<PAGE> 1
President's
Message
John J. Palmer Photo
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, 1999.
New portfolios
During the past six months, we have made adjustments in investment strategies to
expand the breadth and quality of managers and investment styles within our Ohio
National Fund portfolios. This focus on investment style choices and strong
professional investment managers means that we're working hard to provide even
better products and services for you.
Noteworthy among those plans was the shareholder approval in late July for
Legg Mason Fund Adviser, Inc., to subadvise the $300 million Equity portfolio of
Ohio National Fund, Inc., effective August 2. This is the first agreement of
Legg Mason Fund Adviser, Inc., to subadvise a non-proprietary fund. The
portfolio manager, William H. Miller, III, CFA, is Morningstar's "1998 Domestic
Equity Fund Portfolio Manager of the Year." Morningstar's Manager of the Year
Award recognizes portfolio managers who demonstrate excellent investment skill,
the courage to differ from consensus and the commitment to shareholders
necessary to deliver outstanding long-term performance. Mr. Miller, president of
Legg Mason Fund Adviser, Inc., assumed overall responsibility for the equity
funds management area of Legg Mason in late 1990. He manages mutual funds,
including the flagship Legg Mason Value Trust.
The Equity portfolio of Ohio National Fund, Inc., is now available in all of
Ohio National's variable annuity products, variable universal life products, and
pension plans.
In other subaccounts:
- - The Montgomery Small Cap Opportunities Fund has been replaced in our ONcore
variable annuities by the Capital Growth (formerly Small Cap Growth) Portfolio
of Ohio National Fund, Inc., which is managed by RS Investment Management
(formerly Robertson Stephens Investment Management).
- - In January, Federated Investment Management Corp., began managing the
International and International Small Company (formerly Global Contrarian)
portfolios of the Ohio National Fund. They replace Societe Generale as the
subadviser for the funds. Federated Investment Counseling (FIC) already
manages the Blue Chip, Equity Income and High Income Bond portfolios of Ohio
National Fund. Both are part of Pittsburgh-based Federated Investors, an
investment manager founded in 1955 which now has more than $110 billion in
managed assets.
We already see steady gains in overall performance from these strategies. In
fact, four Ohio National Fund portfolios ranked in the top 50 equity funds
tracked by Lipper Analytics for performance during the month of June.
To help our clients continue to pursue investment diversification, plans are
well underway to provide many more investment options with well-known money
managers for those in many of our existing variable universal life, variable
annuity and pension products in the fall 1999.
The importance of diversification
For all investors, it's important to continue to emphasize the value of
diversification. As a company, we certainly do not recommend investing solely in
the "style of the moment" or basing investment decisions strictly on market
timing. We remain dedicated to
1
<PAGE> 2
staying in step with -- and in some cases, even ahead of -- other financial
service providers when it comes to improving our investment selections. We've
always kept a strong focus on providing our clients with diversified and
innovative portfolio choices, and we will continue this progress through 1999.
The market in general
We continue to enjoy an economic climate growing at a solid clip, low
unemployment, modest interest rates, subdued inflation and stable corporate
earnings.
The second quarter of 1999 has proven to be just as interesting as the first.
April began with a strong price increase in the value of downtrodden cyclical
stocks as superior earnings were announced for these companies. Value investing
was back in style and money began to flow into the mid- and small-cap sectors of
the market.
May proved to be relatively flat as investors began to worry about inflation
and the prospect of the Fed tightening the monetary supply. Small caps advanced
slightly, mid-caps were flat and large-caps were slightly down. NASDAQ stocks
did not have a good month and some internet IPOs actually held below the
stratosphere as investors' concern for real earnings began to show.
During June, all of the major indices were up with the NASDAQ leading the way
at +11.4 percent, followed by DJIA up 6.2 percent, and the S&P 500 up 3.7
percent. The month also continued a broadening of the market as small- and
mid-cap stocks performed well versus the larger stocks.
Looking into the future what can we expect based on the first six months of
the year? It seems clear that the volatility experienced in 1998 and the first
half of 1999 will continue for the rest of this year. Fears of higher interest
rates, renewed inflation and a potential downturn in the market are keeping
investors focused on every piece of news regarding their investments which in
turn leads to quick reactions every time there is either good or bad investment
news reported.
It is equally clear that while investors are still enamored of the domestic
stock market, there seems to be a renewed interest in companies outside the
large-cap growth sector. Whether this signals a shift in market leadership is
too soon to tell, but it does bode well for the overall health of the domestic
stock market.
In Closing
Information on your investments is contained in the following pages. 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 expense guarantees. 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
Thomas A. Barefield, Vice President
Joseph P. Brom, Vice President
Michael A. Boedeker, Vice President
Stephen T. Williams, Vice President
Dennis R. Taney, Treasurer
Marcus L. Collins, 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. 8/99
2
<PAGE> 3
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, 1999
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<S> <C>
One-year 6.15%
Three-year 13.79%
Five-year 16.30%
Ten-year 12.16%
Since inception (1/14/71) 11.02%
</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 return for the Equity portfolio during the first half of 1999 was 9.3%. The
return for the portfolio was slightly negative during the first quarter as we
completed the transition from a multiple market capitalization portfolio (median
market capitalization of $2 billion) to a medium and large capitalization
portfolio with a median market capitalization between nine and ten billion. The
second quarter return was approximately 10%.
We expect the markets to remain somewhat volatile as concerns of rising interest
rates and inflation, and extended equity valuations help offset the continuing
strong earnings reported by many companies. Even though we expect the stock
market to incur periods of price corrections, we feel investing in the common
stocks of strong growing companies at reasonable prices will provide the best
returns on the financial markets.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
EQUITY PORTFOLIO (COMMENCED
OPERATIONS JANUARY 14, 1971) S&P 500 INDEX
---------------------------- -------------
<S> <C> <C>
10,000.00 10,000.00
'86 9,701.00 9,806.00
12,425.00 12,508.50
'87 10,751.40 10,318.30
12,236.20 11,645.20
'88 12,367.10 12,052.80
14,124.40 14,034.30
'89 15,237.40 15,847.50
15,798.20 16,335.60
'90 14,649.70 15,345.70
15,814.30 17,543.20
'91 17,606.10 20,032.60
17,370.20 19,904.30
'92 18,935.20 21,568.30
20,016.40 22,607.90
'93 21,605.70 23,722.50
20,916.50 22,911.20
'94 21,659.00 24,033.90
25,247.90 28,876.70
'95 27,550.50 33,029.10
30,211.90 36,398.10
'96 32,607.70 40,653.10
36,592.40 48,986.90
'97 38,531.80 54,169.80
41,934.10 63,763.20
'98 40,734.80 69,648.60
44,510.90 78,271.10
</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 EQUITY HOLDINGS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Cisco Systems, Inc. 6.03
2. Texas Instruments Incorporated 4.01
3. Sun Microsystems, Inc. 3.81
4. General Electric Company 3.13
5. American International Group,
Inc. 2.56
6. Microsoft Corporation 2.50
7. Intel Corporation 2.18
8. Solectron Corporation 2.11
9. Hewlett-Packard Company 2.09
10. AlliedSignal Inc. 2.05
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Computer and Related 23.51
2. Medical and Related 8.32
3. Electrical Equipment 7.21
4. Banking 6.80
5. Semiconductors 6.19
</TABLE>
3
<PAGE> 4
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (3.6%)
94,000 Allied Signal Inc. ............... $ 5,922,000
64,000 Raytheon Co. ..................... 4,504,000
------------
10,426,000
------------
AUTOMOTIVE & RELATED (3.1%)
34,328 *Daimlerchrysler.................. 3,050,901
29,400 Eaton Corp. ...................... 2,704,800
54,184 Ford Motor Co. ................... 3,058,010
1 Meritor Automotive................ 26
------------
8,813,737
------------
BANKING (6.8%)
65,000 Bank One Corp. ................... 3,871,562
40,074 Bank of America Corp. ............ 2,937,925
142,066 Charter One Financial Inc. ....... 3,951,211
123,960 Firstar Corp. .................... 3,470,880
90,000 Mellon Bank Corp. ................ 3,273,750
61,000 Washington Mutual Inc. ........... 2,157,875
------------
19,663,203
------------
BROADCAST RADIO & TV (2.9%)
144,000 *Infinity Broadcasting Corp. ..... 4,284,000
95,000 *CBS Corp. ....................... 4,126,563
------------
8,410,563
------------
BUSINESS SERVICES (1.7%)
112,500 Manpower Inc. .................... 2,545,313
101,000 Reynolds & Reynolds CL A.......... 2,354,562
------------
4,899,875
------------
CHEMICALS (2.5%)
50,000 Hercules Inc. .................... 1,965,625
35,300 Mineral Technologies Inc. ........ 1,970,181
85,000 Monsanto Co. ..................... 3,352,188
------------
7,287,994
------------
COMPUTER & RELATED (23.5%)
56,500 *3Comm Corp. ..................... 1,507,844
270,000 *Cisco Systems, Inc. ............. 17,415,000
63,000 Computer Associates............... 3,465,000
58,000 *Computer Sciences Corp. ......... 4,012,875
78,000 *EMC Corp. ....................... 4,290,000
60,000 Hewlett-Packard Co. .............. 6,030,000
80,000 *Microsoft Corp. ................. 7,215,000
41,000 *NCR Corp. ....................... 2,001,313
47,058 *Seagate Technology............... 1,205,861
91,484 *Solectron Corp. ................. 6,100,839
160,000 *Sun Microsystems, Inc. .......... 11,020,000
101,250 Symbol Technologies............... 3,733,594
------------
67,997,326
------------
CONTAINERS (1.5%)
135,000 *Owens-Illinois Inc. ............. 4,412,813
------------
DRUGS (3.9%)
91,000 Abbott Laboratories............... 1,023,750
64,000 *Applied Analytical Industries.... 2,912,000
34,000 Eli Lilly & Co. .................. 2,435,250
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
DRUGS, CONTINUED
100,000 Mylan Laboratories................ $ 2,650,000
66,000 *Watson Pharmaceuticals Inc. ..... 2,314,125
------------
11,335,125
------------
ELECTRICAL EQUIPMENT (5.6%)
95,000 *American Power Conversion
Corp. ........................... 1,911,875
31,500 Federal Signal Corp. ............. 667,406
80,000 General Electric Co. ............. 9,040,000
80,000 Xerox Corp. ...................... 4,725,000
------------
16,344,281
------------
FINANCIAL SERVICES (1.5%)
100,538 Associates 1st Capital Corp. ..... 4,455,090
------------
FOOD & RELATED (0.9%)
50,000 Food Lion Inc. CL A............... 593,750
165,000 Food Lion Inc. ................... 1,907,813
------------
2,501,563
------------
HOUSING, FURNITURE & RELATED (2.2%)
297,500 Clayton Homes Inc. ............... 3,402,656
64,000 Newell Co. ....................... 2,976,000
------------
6,378,656
------------
INDUSTRIAL SERVICES (2.4%)
50,000 Regal Beloit...................... 1,181,250
44,000 Tyco International Ltd. .......... 4,169,000
71,000 *Wesco International.............. 1,455,500
------------
6,805,750
------------
INSURANCE SERVICES (5.2%)
63,280 American International Group...... 7,407,715
56,000 Equitable Cos. Inc. .............. 3,752,000
81,000 MGIC Investment Corp. ............ 3,938,625
------------
15,098,340
------------
MEDICAL & RELATED (5.8%)
37,500 Baxter International.............. 2,273,437
114,200 *Capital Senior Living Corp. ..... 1,142,000
58,575 Cardinal Health Inc. ............. 3,756,122
70,000 *Centocor Inc. ................... 3,263,750
61,900 *HCR Manor Care................... 1,497,206
69,000 *Kendle International Inc. ....... 1,104,000
1 *Quorum Health Group Inc. ........ 6
58,000 United Healthcare Corp. .......... 3,632,250
------------
16,668,771
------------
OIL, ENERGY & NATURAL GAS (7.1%)
27,000 Chevron Corp. .................... 2,570,062
155,000 *Louis Dreyfus Natural Gas........ 3,342,187
77,170 Schlumberger Ltd. ................ 4,914,764
170,000 *Tesoro Petroleum................. 2,709,375
95,000 Transocean Petroleum Corp. ....... 2,493,750
102,000 Williams Cos. Inc. ............... 4,341,375
------------
20,371,513
------------
REAL ESTATE & LEASING (0.3%)
44,000 JDN Realty Corp. ................. 984,500
------------
</TABLE>
(continued)
4
<PAGE> 5
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
RESTAURANTS (1.0%)
84,000 *Buffets Inc. .................... $ 966,000
101,250 Consolidated Products Inc. ....... 1,822,500
------------
2,788,500
------------
SEMICONDUCTORS (7.8%)
90,000 *Analog Devices Inc. ............. 4,516,875
106,000 Intel Corp. ...................... 6,307,000
80,000 Texas Instruments Inc. ........... 11,600,000
------------
22,423,875
------------
TELECOMMUNICATIONS & CELLULAR (4.9%)
60,000 *ADC Telecommunications........... 2,733,750
72,300 *Amdocs Ltd. ..................... 1,644,825
58,100 *Bell Atlantic Corp. ............. 3,798,287
48,000 *MCI Worldcom Inc. ............... 4,140,000
27,200 *The Associated Group CL B........ 1,773,100
------------
14,089,962
------------
TEXTILES & RELATED (0.9%)
98,000 Warnaco Group CL A................ 2,621,500
------------
TRANSPORTATION & EQUIPMENT (2.4%)
44,000 *Atlas Air Inc. .................. 2,128,500
100,000 Burlington Northern Santa Fe...... 3,100,000
45,000 CNF Transportation Inc. .......... 1,726,875
------------
6,955,375
------------
TOTAL COMMON STOCKS (97.5%) (COST
$140,834,088).................... $281,734,312
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
BANKING (0.3%)
30,000 National Australia Bank LTD
Conv. ........................... $ 911,250
------------
METALS & MINING (0.2%)
50,000 Freeport McMoran Copper & Gold,
Series B......................... 573,750
------------
TOTAL PREFERRED STOCK (0.5%) (COST
$2,070,868)...................... $ 1,485,000
------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL SERVICES (0.2%)
$ 475,000 Medar Inc. 12.95% due 06/30/05.... $ 475,000
------------
TOTAL CONVERTIBLE DEBENTURES
(0.2%) (COST $434,150)........... $ 475,000
------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (1.8%)
$2,461,000 American Express 5.200%
07/01/99......................... $ 2,461,000
2,848,000 Household Finance 5.450%
07/01/99......................... 2,848,000
------------
TOTAL SHORT-TERM NOTES (1.8%)
(COST $5,309,000)................ $ 5,309,000
------------
TOTAL HOLDINGS (100.0%) (COST
$148,648,106) (a)................ $289,003,312
------------
CASH & RECEIVABLES,
NET OF LIABILITIES (0.0%)........ 19,428
------------
TOTAL NET ASSETS (100.0%)......... $289,022,740
============
</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.
