<PAGE> 1
File No. 2-67464
File No. 811-3015
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Post-Effective Amendment No. 31 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 20 /X/
OHIO NATIONAL FUND, INC.
(Exact Name of Registrant)
237 William Howard Taft Road
Cincinnati, Ohio 45219
(Address of Principal Executive Office)
Area Code (513) 559-6316
(Registrant's Telephone Number)
Ronald L. Benedict, Secretary
Ohio National Fund, Inc.
237 William Howard Taft Road
Cincinnati, Ohio 45219
(Name and Address of Agent for Service)
Notice to:
W. Randolph Thompson, Esq.
Of Counsel
Jones & Blouch L.L.P.
Suite 405 West
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
Approximate Date of Proposed Public Offering: as soon after the effective date
of this amendment as is practicable.
Registrant has heretofore registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2 and on February 23, 1996 filed
its Rule 24f-2 Notice for its most recent fiscal year.
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)(i)
---
X on May 1, 1996 pursuant to paragraph (a)(i)
---
75 days after filing pursuant to paragraph (a)(ii)
---
on (date) pursuant to paragraph (a)(ii) of Rule 485.
---
If appropriate, check the following box:
this post-effective amendment designates a new effective date
--- for a previously filed post-effective amendment.
<PAGE> 2
OHIO NATIONAL FUND, INC.
CROSS REFERENCE TO ITEMS
REQUIRED BY RULE 404(a)
<TABLE>
<CAPTION>
N-1A Item of Part A Caption in Prospectus
- ------------------- ---------------------
<S> <C>
1. Cover Page
2. Not Applicable
3. Financial Highlights
4. General Description of the Fund; Investment Objectives and Policies;
Investment Restrictions
5. Management of the Fund
6. Capital Stock, Dividends, Distributions and Taxes
7. Purchase and Redemption of Shares
8. Purchase and Redemption of Shares
9. Not Applicable
<CAPTION>
Caption in Statement of
N-1A Item of Part B Additional Information
- ------------------- -----------------------
<S> <C>
10. Cover Page
11. Table of Contents
12. The Fund
13. Investment Objectives and Policies (Money Market Instruments); Investment
Restrictions (Hedging Transactions, Covered Call Options and Secured Put
Options, Risk Factors with Options, Futures Contracts, Options on Futures
Contracts and Financial Indexes, Risk Factors with Futures and Options on
Futures, Risk Factors with Foreign Investments); Condensed Financial
Information (Portfolio Turnover)
14. Management of the Fund (Directors and Officers of the Fund)
15. Management of the Fund (Controlling Shareholders)
16. Management of the Fund (Investment Advisory and Other Services); Experts
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Caption in Statement of
N-1A Item of Part B Additional Information
- ------------------- -----------------------
<S> <C>
17. Brokerage Allocation
18. Not Applicable
19. Purchase and Redemption of Shares
20. Tax Status
21. Total Return
22. Financial Highlights (Current Yield of Money Market Portfolio)
23. Financial Statements
</TABLE>
<PAGE> 4
PART A.
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 5
OHIO NATIONAL FUND, INC.
237 WILLIAM HOWARD TAFT ROAD
CINCINNATI, OHIO 45219
TELEPHONE (513) 559-6316
MAY 1, 1996
Ohio National Fund, Inc. (the "Fund") is a series investment company which
consists of nine separate investment portfolios that seek the following
investment objectives:
EQUITY PORTFOLIO - long-term growth of capital by investing principally in
common stocks or other equity securities. Current income is a secondary
objective.
MONEY MARKET PORTFOLIO- maximum current income consistent with preservation of
capital and liquidity by investing in high quality money market instruments.
BOND PORTFOLIO - high level of return consistent with preservation of capital by
investing primarily in high quality intermediate and long-term debt securities.
OMNI PORTFOLIO - high level of long-term total return consistent with
preservation of capital by investing in stocks, bonds and money market
instruments.
INTERNATIONAL PORTFOLIO - long-term capital growth by investing primarily in
common stocks of foreign companies.
CAPITAL APPRECIATION PORTFOLIO - maximum capital growth by investing primarily
in common stocks that are (1) considered to be undervalued or temporarily out of
favor with investors, or (2) expected to increase in price over the short term.
SMALL CAP PORTFOLIO - maximum capital growth by investing primarily in common
stocks of small and medium size companies.
GLOBAL CONTRARIAN PORTFOLIO - long-term growth of capital by investing in
foreign and domestic securities believed to be undervalued or presently out of
favor.
AGGRESSIVE GROWTH PORTFOLIO - capital growth.
The Fund's shares are not offered directly to the public but are purchased
principally for the account of certain separate accounts of The Ohio National
Life Insurance Company ("ONLI"), Ohio National Life Assurance Corporation
("ONLAC") and other insurers. Some variable contracts do not permit allocations
to all portfolios of the Fund. The accompanying variable contract prospectus
identifies the portfolios available under that contract.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE FUND THAT A
PROSPECTIVE PURCHASER OF A VARIABLE CONTRACT DESCRIBED IN THE ACCOMPANYING
PROSPECTUS OUGHT TO KNOW BEFORE PURCHASING SUCH A CONTRACT. THIS PROSPECTUS
SHOULD BE RETAINED FOR FUTURE REFERENCE. ADDITIONAL INFORMATION ABOUT THE FUND
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN A STATEMENT OF
ADDITIONAL INFORMATION, DATED MAY 1, 1996, WHICH IS INCORPORATED HEREIN BY
REFERENCE. THE STATEMENT OF ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST AND
WITHOUT CHARGE BY WRITING OR CALLING THE FUND AT THE ADDRESS SHOWN ABOVE.
INVESTMENTS IN THE MONEY MARKET PORTFOLIO ARE NEITHER INSURED NOR GUARANTEED BY
THE UNITED STATES GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE MONEY MARKET
PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $10 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Financial Highlights...................................................................................................... 2
General Description of the Fund........................................................................................... 6
Investment Objectives and Policies........................................................................................ 7
Investment Restrictions................................................................................................... 11
Management of the Fund.................................................................................................... 14
Capital Stock............................................................................................................. 16
Dividends, Distributions and Taxes........................................................................................ 17
Purchase and Redemption of Shares......................................................................................... 17
Fund Performance.......................................................................................................... 18
</TABLE>
FINANCIAL HIGHLIGHTS
OF
OHIO NATIONAL FUND, INC.
FOR THE TEN YEARS ENDED DECEMBER 31, 1995
The following information for each of the years indicated herein has been
audited by KPMG Peat Marwick LLP, independent certified public accountants, and
is an integral part of the Fund's audited financial statements which appear in
the Statement of Additional Information (which may be obtained by variable
contract owners and prospectus purchasers), incorporated by reference herein,
and should be read in conjunction with those financial statements.
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $23.20 $23.90 $21.63 $20.61 $18.02 $20.09 $17.99
------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income .50 .45 .41 .50 .60 .86 .71
Net realized and unrealized
gains (losses) on investments
and foreign currency
transactions 5.56 (.39) 2.57 1.02 2.97 (1.62) 3.42
------ ------ ------ ------ ------ ------ ------
Total from investment operations 6.15 .06 2.98 1.52 3.57 (.76) 4.13
------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income (.39) (.44) (.42) (.50) (.63) (.87) (.66)
Distributions from realized
capital gains (.38) (.32) (.29) - (.35) (.44) (1.37)
------ ------ ------ ------ ------ ------ ------
Total distributions (.77) (.76) (.71) (.50) (.98) (1.31) (2.03)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $28.58 $23.20 $23.90 $21.63 $20.61 $18.02 $20.09
====== ====== ====== ====== ====== ====== ======
Total return(a) 27.20% 0.25% 14.09% 7.55% 20.18% (3.85%) 23.21%
====== ====== ====== ====== ====== ====== ======
Ratios/supplemental data:
Net Assets, end of period
(000's omitted) $175,695 $123,327 $109,858 $87,396 $68,164 $49,209 $42,835
Ratio of expenses to
average net assets .73% .62% .63% .65% .66% .69% 0.70%
Ratio of net investment
income to average
net assets 1.90% 1.90% 1.91% 2.44% 3.12% 4.75% 3.55%
Portfolio turnover rate 14% 8% 18% 12% 23% 5% 16%
</TABLE>
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
- ------------------------------------------------------------------------
1988 1987 1986
---- ---- ----
<S> <C> <C> <C>
Net asset value,
beginning of period $16.82 $15.94 $15.15
------ ------ ------
Income from investment operations:
Net investment income .66 .53 .44
Net realized and unrealized
gains (losses) on investments
and foreign currency
transactions 1.86 1.22 3.10
------ ------ ------
Total from investment operations 2.52 1.75 3.54
------ ------ ------
Less distributions:
Dividends from net
investment income (.67) (.50) (.44)
Distributions from realized
capital gains (.68) (.37) (2.31)
------ ------ ------
Total distributions (1.35) (.87) (2.75)
------ ------ ------
Net asset value, end of period $17.99 $16.82 $15.94
====== ====== ======
Total return(a) 15.01% 10.81% 23.31%
====== ====== ======
Ratios/supplemental data:
Net Assets, end of period
(000's omitted) $33,323 $30,828 $23,175
Ratio of expenses to
average net assets 0.71% 0.68% 0.71%
Ratio of net investment
income to average
net assets 3.59% 2.89% 2.50%
Portfolio turnover rate 9% 7% 24%
</TABLE>
2
<PAGE> 7
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income .54 .39 .27 .31 (.54) .76 .86
Net realized and unrealized
gains (losses) on investments
and foreign currency
transactions. - - - - - - -
Total from investment operations. .54 .39 .27 .31 .54 .76 .86
------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income (.54) (.39) (.27) (.31) (.54) (.76) (.86)
Distributions from realized
capital gains - - - -
Total distributions (.54) (.39) (.27) (.31) (.54) (.76) (.86)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
====== ====== ====== ====== ====== ====== ======
Total return(a) 5.62% 4.00% 2.71% 3.12% 5.39% 7.60% 8.56%
====== ====== ====== ====== ====== ====== ======
Ratios/supplemental data:
Net Assets, end of period
(000's omitted) $15,716 $13,058 $19,123 $20,583 $24,230 $26,055 $23,643
Ratio of expenses to
average net assets(c) .44% .39% .53% 0.66% 0.67% 0.68% 0.70%
Ratio of net investment
income to average
net assets(c) 5.39% 3.69% 2.71% 3.16% 5.41% 7.57% 8.51%
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------
1988 1987 1986
---- ---- ----
<S> <C> <C> <C>
Net asset value,
beginning of period $10.00 $10.00 $10.00
------ ------ ------
Income from investment operations:
Net investment income .69 .61 .61
Net realized and unrealized
gains (losses) on investments
and foreign currency
transactions. - - -
Total from investment operations.
.69 .61 .61
Less distributions: ------ ------ ------
Dividends from net
investment income (.69) (.61) (.61)
Distributions from realized
capital gains - - -
Total distributions (.69) (.61) (.61)
------ ------ ------
Net asset value, end of period $10.00 $10.00 $10.00
====== ====== ======
Total return(a) 6.89% 6.10% 6.10%
====== ====== ======
Ratios/supplemental data:
Net Assets, end of period
(000's omitted) $22,796 $21,141 $21,023
Ratio of expenses to
average net assets(c) 0.71% 0.76% 0.75%
Ratio of net investment
income to average
net assets(c) 6.87% 6.06% 6.12%
</TABLE>
<TABLE>
<CAPTION>
BOND PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 9.70 $10.87 $10.45 $10.37 $ 9.89 $ 9.93 $ 9.72
------ ------ ------ ------ ----- ----- -----
Income from investment operations:
Net investment income .70 .67 .69 .67 .74 .79 .81
Net realized and unrealized
gains (losses) on investments
and foreign currency
transactions 1.08 (1.07) .41 .10 .49 (.05) .20
------ ------ ------ ------ ----- ----- -----
Total from investment operations 1.78 (.40) 1.10 .77 1.23 .74 1.01
------ ------ ------ ------ ----- ----- -----
Less distributions:
Dividends from net
investment income (.55) (.69) (.68) (.69) (.75) (.78) (.80)
Distributions from realized
capital gains - (.08) - - - - -
Total distributions (.55) (.77) (.68) (.69) (.75) (.78) (.80)
------ ------ ------ ------ ----- ----- -----
Net asset value, end of period $10.93 $ 9.70 $10.87 $10.45 $10.37 $ 9.89 $ 9.93
====== ====== ====== ====== ====== ====== ======
Total return(a) 18.90% (3.84%) 10.69% 7.55% 12.96% 7.82% 10.71%
====== ====== ====== ====== ====== ====== ======
Ratios/supplemental data:
Net Assets, end of period
(000's omitted) $18,064 $13,148 $11,979 $8,872 $5,899 $4,686 $4,003
Ratio of expenses to
average net assets .75% .63% .62% 0.65% 0.65% 0.70% 0.70%
Ratio of net investment
income to average%
net assets 6.76% 6.71% 6.33% 6.73% 7.42% 8.02% 8.21%
Portfolio turnover rate 4% 5% 13% 20% 18% 4% -
</TABLE>
<TABLE>
<CAPTION>
BOND PORTFOLIO
- ------------------------------------------------------------------------
1988 1987 1986
---- ---- ----
<S> <C> <C> <C>
Net asset value,
beginning of period $ 9.84 $10.71 $10.36
------ ------ ------
Income from investment operations:
Net investment income .77 .83 .91
Net realized and unrealized
gains (losses) on investments
and foreign currency
transactions (.13) (.76) .35
------ ------ ------
Total from investment operations .64 .07 1.26
------ ------ ------
Less distributions:
Dividends from net
investment income (.76) (.83) (.91)
Distributions from realized
capital gains - (.11) -
Total distributions (.76) (.94) (.91)
------ ------ ------
Net asset value, end of period $ 9.72 $ 9.84 $10.71
====== ====== ======
Total return(a) 6.74% 0.74% 12.49%
====== ====== ======
Ratios/supplemental data:
Net Assets, end of period
(000's omitted) $3,651 $3,830 $3,756
Ratio of expenses to
average net assets 0.79% 1.09% 0.91%
Ratio of net investment
income to average%
net assets 7.50% 7.78% 8.37%
Portfolio turnover rate 27% 13% 70%
</TABLE>
3
<PAGE> 8
<TABLE>
<CAPTION>
OMNI PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $14.76 $15.38 $14.14 $13.63 $12.16 $12.76 $11.89
------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income .58 .55 .58 .63 .65 .78 .75
Net realized and unrealized
gains (losses) on investments
and foreign currency
transactions 2.72 (.63) 1.21 .51 1.49 (.54) 1.07
------ ------ ------ ------ ------ ------ ------
Total from investment operations 3.30 (.08) 1.79 1.14 2.14 .24 1.82
------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income (.46) (.54) (.54) (.63) (.67) (.78) (.73)
Distributions from realized
capital gains - - - - - (06) (.22)
---- ----- -----
Total distributions (.46) (.54) (.55) (.63) (.67) (.84) (.95)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $17.60 $14.76 $15.38 $14.14 $13.63 $12.16 $12.76
====== ====== ====== ====== ====== ====== ======
Total return(a) 22.75% (0.53%) 12.85% 8.61% 18.14% 1.92% 15.45%
====== ====== ====== ====== ====== ====== ======
Ratios/supplemental data:
Net Assets, end of period
(000's omitted) $109,577 $84,966 $74,208 $46,415 $36,484 $35,435 $31,842
Ratio of expenses to
average net assets .75% .62% .62% 0.65% 0.67% 0.69% 0.70%
Ratio of net investment
income to average
net assets 3.56% 3.67% 3.74% 4.66% 5.04% 6.32% 5.99%
Portfolio turnover rate 10% 7% 17% 16% 15% 7% 24%
</TABLE>
<TABLE>
<CAPTION>
OMNI PORTFOLIO
- -------------------------------------------------------------------------
1988 1987 1986
---- ---- ----
<S> <C> <C> <C>
Net asset value,
beginning of period $11.23 $12.18 $10.95
------ ------ ------
Income from investment operations:
Net investment income .67 .59 .49
Net realized and unrealized
gains (losses) on investments
and foreign currency
transactions .99 (.76) 1.45
------ ------ ------
Total from investment operations 1.66 (.17) 1.94
------ ------ ------
Less distributions:
Dividends from net
investment income (.66) (.58) (.48)
Distributions from realized
capital gains (.34) (.20) (.23)
------ ------ ------
Total distributions (1.00) (.78) (.71)
------ ------ ------
Net asset value, end of period $11.89 $11.23 $12.18
====== ====== ======
Total return(a) 15.05% (1.70%) 17.94%
====== ====== ======
Ratios/supplemental data:
Net Assets, end of period
(000's omitted) $26,096 $28,032 $19,637
Ratio of expenses to
average net assets 0.71% 0.69% 0.60%
Ratio of net investment
income to average
net assets 5.40% 4.88% 4.72%
Portfolio turnover rate 14% 12% 29
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL CAPITAL APPRECIATION SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO
1995 1994 1993(e) 1995 1994(e) 1995 1994(e)
---- ---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.30 $12.48 $10.00 $10.25 $10.00 $11.99 $10.00
------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) .31 .16 .02 .39 .22 (.02) .18
Net realized and unrealized
gains (losses) on investments and
foreign currency transactions 1.28 .84 2.47 1.85 .23 3.95 1.94
------ ------ ------ ------ ------ ------ ------
Total from investment operations 1.59 1.00 2.49 2.24 .45 3.93 2.12
------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income (.28) (.12) (.01) (.29) (.20) (.07) (.13)
Distributions from realized
capital gains (.23) (.06) - (.21) - - -
------ ------ ------ ------ ------ ------ ------
Total distributions (.51) (.18) (.01) (.50) (.20) (.07) (1.31)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $14.38 $13.30 $12.48 $11.99 $10.25 $15.85 $11.99
====== ====== ====== ====== ====== ====== ======
Total return(a) 12.10% 8.07% 24.96% 22.62% 4.53% 33.01% 21.26%
====== ====== ====== ====== ====== ====== ======
Ratios/supplemental data:
Net Assets, end of period
(000's omitted) $90,594 $62,875 $17,477 $19,320 $ 6,755 $16,038 $ 3,256
Ratio of expenses to
average net assets(d) 1.12% 1.05% 1.13%(b) .96% .98%(b) .96% .91%(b)
Ratio of net investment
income to average
net assets(d) 2.29% 1.23% .41%(b) 3.47% 3.24%(b) (11%) 3.27%(b)
Portfolio turnover rate 7% 16% 8% 32% 20% 75% 222%
</TABLE>
4
<PAGE> 9
<TABLE>
<CAPTION>
GLOBAL AGGRESSIVE
CONTRARIAN GROWTH
1995(e) 1995(e)
------- -------
<S> <C> <C>
Net asset value,
beginning of period $10.00 $10.00
------ ------
Income from investment operations:
Net investment income (loss) .13 1.56
Net realized and unrealized
gains (losses) on investments and
foreign currency transactions .75 1.08.
--- -----
Total from investment operations .88 2.64
--- ----
Less distributions:
Dividends from net
investment income (.08) (.80)
Distributions from realized
capital gains - -
Total distributions (.08) (.80)
----- -----
Net asset value, end of period $10.80 $11.84
====== ======
Total return(a)
8.89% 26.95%
===== ======
Ratios/supplemental data:
Net Assets, end of period
(000's omitted) $4,421 $4,005
Ratio of expenses to
average net assets(d) 1.58%(b) . 1.02%(b)
Ratio of net investment
income to average
net assets(d) 1.64%(b) 18.18%(b)
Portfolio turnover rate 6%(b) 1,488%(b)
</TABLE>
FINANCIAL HIGHLIGHTS FOOTNOTES
(a) This total return information does not reflect expenses that apply to any
separate account or the related variable annuity or variable life insurance
contracts. Inclusion of those charges would reduce the total return figures
for all periods shown.
(b) Annualized
(c) On and after June 17, 1993, the investment adviser has waived part of the
management fee with respect to the Money Market Portfolio, to the extent
such fee exceeds an annual rate of 0.25% of the Money Market Portfolio's
daily net asset value. Had the fee not been waived, the annualized ratio of
net expenses to average net assets would have been 0.59%, 0.59% and 0.63%,
and the annualized ratio of net investment income to average net assets
would have been 5.27%, 3.51% and 2.60%, respectively, for 1995, 1994 and
1993.
(d) The investment adviser reimbursed certain operating expenses of the
International Portfolio in 1993, the Capital Appreciation and Small Cap
Portfolios in 1994, and the Global Contrarian Portfolio in 1995. Had the
investment adviser not reimbursed such expenses, the annualized ratio of
expenses to average net assets would have been 1.39% and the annualized
ratio of net investment income to average net assets would have been 0.15%
for the International Portfolio in 1993. Had the investment adviser not
reimbursed such expenses of the Capital Appreciation and Small Cap
Portfolios, the annualized ratio of expenses to average net assets would
have been 1.05% and 0.95%, respectively. The annualized ratio of net
investment income to average net assets would have been 3.18% and 3.24%,
respectively, for the Capital Appreciation and Small Cap Portfolios in
1994. Had the investment adviser not reimbursed such expenses of the Global
Contrarian Portfolio, the annualized ratio of expenses to average net
assets would have been 1.90% and the annualized ratio of net investment
income to average net assets would have been 1.32% for the Global
Contrarian Portfolio in 1995.
5
<PAGE> 10
(e) Total return was calculated on an aggregate basis (not annualized) for the
International Portfolio from the commencement of its operations on April
30, 1993, through December 31, 1993, for the Capital Appreciation and
Small Cap Portfolios, from their commencement of operations, May 1, 1994,
through December 31, 1994, and for the Global Contrarian and Aggressive
Growth Portfolios from their commencement of operations, March 31, 1995,
through December 31, 1995.
GENERAL DESCRIPTION OF THE FUND
The Fund, incorporated under the laws of Maryland on March 6, 1980, is an
open-end diversified management investment company commonly referred to as a
"mutual fund." It is a "no-load" fund which sells and redeems its shares at
net asset value without any sales or redemption charge. The Fund is organized
as a "series" company, which means that it has several different investment
portfolios. Currently there are nine investment portfolios: the Equity
Portfolio, the Money Market Portfolio, the Bond Portfolio, the Omni Portfolio,
the International Portfolio, the Capital Appreciation Portfolio, the Small Cap
Portfolio, the Global Contrarian Portfolio and the Aggressive Growth Portfolio.
Interests in each portfolio are represented by a separate class of common
stock, par value $1. Each class represents an undivided interest in the assets
of the portfolio attributable to that class.
Fund shares are currently offered only to the separate accounts of ONLI (a
mutual life insurance company organized under Ohio law) and ONLAC (a stock life
insurer organized under Ohio law and wholly owned by ONLI), but may in the
future be offered to the separate accounts of other life insurance companies
(the "separate accounts"). Such separate accounts use Fund shares as the
underlying investment medium to support certain benefits under variable annuity
and variable life insurance contracts. As is described in the accompanying
variable contract prospectus, each contract owner will select the Fund
portfolio or portfolios that will support certain benefits under his or her
contract. The value of such benefits will vary with the investment experience
of the underlying portfolio(s) of the Fund. Consequently, each prospective
contract owner should carefully review the objectives, policies and risks of
each portfolio and the operation of the Fund generally as set forth in this
prospectus.
It is conceivable that in the future it may become disadvantageous for both
variable life and variable annuity separate accounts to invest in the Fund.
Although ONLI, ONLAC and the Fund do not currently foresee any such
disadvantage, the Board of Directors of the Fund will monitor events in order
to identify any material conflict between variable life and variable annuity
contract owners and to determine what action, if any, should be taken in
response thereto. Such action could include the withdrawal of a separate
account from participation in the Fund. Material conflicts could result from
such things as (1) changes in state insurance law; (2) changes in federal
income tax law; (3) changes in the investment management of any portfolio of
the Fund; or (4) differences between voting instructions given by variable life
and variable annuity contract owners.
The Fund may be used in the future to support benefits under other types of
contracts or for other purposes. Fund shares are not now, and without a change
in applicable law will never be, offered directly to the public. Consequently,
the separate accounts will be the sole shareholders of the Fund. Fund shares
attributable to contracts participating in such separate accounts will be voted
by such separate accounts as directed by the contract owners.
The investment and reinvestment of Fund assets is directed by Ohio National
Investments Inc. (the "Adviser"). See "Management of the Fund," page 14. The
investment and reinvestment of the assets of the following portfolios is
managed by the firms indicated as sub-advisers:
<TABLE>
<CAPTION>
PORTFOLIO SUB-ADVISER
- --------- -----------
<S> <C>
International and Global Contrarian Societe Generale Asset Management Corp. ("SGAM")
Captial Appreciation T. Rowe Price Associates, Inc. ("TRPA")
Small Cap Founders Asset Management, Inc. ("FAM'')
Aggressive Growth Strong Capital Management, Inc. ("SCM")
</TABLE>
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<PAGE> 11
INVESTMENT OBJECTIVES AND POLICIES
Each portfolio has a different investment objective which it pursues through
separate investment policies as described below. The differences in objectives
and policies among the portfolios can be expected to affect the return of each
portfolio and the degree of market and financial risk to which each portfolio
is subject. Financial risk refers to the ability of an issuer of a debt
security to pay principal and interest on such security, and to the earnings
stability and overall financial soundness of an issuer of an equity security.
Market risk refers to the volatility of the price of a security in response to
changes in conditions in the securities markets in general and, particularly in
the case of debt securities, changes in the overall level of interest rates.
There is no assurance that the investment objective of any portfolio will be
realized. The investment objectives of each portfolio discussed below and in
the Statement of Additional Information may not be changed without the approval
of the holders of a majority of the outstanding shares of that portfolio. The
Statement of Additional Information provides a fuller description of the types
of financial instruments in which the Money Market Portfolio may invest and
definitions of debt ratings of nationally recognized statistical rating
organizations.
EQUITY PORTFOLIO
The principal investment objective of the Equity Portfolio is long-term growth
of capital. Current income is a secondary consideration although growth of
income may accompany growth of capital.
This Portfolio will seek to attain its objective of capital growth by investing
primarily in common stocks or securities convertible into, or which carry the
right to buy, common stocks. It may also invest to a limited degree in
non-convertible preferred stocks, debt securities and readily marketable
mortgage notes. When in management's opinion market or economic conditions
warrant a defensive posture, the Portfolio may place any portion of its assets
in investment-grade debt securities, preferred stocks, Government securities or
cash. (The short-term investment position of the Portfolio at December 31,
1995 was 14.1%). The Portfolio may also maintain reasonable amounts in cash or
short-term debt securities pending selection of investments in accordance with
its policies.
This Portfolio will invest primarily in securities listed on national
securities exchanges, but from time to time it may also purchase securities
traded in the over-the-counter market and foreign securities. In general,
investment in shares of this Portfolio should involve greater market and
financial risk than an investment in any of the Money Market, Bond, Omni or
Capital Appreciation Portfolios, but less risk than investments in the
International, Small Cap, Global Contrarian or Aggressive Growth Portfolios.
MONEY MARKET PORTFOLIO
The objective of the Money Market Portfolio is to obtain maximum current income
consistent with preservation of principal and liquidity. This Portfolio seeks
to achieve its objective by investing in high quality money market instruments,
including:
1. obligations maturing in 13 months or less and issued or guaranteed as to
principal and interest by the United States Government, or any agency or
authority controlled or supervised by and acting as an instrumentality of
the U.S. Government pursuant to authority granted by Congress;
2. commercial paper, certificates of deposit and bankers' acceptances that
have received the highest rating by any two nationally recognized
statistical rating organizations ("NRSRO's"), or the highest rating by one
NRSRO if that is the only NRSRO having rated the security, or whose issuer
has received such a rating or ratings with respect to a class of
short-term debt obligations that is now comparable in priority and
security to those to be purchased;
3. commercial paper, certificates of deposit, bankers' acceptances or other
corporate obligations maturing in 13 months or less and which, although
not rated by any NRSRO, the Board of Directors determines to be of a
quality comparable to that of instruments receiving either of the two
highest ratings, provided, that any security determined to be comparable
in quality to the second highest rating shall be included in the 5%
limitation under item 5; and
4. repurchase agreements with respect to any of the foregoing obligations.
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<PAGE> 12
5. as to no more than 5% of the Portfolio's assets, in commercial paper,
certificates of deposit or bankers' acceptances receiving the second
highest rating by any two NRSRO's (or by one NRSRO if (a) that is the only
NRSRO having rated the security or (b) one other NRSRO has given the
security its highest rating), or whose issuer has received such a rating
or ratings with respect to a class of short-term debt obligations that is
now comparable in priority and security to those to be purchased,
provided, that no more than $1 million (or 1% of Portfolio assets, if
greater) may be invested in such securities of any one issuer;
This Portfolio may invest up to 50% of its assets in the securities of foreign
issuers (including private issuers and foreign governments or political
subdivisions, agencies or instrumentalities of foreign governments), provided
they meet the above quality standards and they are denominated in U.S. dollars
and held in custody in the United States.
The investments of this Portfolio in such money market instruments are subject
to the terms and conditions of Rule 2a-7 under the Investment Company Act of
1940, including the requirement that they be limited to those instruments which
the Board of directors determines, present minimal credit risks.
Generally, this Portfolio will purchase money market securities with the
intention of holding them until maturity, at which time they will be redeemed.
To the extent it is able to do so, the Portfolio will not realize any gain or
loss on these securities. There may be times, however, when it may be
necessary or appropriate to sell securities prior to maturity in order to
shorten the Portfolio's average maturity, to meet redemptions, or because of a
reevaluation of an issuer's credit-worthiness.
Rule 2a-7 permits this Portfolio to value its assets on the basis of amortized
cost as a means of maintaining the net asset value of the Money Market shares
at $10 per share. Under the terms of the rule, the Portfolio may neither
purchase any debt security having a remaining maturity of more than 397 days
nor maintain a dollar-weighted average portfolio maturity of more than 90 days.
Under the amortized cost method, all such debt securities are valued at their
cost on the date of acquisition with a daily adjustment being made to accrued
income to reflect amortization of premium or accretion of discount to the
maturity date. If such method results in a deviation in excess of 1/2 of 1%
from value based on available market quotations, the Board of Directors will
promptly consider what, if any, action it should initiate. Such action may
include selling portfolio instruments; withholding dividends; recapitalizing
outstanding shares; requiring shareholders to contribute shares to capital or
using available market quotations.
An investor's rate of return will vary as short-term interest rates vary. The
rate of return will also be affected by other factors such as the operating
expenses of the Portfolio and the sales, if any, of portfolio securities prior
to maturity. On balance, however, investment in this Portfolio should involve
less market and financial risk than an investment in any other portfolio.
BOND PORTFOLIO
The principal investment objective of the Bond Portfolio is to obtain a high
level of income and opportunity for capital appreciation consistent with
preservation of capital. Investments will be made primarily in
intermediate-term and long-term fixed-income securities.
At least 80% of the total assets of this Portfolio (exclusive of cash and
Government securities) will be invested in:
1. publicly traded, investment grade, non-convertible corporate debt
securities issued by United States corporations and assigned within the
four highest bond ratings by Moody's or Standard and Poor's; and
2. corporate debt securities used for short-term investment and limited to
the top grade of these two rating services.
Up to 20% of the total assets of the Portfolio may be invested in: (1)
securities having high potential for capital appreciation; (2) preferred
stocks, convertible securities and securities carrying warrants to purchase
equity securities; and (3) debt securities issued by U.S. banks and savings
and loan associations which at the date of investment have capital, surplus and
undivided profits as of the date of their most recent financial statements in
excess of $100,000,000.
This Portfolio will not invest in common stocks directly, but it may retain for
reasonable periods of time up to 10% of its total assets in common stocks
acquired upon the conversion of debt securities or upon the exercise of
warrants acquired with debt securities.
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<PAGE> 13
It is expected that this Portfolio will include debt securities with varying
maturities selected from various industries, depending upon the Adviser's
evaluation of current and anticipated market conditions. The market values of
debt instruments will vary depending upon their respective yields; therefore,
the net asset value per share of the Portfolio will change from time to time as
the general level of interest rates changes. Consequently, an investment in
the shares of this Portfolio involves substantial market risk, but should
involve less financial risk than an investment in any of the portfolios other
than the Money Market Portfolio.
OMNI PORTFOLIO
The principal investment objective of the Omni Portfolio is to realize a high
level of long-term total rate of return consistent with prudent investment
risks. Total rate of return consists of current income including dividends,
interest and discount accruals and capital appreciation.
This Portfolio will seek to attain its objectives by investing in any of the
securities in which the Equity, Money Market and Bond Portfolios may invest.
The mix of investments will be adjusted from time to time among the various
market sectors (stocks, bonds and money market instruments) to capitalize on
perceived variations in return potential produced by the interaction of
changing market and economic conditions. The Portfolio may at times be
invested in less than all three of the market sectors. No minimum portion of
the Portfolio is required to be invested in any sector. The frequency of
changes in investment mix depends upon market and economic conditions.
The Portfolio's principal investment objective is supplemented and limited by
the investment objectives, policies and restrictions established for each of
the market sectors. Within the equity sector, the Portfolio will attempt to
obtain long-term growth of capital while current income will be a secondary
consideration. Within the bond sector, the Portfolio will attempt to obtain a
high level of income and opportunity for capital appreciation consistent with
preservation of capital. Within the money market sector, the Portfolio will
attempt to obtain maximum current income consistent with the preservation of
principal and liquidity. Investment in this Portfolio involves all of the
risks associated with investing in the other portfolios. In addition, there is
the risk that at any given time this Portfolio will invest too much or too
little in each of the respective market sectors.
INTERNATIONAL PORTFOLIO
The principal investment objective of the International Portfolio is to obtain
long-term capital growth by investing primarily in common stocks (and
securities convertible into common stocks) of foreign companies. This
Portfolio may also invest in fixed-income securities of foreign issuers. When
deemed appropriate for short-term investment or for defensive purposes, it may
invest in short- term debt instruments of U.S. or foreign issuers, in U.S.
Government obligations, or in U.S. common stocks.
This Portfolio enables variable contractowners to diversify their investment by
participating in companies and economies outside the U.S. However, investing
in foreign securities may involve a greater degree of risk than investing in
domestic securities because of the possibilities of currency exchange rate
fluctuations, currency exchange controls, less publicly available information,
more volatile markets, thinner markets (less trading volume), slower settlement
of trades, greater likelihood of trade failures, less securities regulation,
less favorable tax provisions, lack of uniformity of accounting, auditing and
financial reporting standards, war and expropriation. Foreign investments also
generally involve higher brokerage commissions, higher custodian costs, and
currency conversion fees. Investment in this Portfolio will generally involve
a greater degree of market and financial risk than any of the portfolios except
for the Global Contrarian Portfolio.
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<PAGE> 14
CAPITAL APPRECIATION PORTFOLIO
The principal investment objective of the Capital Appreciation Portfolio is to
maximize capital growth through investment primarily in common stocks. This
Portfolio seeks to achieve capital appreciation by investing in securities of
companies that are undervalued in relation to the company's assets, earnings,
market position or breakup value; are currently out of favor in the investment
community; or have attractive growth potential in their business markets.
Securities are also sought that have been over-discounted due to adverse
operating results, deteriorating economic or industry conditions, or
unfavorable publicity.
The Portfolio may also invest in fixed-income securities and money market
instruments to preserve its principal value during uncertain or declining
market conditions. The Portfolio's total return will consist principally of
capital appreciation (or depreciation) and, to a lesser extent, current income.
The Portfolio's active management may result in a higher portfolio turnover
rate and correspondingly higher brokerage costs. Investment in this Portfolio
will generally involve market and financial risks that are comparable to, or
somewhat less than, those of the Equity Portfolio.
SMALL CAP PORTFOLIO
To achieve its investment objective of capital appreciation, this Portfolio
invests primarily in the common stocks of small and medium sized companies.
Ordinarily, these companies are not listed on a national securities exchange
but will be traded over the counter. Under normal market conditions, at least
65% of this Portfolio's assets will be invested in common stocks of companies
with market capitalizations of less than $1 billion. However it may also
invest in larger companies if they appear to present better prospects for
capital appreciation. This Portfolio may invest up to 30% of its assets in
foreign securities.
Small and medium sized companies selected for this Portfolio are generally
those that are still in the developing stages of their life cycles and are able
to achieve rapid growth in sales, earnings and share prices. Investments in
such companies involve greater volatility and risk than is customarily
associated with more established companies because such companies often have
limited product lines, markets or financial resources, and their securities may
be subject to more abrupt or erratic movements in price than securities of
larger companies or the market averages. Investment in this Portfolio
generally involves a higher degree of market and financial risks than those of
the Equity Portfolio.
GLOBAL CONTRARIAN PORTFOLIO
The objective of the Global Contrarian Portfolio is to provide long-term growth
of capital by investing in foreign and domestic securities that, in the
judgment of the portfolio manager, are undervalued or presently our of favor
with other investors but have positive prospects for eventual appreciation.
While this Portfolio will primarily invest in common stocks (and securities
convertible into common stocks), it may also invest in fixed income securities
that appear to be undervalued or out of favor.
A substantial portion (at least 25%) of this Portfolio will be invested in
foreign securities, in at least three countries, under normal market
conditions. To that extent, the risk factors described in the second paragraph
under "International Portfolio," above, will apply. In addition,
"contrarian" investing generally involves substantial risks, particularly in
the short term. Companies or markets that appear to be undervalued or are out
of favor with investors may remain so for an extended period of time or may
never recover. Therefore, this Portfolio should be considered primarily for
long-term investments. Investment in this Portfolio generally involves a high
degree of market and financial risk.
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<PAGE> 15
AGGRESSIVE GROWTH PORTFOLIO
The investment objective of the Aggressive Growth Portfolio is to seek capital
growth. The Portfolio invests in a diversified portfolio of securities
believed to represent attractive growth opportunities. The Portfolio normally
emphasizes equity securities, although it has the flexibility to invest in any
type of security that is believed to have the potential for capital
appreciation. The Portfolio may invest up to 100% of its assets in equity
securities, including common stocks, preferred stocks, securities that are
convertible into common or preferred stocks, such as convertible bonds, and
warrants. The Portfolio may invest up to 100% of its assets in intermediate -
to long-term corporate or U.S. government debt securities. When market
conditions warrant a temporary defensive position, the Portfolio may invest
without limitation in cash and short-term, fixed-income securities, including
U.S. government securities, commercial paper, banker's acceptances,
certificates of deposit, and time deposits. Although the debt securities in
which the Portfolio invests will be primarily investment-grade debt securities,
the Portfolio may invest up to 5% of its total assets in non-investment-grade
debt securities. The Portfolio may invest up to 15% of its assets in foreign
securities, which involve certain risks.
The Portfolio seeks to uncover emerging investment trends and attractive growth
opportunities. In its search for potential investments, the Portfolio
attempts to identify companies that are poised for accelerated earnings growth
due to innovative products or services, new management, or favorable economic
or market cycles. These companies may be small, unseasoned firms in the early
stages of development, or they may be mature organizations. The Portfolio
engages in substantial short-term trading, which involves significant risk and
may be deemed speculative. Such trading results in a higher portfolio turnover
rate and correspondingly higher brokerage costs. Investment in this Portfolio
involves a high degree of market and financial risk.
INVESTMENT RESTRICTIONS
The Fund is subject to a number of restrictions in implementing its investment
policies. The following is a list of certain significant restrictions for all
portfolios other than the Capital Appreciation and Aggressive Growth
Portfolios, the restrictions for which are listed separately. The Statement of
Additional Information provides a complete list of all investment restrictions
applicable to the Fund. Restrictions number 4, 7 and 8 are nonfundamental
policies of the Small Cap and Global Contrarian Portfolios, and restriction
number 8 is a nonfundamental policy of the Small Cap Portfolio, and as such may
be changed by the Board of Directors. Otherwise, none of the following
restrictions may be changed without the affirmative vote of a majority of the
outstanding voting securities of the Fund or of a particular portfolio, as
appropriate.
Each portfolio of the Fund (other than the Capital Appreciation and Aggressive
Growth Portfolios) will not:
1. invest more than 5% of the value of the total assets of such portfolio in
the securities of any one insurer (except U.S. Government securities);
2. purchase more than 10% of the outstanding voting securities of any one
issuer, and the Money Market Portfolio will not acquire the voting
securities of any issuer except in connection with a merger, consolidation
or other reorganization;
3. invest more than 25% of the value of its total assets in any one industry,
except that each portfolio may invest more than 25% of the value of its
total assets in obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities or in certificates of deposit, bankers'
acceptances, bank time deposits or other obligations of banks or financial
institutions. However, it is the intention of management not to invest in
time deposits which involve any penalty or other restriction on
withdrawal;
4. invest more than 10% of the value of its assets (15% in the case of the
Small Cap Portfolio) in securities or other investments, including
repurchase agreements maturing in more than seven days, that are subject
to legal or contractual restrictions upon resale or are otherwise not
readily marketable;
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<PAGE> 16
5. borrow money, except for temporary or emergency purposes from banks, in
which event the aggregate amount borrowed shall not exceed 5% of the value
of the assets of the portfolio. In the case of such borrowing, each
portfolio may pledge, mortgage or hypothecate up to 5% of its assets.
Reverse repurchase agreements are not considered to be borrowing money for
purposes of this restriction;
6. purchase or sell commodities or commodity contracts except that each
portfolio other than the Money Market Portfolio may, for hedging purposes,
purchase and sell financial futures contracts and options thereon within
the limits of investment restriction 7 below;
7. purchase or sell put or call options, except that each portfolio other
than the Money Market Portfolio may, for hedging purposes, (a) write call
options traded on a registered national securities exchange if such
portfolio owns the underlying securities subject to such options, and
purchase call options for the purpose of closing out positions in options
it has written, (b) purchase put options on securities owned, and sell
such options in order to close its positions in put options, (c) purchase
and sell financial futures contracts and options thereon, and (d) purchase
and sell financial index options; provided, however, that no option or
futures contract shall be purchased or sold if, as a result, more than
one-third of the total assets of the portfolio would be hedged by options
or futures contracts, and no more than 5% of any portfolio's total assets,
at market value, may be used for premiums on open options and initial
margin deposits on futures contracts;
8. other than the International and Global Contrarian Portfolios, invest in
securities of foreign issuers except that (a) each of the Equity, Bond and
Omni Portfolios may (i) invest up to 15% of their respective assets in
securities of foreign issuers (including private issuers and foreign
governments or political subdivisions, agencies or instrumentalities of
foreign governments), American Depository Receipts, and securities of
United States domestic issuers denominated in foreign currency, and (ii)
invest up to an additional 10% of the assets of the portfolio in
securities issued by foreign governments or political subdivisions,
agencies or instrumentalities thereof, (b) the Small Cap Portfolio may
invest up to 30% of its assets in the securities of such foreign issuers,
and (c) the Money Market Portfolio may invest up to 50% of its assets in
the securities of such foreign issuers, provided the securities are
denominated in U.S. dollars and held in custody in the United States.
