day per
year basis for the actual number of days during the period commencing on (and
including) the Purchase Date for such Transaction and ending on (but excluding)
the date of determination (reduced by any amount of such Price Differential
previously paid by Seller to Buyer with respect to such Transaction);
(j) "Pricing Rate", the per annum percentage rate for determination for the
Price Differential;
(k) "Purchase Date", the date on which Securities are transferred by Seller
to Buyer;
(l) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter,
such price increased by the amount of any cash paid by Buyer to Seller pursuant
to Paragraph 4 (b) hereof and decreased by the amount of any cash paid by Seller
to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller's
obligations under clause (ii) of Paragraph 5 hereof;

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<PAGE> 2

(m) "Purchased Securities", the U.S. Government and Agency Securities
transferred by Seller to Buyer in a Transaction hereunder, and any Securities
substituted therefor in accordance with Paragraph 9 hereof. The term "Purchased
Securities" with respect to any Transaction at any time also shall include
Additional Purchased Securities pursuant to Paragraph 4 and shall exclude
Securities returned pursuant to Paragraph 4;
(n) "Repurchase Date", the date on which Seller is to repurchase the
Purchased Securities from Buyer, including any date determined by application of
the provisions of Paragraphs 3(c) or 11 hereof;
(o) "Repurchase Price", the price at which Purchased Securities are to be
transferred from Buyer to Seller upon termination of a Transaction, which will
be determined in each case (including transactions terminable upon demand) as
the sum of the Purchase Price and the Price Differential as of the date of such
determination, increased by any amount determined by the application of the
provisions of Paragraph 11 hereof;
(p) "Seller's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of a percentage (which may be equal to
the percentage agreed to pursuant to subparagraph (c) of this Paragraph), agreed
to by Buyer and Seller prior to entering into the Transaction, to the Repurchase
Price for such Transaction as of such date.

3. INITIATION; CONFIRMATION; TERMINATION.
(a) An agreement to enter into a Transaction may be made orally or in
writing at the initiation of either Buyer or Seller, or automatically pursuant
to the terms of any one or more of Buyer's deposit accounts with Seller. On the
Purchase Date for the Transaction, the Purchased Securities shall be held by
Seller or its agent in the manner prescribed in part 450.4 of the Title 17 of
the Code of Federal Regulations, against the crediting of the Purchase Price to
an account of the Seller in immediately available funds.
(b) At the end of the day of initiation of any Transaction hereunder, or at
the end of any other day during which other securities are substituted for
Purchased Securities pursuant to Paragraph 9 hereof, Seller shall promptly
deliver to Buyer a written confirmation of each Transaction (a "Confirmation");
provided, however, that Seller need not send a Confirmation at the end of any
day during which other securities are substituted for Purchased Securities
pursuant to Paragraph 9 hereof unless the substitution results in a change to
issuer, maturity date, par amount or coupon rate specified in the previous
Confirmation, and provided further that Seller need not send a Confirmation with
respect to Transactions or substitutions that occur before January 31, 1988. The
Confirmation shall identify the Buyer and the Seller and shall specify (i) the
Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date, unless the
Transaction is to be terminable on demand, (iv) the Pricing Rate or Repurchase
Price applicable to the Transaction, (v) the Issuer, maturity date, coupon rate,
par amount and market value of the Purchased Securities, (vi) the CUSIP or
mortgage-backed security pool number, as appropriate, of the Purchased
Securities, and (vii) any additional terms or conditions of the Transaction not
inconsistent with this Agreement. The Confirmation, together with this
Agreement, shall constitute conclusive evidence of the terms agreed between
Buyer and Seller with respect to the Transaction to which the Confirmation
relates, unless with respect to the Confirmation specific objection is made
promptly after receipt thereof. In the event of any conflict between the terms
of such Confirmation and this Agreement, this Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such demand shall
be made by the Buyer of Seller, no later than such time as is customary in
accordance with market practice, by telephone or otherwise on or prior to the
banking day on which such termination will be effective. On the date of such
demand, or on the date fixed for termination in the case of Transactions having
a fixed term, termination of the Transaction will be effected by transfer to
Seller or its agent of the Purchased Securities and any Income in respect
thereof collected by the Buyer (and not previously credited or paid to, or
applied to the obligations of, Seller pursuant to Paragraph 5

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<PAGE> 3

hereof) against the crediting of the Repurchase Price to an account of the Buyer
in immediately available funds.