5
<PAGE> 6
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $148,648,106)........... $289,003,312
Cash in bank............................. 959
Receivable for securities sold........... 218,710
Receivable for fund shares sold.......... 287,009
Dividends and accrued interest
receivable............................. 219,754
Other.................................... 1,415
------------
Total assets........................... 289,731,159
------------
Liabilities:
Payable for shares redeemed.............. 218,237
Payable for investment management
services (note 3)...................... 121,800
Other accrued expenses................... 83,807
Dividends payable........................ 284,576
------------
Total liabilities...................... 708,420
------------
Net assets at market value................. $289,022,739
============
Net assets consist of:
Par value, $1 per share.................. $ 7,296,814
Paid-in capital in excess of par value... 144,553,504
Accumulated undistributed net realized
loss on investments.................... (3,490,819)
Net unrealized appreciation on
investments (note 1)................... 140,355,206
Undistributed net investment income...... 308,034
------------
Net assets at market value................. $289,022,739
============
Shares outstanding (note 4)................ 7,296,814
Net asset value per share.................. $ 39.61
============
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................. $ 399,181
Dividends................................. 1,326,905
-----------
Total investment income................. 1,726,086
-----------
Expenses:
Management fees (note 3).................. 747,232
Custodian fees (note 3)................... 29,713
Directors' fees (note 3).................. 4,243
Professional fees......................... 18,875
Accounting and transfer agent fees........ 91,198
Other..................................... 25,745
-----------
Total expenses.......................... 917,006
-----------
Net investment income................... $ 809,080
-----------
Realized and unrealized gain (loss) on
investments:
Net realized loss from investments........ $(3,490,819)
Net increase in unrealized appreciation on
investments............................. 27,716,239
-----------
Net gain on investments................. 24,225,420
-----------
Net increase in net assets from
operations............................ $25,034,500
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- ------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 809,080 $ 3,676,480
Realized gain (loss) on investments....................... (3,490,819) 5,493,034
Unrealized gain on investments............................ 27,716,239 6,996,269
------------ ------------
Net increase in net assets from operations............ 25,034,500 16,165,783
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (501,369) (3,678,591)
Capital gains distributions............................... 0 (5,566,857)
------------ ------------
Total dividends and distributions..................... (501,369) (9,245,448)
------------ ------------
From capital share transactions (note 4):
Received from shares sold................................. 4,358,825 24,773,079
Received from dividends reinvested........................ 501,369 9,245,448
Paid for shares redeemed.................................. (37,273,517) (32,108,106)
------------ ------------
Increase (decrease) in net assets derived from capital
share transactions................................... (32,413,323) 1,910,421
------------ ------------
Increase (decrease) in net assets.................. (7,880,192) 8,830,756
Net Assets:
Beginning of period....................................... 296,902,931 288,072,175
------------ ------------
End of period (a)......................................... $289,022,739 $296,902,931
============ ============
(a) Includes undistributed net investment income of......... $ 308,034 $ 323
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
6-30-99 ---------------------------------------
(UNAUDITED) 1998 1997 1996 1995
---------------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $36.31 $35.44 $32.30 $28.58 $23.20
Income from investment operations:
Net investment income..................................... 0.10 0.45 0.51 0.47 0.50
Net realized & unrealized gain on investments............. 3.26 1.56 5.24 4.58 5.65
------ ------ ------ ------ ------
Total income from investment operations................. 3.36 2.01 5.75 5.05 6.15
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.06) (0.45) (0.63) (0.46) (0.39)
Distributions from net realized capital gains............. 0.00 (0.69) (1.98) (0.87) (0.38)
------ ------ ------ ------ ------
Total distributions..................................... (0.06) (1.14) (2.61) (1.33) (0.77)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $39.61 $36.31 $35.44 $32.30 $28.58
====== ====== ====== ====== ======
Total return................................................ 9.27%(b) 5.72% 18.17% 18.35% 27.20%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 0.64%(a) 0.64% 0.67% 0.73% 0.73%
Ratio of net investment income to average net assets...... 0.57%(a) 1.25% 1.43% 1.60% 1.90%
Portfolio turnover rate..................................... 22% 25% 19% 11% 14%
Net assets at end of period (millions)...................... $289.0 $296.9 $288.1 $175.7 $175.7
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
OHIO NATIONAL FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (3.8%)
$1,737,000 Allied Signal 4.800% 07/09/99...... $ 1,735,147
-----------
AUTOMOTIVE & RELATED (18.8%)
1,151,000 American Honda 4.820% 07/16/99..... 1,148,688
1,300,000 American Honda 4.820% 07/19/99..... 1,296,867
1,356,000 Ford Motor Credit Corp. 5.000%
07/29/99.......................... 1,350,727
2,118,000 General Motors 4.780% 07/01/99..... 2,118,000
289,000 General Motors 4.820% 07/14/99..... 288,497
2,400,000 Hertz Corp. 4.850% 07/08/99........ 2,397,737
-----------
8,600,516
-----------
CHEMICALS (4.4%)
2,016,000 Monsanto Co. 4.920% 07/26/99....... 2,009,112
-----------
COMPUTER & RELATED (4.4%)
2,019,000 IBM Credit 4.980% 07/23/99......... 2,012,856
-----------
CONSUMER PRODUCTS (6.6%)
1,929,000 American Home Products 4.900%
08/02/99.......................... 1,920,598
1,095,000 Fortune Brands 5.100% 08/09/99..... 1,088,950
-----------
3,009,548
-----------
CONTAINERS (2.2%)
1,005,000 Crown Cork & Seal 5.120%
07/15/99.......................... 1,002,999
-----------
FINANCE (14.2%)
976,000 American Express 4.940% 07/14/99... 974,259
460,000 American Express 5.060% 07/14/99... 459,159
1,527,000 Associates First Capital 5.170%
08/04/99.......................... 1,519,544
2,400,000 Heller Financial 5.050% 07/27/99... 2,391,247
1,152,000 Household Finance 5.050%
08/09/99.......................... 1,145,698
-----------
6,489,907
-----------
ELECTRICAL EQUIPMENT (5.2%)
2,400,000 G.E. Capital 5.020% 08/03/99....... 2,388,956
-----------
FOOD & RELATED (10.7%)
1,523,000 Archer Daniels 4.900% 07/28/99..... 1,517,403
1,213,000 Coca-Cola Co. 4.760% 07/02/99...... 1,212,840
1,174,000 Coca-Cola Co. 4.760% 07/06/99...... 1,173,224
1,006,000 Winn-Dixie 5.150% 07/22/99......... 1,002,978
-----------
4,906,445
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
INSURANCE (10.5%)
$2,400,000 AETNA Services 5.000% 07/13/99..... $ 2,396,000
2,400,000 Prudential Funding 4.800%
07/07/99.......................... 2,398,080
-----------
4,794,080
-----------
MACHINERY & EQUIPMENT (4.4%)
2,000,000 John Deere Capital 4.870%
07/20/99.......................... 1,994,859
-----------
OIL, ENERGY & NATURAL GAS (5.3%)
2,450,000 Dupont E.I. De Nemours Co. 4.860%
07/21/99.......................... 2,443,385
-----------
RETAIL (5.5%)
2,319,000 Albertson's Inc. 5.030% 07/30/99... 2,309,604
187,000 Sears Roebuck 4.890% 07/13/99...... 186,695
-----------
2,496,299
-----------
UTILITIES (7.7%)
1,850,000 Central Louisiana Electric 5.150%
08/13/99.......................... 1,838,620
450,000 Houston Industries 5.120%
07/15/99.......................... 449,103
1,215,000 Southern California Edison 4.870%
07/12/99.......................... 1,213,192
-----------
3,500,915
-----------
TOTAL HOLDINGS (103.7%)
(COST $47,385,024) (a)............ $47,385,024
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (-3.7%)............... (1,708,496)
-----------
TOTAL NET ASSETS (100.0%).......... $45,676,528
===========
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 9
OHIO NATIONAL FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $47,385,024)............. $47,385,024
Cash in bank.............................. 1,103
Receivable for fund shares sold........... 546,823
Other..................................... 1,805
-----------
Total assets............................ 47,934,755
-----------
Liabilities:
Payable for shares redeemed............... 2,237,413
Payable for investment management services
(note 3)................................ 10,028
Other accrued expenses.................... 4,659
Dividends payable......................... 6,126
-----------
Total liabilities....................... 2,258,226
-----------
Net assets at market value.................. $45,676,529
===========
Net assets consist of:
Par value, $1 per share................... $ 4,567,659
Paid-in capital in excess of par value.... 41,108,870
-----------
Net assets at market value.................. $45,676,529
===========
Shares outstanding (note 4)................. 4,567,653
Net asset value per share................... $ 10.00
===========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................. $ 1,158,527
-----------
Expenses:
Management fees (note 3).................. 69,970
Custodian fees (note 3)................... 3,445
Directors' fees (note 3).................. 530
Professional fees......................... 2,323
Accounting and transfer agent fees........ 11,047
Other..................................... 2,984
-----------
Total expenses.......................... 90,299
Less fees waived (note 3)............... (11,662)
-----------
Net expenses.......................... 78,637
Net investment income................... $ 1,079,890
-----------
Net increase in net assets from
operations............................ $ 1,079,890
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 10
OHIO NATIONAL FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- ------------
<S> <C> <C>
From operations:
Net increase in net assets from operations............ $ 1,079,890 $ 1,645,134
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (1,079,890) (1,645,134)
------------ ------------
From capital share transactions (note 4):
Received from shares sold................................. 67,412,569 61,020,166
Received from dividends reinvested........................ 1,079,897 1,645,134
Paid for shares redeemed.................................. (67,217,589) (47,405,261)
------------ ------------
Increase in net assets derived from capital share
transactions......................................... 1,274,877 15,260,039
------------ ------------
Increase in net assets............................. 1,274,877 15,260,039
Net Assets:
Beginning of period....................................... 44,401,652 29,141,613
------------ ------------
End of period............................................. $ 45,676,529 $ 44,401,652
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
6-30-99 ---------------------------------------
(UNAUDITED) 1998 1997 1996 1995
---------------- ------ ------ ------ ------
<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..................................... 0.23 0.52 0.52 0.50 0.54
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.23) (0.52) (0.52) (0.50) (0.54)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $10.00 $10.00 $10.00 $10.00 $10.00
====== ====== ====== ====== ======
Total return................................................ 2.32%(b) 5.39% 5.37% 5.17% 5.62%
Ratios net of fees waived by advisor (a):
Ratio of expenses to average net assets................... 0.34%(a) 0.36% 0.38% 0.44% 0.44%
Ratio of net investment income to average net assets...... 4.65%(a) 5.26% 5.11% 4.98% 5.39%
Ratios assuming no fees waived by advisor:
Ratio of expenses to average net assets................... 0.39%(a) 0.41% 0.43% 0.49% 0.55%
Ratio of net investment income to average net assets...... 4.60%(a) 5.21% 5.06% 4.93% 5.27%
Net assets at end of period (millions)...................... $ 45.7 $ 44.4 $ 29.1 $ 25.6 $ 15.7
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 11
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, 1999
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<S> <C>
One-year 2.01%
Three-year 6.44%
Five-year 7.30%
Ten-year 7.51%
Since inception (11/2/82) 8.20%
</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
The Bond Portfolio returned 2.01% over the past year versus 4.19% for the Lehman
Government/Corporate Intermediate Bond Index. For the first six months of 1999,
the fund outperformed the Index -.32 to -.58. During the last six months of
1998, corporate bonds in the Baa category seriously underperformed Treasury
securities and the Index. The first half of 1999 has seen this situation turn
around somewhat and our performance has improved relative to the Index. The
economy is expected to slow somewhat in the second half of 1999 and interest
rates will likely be more stable than in the first half when the 30-year U.S.
Treasury bond yields increased approximately 1%.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
BOND PORTFOLIO (COMMENCED LEHMAN BROS. GOVT./CORP. INDEX -
OPERATIONS NOVEMBER 2, 1982) INTERMEDIATE
---------------------------- --------------------------------
<S> <C> <C>
10,000.00 10,000.00
'86 10,514.00 10,511.00
10,498.20 10,557.30
'87 10,599.00 10,896.10
10,954.10 11,376.70
'88 11,313.40 11,634.90
11,962.80 12,540.10
'89 12,525.00 13,119.50
12,914.50 13,520.90
'90 13,503.40 14,322.70
14,104.30 14,944.30
'91 15,253.80 16,416.30
15,777.00 16,910.40
'92 16,403.40 17,593.60
17,673.00 18,675.60
'93 18,157.30 19,127.60
17,343.80 18,622.60
'94 17,460.00 18,754.80
19,541.30 20,553.40
'95 20,760.60 21,624.30
20,463.80 21,578.90
'96 21,529.90 22,500.30
22,266.20 23,137.00
'97 23,528.70 24,270.70
24,189.90 25,103.20
'98 24,755.90 26,305.70
24,676.70 26,153.10
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Anixter 8.00% 09/15/03 3.95
2. Franchise Finance Corp. of
Amer. 8.25% 10/30/2003 3.90
3. US Industries, Inc. 144A 7.125%
04/15/2005 3.79
4. Dial Corp. 6.5% 9/15/2008 3.65
5. Abitibi-Consolidated Inc. 7.40%
04/01/18 3.49
6. Thermo Electron Corporation
4.25% 01/01/2003 3.42
7. Colonial Realty 8.05% 07/15/06 3.41
8. Texas Utilities 7.48% 01/01/17 2.73
9. Watson Pharmaceuticals, Inc.
7.125% 5/15/08 2.57
10. Mirage Resorts, Inc. 6.75%
02/01/2008 2.50
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Utilities 8.64
2. Oil, Energy, and Natural Gas 8.40
3. Electrical Equipment 7.13
4. Forestry and Paper Products 6.53
5. Financial Services 5.71
</TABLE>
11
<PAGE> 12
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
GOVERNMENT (1.9%)
$ 500,000 U.S. Treasury Note 7.875%
11/15/99.......................... $ 505,313
-----------
AIR COURIER (1.6%)
461,275 Federal Express Inc. 7.020%
01/15/16.......................... 432,849
-----------
AUTOMOTIVE & RELATED (2.3%)
100,000 Arvin Industries 10.000%
08/01/00.......................... 102,853
500,000 General Motors Automobile Corp.
