<PAGE> 1
WEALTH-BULDING OPPORTUNITY
OHIO NATIONAL
FUND, INC.
[OHIO NATIONAL FUND INC. LOGO]
SEMI-ANNUAL REPORT
Ohio National Fund, Inc.
JUNE 30, 1998
OHIO NATIONAL
FINANCIAL SERVICES
<PAGE> 2
[PHOTO]
PRESIDENT'S
MESSAGE
Dear Investor:
First, I want to thank you for being an investor in the Ohio National Fund. All
of us here appreciate your support.
We are pleased to provide you with an update of Ohio National Fund's
performance and investment activity for the six months ended June 30, 1998. It
was an exciting time for the Fund. Highlights included the addition of several
new portfolios and the continued strong growth in net assets, which surpassed
the $1 billion milestone and stood at $1.07 billion as of mid-year.
Looking Back
For some time now we have enjoyed an economic climate of reasonable growth, low
unemployment, modest interest rates, subdued inflation and stable corporate
earnings. Over the past year and a half, however, while the overall direction
has continued to be favorable, the journey has not been an especially smooth one
for many investors. In the past 18 months, diversified U.S. stock mutual funds
have had three calendar quarters of gains and three calendar quarters of losses.
Blue chip stocks have continued to be strong performers, despite higher
valuations than smaller stocks and pressures on earnings due to sinking
currencies and economic turbulence throughout Asia. Also advancing, although not
nearly at the same pace as the large caps, have been the stocks of midsize and
small companies. Abroad, European equities have enjoyed a solid advance on the
strength of a long-term trend of improving corporate performance and optimism
over an improved investment climate accompanying the forthcoming introduction of
the "euro" common currency. Continued economic turmoil in Asia has driven down
emerging markets' equities substantially. As for bonds, the fundamentals
underpinning the U.S. bond market are as strong as at any time in recent memory.
New Portfolios
We welcomed four new portfolios to Ohio National Fund on May 1, 1998. Three -
the Blue Chip, Equity Income, and High Income Bond portfolios - are managed by
Federated Advisers. The fourth - the Small Cap Growth Portfolio - is managed by
Robertson Stephens Investment Management. The addition of these portfolios
further expands the Fund's investment spectrum and offers greater opportunities
for diversification for our investors. Please note that portfolio availability
varies by contract.
Looking Ahead
Markets in the United States and Europe thus far have shown remarkable
resilience amid fears that Asia has not yet reached the bottom of its economic
cycle. The "flight to quality" - cash inflow diverted from battered foreign
markets - is in part helping keep the demand for stocks high.
Inflation is low and is expected to stay in check, at least in the near-term,
as their regional economic tempest causes Asian companies to send their goods to
the U.S. at deeply reduced prices and prevents their competitors in the U.S.
from raising their own prices. Low interest rates could help prolong the U.S.
economic expansion by sustaining the booming housing industry and making loans
for capital investment more affordable. Still, a strong dollar, rising labor
costs and Asia's downturn are combining to temper corporate profitability and in
turn slow earnings growth among larger companies. The time may be approaching
when many midsize and small companies with limited exposure to Asia and less
economic sensitivity generate higher relative earnings growth.
In Closing
Information on your investments is contained in the following pages. We are
proud that Ohio National Fund is able to
<PAGE> 3
provide its investors with the sound results documented herein. Please note in
reviewing performance results that rates of return under variable contracts
differ from those of the underlying portfolios because of applicable charges for
mortality and expenses. Please contact your registered representative for
additional information on the financial protection and tax-deferred accumulation
options afforded by your variable annuity or variable universal life insurance
contract. As your needs change over time, he or she stands ready to serve you.
Thank you again for the confidence you have placed in Ohio National Fund as
you pursue your wealth-building endeavors. Be assured that we will make every
effort to continue to merit that confidence.
Best regards,
/s/ John J. Palmer
John J. Palmer
- --------------------------------------------------------------------------------
Directors and Officers of Ohio National Fund, Inc.
John J. Palmer, President and Director
Ronald L. Benedict, Secretary and Director
George E. Castrucci, Director
Ross Love, Director
George M. Vredeveld, Director
Joseph P. Brom, Vice President
Michael A. Boedeker, Vice President
Stephen T. Williams, Vice President
Dennis R. Taney, Treasurer
Theresa M. Brunsman, Assistant Secretary
William J. Hilbert, Jr., Compliance Director and Assistant Treasurer
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the fund. This report is not
authorized for distribution to prospective investors in the fund unless preceded
or accompanied by an effective prospectus of Ohio National Fund, Inc. For a
prospectus containing more complete information, including charges and expenses,
please contact Ohio National Equities, Inc. (Member NASD/SIPC) One Financial
Way, Cincinnati, Ohio 45242, telephone 513.794.6100. 8/98
<PAGE> 4
EQUITY PORTFOLIO
Ohio National Fund, Inc.
OBJECTIVE
The principal investment objective of the Equity Portfolio is long-term capital
growth. Current income is a secondary objective.
PERFORMANCE AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS:
<S> <C>
One-year 14.60%
Five-year 15.94%
Ten-year 13.11%
Since inception (1/14/71) 11.20%
</TABLE>
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
We continued to see an increasing yet volatile stock market, led by the blue
chips and a select number of growth stocks, during the first half of 1998. The
valuation spread between the largest companies and most others is near an
all-time high. The breadth of the stock market's advance has narrowed
considerably. Interest rates moved lower during the period. The interest rate
spread between Treasury securities and corporate bonds widened as the second
quarter came to an end.
Total return for the Equity Portfolio was 8.83 percent through mid-year. The
portfolio's invested position averaged 93 percent in common stocks and related
securities during the period. The strongest performing sectors were Consumer
Staples, Financial Services, Health Care and Technology. The weaker performing
sectors included Energy, Capital Goods and Real Estate.
We will continue to reduce the number of equity holdings in the portfolio. We
expect the stock market volatility to continue through the remainder of the year
as investors contend with Asian concerns, potential slowdowns in other parts of
the world, Year 2000 issues and reduced corporate profits. On the other hand,
several countries continue to experience steady economic growth, and many
companies (small, medium and large) should continue to report very good earnings
growth. Investments in these areas and companies should provide positive results
for investors over time.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Equity Portfolio S&P Index
(Commenced operations
January 14,1971)
Date Value Value
<S> <C> <C>
12/31/86 $ 9,701.00 $ 9,806.00
12/31/88 12,367.08 12,052.80
12/31/90 14,649.66 15,345.68
12/31/92 18,935.20 21,568.35
12/31/94 21,659.01 24,033.86
12/31/96 32,607.70 40,653.06
06/30/98 41,934.12 63,763.22
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 STOCKS AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C> <C>
1. Cisco Systems, Inc 2.64
2. General Electric 2.32
3. American International Group 1.97
4. Camco International Inc 1.63
5. Monsanto Co 1.51
6. Texas Instruments 1.49
7. Microsoft Corp 1.38
8. AlliedSignal 1.33
9. Xerox Corp 1.30
10. Owens-Illinois 1.29
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Technology 15.89
Capital Goods 15.30
Consumer Cyclical 13.17
Finance 12.72
Basic Materials 9.45
</TABLE>
<PAGE> 5
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -----------------------------------------------------------------
<S> <C> <C>
AEROSPACE (3.3%)
94,000 Allied Signal, Inc. $4,171,250
22,632 Boeing Co. 1,008,539
64,000 Raytheon Co. 3,784,000
31,350 Rockwell International Corp. 1,506,759
--------------
10,470,548
--------------
AUTOMOTIVE AND RELATED (3.2%)
22,500 Arvin Industries, Inc. 817,031
45,400 Cooper Tire & Rubber 936,375
31,000 Chrysler Corp. 1,747,625
29,400 Eaton Corp. 2,285,850
39,184 Ford Motor Co. 2,311,856
1 Meritor Automotive 24
20,000 Magna International, Inc. 1,372,500
47,000 Walbro Corp. 663,875
--------------
10,135,136
--------------
BANKING (3.9%)
52,920 Charter One Financial Inc. 1,782,743
23,880 First Star Bancorp 576,105
42,000 First Union Corp. 2,446,500
40,000 Flagstar Bancorp 975,000
45,000 Mellon Bank Corp. 3,133,125
