<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)
<PAGE> 28
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------------
<S> <C> <C>
DIVISIFIED (1.9%)
$2,988,000 Temple Inland Inc.
6.100% 07-09-98 $2,983,950
----------------
FINANCE (9.0%)
4,373,000 Goldman Sachs Group
5.750% 07-08-98 4,368,111
6,499,000 Media One Group Funding Inc.
5.730% 7-06-98 6,493,827
3,124,000 New Holland Credit
5.700% 07-01-98 3,124,000
----------------
13,985,938
----------------
FORESTRY AND PAPER PRODUCTS (2.5%)
3,904,000 Carter Holt harvey Ltd.
5.680% 07-07-98 3,900,304
----------------
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------------
OIL, ENERGY & NATURAL GAS (6.2%)
$5,629,000 Burlington Resourses
5.850% 07-10-98 $5,620,767
3,950,000 Praxair Inc.
6.020% 07-02-98 3,949,339
----------------
9,570,106
----------------
TOTAL SHORT-TERM NOTES
(19.6%) (COST $30,440,298) $30,440,298
----------------
TOTAL HOLDINGS
(COST $155,198,198) (a) $152,308,329
================
</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
AU - Australian Dollar
DE - Denmark Dollar
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
(35) Holding Companies
The accompanying notes are an integral part of these financial statements.
<PAGE> 29
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $155,198,198) ...................................... $ 152,308,329
Cash in bank ........................................................ 352,374
Unrealized gain on forward currency contracts
(note 5) .......................................................... 1,350,156
Receivable for securities sold ...................................... 967,795
Receivable for fund shares sold ..................................... 41,685
Dividends and accrued interest receivable ........................... 743,920
Other ............................................................... 980
-------------
Total assets ...................................................... 155,765,239
-------------
Liabilities:
Unrealized loss on forward currency contracts
(note 5) .......................................................... 163,970
Payable for securities purchased .................................... 223,644
Payable for shares redeemed ......................................... 23,606
Payable for investment management services
(note 3) .......................................................... 115,640
Other accrued expenses .............................................. 132,964
-------------
Total liabilities ................................................. 659,824
-------------
Net assets at market value ............................................. $ 155,105,415
=============
Net assets consist of:
Par value, $1 per share ............................................. $ 10,964,616
Paid-in capital in excess of par value .............................. 140,989,327
Accumulated undistributed net realized gain
on investments .................................................... 4,842,990
Net unrealized appreciation (depreciation) on:
Investments (note 1) .............................................. (2,889,869)
Foreign currency related transactions ............................. (9,499)
Forward currency contracts (note 5) ............................... 1,186,186
Undistributed net investment income ................................. 21,664
-------------
Net assets at market value ............................................. $ 155,105,415
=============
Shares outstanding (note 4) ............................................ 10,964,616
Net asset value per share .............................................. $14.15
=============
</TABLE>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest (net of $10,514 foreign taxes withheld) .................... $ 1,098,376
Dividends (net of $169,158 foreign taxes withheld) .................. 1,730,892
-------------
Total investment income ........................................... 2,829,268
-------------
Expenses:
Management fees (note 3) ............................................ 701,812
Custodian, accounting and transfer agent fees (note 3)246,672
Directors' fees (note 3) ............................................ 3,978
Professional fees ................................................... 8,608
Filing fees ......................................................... 6,069
Printing, proxy and postage fees .................................... 22,075
Other ............................................................... 1,959
-------------
Total expenses .................................................... 991,173
-------------
Net investment income ............................................. $ 1,838,095
-------------
Realized and unrealized gain on investments and foreign currency:
Net realized gain from:
Investments ..................................................... $ 4,842,990
Forward currency related transactions ........................... 3,721,201
Net increase (decrease) in unrealized appreciation (depreciation) on:
Investments ..................................................... 5,111,687
Foreign currency related transactions ........................... (1,396,334)
-------------
Net gain on investments ......................................... 12,279,544
-------------
Net increase in net assets from operations ...................... $ 14,117,639
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 30
OHIO NATIONAL FUND, INC.
INTERNATIONAL 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 ..................................................... $ 1,838,095 $ 2,843,376
Realized gain on investments and foreign currency transactions ............ 8,564,191 17,258,280
Unrealized gain (loss) on investments and foreign currency transactions ... 3,715,353 (17,805,953)
------------- -------------
Net increase in assets from operations .................................. 14,117,639 2,295,703
------------- -------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ................................. (1,817,110) (3,725,344)
Capital gains and foreign currency related transaction distributions ...... (3,721,201) (21,388,818)
------------- -------------
Total dividends and distributions ....................................... (5,538,311) (25,114,162)
------------- -------------
From capital share transactions (note 4):
Received from shares sold ................................................. 6,838,811 37,696,255
Received from dividends reinvested ........................................ 5,538,311 25,114,162
Paid for shares redeemed .................................................. (21,881,137) (21,251,055)
------------- -------------
Increase (decrease) in net assets derived from capital share transactions (9,504,015) 41,559,362
------------- -------------
Increase (decrease) in net assets ..................................... (924,687) 18,740,903
Net Assets:
Beginning of period ....................................................... 156,030,102 137,289,199
------------- -------------
End of period (a) ......................................................... $ 155,105,415 $ 156,030,102
============= =============
(a) Includes undistributed net investment income of ......................... $ 21,664 $ 679
============= =============
</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 .................. $ 13.39 $ 15.49 $ 14.38 $ 13.30 $ 12.48
Income from investment operations:
Net investment income .............................. 0.17 0.28 0.25 0.31 0.16
Net realized and unrealized gain on investments
and foreign currency transactions ................ 1.10 0.08 1.76 1.28 0.84
------- ------- ------- ------- -------
Total income from investment operations ........ 1.27 0.36 2.01 1.59 1.00
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ............... (0.51) (0.37) (0.25) (0.28) (0.12)
Distributions from net realized capital gains
and foreign currency related transaction ......... 0.00 (2.09) (0.65) (0.23) (0.06)
------- ------- ------- ------- -------
Total distributions .............................. (0.51) (2.46) (0.90) (0.51) (0.18)
------- ------- ------- ------- -------
Net asset value, end of period ........................ $ 14.15 $ 13.39 $ 15.49 $ 14.38 $ 13.30
======= ======= ======= ======= =======
Total return .......................................... 9.44%(b) 2.11% 14.48% 12.10% 8.07%
Ratios and supplemental data:
Ratio of expenses to average net assets ............ 1.26%(a) 1.22% 1.15% 1.12% 1.05%
Ratio of net investment income to average net assets 2.34%(a) 1.82% 1.64% 2.29% 1.23%
Portfolio turnover rate ............................... 17% 24% 14% 7% 16%
Average commission rate (c) ........................... $ 0.02 $ 0.02 $ 0.03 NR NR
Net assets at end of period (millions) ................ $ 155.1 $ 156.0 $ 137.3 $ 90.6 $ 62.9
</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> 31
CAPITAL APPRECIATION PORTFOLIO
Ohio National Fund, Inc.
OBJECTIVE
The Capital Appreciation Portfolio seeks maximum capital growth by investing
primarily in common stocks.
PERFORMANCE AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS:
<S> <C>
One-year 12.60%
Three-year 14.97%
Since inception (4/30/94) 15.19%
</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 Capital Appreciation Portfolio's basic asset allocation changed little over
these past six months. We did, however, extensively groom back the first two
categories. Our largest purchases were Times Mirror convertible bonds and
Niagara Mohawk common stock. We significantly reduced FirstEnergy, also a top
holding, in response to a tremendous run over the past 18 months. Media
holdings, including New York Times, Washington Post and Time Warner, were
strong. Our natural resource holdings, including Newmont Mining, were poor
performers due to broad economic trends, as well as investor disenchantment.
Loews, whose major subsidiary is CNA Insurance, suffered from its modest
cigarette connection.
We expect the economy to slow from its recent pace due to the current flat
yield curve. As for the general level of interest rates, we rule nothing out.
They might fall to surprising lows if the economy slows more than most
anticipate, however, only if inflation steps up dramatically would large
increases be likely. Our biggest concern remains the stock market's high
valuation levels. By most measures - price/earnings ratios, price-to-book
values, etc. - stock prices are at record highs. Furthermore, we see financial
accounting being stretched to the limits of truthfulness. Witness: some
calculations show that over the last decade more than one-quarter of all S&P 500
earnings were subsequently written off. We think that high valuation levels and
suspect corporate reporting dramatically lower the odds of successful investing.
Why then do we maintain even 50 percent in common stocks, with more exposure in
convertibles? First, because we are unwilling to be left at the gate in
history's most rewarding investing climate. Second, and more important, we have
been able to make investments we deem low risk that a capture a good bit of the
returns enjoyed by more aggressive investors.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Capital Appreciation S&P 500 Index
Portfolio
<S> <C> <C>
12/31/94 $10,452.80 $10,131.24
12/31/95 12,816.55 13,923.12
12/31/96 14,835.13 17,136.91
12/31/97 17,089.10 22,834.74
06/30/98 18,032.42 26,878.77
</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. Amerada Hess Corp 4.09
2. Loews Corp 3.34
3. FirstEnergy Corp 2.95
4. Niagra Mohawk Power Co 2.79
5. Tennessee Valley Authority 5.88% 04/01/36 2.67
6. Washington Post Cl B 2.65
7. Times Mirror CV LYON Zero Coupon 4/15/17 2.29
8. New York Times Co 2.04
9. US Treasury Notes 5.875% 02/15/00 1.96
10. Tennessee Valley Authority 6.235% 07/15/45 1.94
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Media and Publishing 10.90
Oil, Energy & Natural Gas 8.70
Utilities 8.47
Government 5.66
Municiples 5.29
</TABLE>
<PAGE> 32
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- ------------------------------------------------------------------
<S> <C> <C>
CHEMICALS (2.1%)
21,500 Great Lakes Chemical Corp. $1,045,094
5,250 Hanson Trust plc ADR 159,140
18,000 * Octel Corp. 357,750
--------------
1,561,984
--------------
COMMUNICATIONS (1.0%)
13,000 MCI Communications Corp. 755,625
--------------
COMPUTER AND RELATED (0.4%)
2,400 IBM Corp. 275,550
--------------
CONSUMER PRODUCTS (2.5%)
1,500 * Nine West Group Inc. 40,219
25,000 Philip Morris Cos., Inc. 984,375
9,500 Polaroid Corp. 337,844
13,000 * Reebok International 359,938
2,000 Tupperware Corp. 70,312
--------------
1,792,688
--------------
DRUGS (2.3%)
20,000 * Genetech Special Common 1,357,500
3,100 Schering - Plough Corp. 284,038
--------------
1,641,538
--------------
DURABLE GOODS (0.1%)
3,000 A T Cross Co. 44,625
--------------
ELECTRICAL EQUIPMENT (3.1%)
1,500 AMP Incorporated 51,563
4,000 Exide Corp. 67,250
69,000 * Firstenergy Corp. 2,121,750
--------------
2,240,563
--------------
ENTERTAINMENT & LEISURE (1.3%)
14,000 * Circus Circus Enterprise 237,125
7,759 Time Warner Inc. 662,910
--------------
900,035
--------------
FINANCE (1.7%)
4,500 Fund American Enterprise 666,000
17,100 Leucadia National Corp. 565,369
--------------
1,231,369
--------------
FOOD AND RELATED (0.6%)
1 Diageo PLC 7
12,500 McCormick & Company, Inc. 446,485
--------------
446,492
--------------
FORESTRY AND PAPER PRODUCTS (2.8%)
61,100 Domtar Inc. 412,425
21,000 Johns-Manville Corp. 316,312
71,000 MacMillan Bloedel 754,375
11,000 Weyerhaeuser Co. 508,063
--------------
1,991,175
--------------
INDUSTRIAL SERVICES (0.5%)
11,000 Corning Inc. 382,250
--------------
INSURANCE (4.7%)
3,000 Aetna Inc. 228,375
27,500 Loews Corp. 2,395,935
5,500 Unitrin, Inc. 382,250
31,500 Willis Corroon Group plc 395,719
--------------
3,402,279
--------------
MARKET
SHARES U.S. COMMON STOCK VALUE
- ------------------------------------------------------------------
MEDIA AND PUBLISHING (7.6%)
23,000 Chris-Craft Ind., Inc. $1,257,813
10,000 Meredith Corp. 469,375
18,500 New York Times Co. CL A 1,466,125
6,000 Readers Digest CL A 162,750
8,000 Readers Digest CL B 217,000
3,300 Washington Post CL B 1,900,800
--------------
5,473,863
--------------
MEDICAL AND RELATED (0.2%)
2,500 Pharmacia & Upjohn 115,313
--------------
METALS AND MINING (2.2%)
28,500 Homestake Mining Co. 295,688
1,600 Inco Ltd. 21,800
38,800 Newmont Mining Corp. 916,650
52,800 Prime Resources Group 366,300
--------------
1,600,438
--------------
OIL, ENERGY AND NATURAL GAS (8.6%)
54,100 Amerada Hess Corp. 2,938,306
6,000 Atlantic Richfield Co. 468,750
1,500 Kerr McGee 86,813
19,000 Mitchell Energy & Development 365,750
22,000 Murphy Oil Corp. 1,115,125
20,550 Texaco, Inc. 1,226,578
--------------
6,201,322
--------------
RETAIL (1.5%)
11,000 * Hill Stores Co. 63,250
168,000 * Petrie Stores- Liq. Trust Unit 480,480
9,700 * Toys R' Us 228,556
4,500 Wal-Mart Stores, Inc. 273,375
--------------
1,045,661
--------------
TRANSPORTATION (0.6%)
16,000 Overseas Shipholding Inc. 397,313
--------------
UTILITIES (5.3%)
23,200 Kansas City Power & Light Co. 672,800
134,000 * Niagra Mohawk Power 2,001,625
32,000 Unicom Corp. 1,122,000
--------------
3,796,425
--------------
TOTAL U.S. COMMON STOCK
(49.1%) (COST $29,942,899) $35,296,508
--------------
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- ------------------------------------------------------------------
UNITED KINGDOM (1.2%)
BUSINESS SERVICES (0.1%)
46,850 Lonrho Africa plc $57,452
--------------
INDUSTRIAL SERVICES (0.1)%
15,438 BTR plc Ord. 30.769 Par 43,852
19,000 BTR plc-B 36.5 Par 10,936
--------------
54,788
--------------
MEDICAL AND RELATED (0.6%)
168,000 Smith & Nephew 419,059
--------------
METALS AND MINING (0.4%)
70,250 Lonrho plc 330,540
--------------
TOTAL UNITED KINGDOM 861,839
--------------
</TABLE>
(continued)
<PAGE> 33
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- ------------------------------------------------------------------
<S> <C> <C>
SWITZERLAND
BANKING (0.1%)
18 Bank for International Settlements $118,077
--------------
TOTAL FOREIGN STOCK
(1.3%) (COST $1,187,363) $979,916
--------------
TOTAL COMMON STOCK
(50.4%) (COST $31,130,262) $36,276,424
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ------------------------------------------------------------------
<S> <C> <C>
FINANCE (0.5%)
7,000 Kemper Co., 5.75% $366,625
--------------
FORESTRY AND PAPER PRODUCTS (0.1%)
1,250 International Paper 5.25% Conv. 60,156
--------------
REAL ESTATE (1.7%)
23,000 Rouse Co. $3 Series B Conv. 1,218,875
--------------
TRANSPORTATION (0.4%)
4,000 Union Pacific Capital Tr. 6.25% Conv. 302,775
--------------
UTILITIES (1.7%)
4,940 Cleveland Electric, adj. rate Series L $494,000
150 Cleveland Electric 9.000% Series R 162,042
265 Cleveland Electric 8.800% Series S 287,461
2,632 Entergy Gulf Series B 131,929
1,000 Niagara Mohawk Power Series B 25,188
3,200 Niagara Mohawk Power Series C 79,800
--------------
1,180,420
--------------
TOTAL PREFERRED STOCK
(4.4%) (COST $2,845,543) $3,128,851
--------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (0.6%)
$325,000 The Pep Boys MM&J Lyons, zero
coupon contracts due 09-20-11 $178,344
300,000 The Pep Boys Manny Moe & Jack
4.000% due 09-01-99 290,250
--------------
468,594
--------------
BUSINESS SERVICES (1.8%)
1,400,000 Automatic Data Process, zero
coupon contracts due 02-20-12 1,293,250
--------------
DRUGS (0.3%)
200,000 Mckesson Corp.
4.500% due 03-02-04 186,813
--------------
ELECTRICAL EQUIPMENT (0.5%)
120,000 Exide Corp.
2.900 % due 12-15-05 74,700
200,000 National Semiconductor
6.500% due 10-01-02 298,188
--------------
372,888
--------------
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ------------------------------------------------------------------
ENTERTAINMENT AND LEISURE (0.1%)
$50,000 Ogden Corp.
5.750% due 10-20-02 $49,125
--------------
FINANCE (0.1%)
130,000 Deutsche Bank, zero coupon
contracts due 02-12-17 72,475
--------------
FOREIGN GBP (0.6%)
325,000 Lonrho Ltd.
6.000% due 02-27-04 499,559
--------------
HOTEL/LODGING (0.4%)
430,000 Marriott International, zero
coupon contracts due 03-25-11 280,575
--------------
INDUSTRIAL SERVICES (2.9%)
1,700,000 Roche Holdings, . zero
coupon contracts due 05-06-12 821,321
1,250,000 WMX Technologies
2.000% due 01-24-05 1,253,125
--------------
2,074,446
--------------
MEDIA AND PUBLISHING (3.3%)
125,000 Clear Channel Communications
2.625% due 06-22-13 134,062
100,000 Interpublic Group
1.800% due 09-16-04 93,500
500,000 News America Hldgs Lyons
zero coupons contracts due 03-11-13 329,688
150,000 Thomas Nelson CL B
5.750% due 11-30-99 149,437
3,650,000 Times Mirror New, zero coupon
contracts due 04-15-17 1,647,063
--------------
2,353,750
--------------
MEDICAL AND RELATED (1.6%)
1,000,000 Chiron Corp.
1.900% due 11-17-00 918,750
295,000 Phycor Inc.
4.500% due 02-15-03 247,431
--------------
1,166,181
--------------
METALS AND MINING (3.3%)
775,000 Homestake Mining
5.500% due 06-23-00 743,938
150,000 Inco Ltd.
7.750% due 03-15-16 143,812
1,200,000 Inco Ltd.
5.750% due 07-01-04 1,107,000
540,000 Teck Corp.
3.750% due 07-15-06 414,449
--------------
2,409,199
--------------
REAL ESTATE (0.9%)
625,000 Rouse Co.
5.750% due 07-23-02 670,313
--------------
RETAIL (0.2%)
150,000 Office Depot, zero coupon
contracts due 11-01-08 116,063
--------------
</TABLE>
(continued)
<PAGE> 34
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
UTILITIES (1.5%)
$500,000 Potomac Electricity & Power Co.,
5.000% due 09-01-02 $487,500
1,500,000 US Cellular Lyons, zero coupon
contracts due 06-15-15 564,375
--------------
1,051,875
--------------
TOTAL CONVERTIBLE DEBENTURES
(18.1%) (COST $12,054,677) $13,065,106
--------------
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (10.9%)
$400,000 FNMA
6.375% 01-16-02 $409,236
100,000 FNMA
5.370% 02-07-01 99,376
450,000 Tennessee Valley Authority
5.980% 04-01-36 459,500
1,880,000 Tennessee Valley Authority
5.880% 04-01-36 1,919,582
1,350,000 Tennessee Valley Authority
6.235% 07-15-45 1,393,955
200,000 U.S. Treasury Note
6.250% 04-30-01 203,750
1,400,000 U.S. Treasury Note
5.875% 02-15-00 1,407,876
400,000 U.S. Treasury Note
6.250% 10-31-01 408,375
250,000 U.S. Treasury Note
6.125% 07-31-00 253,047
1,000,000 U.S. Treasury Note
5.500% 02-28-99 1,000,313
250,000 U. S. Treasury Note
6.750% 05-31-99 252,735
--------------
7,807,745
--------------
COMMUNICATIONS (0.7%)
500,000 Bellsouth Telecomm
5.850% 11-15-45 505,538
--------------
DRUGS (0.1%)
100,000 Merck and Company
5.760% 05-03-37 104,036
--------------
TOTAL LONG-TERM BONDS & NOTES
(11.7%) (COST $8,370,940) $8,417,319
--------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
FOOD AND RELATED (1.5%)
$1,050,000 Kellogg Co.
5.510% 07-24-98 $1,046,304
--------------
GOVERNMENT (0.2%)
146,000 FNMA
5.450% 08-05-98 145,226
--------------
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ------------------------------------------------------------------
INSURANCE (3.6%)
$2,600,000 Metlife Funding Inc.
5.500% 07-10-98 $2,596,425
--------------
MEDICAL AND RELATED (2.8%)
2,000,000 Becton Dickinson & Co.
5.540% 07-23-98 1,993,229
--------------
RETAIL (3.4%)
2,490,000 Toys R Us Inc.
5.520% 07-23-98 2,481,600
--------------
TELECOMMUNICATIONS ( 3.3%)
2,385,000 Ciesco LP
6.200% 07-01-98 2,385,000
--------------
TOTAL SHORT TERM NOTES
(14.8%) (COST $10,647,784) $10,647,784
--------------
</TABLE>
<TABLE>
<CAPTION>
PUT OPTION PURCHASES MARKET
SHARES STOCK/EXPIRATION/EXERCISE PRICE VALUE
- ------------------------------------------------------------------
<S> <C> <C>
15 ALZA Corp./July/$40 $281
15 AMP Inc./Nov/$45 15,563
15 Automatic Data/Nov/$75 7,125
7 Clear Channel Comm./Jan/$110 6,650
3 Clear Channel Comm./Jan/$120 4,612
15 IBM/July/$120 8,250
15 IBM/Jan/$130 26,250
5 News Corp. Ltd./July/$30 156
17 News Corp. Ltd./Oct/$30 1,275
15 Nine West Group Inc./Sep/$30 5,625
15 Pharmacia & Upjohn/Jan/$50 8,913
10 Pharmacia & Upjohn/Oct/$50 5,000
20 Reebok Intl./Jan/$35 15,250
5 Rouse Co./July/$40 4,125
15 Schering-Plough/Aug/$65 94
15 Schering-Plough/Nov/$90 7,875
16 Schering-Plough/Nov/$95 12,000
25 Time Warner Inc./Sep/$80 3,594
30 Time Warner Inc./Dec/$85 12,750
20 Time Warner Inc./Dec/$95 20,500
25 Tupperware Corp./Oct/$30 7,812
15 Walmart/Sep/$45 94
15 Walmart/Sep/$55 1,312
15 Walmart/Dec/$60 9,375
15 Walmart/Dec/$65 8,063
30 Worldcom/Sep/$37.50 1,125
30 Worldcom/Sep/$50 10,875
115 Worldcom/Dec/$50 47,437
16 Worldcom/Jan/$55 11,800
TOTAL PUT OPTION PURCHASE
(0.4%) (COST $464,515) $263,781
--------------
TOTAL HOLDINGS
(COST $65,513,721) (a) $71,799,265
==============
</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> 35
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $65,513,721) ............................... $ 71,799,265
Cash in bank ................................................ 1,014
Receivable for fund shares sold ............................. 6,517
Receivable for securities sold .............................. 106,213
Dividends and accrued interest receivable ................... 359,997
Other ....................................................... 3,314
------------
Total assets .............................................. 72,276,320
------------
Liabilities:
Payable for investment management services
(note 3) .................................................. 46,413
Payable for securities purchased ............................ 380,894
Other accrued expenses ...................................... 16,088
------------
Total liabilities ......................................... 443,395
------------
Net assets at market value ..................................... $ 71,832,925
============
Net assets consist of:
Par value, $1 per share ..................................... $ 5,088,158
Paid-in capital in excess of par value ...................... 57,233,656
Accumulated undistributed net realized gain on
investments ............................................... 3,217,279
Net unrealized appreciation on investments (note 1) 6,285,544
Undistributed net investment income ......................... 8,288
------------
Net assets at market value ..................................... $ 71,832,925
============
Shares outstanding (note 4) .................................... 5,088,158
Net asset value per share ...................................... $14.12
============
</TABLE>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest .................................................... $ 753,069
Dividends ................................................... 370,751
------------
Total investment income ................................... 1,123,820
------------
Expenses:
Management fees (note 3) .................................... 265,297
Custodian fees (note 3) ..................................... 8,643
Directors' fees (note 3) .................................... 1,488
Professional fees ........................................... 3,520
Accounting and transfer agent fees .......................... 26,053
Filing fees ................................................. 1,347
Printing, proxy and postage fees ............................ 6,424
Other ....................................................... 374
------------
Total expenses ............................................ 313,146
------------
Net investment income ..................................... $ 810,674
------------
Realized and unrealized gain (loss) on investments:
Net realized gain from investments .......................... $ 3,217,279
Net decrease in unrealized appreciation on
investments ............................................... (519,189)
------------
Net gain on investments ................................. 2,698,090
------------
Net increase in net assets from operations .............. $ 3,508,764
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 36
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION 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 .......................................... $ 810,674 $ 1,390,500
Realized gain on investments ................................... 3,217,279 2,209,729
Unrealized gain (loss) on investments .......................... (519,189) 3,325,188
------------ ------------
Net increase in assets from operations ....................... 3,508,764 6,925,417
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ...................... (806,160) (1,682,334)
Capital gains distributions .................................... 0 (3,070,931)
------------ ------------
Total dividends and distributions ............................ (806,160) (4,753,265)
------------ ------------
From capital share transactions (note 4):
Received from shares sold ...................................... 11,996,017 17,953,371
Received from dividends reinvested ............................. 806,160 4,753,265
Paid for shares redeemed ....................................... (3,502,950) (3,328,937)
------------ ------------
Increase in net assets derived from capital share transactions 9,299,227 19,377,699
------------ ------------
Increase in net assets ..................................... 12,001,831 21,549,851
Net Assets:
Beginning of period ............................................ 59,831,094 38,281,243
------------ ------------
End of period (a) .............................................. $ 71,832,925 $ 59,831,094
============ ============
(a) Includes undistributed net investment income of .............. $ 8,288 $ 3,775
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Ended 5-1-94
6-30-98 Years Ended December 31, to
(Unaudited) 1997 1996 1995 12-31-94
-------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period .................. $13.53 $12.93 $11.99 $10.25 $10.00
Income from investment operations:
Net investment income .............................. 0.17 0.39 0.48 0.39 0.22
Net realized and unrealized gain on investments .... 0.58 1.48 1.31 1.85 0.23
------ ------ ------ ------ ------
Total income from investment operations .......... 0.75 1.87 1.79 2.24 0.45
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ............... (0.16) (0.46) (0.44) (0.29) (0.20)
Distributions from net realized capital gains ...... 0.00 (0.81) (0.41) (0.21) 0.00
------ ------ ------ ------ ------
Total distributions .............................. (0.16) (1.27) (0.85) (0.50) (0.20)
------ ------ ------ ------ ------
Net asset value, end of period ........................ $14.12 $13.53 $12.93 $11.99 $10.25
====== ====== ====== ====== ======
Total return .......................................... 5.52%(b) 15.19% 15.75% 22.62% 4.53%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets ............ 0.94%(a) 0.95% 0.97% 0.96% 0.98%(a,d)
Ratio of net investment income to average net assets 2.44%(a) 2.88% 3.90% 3.47% 3.24(a,d)
Portfolio turnover rate ............................... 26% 41% 37% 32% 20%
Average commission rate (c) ........................... $ 0.05 $ 0.04 $ 0.05 NR NR
Net assets at end of period (millions) ................ $ 71.8 $ 59.8 $ 38.3 $ 19.3 $ 6.8
</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.
(d) The advisor has reimbursed certain operating expenses of the Capital
Apprciation Portfolio for the period ending December 31, 1994. Had the
advisor not reimbursed such expenses, the annualized ratio of expenses to
average net assets would have been 1.05% and the annualized ratio of net
investment income to average net assets would have been 3.18%.
(NR) Not required prior to 1996.
The accompanying notes are an integral part of these financial statements.
<PAGE> 37
SMALL CAP PORTFOLIO
Ohio National Fund, Inc.
OBJECTIVE
The Small Cap Portfolio seeks maximum capital growth by investing primarily in
common stocks of small- and medium-size companies.
PERFORMANCE AS OF JUNE 30, 1998
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS:
<S> <C>
One-year 12.62%
Three-year 14.50%
Since inception (4/30/94) 15.99%
</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
There continues to be a dramatic shift to larger capitalization securities for
their perceived safety and liquidity. The valuation differential between large
cap and small cap securities is reaching multi-year highs, which would lead us
to believe we are closer to a turn in small-cap, but there is no way to
accurately predict such a turn.
While the current environment is disappointing, long term we are optimistic
this will turn out to be a great buying opportunity. The more people focus on
large companies, the more inefficient valuations become on small companies,
providing great long-term opportunities. The economic environment remains
positive for financial assets with a low inflation rate and high employment. The
U.S. is starting to see a general slowdown from the impact of the Asian crisis,
with the magnitude and length of any slowdown unpredictable at this point.
Earnings reports for the second quarter may be slightly more negative than
expected given the number of negative pre-announcements. We would expect to see
continued near term volatility as the markets try to sort out a slowing economy
which could dampen earnings expectations, with the positive backdrops of lower
interest rates and disposable income growth.
The best and worst stocks were health care names, with the largest position
continuing to be Watson Pharmaceuticals and performing quite well (up over 40
percent in the first half) and the laggard being FPA Medical. While we cut our
Asian exposure significantly, any exposure was too much, and we continue to be
cautious on the impact on our own economy. We remain optimistic over the long
term, and in our experience, these periods of relative underperformance, while
difficult, present tremendous long-term values in small company growth stocks.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Small Cap Portfolio Russell 2000
(Commenced operations Index
April 30, 1994)
<S> <C> <C>
12/31/94 $12,126.14 $10,025.97
12/31/95 16,129.48 12,878.14
12/31/96 18,986.87 15,002.52
12/31/97 20,594.41 18,343.12
06/30/98 21,372.88 19,309,80
</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. Watson Pharmaceutical 2.56
2. HNC Software 2.36
3. Mail-Well Inc. 2.13
4. HBO & Co 2.07
5. Helen of Troy 1.94
6. Action Performance Companies Inc 1.88
7. Henry Schein Inc 1.88
8. Checkfree Holdings 1.74
9. Medicis Phamaceutical ClA 1.60
10. American Disposal Services, Inc 1.55
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Health Care 22.89
Consumer Cyclical 22.47
Technology 19.66
Capital Goods 7.36
Consumer Staples 7.16
</TABLE>
The prices of small company stocks are generally more volatile than the prices
of large company stocks.
<PAGE> 38
OHIO NATIONAL FUND, INC.