8.400% 10/15/99................... 503,348
-----------
606,201
-----------
BUSINESS SERVICES (1.9%)
500,000 Cendant Corp. 7.750% 12/01/03...... 505,475
-----------
BUILDING & CONSTRUCTION (1.9%)
500,000 Owens Corning 7.500% 05/01/05...... 495,429
-----------
CHEMICALS (2.4%)
700,000 Mississippi Chemical Corp. 7.250%
11/15/17.......................... 630,036
-----------
COMMUNICATIONS (1.8%)
200,000 Comcast Cable Communications 8.375%
05/01/07.......................... 213,835
250,000 Tele-Communications Inc. 8.250%
01/15/03.......................... 263,269
-----------
477,104
-----------
COMPUTER & RELATED (1.8%)
300,000 Apple Computer Inc. 6.500%
02/15/04.......................... 276,750
200,000 Comdisco, Inc. 7.750% 09/01/99..... 200,444
-----------
477,194
-----------
CONSUMER GOODS (3.6%)
1,000,000 Dial Corp. 6.500% 09/15/08......... 953,219
-----------
ELECTRICAL EQUIPMENT (7.1%)
1,000,000 Anixter Intl. 8.000% 09/15/03...... 1,030,974
500,000 Pioneer 8.500% 08/01/06............ 457,700
400,000 Tektronix Inc. 7.500% 08/01/03..... 409,461
-----------
1,898,135
-----------
FINANCIAL SERVICES (5.7%)
1,000,000 Franchise Finance Corp of America
8.250% 10/30/03................... 1,018,309
500,000 St. Paul Bancorp Inc. 7.125%
02/15/04.......................... 500,977
-----------
1,519,286
-----------
FORESTRY & PAPER PRODUCTS (6.5%)
1,000,000 Abitibi Consolidated Inc. 7.400%
04/01/18.......................... 910,320
300,000 Boise Cascade Co. 9.850%
06/15/02.......................... 318,191
250,000 Champion International 7.700%
12/15/99.......................... 251,556
250,000 ITT Rayonier Inc. 7.500%
10/15/02.......................... 256,812
-----------
1,736,879
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FOREIGN FOOD & RELATED (1.7%)
$ 500,000 Gruma, SA de C.V. (Mexico) 7.625%
10/15/07.......................... $ 446,250
-----------
FOREIGN GOVERNMENT (1.8%)
200,000 British Columbia (United Kingdom)
7.000% 01/15/03................... 203,560
250,000 Province of Quebec (Canada) 8.625%
01/19/05.......................... 271,653
-----------
475,213
-----------
HOTEL/LODGING (4.8%)
700,000 ITT Destinations 6.750% 11/15/05... 635,155
700,000 Mirage Resorts Inc. 6.750%
02/01/08.......................... 653,050
-----------
1,288,205
-----------
HOUSING, FURNITURE & RELATED (0.6%)
140,000 Armstrong World 9.750% 04/15/08.... 162,744
-----------
INDUSTRIAL SERVICES (5.0%)
400,000 R&B Falcon Corp. Series B 6.750%
04/15/05.......................... 338,000
1,000,000 US Industries Inc. (144A) 7.125%
10/15/03.......................... 989,813
-----------
1,327,813
-----------
INSURANCE (2.5%)
250,000 Continental Corp. 7.250%
03/01/03.......................... 247,659
400,000 Transamerica Finance Corp. 7.500%
03/15/04.......................... 412,406
-----------
660,065
-----------
MACHINERY (3.3%)
1,000,000 Thermo Electron 4.250% 01/01/03.... 892,500
-----------
MEDICAL & RELATED (4.6%)
250,000 Bergen Brunswig 7.375% 01/15/03.... 251,369
300,000 Cardinal Health Inc. 6.500%
02/15/04.......................... 297,830
700,000 Watson Pharmaceuticals 7.125%
05/15/08.......................... 671,108
-----------
1,220,307
-----------
METALS & MINING (1.7%)
500,000 Cyprus Minerals 6.625% 10/15/05.... 455,014
-----------
OIL, ENERGY & NATURAL GAS (8.4%)
200,000 Atlantic Richfield 8.550%
03/01/12.......................... 225,649
100,000 DeKalb Energy 9.875% 07/15/00...... 103,458
400,000 Dresser Industries, Inc. 6.250%
06/01/00.......................... 400,141
500,000 Husky Oil Ltd. 8.900% 08/15/28..... 485,535
125,000 Marathon Oil 7.000% 06/01/02....... 125,293
400,000 PDV America, Inc. 7.875%
08/01/03.......................... 391,490
500,000 System Energy 7.800% 08/01/00...... 503,092
-----------
2,234,658
-----------
</TABLE>
(continued)
12
<PAGE> 13
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
REAL ESTATE & LEASING (5.4%)
$ 300,000 Avalon Properties Inc. 7.375%
09/15/02.......................... $ 300,862
900,000 Colonial Realty 8.050% 07/15/06.... 891,712
250,000 Sun Communities 7.625% 05/01/03.... 250,023
-----------
1,442,597
-----------
RESTAURANTS (1.8%)
500,000 Wendy's Inc. 6.350% 12/15/05....... 479,212
-----------
TRANSPORTATION (3.9%)
250,000 American President Cos., Ltd.
7.125% 11/15/03................... 200,274
350,000 Illinois Central Gulf Railroad
6.750% 05/15/03................... 352,034
482,967 Northwest Airlines 8.070%
01/02/15.......................... 492,271
-----------
1,044,579
-----------
UTILITIES (8.6%)
200,000 Cleveland Electric Illum. 7.625%
08/01/02.......................... 203,470
500,000 Great Lakes Power Inc. 8.900%
12/01/99.......................... 505,045
250,000 Kansas Gas & Electric 8.290%
03/29/16.......................... 252,183
200,000 Old Dominion Electric Co-op 8.760%
12/01/22.......................... 215,176
200,000 Sprint Corp. 8.125% 07/15/02....... 207,476
700,000 Texas Utilities Electric Co. 7.480%
01/01/17.......................... 711,646
200,000 Toledo Edison Co. 7.875%
08/01/04.......................... 205,094
-----------
2,300,090
-----------
TOTAL LONG-TERM BONDS & NOTES
(92.6%) (COST $25,051,055)........ $24,666,367
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
UTILITIES (1.1%)
12,000 GTE Delaware, 8.750%, Series B..... $ 304,500
-----------
TOTAL PREFERRED STOCKS (1.1%) (COST
$300,000)......................... $ 304,500
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCE (4.3%)
$ 561,000 American General Corp. 5.200%
07/01/99.......................... $ 561,000
580,000 G.E. Capital 5.000% 07/02/99....... 579,920
-----------
TOTAL SHORT-TERM NOTES (4.3%)
(COST $1,140,920)................. $ 1,140,920
-----------
TOTAL HOLDINGS (98.0%)
(COST $26,491,975) (a)............ $26,111,787
-----------
CASH & RECEIVABLES,
NET OF LIABILITIES (2.0%)......... 522,020
-----------
TOTAL NET ASSETS (100.0%).......... $26,633,807
===========
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
(144A) 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 buyers. At the period end, the value
of these securities amounted to $989,813 or 3.7% of net assets. These
securities were deemed liquid pursuant to procedures approved by the
Board of Directors.
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 14
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $26,491,975)............. $26,111,787
Cash in bank.............................. 355
Receivable for securities sold............ 0
Receivable for fund shares sold........... 463,214
Dividends and accrued interest
receivable.............................. 519,585
Other..................................... 1,411
-----------
Total assets............................ 27,096,352
-----------
Liabilities:
Payable for shares redeemed............... 3,411
Payable for investment management services
(note 3)................................ 13,083
Other accrued expenses.................... 11,117
Dividends payable......................... 434,935
-----------
Total liabilities....................... 462,546
-----------
Net assets at market value.................. $26,633,806
===========
Net assets consist of:
Par value, $1 per share................... $ 2,573,580
Paid-in capital in excess of par value.... 24,247,028
Accumulated net realized loss on
investments (note 1).................... (245,016)
Net unrealized depreciation on investments
(note 1)................................ (380,188)
Undistributed net investment income....... 438,402
-----------
Net assets at market value.................. $26,633,806
===========
Shares outstanding (note 4)................. 2,573,580
Net asset value per share................... $ 10.35
===========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest................................... $ 968,945
Dividends.................................. 13,125
----------
Total investment income.................. 982,070
----------
Expenses:
Management fees (note 3)................... 80,565
Custodian fees (note 3).................... 2,736
Directors' fees (note 3)................... 517
Professional fees.......................... 2,267
Accounting and transfer agent fees......... 13,656
Other...................................... 3,068
----------
Total expenses........................... 102,809
----------
Net investment income.................... $ 879,261
----------
Realized and unrealized gain (loss) on
investments:
Net realized gain from investments......... $ 26,826
Net increase in unrealized depreciation on
investments.............................. (994,046)
----------
Net loss on investments.................. (967,220)
----------
Net decrease in net assets from
operations............................. $ (87,959)
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 15
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- -----------
<S> <C> <C>
From operations:
Net investment income..................................... $ 879,261 $ 1,603,360
Realized gain (loss) on investments....................... 26,826 (230,373)
Unrealized loss on investments............................ (994,046) (124,666)
----------- -----------
Net increase (decrease) in net assets from
operations........................................... (87,959) 1,248,321
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (440,859) (1,604,016)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 3,140,768 10,579,517
Received from dividends reinvested........................ 440,859 1,604,016
Paid for shares redeemed.................................. (4,800,189) (5,213,682)
----------- -----------
Increase (decrease) in net assets derived from capital
share transactions................................... (1,218,562) 6,969,851
----------- -----------
Increase (decrease) in net assets.................. (1,747,380) 6,614,156
Net Assets:
Beginning of period....................................... 28,381,186 21,767,030
----------- -----------
End of period (a)......................................... $26,633,806 $28,381,186
=========== ===========
(a) Includes undistributed net investment income of......... $ 438,402 $ 2,660
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
6-30-99 ---------------------------------------
(UNAUDITED) 1998 1997 1996 1995
---------------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $10.56 $10.68 $10.62 $10.93 $ 9.70
Income (loss) from investment operations:
Net investment income..................................... 0.34 0.67 0.71 0.69 0.70
Net realized and unrealized gain (loss) on investments.... (0.38) (0.12) 0.23 (0.32) 1.08
------ ------ ------ ------ ------
Total income (loss) from investment operations.......... (0.04) 0.55 0.94 0.37 1.78
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.17) (0.67) (0.88) (0.68) (0.55)
Distributions from net realized capital gains............. 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------
Total distributions..................................... (0.17) (0.67) (0.88) (0.68) (0.55)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $10.35 $10.56 $10.68 $10.62 $10.93
====== ====== ====== ====== ======
Total return................................................ (0.32)%(b) 5.22% 9.28% 3.71% 18.90%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 0.72%(a) 0.72% 0.78% 0.79% 0.75%
Ratio of net investment income to average net assets...... 2.52%(a) 6.21% 6.67% 6.54% 6.76%
Portfolio turnover rate..................................... 0% 12% 10% 3% 4%
Net assets at end of period (millions)...................... $ 26.6 $ 28.4 $ 21.8 $ 20.8 $ 18.1
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 16
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, 1999
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<S> <C>
One-year 2.77%
Three-year 12.18%
Five-year 13.78%
Ten-year 11.09%
Since inception (9/10/84) 11.53%
</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 return for the Omni portfolio during the first half of 1999 was 6.01%. The
return for the portfolio was -0.49 during the first quarter as we completed the
transition of the common stock portion of the portfolio from a multiple market
capitalization portfolio (medium market capitalization of approximately $2
billion) to a medium and large capitalization portfolio with medium market
capitalization of approximately $10 billion. The second quarter return was
6.52%.