(For purposes of this restriction number 8, U.S. dollar denominated
depository receipts traded in domestic markets do not constitute foreign
securities.)
As nonfundamental policies of each portfolio other than the Capital
Appreciation and Aggressive Growth Portfolios, which policies may be changed at
any time by the vote of a majority of the Board of Directors, (a) no portfolio
will invest more than 20% of its assets in securities of issuers located in any
one foreign country, except that up to an additional 5% of its assets may be
invested in securities of issuers located in each of any three of Australia,
Canada, France, Germany, Japan or the United Kingdom; and (b) each portfolio
other than the Money Market Portfolio, in order to hedge against changes in the
exchange rates of foreign currencies in relation to the U.S. dollar, may
engage in forward foreign currency contracts, foreign currency options and
foreign currency futures contracts in connection with the purchase, sale or
ownership of specific securities (but, not more than 5% of a portfolio's assets
may be invested in such currency hedging contracts).
If a percentage restriction is adhered to at the time of an investment, a later
increase or decrease in the investment's percentage of the value of a
portfolio's total assets resulting from a change in such values or assets will
not constitute a violation of the percentage restriction.
CAPITAL APPRECIATION PORTFOLIO FUNDAMENTAL POLICIES
As a matter of fundamental policy, the Portfolio may not:
C.A.1. Borrow money except that the Portfolio may (i) borrow for
non-leveraging, temporary or emergency purposes and (ii) engage in
reverse repurchase agreements and make other investments or engage in
other transactions, which may involve a borrowing, in a manner
consistent with the Portfolio's investment objective and program,
provided that the combination of (i) and (ii) shall not exceed 33 1/3%
of the value of the Portfolio's total assets (including the amount
borrowed) less liabilities (other than borrowings) or such other
percentage permitted by law. Any borrowings which come to exceed this
amount will be reduced in accordance with applicable law.
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<PAGE> 17
The Portfolio may borrow from banks, other portfolios managed by TRPA
or other persons to the extent permitted by applicable law;
C.A.2. Purchase or sell physical commodities; except that it may enter into
futures contracts and options thereon;
C.A.3. Purchase the securities of any issuer if, as a result, more than 25%
of the value of the Portfolio's total assets would be invested in the
securities of issuers having their principal business activities in
the same industry;
C.A.4. Make loans, although the Portfolio may (i) lend portfolio securities
and participate in an interfund lending program with other portfolios
managed by TRPA provided that no such loan may be made if, as a
result, the aggregate of such loans would exceed 33 1/3% of the value
of the Portfolio's total assets; (ii) purchase money market securities
and enter into repurchase agreements; and (iii) acquire
publicly-distributed or privately-placed debt securities and purchase
debt;
C.A.5. Purchase a security if, as a result, with respect to 75% of the value
of its total assets, more than 5% of the value of the Portfolio's
total assets would be invested in the securities of a single issuer,
except securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities;
C.A.6. Purchase a security if, as a result, with respect to 75% of the value
of the Portfolio's total assets, more than 10% of the outstanding
voting securities of any issuer would be held by the Fund (other than
obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities);
C.A.7. Purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the
Portfolio from investing in securities or other instruments backed by
real estate or in securities of companies engaged in the real estate
business);
C.A.8. Issue senior securities except in compliance with the Investment
Company Act of 1940; or
C.A.9. Underwrite securities issued by other persons, except to the extent
that the Portfolio may be deemed to be an underwriter within the
meaning of the Securities Act of 1933 in connection with the purchase
and sale of its portfolio securities in the ordinary course of
pursuing its investment program.
With respect to investment restrictions C.A.1. and C.A.4., the Portfolio will
not borrow from or lend to any other portfolios managed by TRPA unless they
apply for and receive an exemptive order from the SEC or the SEC issues rules
permitting such transactions. The Portfolio has no current intention of
engaging in any such activity and there is no assurance the SEC would grant any
order requested by the Portfolio or promulgate any rules allowing the
transactions.
With respect to investment restriction C.A.2., the Portfolio does not consider
currency contracts or hybrid investments to be commodities.
For purposes of investment restriction C.A.3., U.S., state or local
governments, or related agencies or instrumentalities, are not considered an
industry.
For purposes of investment restriction C.A.4., the Portfolio will consider the
acquisition of a debt security to include the execution of a note or other
evidence of an extention of credit with a term of more than nine months.
AGGRESSIVE GROWTH PORTFOLIO FUNDAMENTAL POLICIES
As a matter of fundamental policy, the Portfolio:
A.G.1. May not with respect to 75% of its total assets, purchase the
securities of any issuer (except securities issued or guaranteed by
the U.S. government or its agencies or instrumentalities) if, as a
result, (i) more than 5% of the Portfolio's total assets would be
invested in the securities of that issuer, or (ii) the Portfolio would
hold more than 10% of the outstanding voting securities of that
issuer.
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<PAGE> 18
A.G.2. May (i) borrow money from banks and (ii) make other investments or
engage in other transactions permissible under the Investment Company
Act of 1940 which may involve a borrowing, provided that the
combination of (i) and (ii) shall not exceed 33 1/3% of the value of
the Portfolio's total assets (including the amount borrowed), less the
Portfolio's liabilities (other than borrowings), except that the
Portfolio may borrow up to an additional 5% of its total assets (not
including the amount borrowed) from a bank for temporary or emergency
purposes (but not for leverage or the purchase of investments). The
Portfolio may also borrow money from the other mutual funds managed
by SCM or other persons to the extent permitted by applicable law.
A.G.3. May not issue senior securities, except as permitted under the
Investment Company Act of 1940.
A.G.4. May not act as an underwriter or another issuer's securities, except
to the extent that the Portfolio may be deemed to be an underwriter
within the meaning of the Securities Act of 1933 in connection with
the purchase and sale of portfolio securities.
A.G.5. May not purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall
not prevent the Portfolio from purchasing or selling options, futures
contracts, or other derivative instruments, or from investing in
securities or other instruments backed by physical commodities).
A.G.6. May not make loans if, as a result, more than 33 1/3% of the
Portfolio's total assets would be lent to other persons, except
through (i) purchases of debt securities or other debt instruments, or
(ii) engaging in repurchase agreements.
A.G.7. May not purchase the securities of any issuer if, as a result, more
than 25% of the Portfolio's total assets would be invested in the
securities of issuers, the principal business activities of which are
in the same industry.
A.G.8. May not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prohibit the Portfolio from purchasing or selling securities or other
instruments backed by real estate or of issuers engaged in real estate
activities.
FOREIGN INVESTMENTS. Investments in foreign securities involve considerations
not normally associated with investing in domestic issuers. For a summary of
such considerations, see the second paragraph under "International Portfolio"
on page 9.
RISKS RELATED TO HEDGING TECHNIQUES. The use for hedging purposes of options
and futures contracts on securities and foreign currencies involves certain
risks, including whether the Adviser or a sub-adviser will be able to predict
correctly the direction of movement of stock prices, interest rates, currency
prices and other economic factors, whether sufficient market liquidity will
exist to permit a portfolio to close out positions taken, and whether price
movements of portfolio securities subject to a hedge follow price movements of
securities or currencies underlying options and futures contracts, none of
which can be assured. A discussion of the risks involved in the use of such
hedging techniques is contained in the Statement of Additional Information.
MANAGEMENT OF THE FUND
The Fund's Board of Directors is responsible for directing the management of
the business and affairs of the Fund. The Board of Directors has the power to
amend the Fund's By-laws, to elect its officers, to declare and pay dividends,
and to exercise all the powers of the Fund except those reserved to the
shareholders.
The Adviser is a wholly-owned subsidiary of ONLI and is located at 237 William
Howard Taft Road, Cincinnati, Ohio 45219. It has served as the Fund's
investment adviser since May 1, 1996. Prior to that date, the Fund's
investment adviser was O.N. Investment Management Company, an indirect
wholly-owned subsidiary of ONLI which, like the Adviser, made use of ONLI's
investment personnel and administrative systems.
The Adviser engages sub-advisers to direct the investments and reinvestments of
certain portfolios.
SGAM, located at 1221 Avenue of the Americas, New York, NY 10020, is owned by
Societe Generale, one of the largest banks in Europe. SGAM and its
predecessors have been investment advisers to international mutual funds since
14
<PAGE> 19
1970. It has managed the assets of the International Portfolio since 1993, and
the Global Contrarian Portfolio since 1995.
TRPA, located at 100 East Pratt Street, Baltimore, MD 21202, manages assets for
various individual and institutional investors, particularly the T. Rowe Price
group of mutual funds. It is the successor to an investment firm founded in
1937. It has managed the assets of the Capital Appreciation Portfolio since
1994.
FAM, located at 2930 East Third Avenue, Denver, CO 80206, manages the assets of
the Founders group of mutual funds as well as private accounts. It was
established in 1938. It has managed the assets of the Small Cap Portfolio
since 1994.
SCM, located at 100 Heritage Reserve, Milwaukee, Wisconsin 53051, manages the
assets of the Strong group of mutual funds as well as pension funds and private
accounts. It was established in 1974. It has managed the assets of the
Aggressive Growth Portfolio since 1995.
The individuals primarily responsible for the day-to-day management of the
Fund's portfolios are Joseph Brom, Michael Boedeker, Stephen Williams,
Jean-Marie Eveillard, Richard Howard, Michael Haines and Richard Strong.
Joseph Brom is president of the Adviser and senior vice president and chief
investment officer of ONLI. He oversees the management of the Equity, Money
Market, Bond and Omni Portfolios. He is a chartered financial analyst with a
bachelor's degree in economics and finance and a law degree from the University
of Wisconsin. He has been an investment officer of ONLI since 1975 and
previously had 15 years of experience in securities management.
Michael Boedeker, a vice president of the Adviser, has managed the Money Market
and Bond Portfolios since 1989. He is a chartered financial analyst with a
bachelor's degree in business and a master of business administration degree in
finance from Indiana University. He has been vice president of fixed income
securities for ONLI since 1989 and previously had over 20 years of experience
in fixed income securities and mutual fund management, most recently as senior
vice president and chief investment officer of Mutual Security Life Insurance
Co. for more than 5 years.
Stephen Williams, a vice president of the Adviser, has managed the Equity and
Omni Portfolios since 1987. He has a bachelor's degree in finance from the
University of Cincinnati. He has been an investment analyst and director of
securities for ONLI since 1977.
Jean-Marie Eveillard, president of SGAM, has managed the International
Portfolio since its inception in 1993. He is a graduate of the Ecole des
Hautes Etudes Commerciales in Paris. He has been president of SoGen
International Fund since 1984 and for 21 years prior to that had been a
securities analyst and mutual fund manager of Societe Generale and SoGen
International Fund.
Richard Howard, president of the T. Rowe Price Capital Appreciation Fund and a
vice president of TRPA, is the portfolio manager of the Capital Appreciation
Portfolio. He is a chartered financial analyst with a bachelor's degree in
engineering from Millikin University and a master of business administration
degree from Harvard. He joined TRPA in 1982 and previously worked as an
industry specialist for Fidelity Management and Research and for CG Investment
Management Company.
Michael Haines, senior vice president of investment of FAM, is the portfolio
manager of the Small Cap Portfolio. He has a bachelor's degree from the
Colorado College and a master of business administration from the University of
Denver. He has been a portfolio manager for FAM since 1990 and for 5 years
prior to that was a financial analyst for FAM.
Richard Strong, chairman of the board of SCM, is the portfolio manager of the
Aggressive Growth Portfolio. He has a bachelor's degree from Baldwin Wallace
College and a master's degree in finance from the University of Wisconsin. He
founded SCM in 1974 after 8 years of investment experience with several other
firms.
15
<PAGE> 20
Under the Investment Advisory Agreement dated May 1, 1996, the Adviser provides
portfolio management and investment advice to the Fund and administers its
other affairs, subject to the supervision of the Fund's Board of Directors. As
compensation for its services to the Equity, Bond and Omni Portfolios, the
Adviser is paid fees at an annual rate of 0.60% of the first $100 million of
each Portfolio's net assets, 0.50% of the next $150 million, 0.45% of the next
$250 million, 0.40% of the next $500 million, 0.30% of the next $1 billion and
0.25% of net assets over $2 billion. For the Money Market Portfolio, the
Adviser is paid a fee at an annual rate of 0.30% of the first $100 million,
0.25% of the next $150 million, 0.23% of the next $250 million, 0.20% of the
next $500 million and 0.15% of net assets over $1 billion. However, as to the
Money Market Portfolio, the Adviser is presently waiving any of its fee in
excess of 0.25%. For the International and Global Contrarian Portfolios, the
Adviser is paid fees at an annual rate of 0.90% of each Portfolio's average
daily net asset value.The Adviser is paid fees at an annual rate of 0.80% of
the average daily net asset value of each of the Capital Appreciation, Small
Cap and Aggressive Growth Portfolios.
Pursuant to Sub-Advisory Agreements dated May 1, 1996, the Adviser (1) pays
SGAM fees at an annual rate of 0.75% of the International and Global Contrarian
Portfolios' average daily net asset value for directing the investment and
reinvestment of those Portfolios' assets, (2) pays TRPA a fee at an annual rate
of 0.70% of the first $5 million, and 0.50% of average daily net asset value in
excess of $5 million for directing the investment and reinvestment of the
Capital Appreciation Portfolio's assets, (3) pays FAM a fee at an annual rate
of 0.65% of the first $75 million, 0.60% of the next $75 million, and 0.55% of
average daily net asset value in excess of $150 million for directing the
investment and reinvestment of the Small Cap Portfolio's assets and (4) pays
SCM a fee at an annual rate of 0.70% of the first $50 million and 0.50% of
average daily net asset value in excess of $50 million for directing the
investment and reinvestment of the Aggressive Growth Portfolio's assets.
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 Fund also incurs other miscellaneous expenses for legal and accounting
services, registration and filing fees, custodial services and shareholder
services.
The Fund's transfer agent and dividend paying agent is The Provident Bank, One
East Fourth Street, Cincinnati, Ohio. The Provident Bank is also the custodian
for those portfolios other than the International and Global Contrarian
Portfolios. The custodian for the International and Global Contrarian
Portfolios is Investors Fiduciary Trust Company, 127 West Tenth Street, Kansas
City, Missouri. For assets held outside the United States, the custodians
enter into subcustodial agreements, subject to approval by the Board of
Directors.
CAPITAL STOCK
The Fund's authorized capital consists of 250 million shares of capital stock
with a par value of $1 per share; 20 million of such shares are allocated to
each of the Equity and Omni Portfolios, and 10 million of such shares are
allocated to each of the other portfolios. These shares may be reallocated by
the Board of Directors to another of the existing portfolios or to any new
portfolio.
All shares of all portfolios have equal voting rights, except that only shares
of a particular portfolio are entitled to vote on matters pertaining only to
that portfolio. Pursuant to the Investment Company Act of 1940 and the rules
and regulations thereunder, certain matters approved by a vote of all Fund
shareholders may not be binding on a portfolio whose shareholders have not
approved such matter.
16
<PAGE> 21
Each issued and outstanding share is entitled to one vote and to participate
equally in dividends and distributions declared by the respective portfolio and
in net assets of such portfolio remaining upon liquidation or dissolution after
satisfaction of outstanding liabilities. The shares of each portfolio, when
issued, will be fully paid and non-assessable, have no preemptive, conversion,
cumulative dividend or similar rights, and are freely transferable. Fund
shares do not have cumulative voting rights, which means that the holders of
more than half of the Fund shares voting for election of directors can elect
all of the directors if they so choose. In such event, the holders of the
remaining shares would not be able to elect any directors.
All of the outstanding Fund shares are owned of record by ONLI and ONLAC and
are held in their various separate accounts. The shares held in connection
with those separate accounts are voted by ONLI or ONLAC in accordance with
instructions received from the owners of variable contracts issued in
connection with such separate accounts and persons receiving payments under the
variable contracts. Fund shares attributable to contracts owned by ONLI and
ONLAC, and Fund shares not attributable to variable contracts, will be voted in
proportion to instructions received from all variable contract owners.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each portfolio seeks to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code. It is the Fund's policy to comply
with the provisions of the Code regarding distribution of investment income and
net realized capital gains so that the Fund will not be subject to federal
income tax on amounts distributed. Consequently, the Fund distributes to its
shareholders each year substantially all of its net investment income and net
realized capital gains (if any). For the Money Market Portfolio, all of the
undistributed net investment income is determined and paid as a dividend to
shareholders of record immediately before each computation of the net asset
value of Money Market shares. For the other portfolios, dividends representing
net investment income will normally be distributed quarterly and any net
realized capital gains will be distributed annually. However, the Fund's Board
of Directors may declare such dividends at more frequent intervals. Dividends
and distributions are automatically reinvested in additional shares of their
respective portfolios at net asset value without a sales charge unless a
shareholder requests that they be paid in cash.
PURCHASE AND REDEMPTION OF SHARES
Fund shares 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. (The net asset value of the Money Market Portfolio is nomally $10
per share.) Depending upon the net asset values at that time, the amount paid
upon redemption may be more or less than the cost of the shares redeemed.
Payment for shares redeemed will be made as soon as possible, but in any event
within seven days after evidence of ownership of the shares is tendered to the
Fund except in extraordinary circumstances as described in the Statement of
Additional Information.
The net asset value of the Fund's shares is determined on each day on which an
order for purchase or redemption of the Fund's shares is received and there is
a sufficient degree of trading in portfolio securities that the current net
asset value of its shares might be materially affected. Such determination is
made as of 4:00 p.m. Eastern time on each business day. 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 shares outstanding for that portfolio.
Shares of one portfolio may be exchanged for shares of another portfolio of the
Fund on the basis of the relative net asset values next computed after an
exchange order is received by the Fund.
17
<PAGE> 22
FUND PERFORMANCE
From time to time, the current yield, average annual total return and
cumulative total returns for the portfolios will be advertised. The results
might be compared to other similar mutual funds or unmanaged indices.
Management's discussion and analysis of the Fund's performance is included in
the Fund's most-recent annual report and is available free upon request.
Total return for a portfolio reflects the sum of all of its earnings plus any
changes in the value of its assets, reduced by all expenses accrued during a
measurement period. For this purpose, it is assumed that all dividends and
capital gains distributions are reinvested. The average annual total return is
expressed as a percentage of an amount invested for a one-year period. Each
portfolio's average return is computed by a formula in which a hypothetical
initial investment of $1,000 is equated to an ending redeemable value from the
inception of the portfolio for one-, five- and ten-year periods. Cumulative
total return reflects a portfolio's aggregate performance, expressed as a
dollar amount change, from the beginning to the end of the period.
Percentage changes in net asset value per share and total returns quoted for a
portfolio include the effect of deducting that portfolio's expenses, but do not
include charges and expenses attributable to any particular insurance product.
The amount by which variable annuity separate account charges and expenses
would reduce Fund's total return may be demonstrated by comparing the Fund's
total return to that of the variable annuity separate account for the same
period. Variable life insurance separate account charges vary significantly,
depending upon a variety of demographic factors (such as age, sex and health
status) and several contract-specific factors (such as stated amount of death
benefit), but in all cases would have the result of lowering the total return
of the Fund.
From time to time the annualized yield and "effective" yield will be quoted
for the Money Market Portfolio. The Money Market Portfolio's yield refers to
the income generated by an investment in the Portfolio over the seven-day
period indicated. This income is then "annualized" by assuming that the same
amount of income generated by the Portfolio that week is generated over a 52-
week period and is shown as a percentage of the investment. "Effective" yield
is calculated similarly but, when annualized, the income earned by an
investment in the Portfolio is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of
this assumed reinvestment.
All performance quotations are based on historical investment performance and
are not intended to indicate future performance.
18
<PAGE> 23
PART B.
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 24
OHIO NATIONAL FUND, INC.
237 William Howard Taft Road
Cincinnati, Ohio 45219
Telephone (5l3) 559-6316
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1996
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the prospectus of Ohio National Fund, Inc. (the "Fund")
dated May 1, 1996.
To obtain a free copy of the Fund's prospectus, write or call the Fund at the
above address.
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Fund Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Current Yield of Money Market Portfolio
Total Return
Portfolio Turnover
Investment Objectives and Policies. . . . . . . . . . . . . . . . . . . . 5
Money Market Instruments
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . 7
Hedging Transactions
Covered Call Options and Put Options
Risk Factors with Options
Futures Contracts
Options on Futures Contracts and Financial Indexes
Risk Factors with Futures, Options on Futures and Options on Indexes
Risk Factors with Foreign Investments
Foreign Currency Hedging Transactions
Management of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . . 19
Directors and Officers
Compensation of Directors
Shareholders' Meetings
Investment Advisory and Other Services
Brokerage Allocation. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Purchase and Redemption of Shares . . . . . . . . . . . . . . . . . . . . 23
Tax Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Debt Security Ratings
</TABLE>
1
<PAGE> 25
THE FUND
The Fund is an open-end diversified management investment company which
currently consists of nine separate portfolios - the Equity Portfolio, the Money
Market Portfolio, the Bond Portfolio, the Omni Portfolio, the International
Portfolio, the Capital Appreciation Portfolio, the Small Cap Portfolio, the
Global Contrarian Portfolio and the Aggressive Growth Portfolio. At present, the
Fund sells its shares only to separate accounts of The Ohio National Life
Insurance Company ("ONLI") and Ohio National Life Assurance Corporation
("ONLAC") to support certain benefits under variable contracts issued by ONLI
and ONLAC. In the future, Fund shares may be used for other purposes, but absent
a change in applicable law, will not be sold directly to the public.
The Fund was created on November 2, 1982 as the result of a plan of
reorganization and an agreement of merger entered into by O.N. Fund, Inc. and
O.N. Market Yield Fund, Inc., both of which were Maryland corporations. O.N.
Fund, Inc. was merged into O.N. Market Yield Fund, Inc., which acquired all of
O.N. Fund's assets and assumed all of O.N. Fund's liabilities. The shares of
O.N. Fund were converted to an equal number of shares of the Equity Portfolio of
O.N. Market Yield Fund and all shares of O.N. Market Yield Fund were converted
into an equal number of shares of the Money Market Portfolio. The name of O.N.
Market Yield Fund was changed to the Fund's current name, Ohio National Fund,
Inc., and a Bond Portfolio was created. The Omni Portfolio was added in 1984,
the International Portfolio in 1993, and the Capital Appreciation and Small Cap
Portfolios in 1994, and the Global Contrarian and Aggressive Growth Portfolios
in 1995. The investments held by each portfolio are maintained separately from
those held by the other portfolios.
The investment and reinvestment of the assets of the Equity, Money Market, Bond
and Omni Portfolios is directed by the Fund's investment adviser, Ohio National
Investments, Inc. (the "Adviser"), a wholly-owned subsidiary of ONLI. The
principal business address of ONLI, ONLAC and the Adviser is 237 William Howard
Taft Road, Cincinnati, Ohio 45219. The investment and reinvestment of
International and Global Contrarian Portfolio assets is managed by Societe
Generale Asset Management Corp. ("SGAM") as sub-adviser. The principal business
address of SGAM is 1221 Avenue of the Americas, New York, New York 10020. The
investment and reinvestment of Capital Appreciation Portfolio assets is managed
by T. Rowe Price Associates, Inc. ("TRPA") as sub-adviser. The principal
business address of TRPA is 100 East Pratt Street, Baltimore, Maryland 21202.
The investment and reinvestment of Small Cap Portfolio assets is managed by
Founders Asset Management, Inc. ("FAM") as sub-adviser. The principal business
address of FAM is 2930 East Third Avenue, Denver, Colorado 80206. The investment
and reinvestment of Aggressive Growth Portfolio assets is managed by Strong
Capital Management, Inc. ("SCM") as sub-adviser. The principal business address
of SCM is 100 Heritage Reserve, Milwaukee, Wisconsin 53051.
FUND PERFORMANCE
The Fund may distribute sales literature comparing the percentage change in net
asset value per share for any of its portfolios against the Consumer Price Index
or such established market indices as the Dow Jones Industrial Average, the
Standard & Poor's 500 Stock Index, one or more of Lehman Brothers Bond Indices,
the Morgan Stanley Europe, Australia and Far East Index, the Morgan Stanley
World Index, the Russell 2000 Index, the New York Stock Exchange Composite
Index, the American Stock Exchange Index, the National Association of Securities
Dealers Automated Quotations Composite Index, the Value Line Composite Index,
the Investors Business Daily 6000 Index, IBC's Money Fund Reports, or other
management investment companies having investment objectives similar to the
portfolio being compared. 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.
The Fund may also advertise the performance rankings assigned to certain
portfolios or their subadvisers 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,
2
<PAGE> 26
Barron's, Forbes, Fortune, Business Week, Financial Services Week, Financial
World, Kiplinger's Personal Finance and Money Magazine.
The prospectus sets forth in tabular form, under the caption "Financial
Highlights," certain information concerning the Fund and its individual
portfolios. The following discussion describes the methods of calculating the
current yield of the Money Market Portfolio and the total return of all
portfolios, and states the Fund's policy with respect to each portfolio's
turnover rate.
CURRENT YIELD OF MONEY MARKET PORTFOLIO
Current annualized yield quotations for the Money Market Portfolio are based on
the portfolio's net investment income for a seven-day period and exclude any
realized or unrealized gains or losses on portfolio securities. Current
annualized yield is computed by determining the net change (exclusive of
realized gains and losses from the sale of securities and unrealized
appreciation and depreciation) in the value of a hypothetical account having a
balance of one share at the beginning of such seven-day period, dividing such
net change in account value by the value of the account at the beginning of the
period, and annualizing this quotient on a 365-day basis. The net change in
account value reflects the value of any additional shares purchased with
dividends from the original share in the account during the seven-day period,
any dividends declared on such original share and any such additional shares
during the period, and expenses accrued during the period. The Fund may also
disclose the effective yield of the Money Market Portfolio for a seven-day
period for which the current annualized yield is computed by expressing the
unannualized return on a compounded, annualized basis.
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
share 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:
P(1 + T) to the nth degree = 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).
The average annual total returns for each of the portfolios from the inception
of the portfolio and for the one-, five- and ten-year periods ending on December
31, 1995, are as stated on the next page:
3
<PAGE> 27
<TABLE>
<CAPTION>
One Five Ten From Inception
Year Years Years Inception Date
---- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
Equity 27.20% 13.46% 13.35% 10.17% 10-06-69
Money Market 5.62% 4.21% 5.74% 7.57% 03-20-80
Bond 18.90% 8.98% 8.31% 9.05% 11-02-82
Omni 22.75% 12.07% 10.75% 11.22% 09-10-84
International 12.10% N/A N/A 16.87% 04-30-93
Capital Appreciation 22.62% N/A N/A 16.04% 05-01-94
Small Cap 33.01% N/A N/A 33.18% 05-01-94
Global Contrarian N/A N/A N/A 12.05% 03-31-95
Aggressive Growth N/A N/A N/A 37.53% 03-31-95
</TABLE>
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. The cumulative total returns for each of
the portfolios from the inception of the portfolio and for the five- and
ten-year periods ending on December 31, 1995 (assuming a hypothetical initial
investment of $1,000) were as follows:
<TABLE>
<CAPTION>
Five Years Ten Years From Inception
---------- --------- --------------
<S> <C> <C> <C>
Equity $1,880 $3,501 $ 13,676
Money Market $1,229 $1,747 $ 3,080
Bond $1,537 $2,221 $ 3,126
Omni $1,768 $2,353 $ 3,327
International N/A N/A $ 1,514
Capital Appreciation N/A N/A $ 1,282
Small Cap N/A N/A $ 1,613
Global Contrarian N/A N/A $ 1,089
Aggressive Growth N/A N/A $ 1,270
</TABLE>
PORTFOLIO TURNOVER
Each portfolio has a different expected rate of portfolio turnover. However, the
rate of portfolio turnover will not be a limiting factor when the management of
the Fund deems it appropriate to purchase or sell securities for a portfolio,
except in the following circumstances. The Fund intends to comply with the
various requirements of the Internal Revenue Code so as to qualify as a
"regulated investment company" thereunder. Among such requirements is a
limitation of less than 30% of the amount of gross income which each portfolio
may derive from gains on the sale or other disposition of securities held for
less than three months. Accordingly, the ability of any portfolio to effect
certain portfolio transactions at a given time may be limited. The relatively
high portfolio turnover rates expected for the Small Cap and Aggressive Growth
Portfolios will result in correspondingly higher brokerage costs which must be
borne by these two Portfolios. The Fund's policy with respect to each portfolio
is as follows:
Equity Portfolio - Although this Portfolio will not normally purchase
securities with the intention of obtaining short-term capital appreciation,
purchases and sales will be made whenever deemed prudent and consistent
with the investment objectives of the Portfolio. During periods of
relatively stable market and economic conditions, it is anticipated that
the annual portfolio turnover rate of the Portfolio will be moderate.
During periods when changing market or economic conditions are foreseen,
shifts in portfolio emphasis may cause the rate of portfolio turnover to
increase. During 1995, the turnover rate for this portfolio was 14%.
4
<PAGE> 28
Money Market Portfolio - Since the assets of this Portfolio consist of
short-term instruments, replacement of portfolio securities will occur
frequently. However, since purchases are generally effected with dealers or
issuers on a net basis, it is not expected that the Portfolio will incur
significant brokerage commissions.
Bond Portfolio - This Portfolio will engage in transactions when the
Adviser believes that they will help to achieve the overall objectives of
the Portfolio. Portfolio securities may or may not be held to maturity. The
rate of portfolio turnover will vary from time to time but is not expected
to exceed 50% annually. The turnover rate for this portfolio was 4% in
1995.
Omni Portfolio - The rate of portfolio turnover will vary from time to time
but is not expected to exceed 50% annually. The turnover rate for this
portfolio was 10% in 1995.
International Portfolio - Although this Portfolio will not normally engage
in short-term trading, purchases and sales of securities will be made
whenever deemed appropriate to achieve the Portfolio's objective of
long-term capital growth. The rate of portfolio turnover will not be a
limiting factor when portfolio changes are deemed appropriate to achieve
this Portfolio's stated objective. Under normal circumstances, the
portfolio turnover rate for this portfolio is not expected to exceed 75%
annually. The turnover rate for this portfolio was 7% in 1995.
Capital Appreciation Portfolio - Although TRPA generally seeks less
volatile securities for this Portfolio, the Portfolio is also traded fairly
aggressively. Its portfolio turnover rate is normally expected to be 50% to
150% annually. The turnover rate for this portfolio was 32% in 1995.
Small Cap Portfolio - While this Portfolio purchases and holds securities
with the goal of meeting its investment objectives, portfolio changes are
made whenever FAM believes they are advisable, usually without reference to
the length of time a security has been held. The engagement in a
substantial number of short-term transactions is expected to result in
annual portfolio turnover rates of 100% to 300%. The turnover rate for this
portfolio was 75% in 1995.
Global Contrarian Portfolio - Because of the long-term growth objective and
the purchase of under-valued and out-of-favor securities, this portfolio
will generally tend to hold portfolio securities for a relatively longer
time with the expectation of eventual price appreciation. As a result, the
portfolio turnover rate is not expected to exceed 50% annually, However, it
could be substantially higher at times due to repositioning of the
portfolio. The turnover rate for this portfolio was 4% for the period from
March 31, 1995 to December 31, 1995 (an annualized rate of 6%).
Aggressive Growth Portfolio - The securities of this portfolio are
generally expected to be traded more aggressively than those of the other
portfolios. Its portfolio turnover rate can normally be expected to be in
the range of 100% to 300% annually. The turnover rate for this portfolio
was 1,116% for the period from March 31, 1995 to December 31, 1995 (an
annualized rate of 1,488%).
INVESTMENT OBJECTIVES AND POLICIES
The following descriptions of money market instruments supplement the Fund's
"Investment Objectives and Policies" set forth in the prospectus. The Money
Market Portfolio and the Omni Portfolio, to the extent the latter invests in the
money market sector, will invest extensively in these instruments. The other
three Portfolios may invest in such instruments to a very limited extent (to
invest otherwise idle cash) or on a temporary basis (if invested for defensive
purposes). The debt security ratings referred to in the prospectus in connection
with the investment policies of the portfolios are defined in the Appendix to
this Statement of Additional Information.
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<PAGE> 29
MONEY MARKET INSTRUMENTS
U.S. Government Obligations - Bills, notes, bonds and other debt securities
issued or guaranteed as to principal or interest by the United States or by
agencies or authorities controlled or supervised by and acting as
instrumentalities of the U.S. Government established under authority
granted by Congress, including, but not limited to, the Government National
Mortgage Association, the Tennessee Valley Authority, the Bank for
Cooperatives, the Farmers Home Administration, and Federal Home Loan Banks.
Some obligations of U.S. Government agencies, authorities and other
instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury;
and others only by the credit of the issuer. Certain of the foregoing may
be purchased on a "when issued" basis at which time the rate of return will
not have been set.
Certificates of Deposit - Certificates issued against funds deposited in a
bank for a definite period of time, at a specified rate of return. Normally
they are negotiable.
Bankers' Acceptances - Short-term credit instruments issued by corporations
to finance the import, export, transfer or storage of goods. They are
termed "accepted" when a bank guarantees their payment at maturity and
reflect the obligation of both the bank and drawer to pay the face amount
of the instrument at maturity.
Commercial Paper - Promissory notes issued by corporations to finance their
short-term credit needs. Commercial paper obligations may include variable
amount master demand notes. Variable amount master demand notes are
obligations that permit the investment of fluctuating amounts by the
Portfolio at varying rates of interest pursuant to direct arrangements
between the Portfolio, as lender, and the borrower. These notes permit
daily changes in the amounts borrowed. The Portfolio has the right to
increase the amount under the note at any time up to the full amount
provided by the note agreement, or to decrease the amount, and the borrower
may prepay up to the full amount of the note without penalty. Because
variable amount master demand notes are direct lending arrangements between
the lender and the borrower, it is not generally contemplated that such
instruments will be traded, and there is no secondary market for these
notes, although they are redeemable (and thus immediately repayable by the
borrower) at face value, plus accrued interest, at any time. In connection
with a master demand note arrangement, the Adviser will monitor, on an
ongoing basis, the earning power, cash flow, and other liquidity ratios of
the issuer, and the borrower's ability to pay principal and interest on
demand. While master demand notes, as such, are not typically rated by
credit rating agencies, if not so rated the Portfolio may invest in them
only if at the time of an investment the issuer meets the criteria set
forth above for all other commercial paper issuers. Such notes will be
considered to have a maturity of the longer of the demand period or the
period of the interest guarantee.
Corporate Obligations - Bonds and notes issued by corporations in order to
finance longer-term credit needs.
Repurchase Agreements - Agreements by which the 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 the Portfolio invest in repurchase
agreements for more than one year. These transactions afford an opportunity
for the 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 ONIMCO to present
minimal credit risks in accordance with criteria established by the Fund's
Board of Directors. ONIMCO 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
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<PAGE> 30
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 at least equal to 100% of the
dollar amount invested by the 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 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. Investments in repurchase agreements will be limited to
transactions with financial institutions believed by the Adviser to present
minimal credit risks. The Portfolio will not enter into repurchase
agreements with securities dealers unless it has obtained an exemptive
order from the Commission or an opinion of counsel that such transactions
will not violate a legal prohibition which in some circumstances bars an
investment company from purchasing any securities issued by a securities
dealer.
INVESTMENT RESTRICTIONS
The prospectus lists the most significant investment restrictions to which the
Fund is subject. The following is a complete list of the Fund's investment
restrictions. Except as otherwise specified, all of the investment restrictions
stated in the prospectus and this Statement of Additional Information are
fundamental policies. Restrictions number 4, 7, 12, 13 and 14 are nonfundamental
policies of the Small Cap and Global Contrarian Portfolios, and restriction
number 8 is a nonfundamental policy of the Small Cap Portfolio. The fundamental
policies and nonfundamental operating policies of the Capital Appreciation and
Aggressive Growth Portfolios are shown separately below. Fundamental policies
may not be changed without the affirmative vote of the majority of the
outstanding voting securities of the Fund or a particular portfolio, as
appropriate. The Investment Company Act of l940 defines a majority vote as the
vote of the lesser of (i) 67% of the shares represented at a meeting at which
more than 50% of the outstanding shares are represented or (ii) more than 50% of
the outstanding voting securities. With respect to the submission of a change in
an investment policy to the holders of outstanding voting securities 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
securities of such portfolio vote for the approval of such matter,
notwithstanding (1) that such matter has not been approved by the holders of a
majority of the outstanding voting securities of any other portfolio affected by
such matter, and (2) that such matter has not been approved by the vote of a
majority of the outstanding voting securities of the Fund.
The Fund may not issue senior securities and each portfolio of the Fund (other
than the Capital Appreciation and Aggressive Growth Portfolios) will not:
l. invest more than 5% of the value of the total assets of such portfolio
in the securities of any one issuer (except U.S. Government
securities);
2. purchase more than l0% of the outstanding voting securities of any one
issuer, and the Money Market Portfolio will not acquire the voting
securities of any issuer except in connection with a merger,
consolidation or other reorganization;
3. invest more than 25% of the value of its total assets in any one
industry, except that each portfolio may invest more than 25% of the
value of its total assets in obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities or in certificates
of deposit, bankers' acceptances, bank time deposits or other
obligations of banks or financial institutions. However, it is the
intention of management not to invest in time deposits which involve
any penalty or other restriction on withdrawal;
4. invest more than 10% of the value of its assets (15% in the case of
the Small Cap Portfolio) in securities or other investments, including
repurchase agreements maturing in more than seven days, that are
subject to legal or contractual restrictions upon resale or are
otherwise not readily marketable;
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<PAGE> 31
5. borrow money, except for temporary or emergency purposes from banks,
in which event the aggregate amount borrowed shall not exceed 5% of
the value of the assets of the portfolio. In the case of such
borrowing, each portfolio may pledge, mortgage or hypothecate up to 5%
of its assets. Reverse repurchase agreements are not considered to be
borrowed money for purposes of this restriction;
6. purchase or sell commodities or commodity contracts except that each
portfolio other than the Money Market Portfolio may, for hedging
purposes, purchase and sell financial futures contracts and options
thereon within the limits of investment restriction 7 below;
7. purchase or sell put or call options, except that each portfolio other
than the Money Market Portfolio may, for hedging purposes, (a) write
call options traded on a registered national securities exchange if
such portfolio owns the underlying securities subject to such options,
and purchase call options for the purpose of closing out positions in
options it has written, (b) purchase put options on securities owned,
and sell such options in order to close its positions in put options,
(c) purchase and sell financial futures contracts and options thereon,
and (d) purchase and sell financial index options; provided, however,
that no option or futures contract shall be purchased or sold if, as a
result, more than one-third of the total assets of the portfolio would
be hedged by options or futures contracts, and no more than 5% of any
portfolio's total assets, at market value, may be used for premiums on
open options and initial margin deposits on futures contracts;
8. other than the International and Global Contrarian Portfolios, invest
in securities of foreign issuers except that (a) each of the Equity,
Bond and Omni Portfolios may (i) invest up to l5% of their respective
assets in securities of foreign issuers (including foreign governments
or political subdivisions, agencies or instrumentalities of foreign
governments) American Depository Receipts, and securities of United
States domestic issuers denominated in foreign currency, and (ii)
invest up to an additional l0% of the assets of the portfolio in
securities issued by foreign governments or political subdivisions,
agencies or instrumentalities thereof, (b) the Small Cap Portfolio may
invest up to 30% of its assets in the securities of such foreign
issuers, and (c) the Money Market Portfolio may invest up to 50% of
its assets in the securities of such foreign issuers, provided the
securities are denominated in U.S. dollars and held in custody in the
United States; (For purposes of this restriction number 8, U.S. dollar
denominated depository receipts traded in domestic markets do not
constitute foreign securities.)
9. underwrite securities of other issuers except insofar as the Fund may
be considered an underwriter under the Securities Act of 1933 in
selling portfolio securities;
10. purchase or sell real estate, except that each portfolio may invest in
securities secured by real estate or interests therein or securities
issued by companies which invest in real estate or interests therein.
For purposes of this restriction, "real estate" does not include
investments in readily marketable notes or other evidence of
indebtedness secured by mortgages or deeds of trust relating to real
property;
11. lend money to other persons except by the purchase of obligations in
which the portfolio is authorized to invest and by entering into
repurchase agreements. No more than 10% of a portfolio's total assets
will be invested in repurchase agreements maturing in more than seven
days;
12. sell securities short or purchase securities on margin except such
short-term credits as are required to clear transactions;
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<PAGE> 32
13. participate on a joint or joint and several basis in any trading
account in securities;
14. purchase securities for the purpose of exercising control or
management;
15. purchase securities of other investment companies, except in
connection with a merger, consolidation or reorganization, or except
the purchase by any portfolio other than the Money Market or Bond
Portfolios of the securities of closed-end investment companies if
after the purchase: (i) a portfolio does not own more than 3% of the
total outstanding voting stock of the other investment company or (ii)
the value of the securities of all investment companies held by such
portfolio does not exceed 10% of the value of the total assets of that
portfolio. Purchases of investment company securities will be made (a)
only on the open market or through dealers or underwriters receiving
the customary sales loads, or (b) as part of a merger, consolidation
or plan of reorganization.