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -----------------------------------------------------------------------------
BUSINESS SERVICES (5.2%)
<S> <C> <C>
39,300 * Checkfree $1,156,894
30,000 * Concord EFS, Inc. 783,750
9,825 * Metzler Group 359,841
11,800 * Pre Paid Legal Services Inc. 372,437
22,300 * Renaissance Worldwide Inc. 485,025
12,025 * US Web Corp. 284,842
-----------------
3,442,789
-----------------
CHEMICALS (0.6%)
9,475 OM Group 390,844
-----------------
COLLECTIBLES (1.9%)
38,775 * Action Performance Co. Inc. 1,248,070
-----------------
COMMUNICATIONS (4.3%)
47,100 * Digital Microwave Corp. 341,475
24,050 * E Spire Communications 542,628
10,900 * Echostar Communications 262,281
10,725 * ICG Communications Inc. 392,133
13,550 * Nextlink Communications 513,206
2,250 * Pacific Gateway Exchange 90,141
14,225 * Periphonics Corp. 178,702
8,075 * US Lec Corp. 168,566
41,625 * Westell Technologies Inc. A 385,031
-----------------
2,874,163
-----------------
COMPUTER AND RELATED (13.9%)
13,425 * Aspen Technology 677,963
19,200 * Brooktrout Technology Inc. 266,400
16,350 * CDW Computer Centers Inc. 817,500
3,375 * Earthlink Network Inc. 259,031
5,750 * Electronic Arts 310,500
38,325 * HNC Software 1,564,139
34,312 * Harbinger Corp. 829,921
13,987 * Insight Enterprises Inc. 559,480
7,725 * JDA Software Group Inc. 337,969
7,425 * Keane Inc. 415,800
19,800 * MMC Networks Inc. 631,125
23,725 * Mastech Corporation 667,266
13,675 * Software AG Systems Inc. 399,994
23,500 * Summit Design Inc. 345,156
34,250 * Sykes Enterprises Inc. 687,141
6,650 * Transaction System Architects 256,025
5,525 * Wind River Systems 198,207
-----------------
9,223,617
-----------------
CONSUMER PRODUCTS (4.2%)
30,875 * Advanced Lighting Technologies 717,844
58,400 * Helen of Troy 1,284,800
21,400 Windmere 766,387
-----------------
2,769,031
-----------------
DRUGS (8.0%)
23,050 * Dura Pharmaceuticals Inc. 515,744
29,125 * Medicis Pharmaceutical CL A 1,063,062
16,675 Jones Pharmaceuticals Inc. 552,359
61,800 * King Pharmaceuticals Inc. 865,200
17,400 * Parexel International Corp. 632,925
36,425 * Watson Pharmaceuticals Inc. 1,700,592
-----------------
5,329,882
-----------------
EDUCATIONAL SERVICES (1.0%)
21,000 * Sylvan Learning Systems Inc. 687,750
-----------------
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -----------------------------------------------------------------------------
ELECTRONICS (5.2%)
<S> <C> <C>
22,075 * ATMI Inc. $331,125
78,300 * Amkor Technology 731,620
33,075 * Berg Electronics Corp. 647,030
38,275 * Brooks Automation 497,575
20,996 * PRI Automation Inc. 358,244
27,062 * Remec Inc. 307,830
17,350 * Sipex Corporation 373,025
6,600 * Vitesse Semiconductor Corp. 203,775
-----------------
3,450,224
-----------------
FINANCIAL SERVICES (2.0%)
45,900 * Unicapital Corp. 877,838
42,550 * United Panam Financial Corp. 436,137
-----------------
1,313,975
-----------------
FOOD AND RELATED (1.7%)
13,175 * American Italian Pasta Co. 490,769
17,775 * U.S. Foodservice Inc. 623,236
-----------------
1,114,005
-----------------
HOTEL/LODGING (2.4%)
21,175 * Capstar Hotel Co. 592,900
11,625 * Peagasus Systems 297,891
29,025 * Silverleaf Resorts Inc. 442,631
13,800 * Vistana 253,575
-----------------
1,586,997
-----------------
HUMAN SERVICES (1.2%)
28,200 * Personal Group of America Inc. 564,000
6,550 * Staffmark, Inc. 239,894
-----------------
803,894
-----------------
INDUSTRIAL SERVICES (2.1%)
22,000 * American Disposal Services Inc. 1,031,250
11,500 * Eastern Environmental Services 391,000
-----------------
1,422,250
-----------------
INSURANCE (2.6%)
31,450 * Annuity & Life 695,831
15,075 HCC Insurance Holdings Inc. 331,650
14,200 Reliastar Financial Corp. 681,600
-----------------
1,709,081
-----------------
INVESTMENT MANAGEMENT (0.6%)
10,725 * Affiliated Managers Group Inc. 398,166
-----------------
MEDICAL AND RELATED (11.8%)
8,950 * Access Health Inc. 228,225
22,100 * Andrx Corp. 812,175
23,025 * Cerner Corp. 651,895
19,100 * ESC Medical Systems 644,625
9,900 * First Health Group 282,150
38,940 HBO & Company 1,372,635
27,050 * Henry Schein Inc. 1,247,681
8,075 * Idexx Laboratories Inc. 200,866
21,100 * Medical Manager Corp. 582,887
9,800 * NCS Healthcare Inc. 279,300
30,050 * Orthodontic Centers of America 629,172
4,875 * R.P. Scherer 432,047
27,675 * Trex Medical Corp. 456,638
-----------------
7,820,296
-----------------
RECYCLING (0.3%)
10,525 IMCO Recycling 194,713
-----------------
</TABLE>
(continued)
<PAGE> 39
OHIO NATIONAL FUND, INC.
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
OIL, ENERGY AND NATURAL GAS (1.0%)
10,825 * Cal Drive Intl. $298,364
17,300 * KTI Inc. 374,113
-----------------
672,477
-----------------
PRINTING (2.1%)
65,000 * Mail-Well Inc. 1,409,688
-----------------
REAL ESTATE (0.8%)
28,225 * Fairfield Communities Inc. 541,567
-----------------
RENTAL AUTO/EQUIPMENT (2.0%)
22,850 * Rental Service Corp. 768,331
13,300 * United Rentals Inc. 558,600
-----------------
1,326,931
-----------------
RESTAURANTS (1.3%)
20,900 CKE Restaurants 862,125
-----------------
RETAIL (6.9%)
64,200 * Global Imaging Systems Inc. 898,800
20,425 * Proffitt's Inc. 618,747
19,700 * Stage Stores 891,425
15,925 * The Men's Wearhouse Inc. 486,337
21,975 * The Wet Seal, Inc. 703,200
46,575 Wolverine World Wide 1,010,095
-----------------
4,608,604
-----------------
RETIREMENT/AGED CARE (2.0%)
78,625 * Capital Senior Living 943,500
11,650 * Sunrise Assisted Living Inc. 400,469
-----------------
1,343,969
-----------------
TEXTILES (1.3%)
19,550 Warnaco Group CL A 829,653
-----------------
TRANSPORTATION (1.5%)
6,625 Expeditors Intl. Wash Inc. 291,500
38,775 Offshore Logistics 688,254
-----------------
979,754
-----------------
MISCELLANEOUS (0.8%)
21,775 * Wackenhut Correction Corp. 508,991
-----------------
TOTAL U.S. COMMON STOCK
(88.7%) (COST $49,631,472) $58,863,506
-----------------
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
BRITIAN (0.9%)
MEDIA
39,600 * Flextech Plc $366,043
MISCELLANEOUS
49,670 Wetherspoon (J.D.) 238,679
-----------------
TOTAL BRITAIN 604,722
-----------------
NETHERLANDS (0.9%)
MISCELLANEOUS
3,085 * Hunter Douglas NV 167,579
TRANSPORTATION
7,100 * IHC Caland 399,637
-----------------
TOTAL NETHERLANDS 567,216
-----------------
TOTAL FOREIGN COMMON STOCK
(1.8%) (COST $768,921) $1,171,938
-----------------
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL (9.6%)
$6,476,000 Star Bank 5.200% 07-01-98
repurchase price $6,476,935
collateralized by GNMA certificates
pool # 8375
due 02-20-24 (Cost $6,476,000) $6,476,000
-----------------
TOTAL REPURCHASE AGREEMENTS
(9.6%) (COST $6,476,000) $6,476,000
-----------------
TOTAL HOLDINGS
(COST $56,876,393) (a) $66,511,444
=================
</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> 40
OHIO NATIONAL FUND, INC.
SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
JUNE 30, 1998 (UNAUDITED)
<S> <C>
ASSETS:
Investments in securities at market value
(note 1) (cost $56,876,393) ........................ $ 66,511,444
Cash in bank .......................................... 833
Receivable for fund shares sold ....................... 66,986
Receivable for securities sold ........................ 131,831
Dividends and accrued interest receivable ............. 5,358
Other ................................................. 4,454
------------
Total assets ....................................... 66,720,906
------------
LIABILITIES:
Payable for securities purchased ...................... 294,807
Payable for investment management services
(note 3) ........................................... 41,542
Other accrued expenses ................................ 10,521
------------
Total liabilities .................................. 346,870
------------
Net assets at market value $ 66,374,036
============
NET ASSETS CONSIST OF:
Par value, $1 per share ...............................$ 3,416,524
Paid-in capital in excess of par value ................ 52,294,021
Accumulated undistributed net realized gain on
investments ........................................ 1,028,440
Net unrealized appreciation on investments (note 1) ... 9,635,051
------------
Net assets at market value $ 66,374,036
============
Shares outstanding (note 4) ........................... 3,416,524
Net asset value per share .............................$ 19.43
============
<CAPTION>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<S> <C>
Investment income:
Interest ....................................... $ 217,581
Dividends ...................................... 24,218
------------
Total investment income ...................... 241,799
------------
Expenses:
Management fees (note 3) ....................... 251,965
Custodian fees (note 3) ........................ 6,471
Directors' fees (note 3) ....................... 1,140
Professional fees............................... 2,476
Accounting and transfer agent fees ............. 21,094
Filing fees .................................... 1,225
Printing, proxy and postage fees ............... 6,525
Other........................................... 330
------------
Total expenses ............................... 291,226
------------
Net investment loss .......................... ($49,427)
------------
Realized and unrealized gain on investments:
Net realized gain from investments ............. $ 1,028,440
Net increase in unrealized appreciation on
investments .................................. 1,259,161
------------
Net gain on investments .................... 2,287,601
------------
Net increase in net assets from operations . $ 2,238,174
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 41
OHIO NATIONAL FUND, INC.
SMALL CAP 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 loss ........................................... ($49,427) ($47,515)
Realized gain on investments .................................. 1,028,440 2,695,780
Unrealized gain on investments ................................ 1,259,161 1,661,151
------------ ------------
Net increase in assets from operations ...................... 2,238,174 4,309,416
------------ ------------
Dividends and distributions to shareholders:
Capital gains distributions ................................... (960) (2,462,490)
------------ ------------
From capital share transactions (note 4):
Received from shares sold ..................................... 9,795,649 21,481,445
Received from dividends reinvested ............................ 960 2,462,490
Paid for shares redeemed ...................................... (3,964,356) (5,950,001)
------------ ------------
Increase in net assets derived from capital share transactions 5,832,253 17,993,934
------------ ------------
Increase in net assets ..................................... 8,069,467 19,840,860
Net Assets:
Beginning of period ........................................... 58,304,569 38,463,709
------------ ------------
End of period (a) ............................................. $ 66,374,036 $ 58,304,569
============ ============
(a Includes undistributed net investment loss of ................ ($248,369) ($198,942)
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months 5-1-94
6-30-98 Years Ended December 31, to
(Unaudited) 1997 1996 1995 12-31-94
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period .................. $ 18.72 $ 18.03 $ 15.85 $ 11.99 $ 10.00
Income (loss) from investment operations:
Net investment income (loss) ......................... (0.02) (0.02) (0.08) (0.02) 0.18
Net realized and unrealized gain on investments ...... 0.73 1.54 2.80 3.95 1.94
--------- --------- --------- --------- ---------
Total income from investment operations ............. 0.71 1.52 2.72 3.93 2.12
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ................. 0.00 0.00 0.00 (0.07) (0.13)
Distributions from net realized capital gains ........ 0.00 (0.83) (0.54) 0.00 0.00
--------- --------- --------- --------- ---------
Total distributions ................................. 0.00 (0.83) (0.54) (0.07) (0.13)
--------- --------- --------- --------- ---------
Net asset value, end of period ........................ $ 19.43 $ 18.72 $ 18.03 $ 15.85 $ 11.99
========= ========= ========= ========= =========
Total return .......................................... 3.78%(b) 8.47% 17.71% 33.01% 21.26%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets .............. 0.92%(a) 0.94% 0.96% 0.96% 0.91%(a,d)
Ratio of net investment income to average net assets . (0.16%)(a) (0.11%) (0.48%) (0.11%) 3.27%(a,d)
Portfolio turnover rate ............................... 49% 80% 70% 75% 22%
Average commission rate (c) ........................... $ 0.05 $ 0.05 $ 0.06 NR NR
Net assets at end of period (millions) ................ $ 66.4 $ 58.3 $ 38.5 $ 16.0 $ 3.3
<FN>
(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.
(d) The advisor has reimbursed certain operating expenses of the Small Cap Portfolio for the period ending December 31, 1994. Had
the advisor not reimbursed such expenses, the annualized ratio of expenses to average net assets would have been 0.95% and the
annualized ratio of net investment income to average net assets would have been 3.24%.
(NR) Not required prior to 1996
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 42
GLOBAL CONTRARIAN PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Global Contrarian Portfolio seeks to provide long-term growth of capital by
investing in foreign and domestic securities that are undervalued or presently
out of favor with other investors but have positive prospects for eventual
appreciation.
PERFORMANCE AS OF JUNE 30, 1998
AVERAGE ANNUAL TOTAL RETURNS:
One-year 7.90%
Three-year 11.55%
Since inception (3/31/95) 12.04%
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 Global Contrarian Portfolio owns mostly small and obscure stocks which we
believe are neglected. It also has exposure to commodity and/or "hard asset"
related stocks in the U.S. as well as foreign markets. Finally, it holds
emerging market debt instruments, both corporate and sovereign. Most commodities
and commodity-related stocks fell in the second quarter, including gold-related
securities. While the U.S. and foreign markets registered advances in the second
quarter, small capitalization stocks lagged large capitalization stocks in most
markets. Also, emerging markets were down sharply over that period.
The portfolio has been reducing its exposure to commodities-related
securities over the last nine months as weaker global economic growth is
anticipated in the medium-term following the Asian crisis. Simultaneously, the
portfolio recently started buying selected stocks and bonds that appear
depressed in a few Asian countries.
<TABLE>
<CAPTION>
CHANGE IN VALUE OF $10,000 INVESTMENT
Global Contrarian Portfolio
(commenced operations March 31, 1995) Morgan Stanley Captl. Intl. World Index
------------------------------------- ---------------------------------------
<S> <C> <C>
12/31/95 $10,889.95 $11,533.30
12/31/96 $12,206.78 $13,087.15
12/31/97 $13,630.50 $15,048.61
06/30/98 $14,466.05 $17,244.21
<FN>
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.
</FN>
</TABLE>
TOP 10 STOCKS AS OF JUNE 30, 1998
% of Portfolio
1. Sagem ADP 3.09
2. Manpower Inc 2.28
3. San Juan Basin Royalty Trust 1.88
4. Kuhne & Nagel International AG,
Bearer Share 1.88
5. Emin Leydier 1.82
6. Buderus AG 1.73
7. Franklin Electric Co, Inc 1.59
8. Shaw Brothers (Hong Kong) Limited 1.51
9. Edipresse SA, Bearer 1.50
10. Bank for International Settlements
(US Tranche) 1.50
TOP 5 COUNTRIES AS OF JUNE 30, 1998
% of Portfolio
United States 32.37
France 9.77
Switzerland 7.02
Japan 6.90
New Zealand 3.20
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> 43
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
MARKET
SHARES U.S. COMMON STOCK VALUE
- --------------------------------------------------------------
<S> <C> <C>
BUILDING MATERIALS (1.2%)
15,000 Justin Industries Inc. $ 241,875
-------------
CAPITAL GOODS (3.4%)
4,000 Bandag Inc. Class 'A' 138,000
8,000 Blount International Inc. CL 'A' 228,000
4,700 Franklin Electric Co., Inc. 319,600
-------------
685,600
-------------
CHEMICALS (1.1%)
20,000 Lawter International Inc. 217,500
-------------
CONSUMER PRODUCTS (1.5%)
1,000 Allen Organ Co. Class 'B' 40,250
3,000 Dole Foods Company, Inc. 149,062
5,000 Jostens Inc. 120,625
-------------
309,937
-------------
ELECTRICAL EQUIPMENT (2.3%)
5,000 UCAR International Inc. 145,937
12,000 Woodhead Industries, Inc. 184,500
5,200 Zero Corporation 147,550
-------------
477,987
-------------
ENERGY, OIL & NATURAL GAS (4.2%)
50,000 Kaneb Services Inc. 271,875
30,000 Matrix Service Co. 217,500
50,000 San Juan Basin Royalty Trust 378,125
-------------
867,500
-------------
FINANCE (1.7%)
7,500 *East Texas Financial Services 104,063
8,000 *First Federal Financial Services 136,000
8,500 Redwood Financial Inc. 111,031
-------------
351,094
-------------
FORESTRY PRODUCTS (1.7%)
1,000 Georgia Pacific Corp. 58,938
1,000 Georgia Pacific Corp. Timber Group 23,062
5,000 Greif Brothers Corp. Class 'A' 186,875
1,500 Rayonier Inc. 69,000
-------------
337,875
-------------
METALS AND MINING (1.4%)
150 Case Pomeroy, Inc. Class A 154,500
1,000 Reynolds Metals Co. 55,938
1,700 Rochester & Pittsburgh Coal Co. 69,700
-------------
280,138
-------------
REAL ESTATE (0.2%)
2,000 Alico, Inc. 41,000
-------------
RETAIL (0.6%)
10,000 Hancock Fabrics 125,000
-------------
SERVICES (5.6%)
10,000 Borg-Warner Security Corp. 226,250
5,000 Chemed Corp. 170,313
15,000 *Kaiser Ventures Inc. 191,250
16,000 Manpower Inc. 459,000
4,000 UniFirst Corp. 100,000
-------------
1,146,813
-------------
TRANSPORTATION (0.6%)
3,500 Kenan Transport Company 115,938
-------------
TECHNOLOGY (5.0%)
20,000 BEI Electronics, Inc. $ 80,000
10,000 BEI Technologies, Inc. 191,250
8,000 Evans & Sutherland Corp. 201,500
5,000 NCR Corporation 162,500
8,000 Teltrend, Inc. 137,500
10,000 Wang Laboratories, Inc. 254,375
-------------
1,027,125
-------------
TOTAL U.S. COMMON STOCK
(30.5%) (COST $5,177,174) $6,225,382
-------------
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- --------------------------------------------------------------
<S> <C> <C>
FRANCE (9.3%)
5,000 Emin-Leydier (14) $367,107
300 Eurafrance (35) 188,091
700 Marine Wendel (35) 128,545
800 Groupe NSC (19) 119,982
900 Rougier SA (14) 60,733
1,490 Sabeton (35) 197,899
1,500 Sagem (8) 620,700
400 Sucriere Pithiviers (1) 210,992
-------------
1,894,049
-------------
SWITZERLAND (6.9%)
40 Bank of Intl. Settlements (3) 261,928
1,100 Edipresse SA, Bearer (25) 301,876
500 Kuehne & Nagel Intl. AG (32) 378,414
500 Sika Finanz AG Bearer (7) 197,762
700 Societe Generale d'Affichage DRC(20) 274,103
-------------
1,414,083
-------------
JAPAN (6.8%)
7,000 Benesse Corp. 243,972
30,000 Dai Tokyo Fire & Marine Ins. Co.(18) 104,128
25,000 Dowa Fire & Marine Ins. Co. (18) 74,557
2,500 Fuji Photo Film Co. Ltd. (9) 86,773
2,500 Fuji Photo Film Co. Ltd. ADR (9) 86,406
8,000 Koekisha Co. Ltd. (29) 124,753
10,000 Makita Corp. (9) 114,908
20,000 Nittetsu Mining Co., Ltd. (22) 71,862
4,000 Secom Co., Ltd. (29) 230,247
1,000 Toho Co. (20) 104,919
25,000 Yomeishu Seizo Co. Ltd. (13) 147,318
-------------
1,389,843
-------------
HONG KONG (2.9%)
999,606 CDL Hotels Intl. Ltd. (16) 296,772
500,000 Shaw Brothers (Hong Kong) Ltd.(20) 303,343
-------------
600,115
-------------
SINGAPORE (2.4%)
200,000 Clipsal Ind. Inc. (4) 179,000
387,000 DelGro Corp. Ltd. (35) 277,657
85,000 Intraco Ltd. (34) 26,460
-------------
483,117
-------------
GERMANY (2.1%)
100 Axel Springer Verlag AG (20) 73,562
700 Buderus AG (5) 348,451
-------------
422,013
-------------
(continued)
</TABLE>
<PAGE> 44
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- --------------------------------------------------------------
<S> <C> <C>
NEW ZEALAND (2.0%)
200,000 Carter Holt Harvey Ltd. (14) $173,930
200,000 Mainfreight Ltd. (29) 129,413
300,000 Shortland Properties (27) 100,942
-------------
404,285
-------------
LATIN AMERICA (1.4%)
10,000 Antofagasta Holdings plc (21) 42,102
75,000 Ledesma SA (1) 69,760
20,000 Quinenco S.A. (34) 180,000
-------------
291,862
-------------
MEXICO (1.3%)
515,000 Grupo Fernandez Editors (25) 72,932
62,500 Industrias Penoles, SA de CV (1) 198,623
-------------
271,555
-------------
SOUTH AFRICA (1.3%)
7,000 Anglogold Ltd. ADR (22) 138,250
22,500 Driefontein ADR (22) 115,313
2,500 Western Areas Gold Mining Ltd. 7,884
-------------
261,447
-------------
CHINA (0.8%)
400,000 Thakral Corp. Ltd. (34) 168,000
-------------
NETHERLANDS (0.6%)
3,000 Bosch & Keuning NV (20) 103,030
2,080 German City Estates NV (27) 26,022
-------------
129,052
-------------
THAILAND (0.5%)
20,000 Oriental Hotel (16) 101,663
-------------
BELGIUM (0.5%)
700 Engrais Rosier SA (34) 91,987
-------------
CANADA (0.4%)
5,000 Noranda, Inc. (21) 86,492
-------------
INDONESIA (0.3%)
750,000 PT Komatsu Rigs Tender (12) 63,345
-------------
SWEDEN (0.2%)
5,000 Bylock & Nordsjofrakt AB 'B'(32) 16,631
5,000 Gorthon Lines (32) 27,823
-------------
44,454
-------------
TOTAL FOREIGN COMMON STOCK
(39.7%) (COST $8,488,443) $8,117,362
-------------
TOTAL COMMON STOCKS
(70.2%) (Cost $13,665,617) $14,342,744
-------------
<CAPTION>
MARKET
SHARES FOREIGN PREFERRED STOCK VALUE
-----------------------------------------------------------
<S> <C> <C>
INDONESIA (1.5%)
7,000 Freeport McMoRan Pfd. 'C' (22) $132,563
10,000 Freeport McMoRan Pfd. 'D' (22) 168,750
-------------
301,313
-------------
NEW ZEALAND (1.2%)
50,000 Independent Press Communications(25) 242,001
-------------
TOTAL FOREIGN PREFERRED STOCK
(2.7%) (COST $676,608) $543,314
-------------
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
-------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (4.8%)
$124,000 Air & Water Technology Corp.
8.000% due 05-15-15 (29) $104,935
50,000 Cheil Jedang
3.000% due 12-31-06 (9) 54,250
200,000 Lukinter Finance
1.000% due 11-03-03 (12) 139,000
155,000 IRSA
4.500% due 08-02-03 (4) 167,400
250,000 Tipco Asphalt Co.
2.750% due 09-19-06 (6) 182,500
100,000 Samsung Electronics Co. Ltd.
due 12-31-07 (11) 79,250
300,000 ICTSI
1.750% due 03-13-04 (6) 257,250
-------------
984,585
-------------
NON U.S. DOLLAR (0.4%)
2,000 FF Immobilier Hotelier
5.000% 01-01-01 (25) $72,597
-------------
TOTAL CONVERTIBLE DEBENTURES
(5.2%) (COST $1,073,365) $1,057,182
-------------
<CAPTION>
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
-------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (2.6%)
$50,000 Cemex SA
9.500% due 09-20-01 (6) $52,438
145,500 Federal Republic Of Brazil
6.687% due 04-15-06 (15) 119,856
200,000 Grupo Televisa
13.250% due 05-15-08 (20) 161,500
190,000 Republic of Argentina FRB
6.687% due 03-31-05 (15) 168,031
50,000 PT Pabrik Kertas Tjiwi Kimia
13.250% due 08-01-01 (14) 39,750
-------------
541,575
-------------
TOTAL NON-CONVERTIBLE BONDS
(2.6%) (COST $485,061) $541,575
-------------
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (4.3%)
$882,000 Ford Motor Credit Co.
5.750% 07-02-98 $881,859
-------------
DIVERSIFIED (4.7%)
961,000 Temple Inland Inc.
6.100% 07-09-98 959,697
-------------
FINANCIAL (2.7%)
542,000 New Holland Credit
5.700% 07-01-8 542,000
-------------
</TABLE>
(continued)
<PAGE> 45
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------------
<S> <C> <C>
FORESTRY AND PAPER PRODUCTS (3.1%)
$631,000 Carter Holt Harvey Ltd.
5.680% 07-07-98 $630,403
-------------
OIL, ENERGY & NATURAL GAS (4.1%)
989,000 Burlington Resources
5.850% 07-10-98 844,763
-------------
TOTAL SHORT-TERM NOTES
(18.9%) (COST $3,858,722) $3,858,722
-------------
TOTAL HOLDINGS
(COST $19,759,373) (A) $20,343,537
=============
<FN>
(a) Also represents cost for Federal Income tax purposes.
* Non-income producing securities.
Foreign Currencies
FF - French Franc
</FN>
</TABLE>
<TABLE>
<CAPTION>
Industry Classifications
<S> <C> <C> <C> <C> <C>
(1) Agriculture (12) Energy and Oil (23) Packaging
(2) Automotive (13) Food & Beverage (24) Paper
(3) Banking (14) Forest Products (25) Publishing
(4) Building Products (15) Governmental (26) Rail Equipment
(5) Capital Goods (16) Hotels (27) Real Estate
(6) Cement (17) Health Care (28) Retailing
(7) Chemicals (18) Insurance (29) Services
(8) Computer Products (19) Machinery (30) Steel
(9) Consumer Products (20) Media (31) Textile
(10) Electrical Products (21) Metal (non-ferrous) (32) Transportation
(11) Electronics (22) Mining (33) Utilities
(34) Miscellaneous
(35) Holding Companies
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 46
OHIO NATIONAL FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<S> <C>
ASSETS:
Investments in securities at market value
(note 1) (cost $19,759,373) ...................... $20,343,537
Cash in bank ....................................... 136,635
Unrealized gain on forward currency contracts
(note 5) ......................................... 70,823
Receivable for fund shares sold .................... 73,677
Dividends and accrued interest receivable .......... 64,609
Other .............................................. 80
------------
Total assets ..................................... 20,689,361
------------
LIABILITIES:
Unrealized loss on forward currency contracts
(note 5) ......................................... 218
Payable for securities purchased ................... 220,921
Payable for investment management services
(note 3) ......................................... 15,147
Other accrued expenses ............................. 22,216
------------
Total liabilities ................................ 258,502
------------
Net assets at market value ............................ $20,430,859
============
Net assets consist of:
Par value, $1 per share ............................ $1,667,659
Paid-in capital in excess of par value ............. 17,319,367
Accumulated undistributed net realized gain
on investment .................................... 786,446
Net unrealized appreciation (depreciation) on:
Investments (note 1) ............................. 584,164
Foreign currency related transactions ............ (494)
Forward currency contracts (note 5) .............. 70,605
Undistributed net investment income ................ 3,112
------------
Net assets at market value ............................ $20,430,859
============
Shares outstanding (note 4) ........................... 1,667,659
Net asset value per share ............................. $12.25
============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<S> <C>
Investment income:
Interest ....................................................... $169,720
Dividends (net of $13,464 foreign taxes withheld) .............. 184,948
-----------
Total investment income ...................................... 354,668
-----------
Expenses:
Management fees (note 3) ....................................... 87,334
Custodian, accounting and transfer agent fees (note 3) ......... 40,238
Directors' fees (note 3) ....................................... 165
Professional fees .............................................. 125
Filing fees .................................................... 272
Printing, proxy and postage fees ............................... 1,937
Other .......................................................... 97
-----------
Total expenses ............................................... 130,168
-----------
Net investment income ........................................ $224,500
-----------
Realized and unrealized gain on investments and foreign currency:
Net realized gain from:
Investments ................................................ $786,446
Forward currency related transactions ...................... 100,544
Net increase (decrease) in unrealized appreciation
(depreciation) on:
Investments ................................................ (52,077)
Foreign currency related transactions ...................... 4,322
-----------
Net gain on investments .................................... 839,235
-----------
Net increase in net assets from operations ................. $1,063,735
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 47
OHIO NATIONAL FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
6-30-98 Year Ended
(Unaudited) 12-31-97
------------ ------------
<S> <C> <C>
From operations:
Net investment income ................................................................... $224,500 $338,300
Realized gain on investments and foreign currency transactions .......................... 886,990 923,298
Unrealized gain (loss) on investments and foreign currency transactions ................. (47,755) 212,957
------------ ------------
Net increase in assets from operations ................................................. 1,063,735 1,474,555
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ............................................... (321,910) (430,394)
Capital gains and foreign currency related transaction distributions .................... 0 (1,126,860)
------------ ------------
Total dividends and distributions ...................................................... (321,910) (1,557,254)
------------ ------------
From capital share transactions (note 4):
Received from shares sold ............................................................... 2,939,211 7,002,064
Received from dividends reinvested ...................................................... 321,910 1,557,254
Paid for shares redeemed ................................................................ (1,595,587) (1,742,872)
------------ ------------
Increase in net assets derived from capital share transactions ......................... 1,665,534 6,816,446
------------ ------------
Increase in net assets ................................................................ 2,407,359 6,733,747
NET ASSETS:
Beginning of period ..................................................................... 18,023,500 11,289,753
------------ ------------
End of period (a) ....................................................................... $20,430,859 $18,023,500
============ ============
(a) Includes undistributed (overdistributed) net investment income of ................... $3,112 ($22)
============ ============
<CAPTION>
FINANCIAL HIGHLIGHTS
Six Months Ended Year Year 4-1-95
6-30-98 Ended Ended to
(Unaudited) 12-31-97 12-31-96 12-31-95
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period ..................... $11.73 $11.66 $10.80 $10.00
Income from investment operations:
Net investment income ................................... 0.14 0.29 0.28 0.13
Net realized and unrealized gain on investments and
foreign currency transactions .......................... 0.58 1.03 1.00 0.75
------------ ------------ ------------ ------------
Total income from investment operations ............... 0.72 1.32 1.28 0.88
------------ ------------ ------------ ------------
Less distributions:
Dividends from net investment income .................... (0.20) (0.38) (0.24) (0.08)
Distributions from net realized capital gains and foreign
currency related transactions .......................... 0.00 (0.87) (0.18) 0.00
------------ ------------ ------------ ------------
Total distributions ................................... (0.20) (1.25) (0.42) (0.08)
------------ ------------ ------------ ------------
Net asset value end of period ............................ $12.25 $11.73 $11.66 $10.80
============ ============ ============ ============
Total return ............................................. 6.13% (b) 11.67% 12.09% 8.89%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets ................. 1.33% (a) 1.32% 1.29% 1.58%(a,d)
Ratio of net investment income to average net assets .... 2.29% (a) 2.33% 2.44% 1.64%(a,d)
Portfolio turnover rate .................................. 28% 29% 18% 6%(a)
Average commission rate (c) .............................. $0.01 $0.01 $0.03 NR
Net assets at end of period (millions) ................... $20.4 $18.0 $11.3 $4.4
<FN>
(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.
(d) The advisor has reimbursed certain operating expenses of the Global Contrarian Portfolio for the period ended December 31,
1995. Had the advisor not reimbursed such expenses, 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%.
(NR) Not required prior to 1996.
</FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 48
AGGRESSIVE GROWTH PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The principal investment objective of the Aggressive Growth Portfolio is to seek
capital growth. The portfolio invests in a diversified collection of securities
believed to represent attractive growth opportunities.