We expect the Equity market to remain somewhat volatile as concerns of rising
interest rates and inflation, and extended equity valuations offset the
continuing strong earnings reported by many companies. It is possible that
interest rates could continue to increase as inflation concerns mount and
commodity prices increase off their lows. We expect the stock market to incur
periods of price corrections and interest rates, though rising somewhat, to stay
within a reasonable range. We feel investing in the common stocks of strong,
growing companies at reasonable prices will provide the best returns in the
financial markets.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
OMNI PORTFOLIO (COMMENCED
OPERATIONS SEPTEMBER 10, 1984) S&P INDEX
------------------------------ ---------
<S> <C> <C>
10,000.00 10,000.00
'86 9,865.00 9,806.00
10,798.20 12,508.50
'87 9,698.97 10,318.30
10,796.90 11,645.20
'88 11,157.50 12,052.80
12,261.00 14,034.30
'89 12,882.60 15,847.50
13,307.70 16,335.60
'90 13,128.10 15,345.70
14,011.60 17,543.20
'91 15,510.80 20,032.60
15,735.80 19,904.30
'92 16,845.10 21,568.30
17,990.60 22,607.90
'93 19,010.70 23,722.50
18,413.70 22,911.20
'94 18,909.10 24,033.90
21,456.10 28,876.70
'95 23,213.40 33,029.10
24,875.40 36,398.10
'96 26,820.70 40,653.10
29,728.10 48,986.90
'97 31,687.10 54,179.80
34,165.10 63,763.20
'98 33,123.10 69,648.60
35,113.70 78,271.10
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Cisco Systems Inc. 4.23
2. Sun Microsystems, Inc. 2.68
3. Texas Instruments Incorporated 2.54
4. American International Group,
Inc 2.06
5. Microsoft Corporation 1.75
6. Schlumberger Limited 1.66
7. Ford Motor Company 1.61
8. General Electric Company 1.54
9. Owens-Illinois Inc. 1.51
10. AlliedSignal Inc. 1.50
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Computer and Related 17.96
2. Oil, Energy, and Natural Gas 9.30
3. Banking 5.19
4. Electrical Equipment 5.16
5. Medical & Related 4.79
</TABLE>
16
<PAGE> 17
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (2.2%)
49,000 Allied Signal Inc. ............... $ 3,087,000
21,600 Raytheon Co. ..................... 1,520,100
------------
4,607,100
------------
AUTOMOTIVE & RELATED (2.7%)
16,294 *DaimlerChrysler AG............... 1,448,129
8,000 Eaton Corp. ...................... 736,000
58,777 Ford Motor Co. ................... 3,317,227
------------
5,501,356
------------
BANKING (5.3%)
24,750 Bank America Corp. ............... 1,814,484
36,700 Bank One Corp. ................... 2,185,944
67,597 Charter One Financial Inc. ....... 1,880,042
76,320 Firstar Corp. .................... 2,136,960
45,000 Mellon Bank Corp. ................ 1,636,875
34,500 Washington Mutual Inc. ........... 1,220,438
------------
10,874,743
------------
BUSINESS SERVICES (1.4%)
54,500 Manpower Inc. .................... 1,233,063
67,000 Reynolds & Reynolds............... 1,561,938
------------
2,795,001
------------
BROADCAST RADIO & TV (1.8%)
60,000 *CBS Corp. ....................... 2,606,250
40,000 *Infinity Broadcasting............ 1,190,000
------------
3,796,250
------------
CHEMICALS (1.3%)
25,000 Hercules Inc. .................... 982,813
20,000 Minerals Technologies Inc. ....... 1,116,250
15,000 Monsanto Co. ..................... 591,562
------------
2,690,625
------------
COMPUTER & RELATED (14.4%)
28,000 *3Comm Corp. ..................... 747,250
135,000 *Cisco Systems Inc. .............. 8,707,500
34,500 Computer Associates............... 1,897,500
26,200 *Computer Sciences Corp. ......... 1,812,713
44,000 *EMC Corp. ....................... 2,420,000
30,000 Hewlett-Packard Co. .............. 3,015,000
40,000 *Microsoft Corp. ................. 3,607,500
16,000 *NCR Corp. ....................... 781,000
47,058 *Seagate Technology Inc. ......... 1,205,861
80,000 *Sun Microsystems Inc. ........... 5,510,000
1,850 *Unisys Corp. .................... 72,034
------------
29,776,358
------------
CONTAINERS (1.5%)
95,000 *Owens-Illinois Inc. ............. 3,105,313
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
DRUGS (3.9%)
56,000 Abbott Laboratories............... $ 2,548,000
57,000 *Applied Analytical Ind. ......... 641,250
24,000 Eli Lilly & Co. .................. 1,719,000
49,000 *Kendle International............. 784,000
45,000 Mylan Laboratories................ 1,192,500
30,000 *Watson Pharmaceutical............ 1,051,875
------------
7,936,625
------------
ELECTRICAL EQUIPMENT (3.6%)
47,000 *American Power Conversion
Corp. ........................... 945,875
26,116 Federal Signal Corp. ............. 553,333
28,000 General Electric Co. ............. 3,164,000
45,000 Xerox Corp. ...................... 2,657,812
------------
7,321,020
------------
ENTERTAINMENT & LEISURE (0.8%)
66,000 Cedar Fair........................ 1,645,875
------------
FINANCIAL SERVICES (2.6%)
60,810 Associates First Capital CL A..... 2,694,643
55,000 MGIC Investment Corp. ............ 2,674,375
------------
5,369,018
------------
FOOD & RELATED (0.6%)
35,000 Food Lion Inc. CL A............... 415,625
70,000 Food Lion Inc. CL B............... 809,375
------------
1,225,000
------------
HOUSING, FURNITURE & RELATED (1.3%)
139,781 Clayton Homes Inc. ............... 1,598,745
24,000 Newell Rubbermaid................. 1,116,000
------------
2,714,745
------------
INDUSTRIAL (1.2%)
26,000 Tyco International Ltd. .......... 2,463,500
------------
INSURANCE (3.2%)
36,280 American International Group...... 4,247,028
18 Cincinnati Financial Corp. ....... 676
36,500 Equitable Cos. Inc. .............. 2,445,500
------------
6,693,204
------------
MEDICAL & RELATED (3.5%)
26,500 Baxter International.............. 1,606,563
57,000 *Capital Senior Living............ 570,000
32,273 Cardinal Health................... 2,069,506
37,500 *HCR Manor Care................... 907,031
34,000 United Healthcare Corp. .......... 2,129,250
------------
7,282,350
------------
</TABLE>
(continued)
17
<PAGE> 18
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
OIL, ENERGY & NATURAL GAS (6.6%)
23,000 Chevron Corp. .................... $ 2,189,313
74,500 *Louis Dreyfus Natural Gas........ 1,606,406
53,630 Schlumberger Ltd. ................ 3,415,561
86,000 *Tesoro Petroleum................. 1,370,625
50,000 Transocean Offshore Inc. ......... 1,312,500
90,000 USEC Inc. ........................ 1,338,750
57,000 Williams Companies Inc. .......... 2,426,062
------------
13,659,217
------------
REAL ESTATE & LEASING (1.1%)
48,000 Commercial Net Lease Realty....... 618,000
50,000 JDN Realty Corp. ................. 1,118,750
24,000 National Health Investors Inc. ... 547,500
------------
2,284,250
------------
RESTAURANTS (1.0%)
50,000 *Buffets Inc. .................... 575,000
81,625 *Consolidated Product............. 1,469,250
------------
2,044,250
------------
SEMICONDUCTOR MANUFACTURE (4.6%)
33,333 *Analog Devices Inc. ............. 1,672,900
44,000 Intel Corp. ...................... 2,618,000
36,000 Texas Instruments Inc. ........... 5,220,000
------------
9,510,900
------------
TELECOMMUNICATIONS & CELLULAR (3.5%)
36,000 *ADC Telecommunications Inc. ..... 1,640,250
20,000 *Associated Group Inc. CL B....... 1,303,750
39,000 *Bell Atlantic Corp. ............. 2,549,625
20,750 *MCI Worldcom Inc. ............... 1,789,688
------------
7,283,313
------------
TEXTILES (0.8%)
58,000 Warnaco Group CL A................ 1,551,500
------------
TRANSPORTATION & EQUIPMENT (1.9%)
32,250 *Atlas Air Inc. .................. 1,040,060
65,000 Burlington Northern Santa Fe...... 2,015,000
24,000 CNF Transportation Inc. .......... 921,000
------------
3,976,060
------------
TOTAL COMMON STOCKS (70.8%) (COST
$78,576,853)..................... $146,107,573
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
BANKING (1.0%)
46,000 Flagstar Bancorp Inc. ............ $ 1,135,625
30,000 National Australia Bank Conv. .... 911,250
------------
2,046,875
------------
COMPUTERS & RELATED (0.5%)
14,392 Unisys Corp. Conv. $3.75 Series
A................................ 937,279
------------
FINANCIAL SERVICES (0.4%)
30,000 Provident Capital Tr. II 8.75%.... 750,000
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
FOOD & RELATED (0.2%)
20,000 Conagra Capital 9.35% Series C.... $ 508,750
------------
METALS & MINING (0.2%)
24,500 Freeport McMoran Copper & Gold
Series C......................... 390,469
------------
OIL, ENERGY & NATURAL GAS (0.5%)
41,000 Consumer Energy II Conv. ......... 1,030,125
------------
RETAIL (0.4%)
14,000 Kmart Conv. 7.75%................. 819,000
------------
UTILITIES (0.2%)
20,000 GTE Delaware 8.75% Series B....... 507,500
------------
TOTAL PREFERRED STOCKS (3.4%)
(COST $7,143,304)................ $ 6,989,998
------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
GOVERNMENT (1.6%)
$ 775,000 U.S. Treasury Note 6.375%
07/15/99......................... $ 775,969
500,000 U.S. Treasury Note 7.875%
11/15/99......................... 505,313
2,005,000 U.S. Treasury Note 7.750%
02/15/01......................... 2,074,549
------------
3,355,831
------------
AEROSPACE (0.2%)
500,000 AAR Corp. 7.250% 10/15/03......... 498,822
------------
BANKING (0.5%)
1,000,000 Green Tree Financial CL A 8.700%
06/15/25......................... 1,065,786
------------
CHEMICALS (0.7%)
1,750,000 GEON Company 7.500% 12/15/98...... 1,535,301
------------
COMMUNICATIONS (1.0%)
1,600,000 Comcast Cable Communications
8.375% 05/01/07.................. 1,710,680
300,000 Sprint 8.125% 07/15/02............ 311,214
------------
2,021,894
------------
COMPUTERS & RELATED (0.3%)
700,000 Apple Computer, Inc. 6.500%
02/15/04......................... 645,750
------------
CONSUMER GOODS (0.7%)
1,400,000 Owens Corning 7.500% 05/01/05..... 1,387,201
------------
FINANCIAL SERVICES (0.8%)
1,000,000 Fertinitro Finance Inc. 8.290%
04/01/20......................... 701,084
500,000 Litchfield Financial Corp. 9.250%
12/01/03......................... 482,500
500,000 RBF Finance 11.000% 03/15/06...... 517,500
------------
1,701,084
------------
FOOD & RELATED (0.4%)
740,000 Marsh Supermarkets Inc. 8.875%
04/01/07......................... 736,300
------------
</TABLE>
(continued)
18
<PAGE> 19
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FORESTRY & PAPER PRODUCTS (0.7%)
$ 700,000 Boise Cascade Co. 9.850%
06/15/02......................... $ 742,445
500,000 Champion International 9.875%
06/01/00......................... 514,736
250,000 ITT Rayonier, Inc. 7.500%
10/15/02......................... 256,812
------------
1,513,993
------------
HOUSING, FURNITURE & RELATED (1.1%)
250,000 Armstrong World 9.750% 04/15/08... 290,614
2,000,000 Oakwood Homes Corp. 8.125%
03/10/09......................... 2,002,718
------------
2,293,332
------------
INDUSTRIAL SERVICES (0.2%)
400,000 Medar Sr. Sub. notes 12.950%
06/30/05......................... 400,000
------------
INSURANCE (0.5%)
500,000 Continental Corp. 7.250%
03/01/03......................... 495,318
600,000 Transamerica Finance Corp. 7.500%
03/15/04......................... 618,608
------------
1,113,926
------------
MACHINERY (0.2%)
500,000 ABC Rail Products Corp. 9.125%
01/15/04......................... 475,000
------------
MEDICAL & RELATED (1.6%)
500,000 Bergen Brunswig 7.375% 01/15/03... 502,739
1,500,000 Centocor Inc. 4.750% 02/15/05..... 1,681,875
1,000,000 Tenet Healthcare Corp. 8.625%
01/15/07......................... 990,000
------------
3,174,614
------------
METALS & MINING (0.2%)
500,000 Cyprus Minerals 6.625% 10/15/05... 455,014
------------
OIL, ENERGY & NATURAL GAS (2.9%)
400,000 Dekalb Energy 9.875% 07/15/00..... 413,832
350,000 Dresser Industries, Inc. 6.250%
06/01/00......................... 350,123
375,000 Marathon Oil 7.00% 06/01/02....... 375,879
600,000 PVD America, Inc. 7.875%
08/01/03......................... 587,235
500,000 Petroleos Mexicanos Global 8.850%
09/15/04......................... 455,000
1,500,000 R & B Falcon Corp. Series B 6.750%
04/15/05......................... 1,267,500
500,000 Union Texas Petroleum 8.250%
11/15/99......................... 503,837
500,000 United Refining Company 10.750%
06/15/07......................... 342,500
2,000,000 Windsor Petroleum Transport Corp.
7.840% 01/15/21.................. 1,570,000
------------
5,865,906
------------
RESTAURANTS (0.9%)
1,900,000 Tricon Global Restaurants 7.450%
05/15/05......................... 1,893,259
------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
TRANSPORTATION (0.4%)
$ 500,000 American President Cos. Ltd.
7.125% 11/15/03.................. $ 400,546
400,000 Illinois Central Gulf Railroad
6.750% 05/15/03.................. 402,325
------------
802,871
------------
UTILITIES (1.9%)
400,000 Cleveland Electric Illum. 7.625%
08/01/02......................... 406,940
700,000 ESI Tractebel 7.990% 12/30/11..... 667,782
1,000,000 Great Lakes Power 9.000%
08/01/04......................... 1,079,121
700,000 Niagra Mohawk Power Corp. 7.750%
10/01/08......................... 721,539
400,000 Old Dominion Elec. Co. 8.760%
12/01/22......................... 430,352
500,000 Texas New Mexico Power Co. 9.250%
09/15/00......................... 514,719
------------
3,820,453
------------
TOTAL LONG-TERM BONDS & NOTES
(16.8%) (COST $35,641,995)....... $ 34,756,337
------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCE (7.4%)
$2,861,000 American Express Credit Corp.
4.950% 07/06/99.................. $ 2,859,033
3,860,000 American General Finance 4.700%
07/02/99......................... 3,859,496
1,474,000 CIGNA Corp. 5.250% 07/09/99....... 1,472,280
4,933,000 Household Finance 4.750%
07/01/99......................... 4,933,000
2,283,000 Prudential Funding 5.110%
07/07/99......................... 2,281,057
------------
15,404,866
------------
RETAIL (1.3%)
2,579,000 Sears Roebuck Acceptance Corp.
5.180% 07/08/99.................. 2,576,402
------------
TOTAL SHORT-TERM NOTES (8.7%)
(COST $17,981,268)............... $ 17,981,268
------------
TOTAL HOLDINGS (99.7%) (COST
$139,343,420) (a)................ $205,835,176
------------
CASH & RECEIVABLES,
NET OF LIABILITIES (0.3%)........ 629,344
------------
TOTAL NET ASSETS (100.0%)......... $206,464,520
============
</TABLE>
- ---------------
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
19
<PAGE> 20
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $139,343,420)........... $205,835,176
Cash in bank............................. 2,620
Receivable for securities sold........... 85,939
Receivable for fund shares sold.......... 2,286,229
Dividends and accrued interest
receivable............................. 841,337
Other.................................... 11,251
------------
Total assets........................... 209,062,552
------------
Liabilities:
Payable for shares redeemed.............. 151,599
Payable for investment management
services (note 3)...................... 89,248
Other accrued expenses................... 70,956
Dividends payable........................ 2,286,229
------------
Total liabilities...................... 2,598,032
------------
Net assets at market value................. $206,464,520
============
Net assets consist of:
Par value, $1 per share.................. $ 9,141,558
Paid-in capital in excess of par value... 134,250,022
Accumulated net realized loss on
investments (note 1)................... (4,578,620)
Net unrealized appreciation on
investments
(note 1)............................... 66,491,756
Undistributed net investment income...... 1,159,804
------------
Net assets at market value................. $206,464,520
============
Shares outstanding (note 4)................ 9,141,558
Net asset value per share.................. $ 22.59
============
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................. $ 1,967,578
Dividends................................. 1,101,544
-----------
Total investment income................. 3,069,122
-----------
Expenses:
Management fees (note 3).................. 548,417
Custodian fees (note 3)................... 20,029
Directors' fees (note 3).................. 2,730
Professional fees......................... 12,738
Accounting and transfer agent fees........ 71,513
Other..................................... 17,890
-----------
Total expenses.......................... 673,317
-----------
Net investment income................... $ 2,395,805
-----------
Realized and unrealized gain (loss) on
investments:
Net realized loss from investments........ $(3,896,764)
Net increase in unrealized appreciation on
investments............................. 13,501,124
-----------
Net gain on investments................. 9,604,360
-----------
Net increase in net assets from
operations............................ $12,000,165
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE> 21
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- ------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 2,395,805 $ 5,640,411
Realized loss on investments.............................. (3,896,764) (681,856)
Unrealized gain on investments............................ 13,501,124 3,546,023
------------ ------------
Net increase in net assets from operations............ 12,000,165 8,504,578
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (1,241,699) (5,642,402)
Capital gains distributions............................... 0 (33,599)
------------ ------------
Total dividends and distributions.................. (1,241,699) (5,676,001)
------------ ------------
From capital share transactions (note 4):
Received from shares sold................................. 5,239,590 30,642,850
Received from dividends reinvested........................ 1,241,699 5,676,001
Paid for shares redeemed.................................. (25,195,252) (18,442,457)
------------ ------------
Increase (decrease) in net assets derived from capital
share transactions................................... (18,713,963) 17,876,394
------------ ------------
Increase (decrease) in net assets.................. (7,955,497) 20,704,971
Net Assets:
Beginning of period....................................... 214,420,017 193,715,046
------------ ------------
End of period (a)......................................... $206,464,520 $214,420,017
============ ============
(a) Includes undistributed net investment income of......... $ 1,159,804 $ 5,698
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
6-30-99 ---------------------------------------
(UNAUDITED) 1998 1997 1996 1995
---------------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $21.44 $21.06 $19.40 $17.60 $14.76
Income from investment operations:
Net investment income..................................... 0.25 0.58 0.56 0.53 0.58
Net realized & unrealized gain on investments............. 1.03 0.38 2.87 2.10 2.72
------ ------ ------ ------ ------
Total income from investment operations............ 1.28 0.96 3.43 2.63 3.30
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.13) (0.58) (0.69) (0.52) (0.46)
Distributions from net realized capital gains............. 0.00 0.00 (1.08) (0.31) 0.00
------ ------ ------ ------ ------
Total distributions................................ (0.13) (0.58) (1.77) (0.83) (0.46)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $22.59 $21.44 $21.06 $19.40 $17.60
====== ====== ====== ====== ======
Total return................................................ 6.01%(b) 4.53% 18.15% 15.54% 22.75%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 0.65%(a) 0.65% 0.71% 0.76% 0.75%
Ratio of net investment income to average net assets...... 2.31%(a) 2.71% 2.69% 2.89% 3.56%
Portfolio turnover rate..................................... 19% 18% 18% 12% 10%
Net assets at end of period (millions)...................... $206.5 $214.4 $193.7 $145.5 $109.6
</TABLE>
- ---------------
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
The accompanying notes are an integral part of these financial statements.