As nonfundamental policies of each portfolio other than the Capital Appreciation
and Aggressive Growth Portfolios, which policies may be changed at any time by
the vote of a majority of the Board of Directors, (a) no portfolio will invest
more than 20% of its assets in securities of issuers located in any one foreign
country, except that up to an additional 5% of its assets may be invested in
securities of issuers located in each of any three of Australia, Canada, France,
Germany, Japan or the United Kingdom; and (b) each portfolio other than the
Money Market Portfolio, in order to hedge against changes in the exchange rates
of foreign currencies in relation to the U.S. dollar, may engage in forward
foreign currency contracts, foreign currency options and foreign currency
futures contracts in connection with the purchase, sale or ownership of specific
securities (but, not more than 5% of a portfolio's assets may be invested in
such currency hedging contracts).
In addition to the above restrictions, in order to comply with Rule 2a-7 under
the Investment Company Act of 1940, no more than 5% of the assets of the Money
Market Portfolio will be invested in "second-tier" short-term debt instruments,
that is those receiving the second highest rating by any two nationally
recognized statistical rating organizations ("NRSRO's") (or by one NRSRO if (a)
that is the only NRSRO having rated the security or (b) one other NRSRO has
given the security its highest rating), or whose issuer has received such a
rating or ratings with respect to a class of short-term debt obligations that is
now comparable in priority and security to those to be purchased. In addition,
not more than $1 million (or 1% of this portfolio's assets, if greater) may be
invested in the second-tier instruments of any one issuer.
Under normal market conditions, at least 65% of the assets of the International
Portfolio and at least 25% of the assets of the Global Contrarian Portfolio will
be invested in foreign securities, including securities of issuers in at least
three different foreign countries. As of the date of this Statement of
Additional Information, the Board of Directors has approved investment by those
portfolios other than the Money Market Portfolio in 50 countries with developed
securities markets, including the following countries with developed economies:
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland,
Israel, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Spain,
Sweden, Switzerland and the United Kingdom; and the following countries with
developing economies: Argentina, Bangla Desh, Brazil, Chile, China (Shanghai and
Shenzhen Exchanges), Czech Republic, Egypt, Greece, Hong Kong, Hungary,
Indonesia, Jordan, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines,
Poland, Portugal, Singapore, South Africa, South Korea, Sri Lanka, Taiwan,
Thailand, Turkey, Uruguay, Venezuela and Zimbabwe.
CAPITAL APPRECIATION PORTFOLIO FUNDAMENTAL POLICIES
As a matter of fundamental policy, the Portfolio may not:
C.A.1. Borrow money except that the Portfolio may (i) borrow for
non-leveraging, temporary or emergency purposes and (ii) engage
in reverse repurchase agreements and make other investments or
engage in other transactions, which may involve a borrowing, in a
manner consistent with the Portfolio's investment objective and
program, provided that the combination of (i) and (ii) shall not
exceed 33 1/3% of the value of the Portfolio's total assets
(including the amount borrowed) less liabilities (other than
borrowings) or such other percentage permitted by law. Any
borrowings which come to exceed this amount will be
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<PAGE> 33
reduced in accordance with applicable law. The Portfolio may
borrow from banks, other portfolios managed by TRPA or other
persons to the extent permitted by applicable law;
C.A.2. Purchase or sell physical commodities; except that it may enter
into futures contracts and options thereon;
C.A.3. Purchase the securities of any issuer if, as a result, more than
25% of the value of the Portfolio's total assets would be
invested in the securities of issuers having their principal
business activities in the same industry;
C.A.4. Make loans, although the Portfolio may (i) lend portfolio
securities and participate in an interfund lending program with
other portfolios managed by TRPA provided that no such loan may
be made if, as a result, the aggregate of such loans would exceed
33 1/3% of the value of the Portfolio's total assets; (ii)
purchase money market securities and enter into repurchase
agreements; and (iii) acquire publicly-distributed or
privately-placed debt securities and purchase debt;
C.A.5. Purchase a security if, as a result, with respect to 75% of the
value of its total assets, more than 5% of the value of the
Portfolio's total assets would be invested in the securities of a
single issuer, except securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities;
C.A.6. Purchase a security if, as a result, with respect to 75% of the
value of the Portfolio's total assets, more than 10% of the
outstanding voting securities of any issuer would be held by the
Fund (other than obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities);
C.A.7. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the Portfolio from investing in securities or other
instruments backed by real estate or in securities of companies
engaged in the real estate business);
C.A.8. Issue senior securities except in compliance with the Investment
Company Act of 1940; or
C.A.9. Underwrite securities issued by other persons, except to the
extent that the Portfolio may be deemed to be an underwriter
within the meaning of the Securities Act of 1933 in connection
with the purchase and sale of its portfolio securities in the
ordinary course of pursuing its investment program.
With respect to investment restrictions C.A.1. and C.A.4,, the Portfolio
will not borrow from or lend to any other portfolios managed by TRPA unless
they apply for and receive an exemptive order from the SEC or the SEC
issues rules permitting such transactions. The Portfolio has no current
intention of engaging in any such activity and there is no assurance the
SEC would grant any order requested by the Portfolio or promulgate any
rules allowing the transactions.
With respect to investment restriction C.A.2., the Portfolio does not
consider currency contracts or hybrid investments to be commodities.
For purposes of investment restriction C.A.3., U.S., state or local
governments, or related agencies or instrumentalities, are not considered
an industry.
For purposes of investment restriction C.A.4., the Portfolio will consider
the acquisition of a debt security to include the execution of a note or
other evidence of an extension of credit with a term of more than nine
months.
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<PAGE> 34
CAPITAL APPRECIATION PORTFOLIO NONFUNDAMENTAL OPERATING POLICIES
As a matter of nonfundamental operating policy, the Portfolio may not:
C.A.10. Purchase additional securities when money borrowed exceeds 5% of
its total assets;
C.A.11. Invest in companies for the purpose of exercising management or
control;
C.A.12. Purchase a futures contract or an option thereon if, with respect
to positions in futures or options on futures which do not
represent bona fide hedging, the aggregate initial margin and
premiums on such options would exceed 5% of the Portfolio's net
asset value;
C.A.13. Purchase illiquid securities and securities of unseasoned issuers
if, as a result, more than 15% of its net assets would be
invested in such securities, provided that the Portfolio will not
invest more than 5% of its total assets in restricted securities
and not more than 5% in securities of unseasoned issuers.
Securities eligible for resale under Rule 144A of the Securities
Act of 1933 are not included in the 5% limitation but are subject
to the 15% limitation;
C.A.14. Purchase securities of open-end or closed-end investment
companies except in compliance with the Investment Company Act of
1940 and applicable state law;
C.A.15. Purchase securities on margin, except (i) for use of short-term
credit necessary for clearance of purchases of portfolio
securities and (ii) to make margin deposits in connection with
futures contracts or other permissible investments;
C.A.16. Mortgage, pledge, hypothecate or, in any manner, transfer any
security owned by the Portfolio as security for indebtedness
except as may be necessary in connection with permissible
borrowings or investments and then such mortgaging, pledging or
hypothecating may not exceed 33 1/3% of the Portfolio's total
assets at the time of borrowing or investment;
C.A.17. Purchase participations or other direct interests in or enter
into leases with respect to, oil, gas, or other mineral
exploration or development programs;
C.A.18. Invest in puts, calls, straddles, spreads, or any combination
thereof, except to the extent permitted by the prospectus and
Statement of Additional Information;
C.A.19. Purchase or retain the securities of any issuer if, to the
knowledge of the Fund's management, those officers and directors
of the Fund, and of the Portfolio's investment manager, who each
owns beneficially more than 0.5% of the outstanding securities of
such issuer, together own beneficially more than 5% of such
securities;
C.A.20. Effect short sales of securities;
C.A.21. Purchase a security (other than obligations issued or guaranteed
by the U.S., any foreign, state of local government, their
agencies or instrumentalities) if, as a result, more than 5% of
the value of the Portfolio's total assets would be invested in
the securities of issuers which at the time of purchase had been
in operation for less than three years (for this purpose, the
period of operation of any issuer shall include the period of
operation of any predecessor or unconditional guarantor of such
issuer). This restriction does not apply to securities of pooled
investment vehicles or mortgage or asset-backed securities; or
C.A.22. Invest in warrants if, as a result thereof, more than 2% of the
value of the total assets of the Portfolio would be invested in
warrants which are not listed on the New York Stock Exchange, the
American Stock Exchange, or a recognized foreign exchange, or
more than 5% of the value
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<PAGE> 35
of the total assets of the Portfolio would be invested in
warrants whether or not so listed. For purposes of these
percentage limitations, the warrants will be valued at the lower
of cost or market and warrants acquired by the Portfolio in units
or attached to securities may be deemed to be without value.
AGGRESSIVE GROWTH PORTFOLIO FUNDAMENTAL POLICIES
As a matter of fundamental policy, the Portfolio:
A.G.1. May not with respect to 75% of its total assets, purchase the
securities of any issuer (except securities issued or guaranteed
by the U.S. government or its agencies or instrumentalities) if,
as a result, (i) more than 5% of the Portfolio's total assets
would be invested in the securities of that issuer, or (ii) the
Portfolio would hold more than 10% of the outstanding voting
securities of that issuer.
A.G.2. May (i) borrow money from banks and (ii) make other investments
or engage in other transactions permissible under the Investment
Company Act of 1940 which may involve a borrowing, provided that
the combination of (i) and (ii) shall not exceed 33 1/3% of the
value of the Portfolio's total assets (including the amount
borrowed), less the Portfolio's liabilities (other than
borrowings), except that the Portfolio may borrow up to an
additional 5% of its total assets (not including the amount
borrowed) from a bank for temporary or emergency purposes (but
not for leverage or the purchase of investments). The Portfolio
may also borrow money from the other mutual funds managed by SCM
or other persons to the extent permitted by applicable law.
A.G.3. May not issue senior securities, except as permitted under the
Investment Company Act of 1940.
A.G.4. May not act as an underwriter of another issuer's securities,
except to the extent that the Portfolio may be deemed to be an
underwriter within the meaning of the Securities Act of 1933 in
connection with the purchase and sale of portfolio securities.
A.G.5. May not purchase or sell physical commodities unless acquired as
a result of ownership of securities or other instruments (but
this shall not prevent the Portfolio from purchasing or selling
options, futures contracts, or other derivative instruments, or
from investing in securities or other instruments backed by
physical commodities).
A.G.6. May not make loans if, as a result, more than 33 1/3% of the
Portfolio's total assets would be lent to other persons, except
through (i) purchases of debt securities or other debt
instruments, or (ii) engaging in repurchase agreements.
A.G.7. May not purchase the securities of any issuer if, as a result,
more that 25% of the Portfolio's total assets would be invested
in the securities of issuers, the principal business activities
of which are in the same industry.
A.G.8. May not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this shall
not prohibit the Portfolio from purchasing or selling securities
or other instruments backed by real estate or of issuers engaged
in real estate activities).
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<PAGE> 36
AGGRESSIVE GROWTH PORTFOLIO NONFUNDAMENTAL OPERATING POLICIES
As a matter of nonfundamental operating policy, the Portfolio may not:
A.G.9 . Sell securities short, unless the Portfolio owns or has the
right to obtain securities equivalent in kind and amount to the
securities sold short, or unless it covers such short sale as
required by the current rules and positions of the SEC or its
staff, and provided that transactions in options, futures
contracts, options on futures contracts, or other derivative
instruments are not deemed to constitute selling securities
short.
A.G.10. Purchase securities on margin, except that the Portfolio may
obtain such short-term credits as are necessary for the clearance
of transactions; and provided that margin deposits in connection
with futures contacts, options on futures contracts, or other
derivative instrumentsshall not constitute purchasing securities
on margin.
A.G.11. Invest in illiquid securities if, as a result of such investment,
more than 15% of its net assets would be invested in illiquid
securities, or such other amounts as may be permitted under the
Investment Company Act of 1940.
A.G.12. Purchase securities of other investment companies except in
compliance with the Investment Company Act of 1940 and applicable
state law.
A.G.13. Purchase the securities of any issuer (other than securities
issued or guaranteed by domestic or foreign governments or
political subdivisions thereof) if, as a result, more than 5% of
its total assets would be invested in the securities of issuers
that, including predecessor or unconditional guarantors, have a
record of less than three years of continuous operation. This
policy does not apply to securities of pooled investment vehicles
or mortgage or asset-backed securities.
A.G.14. Invest in direct interests in oil, gas, or other mineral
exploration programs or leases; however, the Portfolio may invest
in the securities of issuers that engage in these activities.
A.G.15. Engage in futures or options on futures transactions which are
impermissible pursuant to Rule 4.5 under the Commodity Exchange
Act and, in accordance with Rule 4.5, will use futures or options
on futures transactions solely for bona fide hedging transactions
(within the meaning of the Commodity Exchange Act), provided,
however, that the Portfolio may, in addition to bona fide hedging
transactions, use futures and options on futures transactions if
the aggregate initial margin and premiums required to establish
such positions, less the amount by which any such options
positions are in the money (within the meaning of the Commodity
Exchange Act), do not exceed 5% of the Portfolio's net assets.
In addition, (i) the aggregate value of securities underlying
call options on securities written by the Portfolio or
obligations underlying put options on securities written by the
Portfolio determined as of the date the options are written will
not exceed 50% of the Portfolio's net assets; (ii) the aggregate
premiums paid on all options purchased by the Portfolio and which
are being held will not exceed 20% of the Portfolio's net assets;
(iii) the Portfolio will not purchase put or call options, other
than hedging positions, if, as a result thereof, more than 5% of
its total assets would be so invested; and (iv) the aggregate
margin deposits required on all futures and options on futures
transactions being held will not exceed 5% of the Portfolio's
total assets.
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<PAGE> 37
A.G.16. Pledge, mortgage or hypothecate any assets owned by the Portfolio
except as may be necessary in connection with permissible
borrowings or investments and then such pledging, mortgaging, or
hypothecating may not exceed 33 1/3% of the Portfolio's total
assets at the time of the borrowing or investment.
A.G.17. Purchase warrants, valued at the lower of cost or market value,
in excess of 5% of the Portfolio's net assets. Included in that
amount, but not to exceed 2% of the Portfolio's net assets, may
be warrants that are not listed on the New York Stock Exchange or
the American Stock Exchange. Warrants acquired by the Portfolio
in units or attached to securities are not subject to these
restrictions.
A.G.18. Borrow money except (i) from banks or (ii) through reverse
repurchase agreements or mortgage dollar rolls, and will not
purchase securities when bank borrowings exceed 5% of its total
assets.
A.G.19. Make any loans other than loans of portfolio securities, except
through (i) purchases of debt securities or other debt
instruments, or (ii) engaging in repurchase agreements.
HEDGING TRANSACTIONS
The purpose of hedging transactions using put and call options on individual
securities, financial futures contracts, and options on such contracts and on
financial indexes, all to the extent provided in investment restriction 7, is to
reduce the risk of fluctuation of portfolio securities values or to take
advantage of expected market fluctuations. However, while such transactions are
defensive in nature and are not speculative, some risks remain.
The use of options and futures contracts may help the Fund to gain exposure or
to protect itself from changes in market values. For example, the Fund may have
a substantial amount of cash at the beginning of a market rally. Conventional
procedures of purchasing a number of individual issues requires time and may
result in missing a significant market movement. By using futures contracts, the
Fund can obtain immediate exposure to the market.
The buying program will then proceed and, once it is completed (or as it
proceeds), the futures contracts will be closed. Conversely, in the early stages
of a market decline, market exposure can be promptly offset by selling futures
contracts, and individual securities can be sold over a longer period under
cover of the resulting short contract position.
COVERED CALL OPTIONS AND PUT OPTIONS
In writing (i.e., selling) "covered" call options on securities owned by a
portfolio, the portfolio gives the purchaser of the call option the right to
purchase the underlying securities owned by the portfolio at a specified
"exercise" price at any time prior to the expiration of the option, normally
within nine months. In purchasing put options on securities owned by a
portfolio, the portfolio pays the seller of the put option a premium for the
right of the portfolio to sell the underlying securities owned by the portfolio
at a specified exercise price prior to the expiration of the option.
Whenever a portfolio has a covered call option outstanding, the underlying
securities will be segregated by the Custodian and held in an escrow account to
assure that such securities will be delivered to the option holder if the option
is exercised. While the underlying securities are subject to the option, the
portfolio remains the record owner of the securities, entitling it to receive
dividends and to exercise any voting rights.
In order to terminate its position as the writer of a call option or the
purchaser of a put option, the portfolio may enter into a "closing" transaction,
which is the purchase of a call option or sale of a put option on the same
underlying securities and having the same exercise price and expiration date as
the option previously sold or purchased by the portfolio.
14
<PAGE> 38
RISK FACTORS WITH OPTIONS
The purchaser of an option pays the option writer a "premium" for the option. In
the case of a covered call option written by a portfolio, if the purchaser does
not exercise the call option, the premium will generate additional capital gain
to the portfolio. If the market price of the underlying security declines, the
premium received for the call option will reduce the amount of the loss the
portfolio would otherwise incur. However, if the market price of the underlying
security rises above the exercise price and the call option is exercised, the
portfolio will lose its opportunity to profit from that portion of the rise
which is in excess of the exercise price plus the option premium. Therefore, the
Fund will write call options only when the Adviser believes that the option
premium will yield a greater return to the portfolio than any capital
appreciation that might occur on the underlying security during the life of the
option.
In the case of a put option purchased by a portfolio, if the market price of the
underlying security remains or rises above the exercise price of the option, the
portfolio will not exercise the option and the premium paid for such option will
reduce the gain the portfolio would otherwise have earned. Conversely, if the
market price of the underlying security falls below the exercise price less the
premium paid for the option, the portfolio will exercise the option, thereby
reducing the loss the portfolio would have otherwise suffered. Accordingly, a
portfolio will purchase put options only when the Adviser believes that the
market price of the underlying security is more likely to decrease than
increase.
Whenever a portfolio enters into a closing transaction, the portfolio will
realize a gain (or loss) if the premium plus commission it pays for a closing
call option is less (or greater) than the premium it received on the sale of the
original call option. Conversely, the portfolio will realize a gain (or loss) if
the premium it receives, less commission, for a closing put option is greater
(or less) than the premium it paid for the original put option. The portfolio
will realize a gain if a call option it has written lapses unexercised, and a
loss if a put option it has purchased lapses unexercised.
FUTURES CONTRACTS
The Fund may invest in two kinds of financial futures contracts: stock index
futures contracts and interest rate futures contracts. Stock index futures
contracts are contracts developed by and traded on national commodity exchanges
whereby the buyer will, on a specified future date, pay or receive a final cash
payment equal to the difference between the actual value of the stock index on
the last day of the contract and the value of the stock index established by the
contract multiplied by the specific dollar amount set by the exchange. Futures
contracts may be based on broad-based stock indexes such as the Standard &
Poor's 500 Index or on narrow-based stock indexes. A particular index will be
selected according to the Adviser's investment strategy for the particular
portfolio. An interest rate futures contract is an agreement whereby one party
agrees to sell and another party agrees to purchase a specified amount of a
specified financial instrument (debt security) at a specified price at a
specified date, time and place. Although interest rate futures contracts
typically require actual future delivery of and payment for financial
instruments, the contracts are usually closed out before the delivery date. A
public market exists in interest rate futures contracts covering primarily the
following financial instruments: U.S. Treasury bonds; U.S. Treasury notes;
Government National Mortgage Association (GNMA) modified pass-through
mortgage-backed securities; three-month U.S. Treasury bills; 90-day commercial
paper; bank certificates of deposit; and Eurodollar certificates of deposit. It
is expected that futures contracts trading in additional financial instruments
will be authorized.
At the time the Fund enters into a contract, it sets aside a small portion of
the contract value in an account with the Fund's custodian as a good faith
deposit (initial margin) and each day during the contract period requests and
receives or pays cash equal to the daily change in the contract value (variable
margin). The Fund, its futures commission merchant and the Fund's custodian
retain control of the initial margin until the contract is liquidated.
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<PAGE> 39
OPTIONS ON FUTURES CONTRACTS AND FINANCIAL INDEXES
Instead of entering into a financial futures contract, the Fund may buy an
option giving it the right to enter into such a contract at a future date. The
price paid for such an option is called a premium. The Fund also may buy options
on financial indexes that are traded on securities exchanges. Options on
financial indexes react to changes in the value of the underlying index in the
same way that options on financial futures contracts do. All settlements for
options on financial indexes also are for cash.
Financial futures contracts, options on such contracts and options on financial
indexes will only be used for hedging purposes and will, therefore, be
incidental to the Fund's activities in the securities market. Accordingly,
portfolio securities subject to options, or money market instruments having the
market value of any futures contracts, generally will be set aside to
collateralize the options or futures contracts.
RISK FACTORS WITH FUTURES, OPTIONS ON FUTURES AND OPTIONS ON INDEXES
One risk of entering into financial futures contracts, buying options on such
contracts and buying options on financial indexes is that there may not be
enough buyers and sellers in the market to permit the Fund to close a position
when it wants to do so. In such event, besides continuing to be subject to the
margin requirements, the Fund would experience a gain or loss to the extent that
the price movement of the securities subject to the hedge differed from the
position. To limit the risk, the Fund will invest only where there is an
established secondary market.
A risk applicable to both futures contracts and related options is that changes
in the value of the contracts or option may not correlate with changes in the
underlying financial index or with changes in the value of the securities
subject to hedge or both. This failure may be due, in part, to temporary
activity of speculators in the futures markets. To the extent there is not a
perfect correlation, changes in the value of the Fund's assets would not be
offset by change in the value of the contracts and options it had bought.
When the Fund buys an option on a futures contract or an option on a financial
index, its risk of loss is limited to the amount of the premium paid. When the
Fund enters into a futures contract, there is no such limit. However, the loss
on an options contract would exceed that of a futures contract if the change in
the value of the index does not exceed the premium paid for the option.
The success of a hedge depends upon the Adviser's ability to predict increases
or decreases in the relevant financial index. If this expectation proves
incorrect, the Fund could suffer a loss, and would be better off if those
futures contracts or options had not been purchased. The skills involved in
determining whether to enter into a futures contract or purchase or sell an
option are different from those involved in determining whether to buy or sell a
security. The Adviser has had only limited experience using financial futures
contracts, options on financial futures and options on financial indexes.
Because of the low margin deposits required, futures trading involves a high
degree of leverage. As a result, a relatively small price movement in a futures
contract may result in immediate and substantial gain or loss. A purchase or
sale of a futures contract may result in losses in excess of the amount invested
in the futures contract. However, the Fund would presumably have sustained
comparable losses if, instead of the futures contract, it had invested in the
underlying financial instrument.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no more
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movements during a particular trading day and therefore does
not limit potential losses because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures and subjecting some futures
traders to substantial losses.
16
<PAGE> 40
RISK FACTORS WITH FOREIGN INVESTMENTS
Investments in foreign securities involve considerations not normally associated
with investing in domestic issuers. Such factors include changes in currency
exchange rates, currency exchange control regulations, the possibility of
seizure or nationalization of companies, political or economic instability,
imposition of unforeseen taxes, the possibility of financial information being
difficult to obtain or difficult to interpret under foreign accounting
standards, the necessity of trading in markets that in relation to U.S. markets
may be less efficient and have available less information concerning issuers, or
the imposition of other restraints that might adversely affect investments.
In selecting foreign investments, the Fund seeks to minimize these factors. It
seeks to invest in securities having investment characteristics and qualities
comparable to the kinds of domestic securities in which it invests. The Fund
seeks to avoid investments in countries with volatile or unstable political or
economic conditions.
The Fund may invest in securities of foreign issuers either directly or in the
form of American Depository Receipts (ADRs). ADRs are securities typically
issued by an American bank or trust company which evidence ownership of
underlying securities issued by a foreign corporation. ADRs enable foreign
stocks to be traded and cleared on United States markets. They bear the same
investment risks as the underlying foreign stocks.
Since investments in foreign securities, other than U.S. dollar denominated
securities, involve currencies of foreign countries, the value of a portfolio's
assets, as measured in U.S. dollars may be affected favorably or unfavorably by
changes in currency exchange rates and in currency exchange control regulations.
FOREIGN CURRENCY HEDGING TRANSACTIONS
In order to hedge against changes in the exchange rates of foreign currencies in
relation to the U.S. dollar, each portfolio, other than the Money Market
Portfolio, may engage in forward foreign currency contracts, foreign currency
options and foreign currency futures contracts in connection with the purchase,
sale or ownership of a specific security.
The portfolios generally conduct their foreign currency exchange transactions on
a spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange
currency market. When a portfolio purchases or sells a security denominated in a
foreign currency, it may enter into a forward foreign currency contract
("forward contract") for the purchase or sale, for a fixed amount of dollars, of
the amount of currency involved in the underlying security transaction. A
forward contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
In this manner, a portfolio may obtain protection against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar and
the foreign currency during the period between the date the security is
purchased or sold and the date upon which payment is made or received. Although
such contracts tend to minimize the risk of loss due to the decline in the value
of the hedged currency, at the same time they tend to limit any potential gain
which might result should the value of such currency increase.
Forward contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. Generally
a forward contract has no deposit requirement, and no commissions are charged.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference between the prices at which they buy
and sell various currencies. When the portfolio manager believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, a portfolio may enter into a forward contract to sell,
for a fixed amount of dollars, the amount of foreign currency approximating the
value of some or all of that portfolio's securities denominated in such foreign
currency. No portfolio will enter into such forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the portfolio to deliver an amount of foreign currency in excess of the
value of its assets denominated in that currency.
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<PAGE> 41
At the consummation of a forward contract for delivery by a portfolio of a
foreign currency, the portfolio may either make delivery of the foreign currency
or terminate its contractual obligation to deliver the foreign currency by
purchasing an offsetting contract obligating it to purchase, at the same
maturity date, the same amount of the foreign currency. If the portfolio chooses
to make delivery of the foreign currency, it may be required to obtain such
currency through the sale of its securities denominated in such currency or
through conversion of other portfolio assets into such currency. It is
impossible to forecast the market value of portfolio securities at the
expiration of the forward contract. Accordingly, it may be necessary for the
portfolio to purchase additional foreign currency on the spot market (and bear
the expense of such purchase) if the market value of the security is less than
the amount of foreign currency the portfolio is obligated to deliver, and if a
decision is made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary for the portfolio to sell on the spot market
some of the foreign currency received on the sale of its hedged security if the
security's market value exceeds the amount of foreign currency the portfolio is
obligated to deliver.
If the portfolio retains the hedged security and engages in an offsetting
transaction, it will incur a gain or loss to the extent that there has been
movement in spot or forward contract prices. If a portfolio engages in an
offsetting transaction, it may subsequently enter into a new forward contract to
sell the foreign currency. Should forward prices decline during the period
between the portfolio's entering into a forward contract for the sale of a
foreign currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, the portfolio will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the
portfolio will suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
Buyers and sellers of foreign currency options and futures contracts are subject
to the same risks previously described with respect to options and futures
generally (see "Risk Factors with Options" and "Risk Factors with Futures,
Options on Futures and Options on Indexes," above). In addition, settlement of
currency options and futures contracts with respect to most currencies must
occur at a bank located in the issuing nation. The ability to establish and
close out positions on such options is subject to the maintenance of a liquid
market that may not always be available. Currency rates may fluctuate based on
political considerations and governmental actions as opposed to purely economic
factors.
Predicting the movements of foreign currency in relation to the U.S. dollar is
difficult and requires different skills than those necessary to predict
movements in the securities market. There is no assurance that the use of
foreign currency hedging transactions can successfully protect a portfolio
against loss resulting from the movements of foreign currency in relation to the
U.S. dollar. In addition, it must be remembered that these methods of protecting
the value of a portfolio's securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities. It simply establishes a rate of exchange which can be achieved at
some future point in time. Additionally, although such contracts tend to
minimize the risk of loss due to the decline in the value of the hedged
currency, at the same time they tend to limit any potential gain which might
result should the value of such currency increase.
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<PAGE> 42
MANAGEMENT OF THE FUND
DIRECTORS AND OFFICERS OF THE FUND
The directors and officers of the Fund, together with information as to their
principal occupations during the past five years are listed below:
<TABLE>
<CAPTION>
Position with Principal Occupation
Name and address the Fund during past five years
- ---------------- ------------- ----------------------
<S> <C> <C>
Ronald L. Benedict* Secretary and Second Vice President and Counsel and
237 William H. Taft Rd. Director Assistant Secretary, ONLI; Secretary of
Cincinnati, Ohio ONIMCO and of the Adviser
George E. Castrucci Director Business consultant and private
8355 Old Stable Rd. investor; Chairman and Director of
Cincinnati, Ohio Baldwin Piano & Organ Co.;
Formerly President and Chief
Operating Officer of Great
American Communications Co. and
Chairman and Chief Executive
Officer of Great American
Broadcasting Co.; Director of Benchmark
Savings Bank
Maurice H. Kirby, Jr. Director Retired. Formerly Senior Vice
6726 Farmbrook Drive President, First National Bank
Cincinnati, Ohio of Cincinnati
George M. Vredeveld Director Professor of Economics, University of
University of Cincinnati of Cincinnati; Director of Center for
P.O. Box 210223 Economic Education; Private Consultant;
Cincinnati, Ohio Director of Benchmark Savings Bank
Donald J. Zimmerman* President and Director and Senior Vice President,
237 William H. Taft Rd. Director Insurance Operations and
Cincinnati, Ohio Secretary, ONLI
Michael A. Boedeker Vice President Vice President, Fixed Income
237 William H. Taft Rd. Securities, ONLI; Vice President
Cincinnati, Ohio and Director of ONIMCO and of the Adviser
Joseph P. Brom Vice President Vice President, Investments,
237 William H. Taft Rd. ONLI; President and Director
Cincinnati, Ohio of ONIMCO and of the Adviser
Stephen T. Williams Vice President Director of Securities, ONLI;
237 William H. Taft Rd. Vice President and Director of
Cincinnati, Ohio ONIMCO and of the Adviser
Dennis R. Taney Treasurer Mutual Funds Financial Operations,
237 William H. Taft Rd. ONLI; Treasurer of ONIMCO and of the
Cincinnati, Ohio Adviser
</TABLE>
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<PAGE> 43
<TABLE>
<S> <C> <C>
Barbara A. Hopewell Assistant Secretary Associate Counsel, ONLI;
237 William H. Taft Rd. Assistant Secretary of ONIMCO and of the
Cincinnati, Ohio Adviser
</TABLE>
*Indicates Directors who are "Interested Persons" as defined by the Investment
Company Act of 1940, as amended.
All directors and officers of the Fund hold similar positions with ONE Fund,
Inc. ("ONE Fund"), another mutual fund sponsored by ONLI and managed by the
Adviser.
COMPENSATION OF DIRECTORS
Directors who are not affiliated with the Adviser, ONLI, ONLAC or a sub-adviser
were compensated as follows in 1995:
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation
Director From the Fund From Fund Complex*
- -------- ------------- ------------------
<S> <C> <C>
James E.Baker $10,400 $15,000
George E. Castrucci 10,400 15,000
Maurice H. Kirby, Jr. 10,400 15,000
</TABLE>
* The "Fund Complex" consists of the Fund and ONE Fund, Inc.
Directors and officers of the Fund who are affiliated with the Adviser, ONLI or
ONLAC receive no compensation from the Fund Complex. The Fund has no pension,
retirement or deferred compensation plan for its directors or officers.
SHAREHOLDERS' MEETINGS
The Fund's by-laws provide that shareholders meetings need only be held every
three years unless matters requiring shareholder approval should occur more
frequently. It is anticipated that shareholder meetings will generally occur
every three years.
INVESTMENT ADVISORY AND OTHER SERVICES
The Adviser is an Ohio corporation organized on January 17, 1996 to provide
investment advice and management services to funds affiliated with ONLI. The
Adviser is a wholly-owned subsidiary of ONLI. The Adviser succeeded O.N.
Investment Management Company ("ONIMCO") as the Fund's investment adviser on May
1, 1996. Prior to that date, ONIMCO had been the investment adviser from the
Fund's inception. The Adviser, like ONIMCO before it, uses ONLI's investment
personnel and administrative systems.
The Adviser regularly furnishes to the Fund's Board of Directors recommendations
with respect to an investment program consistent with the investment policies of
each portfolio. Upon approval of an investment program by the Fund's Board of
Directors, the Adviser implements the program by placing the orders for the
purchase and sale of securities or, in the case of the International, Capital
Appreciation, Small Cap, Global Contrarian and Aggressive Growth Portfolios, by
delegating that implementation to SGAM, TRPA, FAM or SCM, as the case may be.
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 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 and agency
agreements with The Provident Bank and the custodian agreement with Investors
Fiduciary Trust Company), office space, and other facilities. The Fund pays
20
<PAGE> 44
corporate 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 relating to registration of its shares
for sale and shareholders' meetings.
As compensation for its services, the Adviser receives from the Fund annual fees
on the basis of each portfolio's average daily net assets during the quarterly
period for which the fees are paid based on the following schedule: (a) for each
of the Equity, Bond and Omni Portfolios, 0.60% of the first $100 million of each
Portfolio's net assets, 0.50% of the next $150 million of net assets, 0.45% of
the next $250 million of net assets, 0.40% of the next $500 million of net
assets, 0.30% of the next $1 billion of net assets, and 0.25% of net assets over
$2 billion; (b) for the Money Market Portfolio, 0.30% of the first $100 million
of net assets, 0.25% of the next $150 million of net assets, 0.23% of the next
$250 million of net assets, 0.20% of the next $500 million of net assets, and
0.15% of net assets over $1 billion; (c) for the International and Global
Contrarian Portfolios, 0.90% of each Portfolio's net assets; and (d) for the
Capital Appreciation, Small Cap and Aggressive Growth Portfolios, 0.80% of each
Portfolio's net assets. However, as to the Money Market Portfolio, the Adviser
is presently waiving any of its fee in excess of 0.25%.
Under the Investment Advisory Agreement, the Fund authorizes the Adviser to
retain sub-advisers for the International, Capital Appreciation, Small Cap,
Global Contrarian and Aggressive Growth Portfolios, subject to the approval of
the Fund's Board of Directors. The Adviser has entered into Sub-Advisory
Agreements with SGAM, TRPA, FAM and SCM, respectively, to manage the investment
and reinvestment of those Portfolios' assets, subject to the supervision of the
Adviser. As compensation for their services, (a) SGAM receives from the Adviser
fees at the annual rate of 0.75% of the International and Global Contrarian
Portfolios' average daily net assets during the quarter for which the fee is
paid; (b) TRPA receives from the Adviser a fee at an annual rate of 0.70% of the
first $5 million, and 0.50% of average daily net asset value in excess of $5
million, of the Capital Appreciation Portfolio; (c) FAM receives from the
Adviser a fee at an annual rate of 0.65% of the first $75 million, 0.60% of the
next $75 million, and 0.55% of the average daily net asset value in excess of
$150 million of the Small Cap Portfolio; and (d) SCM receives from the Adviser a
fee at an annual rate of 0.70% of the first $50 million, and 0.50% of average
daily net asset value in excess of $50 million of the Aggressive Growth
Portfolio.
For each of the indicated years, ending December 31*, the following investment
advisory fees from each of the Fund's portfolios were paid to ONIMCO (the
Adviser's predecessor) as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Equity $ 812,156 $ 522,678 $445,082
Money Market** 31,228 33,012 70,380
Bond 87,798 55,332 45,516
Omni 542,756 367,235 262,444
International 678,133 380,483 40,886
Capital Appreciation 96,082 30,172 N/A
Small Cap 69,124 9,398 N/A
Global Contrarian 21,955 N/A N/A
Aggressive Growth 11,898 N/A N/A
---------- ---------- --------
$2,351,130 $1,398,310 $864,308
</TABLE>
* The International Portfolio commenced operations on April 30, 1993. The
Capital Appreciation and Small Cap Portfolios commenced operations on May 1,
1994. The Global Contrarian and Aggressive Growth Portfolios commenced
operations on March 31, 1995.
** An additional $14,932, $25,824 and $21,776 was earned but waived in 1995,
1994 and 1993, respectively, as described above.
The Investment Advisory Agreement also 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 l%, on
an annualized basis, of such portfolio's average daily net asset value, the
Adviser will pay such expenses. Under the same terms, ONIMCO paid the Global
Contrarian Portfolio $8,127 in 1995, ONIMCO paid the Capital
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<PAGE> 45
Appreciation and Small Cap Portfolios $2,669 and $458, respectively, during
1994, and ONIMCO paid the International Portfolio $11,917 in 1993. No other such
amounts were paid to any portfolio during the three years ended December 31,
1995.
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 Agreement, the Service Agreement, and the Sub-Advisory
Agreements for the International, Global Contrarian, Capital Appreciation, Small
Cap and Aggressive Growth Portfolios were approved by the votes of the Board of
Directors on January 24, 1996, and the shareholders on March 28, 1996. 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 directors 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 of
Directors 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 of Directors 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 Agreements may be terminated, without penalty, by the Adviser or
the sub-adviser 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 buys and sells the portfolio securities for the Equity, Money
Market, Bond and Omni Portfolios and selects the brokers to handle such
transactions. It is the Adviser's intention to place orders for the purchase and
sale of securities with the primary 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. Bonds and money market securities are
generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes.
Occasionally, securities may be purchased directly from the issuer. For
securities traded primarily in the over-the-counter market, the Adviser will,
where possible, deal directly with dealers who make a market in the securities
unless better prices and execution are available elsewhere. Such dealers usually
act as principals for their own account.
In selecting brokers through whom to effect transactions, the Adviser considers
a number of factors including the value, quality, efficiency of execution and
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, the advisability of purchasing or
selling securities, the availability of securities or purchasers or sellers of
securities, and analyses and reports concerning issuers, industries, securities,
economic factors and trends and portfolio strategy. In making such
determination, the Adviser may use a broker whose commission in effecting a
securities transaction is in excess of that of some other broker if the Adviser
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.
SGAM selects the brokers and dealers that execute orders for the purchase and
sale of International and Global Contrarian Portfolio securities. SGAM seeks to
obtain the best price and execution available after taking into account research
services provided by such brokers and dealers for the International or Global
Contrarian Portfolio's benefit. Consistent with this policy, portfolio
transactions may be executed by brokers affiliated with
22
<PAGE> 46
Societe Generale (SGAM's ultimate controlling person) 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.
TRPA selects the brokers and dealers that execute orders for the purchase and
sale of Capital Appreciation Portfolio securities. TRPA seeks to obtain quality
execution at the most favorable prices through responsible brokers and dealers
and, in the case of agency transactions, at competitive commission rates. Higher
brokerage commissions may be paid in return for research services that benefit
the Capital Appreciation Portfolio. Portfolio transactions may be executed by
brokers affiliated with TRPA or its affiliates so long as the commission paid to
any such broker is reasonable and fair compared to the commission that would be
charged by an unaffiliated broker in a comparable transaction.
FAM selects the brokers and dealers that execute orders for the purchase and
sale of Small Cap Portfolio securities. FAM seeks to obtain the best execution
of orders at the most favorable prices. Higher brokerage commissions may be paid
in return for research services that may assist FAM in furtherance of its
subadvisory responsibilities to the Portfolio.
SCM selects the brokers and dealers that execute orders for the purchase and
sale of Aggressive Growth Portfolio securities. SCM seeks to obtain the best
execution and best security price available on each transaction in light of the
overall quality of brokerage and research services provided to SCM or the
Portfolio. SCM may cause the Portfolio to pay a broker which provides brokerage
or research services to SCM a commission for effecting a securities transaction
in excess of the amount another broker would have charged for effecting the
transaction.
Generally, it is not possible to place a dollar value on research and related
services provided by brokers to the Adviser or a sub-adviser. However, receipt
of such services may tend to reduce the expenses of the Adviser or the
sub-advisers. Research, statistical and similar information furnished by brokers
may be of incidental assistance to other clients of the Adviser or the sub-
advisers and conversely, transaction costs paid by other clients of the Adviser
or the sub-advisers may generate information which is beneficial to the Fund.
For each of the indicated years, ending on December 3l, the following brokerage
commission amounts were paid by each portfolio:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Equity $ 81,091 $ 52,713 $ 90,597
Money Market None None None
Bond 630 None None
Omni 39,073 25,413 34,582
International 153,524 131,000 34,625
Capital Appreciation 16,786 10,219 N/A
Small Cap 16,688 8,265 N/A
Global Contrarian 12,257 N/A N/A
Aggressive Growth 42,839 N/A N/A
-------- -------- --------
$362,888 $227,610 $159,804
</TABLE>
In l995, substantially all of such commissions were paid to brokers who
furnished statistical data and research information to ONIMCO (the predecessor
to the Adviser), SGAM, TRPA, FAM, or SCM.
23
<PAGE> 47
PURCHASE AND REDEMPTION OF SHARES
Fund shares 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. (The net asset value for the Money Market Portfolio is normally $l0
per share.) Depending upon the net asset values at that time, the amount paid
upon redemption may be more or less than the cost of the shares redeemed.
Payment for shares redeemed will be made as soon as possible, but in any event
within seven days after evidence of ownership of the shares 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.
Shares of one portfolio may be exchanged for shares of another portfolio of the
Fund on the basis of the relative net assets value next computed after an
exchange order is received by the Fund.
The net asset value of the Fund's shares is determined on each day on which an
order for purchase or redemption of the Fund's shares is received and there is a
sufficient degree of trading in portfolio securities that the current net asset
value of its shares might be materially affected. Such determination is made as
of 4:00 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 shares
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 in the Equity, Bond, International, Capital
Appreciation, Small Cap, Global Contrarian and Aggressive Growth Portfolios with
remaining maturities of 60 days or less are valued at amortized cost. The Fund
has obtained an exemptive order from the Commission permitting it to value all
short-term debt securities in the Omni Portfolio at amortized cost. The Fund
relies on Rule 2a-7 under the Investment Company Act of 1940 to value the assets
of the Money Market Portfolio on the basis of amortized cost with a view toward
stabilizing the net asset value at $10 per share and allowing dividend payments
to reflect net interest income as earned. Accordingly, the short-term debt
assets of the Omni and Money Market Portfolios are valued at their cost on the
date of acquisition with a daily adjustment being made to accrued income to
reflect amortization of premium or accretion of discount to the maturity date.
All other assets of the Equity, Bond, Omni, International, Capital Appreciation,
Small Cap, Global Contrarian and Aggressive Growth Portfolios, including
restricted debt securities and other investments for which market quotations are
not readily available, are valued at their fair value as determined in good
faith by the Fund's Board of Directors.