19,574 Nationsbank Corp. 1,497,411
11,000 Star Banc Corp. 702,625
30,750 Susquehanna Bancshares Inc. 1,149,281
--------------
12,262,790
--------------
BUSINESS SERVICES (3.9%)
132,500 * Alternative Resources Inc. 1,639,688
110,000 First Data Corp. 3,664,375
61,000 * Lo Jack 758,687
95,000 Manpower Inc. 2,725,313
101,000 Reynolds & Reynolds CL A 1,836,937
35,000 Standard Register Co. 1,238,125
23,000 Wackenhut Corp. CL B 494,500
--------------
12,357,625
--------------
COMMUNICATIONS (1.6%)
138,250 Andrew Corp. 2,497,141
20,625 Mastec Inc. 492,422
40,000 Motorola Inc. 2,102,500
--------------
5,092,063
--------------
COMPUTER AND RELATED (14.2%)
56,500 * 3Comm Corp. 1,733,844
90,000 Cisco Systems, Inc. 8,285,625
63,000 Computer Associates 3,500,437
28,000 * Computer Sciences Corp. 1,792,000
60,000 Hewlett-Packard Co. 3,592,500
53,000 Intel Corp. 3,928,625
33,000 * LSI Logic 761,062
90,000 MacNeal-Schwendler Corp. 883,125
40,000 * Microsoft Corp. 4,335,000
47,058 * Seagate Technology 1,120,569
45,742 Solectron Corp. 1,924,023
80,000 * Sun Microsystems, Inc. 3,475,000
67,500 Symbol Technologies 2,548,125
80,000 Texas Instruments, Inc. 4,665,000
50,000 * Zebra Tech Corp., CL A 2,137,500
--------------
44,682,435
--------------
CHEMICALS (5.4%)
35,000 E I DuPont De Nemours & Co. $2,611,875
96,000 Engelhard Corp. 1,944,000
50,000 Hercules Inc. 2,056,250
38,750 Hanson Trust PLC 1,174,609
35,300 Mineral Technologies Inc. 1,795,888
85,000 Monsanto Co. 4,749,375
66,000 OM Group, Inc. 2,722,500
---------------
17,054,497
---------------
CONTAINERS (1.3%)
90,000 * Owens-Illinois, Inc. 4,027,500
---------------
DRUGS (1.2%)
86,000 * Applied Analytical Industries 1,236,250
64,000 Abbott Laboratories 2,616,000
---------------
3,852,250
---------------
ELECTRICAL EQUIPMENT (6.8%)
50,000 * Advanced Lighting 1,162,500
60,000 Analog Devices, Inc. 1,473,750
100,000 * Anixter Intl. Inc. 1,906,250
96,700 BMC Industries, Inc. 846,125
31,500 Federal Signal Corp. 765,844
80,000 General Electric Co. 7,280,000
49,000 Hubbell Inc. Class B Shares 2,039,625
45,000 * Richey Electronics Inc. 351,562
40,000 Varian Associates, Inc. 1,560,000
40,000 Xerox Corp. 4,065,000
---------------
21,450,656
---------------
FINANCIAL SERVICES (0.5%)
20,269 * Associates 1st Capital Corp. 1,558,179
---------------
ENTERTAINMENT AND LEISURE (1.0%)
75,000 Cedar Fair 2,071,875
60,000 * Livent Inc. 525,000
60,000 * Royal Olympic Cruise Lines 600,000
---------------
3,196,875
---------------
FOOD AND RELATED (1.2%)
80,000 Food Lion Inc. 850,000
25,500 H.J. Heinz Co. 1,431,188
45,000 Panamerican Beverages, Inc. 1,414,687
---------------
3,695,875
---------------
FORESTRY AND PAPER PRODUCTS (1.4%)
66,000 Boise Cascade Corp. 2,161,500
72,050 Sonoco Products 2,179,513
---------------
4,341,013
---------------
HOTEL/LODGING (1.0%)
50,000 * Guest Supply Inc. 837,500
50,000 La Quinta Inns 1,056,250
60,000 * Mirage Resorts Inc. 1,278,750
---------------
3,172,500
---------------
HOUSING, FURNITURE & RELATED (2.4%)
150,000 Clayton Homes, Inc. 2,850,000
64,000 Newell Co. 3,188,000
100,000 Shelby Williams 1,500,000
---------------
7,538,000
---------------
</TABLE>
(continued)
<PAGE> 6
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -----------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL SERVICES (1.1%)
52,000 Mapics Inc. $1,023,750
20,500 * Medar Inc. 43,563
50,000 Regal Beloit 1,425,000
20,000 York International, Corp. 871,250
--------------
3,363,563
--------------
INSURANCE SERVICES (5.4%)
30,454 Aegon NV 2,634,270
42,187 American International Group 6,159,302
36,000 Chubb Corp. 2,893,500
40,000 Equitable Cos., Inc. 2,997,500
53,000 St. Paul Cos. 2,229,313
--------------
16,913,885
--------------
MACHINERY (2.7%)
48,000 Caterpillar, Inc. 2,538,000
30,000 Deere & Company 1,586,250
80,250 Hardinge Inc. 1,956,094
43,000 Modine Manufacturing Inc. 1,488,875
54,000 Stewart & Stevenson 972,000
--------------
8,541,219
--------------
MEDIA AND PUBLISHING (0.6%)
55,000 CBS 1,746,250
--------------
MEDICAL AND RELATED (6.7%)
35,000 Allegiance Corp. 1,793,750
37,500 Baxter International 2,017,969
41,500 * Cephalon Inc. 326,812
50,700 * Foundation Health Corp. 1,337,213
75,000 * Healthsouth Corp. 2,001,562
30,000 * Humana Inc. 935,625
71,000 Kendle International Inc. 2,147,750
90,000 Mylan Laboratories 2,705,625
23,800 * National Healthcare-LP 785,400
103,313 Quorum Health Group Inc. 2,737,781
80,000 * Sola Industries 2,615,000
28,000 United Healthcare Corp. 1,778,000
--------------
21,182,487
--------------
METALS AND MINING (2.6%)
7,000 Amcast Industrial Corp. 130,375
55,000 Crown Cork & Seal Co. 2,612,500
32,000 Phelps Dodge Corp. 1,830,000
89,000 Worthington Industries 1,340,563
60,700 Wolverine Tube, Inc. 2,306,600
--------------
8,220,038
--------------
OIL, ENERGY AND NATURAL GAS (9.0%)
65,000 * Belco Oil & Gas 560,625
65,500 Camco International, Inc. 5,100,813
27,000 Chevron Corp. 2,242,687
40,000 Kerr-McGee Corp. 2,315,000
125,000 * Louis Dreyfus Natural Gas 2,367,188
100,000 * Matrix Services CO. 725,000
30,000 * Offshore Logistics Inc. 1,153,750
35,000 Pacific Gulf Properties 745,937
85,000 Santa Fe Energy Resources 913,750
40,000 Schlumberger, Ltd. 2,732,500
110,000 * Tesoro Petroleum 1,746,250
28,000 UGI Corp. 696,500
OIL, ENERGY AND NATURAL GAS (CONT.)
47,850 Ultramar Diamond Shamrock $1,510,266
45,000 Westcoast Energy, Inc. 1,004,062
102,000 Williams Cos. Inc. 3,442,500
92,500 Wiser Oil 1,023,281
---------------
28,280,109
---------------
REAL ESTATE AND LEASING (2.9%)
32,500 Berkshire Realty 379,844
28,000 Camden Property Trust REIT 833,000
60,000 Corporate Office Properties 532,500
76,000 Commercial Net Lease Realty 1,230,250
37,500 First Industrial Realty Trust 1,192,969
16,400 Great Lakes REIT 285,975
55,000 Healthcare Realty Trust 1,498,750
67,250 Liberty Property Trust 1,719,078
29,500 National Health Investors, Inc. 977,188
18,500 Regency Realty Corp. 464,812
---------------
9,114,366
---------------
RESTAURANTS (0.8%)
84,000 * Buffets, Inc. 1,317,750
51,800 Consolidated Products Inc. 1,094,275
---------------
2,412,025
---------------
RETAIL (0.1%)
35,000 * Ridgeview Inc. 210,000
---------------
RETIREMENT/AGED HOMES (0.3%)
79,700 * Capital Senior Living Corp. 956,400
---------------
TEXTILES AND RELATED (0.9%)
25,000 Oxford Industries, Inc. 873,437
47,000 Warnaco Group, CL. A 1,994,563
---------------
2,868,000
---------------
TRANSPORTATION AND EQUIPMENT (4.6%)
44,000 * Atlas Air Inc. 1,487,750
63,000 * Avondale Industries Inc. 1,738,409
26,000 Burlington Northern, Inc. 2,552,875
45,000 CNF Transportation Inc. 1,912,500
70,649 Halter Marine Group Inc. 1,064,151
75,000 Norfolk Southern Corp. 2,235,937
56,800 Trinity Industries 2,357,200
49,000 * Wisconsin Central Transportation 1,071,875
---------------
14,420,697
---------------
UTILITIES (0.6%)
27,500 FPL Group, Inc. 1,732,500
---------------
MISCELLANEOUS (0.4%)
64,000 Pall Corp. 1,312,000
---------------
TOTAL COMMON STOCKS
(91.0%) (COST $163,593,941) $286,161,481
---------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES WARRANTS VALUE
- -----------------------------------------------------------------
<S> <C> <C>
95,000 Medar Warrants $6.86 $40,850
---------------
TOTAL WARRANTS
(0.0%) (COST $40,850) $40,850
---------------
</TABLE>
(continued)
<PAGE> 7
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -----------------------------------------------------------------
<S> <C> <C>
BANKING (0.3%)
30,000 National Australia Bank LTD Conv. $860,625
--------------
COMPUTER & RELATED (0.1%)
24,000 General Datacommunications 9% Conv. 324,000
--------------
FINANCIAL SERVICES (0.1%)
11,000 Money Store 6.5% Conv. 344,916
--------------
METALS AND MINING (0.3%)
50,000 Freeport McMoRan Copper & Gold,
Series B 1,059,375
--------------
OIL AND GAS (0.2%)
15,000 Howell Corp. $3.50 Series A Conv. 645,000
--------------
REAL ESTATE (0.2%)
20,000 Camden Property Tr. 9% Series A Conv. 530,000
--------------
TOTAL PREFERRED STOCK
(1.2%) (COST $4,737,838) $3,763,916
--------------
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- -----------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.3%)
$1,100,000 Richey Electric
7.00% due 03-01-06 $1,009,250
--------------
INDUSTRIAL SERVICES (0.1%)
475,000 Medar Inc.
12.95% due 06-30-05 434,150
--------------
METAL FABRICATING (0.3%)
900,000 INCO, Ltd.
7.75% due 03-15-16 862,875
--------------
OIL, ENERGY AND NATURAL GAS (0.3%)
800,000 Offshore Logistics
6.00% due 12-15-06 826,000
--------------
TOTAL CONVERTIBLE
(1.0%) (COST $3,246,900) $3,132,275
--------------
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ----------------------------------------------------------------------
AUTOMOTIVE AND RELATED (0.5%)
$1,721,000 General Motors
5.580% 07-15-98 $1,717,265
----------------
ELECTRICAL EQUIPMENT (0.9%)
2,981,000 G.E. Capital
5.600% 07-13-98 2,975,435
----------------
FINANCIAL SERVICES (2.9%)
2,157,000 American Express
5.540% 07-09-98 2,154,345
2,046,000 American General
5.570% 07-06-98 2,044,417
2,415,000 Associates Corp.