21
<PAGE> 22
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, 1999
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURNS:
One-year (6.08)%
Three-year 2.66%
Five-year 6.54%
Since inception (5/3/93) 10.20%
</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 finally began to see investors focus again on emerging markets and Japan
after a notable period of under-
performance. This turnaround can be attributable to investor optimism that the
"Asian Crisis" is finally over. This rally however came at the expense of the
markets in Western Europe. Concerns over economic slowdown, a weak Euro
currency, and fund outflows were factors. The year-to-date performance ending
June 30, 1999 for the Ohio National International Portfolio stood at -1.01%.
This compared with 3.97% for the Morgan Stanley International Europe, Australia,
and Far East Index. The fund's underperformance was due to the timing in the
first half of 1999 in restructuring the fund. In the second-half of 1999 the
fund better matched our investment strategy. Our investment discipline is driven
by security selection where we are looking for well positioned companies with
strong bottom line growth that are trading at reasonable valuations. Moreover,
the fund was well positioned when the Japanese equity market began to rally.
Secondly, positions in the telecom and media sectors in Western Europe continued
to pay dividends. Finally, some of our top holdings include, Softbank, a leading
Japanese based software and media company and Nortel networks, a leading
provider of global high-capacity data networks for telephone and the internet.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO (COMMENCED MORGAN STANLEY CAPTL. INTL. EAFE
OPERATIONS MAY 3, 1993) INDEX
---------------------------------- --------------------------------
<S> <C> <C>
10,000.00 10,000.00
9,936.00 10,052.00
'93 12,496.50 10,826.00
13,253.80 11,791.70
'94 13,504.30 11,698.50
14,287.50 12,021.40
'95 15,139.10 13,049.20
16,812.00 13,658.60
'96 17,331.40 13,879.90
19,366.20 15,456.70
'97 17,696.80 14,040.80
19,367.40 16,298.60
'98 18,383.50 16,741.90
18,188.60 17,406.60
</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 INTERNATIONAL HOLDINGS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Sony Corp. 1.63
2. Telesystem International
Wireless 1.31
3. Rohm Co. 1.31
4. Advantest Corp. 1.30
5. Bouygues 1.23
6. Cable & Wireless Communication 1.22
7. Equant NV, ADR 1.20
8. MobilCom AG 1.19
9. Global TeleSystems Group, Inc. 1.17
10. Mannesmann AG 1.17
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Telecommunications 14.75
2. Business & Public Services 11.29
3. Electronic Components,
Instruments 9.46
4. Broadcasting & Publishing 9.08
5. Appliances & Household Durables 5.13
</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.
22
<PAGE> 23
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
JAPAN (26.7%)
13,700 Advantest Corp. (12).............. $ 1,504,811
20,600 Aiwa Co. Ltd. (11)................ 680,514
23,000 Asatsu Inc. (29).................. 607,837
48,000 Capcom Co. Ltd. (9)............... 1,016,806
49,000 Ebara Corp. (21).................. 582,326
17,400 Enix Corp. (9).................... 758,740
16,000 Fujitec Co. Ltd. (4).............. 151,563
36,000 Fujitsu Ltd. (9).................. 723,954
150,000 Furukawa Electric Co. (11)........ 687,534
64,000 Hitachi Ltd. (11)................. 599,909
88,000 Inax Corp. (4).................... 537,077
5,500 Japan Digital Laboratory (9)...... 96,523
23,700 Kao Corp. (10).................... 665,483
4,300 Keyence Corp. (12)................ 752,149
22,000 Kyorin Pharmaceutical Co. (24).... 546,889
25,000 Matsushita-Kotobuki Electronics
(12)............................. 706,116
17,400 Mycal Card Inc. (15).............. 790,354
26,700 Namco Ltd. (14)................... 716,645
72,000 Nec Corp. (12).................... 894,909
104,000 Nikko Securities Co. Ltd. (15).... 670,802
42,000 Nikon Corp. (12).................. 686,790
54,000 Nippon Conlux Co. Ltd. (11)....... 290,325
13,000 Nippon Broadcasting System (23)... 644,176
46,000 Olympus Optical Co. Ltd. (12)..... 679,638
13,200 Paris Miki Inc. (23).............. 719,495
18,000 Paltek Corp. (34)................. 707,602
9,700 Rohm Co Ltd. (12)................. 1,518,066
221,000 Sanyo Electric Co. Ltd. (11)...... 897,981
55,000 Sharp Corp. (12).................. 649,544
12,000 Shimamura Co. Ltd. (28)........... 1,015,815
25,900 Shimachu (28)..................... 573,250
55,500 Shinkawa Ltd. (12)................ 1,200,892
5,700 Softbank Corp. (34)............... 1,153,793
17,500 Sony Corp. (12)................... 1,886,072
570 Sotoh Co. (31).................... 3,153
28,200 Square Co. Ltd. (12).............. 1,015,419
71,000 Sumitomo Forestry Co. Ltd. (4).... 552,356
13,500 Takeda Chemical Industries (24)... 625,470
37,000 Taiyo Yuden Co. Ltd. (12)......... 606,863
38,000 Tenma (26)........................ 496,478
9,000 Union Tool (12)................... 668,951
242,000 *Wako Securities Co. Ltd. (15).... 535,624
------------
30,818,694
------------
UNITED KINGDOM (12.8%)
58,500 *Allied Domecq plc (16)........... 565,305
19,600 *Arm Holdings plc ADR (12)........ 683,550
33,844 *Baltimore Tech. Zergo Hldgs
(29)............................. 384,132
17,750 Barclays (3)...................... 517,370
42,300 British Telecom plc (8)........... 706,826
146,945 *Cable & Wireless Communications
(8).............................. 1,417,662
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
UNITED KINGDOM, CONTINUED
30,939 *Colt Telecom Group plc (8)....... $ 649,646
15,600 *Eidos plc (9).................... 512,740
364,600 Electronics Boutique plc (12)..... 530,212
44,686 *Energis plc (8).................. 1,061,576
63,600 *Future Network plc (23).......... 423,594
37,082 *Icon plc ADR (29)................ 727,734
31,500 Logica plc (29)................... 330,216
25,203 *National Westminister Bank (3)... 533,971
77,066 Prudential Corp. plc (20)......... 1,140,761
79,000 *Reuters Group plc (23)........... 1,040,495
2,500 *Sage Group plc (9)............... 88,870
112,001 Securicor plc (29)................ 983,430
36,150 *Sema Group plc (29).............. 348,475
51,600 *Shire Pharmaceuticals Group
(24)............................. 429,080
45,400 Smithkline Beecham plc (24)....... 589,367
144,379 *Telewest Communications plc
(8).............................. 644,105
46,400 *W.H. Smith Group plc (22)........ 445,819
------------
14,754,936
------------
FRANCE (11.8%)
4,400 Alcatel (11)...................... 618,888
5,376 Bouygues (4)...................... 1,419,825
52,100 *Bull Sa (9)...................... 447,745
5,700 *Club Mediterrance (14)........... 604,390
8,743 Dexia France (3).................. 1,169,397
2,370 Essolor Intl. (24)................ 740,221
741,900 *Eurotunnel Sa Esa Units (32)..... 1,093,222
7,910 *Infogrames Entertainment (14).... 509,429
2,300 Labinal (11)...................... 608,625
5,573 M-6 Metropole Television (23)..... 1,170,936
8,800 Pernod Ricard (16)................ 589,417
32,375 *Remy Cointreau (16).............. 627,517
4,383 Societe Du Louvre (14)............ 320,443
3,230 Television Francaise (23)......... 752,207
31,400 Thomson CSF (1)................... 1,090,402
22,650 Vivendi Ex Gen Des Fuax (29)...... 1,833,333
------------
13,595,997
------------
GERMANY (6.8%)
12,700 Bayer AG (7)...................... 528,049
6,760 *Consors Discount Broker (15)..... 515,472
2,630 *Intershop Communications AG
(29)............................. 631,449
9,312 *Kinowelt Medien AG (23).......... 695,677
9,084 Mannesmann AG (8)................. 1,357,288
1,250 *Medion AG (34)................... 358,081
15,340 Mobilcom AG (8)................... 1,406,832
10,638 Ser Systeme AG (12)............... 619,349
14,650 Siemens AG (22)................... 1,129,188
18,100 *Telegate AG (8).................. 619,218
------------
7,860,603
------------
</TABLE>
(continued)
23
<PAGE> 24
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
CANADA (6.3%)
15,400 *Celestcia Inc. (12).............. $ 667,013
15,900 Four Seasons Hotels Inc. (19)..... 695,442
158,300 *Intl Forest Products CL A (17)... 603,007
3,138 *JDS Uniphase (35)................ 521,736
28,000 Molson Cos. Ltd. CL A (16)........ 508,537
90,100 Nexfor Inc. (17).................. 557,724
13,950 Nortel Networks Corp. (11)........ 1,195,633
13,600 Teleglobe Inc. (8)................ 402,884
84,189 *Telesystem Intl. Wireless Inc.
(8).............................. 1,531,907
11,891 *TLC The Laser Center (24)........ 566,200
------------
7,250,083
------------
NETHERLANDS (4.1%)
7,680 *ASM Lithography ADR (12)......... 456,000
16,274 Benckiser NV B Shares (10)........ 867,824
14,757 *Equant NV Reg Shares (29)........ 1,389,003
43,900 TNT Post Group NV (32)............ 1,047,231
15,872 United Pan-Europe Com-Sp ADR
(8).............................. 876,928
------------
4,636,986
------------
GREECE (2.1%)
17,800 *Bank of Piraeus (3).............. 513,733
11,430 Commercial Bank Of Greece (3)..... 816,558
1 EFG Eurobank (3).................. 27
21,900 Lambrakis Media Group (23)........ 554,619
28,400 Teletypos SA (8).................. 504,409
------------
2,389,346
------------
AUSTRALIA (2.1%)
81,610 Aust & NZ Banking Group Ltd.
(3).............................. 599,040
496,417 *Cable & Wireless Opus (8)........ 1,128,346
99,393 Publishing Broadcasting (23)...... 654,769
------------
2,382,155
------------
SINGAPORE & MALAYSIAN (2.0%)
377,000 Clipsal Inc. Ltd. (12)............ 584,350
136,000 Fraser & Neave Ltd. (16).......... 603,042
467,600 Kim Eng Holding (15).............. 436,650
42,000 Singapore Press Holding (23)...... 715,335
------------
2,339,377
------------
SWITZERLAND (2.0%)
2,307 Publicigroupe SA (23)............. 1,260,210
1,215 The Swath Group AG-Reg (28)....... 173,343
1,510 Zurich Allied AG (20)............. 857,839
------------
2,291,392
------------
SWEDEN (1.8%)
49,976 *Modern Times Group B Shares
(23)............................. 1,086,019
11,486 Gambro AB-B Shares................ 115,668
332,558 Societe Europeene Comm B (8)...... 920,481
------------
2,122,168
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
HONG KONG (1.8%)
166,000 *Pacific Century Ins. (20)........ $ 134,363
148,000 Midland Realty Holdings Ltd.
(27)............................. 21,364
328,300 Smartone Telecommunications (8)... 1,167,861
581,000 Wheelock & Co. (27)............... 797,511
------------
2,121,099
------------
ITALY (1.8%)
138,260 Class Editori Spa (23)............ 1,104,143
25,450 Luxottica Group Spa Spon ADR
(24)............................. 396,066
26,000 Pininfarina Spa (2)............... 581,380
------------
2,081,589
------------
BRAZIL (1.6%)
29,200 Telesp Cellular Part ADR (8)...... 781,100
34,500 Tele Norte Leste Participacoes
(8).............................. 640,406
137,200 Usinas Sider Minas Gerais (25).... 465,611
------------
1,887,117
------------
THAILAND (1.4%)
96,300 Bec World Public Co. Ltd. (23).... 594,702
152,800 *Hana Microelectronics (12)....... 455,255
292,100 *Thai Airways Intl Ltd. (32)...... 549,863
------------
1,599,820
------------
INDONESIA (1.1%)
277,000 PT Indosat (8).................... 533,781
331,000 PT Semen Gresik (4)............... 724,818
------------
1,258,599
------------
LUXEMBOURG (1.0%)
8,275 Societe Europeene Satel ADR
(23)............................. 1,200,172
------------
FINLAND (0.9%)
103,200 Merita plc (3).................... 585,947
13,450 Nokian Renkaat OYJ (2)............ 415,787
------------
1,001,734
------------
MEXICO (0.6%)
15,200 *Groupo Televisa SA Spons GDR
(23)............................. 681,150
------------
NORWAY (0.5%)
46,649 Schibsted (23).................... 524,596
------------
DENMARK (0.4%)
5,200 Falck A/S (29).................... 425,107
------------
IRELAND (0.1%)
1,600 *Ryanair Holdings plc SP ADR
(32)............................. 84,800
------------
SOUTH KOREA (0.0%)
2,100 Daeduck Industries................ 24,855
------------
TOTAL FOREIGN COMMON STOCK (89.7%)
(COST $97,807,743)............... $103,332,375
------------
</TABLE>
(continued)
24
<PAGE> 25
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
COMMUNICATIONS (1.6%)
16,790 *Global Telesystems Group Inc. ... $ 1,359,990
6,301 *NTL Inc. Holdings Co. ........... 543,067
------------
TOTAL U.S. COMMON STOCK (1.6%)
(COST $1,483,640)................ $ 1,903,057
------------
TOTAL COMMON STOCK (91.3%) (COST
$99,291,383)..................... $105,235,432
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUSTRALIA (0.6%)
781,650 Village Roadshow Ltd. (14)........ $ 1,167,237
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
GERMANY (0.3%)
894 Wella AG (10)..................... $ 635,643
------------
TOTAL FOREIGN PREFERRED STOCK
(1.6%) (COST $1,802,783)......... $ 1,802,880
------------
TOTAL HOLDINGS (92.9%) (COST
$101,094,166) (a)................ $107,038,312
------------
CASH & RECEIVABLES, NET OF
LIABILITIES (7.1%)............... 8,197,597
------------
TOTAL NET ASSETS (100.0%)......... $115,235,909
============
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities.