4. MARGIN MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions is less than the aggregate Buyer's Margin Amount for
all such Transactions (a "Margin Deficit"), then Buyer may require Seller, at
Seller's option, to make a cash payment to Buyer or to transfer to Buyer
additional Securities reasonably acceptable to Buyer ("Additional Purchased
Securities"), so that the cash and aggregate Market Value of the Purchased
Securities, including any such Additional Purchased Securities, will thereupon
equal or exceed such aggregate Buyer's Margin Amount.
(b) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions exceeds the aggregate Seller's Margin Amount for all
such Transactions at such time (a "Margin Excess"), then Seller may by notice to
Buyer require Buyer, at Buyer's option, to make a cash payment to Seller or to
transfer Purchased Securities to Seller, so that the aggregate Market Value of
the Purchased Securities, after deduction of any such cash or any Purchased
Securities so transferred, will thereupon not exceed such aggregate Seller's
Margin Amount.
(c) Any cash paid or repaid pursuant to this Paragraph shall be attributed
to such Transactions as shall be agreed upon by Buyer and Seller.
(d) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the rights of Buyer or Seller (or both) under subparagraphs (a)
and (b) of this Paragraph may be exercised only where a Margin Deficit or Margin
Excess exceeds a specified dollar amount or a specified percentage of the
Repurchase Price for such Transactions (which amount or percentage shall be
agreed to by Buyer and Seller prior to entering into any such Transactions).
(e) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer and Seller under subparagraphs
(a) and (b) of this Paragraph to require the elimination of a Margin Deficit or
a Margin Excess, as the case may be, can be exercised whenever such a Margin
Deficit or Margin Excess exists with respect to any single Transaction hereunder
(calculated without regard to any other Transaction outstanding under this
agreement).

5. INCOME PAYMENTS.
Where a particular Transaction's term extends over an Income payment date
on the Securities subject to the Transaction, an amount equal to such Income
payment or payments with respect to any Purchased Securities subject to such
Transaction shall, on the date such Income is payable, be paid or credited to
the account of Seller.

6. SECURITY INTEREST.
Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction, and shall
be deemed to have granted to Buyer a security interest in, all of the Purchased
Securities with respect to all Transactions hereunder and all proceeds thereof.

7. PAYMENT AND TRANSFER.
Unless otherwise mutually agreed, all payments hereunder shall be in
immediately available funds. All transfers of securities by one party hereto to
the other party shall be made by Seller or its agent in the manner prescribed in
part 450 of Title 17 of the Code of Federal Regulations.

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<PAGE> 4

8. SEGREGATION OF PURCHASED SECURITIES.
All Purchased Securities in the possession of the Seller shall be
segregated from Seller's securities and shall be identified as subject to this
Agreement. Segregation shall be accomplished as prescribed in Part 450 of Title
17 of the Code of Federal Regulations.