5.450% 07-02-98 2,414,634
2,355,000 CIT Group Holdings
5.520% 07-01-98 2,355,000
----------------
8,968,396
----------------
INSURANCE SERVICES (1.4%)
4,275,000 Prudential Funding
5.570% 07-10-98 4,269,047
----------------
RETAIL (0.9%)
2,936,000 Sears Roebuck
5.540% 07-08-98 2,932,837
----------------
TOTAL SHORT-TERM NOTES
(6.6%) (COST $20,862,980) $20,862,980
----------------
TOTAL HOLDINGS
(COST $192,482,509)(A) $313,961,502
================
</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> 8
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $192,482,509) .................... $313,961,502
Cash in bank ...................................... 4,459
Receivable for fund shares sold ................... 150,147
Dividends and accrued interest receivable ......... 447,344
Other ............................................. 20,368
----------------
Total assets .................................... 314,583,820
----------------
Liabilities:
Payable for investment management services
(note 3) ........................................ 133,478
Other accrued expenses ............................ 86,359
----------------
Total liabilities ............................... 219,837
----------------
Net assets at market value ........................... $314,363,983
================
Net assets consist of:
Par value, $1 per share ........................... $8,199,221
Paid-in capital in excess of par value ............ 176,706,812
Accumulated undistributed net realized gain on
investments ..................................... 7,943,682
Net unrealized appreciation on investments (note 1) 121,478,993
Undistributed net investment income ............... 35,275
----------------
Net assets at market value ........................... $314,363,983
================
Shares outstanding (note 4) .......................... 8,199,221
Net asset value per share ............................ $38.34
================
</TABLE>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest ....................................... $938,379
Dividends ...................................... 1,941,509
--------------
Total investment income ...................... 2,879,888
--------------
Expenses:
Management fees (note 3) ....................... 802,042
Custodian fees (note 3) ........................ 34,400
Directors' fees (note 3) ....................... 6,885
Professional fees .............................. 15,876
Accounting and transfer agent fees ............. 116,384
Filing fees .................................... 7,012
Printing, proxy and postage fees ............... 38,716
Other .......................................... 2,590
--------------
Total expenses ............................... 1,023,905
--------------
Net investment income ........................ $1,855,983
--------------
Realized and unrealized gain on investments:
Net realized gain from investments ............. $7,943,682
Net increase in unrealized appreciation on
investments .................................. 15,836,295
--------------
Net gain on investments .................... 23,779,977
--------------
Net increase in net assets from operations . $25,635,960
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 9
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
6-30-98 Year Ended
(Unaudited) 12-31-97
---------------- ----------------
<S> <C> <C>
From operations:
Net investment income .......................................... $ 1,855,983 $ 3,800,104
Realized gain on investments ................................... 7,943,682 13,144,695
Unrealized gain on investments ................................. 15,836,295 26,148,841
------------- -------------
Net increase in assets from operations ....................... 25,635,960 43,093,640
------------- -------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ...................... (1,823,142) (4,788,921)
Capital gains distributions .................................... (73,823) (15,187,264)
------------- -------------
Total dividends and distributions ............................ (1,896,965) (19,976,185)
------------- -------------
From capital share transactions (note 4):
Received from shares sold ...................................... 16,415,455 38,790,194
Received from dividends reinvested ............................. 1,896,965 19,976,185
Paid for shares redeemed ....................................... (15,759,607) (26,588,013)
------------- -------------
Increase in net assets derived from capital share transactions 2,552,813 32,178,366
------------- -------------
Increase in net assets ..................................... 26,291,808 55,295,821
Net Assets:
Beginning of period ............................................ 288,072,175 232,776,354
------------- -------------
End of period (a) .............................................. $ 314,363,983 $ 288,072,175
============= =============
(a) Includes undistributed net investment income of ............... $ 35,275 $ 2,434
============= =============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Ended
6-30-98 Years Ended December 31,
(Unaudited) 1997 1996 1995 1994
------------ ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period .................... $ 35.44 $ 32.30 $ 28.58 $ 23.20 $ 23.90
Income from investment operations:
Net investment income ................................ 0.23 0.51 0.47 0.50 0.45
Net realized and unrealized gain (loss) on investments 2.91 5.24 4.58 5.65 (0.39)
------- ------- ------- ------- -------
Total income from investment operations ............ 3.14 5.75 5.05 6.15 0.06
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ................. (0.23) (0.63) (0.46) (0.39) (0.44)
Distributions from net realized capital gains ........ (0.01) (1.98) (0.87) (0.38) (0.32)
------- ------- ------- ------- -------
Total distributions ................................ (0.24) (2.61) (1.33) (0.77) (0.76)
------- ------- ------- ------- -------
Net asset value, end of period .......................... $ 38.34 $ 35.44 $ 32.30 $ 28.58 $ 23.20
======= ======= ======= ======= =======
Total return ............................................ 8.83%(b) 18.17% 18.35% 27.20% 0.25%
Ratios and supplemental data:
Ratio of expenses to average net assets .............. 0.67%(a) 0.67% 0.73% 0.73% 0.62%
Ratio of net investment income to average net assets . 1.21%(a) 1.43% 1.60% 1.90% 1.90%
Portfolio turnover rate ................................. 6% 19% 11% 14% 8%
Average commission rate (c) ............................. $ 0.06 $ 0.07 $ 0.07 NR NR
Net assets at end of period (millions) .................. $ 314.4 $ 288.1 $ 232.8 $ 175.7 $ 123.3
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commission paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
(NR) Not required prior to 1996.
The accompanying notes are an integral part of these financial statements.
<PAGE> 10
OHIO NATIONAL FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30,1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -----------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (18.6%)
$1,097,000 American Honda
5.520% 07-20-98 $1,093,798
898,000 Budget Funding
5.530% 07-13-98 896,345
909,000 Ford Motor Credit Corp.
5.560% 07-15-98 907,035
196,000 General Motors
5.550% 07-14-98 195,607
848,000 General Motors
5.550% 07-27-98 844,601
1,500,000 Hertz Corp.
5.540% 07-10-98 1,497,922
--------------
5,435,308
--------------
BANKING (8.1%)
920,000 American Bankers
5.800% 07-24-98 916,591
1,464,000 Associates First Capital
5.530% 07-01-98 1,464,000
--------------
2,380,591
--------------
CHEMICALS (1.9%)
560,000 Great Lakes Chemicals (b)
5.530% 08-03-98 557,161
--------------
CONSUMER PRODUCTS (2.4%)
719,000 PHH Corp.
5.650% 07-24-98 716,405
--------------
ELECTRICAL EQUIPMENT (4.8%)
1,400,000 Avent Inc.
5.560% 07-07-98 1,398,703
--------------
FINANCE (15.4%)
1,322,000 American General Corp. (b)
5.530% 08-06-98 1,314,689
406,000 CIT Group
5.510% 07-02-98 405,938
1,400,000 G.E. Capital
5.620% 07-13-98 1,397,377
1,400,000 Merrill Lynch
5.580% 07-31-98 1,393,490
--------------
4,511,494
--------------
INDUSTRIAL (7.2%)
$1,355,000 BAT Capital
5.620% 07-08-98 $1,353,519
752,000 Flour Corp.
5.530% 07-14-98 750,498
--------------
2,104,017
--------------
INSURANCE (7.7%)
1,093,000 Metlife Funding
5.560% 08-10-98 1,086,248
1,163,000 Prudential Funding
5.510% 07-06-98 1,162,110
--------------
2,248,358
--------------
MACHINERY AND EQUIPMENT (3.8%)
1,105,000 John Deere Capital
5.500 07-21-98 1,101,624
--------------
MEDICAL AND RELATED (5.0%)
1,476,000 Allergan Inc.
5.550% 07-17-98 1,472,359
--------------
OIL, ENERGY, AND NATURAL GAS (4.8%)
1,400,000 (EI) De Nemours Dupont
5.500% 07-14-98 1,398,289
--------------
RETAIL (8.5%)
1,055,000 Sears Roebuck
5.560% 07-29-98 1,050,437
226,000 Sears Roebuck
5.580% 07-29-98 225,019
1,226,000 Southland Corp.
5.530% 07-16-98 1,223,175
--------------
2,498,631
--------------
UTILITIES (10.8%)
885,000 GTE Corp.
5.620% 07-02-98 884,862
1,310,000 New England Electric
5.540% 07-28-98 1,304,557
970,000 National Rural Utilities
5.500% 07-23-98 966,740
--------------
3,156,159
--------------
TOTAL HOLDINGS
(COST $28,979,099) (a) $28,979,099
==============
</TABLE>
(a) Also represents cost for Federal income tax purposes.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,871,850 or 6.4% of net
assets.
The accompanying notes are an integral part of these financial statements.
<PAGE> 11
OHIO NATIONAL FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $28,979,099) .............. $28,979,099
Cash in bank ............................... 609
Receivable for fund shares sold ............ 282,383
Other ...................................... 4,332
----------------
Total assets ............................. 29,266,423
----------------
Liabilities:
Payable for investment management services
(note 3) ................................. 6,052
Payable for shares redeemed ................ 185
Other accrued expenses ..................... 2,406
----------------
Total liabilities ........................ 8,643
----------------
Net assets at market value .................... $29,257,780
================
Net assets consist of:
Par value, $1 per share .................... $2,925,784
Paid-in capital in excess of par value ..... 26,331,996
----------------
Net assets at market value .................... $29,257,780
================
Shares outstanding (note 4) ................... 2,925,784
Net asset value per share ..................... $10.00
================
</TABLE>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest ........................................ $801,060
-------------
Expenses:
Management fees (note 3) ........................ 42,330
Custodian fees (note 3) ......................... 2,548
Directors' fees (note 3) ........................ 143
Accounting and transfer agent fees .............. 7,142
Filing fees ..................................... 416
Printing, proxy and postage fees ................ 2,304
Other ........................................... 214
-------------
Total expenses ................................ 55,097
Less fees waived (note 3) ..................... (7,055)
-------------
Net expenses ................................ 48,042
-------------
Net investment income ......................... $753,018
-------------
Net increase in net assets from operations .. $753,018
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 12
OHIO NATIONAL FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
6-30-98 Year Ended
(Unaudited) 12-31-97
-------------- --------------
<S> <C> <C>
From operations:
Net investment income .......................................... $ 753,018 $ 1,241,762
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ...................... (752,980) (1,241,762)
------------ ------------
From capital share transactions (note 4):
Received from shares sold ...................................... 22,232,704 40,064,944
Received from dividends reinvested ............................. 752,980 1,241,762
Paid for shares redeemed ....................................... (22,869,555) (37,676,423)
------------ ------------
Increase in net assets derived from capital share transactions 116,129 3,630,283
------------ ------------
Increase in net assets ..................................... 116,167 3,630,283
Net Assets:
Beginning of period ............................................ 29,141,613 25,511,330
------------ ------------
End of period (a) .............................................. $ 29,257,780 $ 29,141,613
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Ended
6-30-98 Years Ended December 31,
(Unaudited) 1997 1996 1995 1994
-------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period .................. $10.00 $10.00 $10.00 $10.00 $10.00
Income from investment operations:
Net investment income .............................. 0.27 0.52 0.50 0.54 0.39
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ............... (0.27) (0.52) (0.50) (0.54) (0.39)
------ ------ ------ ------ ------
Net asset value, end of period ........................ $10.00 $10.00 $10.00 $10.00 $10.00
====== ====== ====== ====== ======
Total return .......................................... 2.68%(b) 5.37% 5.17% 5.62% 4.00%
Ratios net of fees waived by advisor (c):
Ratio of expenses to average net assets ............ 0.34%(a) 0.38% 0.44% 0.44% 0.39%
Ratio of net investment income to average net assets 5.32%(a) 5.11% 4.98% 5.39% 3.69%
Ratios assuming no fees waived by advisor:
Ratio of expenses to average net assets ............ 0.39%(a) 0.43% 0.49% 0.55% 0.59%
Ratio of net investment income to average net assets 5.27%(a) 5.06% 4.93% 5.27% 3.51%
Net assets at end of period (millions) ................ $ 29.3 $ 29.1 $ 25.6 $ 15.7 $ 13.1
</TABLE>
(a) Annualized
(b) Calculated on a aggregate basis (not annualized)
(c) On and after June 17, 1993, the advisor has waived part of the management
fee to the extent such fee exceeds an annual rate of 0.25% of the Money
Market Portfolio's daily net asset value.