PERFORMANCE AS OF JUNE 30, 1998
AVERAGE ANNUAL TOTAL RETURNS:
One-year 15.60%
Three-year 12.13%
Since inception (3/31/95) 14.55%
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
Most U.S. stock prices peaked in mid-April and subsequently rolled over for the
rest of the quarter amid concerns about corporate earnings and weakness stemming
from the Asian financial crisis. But blue chip "mega-cap" stocks held their
ground as investors sought their relative safety and liquidity, driving the
popular cap-weighted market indexes to new highs in late June. Thus the gap
between the performance of largest-cap stocks and the rest of the market, which
began in 1995, widened further.
The Aggressive Growth Portfolio performed in line with the small- and mid-cap
indexes. We continue to be pleased with the underlying fundamental performance
of the companies we hold in the portfolio. In the past six months, we have
personally met with the management of more than 75 percent of the companies in
which the portfolio is currently invested. Our trips into the field to "kick the
tires" have confirmed that the portfolio is invested in growing companies that
are doing well. With few exceptions, these companies have been meeting or
exceeding their profit targets.
In addition, the valuations of the portfolio's holdings are attractive. The
portfolio carries an overall price/earnings ratio (on 1999 earnings) below that
of the S&P 500 (19.5x versus 22.4x) even though our holdings are growing their
profits an average of 22 percent compared with just 7 percent for the S&P 500
companies.
Our outlook for the general market is mixed. Valuations are attractive for
small company stocks but rich for the handful of companies that dominate the S&P
500. Profit expectations have a negative bias, but there are pockets of the
market where the profit outlook remains bright. Finally, strong money flows
continue to support a rising market environment.
<TABLE>
<CAPTION>
CHANGE IN VALUE OF $10,000 INVESTMENT
Aggressive Growth Portfolio
(commenced operations March 31, 1995) NASDAQ Composite Index
------------------------------------- ----------------------
<S> <C> <C>
12/31/95 $12,695.39 $12,873.74
12/31/96 $12,792.58 $15,797.41
12/31/97 $14,395.64 $19,216.18
06/30/98 $15,547.29 $19,216.18
<FN>
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.
</FN>
</TABLE>
TOP 10 STOCKS AS OF JUNE 30, 1998
% of Portfolio
1. Associates First Capital Corp 3.95
2. Beneficial Corp 3.90
3. Coinmach Laundry Corp 3.07
4. Sybron International Corp-Wis 2.94
5. Central Garden & Pet Co 2.54
6. Equity Corporation International 2.22
7. Berg Electronics Corp 2.18
8. MGIC Investment Corp 2.16
9. Waste Management Inc 2.01
10. Clear Channel Communications 1.96
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
% of Portfolio
Consumer Cyclical 36.67
Financial Services 15.61
Health Care 10.75
Capital Goods 10.37
Technology 9.69
The prices of small company stocks are generally more volatile than the
prices of large company stocks.
<PAGE> 49
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
MARKET
SHARES COMMON STOCK VALUE
- -----------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (1.5%)
900 Dana Corp. $48,150
8,100 Harley-Davidson, Inc. 313,875
-----------
362,025
-----------
BANKING (1.8%)
1,200 Citicorp 179,100
8,875 TCF Financial Corp. 261,813
-----------
440,913
-----------
BUSINESS SERVICES (9.6%)
4,923 * Accustaff Inc. 153,844
4,875 * Consolidated Graphics, Inc. 287,625
9,425 * Lamar Advertising 338,122
3,300 * Lason Holdings Inc. 179,850
1,800 * Nova Corp. 64,350
9,703 * Outdoor Systems Inc. 271,684
9,800 * Pierce Leahy Corp. 227,850
6,900 Pittston Brink's Group 254,438
7,250 Service Master Corp. 275,953
1,200 United Stationers Inc. 77,700
2,450 Xerox Corp. 248,981
-----------
2,380,397
-----------
COMPUTER AND RELATED (7.1%)
1,400 * America Online Inc. 148,400
9,725 * Black Box Corp. 322,748
2,062 Computer Associates Intl. Inc. 114,570
13,400 * Global Imaging Systems Inc. 187,600
3,275 IBM 376,011
4,150 * Lexmark Intl. Group 253,150
6,100 * Storage Technology Corp. 264,587
4,900 * Sykes Enterprises 98,306
-----------
1,765,372
-----------
COMMUNICATIONS (1.3%)
4,600 * Davel Communications Group, Inc. 112,125
8,550 * Transcrypt Intl. Inc. 30,994
3,700 * Worldcom Inc. 179,219
-----------
322,338
-----------
CONSUMER PRODUCTS AND SERVICES (3.6%)
4,400 * 800-JR CIGAR INC. 86,900
22,875 * Equity Corporation International 549,000
2,100 Philip Morris Companies, Inc. 82,687
1,800 Rocky Shoes & Boots Inc. 25,650
3,650 Service Corporation International 156,494
-----------
900,731
-----------
DRUGS (1.2%)
35,100 * Halsey Drug Co. Inc. 83,363
2,400 Jones Pharma Inc. 79,500
1,625 McKesson Corp. 132,031
-----------
294,894
-----------
DURABLE GOODS (0.8%)
5,825 Applied Power Inc. CL. A 200,234
-----------
EDUCATIONAL PRODUCTS AND SERVICES (2.3%)
6,900 * Edutrek Intl. Inc. 176,812
10,350 * ITT Educational Services Inc. 333,788
3,100 * School Specialty Inc. 50,762
-----------
561,362
-----------
ELECTRICAL EQUIPMENT (3.5%)
27,575 * Berg Electronics Corp. $539,436
14,400 * Rayovac Corp. 326,700
-----------
866,136
-----------
ENTERTAINMENT AND LEISURE (5.7%)
12,075 * Action Performance Co. 388,664
11,700 * American Skiing Corp. 152,100
10,400 * Bally Total Fitness Holding Corp. 374,400
7,150 International Game Technology 173,388
7,362 * SCP Pool Corp. 180,369
2,250 * Viacom Inc. CL B 131,062
-----------
1,399,983
-----------
FINANCE (10.8%)
1,575 American Express Co. 162,450
4,575 Associates First Capital Corp. 978,234
3,850 Beneficial Corp. 965,081
3,550 Block, H&R Inc. 96,888
8,300 * Profit Recovery Group Intl. 231,881
1,500 Torchmark 64,050
7,000 Waddell & Reed Financial 167,563
-----------
2,666,147
-----------
FOOD & RELATED (0.3%)
1,400 * US Foodservice 66,619
-----------
HOTEL/LODGING (0.4%)
1,300 * Candlewood Hotel Co. Inc. 9,750
2,605 * Promus Hotel Corp. 100,293
-----------
110,043
-----------
INDUSTRIAL SERVICES (6.3%)
32,225 * Coinmach Laundry Corp. 761,316
10,300 * Superior Services Inc. 309,644
14,200 Waste Service Inc. 497,000
-----------
1,567,960
-----------
INSURANCE (3.5%)
10,200 * Compent Corp. 159,375
9,375 MGIC Investment Corp. 534,961
8,625 * United Dental Care Inc. 166,301
-----------
860,637
-----------
MEDIA AND PUBLISHING (3.3%)
5,850 * Chancellor Media Corp. CL A 290,489
4,450 * Clear Channel Communications 485,606
1,200 Media One group Inc. 52,725
-----------
828,820
-----------
MEDICAL AND RELATED (8.7%)
3,300 * Arterial Vascular Engineering Inc. 117,975
30,075 * Cohr Inc. 154,134
8,900 * Cytyc Corp. 145,181
2,400 * Datascope 63,750
6,358 * Henry Schein Inc. 293,263
2,100 Medtronic Inc. 133,875
15,900 PSS World Medical Inc. 232,538
700 Pfizer Inc. 76,081
6,800 * Sebratek Corp. 154,700
900 * Steris Corp. 57,234
28,850 * Sybron International Corp.-Wis. 728,463
-----------
2,157,194
-----------
</TABLE>
(continued)
<PAGE> 50
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
MARKET
SHARES COMMON STOCK VALUE
- -----------------------------------------------------------------
<S> <C> <C>
OIL, ENERGY AND NATURAL GAS (5.2%)
3,550 Ensco International Inc. $61,681
10,600 * Marine Drilling Company Inc. 169,600
9,400 * Noble Drilling Corp. 226,188
14,214 * Ocean Energy Inc. 278,061
12,000 * Transmontaigne Oil Co. 178,500
21,675 Union Pacific Resources Group Inc. 380,667
-----------
1,294,697
-----------
PRIVATE CORRECTIONS (1.7%)
18,200 * Corrections Corp. of America 427,700
-----------
REAL ESTATE AND LEASING (1.8%)
33,500 Sunstone Hotel Investors Inc. 445,969
-----------
RESEARCH AND DEVELOPMENT (0.6%)
4,900 Kendle Intl. Inc. 148,225
-----------
RESTAURANTS (2.2%)
6,900 PJ America Inc. 125,925
2,100 * Papa Johns Intl. Inc. 82,819
23,975 * Rainforest Cafe Inc. 332,653
-----------
541,397
-----------
RETAIL (10.4%)
20,225 * Central Garden and Pet Co. 629,503
500 Fastenal Co. 23,219
1,150 Harcourt General Inc. 68,425
1,750 * MSC Industrial Direct Co. CL A 242,250
37,400 * Movie Gallery Inc. 297,975
2,200 Pier 1 Imports Inc. 93,112
5,800 Regis Corp. Minn RJQ 133,031
9,500 * Renters Choice Inc. 360,363
4,600 Rite Aid Corp. 172,787
5,950 * Staples Inc. 189,541
13,300 * Wilmar Industries Inc. 339,150
3,825 * Zale Corp. 45,333
-----------
2,594,689
-----------
TRANSPORTATION & EQUIPMENT (3.0%)
3,500 Burlington Northern Sante Fe 343,656
11,350 * Hub Group Inc. CL A 239,769
1,700 Kansas City Southern Inds. Inc. 84,362
5,725 Rollins Truck Leasing Corp. 70,847
-----------
738,634
===========
(96.7%) (COST $22,890,025) $23,943,116
===========
</TABLE>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM OBLIGATIONS VALUE
- -----------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (0.7%)
$70,000 US Treasury Bills
4.880% 07-30-98 $69,739
110,000 US Treasury Bills
4.580% 09-10-98 108,937
-----------
TOTAL SHORT-TERM OBLIGATIONS
(0.7%) (COST $177,826) $178,676
-----------
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -----------------------------------------------------------------
<S> <C> <C>
FINANCIAL (2.1%)
$516,000 Star Bank 5.200% due 07-01-98
repurchase price $516,007
collateralized by GNMA certificates
pool# 8375
due 02-20-24 (cost $516,000) $516,000
-----------
TOTAL REPURCHASE AGREEMENTS
(2.1%) (COST $516,000) $516,000
-----------
TOTAL HOLDINGS
(COST $23,583,851) (A) $24,637,792
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 51
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $23,583,851) ...................... $24,637,792
Cash in bank ...................................... 0
Receivable for fund shares sold ................... 60,137
Receivable for securities sold .................... 531,713
Dividends and accrued interest receivable ......... 4,750
Other ............................................. 3,020
-----------
Total assets ..................................... 25,237,412
-----------
Liabilities:
Payable for investment management services
(note 3) ......................................... 15,657
Payable for securities purchased .................. 434,348
Other accrued expenses ............................ 10,950
-----------
Total liabilities ................................ 460,955
-----------
Net assets at market value ......................... $24,776,457
===========
Net assets consist of:
Par value, $1 per share ........................... $2,072,515
Paid-in capital in excess of par value ............ 20,162,433
Accumulated undistributed net realized gain on
investments ...................................... 1,487,476
Net unrealized appreciation on investments (note 1) 1,054,033
-----------
Net assets at market value ......................... $24,776,457
===========
Shares outstanding (note 4) ........................ 2,072,515
Net asset value per share .......................... $11.95
===========
<CAPTION>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<S> <C>
Investment income:
Interest .......................................... $31,181
Dividends ......................................... 45,604
-----------
Total investment income .......................... 76,785
-----------
Expenses:
Management fees (note 3) .......................... 89,599
Custodian fees (note 3) ........................... 2,996
Directors' fees (note 3) .......................... 272
Professional fees ................................. 818
Accounting and transfer agent fees ................ 8,912
Filing fees ....................................... 337
Printing, proxy and postage fees .................. 2,724
Other ............................................. 88
-----------
Total expenses ................................... 105,746
-----------
Net investment loss .............................. ($28,961)
-----------
Realized and unrealized gain on investments:
Net realized gain from investments ................ $1,487,476
Net increase in unrealized appreciation on
investments ...................................... 189,415
-----------
Net gain on investments ......................... 1,676,891
-----------
Net increase in net assets from operations ...... $1,647,930
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 52
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
6-30-98 Year Ended
(Unaudited) 12-31-97
------------ ------------
<S> <C> <C>
From operations:
Net investment loss ....................................................................... ($28,961) ($61,720)
Realized gain on investments .............................................................. 1,487,476 1,523,817
Unrealized gain on investments ............................................................ 189,415 318,599
------------ ------------
Net increase in assets from operations ................................................... 1,647,930 1,780,696
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ................................................. 0 (172,523)
Capital gains distributions ............................................................... (34,299) (65,296)
------------ ------------
Total dividends and distributions ........................................................ (34,299) (237,819)
------------ ------------
From capital share transactions (note 4):
Received from shares sold ................................................................. 4,697,757 8,136,995
Received from dividends reinvested ........................................................ 34,299 237,819
Paid for shares redeemed .................................................................. (1,461,937) (2,034,563)
------------ ------------
Increase in net assets derived from capital share transactions ........................... 3,270,119 6,340,251
------------ ------------
Increase in net assets .................................................................. 4,883,750 7,883,128
Net Assets:
Beginning of period ....................................................................... 19,892,707 12,009,579
------------ ------------
End of period (a) ......................................................................... $24,776,457 $19,892,707
============ ============
(a) Includes net investment loss of .......................................................... ($28,961) ($61,720)
============ ============
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Six Months Ended Year Year 4-1-95
6-30-98 Ended Ended to
(Unaudited) 12-31-97 12-31-96 12-31-95
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period ...................... $11.09 $10.03 $11.84 $10.00
Income from investment operations:
Net investment income (loss) ......................... (0.02) (0.05) 1.64 1.56
Net realized and unrealized gain (loss) on investments 0.90 1.29 (1.59) 1.08
------------ ------------ ------------ ------------
Total income from investment operations ............. 0.88 1.24 0.05 2.64
------------ ------------ ------------ ------------
Less distributions:
Dividends from net investment income ................. 0.00 (0.14) (1.86) (0.80)
Distributions from net realized capital gains ........ (0.02) (0.04) 0.00 0.00
------------ ------------ ------------ ------------
Total distributions ................................. (0.02) (0.18) (1.86) (0.80)
------------ ------------ ------------ ------------
Net asset value, end of period ............................ $11.95 $11.09 $10.03 $11.84
============ ============ ============ ============
Total return .............................................. 8.00%(b) 12.53% 0.76% 26.95%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets .............. 0.94%(a) 0.97% 1.01% 1.02%(a)
Ratio of net investment income to average net assets . (0.26%)(a) (0.40%) 15.81% 18.18%(a)
Portfolio turnover rate ................................... 105% 193% 1987% 1488%
Average commission rate (c) ............................... $0.06 $0.06 $0.03 NR
Net assets at end of period (millions) .................... $24.8 $19.9 $12.0 $4.0
<FN>
(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.
</FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 53
CORE GROWTH PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The objective of the Core Growth Portfolio is to provide long-term capital
appreciation.
<TABLE>
<CAPTION>
PERFORMANCE AS OF JUNE 30, 1998
TOTAL RETURN:
<S> <C>
One-year 9.81%
Since inception (1/3/97) 7.04%
</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
Cumulatively, for the first half of 1998, the Core Growth Portfolio outperformed
the Russell Midcap Growth Index by 317 basis points and the Russell 2000 Growth
Index by 959 basis points.
It appears that the market continues to favor large cap stocks even though,
on average, earnings estimates for small cap companies are accelerating while
earnings estimates for large cap companies are decelerating. One analyst
recently observed that, "If the second quarter 1998 profit growth for the small-
and mid-cap segments of the market comes in close to the expectation, it will be
the fifth consecutive quarter in which profit growth for those segments has
surpassed that of the large caps." The consensus estimated average growth rate
for large-cap companies for the next 12 months is 6 percent compared with 10.9
percent for the preceding 12 months. In contrast, the consensus average
estimated growth rate for the Russell 2000 Growth Index companies is 39 percent
over the next 12 months compared with 24 percent over the past 12 months. In
addition to the superior growth forecasts, we believe small-cap stocks are
attractively valued at present. By our reckoning, they now stand at levels seen
every decade or two.
<TABLE>
<CAPTION>
CHANGE IN VALUE OF $10,000 INVESTMENT
Core Growth Portfolio
(commenced operations January 3, 1997 NASDAQ Composite Index
------------------------------------- ----------------------
Date Value Value
---- ----- -----
<S> <C> <C>
12/31/96 $10,000.00 $10,000.00
06/30/97 $10,080.84 $11,776.00
12/31/97 $9,691.92 $13,169.10
06/30/98 $11,069.14 $15,145.78
<FN>
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.
</FN>
</TABLE>
TOP 10 STOCKS AS OF JUNE 30, 1998
% of Portfolio
1. Dell Computers 2.91
2. HBO & Co 2.64
3. America Online 2.59
4. JD Edwards & Co 2.54
5. Saville Systems Irel ADR 2.49
6. Citrix Systems Inc 2.38
7. Clear Chan Com 2.28
8. Cambridge Technology Partners 2.14
9. Visio Software 1.96
10. Advanced Fibre Communications 1.85
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
% of Portfolio
Technology 39.08
Consumer Cyclical 29.20
Health Care 7.84
Capital Goods 4.00
Consumer Staples 2.89
The prices of small company stocks are generally more volatile than the prices
of large company stocks.
<PAGE> 54
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
CORE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------
<S> <C> <C> <C>
AUTOMOTIVE AND RELATED (2.3%)
2,500 * Central Parking $113,750
4,000 Harley Davidson, Inc. 155,000
------------
268,750
------------
BUSINESS SERVICES (19.2%)
2,800 * Abacus Direct Corp. 145,425
6,200 * Apollo Group CL A 204,988
4,500 * Computer Horizons 166,781
2,900 * DA Consulting Group Inc. 41,688
6,000 * Daou Systems Inc. 137,250
1,500 * Documentum Inc. 72,000
2,800 * DST Systems, Inc. 156,800
5,800 * Ecsoft Group 187,775
3,200 * Gartner Group 112,000
5,000 * I2 Technologies 175,625
6,100 * Intl. Telcomm Data Systems 176,900
5,100 * Radiant Systems 73,950
6,200 * RWD Technologies, Inc. 146,475
2,500 * Sterling Commerce, Inc. 121,250
5,700 * Saville Systems 285,713
------------
2,204,620
------------
COMPUTER AND RELATED (22.5%)
7,000 * Bea Systems Inc. 160,563
2,400 * BMC Software Inc. 124,650
5,100 * Cadence Design Systems, Inc. 159,375
4,500 * Cambridge Technology Partners 245,812
4,000 * Citrix Systems 273,500
2,300 * Compuware Corp. 117,587
3,600 * Dell Computer Corp. 334,125
6,600 * Filenet Corp. 190,575
6,800 * JD Edwards & Co. 291,975
1,300 * Manugistics 32,175
600 * Microsoft Corp. 65,025
6,200 * Quadramed Corp. 169,338
2,300 * Software AG Systems 67,275
8,600 * Summit Design, Inc. 126,313
4,700 * Vision Software 224,425
------------
2,582,713
------------
COMMUNICATIONS (7.2%)
5,300 * Advanced Fibre Communications 212,331
1,400 Lucent Technology 116,462
3,200 * Star Telecommunications Inc. 71,600
3,500 * Tekelec 156,625
1,600 * Tellabs Inc. 114,600
1,200 * Univsion Communications 44,700
2,300 * Worldcom Inc. 111,406
------------
827,724
------------
DRUGS (1.7%)
3,200 * Parexel International Corp. 196,425
------------
ELECTRICAL EQUIPMENT (3.4%)
2,200 * Applied Micro Circuits Corp. 56,925
6,400 * Celestica Inc.. 120,000
3,100 * Lernout & Hausp Speech Products 185,031
1,350 * Level One Communications 31,725
------------
393,681
------------
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------
<S> <C> <C>
ENTERTAINMENT AND LEISURE (2.9%)
3,400 * Cinar Films Inc. CL B $66,300
6,300 * Family Golf Center 159,469
1,600 * Premier Parks 106,600
------------
332,369
------------
FINANCIAL SERVICES (1.8%)
2,700 Associates First Capital 207,563
------------
FOOD & RELATED (1.4%)
2,800 * Suiza Foods Corp. 167,125
------------
INDUSTRIAL SERVICES (0.4%)
1,500 * Hanover Compressor 40,594
------------
INTERNET SERVICE PROVIDER (2.6%)
2,800 * America On Line Inc. 296,800
------------
MEDIA AND PUBLISHING (3.9%)
2,400 * Clear Channel Communications 261,900
3,100 * Jacor Communications 182,900
------------
444,800
------------
MEDICAL AND RELATED (8.9%)
8,600 HBO & CO 303,150
5,300 * Health Management Assoc., Inc. 177,219
1,400 * Healthcare Financial 85,837
3,600 * Healthsouth Corp. 96,075
3,600 * Medquist Inc. 103,950
3,000 Omnicare Inc. 114,375
3,400 * Safeskin Corp. 139,825
------------
1,020,431
------------
NETWORK PRODUCTS AND SECURITY (3.8%)
3,400 * Axent Technologies Inc. 104,125
1,900 * Check Point Software 62,225
1,100 * Cisco Systems 101,269
1,950 * Network Assoc. Inc. 93,356
2,500 * Xylan Corp. 74,531
------------
435,506
------------
OIL, ENERGY AND NATURAL GAS (1.8%)
1,700 * Friede Goldman International, Inc. 49,088
3,500 * Global Industries Ltd. 59,062
5,200 * Varco International, Inc. 103,025
------------
211,175
------------
RETAIL (3.7%)
1,000 * CDW Computer Centers, Inc. 50,000
1,200 * General Nutrition 37,350
2,800 * Hibbett Sporting Goods, Inc. 112,000
3,900 * NBTY Inc. 71,662
1,800 * United Rentals Inc. 75,600
1,300 * Whole Food Market, Inc. 78,650
------------
425,262
------------
TEXTILES (1.5%)
4,800 * Jones Apparel Group, Inc. 175,500
------------
</TABLE>
(continued)
<PAGE> 55
<TABLE>
<CAPTION>
ONE FUND, INC.
CORE GROWTH PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION (1.6%)
2,400 * Coach USA Inc. $109,500
3,300 * Motivepower Industries, Inc. 80,850
------------
190,350
------------
TOTAL COMMON STOCK
(90.6%) (COST $8,327,015) $10,421,388
------------
</TABLE>
* Non income producing security.
(a) Also represents cost for Federal income tax purposes.
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- --------------------------------------------------------------
<S> <C> <C>
FINANCIAL (10.5%)
$182,000 Star Bank 5.200% due 07-01-98
repurchase price $1,211,175
collateralized by GNMA certificates,
pool # 8375
due 02-20-24 (cost $1,211,000) $1,211,000
------------
TOTAL REPURCHASE AGREEMENTS
(10.5%) (COST $1,211,000) $1,211,000
------------
TOTAL HOLDINGS
(COST $9,538,015)(A) $11,632,388
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 56
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
CORE GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $9,538,015) ...................... $11,632,388
Cash in bank ..................................... 126
Receivable for fund shares sold .................. 22,422
Receivable for fund securities sold .............. 68,777
Dividends and accrued interest receivable ........ 384
Other ............................................ 685
------------
Total assets .................................... 11,724,782
------------
Liabilities:
Payable for securities purchased ................. 213,078
Payable for investment management services
(note 3) ........................................ 8,343
Other accrued expenses ........................... 4,815
------------
Total liabilities ............................... 226,236
------------
Net assets at market value ........................ $11,498,546
============
Net assets consist of:
Par value, $1 per share .......................... $1,039,692
Paid-in capital in excess of par value ........... 9,083,030
Accumulated undistributed net realized loss on
investments ..................................... (718,549)
Net unrealized appreciation on investments (n .... 2,094,373
------------
Net assets at market value ........................ $11,498,546
============
Shares outstanding (note 4) ....................... 1,039,692
Net asset value per share ......................... $11.06
============
<CAPTION>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<S> <C>
Investment income:
Interest ......................................... $24,340
Dividends ........................................ 2,786
-----------
Total investment income ......................... 27,126
-----------
Expenses:
Management fees (note 3) ......................... 48,314
Custodian fees (note 3) .......................... 3,269
Directors' fees (note 3) ......................... 272
Professional fees ................................ 659
Accounting and transfer agent fees ............... 4,874
Filing fees ...................................... 262
Printing, proxy and postage fees ................. 834
Other ............................................ 45
-----------
Total expenses .................................. 58,529
-----------
Net investment loss ............................. ($31,403)
-----------
Realized and unrealized gain (loss) on investments:
Net realized loss from investments ............... ($270,982)
Net increase in unrealized appreciation on
investments .................................... 1,695,378
-----------
Net gain on investments ........................ 1,424,396
-----------
Net increase in net assets from operations ..... $1,392,993
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 57
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
CORE GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended 1-3-97
6-30-98 to
(Unaudited) 12-31-97
------------ ------------
<S> <C> <C>
From operations:
Net investment loss ...................................................... ($31,403) ($11,892)
Realized loss on investments ............................................. (270,982) (447,567)
Unrealized gain on investments ........................................... 1,695,378 398,995
------------ ------------
Net increase (decrease) in assets from operations ...................... 1,392,993 (60,464)
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ................................ 0 (3,539)
------------ ------------
From capital share transactions (note 4):
Received from shares sold ................................................ 2,276,927 12,368,097
Received from dividends reinvested ....................................... 0 3,539
Paid for shares redeemed ................................................. (1,715,407) (2,763,600)
------------ ------------
Increase in net assets derived from capital share transactions .......... 561,520 9,608,036
------------ ------------
Increase in net assets ................................................ 1,954,513 9,544,033
Net Assets:
Beginning of period ...................................................... 9,544,033 0
------------ ------------
End of period (a) ........................................................ $11,498,546 $9,544,033
============ ============
(a) Includes net investment loss of ....................................... ($31,403) ($11,892)
============ ============
<CAPTION>
FINANCIAL HIGHLIGHTS
Six Months Ended 1-3-97
6-30-98 to
(Unaudited) 12-31-97
------------ ------------
<S> <C> <C>
Per share data:
Net asset value, beginning of period ...................................... $9.68 $10.00
Income (loss) from investment operations:
Net investment loss ...................................................... (0.03) (0.02)
Net realized and unrealized gain (loss) on investments ................... 1.41 (0.30)
------------ ------------
Total income (loss) from investment operations .......................... 1.38 (0.32)
------------ ------------
Net asset value, end of period ............................................ $11.06 $9.68
============ ============
Total return .............................................................. 14.21% (b) (3.08%)
Ratios and supplemental data:
Ratio of expenses to average net assets .................................. 1.14% (a) 1.11%
Ratio of net investment loss to average net assets ....................... (0.61%) (a) (0.18%)
Portfolio turnover rate ................................................... 54% 65%
Average commission rate (c) ............................................... $0.05 $0.05
Net assets at end of period (millions) .................................... $11.5 $9.5
<FN>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized
(c) Represents the total dollar amount of commissions paid on equity security transactions divided by the total number of shares
purchased and s
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 58
GROWTH & INCOME PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Growth & Income Portfolio's investment objective is long-term total return.
PERFORMANCE AS OF JUNE 30, 1998
TOTAL RETURN:
One-year 27.51%
Since inception (1/3/97) 27.97%
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 Growth & Income Portfolio remains overweighted in the cable television,
communication and technology industries. Among the portfolio's strongest
performers during the first half were our cable television stocks, which
benefited from increased merger-and-acquisition activity and other trends.
Tele-Communications, Inc. performed well as AT&T announced plans to acquire TCI.
The proposed deal has fueled TCI's shares and propelled many other cable stocks.
TCI operates multi-channel video and telecom distribution networks and provides
programming services abroad.
We also believe selective internet stocks are attractive. Health care also
comprises a substantial portion of the portfolio. Although health care and
biotech stocks did not perform as well as expected during the second quarter, we
believe the portfolio's holdings look promising. Sunrise Assisted Living, a
leading provider of assisted-living services to the elderly, operates 68
facilities. The company recently announced the development of 55 additional
facilities by 1999 and has also begun to explore international development and
acquisition opportunities in the United Kingdom and Canada.
Looking ahead, we remain optimistic about the growth and valuation prospects
of many smaller and mid-size companies. However, we watch the market's
attraction with large-cap stocks and look for opportunities to add some of these
larger, more liquid names to the portfolio. Change in Value of $10,000
Investment 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.
<TABLE>
<CAPTION>
CHANGE IN VALUE OF $10,000 INVESTMENT
Growth & Income Portfolio
(commenced operations January 3, 1997 Russell 2000 Index
------------------------------------- ------------------
Date Value Value
---- ----- -----
<S> <C> <C>
12/31/96 $10,000.00 $10,000.00
06/30/97 $11,334.00 $11,020.00
12/31/97 $13,657.47 $12,226.69
06/30/98 $14,452.33 $12,871.04
<FN>
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.
</FN>
</TABLE>
TOP 10 HOLDINGS AS OF JUNE 30, 1998
% of Portfolio
1. Mediaone Group Inc 1.80
2. Cox Communications 1.70
3. Sunrise Assisted Living Inc 1.61
4. Sabratek Corp 1.60
5. Tele Communications TCI Group-Ser A 1.49
6. Comcast Corporation Special CL A 1.43
7. Fore Systems Inc 1.43
8. Zapata Corp 1.39
9. System Software Assoc CV BD 7.00%
09/15/02 1.34
10. Sabratek Corp 6.00% 4/15/05 1.34
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
% of Portfolio
Computer and Related 12.75
Medical and Related 9.96
Retail 7.07
Communications 6.78
Telecommunications & Related 6.47
<PAGE> 59
OHIO NATIONAL FUND, INC.