9. SUBSTITUTION.
THE SELLER IS NOT PERMITTED TO SUBSTITUTE OTHER SECURITIES FOR THOSE
SUBJECT TO THIS AGREEMENT AND THEREFORE MUST KEEP THE BUYER'S SECURITIES
SEGREGATED AT ALL TIME, UNLESS IN THIS AGREEMENT THE BUYER GRANTS THE SELLER THE
RIGHT TO SUBSTITUTE OTHER SECURITIES. IF THE BUYER GRANTS THE RIGHT TO
SUBSTITUTE, THIS MEANS THAT THE BUYER'S SECURITIES WILL LIKELY BE COMMINGLED
WITH THE SELLER'S OWN SECURITIES DURING THE TRADING DAY. THE BUYER IS ADVISED,
DURING ANY TRADING DAY THAT THE BUYER'S SECURITIES ARE COMMINGLED WITH THE
SELLER'S SECURITIES, THEY MAY BE SUBJECT TO LIENS GRANTED BY THE SELLER TO THIRD
PARTIES AND MAY BE USED BY THE SELLER FOR DELIVERIES ON OTHER SECURITIES
TRANSACTIONS. WHENEVER THE SECURITIES ARE COMMINGLED, THE SELLER'S ABILITY TO
RESEGREGATE SUBSTITUTE SECURITIES FOR THE BUYER WILL BE SUBJECT TO THE SELLER'S
ABILITY TO SATISFY ANY LIEN OR TO OBTAIN SUBSTITUTE SECURITIES.

10. REPRESENTATIONS.
Each of Buyer and Seller represents and warrants to the other that (i) it
is duly authorized to execute and deliver this Agreement, to enter into the
Transactions contemplated hereunder and to perform its obligations hereunder and
has taken all necessary action to authorize such execution, delivery and
performance, (ii) it will engage in such Transactions as principal (or, if
agreed in writing in advance of any Transaction by the other party hereto, as
agent for a disclosed principal), (iii) the person signing this Agreement on its
behalf is duly authorized to do so on its behalf, (iv) it has obtained all
authorizations of any governmental body required in connection with this
Agreement and the Transactions hereunder and such authorizations are in full
force and effect and (v) the execution, delivery and performance of this
Agreement and the Transactions hereunder will not violate any law, ordinance,
charter, by-law or rule applicable to it or any agreement by which it is bound
or by which any of its assets are affected. On the Purchase Date for any
Transaction Buyer and Seller shall each be deemed to repeat all the foregoing
representations made by it.

11. EVENTS OF DEFAULT.
In the event that (i) Seller fails to repurchase or Buyer fails to deliver
Purchased Securities upon the applicable Repurchase Date, (ii) Seller or Buyer
fails, after one business day's notice, to comply with Paragraph 4 hereof, (iii)
Buyer fails to comply the Paragraph 5 hereof, (iv) an Act of Insolvency occurs
with respect to Seller or Buyer, (v) any representation made by Seller or Buyer
shall prove to have been incorrect or untrue in any material respect when made
or repeated or deemed to have been made or repeated, or (vi) Seller or Buyer
shall admit to the other its inability to, or its intention not to, perform any
of its obligations hereunder (each an "Event of Default");
(a) At the option of the nondefaulting party, exercised by written notice
to the defaulting party (which option shall be deemed to have been exercised,
even if no notice is given, immediately upon the occurrence of an Act of
Insolvency), the Repurchase Date for each Transaction hereunder shall be deemed
immediately to occur.
(b) In all Transactions in which the defaulting party is Seller, if Buyer
exercises or is deemed to have exercised the option referred to in subparagraph
(a) of this paragraph, (i) Seller's obligations hereunder to repurchase all
Purchased Securities in such Transactions shall thereupon become immediately due
and payable, (ii) to the extent permitted by applicable law, the