The accompanying notes are an integral part of these financial statements.
<PAGE> 13
BOND PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Bond Portfolio seeks to obtain a high level of income and opportunity for
capital appreciation consistent with preservation of capital.
PERFORMANCE AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Average Annual Total Returns:
<S> <C>
One-year 8.64%
Five-year 6.48%
Ten-year 8.24%
Since inception (11/2/82) 8.60%
</TABLE>
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
The Bond Portfolio returned 8.64 percent over the past year compared to the 8.54
percent return of its benchmark, the Lehman Government/Corporate Intermediate
Bond Index. For the first six months of 1998, the portfolio is trailing the
index return slightly, 3.47 percent to 2.81 percent. The portfolio has a larger
exposure to corporate securities than the index and corporate bonds, especially
those in the "Baa" category, have underperformed other bond categories in the
past few months.
We do not expect major moves in interest rates over the next few months and
corporate credit fundamentals appear to be improving once again. If those
assessments prove to be correct, our portfolio's performance should compare
favorably with that of the index over the balance of the year.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Bond Portfolio Lehman Bros. Gov't/Corp.
(Commenced operations Index-intermediate
November 2, 1982)
<S> <C> <C>
12/31/86 $10,514.00 $10,511.00
12/31/88 11,313.37 11,634.91
12/31/90 13,503.44 14,322.70
12/31/92 16,403.40 17,593.63
12/31/94 17,460.03 18,754.84
12/31/96 21,529.92 22,500.27
06/30/98 24,189.90 24,270.74
</TABLE>
Hypothetical illustration based on past performance.
Future performance will vary. All returns reflect reinvested dividends. The
portfolio's holdings may differ significantly from the securities in the index.
The index is unmanaged and therefore does not reflect the cost of portfolio
management or trading. Neither the portfolio nor the index is open to direct
investment.
TOP 10 BONDS AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
1. Anixter 8.00% 09/15/03 4.29
2. Abitibi Consolidated Inc 7.40% 4/1/18 4.19
3. Colonial 8.05% 07/15/06 3.94
4. Texas Utilities 7.48% 0/01/17 3.06
5. Mississippi Chemical Corp 7.25% 11/15/17 2.99
6. Watson Pharmaceuticals 7.125% 5/15/08 2.85
7. Mirage Resorts Inc. 6.75% 02/01/08 2.81
8. ITT Dest 6.75% 11/15/05 2.72
9. Pioneer 8.50% 08/01/06 2.18
10. Northwest Airlines 8.07% 01/02/15 2.17
</TABLE>
TOP 5 HOLDING CATEGORIES AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
BBB 62.99
A 15.91
Short-Term Securities 7.40
BB 6.52
AAA 2.71
</TABLE>
<PAGE> 14
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -----------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (2.1%)
$500,000 U.S. Treasury Note
7.875% 11-15-99 $515,313
--------------
AUTOMOTIVE AND RELATED (2.5%)
100,000 Arvin Industries
10.000% 08-01-00 106,119
500,000 GMAC
8.400% 10-15-99 514,960
--------------
621,079
--------------
CHEMICALS (3.0%)
700,000 Mississippi Chemical Corp.
7.250% 11-15-17 737,302
--------------
COMMUNICATIONS (2.0%)
200,000 Comcast Cable Communications
8.375% 05-01-07 224,988
250,000 Tele-Communications, Inc.
8.250% 01-15-03 270,414
--------------
495,402
--------------
COMPUTER AND RELATED (1.9%)
300,000 Apple Computer Inc.
6.500% 02-15-04 276,000
200,000 Comdisco, Inc.
7.750% 09-01-99 203,634
--------------
479,634
--------------
CONSUMER GOODS (2.1%)
200,000 RJR Nabisco Inc.
8.750% 04-15-04 207,975
300,000 RJR Nabisco Inc.
8.625% 12-01-02 311,179
--------------
519,154
--------------
CONTAINERS (2.1%)
500,000 Owens Corning
7.500% 05-01-05 510,401
--------------
ELECTRICAL EQUIPMENT (8.2%)
1,000,000 Anixter Intl.
8.000% 09-15-03 1,059,552
500,000 Pioneer
8.500% 08-01-06 538,589
400,000 Tektronix Inc.
7.500% 08-01-03 420,162
--------------
2,018,303
--------------
ENTERTAINMENT AND LEISURE (2.8%)
700,000 Mirage Resorts Inc.
6.750% 02-01-08 692,817
--------------
FINANCIAL SERVICES (3.1%)
250,000 Aristar Inc.
5.750% 07-15-98 249,991
500,000 St. Paul Bancorp Inc.
7.125% 02-15-04 516,115
--------------
766,106
--------------
FOOD AND RELATED (2.0%)
500,000 Gruma, SA de C.V.
7.625% 10-15-07 503,706
--------------
FORESTRY AND PAPER PRODUCTS (7.7%)
$1,000,000 Abitibi Consolidated Inc.
7.400% 04-01-18 $1,035,078
300,000 Boise Cascade Co.
9.850% 06-15-02 334,059
250,000 Champion International
7.700% 12-15-99 255,447
250,000 ITT Rayonier Inc.
7.500% 10-15-02 263,762
--------------
1,888,346
--------------
GOVERNMENT (FOREIGN) (2.0%)
200,000 British Columbia
7.000% 01-15-03 208,448
250,000 Providence of Quebec
8.625% 01-19-05 282,433
--------------
490,881
--------------
HOTEL/LODGING (2.7%)
700,000 ITT Destinations
6.750% 11-15-05 671,813
--------------
HOUSING, FURNITURE AND RELATED (0.7%)
140,000 Armstrong World
9.750% 04-15-08 174,598
--------------
INDUSTRIAL SERVICES (1.6%)
400,000 R&B Falcon Corp.
6.750% 04-15-05 402,902
--------------
INSURANCE (2.8%)
250,000 Continental Corp.
7.250% 03-01-03 257,874
400,000 Transamerica Finance Corp.
7.500% 03-15-04 425,282
--------------
683,156
--------------
MEDICAL AND RELATED (5.2%)
250,000 Bergen Brunswig
7.375% 01-15-03 262,133
300,000 Cardinal Health Inc.
6.500% 02-15-04 307,030
700,000 Watson Pharmaceuticals
7.125% 10-15-05 703,096
--------------
1,272,259
--------------
METALS AND MINING (2.0%)
500,000 Cyprus Minerals
6.625% 10-15-05 500,995
--------------
REAL ESTATE (6.3%)
300,000 Avalon Properties Inc.
7.375% 09-15-02 312,066
900,000 Colonial Realty
8.050% 07-15-06 971,895
250,000 Sun Communities
7.625% 05-01-03 259,700
--------------
1,543,661
--------------
RESTAURANTS (2.0%)
500,000 Wendy's Inc.
6.350% 12-15-05 505,305
--------------
</TABLE>
(continued)
<PAGE> 15
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -----------------------------------------------------------------
<S> <C> <C>
OIL, ENERGY AND NATURAL GAS (8.9%)
$200,000 Atlantic Richfield
8.550% 03-01-12 $246,335
100,000 DeKalb Energy
9.875% 07-15-00 107,110
400,000 Dresser Industries, Inc.
6.250% 06-01-00 402,686
125,000 Marathon Oil
7.000% 06-01-02 128,218
480,937 Mobile Energy Services Co.
8.665% 01-01-17 243,813
400,000 PDV America, Inc.
7.875% 08-01-03 418,149
140,000 Shell Oil Co.
6.950% 12-15-98 140,697
500,000 System Energy
7.800% 08-01-00 508,112
--------------
2,195,120
--------------
TRANSPORTATION (4.4%)
250,000 American President Cos., Ltd.
7.125% 11-15-03 200,834
350,000 Illinois Central Gulf Railroad
6.750% 05-15-03 359,148
495,731 Northwest Airlines
8.070% 01-02-15 535,152
--------------
1,095,134
--------------
UTILITIES (11.3%)
200,000 Cleveland Electric Illum.
7.625% 08-01-02 207,396
500,000 Great Lakes Power Inc.
8.900% 12-01-99 516,964
250,000 Kansas Gas & Electric
8.290% 03-29-16 270,344
375,000 New Orleans Public Service Co.
8.670% 04-01-05 375,699
200,000 Old Dominion Electric Co-op
8.760% 12-01-22 234,087
200,000 Sprint Corp.
8.125% 07-15-02 214,772
700,000 Texas Utilities Electric Co.
7.480% 01-01-17 755,723
200,000 Toledo Edison Co.
7.875% 08-01-04 212,476
--------------
2,787,461
--------------
TOTAL LONG-TERM BONDS & NOTES
(89.4%) (COST $21,494,734) $22,070,848
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -----------------------------------------------------------------
<S> <C> <C>
UTILITIES (1.3%)
12,000 GTE Delaware, 8.750%, Series B $314,250
--------------
TOTAL PREFERRED STOCKS
(1.3%) (COST $300,000) $314,250
--------------
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -----------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (1.2%)
$288,000 Ford Motor Credit Co.