GROWTH AND INCOME PORTFOLIO
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------
<S> <C> <C>
AEROSPACE (1.8%)
6,000 * Alliant Techsystems Inc. $379,500
10,000 Northwest Airlines 385,625
-----------
765,125
-----------
BANKING (2.4%)
32,000 Austria & New Zealand Banking 220,749
12,500 Golden State Bancorp 371,875
6,000 Mellon Bank Corp. 417,750
-----------
1,010,374
-----------
CHEMICALS (1.3%)
5,500 E I Dupont & Co. 335,813
17,000 W.R. Garce & Co. 230,344
-----------
566,157
-----------
COMMUNICATIONS (8.6%)
15,500 Advanced Radio Telecom Corp. 153,062
10,500 Comsat Corp. 297,281
28,000 Condor Technology Solutions 413,000
15,000 Electric Lightwave Inc. CL A 165,938
11,000 Frontier Corp. 346,500
25,000 IWL Communications Inc.. 220,312
65,000 Mertocall Inc. 394,063
14,000 Nextell Communications Inc. CL 348,250
30,000 Paging Network Inc. 420,000
6,000 Sprint Corp. 423,000
10,000 World Communications Inc. 484,375
-----------
3,665,781
-----------
COMPUTER & RELATED (9.0%)
5,000 Computer Associates Intl. Inc. 277,813
35,000 * Egghead Inc. 295,312
20,000 Electronics For Imaging 422,500
13,000 * Filenet Corp. 375,375
30,000 Macromedia Inc. 560,625
10,000 Metromedia Fiber Network Inc. 466,250
13,700 Microstrategy Inc. 387,025
10,000 * Sunguard Data Systems Inc. 383,750
25,000 * System Software Assoc. Inc. 178,125
15,000 Telxon Corp. 485,625
-----------
3,832,400
-----------
CONSUMER PRODUCTS (0.8%)
10,000 Fruit of the Loom Inc. CL A 331,875
-----------
DRUGS (0.8%)
7,500 Alza Corp. 324,375
-----------
ELECTRICAL EQUIPMENT (3.7%)
4,000 General Electric 364,000
7,500 Intel Corp. 555,938
10,000 LG&E Energy Corp. 270,625
11,000 Montana Power Co. 382,250
-----------
1,572,813
-----------
FINANCIAL SERVICES (3.8%)
9,000 Bear Stearns Companies Inc. 511,875
5,000 Finova Group Inc. 283,125
25,000 Golden State Bancorp 132,812
15,000 Richmond County Finl. Corp. 280,313
25,000 Southern Pacific Funding Corp. 392,188
-----------
1,600,313
-----------
FOOD & RELATED (1.4%)
60,000 Zapata Corp. 592,500
-----------
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -----------------------------------------------------------
<S> <C> <C>
HOTEL/LODGING (1.0%)
50,000 Canadian Hotel Inc. $408,015
-----------
HOUSING, FURNITURE & RELATED (2.4%)
16,000 Oakwood Homes 480,000
30,000 Shaw Industries Inc. 528,750
-----------
1,008,750
-----------
INDUSTRIAL SERVICES (3.4%)
20,000 Cendant Corp. 417,500
12,000 Simpson Mfg. Co. Inc. 463,500
12,500 * Walter Industry Inc. 236,719
10,000 Waste Management Inc. 350,000
-----------
1,467,719
-----------
INSURANCE SERVICES (2.1%)
5,000 American General Corp. 355,938
8,500 United Healthcare Corp. 539,750
-----------
895,688
-----------
MEDIA & PUBLISHING (7.5%)
25,000 Century Communications CL A 468,750
15,000 Comcast Corp. Special CL A 608,907
15,000 Cox Communications Inc. CL A 726,563
17,500 Mediaone Group Inc. 768,905
16,500 Tele Communications TCI Group 634,219
-----------
3,207,344
-----------
MEDICAL & RELATED (8.3%)
20,000 * Beverly Enterprises 276,250
19,200 Dusa Pharmaceuticals 130,800
8,000 Incyte Pharmaceuticals Inc. 273,000
30,000 * Millennium Pharmaceuticals 423,750
35,000 * Molecular Biosystems Inc. 251,563
14,000 Ocular Sciences Inc. 455,000
22,000 Phycor Inc. 364,375
30,000 Sabratek Corp. 682,500
20,000 Sunrise Assisted Living Inc. 687,500
-----------
3,544,738
-----------
METALS AND MINING (1.6%)
22,500 Barrick Gold Corp. 431,719
20,000 Euro-Nevada Mining Corp. 272,688
-----------
704,407
-----------
NETWORKING PRODUCTS (4.7%)
7,000 Ascend Communications Inc. 346,938
20,000 Concord Communications Inc. 511,250
23,000 Fore Systems Inc. 609,500
18,500 Xylan Corp. 551,531
-----------
2,019,219
-----------
NUTRITION PRODUCTS (0.6%)
18,000 Omerga Protein Corp. 276,750
-----------
OIL, ENERGY & NATURAL GAS (5.6%)
14,000 BJ Services Co. 406,875
100,000 * Bonus Resource Service Corp. 261,810
9,000 Burlington Resources Inc. 387,563
5,500 EVI Weatherford Inc. 204,188
15,000 Input/Output Inc. 267,187
11,500 Pioneer Natural Resources Inc. 274,562
10,000 Southern Union Co. 322,500
8,000 William Companies, Inc. 270,000
-----------
2,394,685
-----------
</TABLE>
(continued)
<PAGE> 60
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
GROWTH AND INCOME PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------
<S> <C> <C>
REAL ESTATE AND LEASING (2.0%)
25,100 Capital Automotive Real Estate $356,106
50,000 Equity One Inc. 512,500
-----------
868,606
-----------
RETAIL (8.2%)
9,000 BJ's Wholesale Club Inc. 365,625
16,000 Compusa Inc. 289,000
8,500 Dayton-Hudson Corp. 412,250
18,300 * Dress Barn Inc. 455,212
35,000 Genesis Direct Inc. 389,375
25,000 Kmart Corp. 481,250
10,000 Nike Inc. CL B 486,875
30,000 Petsmart Inc. 300,000
12,500 Pier 1 Imports Inc. 298,437
-----------
3,478,024
-----------
TRANSPORTATION (1.2%)
6,600 * Genesee & Wyoming Inc. CL A 125,400
7,500 Kansas City Southern Ind. Inc. 372,187
-----------
497,587
-----------
UTILITIES (0.0%)
1 US West Inc. 35
-----------
TOTAL COMMON STOCK
(82.2%) (Cost $34,074,121) $35,033,280
-----------
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ------------------------------------------------------
<S> <C> <C>
AEROSPACE (0.1%)
1,500 Trans World Airlines 8% Conv. $58,875
-----------
COMMUNICATIONS (1.2%)
22,000 Cellnet Data Systems Conv. 511,500
-----------
FOOD AND RELATED (0.6%)
5,000 Suiza Foods Corp. Conv. 248,750
-----------
ELECTRICAL EQUIPMENT (0.8%)
7,500 Pioneer Standard Electric Conv. 332,813
-----------
FINANCIAL SERVICES (1.0%)
5,000 Fleetwood Capital Trust 6% 267,500
5,100 United Cos. Financial Corp. 163,200
-----------
430,700
-----------
INDUSTRIAL SERVICES (0.6%)
9,000 Times Mirror Co. 4.25% 254,250
-----------
HOTEL/LODING (0.8%)
7,500 Servico Inc. 7% Conv. 352,500
-----------
METALS AND MINING (0.7%)
15,000 Freeport McMoran Cooper Gold 292,500
-----------
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ----------------------------------------------------------
<S> <C> <C>
TRANSPORTATION & EQUIPMENT (0.3%)
3,500 TWA Series A 8.000% Conv. $137,375
-----------
TOTAL PREFERRED STOCK
(6.1%) (COST $2,609,260) $2,619,263
-----------
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ----------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS (0.9%)
$450,000 Tele-Communications Intl.
4.500% 02-15-06 $404,438
-----------
COMPUTER AND RELATED (2.0%)
350,000 Activision Inc.
6.750% 08-15-04 301,000
700,000 System Software Associates
7.000% 09-15-02 573,125
-----------
874,125
-----------
INDUSTRIAL SERVICES (0.8%)
100,000 Alternative Living Services
5.250% 12-15-02 110,875
300,000 Key Energy Group 144A
5.000% 09-15-04 229,500
-----------
340,375
-----------
MEDICAL AND RELATED (1.9%)
100,000 American Retirement Corp.
5.750% 10-01-02 95,000
125,000 Assisted Living Concepts
6.000% 11-01-02 130,781
600,000 Sabratek Corp.
6.000% 04-15-05 572,250
-----------
798,031
-----------
TRANSPORTATION AND EQUIPMENT (0.8%)
400,000 Halter Marine Inc.
4.500% 09-15-04 324,500
-----------
TOTAL CONVERTIBLE DEBENTURES
(6.4%) (COST $2,769,562) $2,741,469
-----------
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- ----------------------------------------------------------
<S> <C> <C>
FINANCIAL (5.8%)
$2,458,000 Star Bank 5.200%, Due 07-01-98
repurchase price $2,458,355
collateralized by GNMA certificates
pool # 8375
due 02-20-24 (cost $2,458,000 $2,458,000
-----------
TOTAL REPURCHASE AGREEMENTS
(5.8%) (COST $2,458,000) $2,458,000
-----------
TOTAL HOLDINGS
(COST $41,910,943)(A) $42,852,012
============
<FN>
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 61
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
GROWTH & INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $41,910,943) .......................................... $42,852,012
Cash in bank .......................................................... 707
Receivable for fund shares sold ....................................... 276,487
Receivable for securities sold ........................................ 1,405,851
Dividends and accrued interest receivable ............................. 78,499
Other ................................................................. 9,444
-----------
Total assets ......................................................... 44,623,000
-----------
Liabilities:
Payable for securities purchased ...................................... 1,948,648
Payable for investment management services
(note 3) ............................................................. 27,934
Other accrued expenses ................................................ 1,807
-----------
Total liabilities .................................................... 1,978,389
-----------
<S> <C>
Net assets at market value ............................................. $42,644,611
===========
Net assets consist of:
Par value, $1 per share ............................................... $3,146,894
Paid-in capital in excess of par value ................................ 37,248,996
Accumulated undistributed net realized gain on
investments .......................................................... 1,300,043
Net unrealized appreciation on investments (note 1) ................... 941,069
Undistributed net investment income ................................... 7,609
-----------
Net assets at market value ............................................. $42,644,611
===========
Shares outstanding (note 4) ............................................ 3,146,894
Net asset value per share .............................................. $13.55
===========
<CAPTION>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<S> <C>
Investment income:
Interest .............................................................. $122,220
Dividends ............................................................. 161,230
-----------
Total investment income .............................................. 283,450
-----------
Expenses:
Management fees (note 3) .............................................. 133,783
Custodian fees (note 3) ............................................... 3,182
Directors' fees (note 3) .............................................. 165
Professional fees ..................................................... 302
Accounting and transfer agent fees .................................... 3,991
Filing fees ........................................................... 197
Printing, proxy and postage fees ...................................... 538
Other ................................................................. 215
-----------
Total expenses ....................................................... 142,373
-----------
Net investment income ................................................ $141,077
-----------
Realized and unrealized gain (loss) on investments:
Net realized gain from investments .................................... $1,301,479
Net decrease in unrealized appreciation on
investments .......................................................... (174,425)
-----------
Net gain on investments ............................................. 1,127,054
-----------
Net increase in net assets from operations .......................... $1,268,131
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 62
OHIO NATIONAL FUND, INC.
GROWTH & INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended 1-3-97
6-30-98 to
(Unaudited) 12-31-97
-------------- --------------
<S> <C> <C>
From operations:
Net investment income .......................................... $141,077 $83,786
Realized income on investments ................................. 1,301,479 879,953
Unrealized gain (loss) on investments .......................... (174,425) 1,115,494
-------------- --------------
Net increase in assets from operations ........................ 1,268,131 2,079,233
-------------- --------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ...................... (133,289) (83,966)
Capital gains distributions .................................... 0 (881,389)
-------------- --------------
Total dividends and distributions ............................. (133,289) (965,355)
-------------- --------------
From capital share transactions (note 4):
Received from shares sold ...................................... 24,414,075 17,263,935
Received from dividends reinvested ............................. 133,289 965,355
Paid for shares redeemed ....................................... (1,743,875) (636,888)
-------------- --------------
Increase in net assets derived from capital share transactions 22,803,489 17,592,402
-------------- --------------
Increase in net assets ...................................... 23,938,331 18,706,280
Net Assets:
Beginning of period ............................................ 18,706,280 0
-------------- --------------
End of period (a) .............................................. $42,644,611 $18,706,280
============== ==============
(a) Includes undistributed net investment income (loss) of ........... $7,609 ($180)
============== ==============
<CAPTION>
Financial Highlights
Six Months Ended 1-3-97
6-30-98 to
(Unaudited) 12-31-97
-------------- --------------
<S> <C> <C>
Per share data:
Net asset value, beginning of period ................................. $12.85 $10.00
Income from investment operations:
Net investment income .......................................... 0.06 0.11
Net realized and unrealized gain on investments ................ 0.69 3.52
-------------- --------------
Total income from investment operations ....................... 0.75 3.63
-------------- --------------
Less distributions:
Dividends from net investment income ........................... (0.05) (0.11)
Distributions from net realized capital gains .................. 0.00 (0.67)
-------------- --------------
Total distributions ........................................... (0.05) (0.78)
-------------- --------------
Net asset value, end of period ....................................... $13.55 $12.85
============== ==============
Total return ......................................................... 5.82%(b) 36.58%
Ratios and supplemental data:
Ratio of expenses to average net assets ........................ 0.91%(a) 0.95%
Ratio of net investment income to average net assets ........... 0.90%(a) 1.04%
Portfolio turnover rate .............................................. 136% 185%
Average commission rate (c) .......................................... $0.06 $0.06
Net assets at end of period (millions) ............................... $42.6 $18.7
<FN>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commissions paid on equity security transactions divided by the total number of shares
purchased and sold by the portfolio.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 63
S&P 500 INDEX PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The S&P 500 Index Portfolio seeks total return approximating that of the S&P 500
Index, including reinvestment of dividends, at a risk level consistent with that
of the S&P 500 Index.
PERFORMANCE AS OF JUNE 30, 1998
TOTAL RETURN:
One-year 28.75%
Since inception (1/3/97) 34.25%
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 S&P 500 Index Portfolio began on January 3, 1997 with a few simple but
critical goals: hold down expenses to enhance returns; invest new cash quickly;
and match the S&P 500 Index returns. Outperforming the actual index is a
difficult goal because funds incur operating expenses that an index does not.
From January 3, 1997 through December 31, 1997 the S&P 500 Index, with
dividends reinvested, rose 31.85%. The Ohio National S&P 500 Index Portfolio
rose 31.75 percent after expenses during that time period, nearly matching the
expense-free index. And the Dow Jones Industrial Average was up 23.11 percent.
Assets grew throughout 1997 from an initial $4 million to $20.4 million at
year-end.
1997's good performance was rewarded during the first half of 1998 with
increased growth of the fund. New investments in the fund averaged over $1
million per week for the first six months, as the fund balance grew from $20.4
million at 12/31/97 to over $54 million at 6/30/98.
The markets have been strong in the first half of 1998. Through mid-year, the
Dow Jones Industrial Average, with dividends reinvested, was up 14.4 percent.
The S&P 500 Index, with dividends reinvested, was up 17.71 percent. And the Ohio
National S&P 500 Index Portfolio was up, after expenses, 17.84 percent,
outperforming the actual index by 13 basis points. We expect the portfolio to
continue to track the S&P 500 Index, with low expenses and minimal volatility
between the monthly returns of the Index and the portfolio.
<TABLE>
<CAPTION>
CHANGE IN VALUE OF $10,000 INVESTMENT
S&P Index Portfolio
(Commenced operations January 3, 1997 S&P 500 Index
------------------------------------- -------------
Date Value Value
---- ----- -----
<S> <C> <C>
12/31/96 $10,000.00 $10,000.00
12/31/97 $13,174.57 $13,335.95
6/30/98 $15,524.91 $15,697.74
<FN>
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.
</FN>
</TABLE>
<TABLE>
<CAPTION>
TOP 10 HOLDINGS AS OF JUNE 30, 1998
% of Portfolio
<S> <C> <C>
1. S&P 500 Depository Shares 3.14
2. Johnson & Johnson 2.53
3. Chase Manhattan Corp 2.60
4. Merck & Co Inc 1.96
5. Royal Dutch Pete Co 1.56
6. Coca-Cola Co 1.78
7. Microsoft Corp 1.49
8. American International Group Inc 1.38
9. Cisco Systems Inc 1.90
10. Exxon Corp 1.56
</TABLE>
<TABLE>
<CAPTION>
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
% of Portfolio
<S> <C>
Computer and Related 7.44
Banking 5.31
Communications 5.25
Consumer Products 4.51
Oil, Energy & Natural Gas 4.10
</TABLE>
<PAGE> 64
OHIO NATIONAL FUND, INC.
S&P 500 INDEX PORTFOLIO
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------
<S> <C> <C> <C>
AEROSPACE (1.1%)
4,100 Allied Signal $181,938
9,500 Boeing Co. 423,344
-----------
605,282
-----------
AUTOMOTIVE & RELATED (1.0%)
5,100 Ford Motor Co. 300,900
3,500 General Motors Corp. 233,844
-----------
534,744
-----------
BANKING (5.3%)
8,500 Banc One Corp. 474,406
8,800 BankBoston Corp. 489,500
19,000 Chase Manhattan 1,434,500
7,900 Fifth Third Bancorp 497,700
-----------
2,896,106
-----------
CHEMICALS (1.2%)
8,500 Monsanto Corp. 687,263
-----------
COMMUNICATIONS (5.2%)
12,000 AT&T Corp. 685,500
8,900 * Airtouch Communications 520,094
14,600 Ameritech Corp. 655,175
6,900 Motorola Corp. 362,681
15,900 SBC Communications Inc. 636,000
-----------
2,859,450
-----------
COMPUTER & RELATED (7.3%)
11,400 * Cisco Systems 1,049,513
13,100 Compaq Computer 371,712
6,200 Hewlett-Packared 371,225
5,500 Intel Corp. 407,688
4,000 International Business Machines 459,250
7,600 * Microsoft Corp. 823,650
23,300 * Oracle Corp. 572,306
-----------
4,055,344
-----------
CONSUMER PRODUCTS (4.4%)
18,900 Johnson & Johnson 1,393,875
9,000 Philip Morris Co. 354,375
7,800 Procter & Gamble 710,288
-----------
2,458,538
-----------
DRUGS (3.4%)
1,900 * Amgen Corp. 124,212
8,100 Merck & Co. 1,083,375
7,200 Scheing-Plough 659,700
-----------
1,867,287
-----------
DURABLE GOODS (0.3%)
2,600 Gillette Co. 147,388
-----------
ELECTRICAL EQUIPMENT (2.8%)
13,000 Edison International 384,313
7,000 General Electric Co. 637,000
6,500 Honeywell Inc. 543,156
-----------
1,564,469
-----------
ENTERTAINMENT & LEISURE (0.9%)
4,800 Walt Disney 504,300
-----------
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
---------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL SERVICES (2.0%)
4,800 American Express $547,200
1,074 Associates First Capital Corp. CL A 82,564
8,200 Federal National Mtg. Assoc. 498,150
-----------
1,127,914
-----------
FOOD & RELATED (3.4%)
6,100 Campbell Soup 377,187
8,800 Coca-Cola 983,250
2,600 Intl. Flavors & Fragrances Inc. 125,969
3,800 Sara Lee Corp. 363,594
-----------
1,850,000
-----------
FORESTRY & PAPER PRODUCTS (0.3%)
3,700 Weyerhaeuser 170,894
-----------
INSURANCE SERVICES (1.4%)
5,200 American Intl. Group 759,200
-----------
MACHINERY (0.8%)
4,100 Caterpillar Inc. 216,788
3,600 Tyco International Ltd. 226,800
-----------
443,588
-----------
MEDICAL & RELATED (0.7%)
4,400 * Boston Scientific 315,150
900 United Healthcare 57,150
-----------
372,300
-----------
OIL, ENERGY & NATURAL GAS (4.1%)
12,100 Exxon 862,881
15,700 Royal Dutch Petroleum 860,556
3,300 Schlumberger Ltd. 225,431
8,400 USX-Marathon Group 288,223
-----------
2,237,091
-----------
RESTAURANTS (0.4%)
2,900 McDonald's Corp. 200,100
-----------
RETAIL (2.3%)
9,600 Dayton Hudson Corp. 465,600
6,000 Home Depot Inc. 498,375
5,300 Wal-Mart Stores Inc. 321,975
-----------
1,285,950
-----------
TRANSPORTATION & EQUIPMENT (0.3%)
3,400 Norfolk Southern Corp. 101,362
1,400 Union Pacific Corp. 61,775
-----------
163,137
-----------
UTILITIES (0.7%)
6,200 Duke Energy Corp. 367,350
-----------
TOTAL COMMON STOCKS
(49.3%) (COST $24,108,046) $27,157,695
-----------
<CAPTION>
MARKET
SHARES DEPOSITORY SHARES VALUE
---------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL (3.1%)
15,300 S&P 500 Depository Shares $1,733,681
-----------
TOTAL DEPOSITORY SHARES
(3.1%) (COST $1,707,949) $1,733,681
-----------
</TABLE>
(continued)
<PAGE> 65
OHIO NATIONAL FUND, INC.
S&P 500 INDEX PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (5.5%)
$960,000 Ford Motor
5.530% 07-23-98 $956,756
2,080,000 GM Acceptance Corp.
5.630% 07-14-98 2,075,771
-----------
3,032,527
-----------
COMMUNICATIONS (3.8%)
2,108,000 GTE Corp.
5.630% 07-08-98 2,105,692
-----------
COMPUTERS AND RELATED (1.9%)
1,046,000 IBM Corp.
5.560% 07-09-98 1,044,708
-----------
FINANCIAL (17.7%)
1,759,000 American Express Credit Corp.
5.510% 07-07-98 1,757,385
1,500,000 American General Corp.
5.480% 07-01-98 1,500,000
1,250,000 Associates Corp.
5.530% 07-24-98 1,245,584
994,000 BAT Capital Corp.
5.630% 07-01-98 994,000
743,000 BAT Capital Corp.
5.750% 07-13-98 741,576
823,000 Beneficial
5.520% 07-06-98 822,369
468,000 CIT Group Holding
5.540% 07-31-98 465,839
254,000 General Electric Capital Corp.
5.540% 07-29-98 252,905
1,000,000 General Electric Capital Corp.
5.550% 07-30-98 995,529
1,000,000 Household Finance
5.530% 07-27-98 996,006
-----------
9,771,193
-----------
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
INSURANCE (5.3%)
$2,064,000 AETNA Services
5.560% 07-10-98 $2,061,131
840,000 Prudential Funding
5.530% 07-15-98 838,194
-----------
2,899,325
-----------
OIL, ENERGY AND NATURAL GAS (3.5%)
1,948,000 Dixie Pipeline
5.530% 07-16-98 1,943,511
-----------
SERVICES (3.9%)
2,164,000 Hertz Corp.
5.550% 07-02-98 2,163,666
-----------
UTILITIES (3.8%)
2,100,000 New England Electric
5.54% 07-28-98 2,091,276
-----------
TOTAL SHORT-TERM NOTES
(45.4%) (COST $25,051,898) $25,051,898
-----------
TOTAL HOLDINGS
(COST $50,867,893) (A) $53,943,274
===========
<FN>
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 66
OHIO NATIONAL FUND, INC.
S&P 500 PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $50,867,893) ...................................... $53,943,274
Cash in bank ...................................................... 468
Receivable for fund shares sold ................................... 289,956
Receivable from brokers (note 1) .................................. 1,200,896
Dividends and accrued interest receivable ......................... 29,769
Other ............................................................. 7,545
--------------
Total assets ..................................................... 55,471,908
--------------
Liabilities:
Payable for investment management services
(note 3) ......................................................... 16,751
Payable for securities purchased .................................. 317,415
Other accrued expenses ............................................ 1,542
--------------
Total liabilities ................................................ 335,708
--------------
Net assets at market value ........................................... $55,136,200
==============
Net assets consist of:
Par value, $1 per share ........................................... $4,037,119
Paid-in capital in excess of par value ............................ 45,521,432
Accumulated undistributed net realized gain on:
Investments ...................................................... 20,730
Futures contracts ................................................ 1,574,237
Net unrealized appreciation on:
Investments (note 1) ............................................. 3,075,381
Futures contracts (note 1) ....................................... 896,388
Undistributed net investment income ............................... 10,913
--------------
Net assets at market value ........................................... $55,136,200
==============
Shares outstanding (note 4) .......................................... 4,037,119
Net asset value per share ............................................ $13.66
==============
<CAPTION>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<S> <C>
Investment income:
Interest ............................................................ $507,383
Dividends ........................................................... 134,115
--------------
Total investment income ............................................ 641,498
--------------
Expenses:
Management fees (note 3) ............................................ 75,092
Custodian fees (note 3) ............................................. 2,976
Directors' fees (note 3) ............................................ 176
Professional fees ................................................... 243
Accounting and transfer agent fees .................................. 5,265
Filing fees ......................................................... 244
Printing, proxy and postage fees .................................... 1,001
Other ............................................................... 54
--------------
Total expenses ..................................................... 85,051
--------------
Net investment income .............................................. $556,447
--------------
Realized and unrealized gain on investments and future contracts:
Net realized gain from:
Investments ....................................................... $128,805
Futures contracts ................................................. 1,574,237
Net increase in unrealized appreciation on:
Investments ....................................................... 2,845,663
Futures contracts ................................................. 787,063
--------------
Net gain on investments ........................................... 5,335,768
--------------
Net increase in net assets from operations ........................ $5,892,215
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 67
OHIO NATIONAL FUND, INC.
S&P 500 PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended 1-3-97 to
6-30-98 (Unaudited) 12-31-97
-------------- --------------
<S> <C> <C>
From operations:
Net investment income ............................................ $556,447 $617,994
Realized gain on investments and futures contracts ............... 1,703,042 1,486,912
Unrealized gain on investments and futures contracts ............. 3,632,726 339,043
-------------- --------------
Net increase in assets from operations .......................... 5,892,215 2,443,949
-------------- --------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ........................ (550,347) (613,181)
Capital gains distributions ...................................... 0 (1,486,912)
Capital gains distributions in excess of realized gains .......... 0 (108,075)
-------------- --------------
Total dividends and distributions ............................... (550,347) (2,208,168)
-------------- --------------
From capital share transactions (note 4):
Received from shares sold ........................................ 28,638,622 20,644,767
Received from dividends reinvested ............................... 550,347 2,208,168
Paid for shares redeemed ......................................... (1,466,977) (1,016,376)
-------------- --------------
Increase in net assets derived from capital share transactions .. 27,721,992 21,836,559
-------------- --------------
Increase in net assets ........................................ 33,063,860 22,072,340
Net Assets:
Beginning of period .............................................. 22,072,340 0
-------------- --------------
End of period (a) ................................................ $55,136,200 $22,072,340
============== ==============
(a) Includes undistributed net investment income of ................. $10,913 $4,813
============== ==============
<CAPTION>
FINANCIAL HIGHLIGHTS
Six Months Ended 1-3-97 to
6-30-98 (Unaudited) 12-31-97
-------------- --------------
<S> <C> <C>
Per share data:
Net asset value, beginning of period ................................. $11.73 $10.00
Income from investment operations:
Net investment income ............................................ 0.19 0.45
Net realized and unrealized gain on investments .................. 1.90 2.70
-------------- --------------
Total income from investment operations ......................... 2.09 3.15
-------------- --------------
Less distributions:
Dividends from net investment income ............................. (0.16) (0.45)
Distributions from net realized capital gains .................... 0.00 (0.91)
Distributions from excess realized capital gains ................. 0.00 (0.06)
-------------- --------------
Total distributions ............................................ (0.16) (1.42)
-------------- --------------
Net asset value, end of period ....................................... $13.66 $11.73
============== ==============
Total return ......................................................... 17.84%(b) 31.75%
Ratios and supplemental data:
Ratio of expenses to average net assets .......................... 0.45%(a) 0.52%
Ratio of net investment income to average net assets ............. 2.96%(a) 5.29%
Portfolio turnover rate .............................................. 81% 445%
Average commission rate (c) .......................................... $0.05 $0.04
Net assets at end of period (millions) ............................... $55.1 $22.1
<FN>
(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. The accompanying notes are an integral part of these financial
statements.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 68
SOCIAL AWARENESS PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The objective of the Social Awareness Portfolio is to provide long-term growth
of capital by investing primarily in the common stocks and other equity
securities of companies that, in the Adviser's opinion, conduct their business
in a way that enhances society's quality of life. The portfolio's social concern
criteria will necessarily limit the universe of securities that may be selected
for this portfolio. However, the Adviser believes the portfolio's objective of
long-term capital growth can be achieved despite this limitation.
PERFORMANCE AS OF JUNE 30, 1998
TOTAL RETURN:
One-year 10.08%
Since inception (1/3/97) 15.89%
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
As expected, markets continued to exhibit volatility during the first half of
1998. The Social Awareness Portfolio had strong contributions from the Consumer
Staples and Health Care sectors. Unfortunately, they were more than offset by a
number of earnings disappointments and the portfolio's overweighting in energy
companies.
We continue to believe that an overweighting in the energy sector is
appropriate. Commodity prices have declined sharply this year, due to
supply/demand imbalance resulting from a reduction in Asian demand, a mild
winter and resumption of Iraqi exports. However, we would note production
decline rates from existing fields are accelerating and low oil prices are
exerting budgetary pressures on oil exporters. This has led to announced
production cuts from major OPEC and non-OPEC producers. Additionally, several
oil producing regions are experiencing political turmoil and weather patterns
could return to normal. We feel that at current valuation levels, energy stocks
could be one of the best sector opportunities of this decade, along with banking
in 1990 and pharmaceuticals in 1993.
Although disappointed with near-term results, we are encouraged with the
opportunities which are now presenting themselves. Cash reserves are nearing
fully invested levels. We feel the companies in the Social Awareness Portfolio
have favorable risk-reward characteristics and are positioned well for the
future.
<TABLE>
<CAPTION>
CHANGE IN VALUE OF $10,000 INVESTMENT
Social Awareness Portfolio
(commenced operations January 3, 1997 Russell 2000 Index
------------------------------------- ------------------
Date Value Value
---- ----- -----
<S> <C> <C>
12/31/96 $10,000.00 $10,000.00
12/31/97 $12,562.91 $12,226.69
6/30/98 $12,462.41 $12,871.04
<FN>
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.
</FN>
</TABLE>
TOP 10 STOCKS AS OF JUNE 30, 1998
% of Portfolio
1. Recycling Industries 4.06
2. 3COMM 3.15
3. Louis Dreyfus Natural Gas 2.83
4. Sante Fe Energy Resources 2.76
5. Thronburg Mortgage Asset 2.75
6. R & B Falcon Corp 2.63
7. Tupperware 2.57
8. Heilig-Meyers Co 2.48
9. Alternative Resource 2.46
10. Belco Oil & Gas Corp 2.45
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
% of Portfolio
Energy 18.43
Consumer Cyclical 17.44
Capital Goods 13.03
Technology 10.31
Basic Materials 9.53
<PAGE> 69
OHIO NATIONAL FUND, INC.