As a condition of the exemptive order, the Fund has agreed, with respect to
short-term debt securities in its Omni Portfolio, to maintain a dollar-weighted
average maturity of not more than 120 days and to not purchase any such debt
security having a maturity of more than one year. In relying on Rule 2a-7 with
respect to short-term debt securities in its Money Market Portfolio, the Fund
has agreed to maintain a dollar-weighted average portfolio maturity of not more
than 90 days and to not purchase any such debt security having a maturity of
more than 397 days. The dollar-weighted average maturity of short-term debt
securities is determined by dividing the sum of the dollar value of each such
security times the remaining days to maturity of such security by the sum of the
dollar value of all short-term debt securities. Should the disposition of a
short-term debt security result in a dollar- weighted average maturity of more
than the number of days allowed under the exemptive order or Rule 2a-7, as the
case may be, the Portfolio will invest its available cash so as to reduce such
average maturity to the
24
<PAGE> 48
required number of days or less as soon as reasonably practicable. The Fund
normally holds short-term debt securities to maturity and realizes par therefor
unless an earlier sale is required to meet redemption requirements.
In addition, the Omni and Money Market Portfolios are required to limit their
short-term debt investments, including repurchase agreements, to those United
States dollar denominated instruments which the Board of Directors determines
present minimal credit risks and which are in the top two rating categories of
any nationally recognized statistical rating organizations or, in the case of
any instrument that is not rated, of comparable quality as determined by the
Board of Directors. Although the use of amortized cost provides certainty in
valuation, it may result in periods during which value so determined is higher
or lower than the price the Fund would receive if it liquidated its securities.
The Fund's Board of Directors is obligated, as a particular responsibility
within the overall duty of care owed to Money Market Portfolio shareholders, to
establish procedures reasonably designed, taking into account current market
conditions and the investment objective of such Portfolio, to stabilize the
Portfolio's net asset value per share as computed for the purpose of
distribution, redemption and repurchase, at $10 per share. The procedures
adopted by the Board of Directors include periodically reviewing, as it deems
appropriate and at such intervals as are reasonable in light of current market
conditions, the extent of deviation, if any, between the net asset value per
share based on available market quotations and such value based on the
Portfolio's $10 amortized cost price. If such deviation exceeds 1/2 of 1
percent, or if there is any other deviation which the Board of Directors
believes would result in a material dilution to shareholders or purchasers, the
Board of Directors will promptly consider what action, if any, it should
initiate. Such action may include redemption in kind; selling portfolio
instruments prior to maturity to realize capital gains or losses, or to shorten
the average portfolio maturity; withholding dividends; splitting, combining or
otherwise recapitalizing outstanding shares; or using available market
quotations to determine net asset value per share. The Portfolio may reduce the
number of its outstanding shares by requiring shareholders to contribute to
capital proportionately the number of full and fractional shares as is necessary
to maintain the net asset value per share of $10. ONLI and ONLAC, the sole
shareholders of the Money Market Portfolio, have agreed to this procedure and
contract owners who allocate purchase payments to the Money Market Portfolio
will be bound by such agreement.
TAX STATUS
December 31, 1995 the Fund qualified as a regulated investment company under
Subchapter M of the Internal Revenue Code (the "Code"). Under such provisions,
the Fund is not subject to federal income tax on such part of its net ordinary
income and net realized capital gains which it distributes to shareholders. Each
portfolio is treated as a separate entity for federal income tax purposes,
including determining whether it qualifies as a regulated investment company and
determining its net ordinary income (or loss) and net realized capital gains (or
losses). To qualify for treatment as a regulated investment company, each
portfolio must, among other things, derive in each taxable year at least 90% of
its gross income from dividends, interest and gains from the sale or other
disposition of securities and derive less than 30% of its gross income in each
taxable year from the gains (without deduction for losses) from the sale or
other disposition of securities held for less than three months. Each portfolio
also intends to comply with the diversification requirements or regulations
under Section 817(h) of the Code.
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury Regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and the
Treasury Regulations promulgated thereunder. Since the only eligible
shareholders of the Fund are separate accounts of ONLI, ONLAC and other
insurance companies, no discussion is stated herein as to the federal income tax
consequences at the shareholder level.
25
<PAGE> 49
EXPERTS
The financial statements of Ohio National Fund, Inc. as of December 31, 1995 and
for the periods indicated herein included in this Statement of Additional
Information and the Financial Highlights included in the prospectus have been
included herein and in the prospectus in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, appearing in this
Statement of Additional Information, and upon the authority of said firm as
experts in accounting and auditing. KPMG Peat Marwick LLP's business address is
201 East Fifth Street, Cincinnati, Ohio 45202.
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 Second Vice President and Counsel of ONLI, has passed
on all other legal matters relating to the legality of the shares described in
the prospectus and this Statement of Additional Information.
26
<PAGE> 50
OHIO NATIONAL FUNDS, INC.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Ohio National Fund, Inc.:
We have audited the accompanying statements of assets and liabilities and the
schedules of investments of Ohio National Fund, Inc. (comprising, respectively,
the Equity, Money Market, Bond, Omni, International, Capital Appreciation, Small
Cap, Global Contrarian and Aggressive Growth Portfolios) as of December 31,
1995, and the related statements of operations, statements of changes in net
assets and the financial highlights for each of the periods indicated herein.
These financial statements and financial highlights are the responsibility of
the fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the custodian and brokers, and where replies are not received, we carried out
other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios comprising Ohio National Fund, Inc. as of December 31, 1995,
and the results of their operations, the changes in their net assets and their
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Cincinnati, Ohio
January 26, 1996
<PAGE> 51
<TABLE>
OHIO NATIONAL FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<CAPTION>
Portfolio
----------------------------------------------------------------------
Money
Equity Market Bond Omni
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Assets:
Investments in securities at market
value (note 1) ............................... $175,602,520 $14,867,269 $17,736,453 $109,938,908
Cash denominated in foreign currencies
(cost $39,368) (note 1) ...................... 0 0 0 0
Cash in bank ................................... 80,517 20,415 5,796 157,526
Unrealized gain on foreign currency
exchange contracts (note 6) .................. 0 0 0 0
Receivable for securities sold ................. 531,857 0 0 148,420
Receivable for shares sold ..................... 787,863 845,291 56,558 427,102
Dividends and interest receivable .............. 258,678 0 295,198 516,629
Other .......................................... 5,684 834 632 5,425
----------- ---------- ---------- -----------
Total assets ................................. 177,267,119 15,733,809 18,094,637 111,194,010
----------- ---------- ---------- -----------
Liabilities:
Unrealized loss on foreign currency
exchange contracts (note 6) .................. 0 0 0 0
Payable for securities purchased ............... 1,309,215 0 0 1,070,375
Dividends payable .............................. 0 6,620 0 0
Payable for shares redeemed .................... 0 0 1,742 374,667
Payable for investment management
services (note 3) ............................ 239,177 8,318 25,910 158,287
Accrued expenses ............................... 23,529 3,085 2,592 13,465
----------- ---------- ---------- -----------
Total liabilities ............................ 1,571,921 18,023 30,244 1,616,794
----------- ---------- ---------- -----------
NET ASSETS AT MARKET VALUE ........................ $175,695,198 $15,715,786 $18,064,393 $109,577,216
=========== ========== ========== ===========
Net assets consist of:
Par value, $1 per share ........................ $ 6,146,729 $ 1,571,579 $ 1,652,878 $ 6,226,075
Paid-in capital in excess of par value ......... 113,036,283 14,144,207 15,348,472 79,912,413
Accumulated undistributed net realized
gain (loss) on investments ................... 5,341,756 0 (85,093) 1,956,755
Net unrealized appreciation on:
Investments .................................. 50,383,257 0 857,278 20,591,636
Forward currency contracts (note 6) .......... 0 0 0 0
Foreign currency related transactions ........ 0 0 0 0
Undistributed (overdistributed ) net
investment income ............................ 787,173 0 290,858 890,337
----------- ---------- ---------- -----------
NET ASSETS AT MARKET VALUE ........................ $175,695,198 $15,715,786 $18,064,393 $109,577,216
=========== ========== ========== ===========
SHARES OUTSTANDING (note 5) ....................... 6,146,729 1,571,579 1,652,878 6,226,075
----------- ---------- ---------- -----------
NET ASSET VALUE PER SHARE ......................... $ 28.58 $ 10.00 $ 10.93 $ 17.60
=========== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Portfolio
----------------------------------------------------------------------
Capital Small Global Aggressive
International Appreciation Cap Contrarian Growth
------------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in securities at market
value (note 1) ............................... $87,447,951 $19,136,355 $13,496,712 $3,808,824 $5,261,827
Cash denominated in foreign currencies
(cost $39,368) (note 1) ...................... 0 0 0 0 39,234
Cash in bank ................................... 1,990,848 9,525 2,721,747 541,075 775
Unrealized gain on foreign currency
exchange contracts (note 6) .................. 670,868 0 0 5,067 12,008
Receivable for securities sold ................. 0 18,643 0 0 169,763
Receivable for shares sold ..................... 796,153 250,026 230,434 57,952 96,039
Dividends and interest receivable .............. 301,865 39,658 21,471 24,881 77,746
Other .......................................... 25,976 1,077 249 93 39
---------- ---------- ---------- --------- ---------
Total assets ................................. 91,233,661 19,455,284 16,470,613 4,437,892 5,657,431
---------- ---------- ---------- --------- ---------
Liabilities:
Unrealized loss on foreign currency
exchange contracts (note 6)................... 132,484 0 0 2,445 0
Payable for securities purchased ............... 298,086 93,525 401,436 0 1,644,793
Dividends payable .............................. 0 0 0 0 0
Payable for shares redeemed .................... 0 0 0 0 0
Payable for investment management
services (note 3) ............................ 192,492 34,242 27,255 8,804 5,882
Accrued expenses ............................... 16,872 7,234 3,891 6,048 1,295
---------- ---------- ---------- --------- ---------
Total liabilities ............................ 639,934 135,001 432,582 17,297 1,651,970
---------- ---------- ---------- --------- ---------
NET ASSETS AT MARKET VALUE ..................... $90,593,727 $19,320,283 $16,038,031 $4,420,595 $4,005,461
========== ========== ========== ========= =========
Net assets consist of:
Par value, $1 per share ........................ $ 6,298,294 $ 1,611,642 $ 1,011,742 $ 409,218 $ 338,205
Paid-in capital in excess of par value ......... 75,407,025 15,764,214 12,600,728 3,769,059 3,380,489
Accumulated undistributed net realized
gain (loss) on investments ................... 1,691,528 347,729 542,566 36,817 (47,306)
Net unrealized appreciation on:
Investments .................................. 5,858,066 1,453,071 1,906,139 158,445 156,233
Forward currency contracts (note 6) .......... 538,384 0 0 2,622 12,008
Foreign currency related transactions ....... 1,097 0 (34) 18 (134)
Undistributed (overdistributed ) net
investment income ............................ 799,333 143,627 (23,110) 44,416 165,966
---------- ---------- ---------- --------- ---------
NET ASSETS AT MARKET VALUE ..................... $90,593,727 $19,320,283 $16,038,031 $4,420,595 $4,005,461
========== ========== ========== ========= =========
SHARES OUTSTANDING (note 5) ....................... 6,298,294 1,611,642 1,011,742 409,218 338,205
---------- ---------- ---------- --------- ---------
NET ASSET VALUE PER SHARE ......................... $ 14.38 $ 11.99 $ 15.85 $ 10.80 $ 11.84
========== ========== ========== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 52
<TABLE>
OHIO NATIONAL FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<CAPTION>
PORTFOLIO
------------------------------------------------------------------
Money
Equity Market Bond Omni International
--------- ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest ................................ $ 1,500,766 $ 739,126 $1,108,699 $ 2,766,140 $ 653,088
Dividends ............................... 2,444,879 0 55,287 1,367,428 1,915,401 (b)
---------- ---------- ---------- ---------- ----------
Total investment income ............... 3,945,645 739,126 1,163,986 4,133,568 2,568,489
---------- ---------- ---------- ---------- ----------
Expenses:
Management fees (note 3) ................ 812,156 46,160 87,798 542,756 678,133
Custodian fees (note 3) ................. 203,485 16,862 20,900 129,716 130,597
Directors' fees (note 3) ................ 13,205 998 1,310 8,656 6,302
Professional fees ....................... 28,599 1,888 2,768 15,038 11,919
Other ................................... 35,289 4,434 3,525 22,291 13,707
---------- ---------- ---------- ---------- ----------
Total expenses ........................ 1,092,734 70,342 116,301 718,457 840,658
Less fees waived (note 3) ............. 0 (14,932) 0 0 0
---------- ---------- ---------- ---------- ----------
Net expenses .......................... 1,092,734 55,410 116,301 718,457 840,658
---------- ---------- ---------- ---------- ----------
Net investment income (loss) ........ 2,852,911 683,716 1,047,685 3,415,111 1,727,831
---------- ---------- ---------- ---------- ----------
Realized and unrealized gain (loss)
on investments and foreign currency
Net realized gain (loss) from:
Investments ........................... 5,341,756 0 (85,093) 1,972,001 1,691,528
Forward currency related transactions . 0 0 0 0 457,674
Net increase (decrease) in unrealized
appreciation (depreciation) on:
Investments ......................... 26,897,831 0 1,682,695 13,934,522 4,383,871
Foreign currency related transactions 0 0 0 0 523,701
---------- ---------- ---------- ---------- ----------
Net gain on investments ............. 32,239,587 0 1,597,602 15,906,523 7,056,774
---------- ---------- ---------- ---------- ----------
Net increase in net assets
from operations .................. $35,092,498 $ 683,716 $2,645,287 $19,321,634 $8,784,605
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO
-------------------------------------------------------
Capital Small Global Aggressive
Appreciation Cap Contrarian (a) Growth (a)
------------ ---------- ------------- ----------
<S> <C> <C> <C> <C>
Investment income:
Interest ................................ $ 343,156 $ 50,660 $ 18,114 $ 8,633
Dividends ............................... 191,184 23,684 63,446 (c) 303,789
---------- ---------- ---------- ----------
Total investment income ............... 534,340 74,344 81,560 312,422
---------- ---------- ---------- ----------
Expenses:
Management fees (note 3) ................ 96,082 69,124 21,955 11,898
Custodian fees (note 3) ................. 16,214 11,665 25,000 2,008
Directors' fees (note 3) ................ 967 686 250 227
Professional fees ....................... 1,671 1,298 472 342
Other ................................... 1,048 1,355 493 2,099
---------- ---------- ---------- ----------
Total expenses ........................ 115,982 84,128 48,170 16,574
Less fees waived (note 3) ............. 0 0 (8,127) 0
---------- ---------- ---------- ----------
Net expenses .......................... 115,982 84,128 40,043 16,574
---------- ---------- ---------- ----------
Net investment income (loss) ........ 418,358 (9,784) 41,517 295,848
---------- ---------- ---------- ----------
Realized and unrealized gain (loss)
on investments and foreign currency
Net realized gain (loss) from:
Investments ........................... 347,729 561,971 36,817 (47,306)
Forward currency related transactions . 0 2,911 26,795 7,406
Net increase (decrease) in unrealized
appreciation (depreciation) on:
Investments ......................... 1,486,874 1,631,857 158,445 156,233
Foreign currency related transactions 0 (46) 2,639 11,874
---------- ---------- ---------- ----------
Net gain on investments ............. 1,834,603 2,196,693 224,696 128,207
---------- ---------- ---------- ----------
Net increase in net assets
from operations .................. $2,252,961 $2,186,909 $ 266,213 $ 424,055
========== ========== ========== ==========
</TABLE>
(a) Commenced operations March 31, 1995.
(b) Net of $131,617 foreign taxes withheld.
(c) Net of $2,654 foreign taxes withheld.
The accompanying notes are an integral part of these financial statements.
<PAGE> 53
OHIO NATIONAL FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
PORTFOLIO
----------------------------------------------------
EQUITY MONEY MARKET
1995 1994 1995 1994
------------------------ ------------------------
<C> <C> <C> <C>
From operations:
Net investment
income .................. $ 2,852,911 $ 2,234,955 $ 683,716 $ 497,759
Realized gain (loss)
on investments
and foreign
currency related
transactions ............ 5,341,756 2,034,408 0 0
Unrealized gain (loss)
on investments
and foreign
currency related
transactions ............ 26,897,831 (3,945,856) 0 0
------------ ----------- ---------- ----------
Net increase (decrease)
in assets from
operations .......... 35,092,498 323,507 683,716 497,759
------------ ----------- ---------- ----------
Dividends and
distributions to
shareholders:
Dividends declared ...... (2,203,910) (2,223,380) (683,716) (497,759)
Capital gains
distribution .......... (2,034,408) (1,498,522) 0 0
------------ ----------- ---------- ----------
Total dividends and
distributions ...... (4,238,318) (3,721,902) (683,716) (497,759)
------------ ----------- ---------- ----------
From Capital Share
Transactions (note 5):
Received from
shares sold ............. 27,001,671 22,670,224 14,165,258 12,731,281
Received from dividends
reinvested .............. 4,238,318 3,721,902 683,716 497,759
Paid for shares
redeemed ................ (9,726,105) (9,524,993) (12,191,289) (19,293,770)
------------ ----------- ---------- ----------
Increase (decrease) in
net assets derived
from capital share
transactions ........ 21,513,884 16,867,133 2,657,685 (6,064,730)
------------ ----------- ---------- ----------
Increase (decrease)
in net assets .... 52,368,064 13,468,738 2,657,685 (6,064,730)
Net Assets:
Beginning of period ....... 123,327,134 109,858,396 13,058,101 19,122,831
------------ ----------- ---------- ----------
End of period (a) ......... $175,695,198 $123,327,134 $15,715,786 $13,058,101
============ =========== ========== ==========
(a) Includes undistributed
net investment
income of ............... $ 787,173 $ 138,172 $ 0 $ 0
============ =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO
------------------------------------------------------
BOND OMNI
1995 1994 1995 1994
------------------------ -------------------------
<C> <C> <C> <C>
From operations:
Net investment
income .................. $1,047,685 $ 834,629 $ 3,415,111 $ 3,012,739
Realized gain (loss)
on investments
and foreign
currency related
transactions ............ (85,093) 1,741 1,972,001 966,328
Unrealized gain (loss)
on investments
and foreign
currency related
transactions ............ 1,682,695 (1,308,762) 13,934,522 (4,325,399)
---------- ---------- ----------- -----------
Net increase (decrease)
in assets from
operations .......... 2,645,287 (472,392) 19,321,634 (346,332)
---------- ---------- ----------- -----------
Dividends and
distributions to
shareholders:
Dividends declared ...... (802,639) (837,535) (2,700,506) (2,991,171)
Capital gains
distribution .......... (1,741) (86,626) 0 0
---------- ---------- ----------- -----------
Total dividends and
distributions ...... (804,380) (924,161) (2,700,506) (2,991,171)
---------- ---------- ----------- -----------
From Capital Share
Transactions (note 5):
Received from
shares sold ............. 4,015,347 3,529,446 15,409,257 21,588,654
Received from dividends
reinvested .............. 804,380 924,161 2,700,506 2,991,171
Paid for shares
redeemed ................ (1,744,440) (1,887,483) (10,120,050) (10,483,526)
---------- ---------- ----------- -----------
Increase (decrease) in
net assets derived
from capital share
transactions ........ 3,075,287 2,566,124 7,989,713 14,096,299
---------- ---------- ----------- -----------
Increase (decrease)
in net assets .... 4,916,194 1,169,571 24,610,841 10,758,796
Net Assets:
Beginning of period ....... 13,148,199 11,978,628 84,966,375 74,207,579
---------- ---------- ----------- -----------
End of period (a) ......... $18,064,393 $13,148,199 $109,577,216 $84,966,375
========== ========== =========== ===========
(a) Includes undistributed
net investment
income of ............... $ 290,858 $ 45,811 $ 890,337 $ 175,732
========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 54
OHIO NATIONAL FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 AND 1994 (CONTINUED)
<TABLE>
<CAPTION>
PORTFOLIO
-------------------------------------------------------
International Capital Appreciation (b)
1995 1994 1995 1994
------------------------ ------------------------
<S> <C> <C> <C> <C>
From operations:
Net investment
income (loss) ........... $ 1,727,831 $ 517,253 $ 418,358 $ 125,344
Realized gain (loss)
on investments
and foreign
currency related
transactions ............ 2,149,202 979,701 347,729 139,011
Unrealized gain (loss)
on investments
and foreign
currency related
transactions ............ 4,907,572 (53,567) 1,486,874 (33,803)
---------- ---------- ---------- ---------
Net increase (decrease)
in assets from
operations .......... 8,784,605 1,443,387 2,252,961 230,552
---------- ---------- ---------- ---------
Dividends and
distributions to
shareholders:
Dividends declared ...... (1,426,199) (376,185) (284,670) (115,406)
Capital gains
distribution .......... (1,090,908) (87,191) (139,011) 0
---------- ---------- ---------- ---------
Total dividends and
distributions ...... (2,517,107) (463,376) (423,681) (115,406)
---------- ---------- ---------- ---------
From Capital Share
Transactions (note 5):
Received from
shares sold ............. 26,592,168 49,137,629 10,945,010 6,851,101
Received from dividends
reinvested .............. 2,517,107 463,376 423,681 115,406
Paid for shares
redeemed ................ (7,658,197) (5,182,893) (632,303) (327,038)
---------- ---------- ---------- ---------
Increase in net
assets derived
from capital share
transactions ........ 21,451,078 44,418,112 10,736,388 6,639,469
---------- ---------- ---------- ---------
Increase in net
assets ........... 27,718,576 45,398,123 12,565,668 6,754,615
Net Assets:
Beginning of period ....... 62,875,151 17,477,028 6,754,615 0
---------- ---------- ---------- ---------
End of period (a) ......... $90,593,727 $62,875,151 $19,320,283 $6,754,615
========== ========== ========== =========
(a) Includes undistributed
net investment
income of ............... $ 799,333 $ 40,027 $ 143,627 $ 9,939
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO
--------------------------------------------------------
GLOBAL AGGRESSIVE
Small Cap(b) Contrarian(c) Growth
1995 1994 1995 1995
------------------------ ------------ ------------
<S> <C> <C> <C> <C>
From operations:
Net investment
income (loss) ........... $ (9,784) $ 42,276 $ 41,517 $ 295,848
Realized gain (loss)
on investments
and foreign
currency related
transactions ............ 564,882 (19,405) 63,612 (39,900)
Unrealized gain (loss)
on investments
and foreign
currency related
transactions ............ 1,631,811 274,294 161,084 168,107
---------- --------- --------- ---------
Net increase (decrease)
in assets from
operations .......... 2,186,909 297,165 266,213 424,055
---------- --------- --------- ---------
Dividends and
distributions to
shareholders:
Dividends declared ...... (28,120) (30,393) (23,897) (137,288)
Capital gains
distribution .......... 0 0 0 0
---------- --------- --------- ---------
Total dividends and
distributions ...... (28,120) (30,393) (23,897) (137,288)
---------- --------- --------- ---------
From Capital Share
Transactions (note 5):
Received from
shares sold ............. 11,178,786 3,272,162 4,311,648 3,709,801
Received from dividends
reinvested .............. 28,120 30,393 23,897 137,288
Paid for shares
redeemed ................ (584,139) (312,852) (157,266) (128,395)
---------- --------- --------- ---------
Increase in net
assets derived
from capital share
transactions ........ 10,622,767 2,989,703 4,178,279 3,718,694
---------- --------- --------- ---------
Increase in net
assets ........... 12,781,556 3,256,475 4,420,595 4,005,461
Net Assets:
Beginning of period ....... 3,256,475 0 0 0
---------- --------- --------- ---------
End of period (a) ......... $16,038,031 $3,256,475 $4,420,595 $4,005,461
========== ========= ========= =========
(a) Includes undistributed
net investment
income of ............... $ (23,110) $ 11,883 $ 44,416 $ 165,966
========== ========= ========= =========
</TABLE>
(b) Commenced operations May 1, 1994.
(c) Commenced operations March 31, 1995.
The accompanying notes are an integral part of these financial statements.
<PAGE> 55
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------
<S> <C> <C>
AEROSPACE (3.9%)
44,500 Allied Signal, Inc. $ 2,113,750
64,000 Raytheon Co. 3,024,000
31,350 Rockwell International Corp. 1,657,631
-----------
6,795,381
-----------
AUTOMOTIVE AND RELATED (3.3%)
22,500 Arvin Industries, Inc. 371,250
15,500 Chrysler Corp. 858,312
43,000 * Custom Chrome, Inc. 994,375
29,400 Eaton Corp. 1,576,575
20,000 Magna International, Inc. 865,000
43,000 Modine Manufacturing Co. 1,032,000
-----------
5,697,512
-----------
BANKING (3.0%)
15,000 Boatmen's Bancshares, Inc. 613,125
24,000 Charter One Financial Inc. 735,000
21,000 First Union Corp. 1,168,125
70,000 Hanson Trust, PLC 1,067,500
22,500 Mellon Bank Corp. 1,209,375
20,500 Susquehanna Bancshares Inc. 543,250
-----------
5,336,375
-----------
BUSINESS SERVICES (6.5%)
26,500 * Andros, Inc. 404,125
34,500 * Banctec, Inc. 638,250
44,500 First Data Corp. 2,975,938
12,500 Fisher Scientific International 417,187
50,000 Manpower Inc. 1,406,250
50,000 * Mastec Inc. 662,500
38,000 Reynolds & Reynolds CL A 1,477,250
35,000 Standard Register Co. 704,375
30,000 * Symbol Technologies, Inc. 1,185,000
50,000 * Verifone, Inc. 1,431,250
-----------
11,302,125
-----------
CHEMICALS (3.8%)
25,000 Betz Laboratories, Inc. 1,025,000
17,500 E I DuPont De Nemours & Co. 1,222,813
28,000 Lubrizol Corp. 780,500
17,000 Monsanto Co. 2,082,500
46,000 OM Group, Inc. 1,523,750
-----------
6,634,563
-----------
COMPUTER AND RELATED (11.3%)
30,000 * Cisco Systems, Inc. 2,238,750
30,000 Computer Sciences Corp. 2,107,500
53,000 * Continental Circuits Corp. 861,250
20,000 * Exabyte Corp. 292,500
35,500 Hewlett-Packard Co. 2,973,125
32,000 Intel Corp. 1,816,000
20,500 * Medar Inc. 161,437
10,000 * Microsoft Corp. 877,500
40,000 Motorola, Inc. 2,280,000
35,000 * Netframe Systems 185,937
52,500 * Novell, Inc. 748,125
50,000 * Pyxis Corp. 731,250
40,000 * Sun Microsystems, Inc. 1,825,000
28,500 * Teradyne Inc. 712,500
40,000 Texas Instruments, Inc. 2,070,000
-----------
19,880,874
-----------
COMMUNICATIONS (1.9%)
55,000 Andrew Corp. $ 2,103,750
66,000 * General Cable 990,000
25,000 * Granite Broadcasting, Corp. 265,625
-----------
3,359,375
-----------
CONSUMER PRODUCTS (0.8%)
22,500 Panamerican Beverages, Inc. 720,000
23,000 Stanhome, Inc. 669,875
-----------
1,389,875
-----------
CONTAINERS (0.8%)
90,000 * Owens-Illinois, Inc. 1,305,000
-----------
DIVERSIFIED (0.1%)
32,500 Quixote Corp. 251,875
-----------
ELECTRICAL EQUIPMENT (4.1%)
90,000 BMC Industries Inc. - Minn. 2,092,500
31,500 Federal Signal Corp. 815,063
40,000 General Electric Co. 2,880,000
30,000 Varian Associates, Inc. 1,432,500
-----------
7,220,063
-----------
ENTERTAINMENT AND LEISURE (0.5%)
25,000 Cedar Fair 925,000
-----------
FINANCE (1.7%)
37,500 * Medaphis Corp. 1,387,500
15,000 PHH Corp. 701,250
40,000 SEI Corp. 870,000
-----------
2,958,750
-----------
FOOD AND RELATED (0.9%)
33,000 Smart & Final, Inc. 701,250
25,500 H.J. Heinz Co. 844,687
-----------
1,545,937
-----------
HOUSING, FURNITURE & RELATED (2.7%)
108,800 Clayton Homes, Inc. 2,325,600
64,000 Newell Co. 1,656,000
50,000 Shaw Industries, Inc. 737,500
-----------
4,719,100
-----------
INDUSTRIAL SERVICES (3.9%)
30,000 Deere & Company 1,057,500
22,500 Fluor Corp. 1,485,000
38,000 * Nuclear Support Services, Inc. 47,500
50,000 Regal Beloit 1,087,500
32,000 Stewart & Stevenson Services 808,000
50,000 WMX Technologies, Inc. 1,493,750
20,000 York International, Corp. 940,000
-----------
6,919,250
-----------
INSURANCE SERVICES (5.1%)
28,125 American International Group 2,601,563
18,000 Chubb Corp. 1,741,500
34,125 Cincinnati Financial Corp. 2,226,656
40,000 Equitable Cos., Inc. 960,000
34,500 Providian Corp. 1,405,875
-----------
8,935,594
-----------
</TABLE>
(continued)
<PAGE> 56
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
EQUITY PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
Market
Shares Common Stock Value
- --------------------------------------------------------------------
<S> <C> <C>
MACHINERY (3.2%)
28,000 * Bridgeport Machines Inc. $ 588,000
24,000 Caterpillar, Inc. 1,410,000
40,000 Kysor Industrial Corp. 970,000
56,800 Trinity Industries 1,789,200
47,000 Walbro Corp. 846,000
-----------
5,603,200
-----------
MEDICAL AND RELATED (6.0%)
32,000 Abbott Laboratories 1,336,000
36,000 Allergan, Inc. 1,170,000
44,000 Columbia HCA Healthcare Corp. 2,233,000
24,000 * Foundation Health Corp. 1,032,000
34,500 Healthcare Realty Trust 793,500
30,000 * Humana Inc. 821,250
29,500 National Health Investors, Inc. 977,188
13,500 National Healthcare-LP 526,500
23,500 * Quorum Health Group Inc. 517,000
24,000 U.S. Healthcare, Inc. 1,116,000
-----------
10,522,438
-----------
METALS AND MINING (1.8%)
52,500 Easco Inc. 452,812
40,000 Greenbrier Companies, Inc. 485,000
35,300 Minerals Technologies, Inc. 1,288,450
16,000 Phelps Dodge Corp. 996,000
-----------
3,222,262
-----------
METAL FABRICATING (1.2%)
96,000 Engelhard Corp. 2,088,000
-----------
OIL, ENERGY AND NATURAL GAS (6.2%)
40,000 Ashland, Inc. 1,405,000
65,500 Camco International, Inc. 1,834,000
27,000 Chevron Corp. 1,417,500
13,000 Coastal Corp. 484,250
17,500 Diamond Shamrock, Inc. 452,813
57,500 * Enserch Exploration Inc. 668,437
75,000 * Louis Dreyfus Natural Gas 1,134,375
20,000 Schlumberger, Ltd. 1,385,000
45,000 Union Texas Petroleum 871,875
90,000 Westcoast Energy, Inc. 1,316,250
-----------
10,969,500
-----------
PAPER PRODUCTS (0.1%)
15,000 * Specialty Paperboard, Inc. 183,750
-----------
RETAIL (0.4%)
35,000 Family Dollar Stores 481,250
12,500 * Regis Corp. 300,000
-----------
781,250
-----------
REAL ESTATE AND LEASING (0.4%)
51,000 Commercial Net Lease Realty 650,250
5,000 Kennedy-Wilson, Inc. 25,000
-----------
675,250
-----------
TEXTILES AND RELATED (0.6%)
25,000 Oxford Industries, Inc. 418,750
25,000 Singer Co. NV 696,875
-----------
1,115,625
-----------
TRANSPORTATION AND EQUIPMENT (4.5%)
41,382 Burlington Northern, Inc. $ 3,227,796
15,000 Conrail, Inc. 1,050,000
30,000 Consolidated Freightways Inc. 795,000
22,500 Illinois Central Corp. 863,438
25,000 Norfolk Southern Corp. 1,984,375
-----------
7,920,609
-----------
UTILITIES (1.4%)
21,500 Entergy Corp. 628,875
27,500 FPL Group, Inc. 1,275,313
20,500 Montana Power Co. 463,812
-----------
2,368,000
-----------
TOTAL COMMON STOCKS (80.1%)
(COST $91,580,755) $140,626,533
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (0.7%)
12,000 Ford Motor Depository Shares,
Series A, cum., conv. $ 1,137,000
-----------
BANKING (0.9%)
14,000 Washington Mutual Series D 1,603,000
-----------
ELECTRICAL EQUIPMENT (0.5%)
55,000 Westinghouse Equity, red.,
cum., conv. 907,500
-----------
OIL AND GAS (0.4%)
13,000 Ashland Oil, cum., conv. 765,375
-----------
METALS AND MINING (0.9%)
50,000 Freeport McMoRan Copper & Gold,
Series B 1,625,000
-----------
REAL ESTATE (0.3%)
20,000 Oasis Residential Inc. Series A
cum., conv. 515,000
-----------
TOTAL PREFERRED STOCK (3.7%)
(COST $6,078,590) 6,552,875
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- --------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (0.3%)
$300,000 Arvin Industries, Inc., 7.500%
conv. subordinated debentures,
due 09-03-14 $ 296,625
200,000 Magna Intl. Inc. conv. subordinated
debentures due 10-15-02 204,000
-----------
500,625
-----------
COMPUTER AND RELATED (1.2%)
1,000,000 Seagate Technology, Inc., 6.750%
conv. subordinated debentures,
due 05-01-12 1,177,500
1,100,000 * Solectron Corp. liquid yield option, zero
coupon contracts, due 05-05-12 976,250
-----------
2,153,750
-----------
</TABLE>
(continued)
<PAGE> 57
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
EQUITY PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------------
<S> <C> <C>
METAL FABRICATING (0.6%)
$ 900,000 INCO, Ltd., 7.750% conv.
subordinated debentures,
due 03-15-16 $ 963,000
-----------
TOTAL CONVERTIBLE DEBENTURES (2.1%)
(COST $2,754,181)
$3,617,375
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (1.8%)
$3,200,000 General Motors Acceptance Corp.
5.600% 01-11-96 $ 3,195,022
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------------
<S> <C> <C>
FINANCE (12.3%)
$4,700,000 American Express Credit Corp.
5.600% 01-08-96 $4,694,882
4,700,000 American General Capital Services
5.830% 01-10-96 4,693,150
3,300,000 Associates Corp. of N. America
5.620% 01-04-96 3,298,455
2,670,000 Household Finance
5.650% 01-05-96 2,668,324
4,160,000 Prudential Funding Corp.
5.810% 01-03-96 4,158,657
2,100,000 Sears, Roebuck Acceptance Corp.
5.900% 01-09-96 2,097,247
------------
21,610,715
------------
TOTAL SHORT-TERM NOTES (14.1%)
(Cost $24,805,737) 24,805,737
------------
TOTAL HOLDINGS
(Cost $125,219,263)(a) 175,602,520
============
</TABLE>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 58
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (8.4%)
$ 560,000 General Motors Acceptance Corp.
5.550% 03-04-96 $ 554,561
350,000 Echlin Inc.
5.680% 02-09-96 347,846
350,000 Ford Motor Credit Corp.
5.790% 01-10-96 349,493
----------
1,251,900
----------
CHEMICALS (3.8%)
570,000 Dupont (EI) deNemours
5.630% 01-24-96 567,950
----------
COMPUTER AND RELATED (7.8%)
600,000 Hewlett-Packard
5.630% 01-18-96 598,405
560,000 IBM Credit Corp.
5.750% 01-06-96 559,374
----------
1,157,779
----------
COMMUNICATIONS (5.9%)
530,000 Gannett Co.
5.600% 01-26-96 527,939
350,000 Ameritech
5.620% 02-02-96 348,251
----------
876,190
----------
COMMODITIES (1.1%)
165,000 Cargill, Inc.
5.680% 01-08-96 164,693
----------
CONSUMER PRODUCTS (11.0%)
600,000 Pepsi Co.
5.650% 01-19-96 598,305
485,000 Sears, Roebuck Acceptance Corp.
5.720% 01-29-96 482,842
100,000 Sears Roebuck Acceptance Corp.
5.710% 01-29-96 99,556
440,000 Stanley Works
5.540% 03-11-96 435,260
----------
1,615,963
----------
DRUGS (3.4%)
500,000 Glaxo Holdings
5.680% 01-22-96 498,343
----------
FOOD & RELATED (3.7%)
550,000 H.J. Heinz Company
5.680% 01-16-96 548,698
----------
FORESTRY AND PAPER PRODUCTS (4.0%)
600,000 Temple-Inland
5.620% 01-30-96 597,284
----------
FINANCE (21.9%)
$ 590,000 American Express Credit Corp.
5.700% 01-03-96 $ 589,813
500,000 American General Finance Corp.
5.660% 01-16-96 498,821
550,000 Associates Corp.
5.500% 01-25-96 547,983
410,000 G.E. Capital Corp.
5.690% 01-08-96 409,547
620,000 Heller Financial Inc.
5.770% 01-11-96 619,006
600,000 Household Finance Corp.
5.680% 02-02-96 596,971
----------
3,262,141
----------
INSURANCE (2.4%)
360,000 Prudential Funding Inc.
5.780% 01-11-96 359,422
----------
MACHINERY (2.7%)
100,000 Deere and Company
5.690% 01-02-96 99,984
100,000 Deere and Company
5.470% 01-02-96 99,985
200,000 Deere and Company
5.800% 01-02-96 199,968
----------
399,937
----------
OIL, ENERGY AND NATURAL GAS (5.2%)
400,000 Chervon Oil Co.
5.800% 01-09-96 399,485
380,000 KN Energy
5.750% 01-17-96 379,029
----------
778,514
----------
TRANSPORTATION (4.0%)
600,000 Consolidated Rail Corp.
5.680% 01-12-96 598,959
----------
UTILITIES (14.7%)
500,000 AT&T Corp.
5.680% 01-16-96 498,817
550,000 Central and Southwest Corp.
5.700% 02-14-96 546,168
650,000 Illinois Power Co.
5.930% 02-08-96 645,931
500,000 Southern California Edison Co.
5.680% 01-19-96 498,580
----------
2,189,496
----------
TOTAL HOLDINGS
(COST $14,867,269)(a) 14,867,269
==========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 59
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
BOND PORTFOLIO
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM NOTES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (13.8%)
$ 300,000 U.S. Treasury Note
7.625% 04-30-96 $ 302,376
250,000 U.S. Treasury Note
6.375% 08-15-02 262,385
500,000 U.S. Treasury Note
7.375% 11-15-97 518,730
500,000 U.S. Treasury Note
7.875% 11-15-99 543,545
745,000 U.S. Treasury Note
7.750% 02-15-01 822,569
---------
2,449,605
---------
AUTOMOTIVE AND RELATED (4.3%)
100,000 Arvin Industries
10.000% 08-01-00 112,250
500,000 GMAC
8.400% 10-15-99 541,875
100,000 Pep Boys
8.875% 04-15-96 100,875
---------
755,000
---------
COMMUNICATIONS (1.5%)
250,000 Tele-communications, Inc.
8.250% 01-15-03 267,500
---------
COMPUTER AND RELATED (2.9%)
300,000 Apple Computer Inc.
6.500% 02-15-04 297,750
200,000 Comdisco, Inc.
7.750% 09-01-99 209,750
---------
507,500
---------
CONSUMER GOODS (2.9%)
200,000 RJR Nabisco Inc.
8.750% 04-15-04 208,500
300,000 RJR Nabisco Inc.
8.625% 12-01-02 310,875
---------
519,375
---------
ELECTRICAL EQUIPMENT (2.4%)
400,000 Tektronix Inc.
7.500% 08-01-03 417,000
---------
FINANCE (1.4%)
250,000 Aristar Inc.
5.750% 07-15-98 250,312
---------
FOOD AND RELATED (2.8%)
500,000 Wendy's Inc.
6.350% 12-15-05 503,750
---------
FORESTRY AND PAPER PRODUCTS (5.0%)
300,000 Boise Cascade Co.
9.850% 06-15-02 352,125
250,000 Champion International
7.700% 12-15-99 265,312
250,000 ITT Rayonier Inc.
7.500% 10-15-02 266,563
---------
884,000
---------
GOVERNMENT (FOREIGN) (2.8%)
$ 200,000 British Columbia
7.000% 01-15-03 $ 212,500
250,000 Province of Quebec
8.625% 01-19-05 288,438
---------
500,938
---------
HOTEL/LODGING (1.9%)
300,000 Marriott International
7.780% 04-15-05 329,625
---------
HOUSING, FURNITURE AND RELATED (1.0%)
140,000 Armstrong World
9.750% 04-15-08 177,800
---------
INSURANCE (3.9%)
250,000 Continental Corp.
7.250% 03-01-03 260,000
400,000 Transamerica Finance Corp.
7.500% 03-15-04 428,000
---------
688,000
---------
MEDICAL AND RELATED (3.2%)
250,000 Bergen Brunswig
7.375% 01-15-03 265,312
300,000 Cardinal Health Inc.
6.500% 02-15-04 303,375
---------
568,687
---------
METALS AND MINING (2.8%)
500,000 Cyprus Minerals
6.625% 10-15-05 504,375
---------
OIL, ENERGY AND NATURAL GAS (10.9%)
200,000 Atlantic Richfield
8.550% 03-01-12 238,250
100,000 DeKalb Energy
9.875% 07-15-00 101,500
400,000 Dresser Industries, Inc.
6.250% 06-01-00 406,000
125,000 Marathon Oil
7.000% 06-01-02 128,750
500,000 Mobile Energy Services Co.
8.665% 01-01-17 552,613
400,000 PDV America, Inc.
7.875% 08-01-03 369,000
140,000 Shell Oil Co.
6.950% 12-15-98 145,250
---------
1,941,363
---------
REAL ESTATE (1.7%)
300,000 Avalon Properties Inc.
7.375% 09-15-02 308,625
---------
TRANSPORTATION (3.4%)
250,000 American President Cos., Ltd.