5.630% 07-02-98 $287,955
--------------
FINANCE (1.8%)
442,000 American Express Credit
5.510% 07-01-98 442,000
--------------
INSURANCE SERVICES (1.3%)
313,000 Prudential Funding
5.610% 07-06-98 312,756
--------------
RETAIL (3.0%)
751,000 Sears Roebuck
5.700% 07-07-98 750,286
--------------
TOTAL SHORT-TERM NOTES
(7.3%) (COST $1,792,997) $1,792,997
--------------
TOTAL HOLDINGS
(COST $23,587,731)(A) $24,178,095
==============
</TABLE>
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 16
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $23,587,731) ..................... $ 24,178,095
Cash in bank ...................................... 1,231
Receivable for fund shares sold ................... 59,660
Dividends and accrued interest receivable ......... 455,464
Other ............................................. 2,302
------------
Total assets .................................... 24,696,752
------------
Liabilities:
Payable for investment management services
(note 3) ........................................ 11,969
Other accrued expenses ............................ 8,444
------------
Total liabilities ............................... 20,413
------------
Net assets at market value ........................... $ 24,676,339
============
Net assets consist of:
Par value, $1 per share ........................... $ 2,319,438
Paid-in capital in excess of par value ............ 21,773,249
Accumulated undistributed net realized loss on
investments ..................................... (12,335)
Net unrealized appreciation on investments (note 1) 590,364
Undistributed net investment income ............... 5,623
------------
Net assets at market value ........................... $ 24,676,339
============
Shares outstanding (note 4) .......................... 2,319,438
Net asset value per share ............................ $ 10.64
============
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest .......................................... $ 822,230
Dividends ......................................... 13,125
------------
Total investment income ......................... 835,355
------------
Expenses:
Management fees (note 3) .......................... 68,756
Custodian fees (note 3) ........................... 2,637
Directors' fees (note 3) .......................... 246
Professional fees ................................. 322
Accounting and transfer agent fees ................ 13,392
Filing fees ....................................... 357
Printing, proxy and postage fees .................. 2,778
Other ............................................. 216
------------
Total expenses .................................. 88,704
------------
Net investment income ........................... $ 746,651
------------
Realized and unrealized gain (loss) on investments:
Net realized gain from investments ................ $ 31,793
Net decrease in unrealized appreciation on
investments ..................................... (148,160)
------------
Net loss on investments ....................... (116,367)
------------
Net increase in net assets from operations .... $ 630,284
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 17
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
6-30-98 Year Ended
(Unaudited) 12-31-97
-------------- --------------
<S> <C> <C>
From operations:
Net investment income .......................................... $ 746,651 $ 1,355,098
Realized gain on investments ................................... 31,793 38,573
Unrealized gain (loss) on investments .......................... (148,160) 399,815
------------ ------------
Net increase in assets from operations ....................... 630,284 1,793,486
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ...................... (744,344) (1,690,155)
------------ ------------
From capital share transactions (note 4):
Received from shares sold ...................................... 4,063,450 6,831,247
Received from dividends reinvested ............................. 744,344 1,690,155
Paid for shares redeemed ....................................... (1,784,425) (7,636,590)
------------ ------------
Increase in net assets derived from capital share transactions 3,023,369 884,812
------------ ------------
Increase in net assets ..................................... 2,909,309 988,143
Net Assets:
Beginning of period ............................................ 21,767,030 20,778,887
------------ ------------
End of period (a) .............................................. $ 24,676,339 $ 21,767,030
============ ============
(a) Includes undistributed net investment income of .............. $ 5,623 $ 3,316
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Ended
6-30-98 Years Ended December 31,
(Unaudited) 1997 1996 1995 1994
------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period .................... $10.68 $10.62 $10.93 $ 9.70 $10.87
Income (loss) from investment operations:
Net investment income ................................ 0.35 0.71 0.69 0.70 0.67
Net realized and unrealized gain (loss) on investments (0.05) 0.23 (0.32) 1.08 (1.07)
------ ------ ------ ------ ------
Total income (loss) from investment operations ..... 0.30 0.94 0.37 1.78 (0.40)
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ................. (0.34) (0.88) (0.68) (0.55) (0.69)
Distributions from net realized capital gains ........ 0.00 0.00 0.00 0.00 (0.08)
------ ------ ------ ------ ------
Total distributions ................................ (0.34) (0.88) (0.68) (0.55) (0.77)
------ ------ ------ ------ ------
Net asset value, end of period .......................... $10.64 $10.68 $10.62 $10.93 $ 9.70
====== ====== ====== ====== ======
Total return ............................................ 2.81%(b) 9.28% 3.71% 18.90% (3.84%)
Ratios and supplemental data:
Ratio of expenses to average net assets .............. 0.77%(a) 0.78% 0.79% 0.75% 0.63%
Ratio of net investment income to average net assets . 6.49%(a) 6.67% 6.54% 6.76% 6.71%
Portfolio turnover rate ................................. 4% 10% 3% 4% 5%
Net assets at end of period (millions) .................. $ 24.7 $ 21.8 $ 20.8 $ 18.1 $ 13.1
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
The accompanying notes are an integral part of these financial statements.
<PAGE> 18
OMNI PORTFOLIO
Ohio National Fund, Inc.
OBJECTIVE
The Omni Portfolio seeks a high level of long-term total rate of return
consistent with prudent investment risks. Total return consists of current
income and capital appreciation.
PERFORMANCE AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS:
<S> <C>
One-year 14.93%
Three-year 13.69%
Five-year 12.21%
Since inception (9/10/84) 12.20%
</TABLE>
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
We continued to see an increasing yet volatile stock market, led by the blue
chips and a select number of growth stocks, during the first half of 1998. The
valuation spread between the largest companies and most others is near an
all-time high. The breadth of the stock market's advance has narrowed
considerably. Interest rates moved lower during the period. The interest rate
spread between Treasury securities and corporate bonds widened as the second
quarter came to an end.
Total return for the Omni Portfolio was 7.82 percent through mid-year. During
the period we increased our stock and bond exposure to 89 percent of assets
versus 82 percent at the beginning of the year. The strongest performing sectors
in the common stock portion of the portfolio were Consumer Staples, Financial
Services, Health Care and Technology. The weaker performing sectors included
Energy, Capital Goods and Real Estate.
As spreads continue to increase between Treasury securities and corporate
bonds, we are looking to add to our holdings of high-quality corporate bonds. We
will continue to reduce the number of equity holdings in the portfolio. We
expect the stock market volatility to continue through the remainder of the year
as investors contend with Asian concerns, potential slowdowns in other parts of
the world, Year 2000 issues and reduced corporate profits. On the other hand,
several countries continue to experience steady economic growth, and many
companies (small, medium and large) should continue to report very good earnings
growth Investments in these areas and companies should provide positive results
for investors over time.
Change in Value of $10,000 Investment
<TABLE>
<CAPTION>
Omni Portfolio S&P Index
<S> <C> <C>
12/31/86 $ 9,865.00 $ 9,806.00
12/31/88 11,157.51 12,052.80
12/31/90 13,128.09 15,345.68
12/31/92 16,845.13 21,568.35
12/31/94 18,909.06 24,033.86
12/31/96 26,820.71 40,653.06
06/30/98 34,165.08 63,763.22
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
1. Cisco Systems Inc 1.86
2. Camco International 1.59
3. American International Group 1.59
4. Ford Motor Co 1.56
5. Owens-Illinois Inc 1.41
6. General Electric Co 1.15
7. Chubb Corp 1.08
8. Abbott Laboratories 1.03
9. Xerox Corp 1.03
10. AlliedSignal 0.98
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Oil, Energy & Natural Gas 11.40
Computer and Related 8.77
Electrical Equipment 5.72
Banking 4.91
Insurance Services 4.69
</TABLE>
<PAGE> 19
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ---------------------------------------------------------------
<S> <C> <C>
AEROSPACE (2.4%)
49,000 Allied Signal, Inc. $2,174,375
21,456 Boeing Co. 956,133
21,600 Raytheon Co. 1,277,100
17,350 Rockwell International Corp. 833,884
--------------
5,241,492
--------------
AUTOMOTIVE AND RELATED (3.0%)
7,500 Arvin Industries, Inc. 272,344
11,700 Chrysler Corp. 659,587
26,000 Cooper Tire & Rubber 536,250
8,000 Eaton Corp. 622,000
58,777 Ford Motor Co. 3,467,843
10,000 Magna International, Inc. 686,250
34,000 Walbro Corp. 480,250
--------------
6,724,524
--------------
BANKING (3.2%)
28,664 Charter One Financial, Inc. 965,618
25,000 Flagstar Bancorp 609,375
23,880 First State Bancorp 576,105
20,000 First Union Corp. 1,165,000
22,500 Mellon Bank Corp. 1,566,563
13,050 Nations Bank Corporation 998,325
7,000 Star Banc 447,125
18,750 Susquehanna Bancshares, Inc. 700,781
--------------
7,028,892
--------------
BUSINESS SERVICES (3.3%)
70,000 * Alternative Resources Co. 866,250
55,000 First Data Corp. 1,832,188
30,000 Hewlett-Packard Co. 1,796,250
30,000 * Lo Jack Corp. 373,125
50,000 Manpower, Inc. 1,434,375