SOCIAL AWARENESS PORTFOLIO
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
BANKING (1.6%)
9,400 * Telebanc Financial $131,600
-----------
BUSINESS SERVICES (11.0%)
16,100 * Alternative Resources 199,238
15,800 * LoJack Corp. 196,512
6,800 Manpower 195,075
16,500 Source Information Mgt. Co. 102,094
10,700 Reynolds & Reynolds 194,606
-----------
887,525
-----------
CHEMICALS (2.3%)
4,600 Hercules Inc. 189,175
-----------
COMMUNICATIONS (5.4%)
8,300 * 3Comm 254,706
10,100 * Andrew Corp. 182,431
-----------
437,137
-----------
COMPUTER & RELATED (2.5%)
9,200 * Mapinfo 98,900
5,500 * Rand A Technology Can Mutual Fund 100,983
-----------
199,883
-----------
CONSUMER PRODUCTS (4.7%)
5,200 * Sola International 169,975
7,400 Tupperware 208,125
-----------
378,100
-----------
DRUGS (2.3%)
6,100 Mylan Laboratories 183,381
-----------
DURABLE GOODS (1.4%)
3,000 Polaris Industries 112,875
-----------
ELECTRICAL EQUIPMENT (4.8%)
4,500 * Advanced Lighting 104,625
9,000 * Anixter International 171,563
12,500 BMC Industries 109,375
-----------
385,563
-----------
ENTERTAINMENT AND LEISURE (1.4%)
12,600 * Livent Inc. 110,250
-----------
FINANCIAL SERVICES (2.7%)
18,300 Thronburg Mortgage Asset 223,031
-----------
FOOD AND RELATED (1.2%)
4,300 * Specialty Equipment 97,288
-----------
FORESTRY & PAPER PRODUCTS (2.4%)
5,600 Boise Cascade 196,500
-----------
HOTEL/LODGING (1.1%)
5,600 * Guest Supply 93,800
-----------
HOUSING, FURNITURE & RELATED (2.3%)
10,000 Clayton Homes Inc. 190,000
-----------
INSURANCE SERVICES (0.6%)
1,300 Blanch EW 47,775
-----------
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL SERVICES (8.2%)
5,800 Imco Recycling $107,300
30,000 * Medar Inc. 63,750
6,000 Millipore Corp. 163,500
56,000 * Recycling Industries 329,000
-----------
663,550
-----------
MEDICAL & RELATED (5.9%)
6,510 * Foundation Health 171,701
7,000 * Quorum Health 185,500
8,600 * Stericycle Inc. 124,700
-----------
481,901
-----------
METALS & MINING (4.7%)
12,300 Worthington Industries 185,269
5,200 * Wolverine Tube Inc. 197,600
-----------
382,869
-----------
OIL, ENERGY & NATURAL GAS (18.4%)
23,000 * Belco Oil & Gas Corp. 198,375
3,400 Kerr Mc Gee 196,775
12,100 * Louis Dreyfus Natural Gas 229,144
13,500 * Matrix Service Co. 97,875
100,500 * Newstar Resources 109,927
9,400 * R & B Flacon Corp. 212,675
20,800 Santa Fe Energy Resources 223,600
5,800 * SEIM (Norex) Ind. Inc. 99,325
10,800 Wizer Oil Co. 119,475
-----------
1,487,171
-----------
REAL ESTATE AND LEASING (1.3%)
9,100 Bando McGlocklin Capital Corp. 104,650
-----------
RESTAURANTS (2.3%)
11,700 * Buffets 183,544
-----------
RETAIL (2.5%)
16,300 Helig-Meyers Co. 200,694
-----------
RETIREMENT AGED/CARE (1.2%)
8,200 * Capital Senior Living Corp. 98,400
-----------
TEXTILES AND RELATED (1.3%)
18,200 * Ridgeview Inc. 109,200
-----------
TRANSPORTATION & EQUIPMENT (1.1%)
2,600 * Atlas Air Inc. 87,912
-----------
TOTAL COMMON STOCK
(94.6%) (COST $8,020,578) $7,663,774
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -----------------------------------------------------------------------
<S> <C> <C>
METALS AND MINING (2.4%)
9,000 Freeport McMoran Copper & Gold $190,688
-----------
TOTAL PREFERRED STOCK
(2.4%) (COST $228,841) $190,688
-----------
</TABLE>
(continued)
<PAGE> 70
OHIO NATIONAL FUND, INC.
SOCIAL AWARENESS PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -----------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL SERVICES (0.3%)
$25,000 Medar Inc. Sr. Sub. Notes
12.950% 06-30-05 $22,850
-----------
TOTAL LONG-TERM BONDS & NOTES
(0.3%) (COST $22,850) $22,850
-----------
<CAPTION>
MARKET
SHARES WARRANTS VALUE
- -----------------------------------------------------------------------
<S> <C> <C>
5,000 Medar Inc. Warrants @ $6.86 $2,150
-----------
TOTAL WARRANTS
(0.0%) (COST $2,150) $2,150
-----------
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -----------------------------------------------------------------------
<S> <C> <C>
FINANCE (2.2%)
$180,000 American Express
5.570% 07-01-98 $180,000
RETAIL (2.3%)
106,000 Sears Roebuck
5.700% 07-07-98 105,899
TOTAL SHORT-TERM NOTES
(3.5%) (COST $285,899) $285,899
TOTAL HOLDINGS
(COST $8,560,318) (a) $8,165,361
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 71
OHIO NATIONAL FUND, INC.
SOCIAL AWARENESS PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $8,560,318) ......................................... $8,165,361
Cash in bank ........................................................ 810
Receivable for fund shares sold ..................................... 18,200
Dividends and accrued interest receivable ........................... 10,193
Other ............................................................... 709
------------
Total assets ....................................................... 8,195,273
------------
Liabilities:
Payable for securities purchased .................................... 86,310
Payable for fund shares purchased ................................... 3,169
Payable for investment management services
(note 3) ........................................................... 3,902
Other accrued expenses .............................................. 4,058
------------
Total liabilities .................................................. 97,439
------------
Net assets at market value ........................................... $8,097,834
============
Net assets consist of:
Par value, $1 per share ............................................. $717,671
Paid-in capital in excess of par value .............................. 7,550,964
Accumulated undistributed net realized gain on
investments ........................................................ 223,838
Net unrealized depreciation on investments .......................... (394,957)
Undistributed net investment income ................................. 318
------------
Net assets at market value ........................................... $8,097,834
============
Shares outstanding (note 4) .......................................... 717,671
Net asset value per share ............................................ $11.28
============
<CAPTION>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<S> <C>
Investment income:
Interest ............................................................ $16,268
Dividends ........................................................... 27,635
--------------
Total investment income ............................................ 43,903
--------------
Expenses:
Management fees (note 3) ............................................ 19,586
Custodian fees (note 3) ............................................. 3,593
Accounting and transfer agent fees .................................. 2,829
Other ............................................................... 174
--------------
Total expenses ..................................................... 26,182
--------------
Net investment income .............................................. $17,721
--------------
Realized and unrealized gain (loss) on investments:
Net realized gain from investments .................................. $223,838
Net increase in unrealized depreciation on
investments ....................................................... (501,414)
--------------
Net loss on investments ........................................... (277,576)
--------------
Net decrease in net assets from operations ........................ ($259,855)
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 72
OHIO NATIONAL FUND, INC.
SOCIAL AWARENESS PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED 1-3-97
6-30-98 to
(UNAUDITED) 12-31-97
-------------- --------------
<S> <C> <C>
From operations:
Net investment income ......................................... $17,721 $21,619
Realized gain on investments .................................. 223,838 406,600
Unrealized gain (loss) on investments ......................... (501,414) 106,457
-------------- --------------
Net increase (decrease) in assets from operations ............ (259,855) 534,676
-------------- --------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ..................... (17,350) (21,672)
Capital gains distributions ................................... 0 (406,600)
-------------- --------------
Total dividends and distributions ............................ (17,350) (428,272)
-------------- --------------
From capital share transactions (note 4):
Received from shares sold ..................................... 4,078,638 4,461,187
Received from dividends reinvested ............................ 17,350 428,272
Paid for shares redeemed ...................................... (562,779) (154,033)
-------------- --------------
Increase in net assets derived from capital share transactions 3,533,209 4,735,426
-------------- --------------
Increase in net assets ..................................... 3,256,004 4,841,830
Net Assets:
Beginning of period ........................................... 4,841,830 0
-------------- --------------
End of period (a) ............................................. $8,097,834 $4,841,830
============== ==============
(a)Includes undistributed net investment income (loss) of ....... $318 ($53)
============== ==============
<CAPTION>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED 1-3-97
6-30-98 to
(UNAUDITED) 12-31-97
-------------- --------------
<S> <C> <C>
Per share data:
Net asset value, beginning of period ............................ $11.40 $10.00
Income from investment operations:
Net investment income ......................................... 0.03 0.09
Net realized and unrealized gain (loss) on investments ........ (0.12) 2.47
-------------- --------------
Total income (loss) from investment operations ............... (0.09) 2.56
-------------- --------------
Less distributions:
Dividends from net investment income .......................... (0.03) (0.07)
Distributions from net realized capital gains ................. 0.00 (1.09)
-------------- --------------
Total distributions .......................................... (0.03) (1.16)
-------------- --------------
Net asset value, end of period .................................. $11.28 $11.40
============== ==============
Total return .................................................... (0.80%)(b) 25.63%
Ratios and supplemental data:
Ratio of expenses to average net assets ....................... 0.80%(a) 0.95%
Ratio of net investment income to average net assets .......... 0.54%(a) 0.75%
Portfolio turnover rate ......................................... 31% 40%
Average commission rate (c) ..................................... $0.06 $0.07
Net assets at end of period (millions) .......................... $8.1 $4.8
<FN>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commissions paid on equity security transactions divided by the total number of shares
purchased
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 73
STRATEGIC INCOME PORTFOLIO
Ohio National Fund, Inc.
OBJECTIVE
The Strategic Income Portfolio seeks to generate high current income by
investing at least 80 percent of its assets in income-producing securities,
including at least 40 percent of assets in a core group of U.S. government and
corporate fixed-income securities, and the remainder in other income-producing
securities.
PERFORMANCE AS OF JUNE 30, 1998
TOTAL RETURN:
One-year 6.16%
Since inception (1/3/97) 6.19%
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 Strategic Income Portfolio held true to its investment objective during the
first half of the year, concentrating on maximum income generation versus total
return. The REIT portion of the portfolio suffered significant price declines as
investors exited the group in advance of proposed legislation to eliminate the
advantages of the "Paired Share" structure enjoyed by a select few REIT's. These
REIT's had been the industry leaders up to this point. As the economic recovery
extends, more and more companies and even the U.S. government continue to pay
down debt, leading to a constant search for suitable debt obligations for the
portfolio. The portfolio continues to enjoy strong returns from the mortgage and
mortgage- backed securities in the portfolio.
<TABLE>
<CAPTION>
CHANGE IN VALUE OF $10,000 INVESTMENT
Fund 12/31/96 12/31/97
---- -------- --------
<S> <C> <C>
Strategic Income Portfolio $10,000 $10,902.43
Lehman Bros. Govt/Corp. Bond Index-
Intermediate $10,000 $10,777.43
</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.
<TABLE>
<CAPTION>
TOP 10 BONDS AS OF JUNE 30, 1998
% of Portfolio
<S> <C>
1. GNMA 7.00% 02/15/28 4.71
2. FNMA 9.00% 04/01/16 4.65
3. Occidental Petroleum 10.125% 09/15/09 3.25
4. Noble Affiliates Inc 8.00% 04/01/27 2.90
5. ABM-AMRO Bank N.V. 7.75% 05/15/23 2.86
6. NB Cap Trust 8.25% 4/15/27 2.84
7. Zurich Cap Trust 8.376% 6/1/37 2.81
8. Lockheed Corp NT 7.875% 03/15/23 2.72
9. Merrill Lynch & Co 7.00% 04/27/08 2.68
10. Sears Roebuck Acceptance Global 7.00% 6/15/07 2.65
<CAPTION>
TOP 5 HOLDING CATEGORIES AS OF JUNE 30, 1998
% of Portfolio
<S> <C>
Corporate Bonds 45.64
Government Bonds 19.12
Real Estate 16.34
Preferred Stock 9.68
Common Stocks 9.22
</TABLE>
<PAGE> 74
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------------------------
GOVERNMENT (18.7%)
<S> <C>
$ 100,000 FNMA 6.500% 04-18-25 $99,891
174,342 FNMA 9.000% 04-01-16 184,258
96,848 FNMA 7.000% 09-01-27 98,330
77,270 FNMA 7.500% 07-15-21 78,646
90,866 GNMA 7.500% 06-15-27 93,464
183,369 GNMA 7.000% 02-15-28 186,464
--------
741,053
--------
BANKING (7.9%)
100,000 ABM-AMRO Bank N.V.
7.750% 05-15-23 113,345
75,000 Banc One Corp.
8.000% 04-29-27 87,650
100,000 Nations Bank Capital Trust
8.250% 04-15-27 112,527
--------
313,522
--------
COMPUTER AND RELATED (2.0%)
100,000 IBM Corp.
6.500% 01-15-28 80,619
--------
CONSUMER PRODUCTS (2.6%)
100,000 Phillip Morris Co.
7.125% 08-15-02 102,941
FINANCIAL SERVICES (8.1%)
100,000 Lehman Brothers Holdings
7.125% 09-15-03 104,059
100,000 Merrill Lynch & Co.
7.000% 04-27-08 106,001
100,000 Zurich Capital Trust
8.376% 06-01-37 111,417
--------
321,477
--------
FORESTRY & PAPER PRODUCTS (0.8%)
30,000 International Paper Co.
7.625% 01-15-07 32,777
--------
INDUSTRIAL SERVICES (3.4%)
25,000 Fort James Corp. NT
6.625% 09-15-04 25,461
100,000 Lockheed Corp.
7.875% 03-15-23 107,525
--------
132,986
--------
OIL, ENERGY & NATURAL GAS (8.7%)
100,000 Noble Affiliates, Inc.
8.000% 04-01-27 114,857
100,000 Occidental Petroleum
10.125% 09-15-09 128,529
75,000 Transcanada Pipeline
9.875% 01-01-21 102,312
--------
345,698
--------
REAL ESTATE & LEASING (2.5%)
95,000 Meditrust NT
7.600% 07-15-01 96,987
--------
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------------------------
RETAIL (4.7%)
$75,000 JC Penney Inc.
9.450% 07-15-02 $79,751
100,000 Sears Roebuck Acceptance
7.000% 06-15-07 105,108
--------
184,859
--------
UTILITIES (4.0%)
100,000 Duke Power Co.
7.875% 05-01-24 104,159
50,000 GTE Corp.
7.830% 05-01-23 52,757
--------
156,916
--------
TOTAL LONG-TERM BONDS & NOTES
(63.4%) (COST $2,453,115) $2,509,835
----------
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------------------
BANKING (1.1%)
1,000 Campass Bancshares Inc. $45,125
--------
COMMUNICATIONS (1.1%)
1,000 Ameritech Corp. 44,875
--------
OIL, ENERGY, AND NATURAL GAS (0.7%)
1,000 Occidental Pete. Corp. 27,000
--------
FINANCIAL SERVICES (0.1%)
496 *Omega Worldwide Inc. 3,751
--------
Utilities (2.2%)
1,000 Central & South West Corp. 26,875
500 DTE Energy 58,987
--------
85,862
--------
TOTAL COMMON STOCK
(5.2%) (COST $210,653) $206,613
--------
REAL ESTATE MARKET
SHARES INVESTMENT TRUSTS VALUE
- -------------------------------------------------------------------------------
1,000 American Health Properties Inc. $25,000
1,000 Capstead Mortgage Corp. 8,375
2,000 Dynex Cap Inc. 22,250
1,375 Glimcher Realty Trust 26,726
603 Healthcare Realty Trust Inc. 16,432
190 Hospitality Properties Trust 6,104
2,700 IMPAC Mortgage Holdings 42,019
3,581 LTC Properties Inc. 66,696
2,500 National Health Investors Inc. 82,812
2,300 Omega Healthcare Investments 80,788
644 Pennsylvania Real Estate Inv. 14,289
3,400 Summit Properties Inc. 64,387
4,500 Thornburg Mtg. Asset Corp. 54,844
3,000 Town & Country Trust 49,687
5,811 Winston Hotels Inc. 72,638
--------
633,047
--------
TOTAL REAL ESTATE INVEST. TRUSTS
(16.0%) (Cost $734,951) $633,047
--------
(continued)
</TABLE>
<PAGE> 75
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
CLOSED-END MARKET
SHARES INVESTMENT COMPANIES VALUE
- -------------------------------------------------------------------------------
<S> <C>
6,900 First Commonwealth Fund $75,900
11,000 Kleinwort Benson Australian Fund 74,938
---------
150,838
---------
Total Investment Companies
(3.8%) (Cost $184,077) $150,838
---------
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------------------------
FINANCIAL SERVICES (3.6%)
3,000 PLC Capital Trust 8.25% $78,938
2,500 Travelers Capital 8.0% 64,531
----------
143,469
----------
Oil, Energy & Natural Gas (4.3%)
3,000 Enron Capital Trust 8.3% 77,250
3,500 Transcanada Pipeline Ltd. 8.5% 91,000
----------
168,250
----------
Real Estate & Leasing (1.6%)
2,500 Kimco Realty Corp. 8.5% 62,656
----------
Total Preferred Stock
(9.5%) (Cost $372,709) $374,375
----------
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------------------------
FINANCIAL (0.6%)
$23,000 Star Bank 5.200% due 07-01-98
repurchase price 23,003
collateralized by GNMA certificates
pool # 8375
due 02-20-24 (Cost $190,000) $23,000
----------
TOTAL REPURCHASE AGREEMENTS
(0.6%) (Cost $23,000) $23,000
----------
Total Holdings
(Cost $3,978,504) (a) $3,897,708
==========
<FN>
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 76
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments in securities at market value
(note 1) (cost $3,978,504) ................................... $ 3,897,708
Cash in bank .................................................. 635
Receivable for fund shares sold ............................... 12,695
Dividends and accrued interest receivable ..................... 52,923
Other ......................................................... 343
-----------
Total assets ................................................. 3,964,304
-----------
Liabilities:
Payable for investment management services
(note 3) ..................................................... 2,575
Other accrued expenses ........................................ 2,571
-----------
Total liabilities ............................................ 5,146
-----------
Net assets at market value ..................................... $ 3,959,158
===========
Net assets consist of:
Par value, $1 per share ....................................... $ 401,290
Paid-in capital in excess of par value ........................ 3,637,930
Accumulated undistributed net realized loss on
investments .................................................. (145)
Net unrealized depreciation on investments (note 1) ........... (80,796)
Undistributed net investment income ........................... 879
-----------
Net assets at market value ..................................... $ 3,959,158
===========
Shares outstanding (note 4) .................................... 401,290
Net asset value per share ...................................... $ 9.87
===========
<CAPTION>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<S> <C>
Investment income:
Interest ...................................................... $ 83,234
Dividends ..................................................... 69,022
-----------
Total investment income ...................................... 152,256
-----------
Expenses:
Management fees (note 3) ...................................... 14,429
Custodian fees (note 3) ....................................... 3,182
Accounting and transfer agent fees ............................ 2,253
Other ......................................................... 173
-----------
Total expenses ............................................... 20,037
-----------
Net investment income ........................................ $ 132,219
-----------
Realized and unrealized loss on investments:
Net realized loss from investments ............................ ($145)
Net decrease in unrealized appreciation on
investments ................................................. (113,015)
-----------
Net loss on investments ..................................... (113,160)
Net increase in net assets from operations .................. $ 19,059
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 77
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended 1-3-97
6-30-98 to
(Unaudited) 12-31-97
----------- --------
<S> <C> <C>
From operations:
Net investment income .......................................... $132,219 $166,446
Realized gain (loss) on investments ............................ (145) 3,690
Unrealized gain (loss) on investments .......................... (113,015) 32,219
-------- --------
Net increase in assets from operations ........................ 19,059 202,355
-------- --------
Dividends and distributions to shareholders:
Dividends paid from net investment income....................... (132,016) (165,770)
Capital gains distributions..................................... (1,157) (2,533)
-------- --------
Total dividends and distributions ............................. (133,173) (168,303)
-------- --------
From capital share transactions (note 4):
Received from shares sold ...................................... 848,352 3,110,382
Received from dividends reinvested ............................. 133,173 168,303
Paid for shares redeemed ....................................... (158,744) (62,246)
-------- --------
Increase in net assets derived from capital share transactions 822,781 3,216,439
-------- --------
Increase in net assets ...................................... 708,667 3,205,491
Net Assets:
Beginning of period ............................................ 3,250,491 0
-------- --------
End of period (a) .............................................. $3,959,158 $3,205,491
========== ==========
(a)Includes undistributed net investment income of .............. $879 $676
========== ==========
<CAPTION>
FINANCIAL HIGHLIGHTS
Six Months Ended 1-3-97
6-30-98 to
(Unaudited) 12-31-97
----------- --------
<S> <C> <C>
Per share data:
Net asset value, beginning of period ............................ $10.16 $10.00
Income from investment operations:
Net investment income .......................................... 0.37 0.71
Net realized and unrealized gain (loss) on investments ......... (0.31) 0.13
-------- --------
Total income from investment operations ....................... 0.06 0.84
-------- --------
Less distributions:
Dividends from net investment income ........................... (0.35) (0.67)
Distributions from net realized capital gains .................. 0.00 (0.01)
-------- --------
Total distributions ........................................... (0.35) (0.68)
-------- --------
Net asset value, end of period .................................. $9.87 $10.16
======== ========
Total return .................................................... 0.59%(b) 8.74%
Ratios and supplemental data:
Ratio of expenses to average net assets ........................ 1.10%(a) 1.30%
Ratio of net investment income to average net assets ........... 7.29%(a) 7.04%
Portfolio turnover rate ......................................... 67% 102%
Average commission rate (c) ..................................... $0.04 $0.04
Net assets at end of period (millions) .......................... $4.0 $3.2
<FN>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold by
the portfolio.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 78
STELLAR PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Stellar Portfolio seeks to maximize total return by investing approximately
15 percent to 25 percent of its assets in each of the following categories:
domestic equities, domestic bonds, foreign securities, real estate securities,
and precious metal and/or money market securities.
PERFORMANCE AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
TOTAL RETURN:
<S> <C>
One-year 6.86%
Since inception (1/3/97) 8.23%
</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
During the volatile conditions of the first two quarters the Stellar Portfolio's
multi-asset structure served to limit investor exposure to price swings. The
portfolio's domestic equity, international equity and fixed income components
all experienced returns at or above their relative benchmarks. Some of that
performance was offset by negative returns from the REIT portion of the
portfolio. The threat of pending regulatory changes for the industry's hottest
segment, "Paired Shares," cast a pall over the entire group as momentum
investors exited for less threatening climates. The portfolio continues to focus
on large stocks in the equity selection process for both international and
domestic stocks as the flood of new money into the market drives the price of
those issues higher. In the bond segment we continue to focus on quality long
duration assets in accordance with our forecast for lower interest rates for the
foreseeable future.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Stellar Portfolio Lehman Bros. Gov't/Corp.
(Commenced operations Index-Intermediate
January 3, 1997)
<S> <C> <C>
12/31/96 $10,000.00 $10,000.00
06/30/97 10,531.00 10,274.00
12/31/97 10,969.09 10,777.43
06/30/98 11,253.19 10,777.43
</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. FNMA 6.03% 5/07/01 4.82
2. Kimco Realty Corp 3.95
3. FHLMC 7.92% 6/29/11 3.72
4. FNMA 6.21% 11/07/07 2.94
5. GNMA 7.50% 6/15/27 2.65
6. New Plan Realty 2.22
7. Brandywine Realty Trust 2.06
8. Apartment Invt. & Mgmt Co Cl A 2.02
9. Mack Cali Realty Corp 1.97
10. Kroger Equity Inc 1.95
</TABLE>
TOP 5 HOLDING CATEGORIES AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
U.S. Stocks 33.80
Cash 20.83
U.S. Govt. Bonds 17.73
Real Estate 14.99
Investment Companies 9.24
</TABLE>
<PAGE> 79
OHIO NATIONAL FUND, INC.
STELLAR PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- ----------------------------------------------------------
<S> <C> <C>
AEROSPACE (1.0%)
600 *Continental Airlines CL B $36,525
-------
AUTOMOTIVE AND RELATED (0.3%)
200 Paccar Inc. 10,450
-------
BANKING (1.4%)
127 Banc One Corp. 7,088
100 Bank of New York Co. Inc. 6,069
200 Bankboston Corp. 11,125
210 Charter One Financial Inc. 7,074
100 Fleet Financial 8,350
200 Norwest Corp. 7,475
80 Texas Regional Bancshare Inc. 2,620
-------
49,801
-------
BUILDING AND CONSTRUCTION (0.4%)
275 D.R. Horton Inc. 5,741
650 International Comfort Products 7,881
-------
13,622
-------
BUSINESS SERVICES (0.3%)
200 American Management Systems 5,987
150 Deluxe Corp. 5,372
-------
11,359
-------
CHEMICALS (0.4%)
100 Dow Chemical Co. 9,669
125 Lyondell Petro Chemical Co. 3,805
-------
13,474
-------
COMMUNICATIONS (0.2%)
150 MCI Communications Corp. 8,719
-------
COMPUTER AND RELATED (1.1%)
225 *Cisco Systems Inc. 20,714
100 Honeywell Inc. 8,356
150 Intel Corp. 11,119
-------
40,189
-------
CONSUMER PRODUCTS (0.3%)
200 Alberto Culver Co. CL. B 5,800
130 Snap On Inc. 4,713
-------
10,513
-------
DRUGS (0.5%)
225 Warner Lambert Co. 15,609
-------
DURABLE GOODS (0.3%)
300 Parker Hannifin Corp. 11,438
-------
ELECTRICAL EQUIPMENT (1.0%)
225 *Benchmark Electronics 4,500
200 CTS Corp. 5,900
225 *DII Group Inc. 3,839
100 Johnson Controls Inc. 5,719
125 Sony Corp. 10,758
100 Thomas & Betts Corp. 4,925
-------
35,641
-------
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- ----------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES (2.1%)
200 American Express Co. $22,800
100 Associates First Capital CL A 7,688
200 Fannie Mae-Federal National Mgmt. 12,150
75 Hartford Financial Services 8,578
150 INMC Mortgage Holdings 8,304
150 Morgan Stanley Dean Witter & Co. 13,706
181 Omega Worldwide Inc. 1,369
-------
74,595
-------
FOOD AND RELATED (0.9%)
300 Flemming Cos. 5,269
75 General Mills Inc. 5,128
225 Nabisco Corp. CL A 8,114
150 Pepsico Inc. 6,178
100 Sara Lee Corp. 5,594
-------
30,283
-------
INDUSTRIAL SERVICES (0.2%)
260 Ecolab Inc. 8,060
-------
INSURANCE SERVICES (0.4%)
112 AON Corp. 7,868
100 Allmerica Financial Corp. 6,500
-------
14,368
-------
HOUSING, FURNITURE & RELATED (0.6%)
275 *American Homestar Corp. 6,583
175 *Palm Hbr Homes Inc. 7,459
200 Sherwin Williams Co. 6,625
-------
20,667
-------
MACHINERY (0.2%)
275 Terex Corp. 7,838
-------
MEDIA AND PUBLISHING (0.2%)
100 Times Mirror Co. 6,287
-------
MEDICAL AND RELATED (0.8%)
300 *Quorum Health Group 7,950
150 *Sofamore/Danek Group Inc. 12,984
225 *Tenet Healthcare Corp. 7,031
-------
27,965
-------
METALS AND MINING (0.4%)
350 AK Steel Holding Corp. 6,256
100 Aluminum Co. Amer. 6,594
-------
12,850
-------
OIL, ENERGY AND NATURAL GAS (1.8%)
950 *BJ Services Co. 27,609
100 Diamond Offshore Drilling 4,000
200 Ensco International Inc. 3,475
300 *Global Marine Inc. 5,606
208 Kinder Morgan Energy Partners 7,514
200 *Rowan Cos. Inc. 3,888
200 Texaco Inc. 11,937
-------
64,029
-------
RESTAURANTS (0.2%)
215 *Tricon Global Restaurants 6,813
-------
</TABLE>
(continued)
<PAGE> 80
OHIO NATIONAL FUND, INC.
STELLAR PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -----------------------------------------------------------
<S> <C> <C>
RETAIL (1.3%)
200 American Stores Co. $4,837
250 Dayton Hudson Corp. 12,125
187 Gap Inc. 11,524
6,500 *Roberds Inc. 17,063
--------
45,549
--------
TRANSPORTATION (0.6%)
700 *Genesee & Wyoming Inc. 13,300
300 Mesaba Inc. 6,900
--------
20,200
--------
TOTAL COMMON STOCK
(16.9%) (COST $570,176) $596,844
--------
REAL ESTATE MARKET
SHARES INVESTMENT TRUSTS VALUE
- ------------------------------------------------------------
<S> <C> <C>
1,800 Apartment Inv. & Mgmt. Co. CL A $71,100
3,250 Brandywine Realty Trust 72,719
2,500 Glenborough Realty Trust Inc. 65,937
3,400 Kimco Realty Corp. 139,400
3,400 Kroger Equity Inc. 68,638
2,025 Mack Cali Realty Corp. 69,609
3,200 New Plan Realty 78,400
800 Reckson Assoc. Realty Corp. 18,900
64 Reckson Service Ind. 212
2,400 US Restaurants Properties 64,950
--------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(18.4%) (COST $669,966) $649,865
--------
<CAPTION>
CLOSED-END MARKET
SHARES INVESTMENT COMPANIES VALUE
- ----------------------------------------------------------
<S> <C> <C>
500 Argentina Fund Inc. $5,437
300 Brazil Fund Inc. 5,437
3,000 Central European Value Fund 33,375
800 Chile Fund Inc. 10,850
875 First Commonwealth Fund Inc. 9,625
2,200 France Growth Fund 33,137
5,000 Hancock Patriot Prem. Div. Fund II 60,000
1,500 Irish Investment Fund Inc. 33,094
2,200 *Japan Webs Index Series 21,588
5,000 Kleinworth Benson Austral. Inc. Fund 34,063
650 Mexico Fund Inc. 9,506
1,000 Swiss Helvetia Fund 32,000
300 Templeton Emerging Mkts. Fund 4,425
5,000 Templeton Global Govt.. Fund 32,813
2,000 United Kingdom Fund 29,500
--------
TOTAL CLOSED END INVESTMENT CO.
(10.1%) (COST $391,526) $354,850
--------
<CAPTION>
MARKET
SHARES DEPOSITORY SHARES VALUE
- ------------------------------------------------------------
<S> <C> <C>
FINANCIAL (1.8%)
550 S&P 500 Depository Shares $62,322
--------
TOTAL DEPOSITORY SHARES
(1.8%) (COST $61,326) $62,322
--------
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- ------------------------------------------------------------
<S> <C> <C>
ARGENTINA (0.2%)
OIL, ENERGY & NATURAL GAS
200 YPF Sociedad Anonima Spon ADR $6,013
--------
AUSTRALIA (0.7%)
BANKING
350 Nat'l. Australia Bank LTD ADR 23,122
--------
CANADA (1.0%)
METALS AND MINING
500 Alcan Aluminum Ltd. 13,812
Transportation
775 Canadian Pacific Ltd. 21,991
--------
TOTAL CANADA 35,803
--------
DENMARK (1.0%)
CHEMICALS
500 Novo-Nordisk AS ADR 34,406
--------
FINLAND (0.4%)
COMMUNICATIONS
200 Nokia Corp. Sponsored ADR 14,512
--------
GERMANY (0.7%)
AUTOMOTIVE AND RELATED
250 Daimler Benz AG Spon ADR 24,328
--------
GREAT BRITAIN (1.5%)
COMMUNICATIONS
850 Cable & Wireless Pub. Ltd. 31,344
175 Vodafone Group Spon. ADR 22,061
--------
53,405
--------
HOLLAND (1.3%)
ELECTRICAL EQUIPMENT
350 Phillips NV 29,750
Oil, Energy & Natural Gas
350 Royal Dutch Petroleum Co. 19,184
--------
TOTAL HOLLAND 48,934
--------
ITALY (0.4%)
CONSUMER PRODUCTS
875 Luxottica Group ADR 13,562
--------
JAPAN (0.2%)
ELECTRICAL EQUIPMENT
100 Hitachi Ltd. ADR 6,450
--------
NORWAY (0.4%)
CHEMICALS
350 Norsk Hydro AS Spon ADR 15,444
--------
SWEDEN (0.6%)
AUTOMOTIVE AND RELATED
737 Volvo Aktiebolaget Ser B ADR 21,787
--------
</TABLE>
(continued)
<PAGE> 81
OHIO NATIONAL FUND, INC.