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Repurchase Price with respect to each such Transaction shall be increased by the
aggregate amount obtained by daily application of the Pricing Rate for such
Transaction to the Repurchase Price for such Transaction as of the Repurchase
Date as determined pursuant to subparagraph (a) of this Paragraph (decreased as
of any day by (A) any amounts retained by Buyer with respect to such Repurchase
Price pursuant to clause (iii) of this subparagraph, (B) any proceeds from the
sale of Purchased Securities pursuant to subparagraph (d)(i) of this paragraph,
and (C) any amounts credited to the account of Seller pursuant to subparagraph
(e) of this paragraph) on a 360 day per year basis for the actual number of days
during the period from the date of the Event of Default giving rise to such
option to the date of payment of the Repurchase Price as so increased, (iii) all
Income paid after such exercise or deemed exercise shall be paid to Buyer and
applied to the aggregate unpaid Repurchase Prices owed by Seller, and (iv)
Seller shall immediately deliver to Buyer any Purchased Securities subject to
such Transactions then in Seller's possession.
(c) In all Transactions in which the defaulting party is Buyer, upon tender
by Seller of payment of the aggregate Repurchase Prices for all such
Transactions, Buyer's right, title and interest in all Purchased Securities
subject to such Transaction shall be deemed transferred to Seller, and Buyer
shall deliver all such Purchased Securities to Seller.
(d) After one business day's notice to the defaulting party (which notice
need not be given if an Act of Insolvency shall have occurred, and which may be
the notice given under subparagraph (a) of this paragraph or the notice given
under clause (ii) of the first sentence of this Paragraph), the nondefaulting
party may;
(i) as to Transactions in which the defaulting party is Seller, (A)
immediately sell, in a recognized market at such price or prices, as Buyer may
reasonably deem satisfactory, any or all Purchased Securities subject to such
Transactions and apply the proceeds thereof to the aggregate unpaid repurchase
Prices owing by Seller or (B) in its sole discretion elect, in lieu of selling
all or a portion of such Purchased Securities, to give Seller credit for such
Purchased Securities in an amount equal to the price therefor on such date,
obtained from a generally recognized source of the most recent closing bid
quotation from such a source, against the aggregate unpaid Repurchase Price; and
(ii) as to Transactions in which the defaulting party is Buyer, (A)
purchase securities ("Replacement Securities") of the same class and amount as
any Purchased Securities that are not delivered by Buyer to Seller as required
hereunder or (B) in its sole discretion elect, in lieu of purchasing Replacement
Securities, to be deemed to have purchased Replacement Securities at the price
therefor on such date, obtained from a generally recognized source or the most
recent closing bid quotation from such a source.
(e) As to Transactions in which the defaulting party is Buyer, Buyer shall
remain liable to Seller (i) with respect to Purchased Securities, for any excess
of the price paid (or deemed paid) by Seller for Replacement Securities therefor
over the Repurchase Price for such Purchased Securities and (ii) with respect to
Additional Purchased Securities, for the price paid (or deemed paid) by Seller
for the Replacement Securities therefor. In addition, Buyer shall be liable to
Seller for interest on such remaining liability with respect to each such
purchase (or deemed purchase) until paid in full by Buyer. Such interest shall
be at a rate equal to the Pricing Rate.
(f) For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is Buyer shall
not increase above the amount of such Repurchase Price for such Transaction
shall be determined as of the date of the exercise or deemed exercise by Seller
of its option under subparagraph (a) of this paragraph.
(g) The defaulting party shall be liable to the nondefaulting party for the
amount of all reasonable legal or other expenses incurred by the nondefaulting
party in connection with or as a consequence of any Event of Default, together
with interest thereon at a rate equal to the Pricing Rate.

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12. SINGLE AGREEMENT.
Buyer and Seller acknowledge that, and have entered hereinto and will enter
into each Transaction hereunder in consideration of and in reliance upon the
fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of this
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction against
obligations owing to them in respect of any other Transactions hereunder and
(iii) that payments, deliveries and other transfers made by either of them in
respect to any Transaction shall be deemed to have been made in consideration of
payments, deliveries and other Transactions hereunder, and the obligations to
make any such payments, deliveries and other transfers may be applied against
each other and netted.

13. NOTICES AND OTHER COMMUNICATIONS.
Unless another address is specified in writing by the respective party to
whom any notice or other communication is to be given hereunder, all such
notices or communications shall be in writing or confirmed in writing and
delivered at the respective addresses set forth in Annex I attached hereto.

14. ENTIRE AGREEMENT; SEVERABILITY.
This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent from
any other provision or agreement herein and shall be enforceable notwithstanding
the unenforceability of any such other provision or agreement.