50,000 Reynolds & Reynolds 909,375
5,000 Standard Register Co. 176,875
--------------
7,388,438
--------------
CHEMICALS (2.7%)
5,000 E I DuPont DeNemours & Co. 373,125
18,000 Engelhard Corp. 364,500
25,625 Hanson Trust PLC 776,758
25,000 Hercules Inc. 1,028,125
20,000 Minerals Technologies Inc. 1,017,500
15,000 Monsanto Co. 838,125
39,000 OM Group, Inc. 1,608,750
--------------
6,006,883
--------------
COMPUTER AND RELATED (8.4%)
28,000 * 3Comm Corp. 859,250
45,000 * Cisco Systems, Inc. 4,142,813
34,500 Computer Associates 1,916,905
5,200 * Computer Sciences Corp. 332,800
22,000 Intel Corp. 1,630,750
16,000 * LSI Logic 369,000
55,000 MacNeal-Schwendler Corp. 539,688
30,000 Mapics Inc. 590,625
20,000 * Microsoft Corp. 2,167,500
47,058 * Seagate Technology, Inc. 1,120,569
40,000 * Sun Microsystems, Inc. 1,737,500
36,000 Texas Instruments, Inc. 2,099,250
26,000 * Zebra Tech Corp. CL. A 1,111,500
--------------
18,618,150
--------------
MARKET
SHARES COMMON STOCK VALUE
- ---------------------------------------------------------------
COMMUNICATIONS (0.6%)
65,000 Andrew Corp. $1,174,062
11,250 Mastec, Inc. 268,594
--------------
1,442,656
--------------
CONSUMER PRODUCTS (0.9%)
60,000 * Sola International 1,961,250
--------------
CONTAINERS (2.1%)
34,000 Crown Cork & Seal Co. 1,615,000
70,000 * Owens-Illinois, Inc. 3,132,500
--------------
4,747,500
--------------
DRUGS (2.7%)
57,000 * Applied Analytical 819,375
56,000 Abbott Laboratories 2,289,000
40,000 Kendle International 1,210,000
55,000 Mylan Laboratories 1,653,438
--------------
5,971,813
--------------
DURABLE GOODS (0.1%)
15,000 * Meadow Craft Inc. 165,000
--------------
ELECTRICAL EQUIPMENT (5.3%)
35,000 * Advanced Lighting 813,750
33,333 * Analog Devices, Inc. 818,742
52,500 * Anixter International, Inc. 1,000,780
49,800 BMC Industries Inc. 435,750
40,000 CBS Corp. 1,270,000
26,116 Federal Signal Corp. 634,945
28,000 General Electric Co. 2,548,000
28,900 * Hubbell Inc. CL. B 1,202,963
18,000 Varian Associates, Inc. 702,000
22,500 Xerox Corp. 2,286,563
--------------
11,713,493
--------------
ENTERTAINMENT & LEISURE (1.4%)
66,000 Cedar Fair 1,823,250
35,000 * Livent Inc. 306,250
36,000 * Mirage Resorts Inc. 767,250
32,000 * Royal Olympic Cruise Lines 320,000
--------------
3,216,750
--------------
FINANCIAL SERVICES (0.5%)
15,405 Associates First Capital CL A 1,184,259
--------------
FOOD AND RELATED (1.0%)
50,000 Food Lion Inc. CL. A 531,250
16,500 H.J. Heinz Co. 926,063
23,000 Pan American Beverages, Inc. 723,062
--------------
2,180,375
--------------
FORESTRY AND PAPER PRODUCTS (1.0%)
34,000 Boise Cascade 1,113,500
40,150 Sonoco Products Inc. 1,214,538
--------------
2,328,038
--------------
HOTEL/LODGING (0.4%)
25,000 * Guest Supply 418,750
23,000 La Quinta Inns 485,875
--------------
904,625
--------------
</TABLE>
(continued)
<PAGE> 20
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ---------------------------------------------------------------
<S> <C> <C>
HOUSING, FURNITURE & RELATED (1.9%)
71,025 Clayton Homes $1,349,475
55,000 Haverty Furniture Co. 1,216,875
24,000 Newell Co. 1,195,500
35,000 Shelby Williams 525,000
--------------
4,286,850
--------------
INDUSTRIAL SERVICES (0.7%)
45,000 Clarcor 945,000
31,000 Pall Corp. 635,500
1,600 Regal Beloit 45,600
--------------
1,626,100
--------------
INSURANCE (4.5%)
18,094 Aegon NV 1,565,160
24,187 American International Group 3,531,302
30,000 Chubb Corp. 2,411,250
18 Cincinnati Financial Corp. 691
20,000 Equitable Cos., Inc. 1,498,750
25,000 St. Paul Cos. 1,051,562
--------------
10,058,715
--------------
MACHINERY (1.2%)
12,000 Caterpillar, Inc. 634,500
49,500 Hardinge Inc. 1,206,563
41,000 Stewart & Stevenson 738,000
--------------
2,579,063
--------------
MEDICAL AND RELATED (3.6%)
20,300 Allegiance Corp. 1,040,375
26,500 Baxter International 1,426,031
20,000 * Cephalon 157,500
32,500 * Foundation Health Corp. 857,188
40,000 * Healthsouth Corp. 1,334,375
18,000 * Humana, Inc. 561,375
50,500 * Quorum Health Group Inc. 1,338,250
19,000 United Healthcare Corp. 1,206,500
--------------
7,921,594
--------------
METALS AND MINING (1.5%)
27,000 Amcast Industrial Corp. 502,875
16,000 Phelps Dodge Corp. 915,000
30,400 Wolverine Tube Inc. 1,155,200
49,000 Worthington Industries 738,063
--------------
3,311,138
--------------
OIL, ENERGY AND NATURAL GAS (7.5%)
32,500 * Belco Oil & Gas 280,313
45,500 Camco International, Inc. 3,543,313
23,000 Chevron Corp. 1,910,438
20,000 Kerr McGee 1,157,500
60,000 * Louis Dreyfus Natural Gas 1,136,250
100,000 * Matrix Services Co. 725,000
30,000 * Offshore Logistics Inc. 532,500
30,000 Pacific Gulf Properties 639,375
20,000 Schlumberger, Ltd. 1,366,250
60,300 * Tesoro Petroleum 957,263
24,150 Ultramar Diamond Shamrock, Inc. 762,234
23,200 WD-40 Co. 629,300
22,100 Westcoast Energy, Inc. 493,106
57,000 Williams Companies Inc. 1,923,750
46,000 Wiser Oil 508,875
--------------
16,565,467
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE (3.8%)
32,500 Berkshire Realty Co. $379,844
19,000 Camden Property Trust 565,250
76,300 Commercial Net Lease Realty 1,235,106
60,000 Corporate Office Properties 532,500
30,500 First Industrial Realty Trust 970,281
15,000 Great Lakes REIT 261,562
33,000 Health & Retirement Properties Trust 620,813
50,000 Healthcare Realty Trust 1,362,500
56,250 Liberty Property Trust 1,437,890
24,000 National Health Investors, Inc. 795,000
11,500 Regency Hotel Corp. 288,937
----------------
8,449,683
----------------
RESTAURANTS (0.3%)
50,000 * Buffets, Inc. 784,375
----------------
RETAIL (0.3%)
29,800 Consolidated Product 629,525
----------------
TEXTILES (0.6%)
30,000 Warnaco Group CL A 1,273,125
----------------
TRANSPORTATION AND EQUIPMENT (3.2%)
21,500 * Atlas Air Inc. 726,968
34,500 * Avondale Industries 951,986
14,000 Burlington Northern Santa Fe 1,374,625
24,000 CNF Transportation 1,020,000
35,462 Halter Marine Group 534,146
30,000 Norfolk Southern Corp. 894,375
21,000 Trinity Industries 871,500
33,000 * Wisconsin Central Transportations 721,802
----------------
7,095,402
----------------
UTILITIES (0.7%)
15,000 FPL Group, Inc. 945,000
23,500 UGI Corp. 584,562
----------------
1,529,562
----------------
TOTAL COMMON STOCKS
(68.8%) (COST $92,856,753) $152,934,737
----------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- --------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (0.1%)
8,000 Walbro Cap Trust Conv. $177,000
----------------
BANKING (0.9%)
46,000 Flagstar Bancorp Inc. 1,147,125
30,000 National Australia Bank Conv. 860,625
----------------
2,007,750
----------------
COMPUTERS AND RELATED (0.1%)
16,000 General Datacommunications 9% 216,000
----------------
FINANCIAL SERVICES (0.2%)
11,000 Money Store 6.50% Conv. 344,960
----------------
FOOD & RELATED (0.2%)
20,000 Conagra Capital LC 9.35%
Series C 520,000
----------------
</TABLE>
(continued)
<PAGE> 21
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ---------------------------------------------------------------
<S> <C> <C>
METALS AND MINING (0.3%)
30,000 Freeport McMoRan Copper & Gold
Series C $635,625
--------------
OIL, ENERGY AND NATURAL GAS (0.7%)
41,000 Consumer Energy II Conv. 1,035,250
10,000 Howell Corp. $3.50 Series A Conv. 430,000
--------------
1,465,250
--------------
REAL ESTATE (0.1%)
11,385 Camden Property Tr. Conv. 301,703
--------------
UTILITIES (0.2%)
20,000 GTE Delaware 8.750%, Series B 523,750
--------------
TOTAL PREFERRED STOCKS
(2.8%) (COST $6,781,975) $6,192,038
--------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (1.5%)
$775,000 U.S. Treasury Note
6.375% 07-15-99 $781,782
500,000 U.S. Treasury Note
7.875% 11-15-99 515,313
2,005,000 U.S. Treasury Note
7.750% 02-15-01 2,112,771
--------------
3,409,866
--------------
AEROSPACE (0.2%) 500,000 AAR Corp.
7.250% 10-15-03 509,810
--------------
BANKING (0.7%)
400,000 Citified Bancorp Inc.
8.250% 03-01-03 402,008
1,000,000 Green Tree Financial CL. A6
8.700% 06-15-25 1,122,354
--------------
1,524,362
--------------
CHEMICALS (0.8%)
1,750,000 GEON Company
7.500% 12-15-98 1,831,114
--------------
COMMUNICATIONS (1.0%)
1,600,000 Comcast Cable Communications
8.375% 05-01-07 1,799,906
300,000 Sprint
8.125% 07-15-02 322,158
--------------
2,122,064
--------------
COMPUTERS AND RELATED (0.3%)
700,000 Apple Computer, Inc.
6.500% 02-15-04 644,000
--------------
CONSUMER GOODS (0.8%)
140,000 Owens Corning
7.500% 05-01-05 1,429,121
400,000 RJR Nabisco, Inc.
8.750% 04-15-04 415,950
--------------
1,845,071
--------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- --------------------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES (0.5%)
$100,000 Fertinitro Finance Inc.
8.290% 04-01-20 $1,028,879
----------------
FOOD AND RELATED (0.3%)
740,000 Marsh Supermarkets Inc.
8.875% 04-01-07 760,350
----------------
FORESTRY AND PAPER PRODUCTS (0.7%)
700,000 Boise Cascade Co.
9.850% 06-15-02 779,472
500,000 Champion International
9.875% 06-01-00 533,856
250,000 ITT Rayonier, Inc.
7.500% 10-15-02 263,762
----------------
1,577,090
----------------
HOUSING, FURNITURE AND RELATED (0.1%)
250,000 Armstrong World
9.750% 04-15-08 311,781
----------------
INDUSTRIAL SERVICES (0.2%)
400,000 Medar Sr. Sub. notes
12.950% 06-30-05 365,600
----------------
INSURANCE (0.5%)
500,000 Continental Corp.
7.250% 03-01-03 515,749
600000 Transamerica Finance Corp.
7.500% 03-15-04 637,922
----------------
1,153,671
----------------
MACHINERY (0.2%)
500,000 ABC Rail Products Corp.
9.125% 01-15-04 485,000
----------------
MEDICAL AND RELATED (0.7%)
500,000 Bergen Brunswig
7.375% 01-15-03 524,267
1,000,000 Tenet Healthcare Corp.
8.625% 01-15-07 1,036,250
----------------
1,560,517
----------------
METALS AND MINING (0.2%)
500,000 Cyprus Minerals
6.625% 10-15-05 500,995
----------------
RESTAURANTS (0.9%)
1,900,000 Tricon Global Restaurants
7.450% 05-15-05 1,919,870
----------------
TRANSPORTATION (0.4%)
500,000 American President Cos., Ltd.
7.125% 11-15-03 401,668
400,000 Illinois Central Gulf Railroad
6.750% 05-15-03 410,455
----------------
812,123
----------------
</TABLE>
(continued)
<PAGE> 22
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
OIL, ENERGY AND NATURAL GAS (3.0%)
$400,000 Dekalb Energy
9.875% 07-15-00 $428,440
350,000 Dresser Industries, Inc.
6.250% 06-01-00 352,351
375,000 Marathon Oil
7.00% 06-01-02 384,654
600,000 PDV America, Inc.