7.125% 11-15-03 252,187
350,000 Illinois Central Gulf Railroad
6.750% 05-15-03 355,688
---------
607,875
=========
</TABLE>
(continued)
<PAGE> 60
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM NOTES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES (17.6%)
$ 200,000 Cleveland Electric Illum.
7.625% 08-01-02 $ 192,250
500,000 Great Lakes Power Inc.
8.900% 12-01-99 538,125
250,000 Kansas Gas & Electric
8.290% 03-29-16 282,813
150,000 Long Island Lighting
8.750% 05-01-96 151,875
550,000 Mississippi Power & Light
8.800% 04-01-05 579,563
200,000 Old Dominion Electric Co-op
8.760% 12-01-22 243,750
200,000 Sprint Corp.
8.125% 07-15-02 221,000
700,000 Texas Utilities Electric Co.
7.480% 01-01-17 728,000
200,000 Toledo Edison Co.
7.875% 08-01-04 183,000
-----------
3,120,376
----------
MISCELLANEOUS (6.4%)
375,000 New Orleans Public Service Co.
8.670% 04-01-05 413,438
700,000 ITT Destinations Inc.
6.750% 11-15-05 716,407
-----------
1,129,845
----------
TOTAL LONG-TERM NOTES (92.6%)
(COST $15,607,023) 16,431,551
----------
AUTOMOTIVE AND RELATED (2.5%)
$ 200,000 Ford Motor Co.
5.920% 01-02-96 $ 199,967
240,000 General Motors Accepttance Corp.
5.600% 01-05-96 239,851
----------
439,818
----------
FINANCE (1.5%)
270,000 American General Capital Services
5.950% 01-04-96 269,866
----------
OIL, ENERGY AND NATURAL GAS (0.6%)
100,000 Chevron Oil Finance Co.
5.630% 01-03-96 99,968
----------
TOTAL SHORT-TERM NOTES (4.6%)
(COST $809,652) 809,652
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES (2.8%)
12,000 GTE Delaware, 8.750%, Series B $ 322,500
6,500 Phillips Gas Co., 9.320% Series A 172,250
-----------
TOTAL PREFERRED STOCKS (2.8%)
(COST $462,500) $ 494,750
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES WARRANTS VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED
500 * Plastic Specialties & Tech Inc. $ 500
-----------
TOTAL WARRANTS (0.0%) $ 500
-----------
TOTAL HOLDINGS
(COST $16,879,175)(A) $17,736,453
===========
</TABLE>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 61
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
OMNI PORTFOLIO
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM NOTES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (4.6%)
$ 775,000 U.S. Treasury Note
6.375% 07-15-99 $ 801,257
1,500,000 U.S. Treasury Note
7.375% 05-15-96 1,511,535
500,000 U.S. Treasury Note
7.875% 11-15-99 543,545
2,005,000 U.S. Treasury Note
7.750% 02-15-01 2,213,761
----------
5,070,098
----------
AUTOMOTIVE AND RELATED (0.6%)
300,000 Arvin Industries, Inc.
7.500% 09-30-14 296,625
400,000 Pep Boys
8.875% 04-15-96 403,500
----------
700,125
----------
AVIATION (0.5%)
500,000 AAR Corp.
7.250% 10-15-03 493,750
----------
COMPUTERS AND RELATED (0.6%)
700,000 Apple Computer, Inc.
6.500% 02-15-04 694,750
----------
CONSUMER GOODS (1.1%)
700,000 Kroger Co.
9.750% 02-15-04 758,625
400,000 RJR Nabisco, Inc.
8.750% 04-15-04 417,000
----------
1,175,625
----------
FINANCE (0.9%)
1,000,000 Green Tree Financial Corp.
8.700% 06-15-25 1,000,000
----------
FORESTRY AND PAPER PRODUCTS (1.5%)
700,000 Boise Cascade Co.
9.850% 06-15-02 821,625
500,000 Champion International
9.875% 06-01-00 575,000
250,000 ITT Rayonier, Inc.
7.500% 10-15-02 266,563
----------
1,663,188
----------
HOUSING, FURNITURE AND RELATED (0.3%)
250,000 Armstrong World
9.750% 04-15-08 317,500
----------
INSURANCE (1.1%)
500,000 Continental Corp.
7.250% 03-01-03 520,000
600,000 Transamerica Finance Corp.
7.500% 03-15-04 642,000
----------
1,162,000
----------
MEDICAL AND RELATED (0.5%)
500,000 Bergen Brunswig
7.375% 01-15-03 530,625
----------
METALS AND MINING (0.5%)
$ 500,000 Cyprus Minerals
6.625% 10-15-05 $ 504,375
----------
OIL, ENERGY AND NATURAL GAS (2.0%)
400,000 Dekalb Energy
9.875% 07-15-00 406,000
350,000 Dresser Industries, Inc.
6.250% 06-01-00 355,250
375,000 Marathon Oil
7.00% 06-01-02 386,250
600,000 PDV America, Inc.
7.875% 08-01-03 553,500
500,000 Union Texas Petroleum
8.250% 11-15-99 530,000
----------
2,231,000
----------
TRANSPORTATION (0.8%)
500,000 American President Cos., Ltd.
7.125% 11-15-03 504,375
400,000 Illinois Central Gulf Railroad
6.750% 05-15-03 406,500
----------
910,875
----------
UTILITIES (3.4%)
$ 400,000 Cleveland Electric Illum.
7.625% 08-01-02 384,500
1,000,000 Great Lakes Power
9.000% 08-01-04 1,122,500
350,000 Long Island Lighting
8.750% 05-01-96 354,375
500,000 Mississippi Power & Light
8.800% 04-01-05 526,875
400,000 Old Dominion Elec. Co.
8.760% 12-01-22 487,500
300,000 Sprint Corp.
8.125% 07-15--02 331,500
500,000 Texas New Mexico Power Co.
9.250% 09-15-00 520,625
----------
3,727,875
----------
TOTAL LONG-TERM NOTES (18.4%) $20,181,786
----------
(COST $19,252,122)
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------------------------
<S> <C>
FINANCE (17.1%)
$ 100,000 American Express Credit Corp.
5.600% 01-08-96 $ 99,891
3,300,000 American General Finance
5.900% 01-02-96 3,299,459
4,460,000 Associates Corp. of N. America
5.620% 01-04-96 4,457,911
4,600,000 Household Finance Corp.
5.650% 01-05-96 4,597,112
2,800,000 Prudential Funding Corp.
5.740% 01-09-96 2,796,428
3,500,000 Sears Roebuck Acceptance Corp.
5.900% 01-03-96 3,498,853
----------
TOTAL SHORT-TERM NOTES (17.1%)
(COST $18,749,654) $18,749,654
----------
</TABLE>
(continued)
<PAGE> 62
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
OMNI PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (0.1%)
$ 100,000 Magna Intl. Inc., 5.000% conv.
subordinated debentures,
due 10-15-02 $ 102,000
---------
COMPUTER AND RELATED (1.1%)
1,000,000 Seagate Technology Inc., 6.750%
conv. subordinated debentures,
due 05-01-12 1,177,500
----------
METAL FABRICATING (0.5%)
600,000 INCO, Ltd., 7.750% conv. subordinated
debentures, due 03-15-16 642,000
----------
TOTAL CONVERTIBLE DEBENTURES (1.7%)
(COST $1,696,875) $1,921,500
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE (2.7%)
22,000 Allied Signal, Inc. $1,045,000
21,600 Raytheon Co. 1,020,600
17,350 Rockwell International Corp. 917,381
---------
2,982,981
---------
AUTOMOTIVE AND RELATED (1.5%)
7,500 Arvin Industries, Inc. 123,750
5,850 Chrysler Corp. 323,944
17,000 * Custom Chrome, Inc. 393,125
8,000 Eaton Corp. 429,000
10,000 Magna International, Inc. 432,500
---------
1,702,319
---------
BANKING (3.0%)
10,000 Boatmen's Bancshares, Inc. 408,750
13,000 Charter One Financial, Inc. 398,125
10,000 First Union Corp. 556,250
13,650 Franklin National Bank 177,450
45,000 Hanson Trust, Plc 686,250
11,250 Mellon Bank Corp. 604,688
12,500 Susquehanna Bancshares, Inc. 331,250
---------
3,162,763
---------
BUSINESS SERVICES (3.2%)
12,500 * Andros, Inc. 190,625
20,000 First Data Corp. 1,337,500
30,000 Manpower, Inc. 843,750
30,000 * Mastec, Inc. 397,500
5,000 Standard Register Co. 100,625
22,000 * Verifone, Inc. 629,750
---------
3,499,750
---------
CHEMICALS (2.5%)
15,000 Betz Laboratories, Inc. 615,000
2,500 E I DuPont DeNemours & Co. 174,687
20,000 Learonal Inc. 460,000
12,000 Lubrizol Corp. 334,500
3,000 Monsanto Co. 367,500
25,000 OM Group, Inc. 828,125
---------
2,779,812
---------
COMMUNICATIONS (1.6%)
24,000 * Andrew Corp. $ 918,000
49,000 * General Cable Plc 735,000
15,000 * Granite Broadcasting Corp. 159,375
---------
1,812,375
---------
COMPUTER AND RELATED (7.1%)
15,000 * Cisco Systems, Inc. 1,119,375
6,600 Computer Sciences Corp. 463,650
10,000 * Exabyte Corp. 146,250
21,000 Hewlett-Packard Co. 1,758,750
14,000 Intel Corp. 794,500
5,000 * Microsoft Corp. 438,750
20,000 * Netframe Systems 106,250
32,500 * Novell, Inc. 463,125
20,000 * Pyxis Corp. 292,500
20,000 * Sun Microsystems, Inc. 912,500
16,000 * Teradyne Inc. 400,000
18,000 Texas Instruments, Inc. 931,500
---------
7,827,150
---------
CONSUMER PRODUCTS (0.7%)
11,500 PanAmerican Beverages, Inc. 368,000
12,000 Stanhome, Inc. 349,500
---------
717,500
---------
CONTAINERS (0.9%)
70,000 * Owens-Illinois, Inc. 1,015,000
---------
DIVERSIFIED (0.1%)
20,000 Quixote Corp. 155,000
---------
ELECTRICAL EQUIPMENT (2.9%)
40,000 BMC Industries, Inc.-Minn. 930,000
26,116 Federal Signal Corp. 675,752
14,000 General Electric Co. 1,008,000
12,000 Varian Associates, Inc. 573,000
---------
3,186,752
---------
ENTERTAINMENT AND LEISURE (0.8%)
25,000 Cedar Fair 925,000
---------
FINANCE (1.4%)
27,500 * Medaphis Corp. 1,017,500
11,500 PHH Corp. 537,625
---------
1,555,125
---------
FOOD AND RELATED (0.8%)
15,000 Smart & Final, Inc. 318,750
16,500 H.J. Heinz Co. 546,563
---------
865,313
---------
HOUSING, FURNITURE AND RELATED (1.3%)
29,620 Clayton Homes, Inc. 633,133
24,000 Newell Co. 621,000
11,200 Shaw Industries, Inc. 165,200
---------
1,419,333
---------
INDUSTRIAL SERVICES (0.7%)
20,000 * Nuclear Support Services, Inc. 25,000
1,600 Regal Beloit 34,800
28,000 Stewart & Stevenson Services 707,000
---------
766,800
---------
</TABLE>
(continued)
<PAGE> 63
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
OMNI PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE (5.3%)
16,125 American International Group $ 1,491,563
15,000 Chubb Corp. 1,451,250
23,625 Cincinnati Financial Corp. 1,541,531
20,000 Equitable Cos., Inc. 480,000
20,500 Providian Corporation 835,375
----------
5,799,719
----------
MACHINERY (1.8%)
15,000 * Bridgeport Machines, Inc. 315,000
6,000 Caterpillar, Inc. 352,500
21,000 Trinity Industries 661,500
34,000 Walbro Corp. 612,000
----------
1,941,000
----------
MEDICAL AND RELATED (4.6%)
28,000 Abbott Laboratories 1,169,000
14,000 Allergan, Inc. 455,000
15,000 * Foundation Health Corp. 645,000
33,500 Healthcare Realty Trust 770,500
18,000 * Humana, Inc. 492,750
24,000 National Health Investors, Inc. 795,000
15,000 U.S. Healthcare, Inc. 697,500
----------
5,024,750
----------
METAL FABRICATING (1.0%)
27,000 Amcast Industrial Corp. 492,750
18,000 Engelhard Corp. 391,500
4,000 Phelps Dodge Corp. 249,000
----------
1,133,250
----------
METALS AND MINING (1.2%)
32,500 Easco Inc. 280,312
24,000 Greenbrier Companies, Inc. 291,000
20,000 Minerals Technologies, Inc. 730,000
----------
1,301,312
----------
OIL, ENERGY AND NATURAL GAS (6.2%)
15,000 Ashland, Inc. 526,875
45,500 Camco International, Inc. 1,274,000
23,000 Chevron Corp. 1,207,500
7,000 Coastal Corp. 260,750
7,500 Diamond Shamrock, Inc. 194,062
27,000 * Enserch Exploration, Inc. 313,875
40,000 * Louis Dreyfus Natural Gas 605,000
10,000 Schlumberger, Ltd. 692,500
35,000 Union Texas Petroleum Holdings, Inc. 678,125
45,000 Westcoast Energy, Inc. 658,125
10,000 WD-40 Co. 410,000
----------
6,820,812
----------
REAL ESTATE (1.0%)
59,300 Commercial Net Lease Realty 756,075
2,000 * Kennedy-Wilson, Inc. 10,000
17,000 Liberty Property Trust 352,750
----------
1,118,825
----------
TRANSPORTATION AND EQUIPMENT (3.6%)
24,255 Burlington Northern Santa Fe $ 1,891,890
8,000 Conrail, Inc. 560,000
15,000 Consolidated Freightways, Inc. 397,500
7,500 Illinois Central Corp. 287,812
10,000 Norfolk Southern Corp. 793,750
----------
3,930,952
----------
UTILITIES (0.9%)
6,000 Entergy Corp. 175,500
15,000 FPL Group, Inc. 695,625
7,000 Montana Power Co. 158,375
----------
1,029,500
----------
TOTAL COMMON STOCKS (56.8%)
(COST $43,917,736) 62,473,093
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (1.5%)
18,000 Ford Motor Co., cum., conv., Ser. A $1,705,500
----------
BANKING (0.7%)
7,000 Washington Mutual 6.00% Series D 801,500
----------
ELECTRICAL EQUIPMENT (0.6%)
40,000 Westinghouse Equity, cum., conv. 660,000
----------
FOOD & RELATED (0.5%)
20,000 Conagra Capital LC, 9.350% cum.,
conv. Series C 550,000
----------
METALS AND MINING (0.9%)
30,000 Freeport McMoran Copper & Gold
cum., conv. 975,000
----------
OIL, ENERGY AND NATURAL GAS (0.4%)
7,000 Ashland, Inc., cum., conv. 412,125
----------
REAL ESTATE (0.4%)
15,000 Oasis Residential , Inc., 9.000% 386,250
----------
cum., conv. Series A
UTILITIES (1.0%)
20,000 GTE Delaware 8.750%, Series B 537,500
22,000 Phillips Gas Co. 9.320% Series A 583,000
----------
1,120,500
----------
TOTAL PREFERRED STOCKS (6.0%)
(COST $5,730,885) $6,610,875
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES WARRANTS VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED (0.00%)
2,000 * Plastic Specialties & Tech., Inc. $ 2,000
------------
TOTAL WARRANTS (0.0%) $ 2,000
------------
TOTAL HOLDINGS
(COST $89,347,272)(A) $109,938,908
============
</TABLE>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 64
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
MARKET
SHARES COMMON AND PREFERRED STOCK VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
JAPAN (19.8%)
85,000 Aida Engineering Limited (19) $ 650,435
18,000 Asatsu Inc. (20) 754,783
20,000 Chofu Seisakusho (9) 535,266
225,000 Dai-Tokyo Fire Marine Ins. Co. Ltd. (18) 1,713,043
75,000 Fuji Photo Film Co., Ltd. (9) 2,159,420
12,000 Hitachi Ltd. ADR (11) 1,206,000
115,000 * Iino Kaiun Kaisha (5) 653,333
35,000 Ito-Yokado Co. Ltd. (28) 2,150,725
35,000 Japan Airport Terminal Co. (32) 422,705
125,000 Nisshinbo Industries Inc. (8) 1,207,730
85,000 Nittetsu Mining Co., Ltd. (22) 845,894
65,000 Shimano Inc. (9) 1,142,995
10,000 Sotoh Co. (31) 98,551
45,000 Shoei Co. (27) 391,304
8,500 Toho Co. (20) 1,355,073
100,000 Tokyo Marine & Fire Ins. Co. Ltd. (18) 1,304,348
15,000 Tsutsumi Jewelry Co. (9) 749,275
----------
17,340,880
----------
SWITZERLAND (7.9%)
1,000 Affichage (20) 441,941
275 Bank of Intl. Settlements (3) 2,311,525
1,650 Kuehne & Nagel Intl. AG (32) 979,419
400 Lindt & Sprungli AG PC (9) 582,322
5,500 Safra Republic Holdings SA (3) 491,563
1,350 Schindler Holding AG PC (5) 1,397,964
2,000 Sika Finanz AG Bearer (7) 485,269
1 Vetropack Holding AG Bearer (23) 2,990
650 Vetropack Holding AG PC (23) 174,610
----------
6,867,603
----------
FRANCE (7.8%)
2,500 C.E.E. (Continentale d'Equipments
Electriques) (10) 124,325
4,110 Crometal (5) 261,351
15,000 Elf Aquitaine (12) 1,103,027
5,528 Emin Leydier (24) 449,541
5,000 Eramet (22) 326,098
13,750 Gaumont SA (20) 882,759
3,500 La Brosse et DuPont (9) 220,921
16,500 Legrand ADP (10) 1,647,814
4,000 Nicolas Schlumberger et Cie (19) 671,762
1,500 Promodes C.I. (28) 256,802
2,500 SAGA (Societe Anontme de Gerance et
d'Armement) (32) 85,091
1,000 Sucriere de Pithiviers-le-Vieil (1) 492,204
1,000 Taittinger (13) 262,917
----------
6,784,612
----------
GERMANY (7.2%)
5,000 Bayer AG (7) 1,325,444
7,500 Bertelsmann AG D.R.C. (25) 984,163
4,750 Buderus AG (5) 1,851,723
10,000 Hornbach Holdings AG Pfd. (28) 870,171
1,000 SAP AG Pfd. (8) 151,619
1,250 Spar Handells AG Pfd. (28) 268,013
1,000 Axel Springer Verlag AG (20) 671,772
450 Sudzucker AG Pfd. (1) 181,535
----------
6,304,440
----------
NEW ZEALAND (5.6%)
765,549 Carter Holt Harvey Limited (14) $ 1,650,313
50,000 Colonial Motor Co. Ltd. (2) 91,455
650,000 * Evergreen Forests Ltd. (14) 275,998
1,601,500 Shortland Properties, Ltd. (27) 899,715
889,900 Tasman Agriculture Limited (1) 906,870
125,000 Wilson Limited (20) 747,155
450,000 Wrightson Ltd. (1) 340,997
----------
4,912,503
----------
CANADA(4.7%)
50,000 Canadian Pacific Ltd. (34) 906,250
50,000 Dofasco, Inc. (30) 631,984
85,000 Noranda, Inc. (21) 1,751,694
200,000 Redstone Resources, Inc. (22) 578,860
35,000 Le Groupe Videotron, Ltd. (20) 256,457
----------
4,125,245
----------
HONG KONG (4.8%)
3,750,000 CDL Hotels Intl. Ltd. (16) 1,891,368
1,500,000 Shaw Brothers (Hong Kong) Ltd.(20) 1,648,885
1,000,000 South China Morning Post Holdings
Corp. (25) 611,057
----------
4,151,310
----------
NETHERLANDS (4.1%)
16,500 Apothekers Cooperatie OPG (17) 405,317
24,500 German City Estates NV (27) 370,242
1,500 Holdingmaatschappij de Telegraaf (25) 210,821
15,000 Philips Electronics NV ADR (11) 538,125
45,000 Randstad Holdings NV (29) 2,037,313
----------
3,561,818
----------
LATIN AMERICA (3.9%)
165,000 Antofagasta Holdings plc (21) 750,242
20,000 Bladex (3) 930,000
595,000 Ledesma SA (1) 761,486
1,000,000 Siderca S.A.I.C. (12) 969,854
----------
3,411,582
----------
UNITED KINGDOM (2.8%)
225,000 Blenheim Group plc (20) 872,915
100,000 Royal Doulton plc (9) 383,307
275,000 * McBride plc (10) 832,179
50,000 Scottish Television plc (20) 367,400
----------
2,455,801
----------
SWEDEN (2.2%)
40,000 AssiDoman AB (14) 867,633
65,000 Bylock & Nordsjofrakt AB 'B' (32) 567,878
35,000 Orrefors Kosta Boda AB (9) 521,936
----------
1,957,447
----------
SINGAPORE (2.1%)
250,000 Clipsal Industries Ltd. (10) 565,000
45,000 Rothmans Industries Limited (9) 170,226
85,000 Singapore Bus Service Ltd. (32) 607,014
225,000 Times Publishing Ltd. (25) 521,813
----------
1,864,053
----------
DENMARK (1.8%)
3,500 Aarhus Oliefabrik A/S Class 'B' (1) 195,074
20,000 Carlsberg International A/S Class'B'(9) 1,114,707
3,500 Copenhagen Airport (32) 266,810
----------
1,576,591
----------
</TABLE>
(continued)
<PAGE> 65
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
INTERNATIONAL PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON AND PREFERRED STOCK VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
SOUTH AFRICA (1.8%)
10,332 Anglo American Platinum Corp.ADR(22) $ 58,809
35,000 Anglo American Platinum Corp.(22) 199,218
10,000 JCI Ltd. ADR (22) 78,864
25,000 JCI Ltd. (22) 197,161
10,103 Johnnies Industrial Corp. ADR (22) 152,422
15,000 Johnnies Industrial Corp. (22) 226,307
45,000 Omni Media Corporation (20) 715,951
----------
1,628,732
----------
INDONESIA (1.8%)
10,000 Freeport McMoRan Pfd. 'B' (22) 325,000
20,000 Freeport McMoRan Pfd. 'C' (22) 607,500
28,500 Freeport McMoRan Pfd. 'D' (22) 602,062
----------
1,534,562
----------
AUSTRIA (1.4%)
6,500 Flughafen Wien AG (32) 430,868
9,500 VAE AG (26) 798,912
----------
1,229,780
----------
ITALY (1.2%)
50,000 Arnoldo Mondadori Editore SpA (25) 433,249
1,000,000 * Montedison non-conv. Savings SpA(34) 591,939
----------
1,025,188
----------
NORWAY (1.2%)
75,000 Schibsted AS (25) 1,017,366
----------
MEXICO (0.9%)
250,000 * Grupo Fernandez Editores SA de CV(25) 69,760
175,000 Industrias Penoles SA de CV (21) 722,258
----------
792,018
----------
FINLAND (0.8%)
250,000 * Tampella Oy AB (5) 315,544
10,000 Vaisala Oy A (5) 364,884
----------
680,428
----------
AUSTRALIA (0.6%)
185,000 Eltin Ltd. (22) 405,356
100,000 Motors Holdings Ltd. (2) 72,047
----------
477,403
----------
ISRAEL (0.5%)
150,000 Israel Land Development Co. Ltd. (34) 433,294
----------
BELGIUM (0.4%)
2,500 Deceuninck Plastics Ind. SA (4) 279,828
200 Societe Belge de Betons, SA (34) 108,375
----------
388,203
----------
SPAIN (0.3%)
75,000 Energia e Ind. Aragonesas SA (33) 285,321
----------
GREECE (0.3%)
48,200 H. Benrubi & Fils SA (9) 272,041
----------
MISCELLANEOUS (3.0%)
50,000 North European Oil Royalty Tr. (12) 637,500
25,000 Minorco ADR (34) 715,625
450,000 Lonrho plc (34) 1,229,065
----------
2,582,190
----------
TOTAL COMMON & PREFERRED STOCK
(88.9%) (COST $72,650,619) $77,660,411
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (1.5%)
$1,250,000 Federal Republic Of Brazil 7.250%
due 04-15-24 (15) $ 767,969
850,000 Republic of Poland PDI 3.250%
due 10-24-14 (15) 553,563
----------
1,321,532
----------
NON-U.S. DOLLAR (0.4%)
500,000 NZ Republic of New Zealand 10.000%
due 03-15-02 (15) 369,882
----------
TOTAL NON-CONVERTIBLE BONDS(1.9%)
(COST $1,614,599) $1,691,414
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (4.3%)
$ 100,000 Acer Inc. 4.000%
due 06-10-01 (8) $ 301,500
250,000 PT Inti Indorayon Utama 5.500%
due 10-01-02 (24) 280,313
850,000 Cheil Foods & Chemicals Co 3.000%
due 12-31-06 (9) 1,117,750
150,000 Sincere Navigation 3.750%
due 05-26-03 (32) 159,000
500,000 Ssangyong Cement Co. 3.000%
due 12-31-05 (6) 607,500
250,000 PT Pabrik Kertas Tjiwi Kimia
7.250% due 04-21-01 (24) 235,000
500,000 Tubos de Acero de Mexico SA
7.500% due 06-12-97 (12) 450,000
500,000 Tung Ho Steel Corp. 4.000%
due 07-26-01 (30) 607,500
---------
TOTAL U.S. DOLLAR (4.3%) $3,758,563
---------
NON U.S. DOLLAR (2.3%)
1,000,000 FF Alcatel Alstholm 2.500%
due 01-01-04 (11) 159,992
2,000,000 FF Michelin 6.000%
due 01-02-98 (2) 414,247
2,050,000 FF Promodes 5.500%
due 01-01-00 (27) 488,423
425,000 FF Compagnie Generale des Eaux
6.000% due 01-01-98 (33) 286,322
200,000 GBP Lonrho International Finance
6.000% due 02-27-04 (34) 306,684
18,000,000 JPY Nippon Yusen 2.000%
due 09-29-00 (32) 205,217
320,000 NZ Shortland Properties Inc. 7.500%
due 12-31-98 (27) 186,046
---------
TOTAL NON-U.S. DOLLAR (2.3%) $2,046,931
---------
TOTAL CONVERTIBLE SUBORDINATED
DEBENTURES (6.6%)
(COST $5,034,035) $5,805,494
---------
</TABLE>
(continued)
<PAGE> 66
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------------
<S> <C> <C>
UTILITIES (2.6%)
$2,291,000 AT&T Capital Corp.
5.780% 01-02-96 $ 2,290,632
-----------
Total Short-term Notes (2.6%)
(Cost $2,290,632) $ 2,290,632
-----------
Total Holdings $87,447,951
(Cost $81,589,885) (a) ===========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities.
FOREIGN CURRENCIES
NZ - New Zealand Dollar
FF - French Franc
GBP - British Pound
JPY - Japanese Yen
Industry Classifications
(1) Agriculture (18) Insurance
(2) Automotive (19) Machinery
(3) Banking (20) Media
(4) Building Products (21) Metal (non-ferrous)
(5) Capital Goods (22) Mining
(6) Cement (23) Packaging
(7) Chemicals (24) Paper
(8) Computer Products (25) Publishing
(9) Consumer Products (26) Rail Equipment
(10) Electrical Products (27) Real Estate
(11) Electronics (28) Retailing
(12) Energy and Oil (29) Services
(13) Food & Beverage (30) Steel
(14) Forest Products (31) Textile
(15) Governmental (32) Transportation
(16) Hotels (33) Utilities
(17) Health Care (34) Miscellaneous
The accompanying notes are an integral part of these financial statements.
<PAGE> 67
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
CAPITAL APPRECIATION PORTFOLIO
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM NOTES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (1.1%)
$ 100,000 U.S. Treasury Note
5.750% 10-31-97 $ 100,939
100,000 U.S. Treasury Note
7.375% 11-15-97 103,746
-----------
204,685
-----------
BANKING (0.3%)
50,000 Fifth Third Bank
4.250% 01-15-98 57,062
-----------
BUILDING MATERIALS (0.7%)
138,000 Manville Corp.
9.000% 12-31-03 136,793
-----------
ELECTRICAL EQUIPMENT (0.2%)
45,000 Cooper Industries
7.050% 01-01-15 46,350
-----------
ENTERTAINMENT AND LEISURE (0.5%)
100,000 Comcast Cable
3.375% 09-09-05 94,500
-----------
FINANCE (0.3%)
50,000 UBS Finance
2.000% 12-15-00 50,000
-----------
FOREIGN (0.5%)
100,000 Homestake Mining
5.500% 06-23-00 102,000
-----------
INDUSTRIAL SERVICES (0.9%)
200,000 WMX Technologies
2.000% 01-24-05 173,000
-----------
INSURANCE (0.9%)
150,000 Chubb Capital Corp.
6.000% 05-15-98 168,375
-----------
OIL, ENERGY AND NATURAL GAS (1.0%)
100,000 Cross Timbers Oil Co.
5.250% 11-01-03 94,500
100,000 Price Co.
5.500% 02-28-12 97,000
-----------
191,500
-----------
TOTAL LONG-TERM NOTES (6.4%)
(COST $1,144,039) $ 1,224,265
-----------
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (4.8%)
$ 163,000 U.S. Treasury Bill
5.350 01-25-96 $ 162,480
760,000 FNMA Discount Note
5.450 02-13-96 755,115
-----------
917,595
-----------
EDUCATION (1.9%)
360,000 Yale University
5.660% 02-20-96 357,170
-----------
FINANCE (8.5%)
450,000 Ciesco L.P.
5.730% 01-05-96 449,714
750,000 Preferred Receivables Funding
5.800% 01-10-96 748,913
425,000 PHH
5.850% 01-19-96 423,757
-----------
1,622,384
-----------
FOOD AND RELATED (2.5%)
486,000 H.J. Heinz
5.780% 01-26-96 484,049
-----------
HOUSING AND RELATED (3.1%)
590,000 Home Depot
5.900% 01-05-96 589,613
-----------
MEDICAL AND RELATED (1.0%)
200,000 Abbott Laboratories
5.800% 01-11-96 199,678
-----------
UTILITIES (2.4%)
470,000 Tampa Electric
5.770% 01-08-96 469,472
-----------
MISCELLANEOUS (5.2%)
795,000 Corporate Asset Funding
5.670% 02-12-96 789,741
200,000 Siemens Co.
5.800% 01-29-96 199,098
-----------
988,839
-----------
TOTAL SHORT-TERM NOTES (29.4%)
(COST $5,628,800) $ 5,628,800
-----------
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- --------------------------------------------------------------
<S> <C> <C>
COMPUTER AND RELATED (5.2%)
$2,000,000 Automatic Data Process, zero
coupon contracts due 02-20-12 $ 987,500
-----------
DRUGS (0.9%)
300,000 Alza Corp., zero coupon contracts,
due 07-14-14 123,000
50,000 Mckesson Co., 4.500% conv.
subordinated debentures,
due 03-01-04 46,625
-----------
169,625
-----------
DURABLE GOODS (0.3%)
50,000 Outboard Marine, 7.000% conv.
subordinated debentures,
due 07-01-02 51,812
-----------
</TABLE>
(continued)
<PAGE> 68
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
CAPITAL APPRECIATION PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
FOOD AND RELATED (0.5%)
$ 100,000 Food Lion Inc.,5.000% conv. subordinated
debentures, due 06-01-03 $ 100,375
-----------
MEDIA (1.7%)
300,000 TBS, zero coupon contracts
due 02-13-07 135,000
550,000 US West, zero coupon contracts
due 06-25-11 198,688
-----------
333,688
-----------
OIL, ENERGY AND NATURAL GAS (0.2%)
50,000 Pennzoil Co.,4.750% conv. subordinated
debenture, due 10-01-03 50,750
-----------
REAL ESTATE (1.4%)
75,000 Price Co., 6.750% conv. subordinated
debenture, due 03-01-01 76,125
190,000 Rouse Co., 5.750% conv. subordinated
debentures, due 07-23-02 189,762
-----------
265,887
-----------
UTILITIES (1.0%)
200,000 Potomac Electricity & Power Co.,
5.000% conv. subordinated
debentures, due 09-01-02 190,000
-----------
TOTAL CONVERTIBLE DEBENTURES
(11.2%) (COST $2,022,926) $ 2,149,637
-----------
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE (0.7%)
5,000 Teledyne Inc. $ 128,125
-----------
BUILDING MATERIALS (4.2%)
6,600 Lowes Corp. 517,275
22,000 * Manville Corp. 288,750
-----------
806,025
-----------
CHEMICALS (4.5%)
200 CIBA Geigy 175,843
10,500 * Genetech Inc. 556,500
1,500 Great Lakes Chemical Corp. 108,000
1,000 Petrolite Corp. 28,500
-----------
868,843
-----------
COMPUTER AND RELATED (0.2%)
400 IBM Corp. 36,700
-----------
CONSUMER PRODUCTS (4.1%)
3,000 Corning Inc. 96,000
2,000 John Harland Co. 41,750
50,000 Petrie Stores 137,500
2,600 Phillip Morris Cos., Inc. 235,300
5,000 Polaroid Corp. 236,875
2,000 * Toys R Us 43,500
-----------
790,925
-----------
DRUGS (0.9%)
2,000 Schering - Plough Corp. 109,500
1,450 Upjohn Co. 56,188
-----------
165,688
-----------
DURABLE GOODS (0.1%)
2,000 A T Cross Co. 30,250
-----------
FINANCE (4.6%)
3,500 American Express 144,813
800 Federal Nat'l Mortgage Assn. 99,300
2,000 Fund American Enterprise 149,000
1,000 Greenpoint Financial Corp. 26,750
4,000 PHH Corp. 187,000
4,200 Student Loan Marketing 276,675
-----------
883,538
-----------
FORESTRY AND PAPER PRODUCTS (1.6%)
1,500 Int'l Paper Co. 56,812
6,000 Weyerhaeuser Co. 259,500
-----------
316,312
-----------
INSURANCE (2.7%)
2,000 Home Beneficial Corp.Class 'B' 48,000
6,500 Kemper Corp. 322,563
1,800 Unitrin Inc. 86,400
2,000 * Zurich Reinsurance 60,750
-----------
517,713
-----------
MEDIA AND PUBLISHING (5.9%)
5,000 Chris-Craft Ind., Inc. 216,250
500 Meredith Corp. 20,937
17,000 New York Times Co. 503,625
1,200 Times Mirror Co. 40,650
1,200 Washington Post 338,400
-----------
1,119,862
-----------
METALS AND MINING (2.7%)
6,000 * Helcla Mining Co. 41,250
6,000 Homestake Mining Co. 93,750
7,747 Newmont Mining Corp. 350,552
2,000 Santa Fe Pacific Gold 24,250
-----------
509,802
-----------
OIL, ENERGY AND NATURAL GAS (7.9%)
2,500 Atlantic Richfield Co. 276,875
500 Cross Timbers Oil Co. 8,813
5,000 Helmerich & Payne Co. 148,750
6,000 Murphy Oil Corp. 249,000
3,500 * Oryx Energy Co. 46,812
1,600 Pennzoil Co. 63,375
12,000 Petro-Canada Inc. 138,516
2,500 Sun Company Inc. 68,438
4,000 Texaco, Inc. 314,000
10,000 Union Texas Petroleum 193,750
-----------
1,508,329
-----------
REAL ESTATE (0.1%)
1,000 DeBartolo Realty 13,000
-----------
RECREATION (0.2%)
2,000 Skyline Corp. 41,500
-----------
RETAIL (0.2%)
4,000 * Hill Stores Co. 39,500
-----------
</TABLE>
(continued)
<PAGE> 69
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
CAPITAL APPRECIATION PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION (0.9%)
4,000 Overseas Shipholding Inc. $ 76,000
4,000 Ryder System Inc. 99,000
-----------
175,000
-----------
UTILITIES (4.9%)
25,000 Centerior Energy Corp. 221,875
16,000 Entergy Corp. 468,000
4,000 Niagara Mohawk Power Corp. 38,500
8,000 * Public Service Co. New Mexico 141,000
3,400 SCE Corp. 60,350
-----------
929,725
-----------
MISCELLANEOUS (0.4%)
25,161 Lonrho Plc 68,689
-----------
TOTAL COMMON STOCK (46.8%)
(COST $7,726,185) $ 8,949,526
-----------
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
160 AEROSPACE (0.0%)
Teledyne Inc., $15 cum. conv. $ 2,300
-----------
8,000 BUILDING MATERIALS (1.1%)
Manville Corp., $2.70 Series B 201,000
-----------
FINANCE (1.9%)
7,000 Kemper Co., 5.750% Series E 364,875
-----------
REAL ESTATE (0.5%)
2,000 Rouse Co. 6.500% cum. conv. 103,250
-----------
UTILITIES (2.7%)
140 Cleveland Electric 9.000% 124,477
50 Cleveland Electric 8.800% 44,444
3,000 Cleveland Electric 211,500
1,500 Gulf State Utilities, Series B 72,000
1,000 Niagara Mohawk Power Series A 16,125
2,000 Niagara Mohawk Power Series C 37,750
-----------
506,296
-----------
TOTAL PREFERRED STOCK (6.2%)
(COST $1,155,361) $ 1,177,721
-----------
<CAPTION>
PUT OPTION PURCHASES MARKET
SHARES STOCK/EXPIRATION/EXERCISE PRICE VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
5 AUD"B"/May '96'/$85 $ 5,188
5 Times Mirror/June '96'/$35 1,218
-----------
TOTAL PUT OPTION PURCHASE (0.0%)
(COST $5,973) $ 6,406
-----------
TOTAL HOLDINGS
(COST $17,683,284) (a) $19,136,355
===========
</TABLE>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 70
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -----------------------------------------------------------------
<S> <C> <C>
AEROSPACE (1.0%)
9,000 * Tracor Inc. $ 130,500
-----------
AUTOMOBILE AND RELATED (0.8%)
3,550 * Credit Acceptance Corp. 73,662
4,000 * Top Source Technologies Inc. 28,000
-----------
101,662
-----------
BANKS (0.9%)
2,500 Banco Latinoamericao De Exp 116,250
-----------
BUSINESS SERVICES (3.7%)
1,500 * Desktop Data Inc. 36,750
10,250 * Dendrite International 184,500
3,900 Meta Group Inc. 119,438
2,700 Norrell Corp. 79,313
3,500 * US Office Products Co. 79,625
-----------
499,626
-----------
COMMUNICATIONS (1.4%)
7,500 * Comcast UK Cable Partners 93,750
3,100 SFX Broadcasting, Inc. 93,775
-----------
187,525
-----------
COMPUTER AND RELATED (23.2%)
1,500 Adobe Systems Inc. 93,000
5,000 * Astea Int'l Inc. 114,375
6,575 * Avant l Corp. 126,569
3,025 Broadway & Seymour 49,156
9,500 Computervision Corp. 146,063
7,000 * Computron Software Inc. 126,000
11,500 * Creative Computers Inc. 209,875
5,000 * Dialogic Corp. 192,500
4,900 * Eagle Point Software Corp. 105,350
5,725 * Gandalf Technologies Inc. 97,325
8,225 Geoworks 156,275
8,375 GT Interactive Software Corp. 117,250
3,500 * Informix Corp. 105,000
4,300 * Madge Networks NV 192,425
1,750 Manugistics Group Inc. 25,812
7,000 * Mylex Corp. 133,875
4,000 * Network General Corp. 133,500
1,000 * Parametric Technology Corp. 66,500
4,125 * Platinum Tech Inc. 75,797
3,650 * Printronix Inc. 51,100
8,375 * Radisys Corp. 98,406
2,300 Sync Research Inc. 104,075
3,975 Scopus Technology Inc. 100,369
3,000 * 7th Level Inc. 42,000
5,565 * Stormedia Inc. 203,123
4,000 * Symantec Corp. 93,000
8,550 * Triple P N.V. 85,500
5,200 * Woderware Corp. 89,050
-----------
3,133,270
-----------
CONSUMER PRODUCTS (1.7%)
2,000 * Alantec Corp. 116,500
6,025 * Catalina Lighting 29,372
2,000 Loewen Group Inc. 50,625
2,000 * WMS Industries Inc. 32,750
-----------
229,247
-----------
DRUGS (2.4%)
6,050 Pharmaceutical Resources Inc. 45,375
10,000 * SEQUUS Pharmaceuticals 142,500
3,000 Teva Pharmaceuticals 139,125
-----------
327,000
-----------
ELECTRICAL EQUIPMENT (2.2%)
4,000 * Anadigics Inc. 85,000
9,750 * DSP Group 112,125
2,800 * Microchip Technology Inc. 102,200
-----------
299,325
-----------
ELECTRONICS (11.6%)
750 * Altera Corp. 37,312
3,000 * LSI Logic Corp. 98,250
1,500 * Lam Research Corp. 68,625
6,000 * Maxim Integrated Products Inc. 231,000
7,700 Orbit Semiconductor Inc. 75,075
5,300 * PRI Automation Inc. 186,163
3,650 * Sanmina Corp. 189,344
11,150 * Speedfam International Inc. 125,438
14,400 * Tegal Corp. 147,600
3,250 * Tencor Instruments 79,219
5,000 Teradyne Inc. 125,000
11,000 Tylan General Inc. 134,750
5,225 Vitesse Semiconductor Corp. 66,619
-----------
1,564,395
-----------
ENTERTAINMENT AND LEISURE (0.7%)
2,700 * Anchor Gaming 61,425
4,500 * Golf Enterprises Inc. 32,625
-----------
94,050
-----------
HOTEL AND MOTEL (2.6%)
5,000 * Doubletree Corp. 131,250
10,400 * Trump Hotels & Casino Resort 223,600
-----------
354,850
-----------
INSURANCE (3.7%)
4,000 * HCC Insurance Holdings Inc. 148,000
4,000 * Healthsource Inc. 144,000
2,250 Mercury Finance Co. 29,812
4,000 Reliastar Financial Corp. 177,500
-----------
499,312
-----------
MACHINERY (2.0%)
7,900 * Asyst Technologies Inc. 278,475
-----------
MANUFACTURING (0.3%)
1,000 * Plantronics Inc. 36,125
-----------
MEDICAL AND RELATED (8.8%)
7,000 * Gulf South Medical Supply 211,750
5,000 * HCIA Inc. 233,750
5,450 * Horizon Healthcare Corp. 137,612
5,000 * Medaphis Corp. 185,000
6,000 * Multicare Companies Inc. 144,000
2,450 * Orthodontic Centers of America 118,212
6,000 * Sola International Inc. 151,500
-----------
1,181,824
-----------
METALS AND MINING (1.9%)
4,500 Harsco Corp. 261,563
-----------
</TABLE>
(continued)
<PAGE> 71
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
SMALL CAP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -----------------------------------------------------------------
<S> <C> <C>
OIL, ENERGY AND NATURAL GAS (2.6%)
9,000 * Falcon Drilling Co. Inc. $ 135,000
6,000 * Seitel Inc. 212,250
-----------
347,250
-----------
RETAIL (9.3%)
8,000 Authentic Fitness Corp. 166,000
7,400 Insight Enterprises Inc. 92,500
4,500 Maxim Group Inc. 60,750
1,600 * Movie Gallery Inc. 48,800
3,775 * Officemax Inc. 84,465
5,300 Henry Shein Inc. 156,350
4,900 * Proffitt's Inc. 128,625
3,850 * The Sports Authority Inc. 78,444
1,500 Tiffany & Co. 75,563
9,000 * Trend-Lines Inc. 90,000
6,000 Warnaco Group 150,000
3,750 Wolverine World Wide 118,125
-----------
1,249,622
-----------
TELECOMMUNICATIONS (6.5%)
4,000 * Arch Communications Group 96,000
6,000 Frontier Corp. 180,000
7,000 * Intermedia Comm. of Florida 122,500
9,925 Inter-Tel Inc. 153,217
8,000 * LCI International Inc. 164,000
6,000 * Periphonics Corp. 166,500
-----------
882,217
-----------
TEXTILES (3.3%)
6,000 * Nautica Enterprises Inc. 262,500
2,300 * Quicksilver Inc. 78,631
6,900 * Supreme Int'l Corp. 110,400
-----------
451,531
-----------
TRANSPORTATION (2.5%)
4,625 * Celadon Group Inc. 41,625
4,000 * Mark VII Inc. 62,000
3,975 * Western Pacific Airlines Inc. 66,581
2,625 * Wisconsin Central Transport 172,594
-----------
342,800
-----------
UTILITIES (1.1%)
4,000 United Waste Systems Inc. 149,000
-----------
TOTAL U.S. COMMON STOCK (94.2%)
(COST $10,910,542) $12,717,419
-----------
<CAPTION> MARKET
SHARES FOREIGN COMMON STOCK VALUE
- --------------------------------------------------------------
<S> <C> <C>
BRITISH STERLING POUND:
MEDIA
17,000 * Flextech Plc $ 125,108
RETAIL
21,500 * Next Plc 152,217
MISCELLANEOUS
11,000 Wetherspoon (J.D.) 110,157
-----------
TOTAL BRITISH STERLING POUND (2.9%) 387,482
-----------
JAPANESE YEN:
MISCELLANEOUS
4,000 Hoya Corp. 137,661
-----------
TOTAL JAPANESE YEN (1.0%) 137,661
-----------
NETHERLANDS GUILDER:
MISCELLANEOUS
2,500 * Hunter Douglas NV 116,033
TRANSPORTATION
4,100 * IHC Caland 138,117
-----------
TOTAL NETHERLANDS GUILDER (1.9%) 254,150
-----------
TOTAL FOREIGN COMMON STOCK
(5.8%) (COST $680,031) $ 779,293
-----------
TOTAL HOLDINGS
(COST $11,590,573) (a) $13,496,712
===========
</TABLE>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 72
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
GLOBAL CONTRARIAN PORTFOLIO
<TABLE>
<CAPTION>
MARKET
SHARES COMMON AND PREFERRED STOCK VALUE
- -------------------------------------------------------------
<S> <C> <C>
U.S. STOCKS
CHEMICALS (0.9%)
3,000 Lawter International Inc. $ 34,875
-----------
CAPITAL GOODS (1.4%)
1,000 Bandag Inc. Class 'A' 53,000
-----------
CONSUMER PRODUCTS (6.4%)
1,000 Allen Organ Co. Class 'B' 41,500
333 * Castle & Cook Inc. 5,583
1,000 Dole Foods Company, Inc. 35,000
10,000 * Interco Incorporated 90,000
4,000 Unifirst Corp. 72,000
-----------
244,083
-----------
ELECTRONICS (1.4%)
3,000 Zero Corp. 53,250
-----------
ENERGY AND OIL (5.0%)
2,535 * Enterra Corp. 73,198
4,000 North European Oil Royalty Trust 51,000
1,700 Rochester & Pittsburgh Coal Co. 47,600
3,000 * Sithe Energies, Inc. 18,000
-----------
189,798
-----------
FINANCE (5.9%)
5,000 * East Texas Financial Services 80,000
3,000 Pioneer Group, Inc. 81,750
5,000 Southern Banc Co., Inc. 64,375
-----------
226,125
-----------
FORESTRY PRODUCTS (3.4%)
600 Georgia Pacific Corp. 41,175
1,400 Greif Brothers Corp. Class 'A' 37,625
1,500 Rayonier Inc. 50,063
-----------
128,863
-----------
MEDIA (1.6%)
5,000 * Integrity Music, Inc. Class 'A' 10,625
2,000 Cowles Media Co. Pfd. 52,000
-----------
62,625
-----------
METALS AND MINING (1.5%)
1,000 Reynolds Metals Co. 56,625
-----------
REAL ESTATE (3.0%)
2,500 Alico, Inc. 52,500
1,500 Catellus Development Pfd. 60,750
-----------
113,250
-----------
UTILITIES (1.2%)
2,000 Montana Power Co. 45,250
-----------
TOTAL U.S. (31.7%) $ 1,207,744
-----------
FOREIGN
LATIN AMERICA (7.8%)
10,000 Antofagasta Holdings plc (21) $ 45,469
50,000 * Cresud SA (1) 67,990
25,000 IRSA Inversiones y Rep. SA (34) 62,991
60,000 Ledesma SA (1) 76,788
165,000 * Grupo Fernandez Editors (25) 46,042
-----------
299,280
-----------
FRANCE (7.1%)
2 Bank for Intl. Settlements (3) 14,678
300 * Comptoir Lyon-Alemand-Louyot (34) 23,540
1,100 Gaumont SA (20) 70,621
500 Legrand ADP (10) 49,934
300 Nicolas Schlumberger et Cie (19) 50,382
600 Rougier SA (14) 61,266
-----------
270,421
-----------
JAPAN (7.1%)
2,500 Fuji Photo Film Co. Ltd. (9) 71,981
7,000 Nittetsu Mining Co., Ltd. (22) 69,662
400 Toho Co. (20) 63,768
5,000 Yoshimoto Kogyo Co. (20) 65,217
-----------
270,628
-----------
SWITZERLAND (6.0%)
7 Bank of Intl. Settlements (3) 58,839
100 Kuehne & Nagel Intl. AG (32) 59,359
65 Schindler Holding AG PC (5) 67,309
175 Sika Finanz AG Bearer (7) 42,461
-----------
227,968
-----------
GERMANY (4.8%)
100 Axel Springer Verlag AG (20) 67,177
250 Bayer AG (7) 66,272
125 Buderus AG (5) 48,730
-----------
182,179
-----------
CANADA (3.4%)
2,000 Noranda, Inc. (21) 41,216
30,000 Redstone Resources, Inc. (22) 86,829
-----------
128,045
-----------
THAILAND (2.6%)
40,000 Oriental Hotel (16) 98,452
-----------
NEW ZEALAND (2.4%)
30,000 Carter Holt Harvey Limted (14) 64,672
5,500 Shortland Properties, Ltd. (27) 3,090
30,000 Wrightson Ltd. (1) 22,733
-----------
90,495
-----------
NETHERLANDS (2.2%)
1,300 Bosch & Keuning NV (20) 53,762
2,000 German City Estates NV (27) 30,224
-----------
83,986
-----------
SINGAPORE (1.9%)
10,000 Singapore Bus Service Ltd. (32) 71,413
-----------
SWEDEN (1.8%)
5,000 Bylock & Nordsjofrakt AB 'B'(32) 43,683
2,000 Terra Mining AB (22) 24,553
-----------
68,236
-----------
HONG KONG (1.8%)
100,000 CDL Hotels Intl. Ltd. (16) 50,436
16,000 Shaw Brothers (Hong Kong) Ltd.(20) 17,588
-----------
68,024
-----------
INDONESIA (1.6%)
2,000 Freeport McMoRan Pfd. 'C' (22) 60,750
-----------
AUSTRALIA (1.3%)
30,000 * Barlile Corp. Ltd. (1) 51,250
-----------
</TABLE>
(continued)
<PAGE> 73
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
GLOBAL CONTRARIAN PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON AND PREFERRED STOCK VALUE
- --------------------------------------------------------------------
<S> <C> <C>
SOUTH AFRICA (1.1%)
6,000 Free State Consolidated Gold (22) $ 43,500
-----------
BELGIUM (1.1%)
30 Socfinasia (34) 41,606
-----------
UNITED KINGDOM (0.8%)
15,000 ED & F Man (34) 32,589
-----------
TOTAL FOREIGN (54.8%) $ 2,088,822
-----------
TOTAL COMMON & PREFERRED STOCKS
(86.5%) (COST $3,205,227) $ 3,296,566
-----------
<CAPTION>
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
- -----------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (9.1%)
$ 50,000 Cemex SA 9.500%
due 09-20-01 (6) $ 46,188
150,000 Federal Republic Of Brazil 6.812%
due 04-15-06 (15) 103,125
200,000 Republic of Argentina FRB 6.812%
due 03-31-05 (15) 141,625
50,000 PT Pabrik Kertas Tjiwi Kimia
13.250% due 08-01-01 (14) 55,000
TOTAL NON-CONVERTIBLE BONDS -----------
(9.1%) (COST $294,213) $ 345,938
-----------
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (3.3%)
$ 50,000 Cheil Foods & Chemicals Co.