INDUSTRY CLASSIFICATIONS
(1) Aerospace
(2) Automotive
(3) Banking
(4) Building/Construction
(5) Capital Goods
(6) Cement
(7) Chemicals
(8) Communications
(9) Computer Products
(10) Consumer Products
(11) Electrical Products
(12) Electronics
(13) Energy and Oil
(14) Entertainment & Leisure
(15) Finance
(16) Food & Beverage
(17) Forest & Paper Products
(18) Governmental
(19) Hotels
(20) Insurance
(21) Machinery
(22) Manufacturing
(23) Media & Publishing
(24) Medical & Health Care
(25) Metal & Mining
(26) Plastics
(27) Real Estate
(28) Retailing
(29) Services
(30) Steel
(31) Textile
(32) Transportation
(33) Utilities
(34) Wholesale
(35) Miscellaneous
(36) Diversified
The accompanying notes are an integral part of these financial statements.
25
<PAGE> 26
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $101,094,165)........... $107,038,312
Cash..................................... 71,544
Unrealized gain on forward currency
contracts (note 5)..................... 1,500,763
Receivable for securities sold........... 8,250,848
Dividends and accrued interest
receivable............................. 640,115
Other.................................... 980
------------
Total assets........................... 117,502,562
------------
Liabilities:
Unrealized loss on forward currency
contracts (note 5)..................... 1,883,363
Payable for shares redeemed.............. 252,171
Payable for investment management
services (note 3)...................... 80,444
Other accrued expenses................... 50,675
------------
Total liabilities...................... 2,266,653
------------
Net assets at market value................. $115,235,909
============
Net assets consist of:
Par value, $1 per share.................. $ 9,060,540
Paid-in capital in excess of par value... 118,876,177
Net unrealized appreciation
(depreciation) on:
Investments (note 1)................... 5,944,147
Foreign currency related
transactions......................... 3,098,109
Forward currency contracts (note 5).... (328,082)
Accumulated net realized loss on
investments and foreign currency
related transactions (note 1).......... (18,675,937)
Undistributed net investment income...... (2,739,045)
------------
Net assets at market value................. $115,235,909
============
Shares outstanding (note 4)................ 9,060,540
Net asset value per share.................. $ 12.72
============
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest (net of $6,323 foreign taxes
withheld).............................. $ 101,676
Dividends (net of $85,689 foreign taxes
withheld).............................. 1,073,535
------------
Total investment income................ 1,175,211
------------
Expenses:
Management fees (note 3)................. 522,725
Accounting, custody, and transfer agent
fees (note 3).......................... 174,457
Directors' fees (note 3)................. 2,083
Professional fees........................ 8,927
Printing, proxy, and postage fees........ 9,046
Other.................................... 3,642
------------
Total expenses......................... 720,880
------------
Net investment income.................. $ 454,331
------------
Realized and unrealized gain (loss) on
investments and foreign currency:
Net realized loss from:
Investments............................ $(18,647,291)
Forward currency related
transactions......................... (2,946,914)
Net increase in unrealized appreciation
on:
Investments............................ 14,740,238
Foreign currency related
transactions......................... 4,420,975
------------
Net loss on investments................ (2,432,992)
------------
Net decrease in net assets from
operations........................... $ (1,978,661)
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE> 27
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- ------------
<S> <C> <C>
From operations:
Net investment income..................................... $ 454,331 $ 3,449,743
Realized gain (loss) on investments and foreign currency
transactions............................................ (21,594,205) 7,812,947
Unrealized gain (loss) on investments and foreign currency
transactions............................................ 19,161,213 (5,018,504)
------------ ------------
Net increase (decrease) in net assets from
operations........................................... (1,978,661) 6,244,186
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. 0 (3,450,422)
Capital gains and foreign currency related transaction
distributions........................................... 0 (8,013,258)
Distributions in excess of capital gains and foreign
currency related transactions........................... 0 (74,797)
------------ ------------
Total dividends and distributions..................... 0 (11,538,477)
------------ ------------
From capital share transactions (note 4):
Received from shares sold................................. 1,817,477 11,643,429
Received from dividends reinvested........................ 0 11,538,477
Paid for shares redeemed.................................. (24,917,539) (33,603,085)
------------ ------------
Decrease in net assets derived from capital share
transactions........................................... (23,100,062) (10,421,179)
------------ ------------
Decrease in net assets................................ (25,078,723) (15,715,470)
Net Assets:
Beginning of period....................................... 140,314,632 156,030,102
------------ ------------
End of period (a)......................................... $115,235,909 $140,314,632
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
6-30-99 ---------------------------------------
(UNAUDITED) 1998 1997 1996 1995
---------------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $12.86 $13.39 $15.49 $14.38 $13.30
Income (loss) from investment operations:
Net investment income..................................... 0.05 0.32 0.28 0.25 0.31
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (0.19) 0.24 0.08 1.76 1.28
------ ------ ------ ------ ------
Total income (loss) from investment operations.......... (0.14) 0.55 0.36 2.01 1.59
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... 0.00 (0.32) (0.37) (0.25) (0.28)
Distributions from net realized capital gains and foreign
currency related transaction............................ 0.00 (0.75) (2.09) (0.65) (0.23)
Distributions in excess of net realized capital gains and
foreign currency related transaction.................... 0.00 (0.01) 0.00 0.00 0.00
------ ------ ------ ------ ------
Total distributions..................................... 0.00 (1.08) (2.46) (0.90) (0.51)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $12.72 $12.86 $13.39 $15.49 $14.38
====== ====== ====== ====== ======
Total return................................................ (1.06)%(b) 3.88% 2.11% 14.48% 12.10%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 1.17% (a) 1.17% 1.22% 1.15% 1.12%
Ratio of net investment income to average net assets...... 0.74% (a) 2.31% 1.82% 1.64% 2.29%
Portfolio turnover rate..................................... 254% 22% 24% 14% 7%
Net assets at end of period (millions)...................... $115.2 $140.3 $156.0 $137.3 $ 90.6
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
27
<PAGE> 28
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, 1999
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<S> <C>
One-year 8.81%
Three-year 12.75%
Since inception (4/30/94) 13.93%
</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
Stocks made further progress in the second quarter, but bonds were weak. Stock
market participation broadened markedly, with large-cap cyclicals and small and
mid cap stocks supplanting large blue chip growth stocks as market leaders.
Technology stocks extended their gains, although the frenetic rally in Internet
stocks paused in April. The U.S. economy's continued resilience encouraged
investors to look beyond the handful of large growth stocks they had favored
when global growth prospects seemed more uncertain. Cyclical stocks reporting
sizable earnings increases did well, and income-oriented stocks revived. Natural
resources stocks continued to be buoyed by commodity price increases.
On the fixed income side, interest rates rose in the face of strong economic
growth and the Federal Reserve's announcement in May that it was biased toward
tightening. Investors immediately assumed that the Fed would raise short-term
rates at its June 30 meeting (which it did), but uncertainty about the size of
the increase and possible future increases weighed heavily on the fixed income
market. Treasuries and other high-quality bonds posted negative returns for the
quarter, and lower-quality (high-yield) bonds eked our positive returns only
because their high income offset modest price declines.
PERFORMANCE AND STRATEGY REVIEW
With our substantial exposure to basic industry, natural resources, and energy
stocks, the portfolio benefited from the change in stock market sentiment,
although our bond holdings were somewhat of a drag on results. The portfolio's
10.57% return was strong for the quarter, surpassing the broad market as
measured by the 7.05% S&P 500 Stock Index and the Lipper VA Underlying Capital
Appreciation Funds Average of 9.46%.
Reflecting trends in the overall market, several of our best contributors to
second quarter results were in the natural resources and energy areas. Our large
holding in MacMillan Bloedel, a Canadian forest products company, rose as
improving lumber prices and brightening prospects for global growth attracted
investor interest. Positions in Amerada Hess and other oil companies benefited
from oil price increases. Negative contributors included Tennessee Valley
Authority bonds, which suffered from rising interest rates. However, these bonds
fell much less than Treasury bonds of similar maturity because of their unique
features. Financial stocks were generally weak due to the rise in interest
rates.
There was no significant change in our asset allocation. Equity exposure
increased a bit to about 54%, convertibles were approximately 26%, and bonds
about 13%. Major purchases included securities of Roche Holdings (convertibles),
Unionsource Energy, and Niagara Mohawk Holdings. Major sales included Atlantic
Richfield, which is involved in a merger, and Rouse.
OUTLOOK
We remain cautious. The economy looks good, but market valuations
(price/earnings ratios, dividend yields) are expensive. We believe there is a
very strong risk of higher interest rates in coming months, which historically
have hurt the financial markets before slowing the real economy.
Nevertheless, we continue to invest more than half of the fund in common stocks
because: 1) we hope our expertise enables us to benefit from specific company
situations or swings in investor enthusiasm and 2) the American economy is
strong and constantly creating new investment opportunities. We expect also to
continue holding significant nonequity assets to reduce the portfolio's overall
risk and enable investors to benefit from the long-term advantages of common
stocks, but with less interim volatility.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
CAPITAL APPRECIATION PORTFOLIO S&P 500 INDEX S&P 500 INDEX
(COMMENCED OPERATIONS APRIL 30, ---------------------------
1994)
-------------------------------
<S> <C> <C>
10,000.00 10,000.00
9,975.00 9,658.00
'94 10,452.80 10,131.20
11,865.00 12,172.70
'95 12,816.50 13,923.10
13,688.10 15,343.30
'96 14,835.10 17,136.90
16,014.50 20,650.00
'97 17,089.10 22,834.70
18,032.40 26,878.80
'98 18,099.10 29,359.70
19,621.30 32,994.40
</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 LONG TERM HOLDINGS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Amerada Hess Corporation 4.72
2. Loews Corporation 4.08
3. Tennessee Valley Authority 3.64
4. MacMillan Bloedel, Ltd. 3.38
5. Niagara Mohawk Holdings Inc. 3.14
6. The Washington Post Company Cl
B 2.63
7. The Times Mirror Company
CV LYON New 2.21
8. The Rouse Company Ser B PFD 2.17
9. Chris-Craft Industries, Inc. 1.96
10. Tennessee Valley Authority Ser
B 1.93
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Oil, Energy, and Natural Gas 10.98
2. Media and Publishing 9.41
3. Metals and Mining 7.43
4. Insurance Services 7.38
5. Municipal 6.70
</TABLE>
28
<PAGE> 29
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
CHEMICALS (2.8%)
8,500 Cabot Corp. ....................... $ 205,594
26,000 Great Lakes Chemical Corp. ........ 1,197,625
60,000 *Octel Corp. ...................... 750,000
-----------
2,153,219
-----------
CONSUMER PRODUCTS (3.0%)
27,500 Philip Morris Cos., Inc. .......... 1,105,156
20,000 Polaroid Corp. .................... 552,500
34,500 *Reebok International.............. 642,563
-----------
2,300,219
-----------
DRUGS (0.1%)
2,000 Schering-Plough Corp. ............. 106,000
-----------
ELECTRICAL EQUIPMENT (1.7%)
41,500 Firstenergy Corp. ................. 1,286,500
-----------
ENTERTAINMENT & LEISURE (1.3%)
45,000 Mandalay Resort Group.............. 950,625
-----------
FINANCE (1.0%)
30,000 Leucadia National Corp. ........... 750,000
-----------
FOOD & RELATED (0.5%)
11,500 McCormick & Co. Inc. .............. 362,969
-----------
FORESTRY & PAPER PRODUCTS (4.9%)
89,500 Domtar Inc. ....................... 850,250
20,500 Johns-Manville Corp. .............. 266,500
142,000 MacMillan Bloedel Ltd. ............ 2,556,000
-----------
3,672,750
-----------
INSURANCE (6.1%)
3,000 Aetna Inc. ........................ 268,312
5,000 Berkley (WR) Corp. ................ 125,000
39,000 Loews Corp. ....................... 3,085,875
12,000 Unitrin Inc. ...................... 492,000
4,800 White Mountains Ins. Group......... 676,800
-----------
4,647,987
-----------
MEDIA & PUBLISHING (7.2%)
31,500 Chris-Craft Ind. Inc. ............. 1,484,438
11,000 Meredith Corp. .................... 380,875
39,000 New York Times Co. CL A............ 1,435,687
4,500 Readers Digest CL B................ 168,750
3,700 Washington Post CL B............... 1,989,675
-----------
5,459,425
-----------
METALS & MINING (2.6%)
61,000 Homestake Mining Co. .............. 499,437
72,500 Newmont Mining Corp. .............. 1,440,938
-----------
1,940,375
-----------
RETAIL (2.1%)
10,000 JC Penney Co. ..................... 485,625
196,000 *Petrie Stores -- Liq. Trust
Unit.............................. 465,500
29,500 *Toys R' Us........................ 610,281
-----------
1,561,406
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
OIL, ENERGY & NATURAL GAS (10.9%)
60,000 Amerada Hess Corp. ................ $ 3,570,000
12,500 Kerr McGee......................... 627,344
61,500 Mitchell Energy/Development CL B... 1,130,063
1,900 Mitchell Energy/Development CL A... 36,694
27,000 Murphy Oil Corp.................... 1,317,937
6,000 Nevada Power Co. .................. 150,000
22,500 Texaco, Inc. ...................... 1,406,250
-----------
8,238,288
-----------
REAL ESTATE & LEASING (0.6%)
18,500 Rouse Co. ......................... 469,438
-----------
TRANSPORTATION (0.6%)
36,000 Overseas Shipholding Inc. ......... 463,500
-----------
UTILITIES (4.8%)
32,500 Kansas City Power & Light Co. ..... 828,750
148,000 *Niagara Mohawk Power.............. 2,377,250
37,000 Unisource Energy Corp. ............ 441,687
-----------
3,647,687
-----------
TOTAL U.S. COMMON STOCK (50.2%)
(COST $33,424,802)................ $38,010,388
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
CANADA (0.8%)
TRANSPORTATION & EQUIPMENT
26,000 Canadian Pacific Ltd. ............. $ 619,125
-----------
SWITZERLAND (0.2%)
BANKING
23 Bank for International
Settlements....................... 124,351
-----------
UNITED KINGDOM (2.0%)
BUSINESS SERVICES (0.0%)
42,000 Lonrho Africa plc.................. 30,454
-----------
CHEMICALS (1.0%)
19,000 Imperial Chemical Industries....... 755,250
-----------
MEDICAL & RELATED (1.0%)
250,020 Smith & Nephew..................... 760,636
-----------
TOTAL UNITED KINGDOM............... 1,546,340
-----------
TOTAL FOREIGN STOCK (3.0%)
(COST $2,200,042)................. $ 2,289,816
-----------
TOTAL COMMON STOCK (53.2%)
(COST $35,624,844)................ $40,300,204
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCE (0.6%)
7,000 Kemper Co. 5.75% Ser. E (144A)..... $ 366,625
3,000 Reckson Assoc. 7.625% Conv. A...... 68,437
-----------
435,062
-----------
METALS & MINING (0.3%)
4,000 Cyprus Amax Conv. $4............... $ 197,000
-----------
</TABLE>
(continued)
29
<PAGE> 30
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
REAL ESTATE (2.2%)
41,000 Rouse Co. $3 Series B Conv. ....... $ 1,645,125
-----------
TRANSPORTATION (1.8%)
8,500 Union Pacific Capital Trust 6.25%
Conv. 04/01/28 (144A)............. 449,437
17,500 Union Pacific Capital Trust 6.25%
Conv. 04/01/28.................... 929,688
-----------
1,379,125
-----------
UTILITIES (0.6%)
2,700 Cleveland Electric adj. rate Ser.