7.875% 08-01-03 627,224
500,000 Petroleos Mexicanos Global
8.850% 09-15-04 486,250
1,500,000 R & B Falcon Corp.
6.750% 04-15-05 1,510,884
500,000 Union Texas Petroleum
8.250% 11-15-99 513,973
500,000 United Refining Company
10.750% 06-15-07 486,250
2,000,000 Windsor Petroleum Transport Corp.
7.840% 01-15-21 1,750,000
--------------
6,540,026
--------------
UTILITIES (1.8%)
400,000 Cleveland Electric Illum.
7.625% 08-01-02 414,792
70,000 ESI Tractebel
7.990% 12-30-11 712,246
1,000,000 Great Lakes Power
9.000% 08-01-04 1,114,124
700,000 Niagra Mohawk Power Corp.
7.750% 10-01-08 721,875
400,000 Old Dominion Elec. Co.
8.760% 12-01-22 468,174
500,000 Texas New Mexico Power Co.
9.250% 09-15-00 528,419
--------------
3,959,630
--------------
TOTAL LONG-TERM BONDS & NOTES
(14.8%) (COST $31,948,295) $32,861,819
--------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
ELECTRICAL EQUIPMENT (0.5%)
$1,100,000 Richey Electric
7.000% due 03-01-06 $1,009,250
--------------
METALS AND MINING (0.3%)
600,000 INCO, Ltd.
7.750% due 03-15-16 575,250
--------------
OIL, ENERGY AND NATURAL GAS (0.3%)
750,000 Offshore Logistics, Inc.
6.000% due 12-15-06 774,375
--------------
TOTAL CONVERTIBLE DEBENTURES
(1.1%) (COST $2,431,000) $2,358,875
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES WARRANTS VALUE
- --------------------------------------------------------------------
<S> <C> <C>
80,000 * Medar Inc. Warrants $34,400
----------------
TOTAL WARRANTS (0.0%)
(COST $34,400) $34,400
----------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (4.0%)
$4,680,000 General Motors Acceptance Corp.
5.510% 07-01-98 $4,680,000
4,260,000 Ford Motor
5.550% 07-15-98 4,250,806
----------------
8,930,806
----------------
FINANCE (5.1%)
4,300,000 American Express Credit Corp.
5.550% 07-14-98 4,291,382
2,427,000 American General Finance
5.580% 07-09-98 2,423,991
962,000 Associates Corp.
5.550% 07-07-98 961,110
2,033,000 G.E. Capital
5.600% 07-13-98 2,029,205
1,581,000 Household Finance
5.540% 07-06-98 1,579,783
----------------
11,285,471
----------------
INSURANCE (1.6%)
3,565,000 Prudential Funding
5.570% 07-10-98 3,560,036
----------------
RETAIL (1.4%)
3,155,000 Sears Roebuck Acceptance Corp.
5.480% 07-02-98 3,154,519
----------------
TOTAL SHORT-TERM NOTES
(12.1%) (COST $26,930,832) $26,930,832
----------------
TOTAL HOLDINGS
(COST $160,983,255)(A) $221,312,701
================
</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> 23
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $160,983,255) ................... $221,312,701
Cash in bank ..................................... 34,133
Receivable for fund shares sold .................. 155,991
Dividends and accrued interest receivable ........ 900,318
Other ............................................ 16,684
----------------
Total assets ................................... 222,419,827
----------------
Liabilities:
Payable for investment management services
(note 3) ....................................... 95,359
Other accrued expenses ........................... 75,458
----------------
Total liabilities .............................. 170,817
----------------
Net assets at market value .......................... $222,249,010
================
Net assets consist of:
Par value, $1 per share .......................... $9,906,643
Paid-in capital in excess of par value ........... 150,103,971
Accumulated undistributed net realized gain on
investments .................................... 1,889,282
Net unrealized appreciation on investments (note 1) 60,329,446
Undistributed net investment income .............. 19,668
----------------
Net assets at market value .......................... $222,249,010
================
Shares outstanding (note 4) ......................... 9,906,643
Net asset value per share ........................... $22.43
================
</TABLE>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest ....................................... $2,055,046
Dividends ...................................... 1,363,985
--------------
Total investment income ...................... 3,419,031
--------------
Expenses:
Management fees (note 3) ....................... 560,129
Custodian fees (note 3) ........................ 18,811
Directors' fees (note 3) ....................... 10,661
Professional fees .............................. 28,658
Accounting and transfer agent fees ............. 63,332
Filing fees .................................... 9,289
Printing, proxy and postage fees ............... 37,863
Other .......................................... 2,096
--------------
Total expenses ............................... 730,839
--------------
Net investment income ........................ $2,688,192
--------------
Realized and unrealized gain on investments:
Net realized gain from investments ............. $1,889,282
Net increase in unrealized appreciation on
investments .................................. 10,884,837
--------------
Net gain on investments .................... 12,774,119
--------------
Net increase in net assets from operations.. $15,462,311
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 24
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
6-30-98 Year Ended
(Unaudited) 12-31-97
-------------- --------------
<S> <C> <C>
From operations:
Net investment income .......................................... $ 2,688,192 $ 4,595,611
Realized gain on investments ................................... 1,889,282 7,723,290
Unrealized gain on investments ................................. 10,884,837 15,465,006
------------- -------------
Net increase in assets from operations ....................... 15,462,311 27,783,907
------------- -------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ...................... (2,676,213) (5,602,347)
Capital gains distributions .................................... (33,599) (9,150,428)
------------- -------------
Total dividends and distributions ............................ (2,709,812) (14,752,775)
------------- -------------
From capital share transactions (note 4):
Received from shares sold ...................................... 20,416,357 35,259,039
Received from dividends reinvested ............................. 2,709,812 14,752,775
Paid for shares redeemed ....................................... (7,344,704) (14,795,590)
------------- -------------
Increase in net assets derived from capital share transactions 15,781,465 35,216,224
------------- -------------
Increase in net assets ..................................... 28,533,964 48,247,356
Net Assets:
Beginning of period ............................................ 193,715,046 145,467,690
------------- -------------
End of period (a) .............................................. $ 222,249,010 $ 193,715,046
============= =============
(a) Includes undistributed net investment income of .............. $ 19,668 $ 7,689
============= =============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Ended
6-30-98 Years Ended December 31,
(Unaudited) 1997 1996 1995 1994
------------ ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period .................... $ 21.06 $ 19.40 $ 17.60 $ 14.76 $ 15.38
Income (loss) from investment operations:
Net investment income ................................ 0.28 0.56 0.53 0.58 0.55
Net realized and unrealized gain (loss) on investments 1.37 2.87 2.10 2.72 (0.63)
------- ------- ------- ------- -------
Total income (loss) from investment operations ..... 1.65 3.43 2.63 3.30 (0.08)
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ................. (0.28) (0.69) (0.52) (0.46) (0.54)
Distributions from net realized capital gains ........ 0.00 (1.08) (0.31) 0.00. 0.00
------- ------- ------- ------- -------
Total distributions ................................ (0.28) (1.77) (0.83) (0.46) (0.54)
------- ------- ------- ------- -------
Net asset value, end of period .......................... $ 22.43 $ 21.06 $ 19.40 $ 17.60 $ 14.76
======= ======= ======= ======= =======
Total return ............................................ 7.82%(b) 18.15% 15.54% 22.75% 0.53%
Ratios and supplemental data:
Ratio of expenses to average net assets .............. 0.69%(a) 0.71% 0.76% 0.75% 0.62%
Ratio of net investment income to average net assets . 2.55%(a) 2.69% 2.89% 3.56% 3.67%
Portfolio turnover rate ................................. 4% 18% 12% 10% 7%
Average commission rate (c) ............................. $ 0.07 $ 0.07 $ 0.07 NR NR
Net assets at end of period (millions) .................. $ 222.2 $ 193.7 $ 145.5 $ 109.6 $ 85.0
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not audited)
(c) Represents the total dollar amount of commission paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
(NR) Not required prior to 1996.
The accompanying notes are an integral part of these financial statements.
<PAGE> 25
INTERNATIONAL PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The International Portfolio seeks long-term capital growth by investing
primarily in securities of foreign companies.
PERFORMANCE AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS:
<S> <C>
One-year 0.01%
Three-year 10.67%
Five-year 14.28%
Since inception (5/3/93) 13.67%
</TABLE>
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
European markets were volatile due to growing worries over Asian markets,
corporate earnings and the direction of interest rates. Once the EMU founding
members were confirmed and bilateral exchange rates were set, European blue
chips rose as meager earnings announcements continued. Overall, German, French,
Swedish and Finnish blue chips achieved significant gains while other issues
were far weaker. Yet, smaller capitalization stocks, which account for most of
the International Portfolio's holdings, continued to underperform large
capitalization stocks.
In Japan, stocks fell due to the gloomy economic outlook and doubts
concerning the effectiveness of the government's economic package. The yen
weakened significantly until the concerted action between the U.S. and Japanese
governments in June. Japanese authorities also announced plans for the ailing
financial sector and tax cut proposals. Smaller and domestically oriented
companies fared worse than larger stocks, which negatively affected the
portfolio's holdings in Japan.
Other Asian markets plunged due to growing instability in the Pacific Rim
(riots in Indonesia, strikes in South Korea, etc.). New Zealand and Australian
stocks were likewise negatively impacted by those events.
Canadian stocks declined, due in part to weakness in the metals sector. In
Latin America, markets fell sharply as investors fled most emerging markets.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
International Portfolio Morgan Stanley
(Commenced operations Capt. Intl.
May 3, 1993) EAFE Index
<S> <C> <C>
12/31/94 $13,504.29 $11,698.53
12/31/96 17,331.44 13,879.91
06/30/98 19,367.36 16,298.60
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Porffolio
<S> <C>
1. Queensland Treasury 8.00% 09/14/07 2.00
2. Buderus AG 1.97
3. Sagem ADP 1.91
4. Bank for International Settlements
(US Tranche) 1.75
5. Fuji Photo Film Co, Ltd 1.72
6. Secom Co, Ltd 1.71
7. Sika Finanz AG, Bearer 1.69
8. EuraFrance 1.65
9. Kuehne & Nagel International AG Bearer 1.50
10. Societe Generale D'Affichage D.R.C. 1.42
TOP 5 COUNTRIES/REGIONS AS OF JUNE 30, 1998
<CAPTION>
% of Portfolio
<S> <C>
Japan 15.60
France 13.52
Germany 8.79
Switzerland 8.56
New Zealand 4.29
</TABLE>
The risk associated with investing on a worldwide basis includes differences in
regulation of financial data and reporting and currency exchanges as well as
economic and political systems which may be different from those in the United
States. The prices of small company stocks are generally more volatile than the
prices of large company stocks.