3.000% due 12-31-06 (9) $ 65,750
50,000 Tung Ho Steel Corp. 4.000%
due 07-26-01 (30) 60,750
-----------
126,500
-----------
NON-U.S. DOLLAR (1.1%)
260,000 FF Immobiliere Hoteliere 5.000%
due 01-01-01 (16) 33,425
11,000 NZ Shortland Properties Inc. 7.500%
due 12-31-98 (27) 6,395
-----------
39,820
-----------
TOTAL CONVERTIBLE DEBENTURES
(4.4%) (COST $150,939) $ 166,320
-----------
TOTAL HOLDINGS
(COST $3,650,379)(a) $ 3,808,824
===========
</TABLE>
(a) Also represents cost for Federal Income tax purposes.
* Non-income producing securities.
FOREIGN CURRENCIES
NZ - New Zealand Dollar
FF - French Franc
Industry Classifications
(1) Agriculture (18) Insurance
(2) Automotive (19) Machinery
(3) Banking (20) Media
(4) Building Products (21) Metal (non-ferrous)
(5) Capital Goods (22) Mining
(6) Cement (23) Packaging
(7) Chemicals (24) Paper
(8) Computer Products (25) Publishing
(9) Consumer Products (26) Rail Equipment
(10) Electrical Products (27) Real Estate
(11) Electronics (28) Retailing
(12) Energy and Oil (29) Services
(13) Food & Beverage (30) Steel
(14) Forest Products (31) Textile
(15) Governmental (32) Transportation
(16) Hotels (33) Utilities
(17) Health Care (34) Miscellaneous
The accompanying notes are an integral part of these financial statements.
<PAGE> 74
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
MARKET
SHARES COMMON AND PREFERRED STOCK VALUE
- ---------------------------------------------------------------
<S> <C> <C>
U.S. COMMON STOCKS:
AUTOMOTIVE AND RELATED (4.7%)
1,875 Chrysler Corp. $103,828
425 * Custom Chrome Inc. 9,828
500 Exide Corp. 22,937
3,800 Harley-Davidson Inc. 109,218
--------
245,811
--------
BANKING (0.4%)
100 HSBC Holdings 15,133
140 Mitsubishi Bank Ltd. 3,412
30 Sakura Bank Ltd. 3,830
--------
22,375
--------
BUILDING AND CONSTRUCTION (0.0%)
62 Transpro Inc. 659
--------
BUSINESS SERVICES (3.8%)
300 * Access Health Inc. 13,275
1,575 * Accustaff, Inc. 69,300
575 America Online Inc. 21,562
225 * Career Horizons Inc. 7,594
550 * Consolidated Graphics Inc. 14,300
100 Corestaff Inc. 3,650
375 CUC International, Inc. 12,797
275 * Education Alternatives 1,237
25 * Equity Corp. Intl. 594
1,525 * Nu-Kote Holding 25,925
150 Paychex Inc. 7,481
150 Xerox Corp. 20,550
--------
198,265
--------
CHEMICALS (0.1%)
50 Monsanto Co. 6,125
--------
COMPUTER AND RELATED (13.9%)
50 Adobe Systems Inc. 3,100
550 * Avant! Corp. 10,587
169 * Bay Networks, Inc. 6,940
150 * CBT Group 7,950
650 * Cheyenne Software, Inc. 16,981
100 * Compaq Computer Corp. 4,800
1,200 Computer Assoc. Intl., Inc. 68,222
3,025 Danka Business Systems 111,925
575 * Dialogic Corp. 22,137
225 * Diamond Multimedia Systems 8,072
250 * Informix Corp. 7,500
903 Mcafee Assoc. 39,619
5,500 Metatools Inc. 143,000
50 * Netscape Communications Corp. 6,950
250 * Network General Corp. 8,344
300 Ross Technology Inc. 2,925
25 * Seagate Technology, Inc. 1,187
5,400 SQA Inc. 103,950
200 * Sun Mirosystems, Inc. 9,125
400 Sync Research Inc. 18,100
5,850 System Software Assoc., Inc. 127,238
100 * 3 Com Corp. 4,662
--------
733,314
--------
CONSUMER PRODUCTS (2.7%)
2,400 Central Garden & Pet Co. 22,800
2,725 Loewen Group Inc. 68,977
1,125 Physician Sales and Service Inc. 32,063
1,400 * Thompson PBE Inc. 19,600
--------
143,440
--------
DRUGS (1.2%)
75 * Amerisource Health Corp. 2,475
1,495 Pharmacia & Upjohn, Inc. 57,931
--------
60,406
--------
DURABLE GOODS (0.1%)
50 Bandag Inc. 2,650
100 Uniphase Corp. 3,575
--------
6,225
--------
ELECTRICAL EQUIPMENT (0.6%)
375 * Fore Systems 22,312
125 * Kent Electronics Corp. 7,297
--------
29,609
--------
ELECTRONICS (1.7%)
1,325 Marshall Industries 42,578
2,200 Sensormatic Electronics Corp. 38,225
250 * Xilinx Inc. 7,625
--------
88,428
--------
ENTERTAINMENT AND LEISURE (0.1%)
125 The Walt Disney Co. 7,375
--------
FINANCE (2.9%)
225 American Express Co. 9,309
375 Citicorp 25,219
1,025 CWM Mortgage Holdings 17,425
25 Daiwa Securities 3,849
500 * Medaphis Corp. 18,500
950 Mercury Finance Co. 12,587
700 National Auto Credit Inc. 11,375
60 New Japan Securities 3,583
30 Nikko Securities Co. 3,889
50 North American Mortgage 1,062
100 Nomura Securities 21,928
600 Quick and Reilly Group, Inc. 12,300
75 Sunamerica Inc. 3,562
50 Yamaichi Securities 3,253
70 Yasuda Trust & Banking Ltd. 4,168
--------
152,009
--------
FOOD AND RELATED (0.1%)
100 * Quality Dining Inc. 2,425
150 Rainforest Cafe Inc. 4,519
--------
6,944
--------
HOUSING AND RELATED (0.3%)
3,400 Fedders Corp. 14,450
200 Scholodge Inc. 1,900
--------
16,350
--------
HOTEL/LODGING (0.7%)
1,300 Harrah's Entertainment 31,525
100 * Promus Hotel Corp. 2,225
--------
33,750
--------
</TABLE>
(continued)
<PAGE> 75
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
AGGRESSIVE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON AND PREFERRED STOCK VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
INSURANCE (2.0%)
100 * Compdent Corp. $ 4,150
650 * Oxford Health Plans 48,019
600 * Risk Capital Holdings Inc. 14,025
750 * United Dental Care Inc. 30,938
150 U.S. Healthcare Inc. 6,975
-----------
104,107
-----------
MACHINERY (0.5%)
800 Applied Power Inc. 23,972
100 Deere and Co. 3,525
-----------
27,497
-----------
MANUFACTURING (0.1%)
200 Oakley Inc. 6,800
-----------
MEDIA AND PUBLISHING (0.5%)
292 * Evergreen Media Corp. 9,344
400 Ha-Lo Industries Inc. 12,300
225 * Heartland Wireless Comm. Inc. 6,694
-----------
28,338
-----------
MEDICAL AND RELATED (3.0%)
250 * American Oncology Resources 12,156
200 * Coram Healthcare Corp. 875
475 Dentsply International Inc. 19,000
250 * Enterprise Systems Inc. 7,625
400 Gulf South Medical Supply 12,100
800 Home Health Corp of America 8,800
600 * Humana Inc. 16,425
400 Omnicare, Inc. 17,900
50 * Phycor Inc. 2,528
225 * Physicians Health Services Inc. 8,325
2,200 Sheridan Healthcare Inc. 26,675
350 * Sybron Intl. Corp.-Wisconsin 8,313
310 * Vencor Inc. 10,091
150 * Wellpoint Health Networks Inc. 4,819
-----------
155,632
-----------
METALS AND MINING (0.3%)
600 Buckeye Cellulose Corp. 13,200
-----------
OIL, ENERGY AND NATURAL GAS (0.4%)
1,400 * Flores & Rucks Inc. 20,300
-----------
RETAIL (1.9%)
300 * Autozone, Inc. 8,662
700 * Corporate Express Inc. 21,088
325 * Federated Department Stores 8,938
1,200 * Holloywood Entertainment Corp. 10,050
525 * Movie Gallery Inc. 16,013
300 MSC Industrial Direct Co. 8,250
1,200 * Office Depot Inc. 23,700
25 * Officemax, Inc. 559
-----------
97,260
-----------
TRANSPORTATION (0.6%)
75 Burlington Northern Santa Fe 5,850
600 Kansas City Southern Ind., Inc. 27,450
-----------
33,300
-----------
TELECOMMUNICATIONS (3.1%)
50 * Andrew Corp. 1,912
475 * Ascend Communications Inc. 38,534
50 * CAI Wireless Systems Inc. 481
125 * Cascade Communications Corp. 10,656
8 DDI Corp. 62,045
375 * Equalnet Holding Corp. 2,719
375 Network Equipment Tech Inc. 10,266
250 * Newbridge Networks Corp. 10,344
325 * Videoserver Inc. 10,238
825 Vtel Corp. 15,263
-----------
162,458
-----------
MISCELLANEOUS (1.0%)
6,600 Morgan St. Nikkei 50,325
-----------
TOTAL U.S. (46.7%)
(COST $2,305,050) $ 2,450,302
-----------
FOREIGN:
DEUTSCHE MARK (0.9%)
320 SAP Preferred (2) $ 48,695
-----------
JAPANESE YEN (2.7%)
1,000 Daiwa Securities (4) 15,317
1 East Japan Railway Co. (6) 4,867
1,000 Kankaku Securities Co. (4) 4,265
1,000 Long-Term Credit Bank of Japan (1) 8,531
2,000 Marubeni Corp. (3) 10,838
1,000 Mitsui Trust & Banking (1) 10,955
1,000 Mitsui Fudosan Co. (5) 12,312
1,000 Nomura Securities Co. (4) 21,813
1 NTT Data Comm. Systems Corp. (2) 33,640
1,000 Sumitomo Trust & Banking (1) 14,154
1,000 Yasuda Trust & Banking (1) 5,923
-----------
Total Japanese Yen 142,615
-----------
TOTAL FOREIGN (3.6%)
(COST $185,110) $ 191,310
-----------
<CAPTION>
MARKET
SHARES WARRANTS VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
81 Laboratory Corp of America $ 56
TOTAL WARRANTS (0.0%) -----------
(COST $190) $ 56
-----------
<CAPTION>
MARKET
SHARES FUTURES VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
2 March S&P 500 Futures $ 1,238,200
TOTAL FUTURES (23.5%) -----------
(COST $1,238,200) $ 1,238,200
-----------
</TABLE>
(continued)
<PAGE> 76
OHIO NATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
AGGRESSIVE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM NOTES VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C>
$ 510,000 U.S. T-Bond
6.875% 08-15-25 $ 574,959
------------
TOTAL LONG-TERM NOTES (10.9%)
(COST $570,044) $ 574,959
------------
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C>
$ 807,000 Provident Bank 5.350% due 01-02-96,
repurchase price $807,480,
collateralized by U.S. Treasury Bills,
due 03-07-96 (Cost $820,000) $ 807,000
------------
TOTAL REPURCHASE AGREEMENTS
(15.3%) (COST $807,000) $ 807,000
------------
TOTAL HOLDINGS
(COST $5,105,594) (a) $ 5,261,827
============
</TABLE>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
Industry Classifications
(1) Banking
(2) Computer and Related
(3) Consumer Products
(4) Finance
(5) Real Estate
(6) Transportation
The accompanying notes are an integral part of these financial statements.
<PAGE> 77
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Ohio National Fund, Inc. (Fund) is registered under the Investment Company
Act of 1940 as amended, as a diversified open-end management investment
company. The Fund is a series investment company which consists of nine
separate investment portfolios that seek the following investment
objectives:
EQUITY PORTFOLIO--long-term growth of capital by investing principally in
common stocks or other equity securities. Current income is a secondary
objective.
MONEY MARKET PORTFOLIO--maximum current income consistent with
preservation of capital and liquidity by investing in high quality money
market instruments.
BOND PORTFOLIO--high level of return consistent with preservation of
capital by investing primarily in high quality intermediate and long-term
debt securities.
OMNI PORTFOLIO--high level of long-term total return consistent with
preservation of capital by investing in stocks, bonds and money market
instruments.
INTERNATIONAL PORTFOLIO--long-term capital growth by investing primarily
in common stocks of foreign companies.
The following two portfolios commenced operations on May 1, 1994:
CAPITAL APPRECIATION PORTFOLIO--maximum capital growth by investing
primarily in common stocks that are (1) considered to be undervalued or
temporarily out of favor with investors, or (2) expected to increase in
price over the short term.
SMALL CAP PORTFOLIO-maximum capital growth by investing primarily in
common stocks of small and medium size companies.
The following two portfolios commenced operations on March 31, 1995:
GLOBAL CONTRARIAN PORTFOLIO--long-term growth of capital by investing in
foreign and domestic securities believed to be undervalued or presently out
of favor.
AGGRESSIVE GROWTH PORTFOLIO--capital growth.
The following is a summary of significant accounting policies:
Investments in the Money Market Portfolio are valued at amortized cost in
accordance with Rule 2a-7 which approximates market value. All net
investment income of the Money Market Portfolio is declared and paid daily
as a dividend to shareholders immediately before the computation of the net
asset value of Money Market Portfolio shares. Dividends are automatically
reinvested in additional Money Market Portfolio shares at the net asset
value immediately following such computation. Distributions arising from
net investment income from the remaining portfolios are declared and paid
to shareholders quarterly and are recorded on the ex-dividend date.
Distributions arising from accumulated net realized capital gains are
recorded on the ex-dividend date and are distributed to shareholders at
least once a year.
For all other portfolios, securities which are traded on U.S. and foreign
stock exchanges or in the over-the-counter markets are valued at the last
sale price or, if there has been no sale that day, at the last bid price
reported as of the close of trading on the New York Stock Exchange.
Over-the-counter securities are valued at the last bid price as of the
close of trading on the Exchange. Short-term investments (investments with
remaining maturities of 60 days or less) are valued at amortized cost and
fixed income securities are valued by using market quotations, or
independent pricing services which use prices provided by market makers or
estimates of market values obtained from yield data relating to instruments
or securities with similar characteristics. All investments and cash quoted
in foreign currencies are valued daily in U.S. dollars on the basis of the
foreign currency exchange rates prevailing at the time of such valuation.
Foreign currency exchange rates are generally determined prior to the close
of the New York Stock Exchange (NYSE). Occasionally, events affecting the
value of foreign investments and such exchange rates occur between the time
at which they are determined and the close of the NYSE, which in the case
of the International, Small Cap, Global Contrarian and Aggressive Growth
Portfolios, would not be reflected in the computation of the portfolios'
net asset value. If events materially affecting the value of such
securities or currency exchange rates occurred during such time period, the
securities are valued at their fair value as determined in good faith by or
under the direction of the Fund's Board of Directors.
In connection with purchases and sales of securities denominated in foreign
currencies, the Fund may enter into forward foreign currency exchange
contracts (forward contract). A forward contract is a commitment to
purchase or sell a foreign currency at a future date, at a negotiated rate.
Additionally, the Fund may enter into such contracts to hedge certain other
foreign currency denominated investments. These contracts are recorded at
market value, and the related realized and unrealized foreign exchange
gains and losses are included in the statement of operations. In the event
that counterparties fail to settle these currency contracts or the related
foreign security trades, the Fund could be exposed to foreign currency
fluctuations.
<PAGE> 78
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
The Fund may invest in two kinds of financial futures contracts: stock
index futures contracts and interest rate futures contracts. Stock index
futures contracts are contracts developed by and traded on national
commodity exchanges whereby the buyer will, on a specified future date, pay
or receive a final cash payment equal to the difference between the actual
value of the stock index on the last day of the contract and the value of
the stock index established by the contract multiplied by the specific
dollar amount set by the exchange. Future contracts may be based on
broad-based stock indexes such as the Standard & Poor's 500 Index or on
narrow-based stock indexes. A particular index will be selected according
to ONIMCO's investment strategy for the particular portfolio.
Securities transactions are recorded on a trade date basis. Dividend income
is recognized on the ex-dividend date (except in the case of securities in
the International, Small Cap, Global Contrarian and Aggressive Growth
Portfolios in which dividends are recorded as soon after the ex-dividend
date as the fund becomes aware of such dividends), and interest income is
accrued daily as earned. Net realized gain or loss on investments and
foreign exchange transactions are determined on the basis of identified
cost.
The books and records of the International, Small Cap, Global Contrarian
and Aggressive Growth Portfolios are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis:
(1) market value of investments, other assets and liabilities -- at
exchange rates prevailing at the end of the period.
(2) purchases and sales of investments, income and expenses--at the rates
of exchange prevailing on the respective dates of such transactions.
Although the net assets and the market value of the International, Small
Cap, Global Contrarian and Aggressive Growth Portfolios are presented at
the foreign exchange rates at the end of the period, the portfolios do not
generally isolate the effect of fluctuations in foreign exchange rates from
the effect of changes in the market price of the investments. However, the
portfolios do isolate the effect of fluctuations in foreign exchange rates
when determining the gain or loss upon sale or maturity of foreign-currency
denominated debt obligations pursuant to Federal income tax regulations.
Foreign investment and currency transactions may involve certain
considerations and risks not typically associated with investing in U.S.
companies and the U.S. Government. These risks, including re-evaluation of
currency and future adverse political and economic developments, could
cause investments and their markets to be less liquid and prices more
volatile than those of comparable U.S. companies and the U.S. Government.
Each portfolio may acquire repurchase agreements from member banks of the
Federal Reserve System which ONIMCO, the investment advisor to the Fund
deems creditworthy under guidelines approved by the Board of Directors,
subject to the seller's agreement to repurchase such securities at a
mutually agreed upon date and price. The repurchase price generally equals
the price paid by the portfolio plus interest negotiated on the basis of
current short-term rates, which may be more or less than the rate on the
underlying portfolio securities. The seller, under a repurchase agreement,
is required to maintain as collateral for the repurchase transaction
securities in which the portfolio has a perfected security interest with a
value not less than 100% of the repurchase price (including accrued
interest). Securities subject to repurchase agreements are held by the
Fund's custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system. Repurchase agreements are considered to
be loans by the portfolio under the 1940 Act.
It is the policy of the Fund to distribute to its shareholders
substantially all of its taxable income, thus gaining relief from Federal
income taxes under provisions of current tax regulations applicable to
investment companies of this type. Accordingly, no provision for Federal
income taxes has been made.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates.
The gross unrealized appreciation and depreciation on investments in each
portfolio as of December 31, 1995 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO
------------------------------------------------------------------------------------------------------------
MONEY INTER- CAPITAL SMALL GLOBAL AGGRESS.
EQUITY MARKET BOND OMNI NATIONAL APPREC. CAP CONTR. GROWTH
----------- ------ -------- ----------- ----------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross unrealized:
Appreciation...... $54,531,937 -- $922,782 $22,725,436 $10,305,937 $2,030,208 $2,507,070 $ 389,421 $ 269,466
Depreciation...... (4,148,680) -- (65,504) (2,133,800) (4,447,871) (577,137) (600,931) (230,976) (113,233)
----------- ------ -------- ----------- ----------- ---------- ---------- --------- ---------
Net unrealized
Appreciation...... $50,383,257 -- $857,278 $20,591,636 $ 5,858,066 $1,453,071 $1,906,139 $ 158,445 $ 156,233
=========== ====== ======== =========== =========== ========== ========== ========= =========
</TABLE>
<PAGE> 79
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term
securities) for the year ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
PORTFOLIO
-----------------------------------------------------------------------------------------------------------
MONEY INTER- CAPITAL SMALL GLOBAL AGGRESS.
EQUITY MARKET BOND OMNI NATIONAL APPREC. CAP CONTR. GROWTH
----------- ------ ---------- ----------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Common & Preferred
Stocks & Bonds:
Purchases ......... $31,232,576 -- $4,832,415 $20,928,330 $39,698,610 $9,188,610 $14,801,553 $3,748,996 $23,440,589
Sales ............. $17,807,254 -- $ 532,293 $ 7,216,069 $ 4,328,607 $2,796,614 $ 5,527,261 $ 135,434 $20,902,933
U.S. Government
Obligations:
Purchases ......... -- -- -- -- -- $ 196,656 -- -- $ 570,044
Sales ............. -- -- -- $ 500,000 -- -- -- -- --
</TABLE>
(3) INVESTMENT ADVISORY AGREEMENT, SUB-ADVISORY AGREEMENTS AND TRANSACTIONS
WITH AFFILIATED PERSONS The Fund has an investment advisory agreement dated
November 2, 1982, with O.N. Investment Management Company (ONIMCO) under
the terms of which ONIMCO provides portfolio management and investment
advice to the Fund and administers its other affairs, subject to the
supervision of the Fund's Board of Directors. As compensation for its
services to the Equity, Bond and Omni Portfolios, ONIMCO is paid fees at an
annual rate of 0.60% of the first $100 million of each of those Portfolios'
net assets, 0.50% of the next $150 million, 0.45% of the next $250 million,
0.40% of the next $500 million, 0.30% of the next $1 billion and 0.25% of
net assets over $2 billion. For the Money Market Portfolio, ONIMCO is paid
a fee at an annual rate of 0.30% of the first $100 million, 0.25% of the
next $150 million, 0.23% of the next $250 million, 0.20% of the next $500
million and 0.15% of net assets over $1 billion. However, as to the Money
Market Portfolio, ONIMCO is presently waiving any of its fees in excess of
0.25%. The amount waived in 1995 was $14,932. For the International and
Global Contrarian Portfolios, ONIMCO is paid fees at an annual rate of
0.90% of each of those Portfolios' average daily net asset value. ONIMCO is
paid fees at an annual rate of 0.80% of the average daily net asset value
of each of the Capital Appreciation, Small Cap and Aggressive Growth
Portfolios.
ONIMCO pays Societe Generale Asset Management Corporation (SGAM) fees at an
annual rate of 0.75% of the International and Global Contrarian Portfolios'
average daily net asset value for directing the investment and reinvestment
of those Portfolios' assets pursuant to sub-advisory agreements between
ONIMCO and SGAM dated March 18, 1993 and December 15, 1994, respectively.
Under sub-advisory agreements dated March 17, 1994: (1) ONIMCO pays T. Rowe
Price Associates, Inc. (TRPA) a fee at an annual rate of 0.70% of the first
$5 million, and 0.50% of average daily net asset value in excess of $5
million for directing the investment and reinvestment of the Capital
Appreciation Portfolio's assets, and (2) ONIMCO pays Founders Asset
Management, Inc. (FAM) a fee at an annual rate of 0.65% of the first $75
million, 0.60% of the next $75 million, and 0.55% of average daily net
asset value in excess of $150 million for directing the investment and
reinvestment of the Small Cap Portfolio's assets. Under a sub-advisory
agreement dated March 16, 1995, ONIMCO pays Strong Capital Management, Inc.
(SCM) a fee at an annual rate of 0.70% of the first $50 million and 0.50%
of average daily net asset value in excess of $50 million for directing the
investment and reinvestment of the Aggressive Growth Portfolio's assets.
Under the agreement between the Fund and ONIMCO, ONIMCO has agreed to
reimburse the Portfolios for expenses, other than the advisory fee, taxes
and interest, in excess of 1% of their average daily net assets. The amount
reimbursed in 1995 to the Global Contrarian Portfolio was $8,127.
Each director who is not an officer of the Fund or an employee of O.N.
Investment Management Company (ONIMCO) or its corporate affiliates is paid
a quarterly retainer fee of $2,000 plus $400 for each meeting attended.
A special meeting of the shareholders of the Equity, Bond, Omni and Money
Market Portfolios was held on March 1, 1995 for the purpose of approving an
amendment to the Investment Advisory Agreement with O.N. Investment
Management Company. Prior to approving the amendment, a solicitation of
proxies of the variable contract owners of the four portfolios was
conducted and the results were as follows:
<TABLE>
<CAPTION>
TOTAL %
----- -
<S> <C> <C>
EQUITY For 4,112,960 75.7
Against 900,994 16.6
Abstain 419,955 7.7
--------- -----
TOTAL 5,433,909 100.0
--------- -----
</TABLE>
<TABLE>
<CAPTION>
TOTAL %
----- -
<S> <C> <C>
MONEY MARKET For 952,850 73.5
Against 112,430 8.7
Abstain 230,893 17.8
--------- -----
TOTAL 1,296,173 100.0
--------- -----
</TABLE>
<TABLE>
<CAPTION>
TOTAL %
----- -
<S> <C> <C>
BOND For 1,198,743 87.8
Against 87,885 6.4
Abstain 77,986 5.8
--------- -----
TOTAL 1,364,614 100.0
--------- -----
</TABLE>
<TABLE>
<CAPTION>
TOTAL %
----- -
<S> <C> <C>
OMNI For 4,116,501 71.3
Against 1,042,633 18.1
Abstain 610,848 10.6
--------- -----
TOTAL 5,769,982 100.0
--------- -----
</TABLE>
The Fund's transfer agent and dividend paying agent is The Provident Bank,
One East Fourth Street, Cincinnati, Ohio. The Provident Bank is also the
custodian for those portfolios other than the International and Global
Contrarian Portfolios. The custodian for the International and Global
Contrarian Portfolios is Investors Fiduciary Trust Company, 127 West Tenth
Street, Kansas City, Missouri. For International and Global Contrarian
Portfolio assets held outside the United States, Investors Fiduciary Trust
Company enters into subcustodial agreements, subject to approval by the
Board of Directors.
<PAGE> 80
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(4) DISTRIBUTIONS TO SHAREHOLDERS
On January 2, 1996, the following dividends were paid from net investment
income and net realized gains on investments to shareholders of record on
December 29, 1995:
<TABLE>
<CAPTION>
NET INVESTMENT INCOME
- ----------------- ----------------- ---------------- ---------------- ---------------- ----------------- ----------------
Capital
Equity Bond Omni Appreciation International Global Contrarian Aggress. Growth
- ----------------- ----------------- ---------------- ---------------- ---------------- ----------------- ----------------
PER PER PER PER PER PER PER
SHARE AGGREGATE SHARE AGGREGATE SHARE AGGREGATE SHARE AGGREGATE SHARE AGGREGATE SHARE AGGREGATE SHARE AGGREGATE
- ----------------- ----------------- ---------------- ---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
.13 $787,173 .18 $290,858 .14 $890,337 .09 $143,627 .13 $799,333 .11 $44,416 .49 $165,966
</TABLE>
<TABLE>
<CAPTION>
NET REALIZED GAINS ON INVESTMENTS
----------------- ----------------- ---------------- ---------------- ---------------- ------------------
Capital
Equity Omni Appreciation Small Cap International Global Contrarian
----------------- ----------------- ---------------- ---------------- ---------------- ------------------
PER PER PER PER PER PER
SHARE AGGREGATE SHARE AGGREGATE SHARE AGGREGATE SHARE AGGREGATE SHARE AGGREGATE SHARE AGGREGATE
----------------- ----------------- ---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
.87 $5,341,756 .31 $1,956,755 .41 $655,102 .54 $542,566 .27 $1,691,528 .09 $36,817
</TABLE>
For Federal income tax purposes, the Bond and Aggressive Growth portfolios
had capital loss carryovers of $85,093 and $47,306 respectively, at
December 31, 1995. If not offset by capital gains, the losses will expire
in 2003. The Board of Directors does not intend to authorize a distribution
of any net realized gain for a portfolio until the capital loss carryover
has been offset or expires.
(5) CAPITAL SHARES TRANSACTIONS
Dividends, distributions and capital share transactions for the years ended
December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
EQUITY MONEY MARKET BOND OMNI
1995 1994 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales 1,027,904 965,935 1,416,527 1,273,128 386,744 347,731 934,361 1,427,590
Capital shares issued
on reinvested dividends 175,132 158,118 68,371 49,776 78,755 91,513 167,487 199,613
Capital shares redeemed 371,799 404,813 1,219,129 1,929,377 168,371 185,835 631,665 696,931
</TABLE>
<TABLE>
<CAPTION>
GLOBAL AGGRESSIVE
INTERNATIONAL CAPITAL APPRECIATION(a) SMALL CAP(a) CONTRARIAN(b) GROWTH(b)
1995 1994 1995 1994 1995 1994 1995 1995
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales .......... 1,949,778 3,682,954 969,718 680,242 778,636 298,374 421,953 337,342
Capital shares issued
on reinvested dividends .. 186,973 35,329 39,565 11,233 2,166 2,610 2,275 12,046
Capital shares redeemed ...... 564,813 392,237 56,759 32,357 40,666 29,378 15,010 11,183
</TABLE>
(a)Commenced operations May 1, 1994
(b)Commenced operations March 31, 1995
The Fund is authorized to issue 250,000,000 of its capital shares. 20,000,000
shares have been allocated to the Equity and Omni Portfolios, and 10,000,000
shares are allocated to each of the other portfolios. The remaining 140,000,000
shares are unallocated at this time.
<PAGE> 81
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(6) COMMITMENTS
As of December 31, 1995 the International, Global Contrarian and Aggressive
Growth Portfolios had entered into forward currency contracts, as set forth
below summarized by currency:
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
SETTLEMENT CURRENCY TO BE U.S. $ VALUE CURRENCY TO BE U.S. $ VALUE UNREALIZED
DATES THROUGH DELIVERED AT 12/31/95 RECEIVED AT 12/31/95 GAIN (LOSS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/27/96 363,000 Swiss Franc 320,162 316,299 U.S. Dollar 316,299 -- $ (3,863)
02/09/96 5,500,000 Deutsche Mark 3,835,693 3,783,369 U.S. Dollar 3,783,369 -- (52,324)
04/04/96 1,439,000 Deutsche Mark 1,006,927 1,010,175 U.S. Dollar 1,010,175 $ 3,248 --
07/03/96 1,092,000 Deutsche Mark 766,962 764,306 U.S. Dollar 764,306 -- (2,656)
02/09/96 12,500,000 French Franc 2,549,408 2,548,728 U.S. Dollar 2,548,728 -- (680)
04/05/96 6,770,000 French Franc 1,381,830 1,359,35 U.S. Dollar 1,359,335 -- (22,495)
07/11/96 20,670,000 French Franc 4,221,296 4,170,830 U.S. Dollar 4,170,830 -- (50,466)
02/09/96 555,000,000 Japanese Yen 5,389,396 5,921,412 U.S. Dollar 5,921,412 532,016 --
04/04/96 334,250,000 Japanese Yen 3,279,211 3,371,833 U.S. Dollar 3,371,833 92,622 --
07/18/96 240,950,000 Japanese Yen 2,390,140 2,433,121 U.S. Dollar 2,433,121 42,982 --
---------- ---------- -------- ---------
25,141,025 25,679,408 $670,868 $(132,484)
========== ========== ======== =========
</TABLE>
<TABLE>
<CAPTION>
GLOBAL CONTRARIAN
SETTLEMENT CURRENCY TO BE U.S. $ VALUE CURRENCY TO BE U.S. $ VALUE UNREALIZED
DATES THROUGH DELIVERED AT 12/31/95 RECEIVED AT 12/31/95 GAIN (LOSS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
07/03/96 150,000 Deutsche Mark 105,352 104,969 U.S. Dollar 104,969 -- $ (383)
07/11/96 700,000 French Franc 142,956 141,223 U.S. Dollar 141,223 -- (1,733)
02/09/96 7,000,000 Japanese Yen 67,974 69,027 U.S. Dollar 69,027 $ 1,053 --
04/04/96 5,500,000 Japanese Yen 53,959 56,341 U.S. Dollar 56,341 2,382 --
07/18/96 9,000,000 Japanese Yen 89,277 90,909 U.S. Dollar 90,909 1,632 --
06/27/96 125,000 Dutch Guilder 78,473 78,144 U.S. Dollar 78,144 -- (329)
------- ------- --------- -------
537,991 540,613 $ 5,067 $(2,445)
======= ======= ========= =======
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH
SETTLEMENT CURRENCY TO BE U.S. $ VALUE CURRENCY TO BE U.S. $ VALUE UNREALIZED
DATES THROUGH DELIVERED AT 12/31/95 RECEIVED AT 12/31/95 GAIN (LOSS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01/16/96 12,320 Deutsche Mark 8,608 8,707 U.S. Dollar 8,707 $ 99 --
04/17/96 84,240 Deutsche Mark 58,857 59,904 U.S. Dollar 59,904 1,047 --
05/09/96 9,500 Deutsche Mark 6,638 6,768 U.S. Dollar 6,768 130 --
05/13/96 28,994,550 Japanese Yen 281,087 291,819 U.S. Dollar 291,819 10,732 --
------- ------- -------- -------
355,190 367,198 $ 12,008 --
======= ======= ======== =======
</TABLE>
(7) Financial Highlights
The Financial Highlights on pages 2 to 5 of the prospectus are a part of
these Financial Statements.