L................................. 270,675
2,367 Entergy Gulf Series B.............. 118,942
971 Niagara Mohawk Power Ser. B........ 24,457
3,200 Niagara Mohawk Power Ser. C........ 80,200
-----------
494,274
-----------
TOTAL PREFERRED STOCK (5.5%)
(COST $4,122,965)................. $ 4,150,586
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT US CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE & RELATED (1.1%)
$ 785,000 The Pep Boys MM&J Lyons, zero
coupon contracts due 09/20/11..... $ 427,825
375,000 The Pep Boys MM&J 4.000% due
09/01/99.......................... 374,063
-----------
801,888
-----------
BUILDING & CONSTRUCTION (0.3%)
485,000 Lennar Corp. zero coupon contract
due 07/29/18...................... 210,975
-----------
CHEMICALS (0.2%)
210,000 CIBA Special Chemical 1.250%
07/24/03.......................... 171,104
-----------
COMPUTER & RELATED (0.2%)
230,000... Arbor Software 4.500% due
03/15/05........................... 162,438
-----------
CONSUMER PRODUCTS (0.6%)
470,000 Nine West Group Inc. 5.50% due
07/15/03.......................... 472,937
-----------
DRUGS (1.4%)
200,000 McKesson Corp. 4.500% due
03/01/04.......................... 181,623
1,370,000 Roche Inc. zero (144A) coupon
contract due 05/06/12............. 668,738
200,000 Sepracor Inc. (144A) 7.000% due
12/15/05.......................... 196,500
-----------
1,046,861
-----------
ENTERTAINMENT & LEISURE (0.1%)
50,000 Ogden Corp. Euro 5.750% due
10/20/02.......................... 46,915
-----------
ELECTRICAL EQUIPMENT (1.7%)
180,000 Exide Corp. (144A) 2.900% due
12/15/05.......................... 110,250
300,000 Motorola Inc. zero Coupon contract
due 09/27/13...................... 333,750
845,000 National Semiconductor 6.500% due
10/01/02.......................... 805,919
-----------
1,249,919
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT US CONVERTIBLE DEBENTURES VALUE
<C> <S> <C>
- -------------------------------------------------------------
HOTEL/LODGING (1.0%)
$ 855,000 Hilton Hotels 5.000% due
05/15/06.......................... $ 780,188
-----------
INSURANCE SERVICES (1.2%)
1,165,000 Loews Corp. 3.125% 09/15/07........ 942,194
-----------
MEDIA & PUBLISHING (2.2%)
3,515,000 Times Mirror, zero coupon contracts
due 04/15/17...................... 1,669,625
-----------
MEDICAL & RELATED (3.3%)
1,015,000 Chiron Corp. 1.900% due 11/17/00... 1,008,656
865,000 Healthsouth Corp. 3.250%
04/01/03.......................... 727,681
475,000 Phycor Inc. 4.500% due 02/15/03.... 359,813
625,000 Wellpoint Health zero coupon
contracts due 07/02/19............ 419,781
-----------
2,515,931
-----------
METALS & MINING (3.8%)
490,000 Homestake Mining 5.500% due
06/23/00.......................... 469,721
915,000 Homestake Mining (144A) 5.500% due
06/23/00.......................... 887,550
1,550,000 Inco Ltd. 5.750% due 07/01/04...... 1,424,063
120,000 Inco Ltd. 7.750% due 03/15/16...... 108,000
-----------
2,889,334
-----------
OIL, ENERGY & NATURAL GAS (0.1%)
78,000 Kerr-Mcgee Corp. 7.500% due
05/15/14.......................... 78,000
-----------
UTILITIES (1.7%)
400,000 Potomac Electricity & Power Co.
5.000% due 09/01/02............... 390,500
1,735,000 US Cellular Lyons, zero coupon
contracts due 06/15/15............ 891,357
-----------
1,281,857
-----------
TOTAL US CONVERTIBLE DEBENTURES
(18.9%)
(COST $13,718,001)................ $14,320,166
-----------
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C>
FACE MARKET
AMOUNT FOREIGN CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------
<C> <S> <C>
CANADA (0.8%)
METALS & MINING
$ 835,000 Teck Corp. 3.750% due 07/15/06..... $ 604,331
-----------
NETHERLANDS (0.1%)
INDUSTRIAL SERVICES
155,000 Nedlloyd 4.250% due 03/15/01....... 80,942
-----------
</TABLE>
(continued)
30
<PAGE> 31
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT FOREIGN CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------
<C> <S> <C>
UNITED KINGDOM (1.3%)
FINANCIAL SERVICES
$ 630,000 Lonmin Finance Public Ltd. 6.000%
due 02/27/04...................... $ 966,530
-----------
TOTAL FOREIGN CONVERTIBLE
DEBENTURES (2.2%) (COST
$1,631,319)....................... $ 1,651,803
-----------
TOTAL CONVERTIBLE DEBENTURES
(21.1%)
(COST $15,349,320)................ $15,971,969
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
<C> <S> <C>
- -------------------------------------------------------------
GOVERNMENT (4.5%)
$ 400,000 FNMA 6.375% 01/16/02............... $ 404,386
100,000 FNMA 5.370% 02/07/01............... 99,363
200,000 U.S. Treasury Note 6.250%
04/30/01.......................... 202,500
1,400,000 U.S. Treasury Note 5.875%
02/15/00.......................... 1,406,125
400,000 U.S. Treasury Note 6.250%
10/31/01.......................... 405,750
620,000 U.S. Treasury Note 5.875%
09/30/02.......................... 623,875
250,000 U.S. Treasury Note 6.125%
07/31/00.......................... 251,953
-----------
3,393,952
-----------
MUNICIPAL (6.7%)
400,000 California State Ref G.O. 5.250%
10/01/11.......................... 410,340
450,000 Tennessee Valley Authority PR
5.980% 04/01/36................... 447,810
1,450,000 Tennessee Valley Authority Ser. B
6.235% 07/15/45................... 1,463,195
2,810,000 Tennessee Valley Authority Ser. C
5.880% 04/01/36................... 2,755,143
-----------
5,076,488
-----------
COMMUNICATIONS (0.7%)
500,000 Bellsouth Telecomm 5.850%
11/15/45.......................... 502,781
-----------
TOTAL LONG-TERM BONDS & NOTES
(11.9%)
(COST $9,133,644)................. $ 8,973,221
-----------
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
CONSUMER PRODUCTS (0.3%)
$ 250,000 Procter & Gamble 5.000% 08/02/99... $ 248,889
-----------
COMMUNICATIONS (0.4%)
275,000 Bellsouth Telecommunications 4.850%
07/07/99.......................... 274,778
-----------
FINANCIAL SERVICES (4.3%)
2,920,000 Ciesco L.P. 4.820% 07/12/99........ 2,915,699
330,000 GE Capital Inc. 4.800% 07/26/99.... 328,900
-----------
3,244,599
-----------
MEDIA & PUBLISHING (2.6%)
1,370,000 New York Times Co. 5.020%
08/02/99.......................... 1,363,887
590,000 New York Times Co. 4.870%
07/19/99.......................... 588,563
-----------
1,952,450
-----------
UTILITIES (0.6%)
471,000 NY State Power Authority 5.750%
07/01/99.......................... 471,000
-----------
TOTAL SHORT TERM NOTES (8.2%)
(COST $6,191,716)................. $ 6,191,716
-----------
</TABLE>
<TABLE>
<CAPTION>
PUT OPTION PURCHASES MARKET
SHARES STOCK/EXPIRATION/EXERCISE PRICE VALUE
- -------------------------------------------------------------
<C> <S> <C>
$ 15 Motorola Inc./Oct/$90.............. $ 9,000
15 Motorola Inc./Jan/$95.............. 16,500
20 Schering-Plough Corp./Aug/$60...... 17,000
20 Weyerhaeuser Co./Jan/$75........... 20,750
-----------
TOTAL PUT OPTION PURCHASE (0.1%)
(COST $85,960).................... $ 63,250
-----------
TOTAL HOLDINGS (99.9%)
(COST $70,508,450) (a)............ $75,650,946
-----------
CASH & RECEIVABLES,
NET OF LIABILITIES (0.1%)......... 110,521
-----------
TOTAL NET ASSETS (100.0%).......... $75,761,467
===========
</TABLE>
- ---------------
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
(144A) 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 buyers. At the period end, the value
of these securities amounted to $2,679,100 or 3.5% of net assets. These
securities were deemed liquid pursuant to procedures approved by the
Board of directors.
The accompanying notes are an integral part of these financial statements.
31
<PAGE> 32
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $70,508,450)............. $75,650,946
Cash in bank.............................. 951
Receivable for securities sold............ 275,993
Receivable for fund shares sold........... 764,789
Dividends and accrued interest
receivable.............................. 393,885
Other..................................... 2,856
-----------
Total assets............................ 77,089,420
-----------
Liabilities:
Payable for securities purchased.......... 517,310
Payable for shares redeemed............... 12,416
Payable for investment management services
(note 3)................................ 49,187
Other accrued expenses.................... 24,479
Dividends payable......................... 724,561
-----------
Total liabilities....................... 1,327,953
-----------
Net assets at market value.................. $75,761,467
===========
Net assets consist of:
Par value, $1 per share................... $ 5,447,823
Paid-in capital in excess of par value.... 61,748,754
Accumulated net realized income on
investments (note 1).................... 2,689,769
Net unrealized appreciation on investments
(note 1)................................ 5,142,496
Undistributed net investment income....... 732,625
-----------
Net assets at market value.................. $75,761,467
===========
Shares outstanding (note 4)................. 5,447,823
Net asset value per share................... $ 13.91
===========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest................................... $ 761,839
Dividends.................................. 797,506
----------
Total investment income.................. 1,559,345
----------
Expenses:
Management fees (note 3)................... 292,867
Custodian fees (note 3).................... 8,903
Directors' fees (note 3)................... 1,188
Professional fees.......................... 5,268
Accounting and transfer agent fees......... 28,939
Other...................................... 7,407
----------
Total expenses........................... 344,572
----------
Net investment income.................... $1,214,773
----------
Realized and unrealized gain on investments:
Net realized gain from investments......... $2,734,023
Net increase in unrealized appreciation on
investments.............................. 2,033,358
----------
Net gain on investments.................. 4,767,381
----------
Net increase in net assets from
operations............................. $5,982,154
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE> 33
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- -----------
<S> <C> <C>
From operations:
Net investment income..................................... $ 1,214,773 $ 1,755,709
Realized gain on investments.............................. 2,734,023 5,789,990
Unrealized gain (loss) on investments..................... 2,033,358 (3,695,595)
------------ -----------
Net increase in net assets from operations............ 5,982,154 3,850,104
------------ -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (482,752) (1,758,879)
Capital gains distributions............................... 0 (5,804,200)
Distributions in excess of capital gains.................. 0 (30,044)
------------ -----------
Total dividends and distributions..................... (482,752) (7,593,123)
------------ -----------
From capital share transactions (note 4):
Received from shares sold................................. 5,175,384 18,944,729
Received from dividends reinvested........................ 482,752 7,593,123
Paid for shares redeemed.................................. (11,913,893) (6,108,105)
------------ -----------
Increase (decrease) in net assets derived from capital
share transactions................................... (6,255,757) 20,429,747
------------ -----------
Increase (decrease) in net assets.................. (756,355) 16,686,728
Net Assets:
Beginning of period....................................... 76,517,822 59,831,094
------------ -----------
End of period (a)......................................... $ 75,761,467 $76,517,822
============ ===========
(a) Includes undistributed net investment income of......... $ 732,625 $ 605
============ ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
6-30-99 ---------------------------------------
(UNAUDITED) 1998 1997 1996 1995
---------------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $12.92 $13.53 $12.93 $11.99 $10.25
Income from investment operations:
Net investment income..................................... 0.22 0.34 0.39 0.48 0.39
Net realized and unrealized gain on investments........... 0.86 0.46 1.48 1.31 1.85
------ ------ ------ ------ ------
Total income from investment operations................. 1.08 0.80 1.87 1.79 2.24
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.09) (0.34) (0.46) (0.44) (0.29)
Distributions from net realized capital gains............. 0.00 (1.06) (0.81) (0.41) (0.21)
Distributions in excess of capital gains.................. 0.00 (0.01) 0.00 0.00 0.00
------ ------ ------ ------ ------
Total distributions..................................... (0.09) (1.41) (1.27) (0.85) (0.50)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $13.91 $12.92 $13.53 $12.93 $11.99
====== ====== ====== ====== ======
Total return................................................ 8.41%(b) 5.91% 15.19% 15.75% 22.62%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 0.93%(a) 0.93% 0.95% 0.97% 0.96%
Ratio of net investment income to average net assets...... 3.29%(a) 2.52% 2.88% 3.90% 3.47%
Portfolio turnover rate..................................... 19% 45% 41% 37% 32%
Net assets at end of period (millions)...................... $ 75.8 $ 76.5 $ 59.8 $ 38.3 $ 19.3
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
33
<PAGE> 34
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, 1999
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<S> <C>
One-year 41.97%
Three-year 18.03%
Since inception (4/30/94) 23.96%
</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 quarter, investor's expectations of stronger economic growth led to
strong performance among cyclicals, such as energy and producer durable stocks.
We believe the shift toward cyclicals may be positive for small-cap issues in
general since small caps historically have tended to outperform during periods
of accelerating economic growth. The Ohio National Small Cap Portfolio benefited
from a broadening of the market, as interest shifted from large-cap stocks to
small companies.
As we evaluate current holdings in the Portfolio, we often identify particular
areas of strength within various business segments and end markets. Themes that
emerge out of this process allow us to leverage our cumulative research into new
ideas that can capitalize on the same attractive industry or market dynamics.
We continue to see strength in companies that are benefiting from what we call
the "enabling materials theme." In the continuous effort to improve performance
of electronic devices through faster, more powerful semiconductors, many
manufacturers are finding a need to produce devices on new material other than
the traditional silicon. We own a variety of companies that participate in this
trend.
Strong performers for the quarter include many of our holdings in the technology
sector. We saw extremely strong performance from holdings that fall into what we
refer to as the "rapid adoption of digital consumer electronics" theme.