15. NON-ASSIGNABILITY; TERMINATION.
The rights and obligations of the parties under this Agreement and under
any Transaction shall not be assigned by either party without the prior written
consent of the other party. Subject to the foregoing, this Agreement and any
Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. This Agreement may be canceled by
either party upon giving written notice to the other, except that this Agreement
shall, notwithstanding such notice, remain applicable to any Transactions then
outstanding.

16. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Ohio without
giving effect to the conflict of law principles thereof.

17. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the failure to give
a notice pursuant to subparagraphs 4(a) and 4(b) hereof will not constitute a
waiver of any right to do so at a later date.

18. USE OF EMPLOYEE PLAN ASSETS.
If assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") are intended to be
used by either party hereto (the "Plan

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Party") in a Transaction, the Plan Party shall so notify the other party prior
to the Transaction. The Plan Party shall represent in writing to the other party
that the Transaction does not constitute a prohibited transaction under ERISA or
is otherwise exempt therefrom, and the other party may proceed in reliance
thereon but shall not be required so to proceed.

STAR BANK, N.A. OTHER PARTY TO AGREEMENT
("SELLER") ("BUYER"): DOW TARGET VARIABLE FUND LLC

BY: BY:

PRINT NAME: PRINT NAME:

TITLE: TITLE:

DATE DATE

ANNEX I

[Names and Addresses for Communications Between Parties.]

Page 7

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Exhibit (h)(4)

SERVICE AGREEMENT

THIS AGREEMENT, made this twelfth day of October, 1998, by and among
DOW TARGET VARIABLE FUND LLC, (the "Fund"), an Ohio limited liability company,
OHIO NATIONAL INVESTMENTS, INC. ("Adviser"), an Ohio corporation and THE OHIO
NATIONAL LIFE INSURANCE COMPANY ("Ohio National Life"), a life insurance company
incorporated under the laws of the State of Ohio;

WHEREAS, Ohio National Life has caused the Adviser to be organized to
serve as investment adviser to investment companies and to others; and

WHEREAS, the Adviser and the Fund have entered into an Investment
Advisory Agreement dated October 12, 1998 whereby the Adviser undertakes to
furnish the Fund with investment advisory services and to furnish or pay the
expenses of the Fund for certain other services; and

WHEREAS, Ohio National Life is willing to make available to the Adviser
on a part-time basis certain employees of Ohio National Life for the purpose of
better enabling the Adviser to fulfill its obligations under the Investment
Advisory Agreement, provided that the Adviser bears all costs allocable to the
time spent by them on the affairs of the Adviser, and the Adviser and the Fund
believe that such an arrangement will be for their mutual benefit;

NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

1. The Adviser shall have the right to use, on a part-time basis, and
Ohio National Life shall make available on such basis, such employees of Ohio
National Life for such periods as may be agreed upon by the Adviser and Ohio
National Life, as may be reasonably needed by the Adviser in the performance of
its investment advisory functions. It is anticipated that most of such employees
will be persons employed in the investment operations of Ohio National Life in
addition to such clerical, stenographic and administrative services as the
Adviser may reasonably request.

2. The employees of Ohio National Life in performing services for the
Adviser hereunder may, to the full extent that they deem appropriate, have
access to and utilize statistical and economic data, investment research reports
and other materials prepared for or contained in the files of Ohio National Life
which is relevant to making investment decisions within the investment
objectives of the Fund, and may make such materials available to the Adviser;
provided, that any such materials prepared or obtained in connection with a
private placement or other nonpublic transaction need not be made available to
the Adviser if Ohio National Life deems such materials confidential.

3. Employees of Ohio National Life performing services for the Adviser
pursuant hereto shall report and be responsible solely to the officers and
directors of the Adviser or persons designated by them. Ohio National Life shall
have no responsibility for investment recommendations and decisions of the
Adviser based upon information or advice given or obtained by or through such
Ohio National Life employees.