STELLAR PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- ------------------------------------------------------------
<S> <C> <C>
SPAIN (1.7%)
BANKING
250 Banco de Santander ADR $12,672
OIL, ENERGY & NATURAL GAS
850 Repsol SA Spon. ADR 46,750
----------
TOTAL SPAIN 59,422
----------
TOTAL FOREIGN COMMON STOCK
(10.1%) (COST $265,098) $357,188
----------
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ------------------------------------------------------------
<S> <C> <C>
BANKING (1.5%)
1,000 Banco Bilbao Vizcaya 8.0% $25,750
1,000 BankUnited Cap II 9.6% 25,625
----------
51,375
----------
FINANCIAL SERVICES (1.0%)
1,500 MSDW Capital Trust I 7.1% 36,938
----------
UTILITIES (0.9%)
1,200 HL&P Cap Trust I 8.125% 30,600
----------
TOTAL PREFERRED STOCK
(3.4%) (COST $117,500) $118,913
----------
<CAPTION>
MARKET
SHARES WARRANTS VALUE
- ------------------------------------------------------------
<S> <C> <C>
46 Security Cap GRP-B $16
----------
TOTAL WARRANTS
(0.0%) (COST $0.00) $16
----------
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- ------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (17.5%)
$100,000 FNMA
6.210% 11-07-07 $103,511
125,000 Federal Home Loan Mortgage
7.920% 06-29-11 131,318
170,000 FNMA
6.030% 05-07-01 169,921
90,866 GNMA
7.500% 06-15-27 93,464
50,000 US Treasury Bond
8.125% 08-15-21 65,188
50,000 US Treasury Note
7.250% 05-15-04 54,265
----------
TOTAL LONG-TERM BONDS & NOTES
(17.5%) (COST $608,795) $617,667
----------
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- ------------------------------------------------------------
<S> <C> <C>
FINANCIAL (21.1%)
$745,000 Star Bank 5.200% 07-01-98
repurchase price $745,108
collateralized by GNMA certificates
pool # 8375
due 02-20-24 (Cost $745,000) $745,000
----------
TOTAL REPURCHASE AGREEMENTS
(21.1%) (COST $745,000) $745,000
----------
TOTAL HOLDINGS
(COST $3,372,610) $3,502,665
==========
<FN>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 82
OHIO NATIONAL FUND, INC.
STELLAR PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $3,372,610) .......................... $3,502,665
Cash in bank ......................................... 393
Receivable for fund shares sold ...................... 11,440
Dividends and accrued interest receivable ............ 18,138
Other ................................................ 356
----------
Total assets ........................................ 3,532,992
----------
Liabilities:
Payable for investment management services
(note 3) ............................................ 2,832
Other accrued expenses ............................... 3,452
----------
Total liabilities ................................... 6,284
----------
Net assets at market value $3,526,708
==========
Net assets consist of:
Par value, $1 per share .............................. $327,879
Paid-in capital in excess of par value ............... 3,037,556
Accumulated undistributed net realized gain on
investments ......................................... 30,393
Net unrealized appreciation on investments (note 1) .. 130,055
Undistributed net investment income .................. 825
Net assets at market value $3,526,708
==========
Shares outstanding (note 4) ........................... 327,879
Net asset value per share ............................. $10.76
==========
<CAPTION>
STATEMENT OF OPERATIONS
FOR SIX MONTHS
ENDED
JUNE 30, 1998
(UNAUDITED)
<S> <C>
Investment income:
Interest ......................................... $28,555
Dividends ........................................ 46,592
-------
Total investment income ......................... 75,147
-------
Expenses:
Management fees (note 3) ......................... 15,591
Custodian fees (note 3) .......................... 3,164
Accounting and transfer agent fees ............... 2,961
Other............................................. 155
-------
Total expenses .................................. 21,871
-------
Net investment income ........................... $53,276
-------
Realized and unrealized gain (loss) on investments:
Net realized gain from investments ............... $42,310
Net decrease in unrealized appreciation on
investments .................................... (28,013)
-------
Net gain on investments ........................ 14,297
-------
Net increase in net assets from operations ..... $67,573
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 83
OHIO NATIONAL FUND, INC.
STELLAR PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED 1-3-97
6-30-98 TO
(UNAUDITED) 12-31-97
---------- ----------
<S> <C> <C>
From operations:
Net investment income .............................................. $53,276 $73,156
Realized gain (loss) on investments ................................ 42,310 (11,917)
Unrealized gain (loss) on investments .............................. (28,013) 158,068
---------- ----------
Net increase in assets from operations ........................... 67,573 219,307
---------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income .......................... (52,690) (72,918)
---------- ----------
From capital share transactions (note 4):
Received from shares sold .......................................... 730,013 2,644,507
Received from dividends reinvested ................................. 52,690 72,918
Paid for shares redeemed ........................................... (77,426) (57,267)
---------- ----------
Increase in net assets derived from capital share transactions ... 705,277 2,660,158
---------- ----------
Increase in net assets .......................................... 720,160 2,806,547
Net Assets:
Beginning of period ................................................ 2,806,548 0
---------- ----------
End of period (a) .................................................. $3,526,708 $2,806,548
========== ==========
(a)Includes undistributed net investment income of .................. $825 $238
========== ==========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED 1-3-97
6-30-98 TO
(UNAUDITED) 12-31-97
---------- ----------
<S> <C> <C>
Per share data:
Net asset value, beginning of period ................................ $10.65 $10.00
Income from investment operations:
Net investment income .............................................. 0.18 0.32
Net realized and unrealized gain on investments .................... 0.10 0.64
------ ------
Total income from investment operations .......................... 0.28 0.96
------ ------
Less distributions:
Dividends from net investment income ............................... (0.17) (0.31)
------ ------
Net asset value, end of period ...................................... $10.76 $10.65
====== ======
Total return ........................................................ 2.63%(b) 9.70%
Ratios and supplemental data:
Ratio of expenses to average net assets ............................ 1.39%(a) 1.54%
Ratio of net investment income to average net assets ............... 3.38%(a) 3.07%
Portfolio turnover rate ............................................. 72% 17%
Average commission rate (c) ......................................... $0.17 $0.18
Net assets at end of period (millions)............................... $3.5 $2.8
<FN>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commissions paid on equity security transactions divided by
the total number of shares purchased and sold by the portfolio.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 84
RELATIVE VALUE PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Relative Value Portfolio seeks the highest total return as is consistent
with reasonable risk by investing in stocks which Star deems to represent
characteristics with low volatility, above-average yields and are undervalued
relative to the stocks comprising the S&P Composite Stock Index.
PERFORMANCE AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
TOTAL RETURN:
<S> <C>
One-year 22.24%
Since inception (1/3/97) 26.55%
</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 Relative Value Portfolio slightly lagged the major market index during the
first half of 1998. This occurred as investors pushed for revenue growth over
valuation as a stock selection criteria. The driving force behind this switch
continues to be the stable low inflation, declining interest rate environment.
In this type of setting investors become more aggressive in their security
selection and push investment horizons out farther, thereby justifying the
premium paid for future earnings. The stock selection discipline of the
portfolio remains constant over time and as a result we experience these
intermittent periods of underperformance.
The strongest areas to date in the portfolio have been the financial services
area and the pharmaceutical stocks, both perennial value investments. The energy
sector bore the brunt of the price decline in crude oil during the first six
months as the price of a barrel fell from $22 to $12. Even non-oil related
energy companies witnessed price declines in sympathy. The best performing stock
during the first half was Lucent Technologies, a spin-off from AT&T, which
gained 120 percent. The largest single decliner was Cincinnati Financial, which
retreated some 43 percent over the same time- period.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Relative Value Portfolio S&P 500
(Commenced operations Index
January 3, 1997)
<S> <C> <C>
12/31/96 $10,000.00 $10,000.00
06/30/97 11,628.00 12,060.00
12/31/97 12,828.01 13,335.95
06/30/98 14,213.43 15,697.74
</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 STOCKS AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
1. Intel Corp 5.00
2. Philip Morris Cos Inc 4.74
3. IBM Corp 4.43
4. Texaco Inc 4.03
5. Procter & Gamble Co 3.51
6. J.C. Penney Inc 3.48
7. Lehman Brothers Holding Inc 3.36
8. Smithkline Beecham PLC ADR Cl A 3.21
9. Cincinnati Bell Inc 2.76
10. General Electric 2.63
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
% of Portfolio
<S> <C>
Technology 18.59
Financial Services 17.27
Energy 11.23
Consumer Staples 10.45
Health Care 9.50
</TABLE>
<PAGE> 85
OHIO NATIONAL FUND, INC.
RELATIVE VALUE PORTFOLIO
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS JUNE 30, 1998
(UNAUDITED)
MARKET
SHARES U.S. COMMON STOCK VALUE
- ----------------------------------------------------------------
<S> <C> <C>
AEROSPACE (4.3%)
2,000 Allied Signal Inc. $88,750
2,500 Lockheed Martin Corp. 264,688
1,500 Raytheon Co. Class B 88,687
---------
442,125
---------
AUTOMOTIVE & RELATED (2.7%)
1,500 Ford Motor Co. 88,500
1,000 General Motors Corp. 66,813
1,900 Goodyear Tire & Rubber Co. 122,431
---------
277,744
---------
BANKING (5.6%)
1,100 Bank New York Inc. 66,756
250 Citicorp 37,313
5,000 First Financial Bancorp 129,375
2,000 Mellon Bank Corp. 139,250
2,000 Nationsbank Corp. 153,000
2,000 TCF Financial Corp. 59,000
---------
584,694
---------
CHEMICALS (2.3%)
2,500 Dow Chemical Co. 241,719
---------
COMMUNICATIONS (5.8%)
4,000 AT&T Corp. 228,500
10,000 Cincinnati Bell Inc. 286,250
1,000 Lucent Technologies Inc. 83,187
---------
597,937
---------
COMPUTER & RELATED (11.0%)
2,000 Honeywell Inc. 167,125
7,000 Intel Corp. 518,875
4,000 International Business Machines 459,250
---------
1,145,250
---------
CONSUMER PRODUCTS (9.9%)
3,000 Gillette Co. 170,062
12,500 Philip Morris Cos. Inc. 492,188
4,000 Procter & Gamble Co. 364,250
---------
1,026,500
---------
DRUGS (6.2%)
3,600 American Home Products Corp. 186,300
2,100 Bristol Myers Squibb Co. 241,369
1,600 Merck & Co. Inc. 214,000
---------
641,669
---------
ELECTRICAL EQUIPMENT (3.2%)
3,000 General Electric Co. 273,000
1,000 Johnson Controls Inc. 57,188
---------
330,188
---------
FINANCIAL SERVICES (5.9%)
2,000 American Express Co. 228,000
393 Associates First Capital CL A 30,212
4,500 Lehman Brothers Holdings Inc. 349,031
---------
607,243
---------
FOOD AND RELATED (0.4%)
2,000 Lance Inc. 44,750
---------
INSURANCE SERVICES (5.4%)
3,000 Cincinnati Financial Corp. 115,125
6,000 Ohio Casualty Corp. 265,500
3,000 Travelers Group Inc. 181,875
---------
562,500
---------
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- ----------------------------------------------------------------
OIL, ENERGY & NATURAL GAS (8.8%)
5,000 Halliburton Co. $222,813
3,500 Mobil Corp. 268,187
7,000 Texaco Inc. 417,813
----------
908,813
----------
RETAIL (5.0%)
5,000 JC Penny Inc. 361,563
2,500 Sears Roebuck & Co. 152,656
----------
514,219
----------
TRANSPORTATION & EQUIPMENT (0.8%)
400 Burlington Northern Santa Fe Corp. 39,275
1,500 Comair Holdings Inc. 46,312
----------
85,587
----------
UTILITIES (4.4%)
3,000 Cinergy Corp. 105,000
5,000 GPU Inc. 189,062
3,000 GTE Corp. 166,875
----------
460,937
----------
TOTAL U.S. COMMON STOCK
(84.9%) (COST $7,276,867) $8,471,875
----------
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- ----------------------------------------------------------------
AUSTRALIA (0.1%)
BANKING
250 National Australia Bank Ltd. ADR $16,516
----------
UNITED KINGDOM (4.8%)
COMMUNICATIONS
1,000 Cable & Wireless Co. ADR 36,875
1,000 Vodafone Group PLC ADR 126,062
----------
162,937
----------
DRUGS
5,500 Smithkline Beecham PLC ADR 332,750
----------
TOTAL UNITED KINGDOM 495,687
----------
HOLLAND (1.3%)
OIL, ENERGY AND NATURAL GAS
2,500 Royal Dutch Petroleum 137,031
----------
TOTAL FOREIGN COMMON STOCK
(3.0%) (COST $487,937) $649,234
----------
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- ----------------------------------------------------------------
FINANCIAL (11.2%)
$1,337,000 Star Bank 5.20% due 7-01-98
repurchase price $1,160,168
collateralized by GNMA certificates
pool # 8375
due 02-20-24 (cost $1,160,000) $ 1,160,000
-----------
TOTAL REPURCHASE AGREEMENTS
(11.2%) (COST $1,160,000) $ 1,160,000
-----------
TOTAL HOLDINGS
(COST $8,924,804)(A) $10,281,109
===========
<FN>
(a) Also represents cost for Federal income tax purposes.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 86
OHIO NATIONAL FUND, INC.
RELATIVE VALUE PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $8,924,804) ....................... $10,281,109
Cash in bank ...................................... 16
Receivable for fund shares sold ................... 90,145
Dividends and accrued interest receivable ......... 14,209
Other ............................................. 2,207
-----------
Total assets ..................................... 10,387,686
-----------
Liabilities:
Payable for investment management services
(note 3) ......................................... 7,428
Other accrued expenses ............................ 3,188
-----------
Total liabilities ................................ 10,616
-----------
Net assets at market value $10,377,070
===========
Net assets consist of:
Par value, $1 per share ........................... $742,745
Paid-in capital in excess of par value ............ 8,243,171
Accumulated undistributed net realized gain on
investments ...................................... 32,750
Net unrealized appreciation on investments (note 1) 1,356,305
Undistributed net investment income ............... 2,099
-----------
Net assets at market value $10,377,070
===========
Shares outstanding (note 4) ........................ 742,745
Net asset value per share .......................... $13.97
===========
<CAPTION>
STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<S> <C>
Investment income:
Interest ...................................... $32,378
Dividends ..................................... 60,883
-----------
Total investment income ...................... 93,261
-----------
Expenses:
Management fees (note 3) ...................... 35,641
Custodian fees (note 3) ....................... 3,182
Accounting and transfer agent fees ............ 1,529
Other.......................................... 230
-----------
Total expenses ............................... 40,582
-----------
Net investment income ........................ $52,679
-----------
Realized and unrealized gain on investments:
Net realized gain from investments ............ $35,196
Net increase in unrealized appreciation on
investments ................................. 592,251
-----------
Net gain on investments ..................... 627,447
-----------
Net increase in net assets from operations .. $680,126
===========
</TABLE>
<PAGE> 87
OHIO NATIONAL FUND, INC.
RELATIVE VALUE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED 1-3-97
6-30-98 TO
(UNAUDITED) 12-31-97
---------------- ----------
<S> <C> <C>
From operations:
Net investment income ............................................ $52,679 $47,841
Realized gain (loss) on investments .............................. 35,196 (2,446)
Unrealized gain on investments ................................... 592,251 764,054
----------- ----------
Net increase in assets from operations .......................... 680,126 809,449
----------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income ........................ (50,756) (47,665)
----------- ----------
From capital share transactions (note 4):
Received from shares sold ........................................ 4,171,151 5,066,632
Received from dividends reinvested ............................... 50,756 47,665
Paid for shares redeemed ......................................... (207,504) (142,784)
----------- ----------
Increase in net assets derived from capital share transactions .. 4,014,403 4,971,513
----------- ----------
Increase in net assets ......................................... 4,643,773 5,733,297
Net Assets:
Beginning of period .............................................. 5,733,297 0
----------- ----------
End of period (a) ................................................ $10,377,070 $5,733,297
=========== ==========
(a) Includes undistributed net investment income of ................. $2,099 $176
=========== ==========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED 1-3-97
6-30-98 TO
(UNAUDITED) 12-31-97
---------------- ----------
<S> <C> <C>
Per share data:
Net asset value, beginning of period .............................. $12.68 $10.00
Income from investment operations:
Net investment income ............................................ 0.09 0.16
Net realized and unrealized gain on investments .................. 1.28 2.66
----------- ----------
Total income from investment operations ......................... 1.37 2.82
----------- ----------
Less distributions:
Dividends from net investment income ............................. (0.08) (0.14)
----------- ----------
Net asset value, end of period .................................... $13.97 $12.68
=========== ==========
Total return ...................................................... 10.80%(b 28.28%
Ratios and supplemental data:
Ratio of expenses to average net assets .......................... 1.02%(a) 1.18%
Ratio of net investment income to average net assets ............. 1.32%(a) 1.35%
Portfolio turnover rate ........................................... 10% 7%
Average commission rate (c) ....................................... $0.15 $0.24
Net assets at end of period (millions)............................. $10.4 $5.7
<FN>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commissions paid on equity security transactions divided by the
total number of shares purchased and sold by the portfolio.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 88
BLUE CHIP PORTFOLIO
Ohio National Fund, Inc.
OBJECTIVE
The Blue Chip Portfolio seeks growth of capital and income by investing in
securities of high quality companies.
PERFORMANCE AS OF JUNE 30, 1998
Total Return:
Since inception (5/1/98) 0.00%
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 second quarter appeared to be a reasonable continuation
of the bull market with the S&P 500 returning 3.3 percent. However, market
participation was quite narrow during the quarter as rekindled concerns over
Asia and the possibility of global recession caused a flight to quality in both
the equity and fixed income markets. This global flight to quality manifested
itself in the domestic equity markets by focusing investor attention on the
extremely large capitalization global growth companies which have led the market
for the past three years and dominate the returns of the S&P 500. For the
quarter, the largest 50 stocks in the S&P 500, which comprise one half of the
index's weight, provided a total return of over 8 percent. The remaining 450
stocks, which comprise the other half of the index's weight, actually lost value
during the quarter. This dominance by the richly valued "nifty-fifty" stocks
made it difficult for active managers to outperform the S&P 500 benchmark for
the period.
There currently are significant tailwinds pushing the stock market: ample
liquidity driven by favorable demographics, low inflation and interest rates,
increased productivity due to technology and enormous free cash flow generation
by corporate America. While these forces can justify current valuations on a
backward looking basis, moving forward it is imperative that corporate earnings
remain strong and inflation remains subdued for this bull market to continue.
There is nothing on the near horizon to suggest that this cannot be
accomplished, however, one must recognize that the margin for error is quite
small given the markets high valuation.
We continue to overweight utilities, transportation, energy and cyclicals as
valuations remain attractive. Finance and health care remain underweighted due
to excessive valuations. Our investments in technology have increased due to
their attractiveness.
CHANGE IN VALUE OF $10,000 INVESTMENT
[GRAPH]
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
% of Portfolio
1. Electronic Data Systems Corp 2.34
2. Phamacia & Upjohn Inc 2.29
3. UST Inc 2.19
4. Archer-Daniels Midland Co 1.92
5. Wal-Mart Stores Inc 1.92
6. News Corp Ltd ADR 1.91
7. CIGNA Corporation 1.87
8. Ashland Inc 1.86
9. Peco Energy Company 1.84
10. First Data Corp 1.80
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
% of Portfolio
Oil, Energy & Natural Gas 9.19
Food & Related 9.09
Utilities 8.69
Computer & Related 7.83
Financial Services 7.76
<PAGE> 89
OHIO NATIONAL FUND, INC.
BLUE CHIP PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- ----------------------------------------------------------------------
<S> <C>
AEROSPACE (0.8%)
300 Raytheon CL A $ 17,288
--------
Automotive & Related (2.2%)
200 General Motors Corp. 13,362
500 ITT Industries Inc. 18,688
300 Johnson Controls Inc. 17,156
--------
49,206
--------
BANKING (0.8%)
300 Republic New York Corp. 18,881
--------
BUSINESS SERVICES (3.4%)
200 *AMR Corp. 16,650
1,200 First Data Corp. 39,975
300 *Lexmark Intl. Group CL A 18,300
--------
74,925
--------
CHEMICALS (0.9%)
200 Dow Chemical Co. 19,338
--------
COMMUNICATIONS (1.8%)
100 Motorola Inc. 5,256
400 SBC Communications Inc. 16,000
400 US West Inc. 18,800
--------
40,056
--------
COMPUTER & RELATED (7.6%)
1,300 Electronic Data Systems Corp. 52,000
200 IBM CO. 22,963
1,800 *Novell Inc. 22,950
800 *Seagate Technology Inc. 19,050
1,400 *Sequent Computer System Inc. 16,887
800 *Storage Technology Corp. 34,700
--------
168,550
--------
CONSUMER PRODUCTS (8.4%)
200 Deere & Co. 10,575
300 Eastman Kodak Co. 21,919
500 Liz Calibrone Inc. 26,125
700 Phillip Morris Co. Inc. 27,563
300 RJR Nabisco Corp. 7,125
800 *Reebok International Ltd. 22,150
300 Unilever N.V. 23,681
1,800 UST Inc. 48,600
--------
187,738
--------
DRUGS (5.0%)
600 Abbott Laboratories 24,525
200 Merck & Co. Inc. 26,750
800 *Perrigo Co. 8,050
800 Pharmacia & Upjohn Inc. 50,738
--------
110,063
--------
ELECTRICAL EQUIPMENT (1.9%)
600 AMP Inc. 20,625
700 Houston Industries Inc. 21,613
--------
42,238
--------
ENTERTAINMENT AND LEISURE (2.4%)
600 *Viacom Inc. CL A 35,100
300 *Viacom Inc. CL B 17,475
--------
52,575
--------
FINANCIAL SERVICES (7.7%)
300 Bear Stearns Co. Inc. $17,063
600 CIGNA Corp. 41,400
100 General RE Corp. 25,350
900 Green Tree Financial Corp. 38,531
300 MBIA Inc. 22,463
300 Morgan Stanley, Dean Witter Discover 27,412
--------
172,219
--------
FOOD AND RELATED (5.3%)
600 Anheuser Busch Co. Inc. 28,313
300 Bestfoods 17,419
800 *Corn Products Intl. Inc. 27,100
300 Sara Lee Corp. 16,781
700 Seagram Co. Ltd. 28,656
--------
118,269
--------
FORESTRY AND PAPER PRODUCTS (0.7%)
600 Consolidated Papers Inc. 16,350
--------
INDUSTRIAL SERVICES (6.1%)
2,200 Archer-Daniels Midland Co. 42,625
400 Browning-Ferris Ind. Inc. 13,900
400 Centrex Corp. 15,100
500 General Signal Corp. 18,000
300 Nucor Corp. 13,800
900 Waste Management Inc. 31,500
--------
134,925
--------
INSURANCE SERVICES (2.4%)
200 Allstate Corp. 18,312
600 Marsh & McLennan Co. Inc. 36,263
--------
54,575
--------
MACHINERY (0.9%)
100 Cincinnati Milacron Inc. 2,431
400 Ingersoll-Rand Co. 17,625
--------
20,056
--------
MEDIA AND PUBLISHING (1.0%)
800 Readers Digest Assoc. Inc. CL A 21,700
--------
MEDICAL AND RELATED (3.7%)
300 Bristol-Myers Squibb Co. 34,481
1,400 Oxford Health Plans Inc. 21,438
400 United Healthcare Corp. 25,400
--------
81,319
--------
METALS AND MINING (1.3%)
1,500 Barrick Gold Corp. 28,781
--------
OIL, ENERGY & NATURAL GAS (8.4%)
300 Amerada-Hess Corp. 16,294
800 Ashland Inc. 41,300
300 Exxon Corp. 21,394
300 Mobil Corp. 22,987
800 Occidental Petroleum Corp. 21,600
900 Sun Co. Inc. 34,931
200 Texaco Inc. 11,938
500 USX-Marathon Group 17,156
--------
187,600
--------
(continued)
</TABLE>
<PAGE> 90
OHIO NATIONAL FUND, INC.
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE AND LEASING (0.5%)
400 *Security Capital Group Inc. CL B $10,650
----------
RESTAURANTS (1.6%)
1,100 *Tricon Global Restaurants Inc. 34,856
----------
RETAIL (7.3%)
1,000 American Stores Co. 24,187
500 Dillards Inc. CL A 20,719
1,100 *K Mart Corp. 21,175
600 Sherwin-Williams Co. 19,875
1,400 *Toys "R" Us Inc. 32,987
700 Wal-Mart Stores Inc. 42,525
----------
161,468
----------
TRANSPORTATION AND EQUIPMENT (1.7%)
500 CNF Transportation Inc. 21,250
500 Ryder Systems Inc. 15,781
----------
37,031
----------
UTILITIES (8.7%)
300 Coastal Corp. 20,944
300 Columbia Gas System Inc. 16,687
500 Consolidated Natural Gas Co. 29,438
900 Entergy Corp. 25,875
300 GTE Corp. 16,687
800 PG&E Corp. 25,250
1,400 *Peco Energy Co. 40,862
500 Public Service Enterprises Group 17,219
----------
192,962
----------
TOTAL U.S. COMMON STOCK
(92.5%) (Cost $2,061,716) $2,053,619
----------
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------------------------
AUSTRALIA (0.2%)
MEDIA AND PUBLISHING
100 News Corp. Ltd. ADR $3,212
----------
CANADA (0.7%)
TRANSPORTATION AND EQUIPMENT
300 Canadian National Railway 15,938
----------
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------------------------
Japan (0.7%)
Electrical Equipment
100 Matsushita Electric Ind. Co. ADR $16,075
----------
Netherlands (0.7%)
Oil, Energy and Natural Gas
1,000 Cable & Wireless Co. ADR 16,444
----------
Sweden (1.3%)
Electrical Equipment
200 ABB AB Sponsored ADR 27,625
----------
Total Foreign Common Stock
(3.6%) (Cost $87,668) $79,294
----------
MARKET
SHARES FOREIGN PREFERRED STOCK VALUE
- -------------------------------------------------------------------------------
Australia (1.9%)
Media and Publishing
1,500 News Corp. Ltd. ADR $42,375
----------
Total Foreign Preferred Stock
(1.9%) (Cost $35,812) $42,375
----------
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------------------------
Financial (2.3%)
$51,000 Star Bank 5.20% due 7-01-98
repurchase price $51,007
collateralized by GNMA certificates
pool # 8375
due 02-20-24 (cost $51,000) $51,000
----------
Total Repurchase Agreements
(2.3%) (Cost $51,000) $51,000
----------
Total Holdings
(Cost $2,236,196) (a) $2,226,288
==========
</TABLE>
*Non-inomce producing
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 91
OHIO NATIONAL FUND, INC.
BLUE CHIP PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $2,236,196) ................................. $ 2,226,288
Cash in bank ................................................ 799
Dividends and accrued interest receivable ................... 2,570
Other ....................................................... 3,250
-----------
Total assets ............................................... 2,232,907
-----------
Liabilities:
Payable for securities purchased ............................ 10,460
Payable for investment management services
(note 3) ................................................... 1,561
Other accrued expenses ...................................... 1,274
-----------
Total liabilities .......................................... 13,295
-----------
Net assets at market value ................................... $ 2,219,612
===========
Net assets consist of:
Par value, $1 per share ..................................... $ 221,843
Paid-in capital in excess of par value ...................... 1,996,079
Accumulated undistributed net realized gain on
investments ................................................ 8,352
Net unrealized depreciation on investments (note 1) ......... (9,908)
Undistributed net investment income ......................... 3,246
-----------
Net assets at market value ................................... $ 2,219,612
===========
Shares outstanding (note 4) .................................. 221,843
Net asset value per share .................................... $ 10.01
===========
STATEMENT OF OPERATIONS
MAY 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
Investment income:
Interest .................................................... $ 1,598
Dividends ................................................... 6,992
-----------
Total investment income .................................... 8,590
-----------
Expenses:
Management fees (note 3) .................................... 3,039
Custodian fees (note 3) ..................................... 900
Directors fees (note 3) ..................................... 60
Professional fees ........................................... 60
Accounting and transfer agent fees .......................... 1,095
Other ....................................................... 190
-----------
Total expenses ............................................. 5,344
-----------
Net investment income ...................................... $ 3,246
-----------
Realized and unrealized gain (loss) on investments:
Net realized gain from investments .......................... $ 8,352
Net increase in unrealized depreciation on
investments ............................................... (9,908)
-----------
Net loss on investments ................................... (1,556)
-----------
Net increase in net assets from operations ................ $ 1,690
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 92
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
BLUE CHIP PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Period from May 1, 1998 to June 30, 1998 (Unaudited)
<S> <C>
From operations:
Net investment income ................................... $ 3,246
Realized gain on investments ............................ 8,352
Unrealized loss on investments .......................... (9,908)
-------------
Net increase in assets from operations ................. 1,690
-------------
From capital share transactions (note 4):
Received from shares sold ............................... 2,217,922
-------------
Increase in net assets ................................. 2,219,612
Net Assets:
Beginning of period ..................................... 0
-------------
End of period (a) ....................................... $ 2,219,612
=============
(a) Includes undistributed net investment income of ...... $ 3,246
=============
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
For the Period from May 1, 1998 to June 30, 1998 (Unauduted)
<S> <C>
Per share data:
Net asset value, beginning of period ..................... $ 10.00
Income from investment operations:
Net investment income ................................... 0.02
Net realized and unrealized loss on investments ......... (0.01)
-------------
Total gain from investment operations .................. 0.01
Net asset value, end of period ........................... $ 10.01
=============
Total return ............................................. 0.00%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets ................. 1.53%(a)
Ratio of net investment income to average net assets .... 0.93%(a)
Portfolio turnover rate .................................. 4%
Average commission rate (c) .............................. $ 0.03
Net assets at end of period (millions) ................... $ 2.2
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold by
the portfolio.
The accompanying notes are an integral part of these financial statements.
<PAGE> 93
EQUITY INCOME PORTFOLIO
OHIO NATIONAL FUND, INC.
- -------------------------------------------------------------------------------
OBJECTIVE
- -------------------------------------------------------------------------------
The Equity Income Portfolio seeks above-average income and capital appreciation
by investing primarily in income-producing equity securities.
- -------------------------------------------------------------------------------
PERFORMANCE AS OF JUNE 30, 1998
- -------------------------------------------------------------------------------
Total Return:
Since inception (5/1/98) 0.34%
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
- -------------------------------------------------------------------------------
After completing one of the strongest first quarters in 50 years, the market
traded in a choppy pattern for much of the second quarter. Although the S&P500
advanced an additional 3.30% in the second quarter, all of the appreciation
occurred in the second half of June. Since inception on May 1 1998 through June
30, 1998, the portfolio had a total return of 0.34 percent versus a -1.15
percent return for the average equity income fund.
The second half of the year will likely reveal the extend to which the
deep and growing crisis in Asian economies will affect U.S.-based companies.
Evidence is beginning to build that the U.S. economy is slowing. Export orders
continue to contract. Retailers have reported significantly weaker sales in
recent weeks. Unemployment claims have moved up. Manufacturing activity in the
midwest has weakened, reflecting a combination of the General Motors strike and
Asian recessions. It is important to remember that the problems in Asia have
directly affected economies representing one-third of the world GDP. The pricing
environment remain extremely weak, as evidenced by the National Association of
Purchasing Managers price index, which has fallen to its lowest level since May
1991. The positive effect of this weakness is that the Federal Reserved hasn't
moved to increase interest rates. At this time, inflation remains at a 30-year
low and consumer confidence is at its highest level since June 1969.
The majority of stocks have been declining in recent months. In this
environment, we will continue to implement our sector-neutral strategy,
searching for market-leading companies with consistent revenue and earnings
streams. We will emphasize dividend-paying common stocks and use convertible
securities to augment our earnings and to cushion the Fund's performance in
market downturns.
- -------------------------------------------------------------------------------
CHANGE IN VALUE OF $10,000 INVESTMENT
- -------------------------------------------------------------------------------
[GRAPH]
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
- -------------------------------------------------------------------------------
% of Portfolio
1. American Home Products Corp 2.06
2. General Mills Inc 2.04
3. Merck & Co Inc 2.00
4. Banc One Corp 1.95
5. Microsoft Corp Conv Pfd 1.89
6. Baxter International Inc 1.88
7. Enron Corp 1.88
8. J.C. Penney Co Inc 1.80
9. First Union Corp 1.74
10. Bristol-Myers Squibb Co 1.72
- -------------------------------------------------------------------------------
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
- -------------------------------------------------------------------------------
% of Portfolio
Financial Services 19.09
Consumer Products 16.19
Utilities 13.28
Technology 10.31
Health Care 8.65
<PAGE> 94
OHIO NATIONAL FUND, INC.