<PAGE> 82
APPENDIX
DEBT SECURITY RATINGS
The Commission has designated six nationally recognized statistical rating
organizations: Duff and Phelps, Inc. ("D & P"), Fitch Investors Service, Inc.
("Fitch"), Moody's Investors Service, Inc. (Moody's"), Standard & Poor's Corp.
("S & P"), and, with respect to bank-supported debt and debt issued by banks,
broker-dealers and their affiliates, IBCA Inc. and its British affiliate, IBCA
Limited ("IBCA") and Thompson Bankwatch, Inc. ("TBW"). ONIMCO may use the
ratings of all six such rating organizations as factors to consider in
determining the quality of debt securities, although it will generally only
follow D&P, Fitch, Moody's and S&P. IBCA and TBW will only be consulted if fewer
than two of the other four rating organizations have given their top rating to a
security. Only the ratings of Moody's and S & P will be considered in
determining the eligibility of bonds for acquisition by the Fund.
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
Commercial Paper:
Moody's short-term debt ratings are opinions of the ability of issuers to
punctually repay senior debt obligations having an original maturity not
exceeding one year.
P-1 The Prime-1 (P-1) rating is the highest commercial paper rating assigned
by Moody's. Issuers (or supporting institutions) rated P-1 have a superior
ability for repayment of senior short-term debt obligations. P-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries, high rates of
return on funds employed, conservative capitalization structure with
moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well-established access to a range of financial markets
and assured sources of alternate liquidity.
P-2 Issuers (or supporting institutions) rated Prime-2 (P-2) have a strong
ability for repayment of senior short-term obligations. This will normally
be evidenced by many of the characteristics cited above for P-1, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Bonds:
Aaa Bonds which are rated Aaa by Moody's are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or
by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa Bonds which are rated as Aa by Moody's are judged to be of high quality by
all standards. Together with the Aaa group, they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.
A Bonds which are rated A by Moody's possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
55
<PAGE> 83
Baa Bonds which are rated Baa by Moody's are considered as medium grade
obligations, that is, they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
STANDARD & POOR'S CORP. ("S & P")
Commercial Paper:
An S & P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than one year.
A-1 This is S & P's highest category and it indicates that the degree of
safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are designated A-1+.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated as A-1.
Bonds:
AAA Bonds rated AAA by S&P are the highest grade obligations. They possess the
ultimate degree of protection as to principal and interest. Market prices
move with interest rates, and hence provide maximum safety on all counts.
AA Bonds rated AA by S&P also qualify as high grade obligations, and in the
majority of instances differ from AAA issues only in small degree. Here,
too, prices move with the long-term money market.
A Bonds rated A by S&P are regarded as upper medium grade. They have
considerable investment strength but are not entirely free from the
adverse effects of changes in economic and trade conditions. Interest and
principal are regarded as safe. They predominantly reflect money rates in
their market behavior, but to some extent, also economic conditions.
BBB The BBB or medium grade category is the borderline between definitely
sound obligations and those where the speculative element begins to
predominate. These bonds have adequate asset coverage and normally are
protected by satisfactory earnings. Their susceptibility to changing
conditions, particularly to depressions, necessitates constant watching.
Marketwise, the bonds are more responsive to business and trade conditions
than to interest rates. This is the lowest group which qualifies for
commercial bank investments.
DUFF & PHELPS, INC. ("D & P")
Commercial Paper:
D & P's short-term ratings have incorporated gradations of "1+" and "1-" in
recognition of quality differences within the first tier.
D-1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection.
56
<PAGE> 84
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors
are small.
FITCH INVESTORS SERVICE, INC. ("FITCH")
Commercial Paper
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of up to three years, including commercial paper,
certificates of deposit, medium-term notes, and municipal and investment notes.
Fitch's short-term ratings emphasize the existence of liquidity necessary to
meet the issuer's obligations in a timely manner.
F-1+ Exceptionally strong credit quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 Very strong credit quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues
rated F-1+.
F-2 Good credit quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not
as great as the F-1+ and F-1 categories.
57
<PAGE> 85
OHIO NATIONAL FUND, INC.
FORM N-1A
PART C.
OTHER INFORMATION
<PAGE> 86
FINANCIAL STATEMENTS AND EXHIBITS
The following audited financial statements are included in Part B of this
registration statement:
Statements of Assets and Liabilities as of December 31, 1995
Statements of Operations for the Year Ended December 31, 1995
Statements of Changes in Net Assets for the Years Ended December
31, 1995 and 1994
Schedule of Investments at December 31, 1995 --Equity Portfolio
Schedule of Investments at December 31, 1995 -- Money Market
Portfolio
Schedule of Investments at December 31, 1995 -- Bond Portfolio
Schedule of Investments at December 31, 1995 -- Omni Portfolio
Schedule of Investments at December 31, 1995 -- International
Portfolio
Schedule of Investments at December 31, 1995 -- Capital
Appreciation Portfolio
Schedule of Investments at December 31, 1995 -- Small Cap
Portfolio
Schedule of Investments at December 31, 1995 -- Global Contrarian
Portfolio
Schedule of Investments at December 31, 1995 -- Aggressive Growth
Portfolio
Notes to Financial Statements for December 31, 1995
Independent Auditors' Report of KPMG Peat Marwick LLP dated
January 26, 1996
The following audited financial information is included in Part A of this
registration statement:
Financial Highlights (Ten years ended December 31, 1995)
Written Consents of the Following Persons:
Ronald L. Benedict, Esq. as Legal Counsel to the Registrant
Jones & Blouch L.L.P. as Legal Counsel to the Registrant
KPMG Peat Marwick LLP as Independent Certified Public Accountants
for the Registrant
Exhibits:
(5)(a) Investment Advisory Agreement between the Registrant and
Ohio National Investments, Inc., dated May 1, 1996.
(5)(b) Sub-Advisory Agreement (for the International and Global
Contrarian Portfolios) between Ohio National
Investments, Inc. and Societe Generale Asset Management
Corp., dated May 1, 1996.
-1-
<PAGE> 87
(5)(c) Sub-Advisory Agreement (for the Capital Appreciation
Portfolio) between Ohio National Investments, Inc. and
T. Rowe Price Associates, Inc., dated May 1, 1996.
(5)(d) Sub-Advisory Agreement (for the Small Cap Portfolio)
between Ohio National Invesments, Inc and Founders Asset
Management, Inc., dated May 1, 1996.
(5)(e) Sub-Advisory Agreement (for the Aggressive Growth
Portfolio) between Ohio National Investments, Inc. and
Strong Capital Management, Inc., dated May 1, 1996.
(9)(b) Service Agreement among the Registrant, Ohio National
Investments, Inc. and The Ohio National Life Insurance
Company, dated May 1, 1996.
(9)(d) Joint Insured Agreement among the Registrant, ONE Fund,
Inc. and Ohio National Investments, Inc., dated May 1,
1996.
(16) Computation of Performance Data (for the years ended
December 31, 1995).
All other relevant exhibits, which have previously been filed with the
Commission and are incorporated herein by reference, are as follows:
(1) Articles of Incorporation of the Registrant (amended as
of November 2, 1982) were filed as Exhibit (1) of the
Registrant's Form N-1, Post-effective Amendment No. 6,
on August 3, 1982.
(1)(a) Articles Supplementary of the Registrant, effective
December 30, 1992, were filed as Exhibit (1)(a) of the
Registrant's Form N-1A, Post-effective amendment No. 21,
on February 26, 1993.
(1)(b) Articles Supplementary of the Registrant, effective
March 1, 1994, were filed as Exhibit (1)(b) of the
Registrant's Form N-1A, Post-effective Amendment No. 24,
on March 2, 1994.
(1)(c) Articles Supplementary of the Registrant, effective
December 15, 1994 were filed as Exhibit (1)(c) of the
Registrant's Form N-1A, Post-effective Amendment No. 27,
on December 30, 1994.
(2) By-laws of the Registrant (as amended March 16, 1989)
were filed as Exhibit (2) of the Registrant's Form N-1A,
Post-effective Amendment No. 17, on March 27, 1989.
(4) Specimen of certificated securities of the Registrant's
International Portfolio was filed as Exhibit (4) of the
Registrant's Form N-1A, Post-effective Amendment No. 21,
on February 26, 1993.
(4)(a) Specimen of certificated securities of the Registrant's
Capital Appreciation Portfolio was filed as Exhibit
(4)(a) of the Registrant's Form N-1A, Post-effective
Amendment No. 25, on March 25, 1994.
(4)(b) Specimen of certificated securities of the Registrant's
Small Cap Portfolio was filed as Exhibit (4)(b) of the
Registrant's Form N-1A, Post-effective Amendment No. 25,
on March 25, 1994.
(4)(c) Specimens of certificated securities of the Registrant's
Global Contrarian and Aggressive Growth Portfolios were
filed as Exhibit (4)(c) of the Registrant's Form N-1A,
Post-effective Amendment No. 27, on December 30, 1994.
-2-
<PAGE> 88
(8) Custodian Agreement between the Registrant and The
Provident Bank was filed as Exhibit No. (12) of the
Registrant's Form N-1A, Post-effective Amendment No. 16,
filed April 27, 1988.
(8)(a) Custody Agreement (for the International Portfolio)
between the Registrant and Investors Fiduciary Trust
Company was filed as Exhibit (8)(a) of the Registrant's
Form N-1A, Post-effective Amendment No. 22, on April 22,
1993.
(8)(a)(i) First Amendment of Custody Agreement (adding the Global
Contrarian Portfolio) between the Registrant and
Investors Fiduciary Trust Company was filed as Exhibit
(8)(a)(i) of the Registrant's Form N-1A, Post-effective
Amendment No. 27, on December 30, 1994.
(9)(a) Agency Agreement between the Registrant and The
Provident Bank was filed as Exhibit No. (13) of the
Registrant's Form N-1A, Post-effective Amendment No. 16,
filed April 27, 1988.
(9)(c) Repurchase Transactions, Terms and Conditions (master
agreement) between the Registrant and The Provident Bank
was filed as Exhibit (9)(c) of the Registrant's Form
N-1A, Post-effective Amendment No. 21, on February 26,
1993.
(9)(e) Services Agreement (for the International Portfolio)
between the Registrant and Interactive Data Corporation
was filed as Exhibit (9)(e) of the Registrant's Form
N-1A, Post-effective Amendment No. 23, on October 29,
1993.
(10) Opinion and consent of Ronald L. Benedict, Esq., as to
the shares of the Registrant's International Portfolio
was filed as Exhibit (10) of the Registrant's Form N-1A,
Post-effective Amendment No. 21, on February 26, 1993.
(10)(a) Opinion and consent of Ronald L. Benedict, Esq., as to
the shares of the Registrant's Capital Appreciation,
Small Cap, Global Contrarian and Aggressive Growth
Portfolios was filed as Exhibit (10)(a) of the
Registrant's Form N-1A, Post-effective Amendment No. 27,
on December 30, 1994.
(13) Investment letter for the initial subscription of
capital stock of the Registrant's International
Portfolio was filed as Exhibit (13) of the Registrant's
Form N-1A, Post-effective Amendment No. 22, on April 22,
1993.
(13)(a) Investment letters for the initial subscriptions of
capital stock of the Registrant's Capital Appreciation,
Small Cap, Global Contrarian and Aggressive Growth
Portfolios were filed as Exhibit (13)(a) of the
Registrant's Form N-1A, Post-effective Amendment No. 27,
on December 30, 1994.
(16) Computation of Performance Data was filed as exhibits
(16) of the Registrant's Form N-1A, Post-effective
Amendments No. 18 on March 2, 1990, No. 19 on April 18,
1991, No. 20 on April 29, 1992, No. 21 on February 26,
1993, No. 24 on March 2, 1994, and No. 28 on February
17, 1995.
-3-
<PAGE> 89
PERSONS UNDER COMMON CONTROL WITH REGISTRANT
The Registrant is an affiliate of The Ohio National Life Insurance Company
("ONLI"). The diagram on page 4A shows all persons under common control with the
Registrant. ONLI is a mutual life insurer and it owns 100% of the voting
securities of each of its subsidiaries. As of February 1, 1996, it also owned
92.9% of the voting securities of the Registrant, which are held of record in
the separate accounts of ONLI. The remaining 7.1% of the Registrant's voting
securities were owned by Ohio National Life Assurance Corporation ("ONLAC") and
held of record in ONLAC's separate account. ONLI owns 100% of the voting
securities of Ohio National Investments, Inc. (the "Adviser"). ONLI also owned
73.1% of the voting shares of ONE Fund, Inc. ("ONE Fund") as of that date.
NUMBER OF HOLDERS OF SECURITIES
As of February 1, 1996, the securities of the Registrant were held as follows:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Equity 5
Money Market 5
Bond 5
Omni 5
International 5
Capital Appreciation 5
Small Cap 5
Global Contrarian 5
Aggressive Growth 5
</TABLE>
INDEMNIFICATION
Under Section 2-418 of the Maryland General Corporation Law, with respect to any
proceedings against a present or former director, officer, agent or employee (a
"corporate representative") of the Registrant (a Maryland corporation), except a
proceeding brought by or on behalf of the Registrant, the Registrant may
indemnify the corporate representative against expenses, including attorneys'
fees, and judgments, fines, penalties, and amounts paid in settlement, if such
expenses were actually and reasonably incurred by the corporate representative
in connection with the proceeding, if: (i) he or she acted in good faith; (ii)
in the case of conduct in his or her official capacity he or she reasonably
believed that his or her conduct was in the best interests of the Registrant,
and in all other cases he or she reasonably believed that his or her conduct was
not opposed to the best interests of the Registrant; and (iii) with respect to
any criminal proceeding, he or she had no reasonable cause to believe his or her
conduct was unlawful. The Registrant is also authorized under Section 2-418 of
the Maryland General Corporation Law to indemnify a corporate representative
under certain circumstances against reasonable expenses incurred in connection
with the defense of a suit or action by or in the right of the Registrant except
where the corporate representative has been adjudged liable to the Registrant.
Under Article 11 of the Registrant's By-laws, directors and officers of
Registrant are entitled to indemnification by the Registrant to the fullest
extent permitted under Maryland law and the Investment Company Act of 1940.
Reference is made to Article 11 of Registrant's By-laws and Section 2-418 of the
Maryland General Corporation Law.
-4-
<PAGE> 90
<TABLE>
<CAPTION>
THE OHIO NATIONAL LIFE INSURANCE COMPANY/Cincinnati
A mutual 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. D. Zimmerman
Secy. & Dir. T. Tews VP/COO/Dir. D. McClure
Treas. & Dir. P. Bergmann VP & Dir. T. Backus
Director T. Bowman
Secretary R. Benedict
Treasurer K. Jaeger
Compliance
Officer A. Starkey
Asst. Secy. B. Hopewell
- ---------------------------------------- --------------------------------------
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
THE OHIO NATIONAL LIFE INSURANCE COMPANY/CINCINNATI
A MUTUAL 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 |
| | -------------------------------- |
| | | |
| | | |
- ------------------------------- ------------------------------ | -------------------------------------
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. D. Zimmerman | Sr. VP/Secy. & Dir. D. Zimmerman
VP & Dir. M. Boedeker | Sr. VP & Dir. S. Summers
V.P. & Dir. T. Bowman | Sr. VP & Dir. J. Brom
VP & Dir. D. McClure | Sr. Vice Pres. D. Cook
V.P., COO & Dir. D. McClure | Sr. Vice Pres. G. Smith
VP & Dir. S. Williams | Vice President P. Bergmann
Secy. & Dir. R. Benedict | Vice President M. Boedeker
Treasurer D. Taney | Vice President R. DiTommaso
Director S. Summers | Vice President J. Mettey
Secretary R. Benedict | Vice President G. Pearson
Treasurer K. Jaeger | Vice President D. Pennington
Asst. Secy. B. Hopewell | Vice President M. Stohler
Asst. Secretary B. Hopewell | Second Vice Pres. J. Houser
| Asst. Secy. R. Benedict
Compliance Director A. Starkey | Asst. Secy. T. Tews
| Asst. Actuary K. Flischel
- ------------------------------- ------------------------------ | ------------------------------------
| | SEPARATE ACCOUNT
| |-------------------------------------
| | R
| | ---
<- Advisor to | Advisor to -> |
-------------------------------------------------------- |
| | |
- ----------------------------- -------------------------------- | | --------------------------------
ONE FUND, INC. O.N. Investment Management Co. | | Ohio National Fund
| |
A MARYLAND CORPORATION An Ohio Corporation | | A Maryland Corporation
AN OPEN END DIVISIFIED A Financial Advisory service | | An open end diversified
MANAGEMENT INVESTMENT COMPANY Capitalized by ONESCO @ $145,000 | | management investment company
- ----------------------------- -------------------------------- | | --------------------------------
Pres. & Dir. D. Zimmerman Pres. & Dir. J. Brom | | Pres. & Dir. D. Zimmerman
Vice. Pres. M. Boedeker | ----- Vice President M. Boedeker
Vice Pres. J. Brom VP & Dir. M. Boedeker | Vice President J.Brom
Vice Pres. D. McClure | Vice President S. Williams
Vice Pres. S. Williams VP & Dir. D. McClure | Treasurer D. Taney
Treasurer D. Taney -------- Secy. & Dir. R. Benedict
Secy. & Dir. R. Benedict VP & Dir. S. Willams Asst. Secy. B. Hopewell
Asst. Secy. B. Hopewell Director J. Baker
Asst. Secy. A. Starkey Treasurer D. Taney Director G. Castrucci
Director J. Baker Director M. Kirby
Director G. Castrucci Secretary R. Benedict
Director M. Kirby
Asst. Secy. B. Hopewell
- --------------------------------- -------------------------------- ---------------------------------
</TABLE>
<PAGE> 92
BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The Adviser is engaged in providing investment management services to the
Registrant and to ONE Fund. The Adviser is also authorized to provide such
services to others. The Adviser has not engaged in any other business of a
substantial nature during the past two fiscal years. The names of each director
and officer of the Adviser and the business of a substantial nature of each
during the past two fiscal years are as follows:
<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
President Investment Officer of ONLI; Vice President of
Registrant; Senior Vice President of ONLAC; Vice
President of ONE Fund; Director and
President of ONIMCO
Michael A. Boedeker Director and Vice President, Fixed Income Securities
Vice President of ONLI; Vice President of ONLAC; Vice President of
Registrant; Vice President of ONE Fund; Director
and Vice President of ONIMCO
Stephen T. Williams Director and Director of Securities of ONLI; Vice
Vice President President of Registrant; Vice President of ONE
Fund; Director and Vice President of ONIMCO
David G. McClure Director and Vice President, Variable Product Sales of
Vice President ONLI; Vice President, Chief Operating Officer and
Director of O.N. Equity Sales Co. ("ONESCO") and
Ohio National Equities, Inc. ("ONE, Inc."); Vice
President of ONE Fund; Director and Vice President
of ONIMCO
Ronald L. Benedict Secretary Second Vice President and Counsel of ONLI; Director
and Secretary of Registrant; Director and Secretary
of ONE Fund; Director and Secretary of ONESCO;
Assistant Secretary of ONLAC; Secretary of ONIMCO;
Secretary of ONE, Inc.
Dennis R. Taney Treasurer Mutual Fund Financial Operations Director of ONLI;
Treasurer of Registrant; Treasurer of ONE Fund;
Treasurer of ONIMCO
Barbara A. Hopewell Assistant Associate Counsel of ONLI; Assistant
Secretary Secretary of Registrant; Assistant Secretary of ONESCO;
Assistant Secretary of ONE Fund; Assistant
Secretary of ONIMCO; Assistant
Secretary of ONE, Inc.
</TABLE>
-5-
<PAGE> 93
BUSINESS AND OTHER CONNECTIONS OF SGAM
SGAM provides investment management services to the International and Global
Contrarian Portfolios of the Registrant and of ONE Fund. SGAM's primary business
is managing SoGen International Fund, Inc. and SoGen Funds, Inc. ("SoGen"),
diversified investment companies of the management type registered under the
1940 Act. The officers and directors of SGAM and their business of a substantial
nature during the past two fiscal years are as follows:
<TABLE>
<CAPTION>
Position Business of a Substantial
Name with SGAM Nature During Past Two Years
- ---- --------- ----------------------------
<S> <C> <C>
Philip J. Bafundo Secretary and VicePresident, Secretary and
Treasurer Treasurer of SoGen; Certified
Public Accountant (New York)
Frances G. Bijon Director International Director of Societe Generale
Asset Management S.A.
Jean-Marie Eveillard President and President and Director of
Director SoGen
Jean-Pierre Gentil Chairman of the Chairman of the Board and
Board and Director Director of SoGen; Manager of
the Investment and Custody
Department of Societe Generale
Jean-Roger Huet Director President of New York Branch
of Societe Generale.
Jean-Marie Stein Director Director of French Funds of
Societe Generale
</TABLE>
BUSINESS AND OTHER CONNECTIONS OF TRPA
TRPA provides investment management services to the Capital Appreciation
Portfolio of the Registrant. TRPA's primary business is the management of assets
for individual and institutional investors, particularly the T. Rowe Price group
of mutual funds. The officers and directors of TRPA and their business of a
substantial nature during the past two fiscal years are as follows:
<TABLE>
<CAPTION>
Position Business of a Substantial
Name with TRPA Nature during Past Two Years
- ---- --------- ----------------------------
<S> <C> <C>
George J. Collins President, Chief Director of Rowe Price-
Executive Officer Fleming International, Inc.
and Managing Director ("Price-Fleming"); Director of
T. Rowe Price Retirement Plan
Services, Inc. ("RPS");
Director of T. Rowe Price
Trust Company ("Trust Co.");
Chairman of the Board of T.
Rowe Price mutual funds
("Price Funds")
</TABLE>
-6-
<PAGE> 94
<TABLE>
<CAPTION>
Position Business of a Substantial
Name with TRPA Nature during Past Two Years
- ---- --------- ----------------------------
<S> <C> <C>
James S. Riepe Managing Director Chairman of the Board of T.
Rowe Price Services, Inc.
("Price Services"); Chairman
of the Board of RPS; Chairman
of the Board of Trust Co.;
President and Director of
T. Rowe Price Investment
Services, Inc. ("Investment
Services"); Vice President and
Trustee of Price Funds
Henry H. Hopkins Managing Director Vice President and Director of
Investment Services; Vice
President and Director of
Price Services; Vice President
and Director of Trust Co.;
Vice President of Price-
Fleming; Vice President of
RPS; Director of ICI Mutual
Insurance Company; Vice
President of Price Funds
James W. Halbkat, Jr. Director President of U.S. Monitor
Corp.
John W. Rosenblum Director Taylor Murphy Professor of Darden Graduate
School of Business Administration,
University of Virginia; Director of Chesapeake
Corporation; Director of Cadmus
Communications Corp.; Director of Comdial
Corp.; Director of Cone Mills Corp.
Robert L. Strickland Director Chairman of Lowe's Companies, Inc.
Philip C. Walsh Director Consultant to and Director of Cyprus
Minerals Corp.; Director of Piedmont Mining
Co., Inc.
George A. Roche Chief Financial Vice President and Director of Price-Fleming
Officer and Managing
Director
M. David Testa Managing Director Chairman of the Board of Price-Fleming
Charles P. Smith Managing Director Vice President of Price-Fleming
Peter Van Dyke Managing Director Vice President of Price-Fleming
Robert P. Campbell Vice President Vice President of Price-Fleming
</TABLE>
-7-
<PAGE> 95
<TABLE>
<CAPTION>
Position Business of a Substantial
Name with TRPA Nature during Past Two Years
- ---- --------- ----------------------------
<S> <C> <C>
Robert C. Howe Vice President Vice President of Price-Fleming
Veena A. Kutler Vice President Vice President of Price-Fleming
George A. Murnaghan Vice President Vice President of Price-Fleming;
Assistant Vice President of
Investment Services
William F. Wendler, II Vice President Vice President of Price-Fleming;
Assistant Vice President of Investment
Services
Edward A. Wiese Vice President Vice President of Price-Fleming
Price-Fleming
Alvin M. Younger, Jr. Managing Director, Secretary and Treasurer of
Secretary and Price-Fleming
Treasurer
Joseph P. Croteau Vice President Controller of Price-Fleming
Nolan L. North Vice President and Assistant Treasurer of Price-Fleming
Assistant Treasurer
Arthur B. Cecil Vice President Vice President of Price Funds
Charles A. Morris Vice President Vice President of Price Funds
David A. Rea Vice President Vice President of Price Funds
Alan R. Stuart Vice President Vice President of Price Funds
Lenora V. Hornung Vice President Secretary of Price Funds
Carmen F. Deyesu Vice President Vice President of Price Services;
Vice President of Trust Co.;
Treasurer of Price Funds
David S. Middleton Vice President Vice President of Price Services;
Vice President of Trust Co.; Controller
of Price Funds
Richard P. Howard Vice President President and portfolio manager
of T. Rowe Price Capital Appreciation Fund
</TABLE>
Wholly-owned subsidiaries of TRPA include the following:
Investment Services, a Maryland corporation, is the principal
underwriter and distributor of the Price Funds;
Price Services, a Maryland corporation, provides transfer agent,
dividend disbursing and shareholder services to the Price Funds;
-8-
<PAGE> 96
RPS, a Maryland corporation, provides administrative,
recordkeeping and subaccounting services to administrators of
employee benefit plans;
Trust Co., a Maryland limited purpose trust company, provides
fiduciary and custodial services to employee benefit plans and
common trust funds;
T. Rowe Price Real Estate Group, Inc., a Maryland corporation,
provides real estate services and is the investment manager of
several real estate investment trusts, funds and limited
partnerships;
T. Rowe Price Stable Asset Management, Inc., a Maryland
corporation, is an investment adviser specializing in management
of portfolios seeking stable and consistent returns;
T. Rowe Price Recovery Fund Associates, Inc., a Maryland
corporation, is the general partner of T. Rowe Price Recovery
Fund, LP, a Delaware limited partnership that invests in
financially distressed companies;
T. Rowe Price (Canada), Inc., a Maryland corporation, is an
investment adviser which may register as such under the Securities
Act of Ontario.
Tower Venture, Inc., a Maryland corporation, serves as a general
partner of 100 East Pratt Street, LP, a Maryland limited
partnership (whose limited partners include TRPA) formed to
improve TRPA's headquarters property;
TRP Suburban, Inc., a Maryland corporation, is involved in the
construction of an office building to house certain administrative
functions of TRPA in Owings Mills, MD;
TRP Finance, Inc. and TRP Finance MRT, Inc., are Delaware
corporations managing passive corporate investments and other
intangible assets.
TRP Distribution, Inc., a Maryland corporation, is a wholly-owned subsidiary of
Investment Services and engages in the sale of investment products prepared by
Investment Services.
Price-Fleming, a Maryland corporation, is a joint venture 50% owned by TRP
Finance, Inc., and provides investment counsel service with respect to foreign
securities for U.S. institutional investors.
BUSINESS AND OTHER CONNECTIONS OF FAM
FAM provides investment management services to the Small Cap Portfolio of the
Registrant. FAM's primary business is the management of the Founders group of
mutual funds. It also serves as investment adviser to private accounts. The
officers and directors of FAM and their business of a substantial nature during
the past two fiscal years are as follows:
<TABLE>
<CAPTION>
Position Business of a Substantial
Name with FAM Nature During Past Two Years
- ---- -------- ----------------------------
<S> <C> <C>
Bjorn K. Borgen President, Secretary, President, Executive Committee
sole Director and member and Director of
owner Founders Funds, Inc.
Michael K. Haines SeniorVice President Portfolio manager for
of Investments Founders Discovery Fund and
Founders Frontier Fund
</TABLE>
-9-
<PAGE> 97
<TABLE>
<CAPTION>
Position Business of a Substantial
Name with FAM Nature During Past Two Years
- ---- -------- ----------------------------
<S> <C> <C>
David L. Ray Vice President, Vice President, Secretary and
Assistant Secretary Treasurer of Founders Funds,
and Treasurer Inc.
Michael W. Gerding Vice President of Portfolio manager for
Investments Founders Worldwide Growth
Fund and Founders Passport
Fund
Charles W. Hooper Vice President of Portfolio manager for
Investments Founders Special Fund
Gregory P. Contillo Vice President of N/A
Institutional Marketing
James P. Rankin Vice President of N/A
Shareholder Services
Lois F. Wong Vice President of N/A
Advertising
</TABLE>
BUSINESS AND OTHER CONNECTIONS OF SCM
SCM provides investment management services to the Aggressive Growth Portfolio
of the Registrant. SCM's primary business is the management of the Strong group
of mutual funds ("Strong Funds"). It also serves as investment adviser to
individual and institutional accounts. The officers and directors of SCM and
their business of a substantial nature during the past two fiscal years are as
follows:
<TABLE>
<CAPTION>
Position Business of a Substantial
Name with SCM Nature During Past Two Years
- ---- -------- ----------------------------
<S> <C> <C>
Richard S. Strong Chairman and Director Chairman and Director of the Strong
Funds; Chairman and Director of
Strong Holdings, Inc.; Chairman and Director
of Strong Funds Distributors, Inc.; Chairman
and Director of Heritage Reserve Development
Corp.; Managing board member of Fussville
Real Estate Holdings LLC and Fussville
Development LLC.
John Dragisic Vice Chairman and Director Vice Chairman and Director of the Strong
Funds; Director of Strong Holdings, Inc.;
Director of Strong Funds Distributors, Inc.;
Until July 1994 was President and Chief
Executive Officer of Grunau Company, Inc.
Richard T. Weiss Director N/A
</TABLE>
-10-
<PAGE> 98
<TABLE>
<CAPTION>
Position Business of a Substantial
Name with SCM Nature During Past Two Years
- ---- -------- ----------------------------
<S> <C> <C>
Rochelle Lamm Wallach President and Director of Until November, 1994, was President and
Strong Advisory Services, Director of AAL Capital Management
a division of SCM Corporation and the AAL Mutual Funds.
Thomas P. Lemke Senior Vice President, Senior Vice President of the Strong Funds;
Secretary and General Until September 1994 was Resident Counsel
Counsel for Funds Management at J.P. Morgan & Co.
Ronald A. Neville Senior Vice President Until January, 1995, was Treasurer and Chief
and Chief Financial Officer Financial Officer of Twentieth Century Securities.
Bruce Behling Senior Vice President N/A
Lloyd Cole Senior Vice President N/A
Lawrence A. Totsky Senior Vice President Senior Vice President of the Strong Funds
Thomas M. Zoeller Treasurer Treasurer of the Strong Funds; Treasurer
of Strong Holdings, Inc.; Treasurer and
Secretary of Strong Funds Distributors, Inc.;
Treasurer of Heritage Reserve Development
Corp.; Treasurer of Fussville Real Estate
Holdings LLC and Fussville Development
LLC.
</TABLE>
Strong Holdings, Inc., a Wisconsin corporation, is a subsidiary of SCM. Strong
Funds Distributors, Inc., a Wisconsin corporation, is a subsidiary of Strong
Holdings, Inc. Heritage Reserve Development Corp., a Wisconsin corporation, is a
subsidiary of Strong Holdings, Inc. Fussville Real Estate Holdings LLC and
Fussville Development LLC, Wisconsin limited liability companies, are
subsidiaries of SCM.
PRINCIPAL UNDERWRITERS
Not Applicable
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:
For those portfolios other than the International and Global
Contrarian Portfolio:
The Provident Bank ("Provident")
One East Fourth Street
Cincinnati, Ohio 45202
For the International and Global Contrarian Portfolios:
-11-
<PAGE> 99
Investors Fiduciary Trust Co. ("IFTC")
127 West Tenth Street
Kansas City, Missouri 64105
(b) General and auxiliary ledgers:
Provident and IFTC
(c) Securities records for portfolio securities:
Provident and IFTC
(d) Corporate charter (Articles of Incorporation), By-Laws and Minute
Books:
Ronald L. Benedict, Secretary
Ohio National Fund, Inc.
237 William Howard Taft Road
Cincinnati, Ohio 45219
(e) Records of brokerage orders:
ONIMCO
(f) Records of other portfolio transactions:
ONIMCO
(g) Records of options:
ONIMCO
(h) Records of trial balances:
Provident and ONIMCO
(i) Quarterly records of allocation of brokerage orders and
commissions:
ONIMCO
(j) Records identifying persons or group authorizing portfolio
transactions:
ONIMCO
(k) Files of advisory materials
ONIMCO
MANAGEMENT SERVICES
Not Applicable
UNDERTAKINGS
Not Applicable.
-12-
<PAGE> 100
SIGNATURES
Pursuant to the requirements of the Securities Act of l933 and the Investment
Company Act of l940, Ohio National Fund, Inc., has duly caused this
post-effective amendment to the registration statement to be signed on its
behalf by the undersigned thereunto duly authorized in the City of Cincinnati
and the State of Ohio on the 28th day of February, 1996.
OHIO NATIONAL FUND, INC.
By /s/Donald J. Zimmerman
----------------------------
Donald J. Zimmerman, President
Attest /s/Ronald L. Benedict
-------------------------
Ronald L. Benedict, Secretary
Pursuant to the requirements of the Securities Act of l933, this post-effective
amendment to the 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/Donald J. Zimmerman President and Director February 28, 1996
- ------------------------ (Principal Executive Officer)
Donald J. Zimmerman
/s/Dennis R. Taney Treasurer (Principal Financial February 28, 1996
- ------------------------ and Accounting Officer)
Dennis R. Taney
/s/James E. Baker Director February 28, 1996
- ------------------------
James E. Baker
/s/Ronald L. Benedict Director February 28, 1996
- ------------------------
Ronald L. Benedict
/s/George E. Castrucci Director February 28, 1996
- ------------------------
George E. Castrucci
/s/Maurice H. Kirby, Jr. Director February 28, 1996
- ------------------------
Maurice H. Kirby, Jr.
</TABLE>
<PAGE> 101
INDEX OF CONSENTS AND EXHIBITS
<TABLE>
<CAPTION>
Page Number in
Exhibit Sequential Numbering
Number Description System Where Located
- ------ ----------- --------------------
<S> <C> <C>
Consent of Ronald L. Benedict, Esq.
Consent of Jones & Blouch L.L.P.
Consent of KPMG Peat Marwick LLP
(5)(a) Investment Advisory Agreement between the Registrant
and Ohio National Investments, Inc., dated May 1, 1996
(5)(b) Sub-Advisory Agreement (for the International and
Global Contrarian Portfolios) between Ohio National
Investments, Inc. and Societe Generale Asset Management
Corp., dated May 1, 1996
(5)(c) Sub-Advisory Agreement (for the Capital Appreciation
Portfolio) between Ohio National Investments, Inc. and
T. Rowe Price Associates, Inc., dated May 1, 1996
(5)(d) Sub-Advisory Agreement (for the Small Cap Portfolio)
between Ohio National Investments, Inc. and Founders
Asset Management, Inc., dated May 1, 1996
(5)(e) Sub-Advisory Agreement (for the Aggressive Growth
Portfolio) between Ohio National Investments, Inc. and
Strong Capital Management, Inc., dated May 1, 1996
(9)(b) Service Agreement among the Registrant, Ohio National
Investments, Inc. and The Ohio National Life Insurance
Company, dated May 1, 1996
(9)(d) Joint Insured Agreement among the Registrant, ONE Fund,
Inc. and Ohio National Investments, Inc., dated May 1, 1996
(16) Computation of Performance Data (for the years ended
December 31, 1995)
</TABLE>
<PAGE> 102
CONSENTS
<PAGE> 103
[Ohio National Fund, Inc. Letterhead]
February 28, 1996
The Board of Directors
Ohio National Fund, Inc.
237 William Howard Taft Road
Cincinnati, Ohio 452l9
Re: Ohio National Fund, Inc. Registration Statement
File Nos. 2-67464 and 811-3015
Gentlemen:
The undersigned hereby consents to the use of my name under the caption of
"Legal Counsel" in the registration statement on Form N-lA of the above
captioned registrant.
Sincerely,
/s/ Ronald L. Bendict
---------------------------
Ronald L. Benedict
Secretary and Legal Counsel
RLB/nh
<PAGE> 104
JONES & BLOUCH L.L.P.
1025 Thomas Jefferson Street, N.W.
Suite 405 West
Washington, D.C. 20007
February 29, 1996
Board of Directors
Ohio National Fund, Inc.
237 William Howard Taft Road
Cincinnati, OH 45219
Re: Ohio National Fund, Inc.
Registration Statement on Form N-1A
File No. 2-67464
------------------------------------
Dear Sirs:
We hereby consent to the reference to this firm under the caption
"Legal Counsel" in the statement of additional information included in
post-effective amendment No. 31 under the Securities Act of 1933 to the
above-referenced registration statement for Ohio National Fund, Inc.
Very truly yours,
/s/ Jones & Blouch L.L.P.
------------------------
Jones & Blouch L.L.P.
<PAGE> 105
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
Ohio National Fund, Inc:
We consent to the inclusion of our report included herein and to the reference
to our firm under the heading "Experts" in the Statement of Additional
Information.
KPMG Peat Marwick LLP
Cincinnati, Ohio
February 29, 1996
<PAGE> 106
EXHIBITS
<PAGE> 1
EXHIBIT (5)(a)
INVESTMENT ADVISORY AGREEMENT
BETWEEN THE REGISTRANT AND OHIO NATIONAL INVESTMENTS, INC.
DATED MAY 1, 1996
<PAGE> 2
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this first day of May, 1996, by and between OHIO NATIONAL
FUND, INC., a Maryland corporation (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 Directors 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 Directors, 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 economic, statistical and financial data
and other information relevant to the investment policies of the Fund,
affecting the economy generally and individual companies or industries the
securities of which are included in the Fund's investment portfolios or are
under consideration for inclusion therein;
(b) regularly furnish to the Board of Directors of the Fund for approval,
modification or rejection, recommendations with respect to investment programs
consistent with the fundamental policies and related investment policies for
each investment portfolio as set forth in the Fund's currently effective
prospectus and Statement of Additional Information;
(c) take such steps as are necessary to implement the investment programs
approved by the Fund's Board of Directors by purchase and sale of securities,
including the placing of orders for such purchase and sale; and
<PAGE> 3
(d) regularly report to the Fund's Board of Directors with respect to
implementation of the approved investment programs and the Adviser's activities
in connection with the administration of the Fund.
3. USE OF SUB-ADVISERS
In providing the services and assuming the obligations set forth herein, in
connection with any investment portfolio 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
Directors, and shareholders of 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
Directors 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:
2
<PAGE> 4
(a) any of the costs of printing and mailing the items referred to in
subparagraph (c) of paragraph 4;
(b) the costs of preparation, printing and mailing disclosure documents
required by regulatory authorities;
(c) compensation of directors of the Fund who are not directors, officers
or employees of the Adviser;
(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 corporate fees payable by the Fund to federal, state or
other governmental agencies;
(j) the cost of stock certificates, if any, representing shares of the
Fund;
(k) legal fees and expenses in connection with the affairs of the Fund,
including registering and qualifying its shares with regulatory authorities;
and
(l) expenses of shareholders and directors 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
3
<PAGE> 5
provide such 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 rates
shown on Schedule A hereof 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 Directors 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 Directors 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 directors, officers, agents and shareholders 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 directors, officers, shareholders or
otherwise, that the Adviser may be interested in the Fund and that the
existence of any such dual
4
<PAGE> 6
interest shall not affect the validity hereof or of any transactions hereunder
except as otherwise provided in the Articles of Incorporation of the Fund and
the Adviser, respectively, 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 Directors of the Fund and the
shareholders of the class of capital stock 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 Directors 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 directors 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 shareholder 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 capital stock 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> 7
(b) If the shareholders of capital stock 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 Directors 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
directors 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 237 William Howard Taft Road, Cincinnati,
Ohio 45219.
(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 Cincinnati, Ohio, as of the date
first above written.
OHIO NATIONAL FUND, INC. OHIO NATIONAL INVESTMENTS,
INC.
By By
------------------------------- --------------------------------
Donald J. Zimmerman, President Joseph P. Brom, President
6
<PAGE> 8
SCHEDULE A
TO
INVESTMENT ADVISORY AGREEMENT
Each portfolio of Ohio National Fund, Inc. shall pay fees to Ohio National
Investments, Inc. computed at the following rates as provided in paragraph 7 of
the Agreement:
<TABLE>
<CAPTION>
Net Assets Money
in Portfolio Equity Bond Omni Market
------------ ------ ---- ---- ------
<S> <C> <C> <C> <C>
First $100,000,000 0.60% 0.60% 0.60% 0.30%
Next $150,000,000 0.50% 0.50% 0.50% 0.25%
Next $250,000,000 0.45% 0.45% 0.45% 0.23%
Next $500,000,000 0.40% 0.40% 0.40% 0.20%
Next $1,000,000,000 0.30% 0.30% 0.30% 0.15%
All Portfolio Assets
over $2,000,000,000 0.25% 0.25% 0.25% 0.15%
</TABLE>
<TABLE>
<CAPTION>
Capital Small Aggressive Global
International Appreciation Cap Growth Contrarian
------------- ------------ ----- ---------- ----------
<S> <C> <C> <C> <C> <C>
All Portfolio Assets 0.90% 0.80% 0.80% 0.80% 0.90%
</TABLE>
Agreed to and accepted as of May 1, 1996.
OHIO NATIONAL FUND, INC. OHIO NATIONAL INVESTMENTS, INC.
By: By:
---------------------------- -----------------------------
Donald J. Zimmerman, President Joseph P. Brom, President
<PAGE> 1
EXHIBIT (5)(b)
SUB-ADVISORY AGREEMENT (FOR THE INTERNATIONAL
AND GLOBAL CONTRARIAN PORTFOLIOS) BETWEEN
OHIO NATIONAL INVESTMENTS, INC. AND
SOCIETE GENERALE ASSET MANAGEMENT CORP.