<PAGE> 2

4. Ohio National Life will, to the extent requested by the Adviser,
supply to employees of the Adviser, including part-time employees of Ohio
National Life serving the Adviser, such clerical, stenographic and
administrative services and such office supplies and equipment as may be
reasonably required in order that they may properly perform their respective
functions on behalf of the Adviser in connection with its performance of the
Investment Advisory Agreement.

5. The obligation of performance under the Investment Advisory
Agreement is solely that of the Adviser, and Ohio National Life undertakes no
obligation in respect thereto, except as otherwise expressly provided herein.

6. In consideration of the services to be rendered by Ohio National
Life and its employees pursuant to this Agreement, the Adviser agrees to
reimburse Ohio National Life for such costs, direct and indirect, as may be
fairly attributable to the services performed for the Adviser. Such costs shall
include, but not be limited to, an appropriate portion of salaries, employee
benefits, general overhead expense, supplies and equipment, and a charge in the
nature of rent for the cost of space in Ohio National Life offices fairly
allocable to activities of the Adviser under the Investment Advisory Agreement.
In the event of disagreement between the Adviser and Ohio National Life as to a
fair basis for allocating or apportioning costs, such basis shall be fixed by
the independent public accountants for the Fund.

7. (a) This Agreement shall continue in effect as to any portfolio of
the Fund for a period more than two years from the date of its execution only so
long as such continuation is specifically approved at least annually by either
the Board of Managers of the Fund or by vote of a majority of that portfolio's
outstanding voting securities, provided that in either event such continuation
shall also be approved by the vote of a majority of the Managers who are not
interested persons of the Fund, cast by them in person at a meeting called for
purpose of voting on such approval; provided, however, that:

(b) This Agreement may at any time be terminated as to any portfolio
of the Fund without the payment of any penalty on 60 days' notice to the Adviser
and to Ohio National Life either by vote of the Board of Managers of the Fund or
by vote of a majority of the outstanding voting securities of that portfolio.

(c) This Agreement shall immediately terminate in event of its
assignment (as that term is defined in the Investment Company Act of 1940).

(d) This Agreement may be terminated by the Adviser or by Ohio
National Life on 90 days' written notice to the other and to the Fund.

8. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party it is agreed that the address of the Fund, that of the
Adviser and that of Ohio National Life for this purpose shall be One Financial
Way, Montgomery, Ohio 45242.

2
<PAGE> 3

IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers the day and year first above
written.

DOW TARGET VARIABLE FUND LLC

By
-----------------------------------
John J. Palmer, President

OHIO NATIONAL INVESTMENTS, INC.

By
-----------------------------------
Joseph P. Brom, President

THE OHIO NATIONAL LIFE INSURANCE COMPANY

By
-----------------------------------
David B. O'Maley, Chairman,
President & Chief Executive Officer

<PAGE> 1

Exhibit (h)(5)

JOINT INSURED AGREEMENT

AGREEMENT made this eighteenth day of November, 1998, by and among DOW TARGET
VARIABLE FUND LLC, an Ohio limited liability company, OHIO NATIONAL FUND, INC.,
a Maryland corporation, ONE FUND, INC., a Maryland corporation, (each
individually referred to herein as a "Fund," and collectively as the "Funds"),
and OHIO NATIONAL INVESTMENTS, INC. (the "Adviser"), an Ohio corporation.