EQUITY INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Market
Shares Common Stock Value
- -------------------------------------------------------------------------------
<S> <C>
AEROSPACE (2.2%)
500 General Dynamics Corp. $ 23,250
200 Lockhead Martin Corp. 21,175
--------
44,425
--------
AUTOMOTIVE & RELATED (2.5%)
800 Cooper Tire and Rubber Co. 16,500
400 Ford Motor Co. 23,600
100 Magna International Inc. 6,862
--------
46,962
--------
BANKING (7.4%)
700 Banc One Corp. 39,069
400 Chase Manhattan Corp. 30,200
600 First Union Corp. 34,950
300 Mellon Bank Corp. 20,888
300 Nationbank Corp. 22,950
--------
148,057
--------
BUSINESS SERVICES (0.4%)
100 Xerox 10,163
--------
CHEMICALS (0.7%)
200 Duponte (EI) DE Nemours & Co. 14,926
--------
COMMUNICATIONS (2.2%)
500 Ameritech Corp. 22,438
300 Sprint Corp. 21,150
--------
43,588
--------
COMPUTER & RELATED (3.3%)
400 Hewlett Packard Co. 23,950
300 IBM CO. 34,444
700 Western Digital Corp. 8,269
--------
66,663
--------
CONSUMER PRODUCTS (5.5%)
200 AVON Products Inc. 15,500
1,200 Dial Corp. 31,125
400 Kimberly Clark Corp. 18,350
600 Phillip Morris Co. Inc. 23,625
800 UST Inc. 21,600
--------
110,200
--------
CONTAINERS (1.2%)
500 Crown Cork & Seal 23,750
--------
DRUGS (6.4%)
800 Abbott Laboratories 32,700
800 American Home Products Corp. 41,400
300 Merck & Co. Inc. 40,125
200 Tellabs Inc. 14,325
--------
128,550
--------
ELECTRICAL EQUIPMENT (3.1%)
600 AMP Inc. 20,625
500 Avnet Inc. 27,344
200 Intel Corp. 14,825
--------
62,794
--------
FINANCIAL SERVICES (2.6%)
100 Associated First Capital Corp. CL A 7,688
400 H&R Block Inc. 16,850
300 Morgan Stanley, Dean Whitter 27,412
--------
51,950
--------
FOREIGN (1.2%)
500 Diageo Plc ADR 24,094
--------
Food and Related (3.7%)
600 General Mills Inc. $41,025
600 HJ Heinz Co. 33,675
--------
74,700
--------
INDUSTRIAL SERVICES (3.3%)
700 Browning Ferris Ind. 13,900
700 Dresser Industries Inc. 30,844
300 Textron Inc. 21,506
--------
66,250
--------
INSURANCE SERVICES (2.2%)
100 General RE Corp. 25,350
300 Marsh & McLennan Co. Inc. 18,131
--------
43,481
--------
MANUFACTURING (0.9%)
400 York Intl. Corp. 17,425
--------
MEDIA AND PUBLISHING (0.3%)
300 Hollinger Intl. Publishing Inc. 5,100
--------
MEDICAL AND RELATED (5.9%)
700 Baxter International Inc. 37,669
600 Bergen Brunswig Corp. CL A 27,825
300 Bristol-Myers Squibb 34,481
400 US Surgical Corp. 18,250
--------
118,225
--------
METALS AND MINING (2.1%)
900 Allegheny Teledyne Inc. 20,587
1,100 Barrick Gold Corp. 21,106
--------
41,693
--------
OIL, ENERGY & NATURAL GAS (4.9%)
400 Burlington Resources Inc. 17,225
400 Exxon Corp. 28,525
400 Mobil Corp. 30,650
700 Ultramar Diamond Shamrock 22,094
--------
98,494
--------
RESTAURANTS (0.2%)
200 Wendy's Intl. Inc. 4,700
--------
RETAIL (2.9%)
1,300 Food Lion Inc. CL A 13,812
900 Food Lion Inc. CL B 9,056
500 JC Penney Inc. 36,156
--------
59,024
--------
TRANSPORTATION & EQUIPMENT (1.0%)
500 CNF Transportation Inc. 21,250
--------
UTILITIES (11.4%)
400 CMS Energy Corp. 17,600
300 Elpaso Natural Gas 11,475
700 Enron Corp. 37,844
300 General Electric Co. 27,300
400 MIC Communications 23,250
1,000 Pacificorp 22,625
500 Sonat Inc. 19,312
300 Teco Energy Inc. 24,131
900 Texas Utilities Co. 29,138
700 Williams Co. Inc. 16,875
--------
229,550
--------
(continued)
</TABLE>
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
EQUITY INCOME PORTFOLIO (CONTINUED)
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------------------------
<S> <C>
TOTAL U.S. COMMON STOCK
(77.5%) (Cost $1,554,602) $1,556,014
----------
REAL ESTATE MARKET
SHARES INVESTMENT TRUSTS VALUE
- -------------------------------------------------------------------------------
300 Colonial Properties Trust $9,300
300 Duke Realty Investments Inc. 7,106
200 Equity Residential Properties Trust 9,487
300 Liberty Property Trust 7,669
200 Meditrust Corp. 5,587
300 New Plan Realty Trust 7,350
300 Post Properties Inc. 11,550
----------
TOTAL REAL ESTATE INVESTMENT
TRUSTS (2.9%) (COST $59,602) $58,049
----------
MARKET
SHARES PREFERRED STOCKS VALUE
- --------------------------------------------------------------------------------
COMPUTER AND RELATED (1.9%)
400 Microsoft Corp. $2.196 Conv. $38,000
----------
CONSUMER PRODUCTS (1.0%)
300 Ralston Purina Co. 7% Conv. 19,050
----------
FINANCIAL SERVICES (4.1%)
500 Conseco Inc. 7% Series F Conv. 26,500
200 Jefferson Pilot 7.25% Conv. 26,525
400 Merril Lynch & Co. 6.25% Conv. 12,600
100 Sunamerica Inc. $3.10 Ser E Conv. 16,112
----------
81,737
----------
FOOD AND RELATED (1.0%)
400 Suiza Foods Corp. 5.5% Conv. 19,900
----------
INDUSTRIAL SERVICES (0.3%)
200 Browning Perris Ind. 7.25% 6,950
----------
MEDIA AND PUBLISHING (1.2%)
1,500 Hollinger Intl. Pub. Inc. 9.75% Conv. 23,625
----------
MEDICAL AND RELATED (1.1%)
200 McKesson Corp. 5% Conv. 22,725
----------
OIL, ENERGY AND NATURAL GAS (0.8%)
300 Unocal Corp. $3.125 Conv. 16,087
----------
RESTAURANTS (0.8%)
300 Wendy's Intl. Inc. Ser A $2.50 Conv. 16,500
----------
UTILITIES (0.8%)
400 Williams Co. $3.50 Conv. 15,950
----------
TOTAL PREFERRED STOCKS
(13.0%) (COST $256,354) $260,524
----------
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
AUTOMOTIVE AND RELATED (1.5%)
- -------------------------------------------------------------------------------
$15,000 MAGNA INTL. INC.
5.000% due 10-15-02 $19,144
10,000 Magna Intl. Inc.
4.875% due 02-15-05 11,050
----------
30,194
----------
COMPUTER AND RELATED (2.1%)
20,000 EMC CORP.
3.250% due 03-15-02 41,275
----------
RETAIL (1.9%)
20,000 Home Depot Inc.
3.250% due 10-01-01 37,350
----------
OIL, ENERGY AND NATURAL GAS (1.1%)
20,000 Diamond Offshore
3.750% due 02-15-07 23,250
----------
TOTAL CONVERTIBLE DEBENTURES
(6.6%) (COST $129,574) $132,069
----------
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------------------------
FINANCIAL (0.5%)
$10,000 Star Bank 5.20% due 7-01-98
repurchase price $10,001
collateralized by GNMA certificates
pool # 8375
due 02-20-24 (COST $10,000) $10,000
----------
TOTAL REPURCHASE AGREEMENTS
(0.5%) (COST $10,000) $10,000
----------
TOTAL HOLDINGS
(COST $2,010,132) (a) $2,016,656
==========
</TABLE>
<PAGE> 95
OHIO NATIONAL FUND, INC.
EQUITY INCOME PORTFOLIO
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 TO JUNE 30, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
Investments in securities at market value
<S> <C>
(note 1) (cost $2,010,132) ............................... $ 2,016,656
Cash in bank .............................................. 921
Dividends and accrued interest receivable ................. 3,875
Other ..................................................... 3,250
-----------
Total assets ............................................. 2,024,702
-----------
Liabilities:
Payable for securities purchased .......................... 14,330
Payable for investment management services
(note 3) ................................................. 1,214
Other accrued expenses .................................... 1,210
-----------
Total liabilities ........................................ 16,754
-----------
Net assets at market value ................................. $ 2,007,948
===========
Net assets consist of:
Par value, $1 per share ................................... $ 200,100
Paid-in capital in excess of par value .................... 1,800,900
Accumulated undistributed net realized loss on
investments .............................................. (4,112)
Net unrealized appreciation on investments (note 1) ....... 6,524
Undistributed net investment income ....................... 4,536
-----------
Net assets at market value ................................. $ 2,007,948
===========
Shares outstanding (note 4) ................................ 200,100
Net asset value per share .................................. $ 10.03
===========
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS MAY 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
Investment income:
Interest .................................................. $ 1,839
Dividends ................................................. 7,442
-----------
Total investment income .................................. 9,281
-----------
Expenses:
Management fees (note 3) .................................. 2,440
Custodian fees (note 3) ................................... 900
Directors fees (note 3) ................................... 60
Professional fees ......................................... 60
Accounting and transfer agent fees ........................ 1,095
Other ..................................................... 190
-----------
Total expenses ........................................... 4,745
-----------
Net investment income .................................... $ 4,536
-----------
Realized and unrealized gain (loss) on investments:
Net realized loss from investments ........................ ($ 4,112)
Net increase in unrealized appreciation on
investments ............................................. 6,524
-----------
Net gain on investments ................................. 2,412
-----------
Net increase in net assets from operations .............. $ 6,948
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 96
OHIO NATIONAL FUND, INC.
Equity Income Portfolio
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------
For the Period from May 1, 1998 to June 30, 1998 (Unaudited)
<TABLE>
<S> <C>
From operations:
Net investment income ..................................................... $ 4,536
Realized loss on investments .............................................. (4,112)
Unrealized gain on investments ............................................ 6,524
-------------
Net decrease in assets from operations ................................... 6,948
-------------
From capital share transactions (note 4):
Received from shares sold ................................................. 2,001,000
-------------
Increase in net assets ................................................... 2,007,948
Net Assets:
Beginning of period ....................................................... 0
-------------
End of period (a) ......................................................... $ 2,007,948
============
(a) Includes undistributed net investment income of ......................... $ 4,536
============
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
For the Period from May 1, 1998 to June 30, 1998 (Unaudited)
Per share data:
<S> <C>
Net asset value, beginning of period ....................................... $ 10.00
Income from investment operations:
Net investment income ..................................................... 0.02
Net realized and unrealized gain on investments ........................... 0.01
-------------
Total gain from investment operations .................................... 0.03
-------------
Net asset value, end of period ............................................. $ 10.03
Total return ............................................................... 0.34%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets ................................... 1.43%(a)
Ratio of net investment income to average net assets ...................... 1.37%(a)
Portfolio turnover rate .................................................... 9%
Average commission rate (c) ................................................ $ 0.03
Net assets at end of period (millions) ..................................... $ 2.0
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold by
the portfolio.
The accompanying notes are an integral part of these financial statements.
<PAGE> 97
HIGH INCOME BOND PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The High Income Bond Portfolio seeks high current income by investing primarily
in lower rated corporate debt obligations.
PERFORMANCE AS OF JUNE 30, 1998
TOTAL RETURN:
Since inception (5/1/98) 1.12%
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
Two opposing factors impacted the high yield market during the six months ended
June 30, 1998. Domestic economic growth continued strong while Asian economies
continued to struggle. Concerns about Asia's impact on the domestic economy
caused high yield bond spreads to widen and high yield performance to falter
late in the second quarter. However, strong first quarter performance for high
yield bonds allowed them to outperform high quality bonds for the six-month
period.
The High Income Bond Portfolio's holdings of high yield bonds was
initialized during May of 1998. For the two months ended June 30, the portfolio
generated performance above both the Lehman Brothers High Yield Bond Index and
the Lipper High Current Yield Fund average. As of June 30, the portfolio held
positions in 86 issuers, with industry overweights in telecommunication,
broadcasting and cable television.
The performance of the high yield market over the balance of 1998 will
be a function of the domestic economy and strength of corporate profits. We
believe that the domestic economy is slowing. However, we believe the economy
will not sink into recession and the lull in the economy in the second half of
1998 may set the stage for a continuation of the current business cycle into
1999.
<TABLE>
<CAPTION>
CHANGE IN VALUE OF $10,000 INVESTMENT
5/98 6/98
------- --------
<S> <C> <C>
Equity Income Portfolio
(Commenced operations May 1, 1998) $10,000 $10,034
S&P 500 Index $10,000 $10,143
</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
% of Portfolio
1. Tenet Health Corp Sr Sub Ser 144A 8.125% 12/1/08 2.50
2. Allied Waste N.A., Inc 10.25% 12/1/06 2.18
3. Premier Parks Inc Cpn 0% till 4/03 then 10% 3/1/08 2.15
4. NTL, Inc Sr Defd 0% til 2003 then 9.0% 4/1/08 2.10
5. Sinclair Broadcast Group 8.75% 12/15/07 2.05
6. Viacom Inc Sub Deb 8.00% 7/7/06 2.05
7. Chancellor Media Corp 8.125% 12/15/07 2.01
8. Intermedia Communication, Sr Note 8.60% 6/1/08 2.01
9. Revlon Consumer Products Corp Ser 144A 8.625% 2/1/08 1.99
10. Polymer Group Inc Ser 144A 8.75% 3/1/08 1.98
TOP 5 INDUSTRIES AS OF JUNE 30, 1998 % of Portfolio
Communications 20.75
Consumer Products 9.79
Cable TV 8.06
Entertainment & Leisure 7.86
Broadcast TV & Radio 7.63
Investments in lower rated bonds are subject to a greater risk of loss of
principal and interest than investments in higher rated bonds. Purchasers should
carefully assess the risks associated with investment in this portfolio.
<PAGE> 98
OHIO NATIONAL FUND, INC.
HIGH INCOME BOND PORTFOLIO
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- --------------------------------------------------------------------------------
<S> <C>
ADVERTISING (1.8%)
$50,000 Lamar Advertising Co.
8.625% 09-15-07 $ 51,375
125,000 Outdoor Systems Inc.
8.875% 06-15-07 130,625
----------
182,000
----------
AUTOMOTIVE AND RELATED (1.1%)
100,000 Collins & Aikman Products
11.500% 04-15-06 111,875
----------
BANKING (2.0%)
175,000 First Nationwide Escrow
10.625% 10-01-03 197,312
----------
BROADCAST RADIO/TV (6.3%)
100,000 Big City Radio due 03-15-05
0% till 3-15-01 then 11.250% 76,000
200,000 Chancellor Media Corp.
8.125% 12-15-07 203,000
50,000 Cummulus Media Inc.
10.375% 07-01-08 50,000
150,000 Fox/Liberty Networks due 08-15-07
0% till 08-01-02 then 9.750% 103,500
200,000 Sinclair Broadcast Group
8.750% 12-15-07 207,000
----------
639,500
----------
BUSINESS SERVICES (4.8%)
75,000 Dialog Corp.
11.000% 11-15-07 82,500
100,000 Fisher Scientific Intl.
9.000% 02-01-08 100,000
100,000 Sitel Corp.
9.250% 03-15-06 97,500
100,000 United Stationers Supplies
8.375% 04-15-08 100,500
100,000 US Office Products
9.750% 06-15-08 101,125
----------
481,625
----------
CABLE TV (8.1%)
125,000 Diamond Cable Comm. due 02-15-07
0% till 02-01-02 then 10.750% 92,500
100,000 Lenfest Communications
8.375% 11-01-05 106,750
325,000 NTL Inc. due 04-01-08
0% till 04-01-03 then 9.750% 212,875
100,000 Pegasus Communications
9.625% 10-15-05 103,500
125,000 Rogers Cablesystems Ltd.
10.000% 03-15-05 139,375
100,000 Telewest PLC due 10-01-07
0% till 10-01-00 then 11.000% 83,000
125,000 United Intl. Hlgs. due 02-15-08
0% till 02-15-03 then 10.750% 78,125
----------
816,125
----------
COMMUNICATIONS (19.7%)
$50,000 American Cellular Corp.
10.500% 05-15-08 $50,125
50,000 Arch Communications Group
12.750% 07-01-07 50,750
150,000 Call-Net Enterprises Inc. due 03-15-05
0% till 3-15-01 then 11.25% 105,750
150,000 ICG Services Inc. due 08-15-07
0% till 8-15-02 then 9.750% 87,750
200,000 Intermedia Communications
8.600% 06-01-08 203,500
100,000 IXC Communications Inc.
9.000% 04-15-08 100,750
200,000 Level 3 Communication
9.125% 05-01-08 196,000
225,000 Mcleod due 03-01-07
0% till 03-02-02 then 10.500% 168,750
200,000 Metronet Escrow Corp. due 06-15-08
0% till 06-01-03 then 9.950% 124,750
300,000 Nextel Communications due 02-15-08
0% till 02-16-03 then 9.950% 194,625
150,000 Nextlink Communications due 04-15-08
0% 04-01-01 then 9.450% 92,625
100,000 Paging Network
10.000% 08-01-07 104,500
100,000 Psinet Inc.
10.000% 02-15-05 102,750
175,000 Qwest Communications due 10-15-07
0% 10-01-02 the 9.470% 131,469
100,000 Telecommunications Technology
9.750% 05-15-08 102,750
150,000 Telesystem Intl. due 06-30-07
0% till 06-02-02 then 13.250% 99,375
75,000 Teligent Inc.
11.500% 12-01-07 75,937
----------
1,992,156
----------
CONSUMER PRODUCTS (8.8%)
100,000 Amscan Holdings
9.875% 12-15-07 101,500
100,000 Diamond Brands
10.125% 04-15-08 100,500
100,000 NBTY Inc.
8.625% 10-15-07 102,000
100,000 Playtex Family Products
9.000% 12-15-03 103,000
200,000 Revlon Consumer Products Corp.
8.625% 02-01-08 201,000
125,000 Sealy Mattress Co. due 12-15-07
0% till 12-01-02 then 10.875% 81,875
100,000 Tenki-Flex Inc.
9.250% 03-01-08 100,500
100,000 The Boyd Collection
9.000% 05-15-08 100,250
----------
890,625
----------
</TABLE>
<PAGE> 99
OHIO NATIONAL FUND, INC.
HIGH INCOME BOND PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- ------------------------------------------------------------------------------
CHEMICALS (3.5%)
<S> <C>
$150,000 ISF Holdings Inc.
9.000% 10-15-03 $156,375
200,000 Polymer Group Inc.
8.750% 03-01-08 200,500
----------
356,875
----------
ENTERTAINMENT AND LEISURE (7.9%)
100,000 Amp Group due 03-15-06
0% till 03-01-01 then 12.250% 80,500
175,000 CSC Holdings Inc.
9.250% 11-01-05 188,125
325,000 Premeir Parks Inc. due 04-01-08
0% till 04-01-03 then 10.000% 217,750
100,000 Regal Cinemas Inc.
9.500% 06-01-08 101,500
200,000 Viacom Inc.
8.000% 07-07-06 207,250
----------
795,125
----------
FOOD AND RELATED (7.5%)
150,000 Ameriserve Food Distribution Inc.
10.125% 07-15-07 155,063
100,000 Aurora Foods Inc.
9.875% 02-15-07 106,500
75,000 Digiorgio Corp.
10.000% 06-15-07 74,812
100,000 Eagle Family Foods
8.750% 01-15-08 98,000
100,000 International Home Foods
10.375% 11-01-06 109,500
100,000 Jitney Jungle Stores
10.375% 09-15-07 107,250
100,000 Stater Brothers Holdings
9.000% 07-01-04 103,000
----------
754,125
----------
INDUSTRIAL SERVICES (6.8%)
100,000 ACME Television
10.875% 09-30-04 83,000
200,000 Allied Waste N.A. Inc.
10.250% 12-01-06 220,250
100,000 Amphenol Corp.
9.875% 05-15-07 105,750
75,000 Grove Worldwide LLC
9.250% 05-01-08 74,625
100,000 JTM Industries Inc.
10.000% 04-15-08 102,000
100,000 Wesco Distributions
9.125% 06-01-08 99,500
----------
685,125
----------
MEDIA AND PUBLISHING (2.0%)
100,000 Hollinger Intl. Publishing
9.250% 02-01-06 105,000
100,000 Ziff Davis Inc.
8.500% 05-01-08 101,500
----------
206,500
----------
MEDICAL AND RELATED (5.9%)
$100,000 Chattem Inc.
8.875% 04-01-08 $99,250
100,000 Conmed Corp.
9.000% 03-15-08 100,000
100,000 Hudson Respiratory Care Inc.
9.125% 04-15-08 95,500
50,000 Oxford Health Plans Inc.
11.000% 05-15-05 51,250
250,000 Tenet Health Corp.
8.125% 12-01-08 252,500
----------
598,500
----------
OIL, ENERGY & NATURAL GAS (6.8%)
100,000 Chiles Offshore LLC
10.000% 05-01-08 97,000
100,000 Dailey International
9.500% 02-15-08 98,500
200,000 KCS Energy
8.875% 01-15-08 191,000
100,000 Nuevo Energy Co.
8.875% 06-01-08 101,750
100,000 Pride Petroleum Services
9.375% 05-01-07 105,750
150,000 Universal Compression due 02-15-08
0% till 02-15-03 then 9.875% 95,250
----------
689,250
----------
TEXTILES AND RELATED (1.9%)
75,000 Glenoit Corp.
11.000% 04-15-07 80,625
100,000 Pillowtex Corp.
10.000% 11-15-06 107,500
----------
188,125
----------
TRANSPORTATION AND EQUIPMENT (1.2%)
125,000 Stena Line AB
10.625% 06-01-08 127,188
----------
UTILITIES (0.3%)
50,000 Niagara Mohawk Power due 07-01-10
0% till 07-01-03 then 8.500% 34,609
----------
TOTAL LONG-TERM BONDS & NOTES
(96.4%) (COST $9,718,845) $9,746,640
==========
MARKET
SHARES PREFERRED STOCK VALUE
- ------------------------------------------------------------------------
COMMUNICATIONS (0.5%)
50 Benedek Communications $50,000
----------
MEDIA AND PUBLISHING (1.3%)
1,300 Primedia Inc. Series G 8.625% 126,750
----------
TOTAL PREFERRED STOCKS
(1.8%) (COST $179,025) $176,750
----------
</TABLE>
(continued)
<PAGE> 100
OHIO NATIONAL FUND, INC.
HIGH INCOME BOND PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------------------------
<S> <C>
FINANCIAL (1.0%)
$97,000 Star Bank 5.200% due 07-01-98
repurchase price $97,014
collateralized by GNMA certificates,
pool # 8375
due 02-20-24 (cost $97,000) $97,000
-----------
TOTAL REPURCHASE AGREEMENTS
(1.0%) (COST $97,000) $97,000
-----------
TOTAL HOLDINGS
(COST $9,994,870)(A) $10,020,390
===========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 101
OHIO NATIONAL FUND, INC.
HIGH INCOME BOND PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $9,994,870) ................................ $10,020,390
Cash in bank ............................................... 744
Dividends and accrued interest receivable .................. 145,628
Other ...................................................... 3,482
-----------
Total assets .............................................. 10,170,244
-----------
Liabilities:
Payable for securities purchased ........................... 50,000
Payable for investment management services
(note 3) .................................................. 6,213
Other accrued expenses ..................................... 900
-----------
Total liabilities ......................................... 57,113
-----------
Net assets at market value .................................. $10,113,131
===========
Net assets consist of:
Par value, $1 per share .................................... $ 1,000,100
Paid-in capital in excess of par value ..................... 9,000,900
Net unrealized appreciation on investments (note 1) ........ 25,520
Undistributed net investment gain .......................... 86,611
-----------
Net assets at market value .................................. $10,113,131
===========
Shares outstanding (note 4) ................................. 1,000,100
Net asset value per share ................................... $ 10.11
===========
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
MAY 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
<S> <C>
Investment income:
Interest ................................................... $ 101,346
-----------
Expenses:
Management fees (note 3) ................................... 12,386
Custodian fees (note 3) .................................... 930
Directors fees (note 3) .................................... 60
Professional fees .......................................... 75
Accounting and transfer agent fees ......................... 1,095
Other ...................................................... 189
-----------
Total expenses ............................................ 14,735
-----------
Net investment income ..................................... $ 86,611
-----------
Unrealized gain on investments:
Net increase in unrealized appreciation on
investments .............................................. $ 25,520
-----------
Net increase in net assets from operations ............... $ 112,131
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 102
OHIO NATIONAL FUND, INC.
HIGH INCOME BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM MAY 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
From operations:
<S> <C>
Net investment gain ................................... $ 86,611
Unrealized gain on investments ........................ 25,520
--------------
Net increase in assets from operations ............... 112,131
--------------
From capital share transactions (note 4):
Received from shares sold ............................. 10,001,000
--------------
Increase in net assets ............................... 10,113,131
Net Assets:
Beginning of period ................................... 0
--------------
End of period (a) ..................................... $ 10,113,131
==============
(a) Includes undistributed net investment income of .... $ 86,611
==============
FINANCIAL HIGHLIGHTS
</TABLE>
FOR THE PERIOD FROM MAY 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Per share data:
<S> <C>
Net asset value, beginning of period ................... $ 10.00
Income from investment operations:
Net investment gain ................................... 0.09
Net unrealized gain on investments .................... 0.02
--------------
Total loss from investment operations ................ 0.11
--------------
Ret asset value, end of period ......................... $ 10.11
==============
Total return ........................................... 1.12%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets ............... 0.88%(a)
Ratio of net investment income to average net assets .. 5.16%(a)
Net assets at end of period (millions) ................. $ 10.1
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
The accompanying notes are an integral part of these financial statements.
<PAGE> 103
SMALL CAP GROWTH PORTFOLIO
Ohio National Fund, Inc.
OBJECTIVE
The Small Cap Growth Portfolio seeks capital appreciation by investing primarily
in common stocks of emerging growth companies.
PERFORMANCE AS OF JUNE 30, 1998
TOTAL RETURN:
Since inception (5/1/98) -1.78%
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
In the second quarter, small cap stocks did not build on the strong performance
they exhibited in the first quarter. Concern over ongoing weakness in Asia and
potentially slowing corporate earnings growth here in the U.S. prompted
investors to return their focus to large-cap, blue-chip stocks. The market
continues to perceive safety in these stocks despite large-cap stocks' typically
greater exposure to Asia and slowing earnings growth rates.
Despite this lackluster environment, we managed to produce significant
outperformance relative to the benchmark Russell 2000 Growth Index. Our
performance was supported by superior stock selection in the broad technology
area and strong performance from several consumer stocks.
We enjoyed continued strong performance from a UK-based company called
ECSoft Group PLC, a systems-integrator company providing consulting and
installation primarily to European-based companies. The company is executing its
strategy very successfully and is benefiting from a strong European economy.
Going forward, despite the lack of investor interest in small-cap
stocks, we see positive fundamentals for many smaller companies. However, we
also believe the volatility the markets have endured in the last year will
continue. Despite this volatility, we believe our fundamental research process
and valuation discipline will enable us to produce solid long-term performance.
CHANGE IN VALUE OF $10,000 INVESTMENT
5/98 6/98
---- ----
Small Cap Growth Portfolio (Commenced operations May 1, 1998) 10,000 $9,822
Russell 2000 Index 10,000 $9,450
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
% of Portfolio
1. Realnetworks Inc 5.70
2. ECSoft Group PLC 2.96
3. Gemstar Intl Group LTD 2.86
4. Education Management Corp 1.84
5. Select Appointments Holdings PLC-ADR 1.80
6. ITT Educational Services Inc 1.80
7. Four Seasons Hotels 1.79
8. TSI International Software LTD 1.75
9. Micromuse Inc 1.66
10. Systems & Computer Technology Corp 1.65
TOP 5 INDUSTRIES AS OF JUNE 30, 1998
% of Portfolio
Computer & Related 21.73
Communications 12.25
Business Services 11.10
Pre-Packaged Software 10.14
Financial Services 6.73
<PAGE> 104
OHIO NATIONAL FUND, INC.
SMALL CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------------------------
ADVERTISING (1.6%)
<S> <C>
900 *TMP Worldwide Inc. $31,387
---------
AUTOMOTIVE AND RELATED (0.2%)
100 *National RV Holdings Inc. 4,512
---------
BROADCAST RADIO AND TV (2.8%)
200 *CD Radio Inc. 7,700
300 *Emmis Broadcasting Corp. CL A 14,344
300 *Jacor Communications CL A 17,700
400 *Univision Communications Inc. 14,900
---------
54,644
---------
BUSINESS SERVICES (0.7%)
500 *Compass Int. Services Corp. 4,750
400 *Professional Detailing 9,950
---------
14,700
---------
COLLECTIBLES (0.9%)
900 *Media Arts Group Inc. 17,325
---------
COMMUNICATIONS (3.9%)
600 *Com Twenty-One Inc. 12,750
200 *Echostar Communication 4,812
1,200 *Paging Network Inc. 16,800
300 *Premisys Communications Inc. 7,462
400 *Skytel Communications Inc. 16,384
400 *Tekelec Inc. 17,900
---------
76,108
---------
COMPUTER SERVICES (10.8%)
700 *Atlantic Data Services 13,431
1,400 *Brightstar Inform. Tech. Group Inc. 19,425
2,000 *Carreker-Antinori Inc. 21,000
500 *Cognizant Tech Solutions Corp. 6,031
700 *Computer Horizons Corp. 25,944
500 *Intelligroup Inc. 8,875
200 *Mastech Corp. 5,625
1,200 *Systems & Computer Tech. Corp. 32,400
800 *Technology Solutions Corp. 25,350
1,100 *Tier Technologies Inc. 19,594
1,500 *TSI Intl. Software Corp. 34,312
---------
211,987
---------
COMPUTER SOFTWARE (11.3%)
300 *Brio Technology Inc. 4,013
500 *Electronic Processing Inc. 6,000
1,000 *Filenet Corp. 28,875
500 *Information Mgt. Resources 16,906
900 *Inso Corp. 12,319
300 *JDA Software Group Inc. 13,125
300 *Mapics Inc. 5,906
800 *Micromuse Inc. 32,650
100 *Microstrategy Inc. 2,825
600 *Memco Software Ltd. 11,400
500 *New Era of Networks Inc. 15,250
300 *Peregrine Systems Inc. 8,550
1,900 *Pervasive Software Inc. 19,712
600 *Remedy Corp. 10,200
100 *Siebel Systems Inc. 3,225
700 *Software AG Systems Inc. 20,475
100 Timberline Software Corp. 2,356
1,100 *Viagraphix Corp. 8,525
---------
222,312
---------
CONSUMER PRODUCTS (3.0%)
400 *Fossil Inc. $9,950
200 *French Fragrances 3,125
600 Movado Group Inc. 18,150
500 *Rocky Shoes & Boots Inc. 7,125
100 *Timberland Co. CL A 7,194
600 *Tropical Sportswear Intl. 12,750
---------
58,294
---------
EDUCATIONAL SERVICES (5.1%)
200 *Corporate Family Solutions Inc. 5,000
1,100 *Education Management Corp. 36,163
700 *Computer Learning Centers 17,213
1,100 *ITT Educational Services Inc. 35,475
200 Strayer Education Inc. 7,250
---------
101,101
---------
ELECTRICAL EQUIPMENT (5.2%)
700 *Applied Micro Circuits 18,113
1,500 *Gemstar Intl. Group Ltd. 56,156
600 *PMC-Sierra Inc. 28,125
---------
102,394
---------
ENTERTAINMENT AND LEISURE (2.9%)
900 *Royal Olympic Cruise Lines 9,000
300 *SFX Entertainment 13,763
800 *Steiner Leisure Ltd. 24,200
300 *Travel Services Intl. Inc. 9,862
---------
56,825
---------
FINANCIAL SERVICES (5.6%)
700 Arm Financial Group Inc. CL A 15,488
1,100 *Financial Federal Corp. 29,494
900 *Franchise Mortgage Co. 23,456
700 *Imperial Credit Ind. Inc. 16,450
200 *NCO Group Inc. 4,400
100 *Unicapital Corp. 1,912
800 Waddell & Reed 19,150
---------
110,350
---------
FOOD AND RELATED (0.5%)
500 *P.J. America Inc. 9,125
---------
HOTEL/LODGING (3.0%)
1,000 Four Seasons Hotels Inc. 35,250
500 Intrawest Resorts 9,969
500 *Resortquest International 8,156
400 *Silverleaf Resorts Inc. 6,100
---------
59,475
---------
HUMAN SERVICES (6.7%)
700 *Acsys Inc. 9,625
300 *Data Processing Resources Inc. 9,319
500 *Hall Kinion & Assoc. 3,344
200 *On Assignment Inc. 6,987
200 *Provant Inc. 3,675
400 *Robert Half Intl. Inc. 22,350
1,000 *Romac Intl. Inc. 30,375
400 *Staff Leasing Inc. 11,800
700 *Staffmark Inc. 25,638
400 *Vincam Group Inc. 7,850
---------
130,963
---------
</TABLE>
<PAGE> 105
OHIO NATIONAL FUND, INC.