DATED MAY 1, 1996
<PAGE> 2
SUB-ADVISORY AGREEMENT
This Agreement is made as of the first day of May, 1996 by and between OHIO
NATIONAL INVESTMENTS, INC. , an Ohio corporation (the "Adviser"), and SOCIETE
GENERALE ASSET MANAGEMENT CORP., a Delaware corporation (the "Sub-Adviser").
WHEREAS, OHIO NATIONAL FUND, INC. (the "Fund"), is a Maryland corporation 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 with
respect to those portions of the assets of the Fund designated as the
INTERNATIONAL PORTFOLIO and the GLOBAL CONTRARIAN PORTFOLIO of the Fund 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
International Portfolio and the Global Contrarian Portfolio that the Adviser
shall from time to time place under the supervision of the Sub-Adviser (such
cash, securities and other assets initially and as same shall thereafter be
increased or decreased by the investment performance thereof and by additions
thereto and withdrawals therefrom by the Adviser shall hereinafter be referred
to as the "Portfolios").
(b) All activities by the Sub-Adviser on behalf of the Adviser and the
Portfolios 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 Directors of
the Fund and by the Adviser. All activities of the Sub-Adviser on behalf of the
Adviser and the Portfolios 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, dealers and futures commission merchants for the execution of
transactions of the Portfolios 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.
<PAGE> 3
(d) In carrying out its obligations to manage the investments and reinvestments
of the assets of the Portfolios, the Sub-Adviser shall: (1) obtain and evaluate
pertinent economic, statistical, financial and other information affecting the
economy generally and individual companies or industries the securities of which
are included in each of the Portfolios or are under consideration for inclusion
therein; (2) formulate and implement continuous investment programs for the
Portfolios consistent with the investment objectives and related investment
policies and restrictions for the Portfolios as set forth in the Prospectus; and
(3) take any steps necessary to implement the aforementioned investment programs
by placing orders for the purchase and sale of securities.
(e) In connection with the purchase and sale of securities of the Portfolios,
the Sub-Adviser shall arrange for the transmission to the Adviser and the
Portfolios' 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 Portfolios. With respect to
securities of the Portfolios 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 Portfolios' custodian.
(f) In connection with the placement of orders for the execution of the
Portfolios' securities transactions, the Sub-Adviser shall create and maintain
all necessary records of the Portfolios 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 Portfolios 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 Directors of the Fund concerning the investment activity and composition of
the Portfolios 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 organizing and registering the
Portfolios, 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 shareholders of the Portfolios, expenses of offering interests
in the Portfolios 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 shareholders of the Fund,
and all other costs incident to the existence of the Portfolios.
2
<PAGE> 4
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, such advice regarding economic factors and
trends or such other information, advice or assistance 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 and the Portfolios.
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 quarterly, equal to
0.1875% of the average daily net assets of each of the Portfolios during the
quarter preceding each payment (equivalent to an annual fee of three-quarters of
one percent (0.75%) of the average daily net assets of each of the Portfolios
during the year) (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 quarterly to the Sub-Adviser on or before the fifth business day of the
next succeeding quarter. The daily fee accruals will be computed by multiplying
the fraction of one over the number of calendar days in the quarter by 0.1875%
and multiplying this product by the net assets of each Portfolio as determined
in accordance with the Prospectus as of the close of business on the previous
business 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 shareholders of the Fund or to the
Adviser. The Sub-Adviser shall not be liable to the Fund or to any shareholder
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 in foreign countries, or from any political acts of any foreign
governments to which such assets might be exposed, or for any tax of any kind,
including without limitation any statutory, governmental, state, provincial,
regional, 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 either Portfolio, 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.
3
<PAGE> 5
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 Portfolios 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 Portfolios 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 a Portfolio as well as other customers, the
Sub-Adviser may, with the consent of the Adviser and 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 fiduciary 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
Directors 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 until approved by
a majority vote of the voting securities of each of the Portfolios, at a meeting
to take place not more than one year after the effective date of the Fund's
registration statement relating to that Portfolio. Thereafter, this Agreement
shall continue in effect from year to year, subject to approval annually by the
Board of Directors of the Fund or by vote of a majority of the voting securities
of each of the Portfolios 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 Directors of the Fund who are not parties to this Agreement or interested
persons (as defined in the 1940 Act) of any such person.
4
<PAGE> 6
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 Directors of the
Fund or by vote of a majority of the voting securities of either or both of the
Portfolios. 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).
(c) Termination of this Agreement for any reason shall not affect rights of the
parties that have accrued prior thereto.
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 portfolio managers; (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 either Portfolio; or (4) any change in ownership or 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) 559-6589
With a copy to:
Joseph P. Brom, President
Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201
5
<PAGE> 7
If to the Sub-Adviser:
Societe Generale Asset Management Corp.
1221 Avenue of the Americas, Eighth Floor
New York, New York 10020
Fax No. (212) 278-5911
With a copy to:
Jean-Marie Eveillard, President
Societe Generale Asset Management Corp.
1221 Avenue of the Americas, Eighth Floor
New York, New York 10020
SECTION 11. Governing Law
This Agreement shall be governed by and subject to the requirements of the laws
of the State of New York 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
SOCIETE GENERALE ASSET MANAGEMENT CORP.
By:
------------------------------------------
Jean-Marie Eveillard, President
Accepted and Agreed:
OHIO NATIONAL FUND, INC.
By:
-----------------------------------
Donald J. Zimmerman, President
6
<PAGE> 1
EXHIBIT (5)(c)
SUB-ADVISORY AGREEMENT (FOR THE CAPITAL APPRECIATION
PORTFOLIO) BETWEEN OHIO NATIONAL INVESTMENTS, INC.
AND T. ROWE PRICE ASSOCIATES, INC., DATED MAY 1, 1996
<PAGE> 2
SUB-ADVISORY AGREEMENT
This Agreement is made as of the first day of May, 1996 by and between OHIO
NATIONAL INVESTMENTS, INC., an Ohio corporation (the "Adviser"), and T. ROWE
PRICE ASSOCIATES, INC., a Maryland corporation (the "Sub-Adviser").
WHEREAS, OHIO NATIONAL FUND, INC. (the "Fund"), is a Maryland corporation 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 with
respect to that portion of the assets of the Fund designated as the CAPITAL
APPRECIATION PORTFOLIO of the Fund 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 Capital
Appreciation Portfolio that the Adviser shall from time to time place under the
supervision of the Sub-Adviser (such cash, securities and other assets initially
and as same shall thereafter be increased or decreased by the investment
performance thereof and by additions thereto and withdrawals therefrom by the
Adviser shall hereinafter be referred to as the "Portfolio").
(b) All activities by the Sub-Adviser on behalf of the Adviser and the Portfolio
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 Directors of
the Fund and by the Adviser. All activities of the Sub-Adviser on behalf of the
Adviser and the Portfolio 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, dealers and futures commission merchants for the execution of
transactions of the Portfolio 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.
<PAGE> 3
(d) In carrying out its obligations to manage the investments and reinvestments
of the assets of the Portfolio, the Sub-Adviser shall:
(1) obtain and evaluate pertinent economic, statistical, financial and other
information affecting the economy generally and individual companies or
industries the securities of which are included in the Portfolio or are under
consideration for inclusion therein;
(2) formulate and implement a continuous investment program for the Portfolio
consistent with the investment objectives and related investment policies and
restrictions for such Portfolio 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 Portfolio, the
Sub-Adviser shall arrange for the transmission to the Adviser and the
Portfolio'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 Portfolio. With respect to
Portfolio 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 Portfolio's custodian.
(f) In connection with the placement of orders for the execution of the
Portfolio's securities transactions, the Sub-Adviser shall create and maintain
all necessary records of the Portfolio 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 Portfolio 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 Directors of the Fund concerning the investment activity and composition of
the Portfolio 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 the Portfolio's 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 shareholders of the Portfolio, expenses of
offering interests in the Portfolio 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
shareholders of the Fund, and all other costs incident to the Portfolio's
existence.
2
<PAGE> 4
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, such advice regarding economic factors and
trends or such other information, advice or assistance 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 and the Portfolio.
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 quarterly, at the
annual rate of 0.7% of the first five million dollars ($5,000,000) of the
average daily net assets of the Portfolio during the quarter preceding each
payment and 0.5% of the average daily net assets of the Portfolio in excess of
five million dollars ($5,000,000) (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 quarterly to the Sub-Adviser on or before the fifth
business day of the next succeeding quarter. The daily fee accruals will be
computed on the basis of the valuations of the total net assets of the Portfolio
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 shareholders of the Fund or to the
Adviser. The Sub-Adviser shall not be liable to the Fund or to any shareholder
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 in foreign countries, or from any political acts of any foreign
governments to which such assets might be exposed, or for any tax of any kind,
including without limitation any statutory, governmental, state, provincial,
regional, 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 Portfolio, 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.
3
<PAGE> 5
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 Portfolio 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 Portfolio 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 Portfolio 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
Directors 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 until approved by
a majority vote of the voting securities of the Portfolio, at a meeting to take
place not more than one year after the effective date of the Fund's registration
statement relating to the Portfolio. Thereafter, this Agreement shall continue
in effect from year to year, subject to approval annually by the Board of
Directors of the Fund or by vote of a majority of the voting securities of the
Portfolio 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
Directors of the Fund who are not parties to this
Agreement or interested persons (as defined in the 1940 Act) of any such person.
4
<PAGE> 6
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 Directors of the
Fund or by vote of a majority of the voting securities of the Portfolio. 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).
(c) Termination of this Agreement for any reason shall not affect rights of the
parties that have accrued prior thereto.
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 the Portfolio's portfolio
manager; (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
Portfolio; 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) 559-6589
With a copy to:
Joseph P. Brom, President
Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201
5
<PAGE> 7
If to the Sub-Adviser:
Hannes van Wagenberg
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Fax No. (410) 547-0180
With a copy to:
Henry H. Hopkins, Esq.
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
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
T. ROWE PRICE ASSOCIATES, INC.
By:
---------------------------
George J. Collins
President, Chief Executive Officer and
Managing Director
Accepted and Agreed:
OHIO NATIONAL FUND, INC.
By:
------------------------------------
Donald J. Zimmerman, President
6
<PAGE> 1
EXHIBIT (5)(d)
SUB-ADVISORY AGREEMENT (FOR THE SMALL CAP PORTFOLIO)
BETWEEN OHIO NATIONAL INVESTMENTS, INC. AND FOUNDERS
ASSET MANAGEMENT, INC., DATED MAY 1, 1996
<PAGE> 2
SUB-ADVISORY AGREEMENT
This Agreement is made as of the first day of May, 1996 by and between OHIO
NATIONAL INVESTMENTS, INC., an Ohio corporation (the "Adviser"), and FOUNDERS
ASSET MANAGEMENT, INC., a Delaware corporation (the "Sub-Adviser").
WHEREAS, OHIO NATIONAL FUND, INC. (the "Fund"), is a Maryland corporation 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 with
respect to that portion of the assets of the Fund designated as the SMALL CAP
PORTFOLIO of the Fund 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 Small Cap
Portfolio that the Adviser shall from time to time place under the supervision
of the Sub-Adviser (such cash, securities and other assets initially and as same
shall thereafter be increased or decreased by the investment performance thereof
and by additions thereto and withdrawals therefrom by the Adviser shall
hereinafter be referred to as the "Portfolio").
(b) All activities by the Sub-Adviser on behalf of the Adviser and the Portfolio
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 Directors of
the Fund and by the Adviser. All activities of the Sub-Adviser on behalf of the
Adviser and the Portfolio 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, dealers and futures commission merchants for the execution of
transactions of the Portfolio 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.
<PAGE> 3
(d) In carrying out its obligations to manage the investments and reinvestments
of the assets of the Portfolio, the Sub-Adviser shall: (1) obtain and evaluate
pertinent economic, statistical, financial and other information affecting the
economy generally and individual companies or industries the securities of which
are included in the Portfolio or are under consideration for inclusion therein;
(2) formulate and implement a continuous investment program for the Portfolio
consistent with the investment objectives and related investment policies and
restrictions for such Portfolio 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 Portfolio, the
Sub-Adviser shall arrange for the transmission to the Adviser and the
Portfolio'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 Portfolio. With respect to
Portfolio 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 Portfolio's custodian.
(f) In connection with the placement of orders for the execution of the
Portfolio's securities transactions, the Sub-Adviser shall create and maintain
all necessary records of the Portfolio 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 Portfolio 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 Directors of the Fund concerning the investment activity and composition of
the Portfolio 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 the Portfolio's 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 shareholders of the Portfolio, expenses of
offering interests in the Portfolio 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
shareholders of the Fund, and all other costs incident to the Portfolio's
existence.
2
<PAGE> 4
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, such advice regarding economic factors and
trends or such other information, advice or assistance 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 and the Portfolio.
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 quarterly, at the
annual rate of 0.65% of the first seventy-five million dollars ($75,000,000) of
the average daily net assets of the Portfolio during the quarter preceding each
payment, 0.6% of the next seventy-five million dollars ($75,000,000), and 0.55%
of the average daily net assets of the Portfolio in excess of one hundred and
fifty million dollars ($150,000,000) (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 quarterly to the Sub-Adviser on or before the fifth
business day of the next succeeding quarter. The daily fee accruals will be
computed on the basis of the valuations of the total net assets of the Portfolio
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 shareholders of the Fund or to the
Adviser. The Sub-Adviser shall not be liable to the Fund or to any shareholder
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 in foreign countries, or from any political acts of any foreign
governments to which such assets might be exposed, or for any tax of any kind,
including without limitation any statutory, governmental, state, provincial,
regional, 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 Portfolio, 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.
3
<PAGE> 5
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 Portfolio 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 Portfolio 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 Portfolio 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
Directors 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 until approved by
a majority vote of the voting securities of the Portfolio, at a meeting to take
place not more than one year after the effective date of the Fund's registration
statement relating to the Portfolio. Thereafter, this Agreement shall continue
in effect from year to year, subject to approval annually by the Board of
Directors of the Fund or by vote of a majority of the voting securities of the
Portfolio 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
Directors of the Fund who are not parties to this Agreement or interested
persons (as defined in the 1940 Act) of any such person.
4
<PAGE> 6
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 Directors of the
Fund or by vote of a majority of the voting securities of the Portfolio. 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).
(c) Termination of this Agreement for any reason shall not affect rights of the
parties that have accrued prior thereto.
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
Portfolio; 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) 559-6589
With a copy to:
Joseph P. Brom, President
Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201
5
<PAGE> 7
If to the Sub-Adviser:
Gregory P. Contillo, Vice President
Founders Asset Management, Inc.
2930 East Third Avenue
Denver, Colorado 80206
Fax No. (303) 329-3848
With a copy to:
David L. Ray, Chief Financial Officer
Founders Asset Management, Inc.
2930 East Third Avenue
Denver, Colorado 80206
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
FOUNDERS ASSET MANAGEMENT, INC.
By:
---------------------------------------
David L. Ray
Chief Financial Officer
Accepted and Agreed:
OHIO NATIONAL FUND, INC.
By:
----------------------------------
Donald J. Zimmerman, President
6
<PAGE> 1
EXHIBIT (5)(e)
SUB-ADVISORY AGREEMENT (FOR THE AGGRESSIVE GROWTH
PORTFOLIO) BETWEEN OHIO NATIONAL INVESTMENTS, INC.
AND STRONG CAPITAL MANAGEMENT, INC., DATED MAY 1, 1996
<PAGE> 2
SUB-ADVISORY AGREEMENT
This Agreement is made as of the first day of May, 1996 by and between OHIO
NATIONAL INVESTMENTS, INC., an Ohio corporation (the "Adviser"), and STRONG
CAPITAL MANAGEMENT, INC., a Wisconsin corporation (the "Sub-Adviser").
WHEREAS, OHIO NATIONAL FUND, INC. (the "Fund"), is a Maryland corporation 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 with
respect to that portion of the assets of the Fund designated as the AGGRESSIVE
GROWTH PORTFOLIO of the Fund 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
Aggressive Growth Portfolio that the Adviser shall from time to time place under
the supervision of the Sub-Adviser (such cash, securities and other assets
initially and as same shall thereafter be increased or decreased by the
investment performance thereof and by additions thereto and withdrawals
therefrom by the Adviser shall hereinafter be referred to as the "Portfolio").
(b) All activities by the Sub-Adviser on behalf of the Adviser and the Portfolio
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 Directors of
the Fund and by the Adviser. All activities of the Sub-Adviser on behalf of the
Adviser and the Portfolio 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, dealers and futures commission merchants for the execution of
transactions of the Portfolio and, when applicable, shall negotiate commissions
in connection therewith. The Sub-Adviser is authorized, subject to the
supervision of the Adviser and the Board of Directors of the Fund, to place
orders for the purchase and sale of the Portfolio's investments with or through
such persons, brokers or dealers, including the Sub-Adviser or affiliates
thereof, and to negotiate commissions to be paid on such transactions in
accordance with
<PAGE> 3
the Fund's policy with respect to brokerage as set forth in the Statement of
Additional Information. The Sub-Adviser may, on behalf of the Portfolio, pay
brokerage commissions to a broker which provides brokerage and research services
to the Sub-Adviser in excess of the amount another broker would have charged for
effecting the transaction, provided (i) the Sub-Adviser determines in good faith
that the amount is reasonable in relation to the value of the brokerage and
research services provided by the executing broker in terms of the particular
transaction or in terms of the Sub-Adviser's overall responsibilities with
respect to the Portfolio and the accounts as to which the Sub-Adviser exercises
investment discretion, (ii) such payment is made in compliance with Section
28(e) of the Securities Exchange Act of 1934, as amended, and any other
applicable laws and regulations, and (iii) in the opinion of the Sub-Adviser,
the total commissions paid by the Portfolio will be reasonable in relation to
the benefits to the Portfolio over the long term. It is recognized that the
services provided by such brokers may be useful to the Sub-Adviser in connection
with the Sub-Adviser's services to other clients.
(d) In carrying out its obligations to manage the investments and reinvestments
of the assets of the Portfolio, the Sub-Adviser shall: (1) obtain and evaluate
pertinent economic, statistical, financial and other information affecting the
economy generally and individual companies or industries the securities of which
are included in the Portfolio or are under consideration for inclusion therein;
(2) formulate and implement a continuous investment program for the Portfolio
consistent with the investment objectives and related investment policies and
restrictions for such Portfolio 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 Portfolio, the
Sub-Adviser shall arrange for the transmission to the Adviser and the
Portfolio'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 Portfolio. With respect to
Portfolio 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 Portfolio's custodian.
(f) The Sub-Adviser will maintain all books and records required to be
maintained pursuant to the Investment Company Act and the rules and regulations
promulgated thereunder with respect to transactions made by it on behalf of the
Portfolio including, without limitation, the books and records required by
Subsections (b)(1), (5), (6), (7), (9), (10) and (11) and Subsection (f) of Rule
31a-1 under the 1940 Act and shall timely furnish to the Adviser all information
relating to the Sub-Adviser's services hereunder needed by the Adviser to keep
such other books and records of the Portfolio required by Rule 31a-1 under the
1940 Act. The Sub-Adviser will also preserve all such books and records for the
periods prescribed in Rule 31a-2 under the 1940 Act, and agrees that such books
and records shall remain the sole property of the Fund and shall be immediately
surrendered to the Fund upon request. The Sub-Adviser further agrees that all
books and records maintained hereunder shall be made available to the Fund or
the Adviser at any time upon request, including telecopy without unreasonable
delay, during any business day.
(g) The Sub-Adviser shall render such reports to the Adviser and/or to the Board
of Directors of the Fund concerning the investment activity and composition of
the Portfolio 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 and shall have no
authority to act for or represent the Fund or the Adviser in any way or
otherwise be deemed an agent of the Fund or the Adviser.
2
<PAGE> 4
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 the Portfolio's 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 shareholders of the Portfolio, expenses of
offering interests in the Portfolio 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
shareholders of the Fund, and all other costs incident to the Portfolio's
existence.
SECTION 3. Use of Services of Others
The Sub-Adviser may (at its expense except as set forth in Sections 1(c) and 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, such advice regarding economic
factors and trends or such other information, advice or assistance 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 and the
Portfolio.
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 0.7% of the first fifty million dollars ($50,000,000) of the
average daily net assets of the Portfolio during the month preceding each
payment, and 0.5% of the average daily net assets of the Portfolio in excess of
fifty million dollars ($50,000,000) (the "Sub-Advisory Fee") during such period.
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 Portfolio 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) In the absence of willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder or its reckless disregard of its duties
under this Agreement, the Sub-Adviser shall not be subject to any liability to
the Fund, the shareholders of the Fund or to the Adviser. The Sub-Adviser shall
not be liable to the Fund or to any shareholder 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 in foreign countries, or
from any political acts of any foreign governments to which such assets might be
exposed, or for any tax of any kind, including without limitation any statutory,
governmental, state, provincial, regional, 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").
3
<PAGE> 5
(b) In the event the Sub-Adviser is assessed any taxation in respect of the
assets, income or activities of the Portfolio, 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.
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 Portfolio 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 Portfolio 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 Portfolio as well as other clients of the
Sub-Adviser, the Sub-Adviser may, but shall be under no obligation, 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 clients.
(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 fiduciary accounts for which it
has investment responsibility. The Sub-Adviser will comply with all applicable
rules and regulations of the Securities and Exchange Commission.
SECTION 7. Reports to the Sub-Adviser
(a) 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.
4
<PAGE> 6
(b) The Adviser hereby agrees to provide to the Sub-Adviser any amendments,
supplements or other changes to the Fund's Articles of Incorporation, By-Laws,
currently effective registration statement under the 1940 Act, including any
amendments or supplements thereto, and Notice of Eligibility under Rule 4.5 of
the Commodity Exchange Act (collectively, "Governing Instruments and Regulatory
Filings") as soon as practicable after such materials become available and, upon
receipt by the Sub-Adviser, the Sub-Adviser will act in accordance with such
amended, supplemented or otherwise changed Governing Instruments and Regulatory
Filings.
(c) Except for the restrictions necessary to comply with Section 817(h) of the
Internal Revenue Code of 1986, as amended and Treasury Regulations Section
1.817-5 (the "Tax Restrictions"), Adviser represents and warrants that the
investment objective of the Portfolio is identical to, and that investment
policies, restrictions and limitations of the Portfolio are no more restrictive
or limiting than, those contained in the current prospectus and statement of
additional information of the Strong Discovery Fund, Inc. Except to the extent
of the Tax Restrictions, and to the extent that the parties hereto may otherwise
agree in writing, and subject to the approval of the Fund's Board of Directors
and, in the case of fundamental policies, approval of the Portfolio's
shareholders, Adviser shall cause the Fund to file such amendments, supplements
and stickers to its Prospectus and Statement of Additional Information as are
necessary to ensure that the investment policies, restrictions and limitations
applicable to the Portfolio are at all times no more restrictive than those
contained in the prospectus and statement of additional information, as the same
may be amended or supplemented from time to time, of the Strong Discovery Fund,
Inc., provided that the Sub-Adviser shall have afforded the Adviser sufficient
notice of such changes to Strong Discovery Fund, Inc. so as to enable
corresponding changes to be timely made with regard to the Portfolio's
investment objectives, policies, restrictions and limitations. Adviser shall not
permit the investment objective of the Portfolio to change without the prior
written consent of the Sub-Adviser unless such change is in response to a change
made to the Strong Discovery Fund, Inc. and then, only to the extent necessary
to make the investment objective of the Portfolio substantially identical to
that of the Strong Discovery Fund, Inc.
SECTION 8. Term of Agreement
This Agreement shall be effective on the date hereof. Unless earlier terminated
as hereinafter provided, this Agreement shall continue in effect until approved
by a majority vote of the voting securities of the Portfolio, at a meeting to
take place not more than one year after the effective date of the Fund's
registration statement relating to the Portfolio. Thereafter, this Agreement
shall continue in effect from year to year, subject to approval annually by the
Board of Directors of the Fund or by vote of a majority of the voting securities
of the Portfolio 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
Directors of the Fund who are not parties to this Agreement or interested
persons (as defined in the 1940 Act) of any such person.
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 Directors of the
Fund or by vote of a majority of the voting securities of the Portfolio. 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).
5
<PAGE> 7
(c) Termination of this Agreement for any reason shall not affect rights of the
parties that have accrued prior thereto.
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 the portfolio manager of the
Strong Discovery Fund, Inc. or the Portfolio; (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; or
(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 Portfolio.
(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) 559-6589
With a copy to:
Joseph P. Brom, President
Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201
If to the Sub-Adviser:
Strong Capital Management, Inc.
100 Heritage Reserve
Milwaukee, Wisconsin 53051
Attention: Rochelle Lamm Wallach
Fax No. (414) 359-3888
With a copy to:
Thomas P. Lemke, General Counsel
Strong Capital Management, Inc.
100 Heritage Reserve
Milwaukee, Wisconsin 53051
Fax No. (414) 359-3948
6
<PAGE> 8
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.
SECTION 14. Representations and Warranties of Sub-Adviser
The Sub-Adviser represents and warrants to the Adviser and the Fund as follows:
(a) The Sub-Adviser is registered as an investment adviser under the Advisers
Act;
(b) The Sub-Adviser has filed a notice of exemption pursuant to Rule 4.14 under
the CEA with the Commodity Futures Trading Commission (the "CFTC") and the
National Futures Association;
(c) The Sub-Adviser is a corporation duly organized and validly existing under
the laws of the State of Wisconsin with the power to own and possess its assets
and carry on its business as it is now being conducted;
(d) The execution, delivery and performance by the Sub-Adviser of this Agreement
are within the Sub-Adviser's powers and have been duly authorized, and no action
by or in respect of, or filing with, any governmental body, agency or official
is required on the part of the Sub-Adviser for the execution, delivery and
performance by the Sub-Adviser of this Agreement, and the execution, delivery
and performance by the Sub-Adviser of this Agreement do not contravene or
constitute a default under (i) any provision of applicable law, rule or
regulation, (ii) the Sub-Adviser's governing instruments, or (iii) any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Sub-Adviser;
(e) This Agreement is a valid and binding agreement of the Sub-Adviser;
(f) A true and complete copy of the Form ADV of the Sub-Adviser, as amended to
the date hereof and filed with the Commission has been furnished to the Adviser,
and the information contained therein is accurate and complete in all material
respects and does not omit to state any material fact necessary in order to make
the statements made, in light of the circumstances under which they were made,
not misleading.
(g) The Sub-Adviser agrees to observe and comply with Rule 17j-1 under the 1940
Act and the Sub-Adviser's Code of Ethics, as may be amended from time to time.
SECTION 15. Representations and Warranties of Adviser.
The Adviser represents and warrants to the Sub-Adviser as follows:
7
<PAGE> 9
(a) The Adviser is registered as an investment adviser under the Advisers Act;
(b) The Fund has filed a Notice of Eligibility under Rule 4.5 of the CEA, with
the Commodity Futures Trading Commission (the "CFTC") and the National Futures
Association;
(c) The Adviser is a corporation duly organized and validly existing under the
laws of the State of Ohio with the power to own and possess its assets and carry
on its business as it is now being conducted;
(d) The execution, delivery and performance by the Adviser of this Agreement are
within the Adviser's powers and have been duly authorized, and no action by or
in respect of, or filing with, any governmental body, agency or official is
required on the part of the Adviser for the execution, delivery and performance
by the Adviser of this Agreement, and the execution, delivery and performance by
the Adviser of this Agreement do not contravene or constitute a default under
(i) any provision of applicable law, rule or regulation, (ii) the Adviser's
governing instruments, or (iii) any agreement, judgment, injunction, order,
decree or other instrument binding upon the Adviser;
(e) This Agreement is a valid and binding agreement of the Adviser;
(f) A true and complete copy of the Form ADV of the Adviser, as amended to the
date hereof and filed with the Commission has been furnished to the Sub-Adviser,
and the information contained therein is accurate and complete in all material
respects and does not omit to state any material fact necessary in order to make
the statements made, in light of the circumstances under which they were made,
not misleading;
(g) The Adviser acknowledges that it received a copy of the Sub-Adviser's Form
ADV at least 48 hours prior to the execution of this Agreement.
(h) The Adviser agrees to observe and comply with Rule 17j-1 under the 1940 Act
and the Adviser's Code of Ethics as may be amended from time to time.
SECTION 16. Survival of Representations and Warranties: Duty to Update
Information.
All representations and warranties made by the Sub-Adviser and the Adviser
pursuant to Sections 14 and 15 hereof shall survive for the duration of this
Agreement and the Parties hereto shall immediately notify, but in no event later
than five (5) business days, each other in writing upon becoming aware that any
of the foregoing representations and warranties are no longer true. In addition,
the Sub-Adviser will deliver to the Adviser and the Fund copies of any
amendments, supplements or updates to any of the information provided to the
Adviser and attached as exhibits hereto within fifteen (15) days after becoming
available.
SECTION 17. Voting of Proxies
The Sub-Adviser shall direct the Fund's custodian as to how to vote such proxies
as may be necessary or advisable in connection with the any matters submitted to
a vote of shareholders of securities held by the Portfolio.
SECTION 18. Confidentiality
Subject to the duties of the Adviser, the Fund and the Sub-Adviser to comply
with applicable law, including any demand of any regulatory or taxing authority
having jurisdiction, the parties hereto shall treat as confidential all
information pertaining to the Fund and the actions of the Sub-Adviser, the
Adviser and the Fund in respect thereof.
8
<PAGE> 10
SECTION 19. Non-Exclusivity
Adviser acknowledges and agrees that this Agreement and the arrangements
described herein are intended to be non-exclusive and that Sub-Adviser is free
to enter into similar agreements and arrangements with other entities.
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
STRONG CAPITAL MANAGEMENT, INC.
By:
---------------------------------------------
Rochelle Lamm Wallach
President of Strong Advisory
Services, a division of Strong
Capital Management, Inc.
Accepted and Agreed:
OHIO NATIONAL FUND, INC.
By:
-----------------------------
Donald J. Zimmerman
President
9
<PAGE> 1
EXHIBIT (9)(b)
SERVICE AGREEMENT AMONG THE REGISTRANT, OHIO NATIONAL
INVESTMENTS, INC. AND THE OHIO NATIONAL LIFE INSURANCE
COMPANY, DATED MAY 1, 1996
<PAGE> 2
SERVICE AGREEMENT
THIS AGREEMENT, made this first day of May, 1996, by and among OHIO
NATIONAL FUND, INC., (the "Fund"), a Maryland corporation, OHIO NATIONAL
INVESTMENTS, INC. ("Adviser"), an Ohio corporation and THE OHIO NATIONAL LIFE
INSURANCE COMPANY ("Ohio National Life"), a mutual life insurance company
organized 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 May 1, 1996 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.
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.
<PAGE> 3
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 Directors 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 directors 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 Directors
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 237 William
Howard Taft Road, Cincinnati, Ohio 45219.
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.
OHIO NATIONAL FUND, INC.
By
---------------------------------------
Donald J. Zimmerman, President
2
<PAGE> 4
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
3
<PAGE> 1
EXHIBIT (9)(d)
JOINT INSURED AGREEMENT AMONG THE REGISTRANT,
ONE FUND, INC,. AND OHIO NATIONAL INVESTMENTS, INC.
DATED MAY 1, 1996
<PAGE> 2
JOINT INSURED AGREEMENT
AGREEMENT made this twenty-eighth day of March, 1996, to take effect the first
day of May, 1996, by and among OHIO NATIONAL FUND, INC., ONE FUND, INC. (each
individually referred to herein as a "Fund," and collectively as the "Funds"),
both Maryland corporations, 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 Directors 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 either or both 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.
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 directors of that
Fund who are not defined as "interested persons" of the Fund
under Section 2(a)(19) of the
<PAGE> 3
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 both of the Funds.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
in triplicate in Cincinnati, Ohio on the twenty-eighth day of March, 1996.
OHIO NATIONAL FUND, INC.
By:
---------------------------
Donald J. Zimmerman
President
ONE FUND, INC.
By:
---------------------------
Donald J. Zimmerman
President
OHIO NATIONAL INVESTMENTS, INC.
By:
---------------------------
Joseph P. Brom
President
2
<PAGE> 1
EXHIBIT (16)
COMPUTATION OF PERFORMANCE DATA (FOR THE YEARS
ENDED DECEMBER 31, 1995)
<PAGE> 2
Annual Report Calculations
Equity
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Retirement Fund Fund
Year ROR Value TOP A TOP B TOP + Advantage Cumulative Annualized
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/68 10.000000 8.82% 8.88% 9.18% 8.70% 1267.64% 10.17%
12/31/69 1.0090 10.090000
12/31/70 1.0763 10.859867
12/31/71 1.0766 11.691733
12/31/72 1.1340 13.258425
12/31/73 0.8989 11.917998
12/31/74 0.8047 9.590413
12/31/75 1.1985 11.494110
12/31/76 1.1680 13.425121
12/31/77 0.9116 12.238340
12/31/78 1.0726 13.126844
12/31/79 1.1587 15.210074
12/31/80 1.4147 21.517691
12/31/81 0.9707 20.887223
12/31/82 1.2874 26.890211
12/31/83 1.1849 31.862211
12/31/84 0.9912 31.581823
12/31/85 1.2369 39.063557 11.96% 12.02% 12.33% 11.83% 250.11% 13.35%
12/31/86 1.2331 48.169272
12/31/87 1.1082 53.381187
12/31/88 1.1503 61.404380
12/31/89 1.2321 75.656336
12/31/90 0.9614 72.736002 12.07% 12.13% 12.44% 11.94% 88.03% 13.46%
12/31/91 1.2018 87.414127
12/31/92 1.0754 94.005152
12/31/93 1.1409 107.250478
12/31/94 1.0025 107.518604 25.65% 25.71% 26.07% 25.51% 27.20% 27.20%
12/31/95 1.2720 136.763665
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
Money Market
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Retirement Fund Fund
Year ROR Value TOP A TOP B TOP + Advantage Cumulative Annualized
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/80 10.000000 6.25% 6.31% 6.89% 6.13% 208.04% 7.57%
12/31/80 1.0483 10.483000
12/31/81 1.1625 12.186488
12/31/82 1.1227 13.681770
12/31/83 1.0861 14.859770
12/31/84 1.1011 16.362093
12/31/85 1.0775 17.630155 4.44% 4.50% 5.23% 4.33% 74.72% 5.74%
12/31/86 1.0630 18.740855
12/31/87 1.0628 19.917780
12/31/88 1.0713 21.337918
12/31/89 1.0889 23.234859
12/31/90 1.0789 25.068089 2.93% 2.99% 3.28% 2.82% 22.88% 4.21%
12/31/91 1.0554 26.456861
12/31/92 1.0317 27.295544
12/31/93 1.0274 28.043442
12/31/94 1.0400 29.165179 4.32% 4.38% 4.67% 4.21% 5.62% 5.62%
12/31/95 1.0562 30.804262
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
Bond
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Retirement Fund Fund
Year ROR Value TOP A TOP B TOP + Advantage Cumulative Annualized
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/02/82 10.000000 7.70% 7.77% 8.07% 7.59% 212.58% 9.05%
12/31/82 1.0060 10.060000
12/31/83 1.0263 10.324578
12/31/84 1.1215 11.579014
12/31/85 1.2153 14.071976 6.98% 7.04% 7.34% 6.86% 122.13% 8.31%
12/31/86 1.1249 15.829566
12/31/87 1.0081 15.957785
12/31/88 1.0674 17.033340
12/31/89 1.1071 18.857611
12/31/90 1.0782 20.332276 7.64% 7.70% 8.00% 7.53% 53.74% 8.98%
12/31/91 1.1296 22.967339
12/31/92 1.0754 24.699076
12/31/93 1.1069 27.339407
12/31/94 0.9616 26.289574 17.44% 17.50% 17.83% 17.31% 18.90% 18.90%
12/31/95 1.1890 31.258304
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Omni
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Retirement Fund Fund
Year ROR Value TOP A TOP B TOP + Advantage Cumulative Annualized
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
9/10/84 10.000000 9.31% 9.38% 10.22% 9.20% 232.74% 11.22%
12/31/84 1.0374 10.374000
12/31/85 1.1559 11.991307
12/31/86 1.1794 14.142547 8.78% 8.84% 9.75% 8.66% 135.28% 10.75%
12/31/87 0.9832 13.904952
12/31/88 1.1503 15.994867
12/31/89 1.1546 18.467673
12/31/90 1.0191 18.820405 10.69% 10.75% 11.07% 10.58% 76.80% 12.07%
12/31/91 1.1815 22.236309
12/31/92 1.0860 24.148632
12/31/93 1.1285 27.251731
12/31/94 0.9947 27.107297 21.25% 21.31% 21.66% 21.12% 22.75% 22.75%
12/31/95 1.2275 33.274207
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
International
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Retirement Fund Fund
Year ROR Value TOP A TOP B TOP + Advantage Cumulative Annualized
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5/03/93 10.000000 15.41% 15.48% 15.80% 15.29% 51.38% 16.87%
12/31/93 1.2496 12.496000
12/31/94 1.0807 13.504427 10.73% 10.79% 11.10% 10.61% 12.10% 12.10%
12/31/95 1.1210 15.138463
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Small Cap
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Retirement Fund Fund
Year ROR Value TOP A TOP B TOP + Advantage Cumulative Annualized
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4/30/94 10.000000 31.48% 31.56% 31.92% 31.34% 61.29% 33.18%
12/31/94 1.2126 12.126000 31.38% 31.44% 31.82% 31.24% 33.01% 33.01%
12/31/95 1.3301 16.128793
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Capital Appreciation
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Retirement Fund Fund
Year ROR Value TOP A TOP B TOP + Advantage Cumulative Annualized
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4/30/94 10.000000 14.59% 14.67% 14.97% 14.46% 28.17% 16.04%
12/31/94 1.0453 10.453000 21.12% 21.18% 21.52% 20.98% 22.62% 22.62%
12/31/95 1.2262 12.817469
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Aggressive Growth
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Retirement Fund Fund
Year ROR Value TOP A TOP B TOP + Advantage Cumulative Annualized
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/95 10.000000 25.78% 25.84% 26.10% 25.68% 26.95% 37.53%
12/31/95 1.2695 12.695000
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Global Contrarian
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Retirement Fund Fund
Year ROR Value TOP A TOP B TOP + Advantage Cumulative Annualized
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/95 10.000000 7.89% 7.95% 8.16% 7.80% 8.89% 12.05%
12/31/95 1.0889 10.889000
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000315754
<NAME> OHIO NATIONAL FUND, INC.
<SERIES>
<NUMBER> 01
<NAME> EQUITY
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 23.30
<PER-SHARE-NII> 0.50
<PER-SHARE-GAIN-APPREC> 5.65
<PER-SHARE-DIVIDEND> (0.39)
<PER-SHARE-DISTRIBUTIONS> (0.38)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 28.58
<EXPENSE-RATIO> 0.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<ARTICLE> 6
<CIK> 0000315754
<NAME> OHIO NATIONAL FUND, INC.
<SERIES>
[NUMBER] 02
<NAME> MONEY MARKET
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
[INVESTMENTS-AT-COST] 0
[INVESTMENTS-AT-VALUE] 0
[RECEIVABLES] 0
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 0
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 0
[TOTAL-LIABILITIES] 0
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 0
[SHARES-COMMON-STOCK] 0
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 0
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<ARTICLE> 6
<CIK> 0000315754
<NAME> OHIO NATIONAL FUND, INC.
<SERIES>
[NUMBER] 03
<NAME> BOND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
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[PER-SHARE-NAV-BEGIN] 9.70
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<ARTICLE> 6
<CIK> 0000315754
<NAME> OHIO NATIONAL FUND, INC.
<SERIES>
[NUMBER] 04
<NAME> OMNI
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
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[PER-SHARE-NAV-BEGIN] 14.76
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<ARTICLE> 6
<CIK> 0000315754
<NAME> OHIO NATIONAL FUND, INC.
<SERIES>
[NUMBER] 05
<NAME> INTERNATIONAL
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
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[PER-SHARE-NAV-BEGIN] 13.30
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<ARTICLE> 6
<CIK> 0000315754
<NAME> OHIO NATIONAL FUND, INC.
<SERIES>
[NUMBER] 06
<NAME> CAPITAL APPRECIATION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
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[NET-CHANGE-FROM-OPS] 0
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[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 0
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[PER-SHARE-NAV-BEGIN] 10.25
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[PER-SHARE-DIVIDEND] (0.29)
[PER-SHARE-DISTRIBUTIONS] (0.21)
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[EXPENSE-RATIO] 0.96
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<ARTICLE> 6
<CIK> 0000315754
<NAME> OHIO NATIONAL FUND, INC.
<SERIES>
[NUMBER] 07
<NAME> SMALL CAP
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
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[PER-SHARE-NAV-BEGIN] 11.99
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<ARTICLE> 6
<CIK> 0000315754
<NAME> OHIO NATIONAL FUND, INC.
<SERIES>
[NUMBER] 08
<NAME> GLOBAL CONTRARIAN
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> MAR-31-1995
<PERIOD-END> DEC-31-1995
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[GROSS-ADVISORY-FEES] 0
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 0
[AVERAGE-NET-ASSETS] 0
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 0.13
[PER-SHARE-GAIN-APPREC] 0.75
[PER-SHARE-DIVIDEND] (0.08)
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[PER-SHARE-NAV-END] 10.80
[EXPENSE-RATIO] 1.58
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<ARTICLE> 6
<CIK> 0000315754
<NAME> OHIO NATIONAL FUND, INC.
<SERIES>
[NUMBER] 09
<NAME> AGGRESSIVE GROWTH
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> MAR-31-1995
<PERIOD-END> DEC-31-1995
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[ACCUMULATED-NII-CURRENT] 0
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[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 0
[DIVIDEND-INCOME] 0
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[EXPENSES-NET] 0
[NET-INVESTMENT-INCOME] 0
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 0
[EQUALIZATION] 0
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[NUMBER-OF-SHARES-SOLD] 0
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[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 0
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 0
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 0
[AVERAGE-NET-ASSETS] 0
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 1.56
[PER-SHARE-GAIN-APPREC] 1.08
[PER-SHARE-DIVIDEND] (0.80)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.84
[EXPENSE-RATIO] 1.02
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