WHEREAS, the Funds have purchased Financial Institution Bond No. SSB-FR7766
underwritten by Hartford Fire Insurance Company and will, in the future,
purchase similar fidelity bonds in replacement thereof (the "Bond"); and

WHEREAS, the Bond covers the Adviser and the Funds as joint insureds; and

WHEREAS, the Boards of each of the Funds have determined that the Bond premiums
shall be equitably borne by each portfolio of the Funds; and

WHEREAS, future fidelity bonds issued in replacement of the Bond might include
deductible provisions with respect to certain coverages thereunder; and

WHEREAS, the Division of Investment Management of the Securities and Exchange
Commission has adopted the position that applicable law does not permit an
investment company to maintain a fidelity bond having a deductible clause unless
such investment company's investment adviser agrees to indemnify the investment
company for losses subject to the deductible clause and further provided that
such investment adviser shall maintain an amount equal to the deductible amount
in an escrow or similar account;

NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Funds and the Adviser agree as follows:

1. In the event of the recovery under the Bond as a result of any
loss sustained by the Adviser and any or all of the Funds, the
recovering Fund or Funds shall receive an equitable and
proportionate share of the recovery, but at least equal to the
amount which each recovering Fund would have received had it
provided and maintained a single insured bond with the minimum
coverage required by paragraph (d)(1) of Rule 17g-1 under the
Investment Company Act of 1940, as amended.

2. In the event of any loss by a Fund which the underwriter of the
Bond determines would otherwise be payable under the Bond but
for the limitations of any deductible clause, the Adviser
agrees to indemnify that Fund and pay it for any such loss not
to exceed the deductible amount.

3. The Adviser agrees that, in the event that the Bond should
contain any deductible clause, the Adviser shall then maintain
a special reserve account in the amount of no less than the
deductible amount which amount shall be specifically reserved
for payment by the Adviser to the Funds in the event of any
claim by either of the Funds under this agreement.

<PAGE> 2

4. In the event that either of the Funds should suffer any loss as
a result of the Adviser's failure to maintain adequate reserves
as provided in section 3 of this agreement, the amount of such
loss, as determined by a majority of those members of the Board
of that Fund who are not defined as "interested persons" of the
Fund under Section 2(a)(19) of the Investment Company Act of
1940, shall be set off and deducted from any fees then or later
owed by that Fund to the Adviser under the Investment Advisory
Agreement, or any supplement thereto, between the Fund and the
Adviser.

5. Each of the Funds shall pay, from the assets of each of their
portfolios, that portion of the Bond's premium which is a
fraction of the total premium which, on the date of payment,
each respective portfolio's total net assets bears to the
combined total net assets of all of the Funds.

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
in triplicate in Montgomery, Ohio on the eighteenth day of November, 1998.

OHIO NATIONAL FUND, INC.

By:
-------------------------
John J. Palmer
President

ONE FUND, INC.

By:
-------------------------
John J. Palmer
President

DOW TARGET VARIABLE FUND LLC

By:
-------------------------
John J. Palmer
President

OHIO NATIONAL INVESTMENTS, INC.

By:
-------------------------
Joseph P. Brom
President

<PAGE> 1

[OHIO NATIONAL FINANCIAL SERVICES LETTERHEAD]

[OHIO NATIONAL FINANCIAL SERVICES LOGO]

September 22, 1998

Board of Managers
Dow Target Variable Fund LLC
One Financial Way
Montgomery, Ohio 45242

Re: Registration of Membership Interests
Dow Target Variable Fund LLC
Opinion of Counsel

Gentlemen:

In my capacity as legal counsel for Dow Target Variable Fund LLC (the "Fund"), I
have supervised the organization and lawful operation of the Fund and the
Issuance of the Fund's membership interests. In such capacity I have also
participated in the preparation of the Fund's Registration Statement on Form
N-1A and the filing of such Registration Statement under the Securities Act of
1933 and with respect to the membership interests of the Fund.

Based upon such examination of law and such company organization records and
other documents as in my judgment are necessary or appropriate, I am of the
opinion that all necessary and required proceedings have been taken in
connection with the issuance of the membership interests being registered, and
all such membership interests, when sold, will be legally issued, fully paid and
nonassessable.

I hereby consent to the filing of this letter as an exhibit to the Registration
Statement for the Fund.

Sincerely,

/s/ RONALD L. BENEDICT
---------------------------
Ronald L. Benedict
Secretary and Legal Counsel

RLB:mam