SMALL CAP GROWTH PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- ------------------------------------------------------------------------------
INDUSTRIAL SERVICES (2.0%)
<S> <C> <C>
100 *Rental Service Corp. $3,362
600 *Richie Bros. Auctioneers Inc. 15,938
900 *U.S. Liquids Inc. 19,575
----------
38,875
----------
INTERNET SOFTWARE AND SERVICES (11.2)%
200 *Earthlink Network Inc. 15,350
100 *Excite Inc. 9,350
500 *Exodus Communication Inc. 22,375
600 *Network Solutions 27,000
3,000 *Realnetworks Inc. 111,938
600 *Verio Inc. 14,925
1,500 *Wavephore 17,344
----------
218,282
----------
INSURANCE SERVICES (0.3%)
200 *Inspire Insurance Solutions 6,650
----------
MEDIA AND PUBLISHING (0.5%)
400 *Peterson Companies 10,250
----------
MEDICAL AND RELATED (2.8%)
400 *Envoy Corp. 18,950
100 *Healthcare Financial Partners Inc. 6,131
200 *Lincare Holdings Inc. 8,413
500 *Ocular Sciences Inc. 16,250
400 *Schick Technology 6,175
----------
55,919
----------
MOTION PICTURES & SERVICES (0.2%)
200 *Macrovision Corp. 4,775
----------
NETWORK PRODUCTS (4.4%)
900 *Concord. Communications 23,006
500 *International Network Services 20,500
200 *ISS Group 7,525
300 *MMC Networks Inc. 9,562
700 *Visual Networks Inc. 25,638
----------
86,231
----------
REAL ESTATE AND LEASING (1.0%)
600 *CB Commercial Real Estates Svcs. 20,063
RETAIL (1.8%)
600 *1-800 Contacts Inc. 9,150
800 *Gadzooks Inc. 22,050
100 *Restoration Hardware Inc. 2,512
100 *Software Net Corp. 1,912
----------
35,624
----------
RETIREMENT/AGED CARE (1.1%)
1,100 *Balanced Care 7,975
400 *Sunrise Assisted Living Inc. 13,750
----------
21,725
----------
TRANSPORTATION (1.4%)
100 Skywest Inc. $28,000
----------
VITAMINS/NUTRITION PRODUCTS (2.7%)
400 *Balance Bar Co. 5,750
900 *NBTY Inc. 16,538
300 *Natural Alternatives Intl. Inc. 6,000
200 *Twinlab Corp. 8,737
500 *Usana Inc. 15,563
----------
52,588
----------
TOTAL U.S. COMMON STOCK
(93.6%) (COST $1,788,183) $1,840,684
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------------------------
IRELAND (1.0%)
COMPUTER SERVICES
400 *Saville Systems Ireland PLC ADR $20,050
----------
SWEDEN (0.3%)
AEROSPACE
500 *Indigo Aviation AB ADR 5,438
----------
UNITED KINGDOM (5.1%)
BUILDING/RESIDENTAL
1,200 *Fairfield Communities Inc. 5,756
----------
COMPUTER SERVICES
800 *Ecsoft Group PLC 58,275
----------
HUMAN SERVICES
1,200 Select Appointments Holdings ADR 35,400
----------
TOTAL UNITED KINGDOM 99,431
----------
TOTAL FOREIGN COMMON STOCK
(6.4%) (COST $120,380) $124,919
----------
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------------------------
FINANCIAL (1.0%)
$1,337,000 Star Bank 5.20% due 7-01-98
repurchase price $20,003
collateralized by GNMA certificates
pool # 8375
due 02-20-24 (COST $20,000) $ 20,000
----------
TOTAL REPURCHASE AGREEMENTS
(1.0%) (COST $20,000) $ 20,000
----------
TOTAL HOLDINGS
(COST $1,928,563) (a) $1,985,603
----------
</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> 106
OHIO NATIONAL FUND, INC.
SMALL CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $1,928,563) ............................... $ 1,985,603
Cash in bank .............................................. 276
Receivable for securities sold ............................ 2,650
Dividends and accrued interest receivable ................. 93
Other ..................................................... 3,250
-----------
Total assets ............................................. 1,991,872
-----------
Liabilities:
Payable for securities purchased .......................... 23,881
Payable for investment management services
(note 3) ................................................. 1,361
Other accrued expenses .................................... 1,172
-----------
Total liabilities ........................................ 26,414
-----------
Net assets at market value ................................. $ 1,965,458
===========
Net assets consist of:
Par value, $1 per share ................................... $ 200,100
Paid-in capital in excess of par value .................... 1,800,900
Accumulated undistributed net realized loss on
investments .............................................. (89,002)
Net unrealized appreciation on investments (note 1) ....... 57,040
Undistributed net investment loss ......................... (3,580)
-----------
Net assets at market value ................................. $ 1,965,458
===========
Shares outstanding (note 4) ................................ 200,100
Net asset value per share .................................. $ 9.82
===========
STATEMENT OF OPERATIONS
MAY 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
Investment income:
Interest .................................................. $ 1,367
Dividends ................................................. 128
-----------
Total investment income .................................. 1,495
-----------
Expenses:
Management fees (note 3) .................................. 2,771
Custodian fees (note 3) ................................... 900
Directors fees (note 3) ................................... 60
Professional fees ......................................... 60
Accounting and transfer agent fees ........................ 1,095
Other ..................................................... 189
-----------
Total expenses ........................................... 5,075
-----------
Net investment loss ...................................... ($ 3,580)
-----------
Realized and unrealized gain (loss) on investments:
Net realized loss from investments ........................ ($ 89,002)
Net increase in unrealized appreciation on
investments ............................................. 57,040
-----------
Net loss on investments ................................. (31,962)
-----------
Net decrease in net assets from operations .............. ($ 35,542)
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 107
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM MAY 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
From operations:
<S> <C>
Net investment loss ....................................... ($ 3,580)
Realized gain (loss) on investments ....................... (89,002)
Unrealized gain on investments ............................ 57,040
-------------
Net decrease in assets from operations ................... (35,542)
-------------
From capital share transactions (note 4):
Received from shares sold ................................. 2,001,000
-------------
Increase in net assets ................................... 1,965,458
Net Assets:
Beginning of period ....................................... 0
-------------
End of period (a) ......................................... $ 1,965,458
=============
(a) Includes undistributed net investment loss of .......... ($ 3,580)
=============
FINANCIAL HIGHLIGHTS
FOR THE PERIOD FROM MAY 1, 1998 TO JUNE 30, 1998 (UNAUDITED)
Per share data:
Net asset value, beginning of period ....................... $ 10.00
Loss from investment operations:
Net investment loss ....................................... (0.02)
Net realized and unrealized loss on investments ........... (0.16)
-------------
Total loss from investment operations .................... (0.18)
-------------
Net asset value, end of period ............................. $ 9.82
=============
Total return ............................................... (1.78%)(b)
Ratios and supplemental data:
Ratio of expenses to average net assets ................... 1.61%(a)
Ratio of net investment income to average net assets ...... (1.13%)(a)
Portfolio turnover rate .................................... 28%
Average commission rate (c) ................................ $ 0.06
Net assets at end of period (millions) ..................... $ 2.0
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold by
the portfolio.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 108
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 (UNAUDITED)
(1) BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Ohio National
Fund, Inc. (Fund) is registered under the Investment Company Act of 1940 as
amended (the "1940 Act"), as a diversified, open-end management investment
company. The Fund is a series investment company which consists of twenty
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-sized 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.
CORE GROWTH PORTFOLIO - long-term capital appreciation.
GROWTH & INCOME PORTFOLIO - long-term total return by investing in equity and
debt securities focusing on small- and mid-cap companies that offer potential
for capital appreciation, current income, or both.
S&P 500 INDEX PORTFOLIO - total return that approximates that of the Standard &
Poor's 500 Index ("S&P 500") by investing in common stocks and in stock index
futures contracts hedged by U.S. Government obligations, investment grade
corporate bonds and cash equivalents.
SOCIAL AWARENESS PORTFOLIO - long-term capital growth by investing primarily in
common stocks and other equity securities of companies that, in the Advisor's
opinion, conduct their business in a way that enhances society's quality of
life.
STRATEGIC INCOME PORTFOLIO - high current income by investing at least 40% of
its assets in a core group of U.S. government and corporate fixed income
securities and the remainder in other income producing securities.
STELLAR PORTFOLIO - maximum total return by investing in domestic and foreign
securities (equity and fixed income), real estate, precious metal securities,
and money market securities.
RELATIVE VALUE PORTFOLIO - maximum total return consistent with reasonable risk
by investing primarily in equity securities.
The following portfolios commenced operations on May 1, 1998:
BLUE CHIP PORTFOLIO - growth of capital and income by concentrating investment
decisions in securities of high quality companies.
EQUITY INCOME PORTFOLIO - above average income and capital appreciation by
investing primarily in high quality income producing equity securities including
common stock, preferred stock, REIT's, and securities convertible into common
stock.
HIGH INCOME BOND PORTFOLIO - seek high current income by investing primarily in
lower rated corporate debt obligations commonly referred to as "junk bonds". The
portfolio's investments are generally rated Baa or lower by Moody's, or BBB or
lower by S&P or Fitch.
SMALL CAP GROWTH - capital appreciation by investing in and actively managing
equity securities in emerging growth companies.
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
<PAGE> 109
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
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 but the Money Market Portfolio, 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 reported
as of 4:00 p.m. Eastern time on each day the New York Stock Exchange is open for
unrestricted trading. 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 value 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 4:00 p.m.
Eastern time. Occasionally, events affecting the value of foreign investments
and such exchange rates occur between the time at which they are determined and
the time of valuation, which in the case of the International, Small Cap, Global
Contrarian, Aggressive Growth, and Stellar 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 contracts). 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.
Each portfolio other than the Money Market Portfolio may (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 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 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. Options are recorded at market value, and the related realized and
unrealized gains and losses are included in the statement of operations. The
portfolios making use of options bear the market risk of an unfavorable change
in the price of any security underlying the options.
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 Ohio National Investments, Inc. `s ("ONI's"), the
investment advisor to the Fund, investment strategy for the particular
portfolio. The Fund may enter into such contracts to reduce the risk of
fluctuation of portfolio securities values or to take advantage of expected
market fluctuations.
<PAGE> 110
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1998 (Unaudited)
The S&P 500 Index Portfolio currently holds investments in S&P 500 Index Futures
Contracts. The contracts in the S&P 500 Index Portfolio are fully hedged with
commercial paper and/or US Treasuries. The futures contracts in the S&P 500
Index Portfolio at June 30, 1998 are as follows:
EXPIRATION UNDERLYING FACE UNREALIZED CASH DEPOSITED
PURCHASED DATE AMOUNT AT VALUE GAIN AS MARGIN REQUIREMENT
- -------- ---------- --------------- ---------- ---------------------
92 S&P 500
Index Contracts Sept `98 $25,392,612 $896,388 $304,509
Securities transactions are recorded on a trade date basis. Dividend income is
recognized on the ex-dividend date (except in the case of foreign securities in
the International, Small Cap, Global Contrarian, Aggressive Growth, and Stellar
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 using the first-in, first-out method except in the
case of the Aggressive Growth and Growth and Income Portfolios in which the
identified cost basis is used.
The books and records of all the portfolios are maintained in U.S. dollars.
Foreign currency amounts in the International, Small Cap, Global Contrarian,
Aggressive Growth and Stellar Portfolios 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 transaction.
Although the net assets and the market value of the 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, for tax
purposes, 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 ONI 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.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily due to wash sales and net
operating losses. The character of distributions made during the period from net
investment income or net realized gains, if any, may differ from their ultimate
characterization for federal income tax purposes. On the statement of assets and
liabilities, as a result of permanent book-to-tax differences, the following
reclassifications were made in the Small Cap, Aggressive Growth, and Core Growth
Portfolios: accumulated net investment loss has been decreased by $49,427,
$28,961, and $31,403, respectively, resulting in a reclassification adjustment
to decrease Paid-in capital in excess of par value by $49,427, $28,961, $31,403
respectively. This reclassification has no effect on net assets or net asset
value per share.
For Federal income tax purposes, the Bond, Core Growth, Stellar, and Relative
Value Portfolios had capital loss carryovers of $44,128, $447,567, $11,917, and
$2,446 respectively, at December 31, 1997. If not offset by capital gains,
$44,128 will expire in 2003 in the Bond Portfolio and $447,567, $11,917 and
$2,446 will expire in 2005 in the Core Growth , Stellar, and Relative Value
Portfolios, respectively. The
<PAGE> 111
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1998 (Unaudited)
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.
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.
Most expenses of the Fund can be directly attributed to a portfolio. Expenses
which cannot be directly attributed are allocated among the portfolios in the
Fund based on average net assets.
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 June 30, 1998 were as follows:
<TABLE>
<CAPTION>
CAPITAL
EQUITY BOND OMNI INTERNATIONAL APPRECIATION
------ ---- ---- ------------- ------------
<S> <C> <C> <C> <C> <C>
Gross unrealized:
Appreciation ...... $ 132,959,150 $ 974,172 $ 67,103,184 $ 18,712,154 $ 8,054,842
Depreciation ...... (11,480,157) (383,807) (6,773,738) (21,602,023) (1,769,298)
Net Unrealized:
Appreciation
(Depreciation).. (121,478,993) 590,365 60,329,446 (2,889,869) 6,285,544
<CAPTION>
SMALL GLOBAL AGGRESSIVE CORE GROWTH &
CAP CONTRARIAN GROWTH GROWTH INCOME
--- ---------- ------ ------ ------
Gross unrealized:
<S> <C> <C> <C> <C> <C>
Appreciation .... $ 12,462,144 $ 2,218,819 $ 2,404,561 $ 2,315,802 $ 2,830,661
Depreciation .... (2,827,093) (1,634,655) (1,350,528) (221,429) (1,889,592)
Net Unrealized:
Appreciation .. 9,635,051 584,164 1,054,033 2,094,373 941,069
<CAPTION>
SOCIAL STRATEGIC RELATIVE
S&P 500 AWARENESS INCOME STELLAR VALUE
------- --------- ------ ------- -----
Gross unrealized:
<S> <C> <C> <C> <C> <C>
Appreciation .... $ 3,506,158 $ 590,175 $ 67,015 $ 252,461 $ 1,373,501
Depreciation .... (430,777) (985,132) (147,811) (122,406) (17,196)
Net Unrealized:
Appreciation .. 3,075,381 (394,957) (80,796) 130,055 1,356,305
</TABLE>
<PAGE> 112
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
EQUITY HIGH INCOME SMALL CAP
BLUE CHIP INCOME BOND GROWTH
--------- ------ ---- ------
Gross unrealized:
<S> <C> <C> <C> <C>
Appreciation.................$76,664 $76,70,430 $ 77,251 $162,887
Depreciation..................(86,572) (67,935) (51,731) (105,847)
Net Unrealized:
Appreciation.................(9,908) 6,524 25,520 57,040
</TABLE>
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term
securities) for the six months ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
CAPITAL
EQUITY BOND OMNI INTERNATIONAL APPRECIATION
------ ---- ---- ------------- ------------
Stocks & Bonds:
<S> <C> <C> <C> <C> <C>
Purchases............... $ 29,221,391 $3,280,273 $28,938,261 $10,321,625 $20,155,380
Sales................... 18,202,989 1,706 6,689,119 21,993,630 14,374,424
U.S. Government
Obligations:
Purchases............... -- -- -- -- 1,822,469
Sales................... -- -- -- -- 125,000
</TABLE>
<TABLE>
<CAPTION>
SMALL GLOBAL AGGRESSIVE CORE GROWTH &
CAP CONTRARIAN GROWTH GROWTH INCOME
--- ---------- ------ ------ ------
Stocks & Bonds:
<S> <C> <C> <C> <C> <C>
Purchases............... $ 6,294,370 $6,294,370 $26,573,651 $5,489,371 $62,864,661
Sales................... 26,754 4,398,184 21,963,306 5,023,315 39,607,306
U.S. Government
Obligations:
Purchases............... -- -- 222,284 -- --
Sales................... -- -- 215,000 -- --
</TABLE>
<TABLE>
<CAPTION>
SOCIAL STRATEGIC RELATIVE
S&P 500 AWARENESS INCOME STELLAR VALUE
------- --------- ------ ------- -----
Stocks & Bonds:
<S> <C> <C> <C> <C> <C>
Purchases............. $31,385,932 $5,591,531 $3,012,063 $1,766,656 $3,766,280
Sales.................. 15,800 1,899,066 2,115,163 1,562,867 698,814
U.S. Government
Obligations:
Purchases.............. -- -- 382,270 518,326 --
Sales.................. -- -- 218,581 222,859 --
</TABLE>
<PAGE> 113
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
EQUITY HIGH INCOME SMALL CAP
BLUE CHIP INCOME BOND GROWTH
--------- ------ ---- ------
<S> <C> <C> <C> <C>
Stocks & Bonds:
Purchases............. $2,285,098 $2,187,882 $9,897,870 $2,530,012
Sales................. 88,218 3,637 -- 532,447
U.S. Government
Obligations:
Purchases............. -- -- -- --
Sales................. -- -- -- --
</TABLE>
(3) INVESTMENT ADVISORY AGREEMENT, SUB-ADVISORY AGREEMENTS AND TRANSACTIONS WITH
AFFILIATED PERSONS
The Fund has an investment advisory agreement with Ohio National
Investments, Inc. ("ONI") a wholly owned subsidiary of Ohio National Life
Insurance Company (ONLIC), under the terms of which ONI 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, ONI receives from the Fund annual fees on the
basis of each portfolio's average daily net assets based on the following
schedule: (a) for each of the Equity, Bond, Omni and Social Awareness
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 net $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, Global
Contrarian, Relative Value, Small Cap Growth, and Blue Chip Portfolios,
0.90% of each Portfolio's net assets; (d) for the Capital Appreciation,
Small Cap, Aggressive Growth and Strategic Income Portfolios, 0.80% of each
Portfolio's net assets, (e) for the Core Growth Portfolio, 0.95% of the
first $150 million of net assets, and 0.80% of net assets over $150 million;
(f) for the Growth & Income Portfolio, 0.85% of the first $200 million of
net assets and 0.80% of net assets over $200 million, (g) for the S&P 500
Index Portfolio, 0.40% of the first $100 million of net assets, 0.35% of the
next $150 million of net assets, and 0.33% of net assets over $250 million;
(h) for the Stellar Portfolio, 1.00% of that Portfolio's net assets; and (I)
for the High Income Bond and Equity Income, 0.75% of each Portfolio's net
assets. However, as to the Money Market Portfolio, the Advisor is presently
waiving any of its fee in excess of 0.25%.
Under the Investment Advisory Agreement, the Fund authorizes ONI to retain
sub-advisors for the International, Capital Appreciation, Small Cap, Global
Contrarian, Aggressive Growth, Core Growth, Growth & Income, Small Cap
Growth, Strategic Income, Stellar, Relative Value, High Income Bond, Equity
Income, and Blue Chip Portfolios, subject to the approval of the Fund's
Board of Directors. ONI has entered into Sub-Advisory Agreements with
Societe Generale Asset Management Corp. ("SGAM"), T. Rowe Price Associates,
Inc. ("TRPA"), Founders Asset Management, Inc. ("FAM"), Strong Capital
Management, Inc. ("SCM"), Pilgrim Baxter & Associates, Ltd. ("PBA"),
Robertson Stephens Investment Management, L.P. ("RSIM"), Star Bank, N.A.
("Star"), and Federated Investment Counseling ("FIC") respectively, to
manage the investment and reinvestment of those Portfolios' assets, subject
to the supervision of ONI. As compensation for their services, (a) SGAM
receives from ONI fees at the annual rate of 0.65% of the International and
Global Contrarian Portfolios' average daily net assets during the quarter
for which the fee is paid, (b) TRPA receives from ONI a fee at an annual
rate of 0.50% of average daily net assets of the Capital Appreciation
Portfolio, (c) FAM receives from ONI 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;
(d) SCM receives from ONI 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; (e) PBA receives from ONI a fee at an
annual rate of 0.75% of the first $50 million, 0.70% of the next $100
million, and 0.50% of average daily net assets in excess of $150 million of
the Core Growth Portfolio: (f) RSIM receives from ONI a fee at an annual
rate of (i) 0.60% of the first $100 million, 0.55% of the next $100 million,
and 0.50% of average daily net assets in excess of $200 million of the
Growth & Income Portfolio, and (ii) 0.64% of the first $100 million, 0.60%
of the next $100 million, and 0.55% of the average daily net assets in
excess of $200 million of the Small Cap Growth Portfolio; (g) Star receives
from ONI fees at an annual rate of (i) 0.55% of the first $50 million and
0.50% of average daily net assets in excess of $50 million of the Strategic
Income Portfolio, (ii) 0.75% of the $50 million and 0.70% of average daily
net assets in excess of $50 million of the Stellar Portfolio and (iii) 0.65%
of the first $50 million and 0.60% of average daily net assets in excess of
$50 million of the Relative Value Portfolio; and (h) FIC receives from ONI
fees at an annual rate of 0.50% of the first $35 million, 0.35% of the next
$65 million, and 0.25% of the average daily net assets in excess of $100
million of each of the Equity Income and Blue Chip Portfolios.
<PAGE> 114
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
Each director who is not an officer of the Fund or an employee of ONI or its
corporate affiliates is paid a quarterly retainer fee of $2,000 plus $400
for each meeting attended.
The Fund's transfer agent and dividend paying agent is American Data
Services, Inc., The Hauppauge Corporate Center, 150 Motor Parkway, Suite
109, Hauppauge, New York. The Fund's custodian for those portfolios other
than the International and Global Contrarian Portfolios is Star Bank, N.A.,
425 Walnut Street, Cincinnati. Ohio. The custodian for the International
and Global Contrarian Portfolios is Investors Fiduciary Trust Company, 801
Pennsylvania, Kansas City, Missouri. For assets held outside the United
States, Star Bank and Investors Fiduciary Trust Company enter into
subcustodial agreements, subject to approval by the Board of Directors.
(4) CAPITAL SHARE TRANSACTIONS Capital share transactions for the six months
ended June 30, 1998 and the year ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
EQUITY MONEY MARKET BOND
----------------------------------------------------------------
6 MONTHS YEAR ENDED 6 MONTHS YEAR ENDED 6 MONTHS YEAR
ENDED 12-31-97 ENDED 12-31-97 ENDED ENDED
6-30-98 6-30-98 6-30-98 12-31-97
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales............. 436,839 1,099,809 2,223,280 4,006,494 376,264 644,662
Capital shares issued
on reinvested dividends..... 49,065 574,786 75,298 124,176 69,861 161,245
Capital shares redeemed....... 415,962 752,158 2,288,955 3,767,642 165,213 723,200
</TABLE>
<TABLE>
<CAPTION>
OMNI INTERNATIONAL CAPITAL APPRECIATION
----------------------------------------------------------------
6 MONTHS YEAR ENDED 6 MONTHS YEAR ENDED 6 MONTHS YEAR
ENDED 12-31-97 ENDED 12-31-97 ENDED ENDED
6-30-98 6-30-98 6-30-98 12-31-97
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales............ 918,634 1,691,998 634,659 2,422,039 863,818 1,350,471
Capital shares issued
on reinvested dividends.... 120,167 715,507 238,752 1,742,189 56,699 359,011
Capital shares redeemed...... 329,092 709,824 1,557,253 1,377,360 253,298 249,388
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP GLOBAL CONTRARIAN AGGRESSIVE GROWTH
----------------------------------------------------------------
6 MONTHS YEAR ENDED 6 MONTHS YEAR ENDED 6 MONTHS YEAR
ENDED 12-31-97 ENDED 12-31-97 ENDED ENDED
6-30-98 6-30-98 6-30-98 12-31-97
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales........... 506,875 1,170,240 235,749 579,754 401,667 767,314
Capital shares issued
on reinvested dividends... 47,929 131,550 25,988 132,202 2,777 23,559
Capital shares redeemed..... 205,232 320,642 130,781 143,586 126,339 193,560
</TABLE>
<PAGE> 115
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
CORE GROWTH GROWTH & INCOME S&P 500
-----------------------------------------------------------------
6 MONTHS YEAR ENDED 6 MONTHS YEAR ENDED 6 MONTHS YEAR
ENDED 12-31-97 ENDED 12-31-97 ENDED ENDED
6-30-98 6-30-98 6-30-98 12-31-97
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales................... 21,510 1,272,254 1,811,764 1,436,044 2,229,227 1,782,577
Capital shares issued
on reinvested dividends.......... 0 419 9,594 75,471 40,728 187,990
Capital shares redeemed............ 167,324 287,167 129,828 56,151 115,302 88,101
</TABLE>
<TABLE>
<CAPTION>
SOCIAL AWARE. STRATEGIC INCOME STELLAR
-----------------------------------------------------------------
6 MONTHS YEAR ENDED 6 MONTHS YEAR ENDED 6 MONTHS YEAR
ENDED 12-31-97 ENDED 12-31-97 ENDED ENDED
6-30-98 6-30-98 6-30-98 12-31-97
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales................... 338,601 399,740 83,755 309,296 66,597 262,250
Capital shares issued
on reinvested dividends........... 1,512 37,565 13,403 16,810 4,848 6,971
Capital shares redeemed............. 47,131 12,616 15,783 6,191 7,094 5,693
</TABLE>
<TABLE>
<CAPTION>
RELATIVE VALUE BLUE CHIP EQUITY INC. HIGH INCOME S.CAP G.
------------------------------------------------------------------
6 MONTHS YEAR ENDED 6 MONTHS 6 MONTHS 6 MONTHS 6 MONTHS
ENDED 12-31-97 ENDED ENDED ENDED ENDED
6-30-98 6-30-98 6-30-98 6-30-98 6-30-98
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales................. 301,864 460,646 221,843 200,100 1,000,100 200,100
Capital shares issued
on reinvested dividends......... 3,623 3,973 0 0 0 0
Capital shares redeemed........... 15,010 12,351 0 0 0 0
</TABLE>
The Fund is authorized to issue 250,000,000 of its capital shares. 20,000,000
shares each have been allocated to the Equity, Omni, and International
Portfolios, and 10,000,000 are allocated to each of the other portfolios. The
remaining 20,000,000 are unallocated at this time.
<PAGE> 116
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
(5) COMMITMENTS
As of June 30, 1998, the International and Global Contrarian Portfolios had
entered into forward currency contracts, as set forth below, summarized by
currency:
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
SETTLE CURRENCY TO BE DELIVERED U.S. $ VAL CURRENCY TO BE RECEIVED U.S. & VAL. UNREALIZED
DATES AMOUNT TYPE AT 6/30/98 AMOUNT TYPE AT 6/30/98 GAIN LOSS
----- ------ ---- ---------- ------------- ----- ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/21/98 4,350,000 Australian Dollar 2,686,560 2,598,081 U.S. Dollar 2,598,081 $(88,479)
09/10/98 8,021,000 Swiss Franc 5,314,736 5,581,806 U.S. Dollar 5,581,806 $267,070
09/10/98 6,774,945 U.S. Dollar 774,944 1,136,000 Swiss Franc 752,717 (22,227)
09/17/98 12,066,000 Deutsche Mark 6,704,079 6,736,995 U.S. Dollar 6,736,994 32,915
12/17/98 1,812,000 Deutsche Mark 1,011,725 1,008,909 U.S. Dollar 1,008,908 (2,817)
09/22/98 16,943,000 French Franc 2,808,853 2,786,512 U.S. Dollar 2,786,512 (22,341)
09/22/98 1,652,389 U.S. Dollar 1,652,389 9,846,000 French Franc 1,632,294 (20,095)
12/14/98 38,024,000 French Franc 6,332,056 6,436,501 U.S. Dollar 6,436,501 104,445
10/01/98 332,000 British Pound 556,366 548,361 U.S. Dollar 548,361 (8,005)
09/29/98 816,928,000 Japanese Yen 5,946,268 6,669,852 U.S. Dollar 6,669,852 723,584
09/29/98 10,386 U.S. Dollar 10,386 1,426,000 Japanese Yen 10,380 (6)
12/24/98 1,185,815,000 Japanese Yen 8,738,826 8,818,435 U.S. Dollar 8,818,435 79,609
10/06/98 7,360,000 New Zld Dollar 3,832,721 3,975,254 U.S. Dollar 3,975,254 142,533
-------------- ------------------------------------
46,369,909 47,556,095 $1,350,156 $(163,970)
<CAPTION> ============== ====================================
SETTLE CURRENCY TO BE DELIVERED U.S. $ VAL CURRENCY TO BE RECEIVED U.S. & VAL. UNREALIZED
DATES AMOUNT TYPE AT 6/30/98 AMOUNT TYPE AT 6/30/98 GAIN LOSS
----- ------ ---- ----------- ------ ----- ---------- ---- -----
<C> <C> <C> <C> <C> <C> <C> <C> <C>
12/23/98 564,000 Swiss Franc 389,503 389,503 U.S. Dollar 389,503 $11,892
12/17/98 140,000 Deutsche Mark 78,169 77,951 U.S. Dollar 77,951 $(218)
12/14/98 392,000 French Franc 66,381 66,381 U.S. Dollar 66,381 1,102
09/29/98 50,404,000 Japanese Yen 397,947 397,947 U.S. Dollar 397,947 31,066
12/24/98 44,299,000 Japanese Yen 329,434 329,434 U.S. Dollar 329,434 2,974
11/13/00 18,480,000 Japanese Yen 173,147 173,147 U.S. Dollar 173,147 23,675
9/10/98 125,000 Dutch Guilder 61,698 61,698 U.S. Dollar 61,698 1
------------- ------------------------------------
1,425,456 1,496,061 $70,8236 $(218)
============= ====================================
</TABLE>