<PAGE> 26
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------
<S> <C> <C>
JAPAN (15.3%)
275,000 Aida Engineering Limited (19) $1,067,155
70,700 Chofu Seisakusho (9) 960,246
375,000 Dai-Tokyo Fire Marine Ins. Co. Ltd. (18) 1,301,606
325,000 Dowa Fire & Marine Ins. Co. Ltd. (18) 969,243
75,000 Fuji Photo Film Co., Ltd. (9) 2,603,212
15,000 Hitachi Ltd. ADR (11) 967,500
400,000 * Iino Kaiun Kaisha (5) 758,866
35,000 Ito-Yokado Co. Ltd. (28) 1,642,413
250,000 Koa Fire & Marine Ins. Co., Ltd. (18) 959,362
275,000 Nichido Fire & Marine Ins. Co., Ltd. (18)1,432,755
275,000 Nisshinbo Industries Inc. (8) 1,096,799
150,000 Nittetsu Mining Co., Ltd. (22) 538,967
45,000 Secom Co., Ltd. (29) 2,590,277
85,000 Shimano Inc. (9) 2,150,120
65,000 Shiseido Company (9) 736,158
127,000 Sotoh Co. (31) 866,106
155,000 Shoei Co. (27) 928,964
15,000 Toho Co. (20) 1,573,785
50,000 Tokyo Marine & Fire Ins. Co. Ltd. (18) 512,378
----------------
23,655,912
----------------
FRANCE (12.1%)
10,000 CGDE Michelin 'B' (34) 575,822
8,130 Crometal (5) 546,078
8,500 Elf Aquitaine (12) 1,192,067
17,500 Emin Leydier (24) 1,284,875
4,000 Eurafrance (34) 2,507,878
10,000 Gaumont SA (20) 775,463
3,500 La Brosse et DuPont (9) 352,258
9,000 Legrand ADP (10) 1,544,325
6,500 Marine Wendel (34) 1,193,635
6,396 NSC Groupe (19) 959,258
2,133 Promodes C.I. (28) 784,799
7,000 SAGEM (32) 2,896,599
2,000 Sucriere de Pithiviers-le-Vieil (1) 1,054,959
3,500 Taittinger (13) 1,969,179
5,000 Vivendi (33) 1,065,023
----------------
18,702,218
----------------
SWITZERLAND (8.4%)
405 Bank of Intl. Settlements (3) 2,652,024
5,500 Edipresse SA Bearer (20) 1,509,378
3,000 Kuehne & Nagel Intl. AG (32) 2,270,484
300 Lindt & Sprungli AG PC (9) 771,964
500 Nestle SA (9) 1,068,115
500 Sika Finanz AG Bearer (7) 2,570,911
5,500 Societe Generale d'Affichage (20) 2,153,669
----------------
12,996,545
----------------
GERMANY (7.4%)
1,550 Axel Springer Verlag AG (20) 1,140,210
20,000 Bayer AG (7) 1,029,867
12,500 Bertelsmann AG D.R.C. (25) 1,607,439
6,000 Buderus AG (5) 2,986,726
85,000 Gerresheimer Glas AG (4) 1,274,060
35,000 IVG Holding AG (27) 1,593,197
3,000 Suedzucker AG (8) 1,820,243
----------------
11,451,742
----------------
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------
NEW ZEALAND (2.8%)
1,275,549 Carter Holt Harvey Limited (14) $1,109,284
1,000,000 * Evergreen Forests Ltd. (14) 207,060
299,250 Independent Press Comm. (20) 1,448,378
1,601,500 Shortland Properties, Ltd. (27) 538,861
1,870,310 Tasman Agriculture Limited (1) 894,643
450,000 Wrightson Ltd. (1) 86,189
----------------
4,284,415
----------------
UNITED KINGDOM (2.7%)
550,000 Lonrho Africa plc (34) 674,046
200,000 Lonrho plc (34) 940,414
425,000 * McBride plc (10) 1,222,413
375,000 Royal Doulton plc (9) 1,369,352
----------------
4,206,225
----------------
HONG KONG (2.3%)
6,427,368 CDL Hotels Intl. Ltd. (16) 1,908,216
2,000,000 Shaw Brothers (Hong Kong) Ltd.(20) 1,213,373
1,000,000 South China Morning Post Holdings
Corp. (25) 480,831
----------------
3,602,420
----------------
LATIN AMERICA (2.3%)
40,000 Banco Latinoamericano 'Bladex' (3) 1,230,000
350,000 Antofagasta Holdings plc (21) 1,473,565
681,944 Ledesma SA (1) 634,300
100,000 Siderca S.A.I.C. (12) 171,023
----------------
3,508,888
----------------
CANADA (2.0%)
50,000 Canadian Pacific Ltd. (34) 1,418,750
40,000 Franco-Nevada Mining Corp. (21) 794,089
50,000 Noranda, Inc. (21) 864,916
----------------
3,077,755
----------------
NETHERLANDS (1.7%)
35,000 Apothekers Cooperatie OPG (17) 1,176,254
55,000 European City Estates NV (27) 688,090
8,500 Philips Electronics NV ADR (11) 722,500
----------------
2,586,844
----------------
SINGAPORE (1.6%)
675,000 Clipsal Industries Ltd. (10) 604,125
800,000 Del Gro Corp. (35) 573,970
700,000 Intraco Ltd. (34) 217,907
200,000 Singapore Bus Service Ltd. (32) 82,419
650,000 Times Publishing Ltd. (25) 1,079,158
----------------
2,557,579
----------------
SWEDEN (1.5%)
15,000 AssiDoman AB (14) 435,163
45,000 Bylock & Nordsjofrakt AB 'B' (32) 149,681
55,000 Gorthon Lines 'B' (32) 306,052
10,000 Investor AB Class B (34) 582,093
70,000 IRO AB (31) 919,095
----------------
2,392,084
----------------
BELGIUM (1.1%)
5,000 Deceuninck Plastics Ind. SA (4) 1,689,552
----------------
SPAIN (1.0%)
6,500 Corporation Financiera Alba SA (34) 713,611
100,000 Energia e Ind. Aragonesas SA (33) 866,562
----------------
1,580,173
----------------
</TABLE>
(continued)
<PAGE> 27
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------
<S> <C> <C>
MEXICO (0.9%)
1,000,000 Grupo Fernandez Editores SA de CV(25) $141,615
415,000 Industrias Penoles SA de CV (21) 1,318,856
----------------
1,460,471
----------------
NORWAY (0.7%)
70,000 Schibsted AS (25) 1,177,929
----------------
DENMARK (0.7%)
10,000 Carlsberg International A/S Class'B'(9) 726,058
3,500 Kobenhavns Lufthavne (32) 424,000
----------------
1,150,058
----------------
SOUTH KOREA (0.4%)
7,000 Daeduck (11) 291,624
35,000 Fursys Inc. (9) 369,629
----------------
661,253
----------------
FINLAND (0.4%)
7,000 Vaisala Oy A (5) 565,564
----------------
ITALY (0.3%)
700,000 Montedison non-conv. Savings SpA(34) 540,503
----------------
SOUTH AFRICA (0.2%)
28,000 Anglo American Platinum Corp.(22) 299,751
----------------
PORTUGAL (0.1%)
10,000 Companhia de Celulose do Cairna (1) 156,681
----------------
AUSTRALIA (0.1%)
185,000 Eltin Ltd. (22) 150,015
----------------
GREECE (0.1%)
38,090 H. Benrubi & Fils SA (9) 93,512
----------------
MISCELLANEOUS (1.0%)
65,000 North European Oil Royalty Tr. (12) 983,125
45,000 Minorco ADR (34) 537,188
----------------
1,520,313
----------------
TOTAL COMMON STOCK
(67.1%) (COST $106,566,981) $104,068,402
----------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- --------------------------------------------------------------------
<S> <C> <C>
INDONESIA (1.0%)
26,500 Freeport McMoRan Pfd. 'B' (22) $561,469
26,500 Freeport McMoRan Pfd. 'C' (22) 501,844
31,500 Freeport McMoRan Pfd. 'D' (22) 531,563
----------------
1,594,876
----------------
GERMANY (1.2%)
20,500 Hornbach Holdings AG (28) 1,876,521
----------------
TOTAL PREFERRED STOCK
(2.2%) (COST $3,976,664) $3,471,397
----------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- --------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (2.0%)
$1,000,000 PT Inti Indorayon Utama 7.000%
due 05-02-06 (24) $395,000
1,000,000 Cheil Foods & Chemicals Co 3.000%
due 12-31-06 (9) 1,085,000
250,000 Medya International Ltd. 10.000%
due 06-28-01 (20) 198,750
1,350,000 Scandinavian Broadcasting
7.250% due 08-01-05 (20) 1,461,375
----------------
$3,140,125
----------------
NON U.S. DOLLAR (2.0%)
1,527 FF Gaumont SA 3.750%
due 01-01-03 (20) $156,205.00
20,000 FF Immobiliere Hoteliere
due 01-01-01 (33) 725,965
550,000 GBPBerisford plc 5.000%
due 01-31-15 (9) 901,021
300,000 GBPBAA plc 5.750%
due 03-29-06 (32) 632,778
350,000 GBPLonrho
6.000% due 02-27-04 (34) 537,632
320,000 NZ Shortland Properties Inc. 7.500%
due 12-31-98 (27) 112,641
----------------
$3,066,242
----------------
TOTAL CONVERTIBLE SUBORDINATED
DEBENTURES
(4.0%) (COST $5,930,559) $6,206,367
----------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
- --------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (1.3%)
$1,250,000 Federal Republic Of Brazil
6.875% due 04-15-24 (15) $965,625
500,000 United Mexican States 'A'
6.867% due 12-31-19 (15) 449,687
500,000 United Mexican States 'B'
6.617% 12-31-19 (15) 449,687
250,000 United Mexican States 'C'
6.718% 12-31-19 (15) 224,844
----------------
$2,089,843
----------------
NON-U.S. DOLLAR (3.9%)
4,250,000 AU Queensland Treasury
8.000% due 09-14-07 (11) $3,040,542
650,000 DE Carlberg Finance
7.000% due 02-26-13 (15) 1,113,615
1,000,000 NZ Republic of New Zealand
10.000% due 03-15-02 (15) 568,772
2,500,000 NZ Trans Power Finance Ltd.
8.000% due 03-15-02 (15) 1,309,093
----------------
6,032,022
----------------
TOTAL NON-CONVERTIBLE BONDS
(5.2%) (COST $8,283,696) $8,121,865
----------------
</TABLE>
(continued)