Macrovision Corp. posted a quarterly return of more than 100%. Macrovision is
seeing strong demand for its copy protection solutions used to protect DVD's and
VHS cassettes.
Another strong performer within this theme was Zomax, Inc., the Portfolio's
largest holding. Zomax provides CD and DVD mastering and replication services,
and indicated within the quarter that earnings results would significantly
exceed expectations. Zomax returned more than 110% in the quarter.
The Portfolio recently initiated a position in Papa John's International
(0.96%). Papa John's is the fourth largest pizza chain in the U.S. with more
than 2,000 units, and we believe they have the potential to triple their current
base of units over the next several years. Attractive store economics, a
commitment to premium quality ingredients, and an increasing brand identity have
all contributed to create the most rapidly growing U.S. pizza chain.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
SMALL CAP PORTFOLIO (COMMENCED
OPERATIONS APRIL 30, 1994) RUSSELL 2000 INDEX
------------------------------ ------------------
<S> <C> <C>
10,000.00 10,000.00
10,144.00 9,554.00
'94 12,126.10 10,026.00
14,236.10 11,471.70
'95 16,129.50 12,878.10
18,455.40 14,212.30
'96 18,986.90 15,002.50
18,979.30 16,532.80
'97 20,594.40 18,343.10
21,372.90 19,309.80
'98 22,770.70 17,933.00
30,341.90 19,597.20
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Digital Microwave Corporation 2.71
2. Zomax Inc. 2.47
3. ChiRex Inc. 2.13
4. Allegiance Telecom, Inc. 2.10
5. Gemstar International Group
Limited 2.04
6. Viatel, Inc. 1.92
7. NCO Group, Inc. 1.82
8. Andrx Corporation 1.76
9. Laser Vision Centers, Inc. 1.71
10. Insight Enterprises, Inc. 1.59
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Communications 14.24
2. Computer and Related 14.18
3. Electrical Equipment 12.45
4. Medical and Related 9.10
5. Media & Publishing 4.55
</TABLE>
The prices of small company stocks are generally more volatile than the price of
large company stocks.
34
<PAGE> 35
OHIO NATIONAL FUND, INC.
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
ADVERTISING (0.2%)
7,400 *AdForce Inc. .................... $ 173,900
------------
BROADCAST RADIO & TV (1.7%)
10,775 *Cox Radio Inc. .................. 584,544
21,100 *Entercom Communications Corp. ... 902,025
5,175 *Radio One Inc. .................. 240,638
------------
1,727,207
------------
BUSINESS SERVICES (6.8%)
32,575 *AHL Services Inc. ............... 812,339
20,175 *Corp Executive Board............. 717,473
11,562 *Dycom Industries................. 647,472
36,700 *Heidreck & Struggles............. 697,300
14,650 *Lason Inc. ...................... 727,006
54,100 *Metzler Group.................... 1,494,513
16,100 *Pre Paid Legal Services Inc. .... 437,719
71,037 *US Web Corp. .................... 1,576,133
------------
7,109,955
------------
CHEMICALS (1.3%)
44,000 *Albany Molecular Research........ 1,309,000
------------
COMMUNICATIONS (11.7%)
40,000 *Allegiance Telecom Inc. ......... 2,195,000
14,450 *Concord Communications........... 650,250
2,750 Cooper Mtn Networks............... 212,438
33,950 *Destia Communications............ 420,131
32,575 *Ditech Communications............ 651,500
222,850 *Digital Microwave Corp. ......... 2,841,338
14,500 *Harmonic Inc. ................... 832,844
17,300 *RF Micro Devices Inc. ........... 1,291,013
15,675 *Time Warner Telecommunications... 454,575
3,525 *Uniphase Corp. .................. 585,150
35,875 *Viatel Inc. ..................... 2,013,484
------------
12,147,723
------------
COMPUTER & RELATED (16.2%)
5,725 *Ariba Inc. ...................... 556,756
28,550 *Bindview Development Corp. ...... 678,062
57,925 *Brio Technology Inc. ............ 1,158,500
32,900 *CDW Computer Centers Inc. ....... 1,447,600
17,175 *Check Point Software............. 921,009
11,250 *Complete Business Solutions...... 201,797
30,050 *Exchange Application Inc. ....... 1,224,538
3,050 *Extreme Networks................. 177,091
67,320 *Insight Enterprises Inc. ........ 1,666,170
23,900 *MMC Networks Inc. ............... 1,069,525
26,950 *Macromedia Inc. ................. 949,988
29,050 *Peregrine Systems................ 746,222
30,600 *Pervasive Software............... 761,175
31,800 *Pinnacle Systems Inc. ........... 1,069,275
29,325 *Sandisk Corp. Designs............ 1,319,625
48,800 *Sykes Enterprises Inc. .......... 1,628,700
20,400 *Tenfold Corp. ................... 647,700
19,650 *TSI International................ 557,569
------------
16,781,302
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
CONSUMER PRODUCTS (0.7%)
22,825 *Action Performance Co. Inc. ..... $ 753,225
------------
DRUGS (2.2%)
55,300 *King Pharmaceuticals Inc. ....... 1,430,888
33,187 *Medicis Pharmaceutical CL A...... 842,120
------------
2,273,008
------------
EDUCATIONAL SERVICES (0.3%)
16,075 *Advantage Learning............... 355,659
------------
ELECTRICAL EQUIPMENT/ELECTRONICS (13.0%)
27,875 *ATMI Inc. ....................... 829,281
62,200 *American Xtal Technology Inc. ... 1,481,138
17,000 *Applied Micro Circuits Corp. .... 1,398,250
38,550 *Brooks Automation Inc. .......... 1,043,259
29,875 *Credence Systems Corp. .......... 1,109,109
14,775 *Cree Research Inc. .............. 1,136,751
66,825 *Emcore Corp. .................... 1,344,853
7,375 Optical Coating Lab............... 616,734
30,350 *PRI Automation Inc. ............. 1,100,187
50,037 *Remec Inc. ...................... 806,847
11,450 *SDL Inc. ........................ 584,666
8,350 *Sanmina Corp. ................... 633,556
31,225 *Sawtek Inc. ..................... 1,432,447
------------
13,517,078
------------
ENTERTAINMENT & LEISURE (0.8%)
14,050 *Cheap Tickets Inc. .............. 512,825
17,450 *Hollywood Entertainment Corp. ... 341,366
------------
854,191
------------
FINANCIAL SERVICES (4.1%)
71,700 *CompuCredit Corp. ............... 1,362,300
50,100 *NCO Group Inc. .................. 1,903,800
*Profit Recovery Group Intl.
21,825 Inc. ............................ 1,032,595
------------
4,298,695
------------
INDUSTRIAL SERVICES (5.6%)
37,675 *Insituform Tech.................. 814,722
21,900 *IT Group Inc. ................... 351,769
53,481 *Safety-Kleen Corp. .............. 969,343
48,200 *Superior Services Inc. .......... 1,286,338
73,593 *Tertra Tech Inc. ................ 1,214,297
37,050 *Waste Connections Inc. .......... 1,130,025
------------
5,766,494
------------
INTERNET PRODUCTS & SERVICES (0.8%)
3,775 *Ask Jeeves....................... 52,850
675 *Clarent.......................... 10,125
11,775 *Flycast Communications........... 225,197
17,110 *MapQuest.com Inc. ............... 278,944
3,925 *Vignette Corp. .................. 294,375
------------
861,491
------------
HOTEL/LODGING (0.6%)
41,000 *Sunterra......................... 571,438
------------
HOUSING & RELATED (0.7%)
29,725 *Trex Co. Inc. ................... 754,272
------------
</TABLE>
(continued)
35
<PAGE> 36
OHIO NATIONAL FUND, INC.
SMALL CAP PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
MACHINERY (1.4%)
25,350 *Advanced Energy Ind. ............ $ 1,028,259
31,325 *National Oilwell Inc. ........... 397,436
------------
1,425,695
------------
MEDIA & PUBLISHING (4.5%)
32,700 *Gemstar Intl. Group Ltd. ........ 2,133,675
58,900 *Zomax Optical Media Inc. ........ 2,591,600
------------
4,725,275
------------
MEDICAL & RELATED (10.5%)
28,325 *Accredo Health Inc. ............. 927,644
23,975 *Andrx Corp. ..................... 1,849,072
69,612 *Chirex Inc. ..................... 2,236,286
42,350 *Hanger Orthopedic................ 600,841
11,975 *Infocure Corp. .................. 633,926
29,825 *Kendle International Inc. ....... 477,200
56,525 *LCA Vision....................... 452,200
25,875 *Laser Vision Centers Inc. ....... 1,630,125
*Orthodontic Centers of America
45,050 Inc. ............................ 636,331
13,025 *Patterson Dental................. 452,619
20,575 *Pharmaceutical Product........... 563,241
14,075 *Sunrise Assisted Living Inc. .... 490,865
------------
10,950,350
------------
OIL, ENERGY & NATURAL GAS (0.4%)
14,425 *Cal Dive International........... 430,947
------------
REAL ESTATE & LEASING (1.5%)
93,450 *Fairfield Communities Inc. ...... 1,506,881
------------
RENTAL AUTO/EQUIPMENT (1.5%)
45,600 *Rental Service Corp. ............ 1,305,300
9,750 *United Rentals Inc. ............. 287,625
------------
1,592,925
------------
RETAIL (4.1%)
97,725 *Blue Rhino Corp. ................ 897,848
14,200 *Fossil Inc. ..................... 686,925
14,300 *Linens N Things.................. 625,625
25,500 *The Men's Wearhouse Inc. ........ 650,250
*Trans World Entertainment
43,675 Corp. ........................... 491,344
26,500 *Williams-Sonoma Inc. ............ 922,531
------------
4,274,523
------------
RESTAURANTS (1.7%)
30,800 *Dave & Busters Inc. ............. 893,200
19,175 *Papa Johns....................... 856,883
------------
1,750,083
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
TRANSPORTATION & RELATED (1.6%)
14,900 C.H. Robinson World............... $ 547,575
24,500 US Freightways Corp. ............. 1,134,655
------------
1,682,230
------------
TOTAL U.S. COMMON STOCK (93.9%)
(COST $65,119,818)............... $ 97,593,547
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
BRITAIN (0.5%)
MEDIA
33,600 *Flextech Plc..................... $ 545,593
------------
NETHERLANDS (0.5%)
TRANSPORTATION
11,950 *IHC Caland....................... 468,301
------------
NORWAY (0.6%)
OIL, ENERGY & NATURAL GAS
57,275 *Stolt Comex Seaway............... 622,866
------------
CANADA (0.6%)
ELECTRICAL EQUIPMENT
25,775 *Genesis Microchip................ 608,934
------------
TOTAL FOREIGN COMMON STOCK (2.2%)
(COST $1,919,539).............. $ 2,245,694
------------
TOTAL COMMON STOCK (96.1%)
(COST $67,039,357)............. $ 99,839,241
------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL (4.4%)
$4,552,000 Star Bank 3.300% 07/01/99
repurchase price $4,552,412
collateralized by GNMA
certificates pool # 8375 due
02/20/24 (Cost $4,552,000)....... $ 4,552,000
------------
TOTAL REPURCHASE AGREEMENTS (4.4%)
(COST $4,552,000)................ $ 4,552,000
------------
TOTAL HOLDINGS (100.5%)
(COST $71,591,357) (a)........... $104,391,241
------------
CASH & RECEIVABLES,
NET OF LIABILITIES (-0.5%)....... (495,665)
------------
TOTAL NET ASSETS (100.0%)......... $103,895,576
============
</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.
36
<PAGE> 37
OHIO NATIONAL FUND, INC.
SMALL CAP PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $71,591,357)............ $104,391,241
Cash in bank............................. 246
Receivable for securities sold........... 1,598,242
Receivable for fund shares sold.......... 94,371
Dividends and accrued interest
receivable............................. 2,188
Other.................................... 2,789
------------
Total assets........................... 106,089,077
------------
Liabilities:
Payable for securities purchased......... 2,109,277
Payable for shares redeemed.............. 4,625
Payable for investment management
services (note 3)...................... 61,881
Other accrued expenses................... 17,718
------------
Total liabilities...................... 2,193,501
------------
Net assets at market value................. $103,895,576
============
Net assets consist of:
Par value, $1 per share.................. $ 3,770,009
Paid-in capital in excess of par value... 58,198,452
Accumulated net realized income on
investments (note 1)................... 9,127,231
Net unrealized appreciation on
investments (note 1)................... 32,799,884
------------
Net assets at market value................. $103,895,576
============
Shares outstanding (note 4)................ 3,770,009
Net asset value per share.................. $ 27.56
============
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................. $ 90,909
Dividends................................. 19,533
-----------
Total investment income................. 110,442
-----------
Expenses:
Management fees (note 3).................. 330,142
Custodian fees (note 3)................... 7,261
Directors' fees (note 3).................. 1,198
Professional fees......................... 5,320
Accounting and transfer agent fees........ 21,139
Other..................................... 7,500
-----------
Total expenses.......................... 372,560
-----------
Net investment income................... $ (262,118)
-----------
Realized and unrealized gain on investments:
Net realized gain from investments........ $13,325,652
Net increase in unrealized appreciation on
investments............................. 12,669,591
-----------
Net gain on investments................. 25,995,243
-----------
Net increase in net assets from
operations............................ $25,733,125
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
37
<PAGE> 38
OHIO NATIONAL FUND, INC.
SMALL CAP PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- -----------
<S> <C> <C>
From operations:
Net investment loss....................................... $ (262,118) $ (187,071)
Realized gain (loss) on investments....................... 13,325,652 (4,198,422)
Unrealized gain on investments............................ 12,669,591 11,754,403
------------ -----------
Net increase in net assets from operations............ 25,733,125 7,368,910
------------ -----------
Dividends and distributions to shareholders:
Capital gains distributions............................... 0 (961)
------------ -----------
From capital share transactions (note 4):
Received from shares sold................................. 10,271,647 16,824,812
Received from dividends reinvested........................ 0 961
Paid for shares redeemed.................................. (7,685,176) (6,922,311)
------------ -----------
Increase in net assets derived from capital share
transactions......................................... 2,586,471 9,903,462
------------ -----------
Increase in net assets............................. 28,319,596 17,271,411
Net Assets:
Beginning of period....................................... 75,575,980 58,304,569
------------ -----------
End of period............................................. $103,895,576 $75,575,980
============ ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
6-30-99 --------------------------------------
(UNAUDITED) 1998 1997 1996 1995
---------------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $20.70 $18.72 $18.03 $15.85 $11.99
Income (loss) from investment operations:
Net investment loss....................................... (0.07) (0.06) (0.02) (0.08) (0.02)
Net realized & unrealized gain on investments............. 6.93 2.04 1.54 2.80 3.95
------ ------ ------ ------ ------
Total income from investment operations................. 6.86 1.98 1.52 2.72 3.93
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income...................... 0.00 0.00 0.00 0.00 (0.07)
Distributions from net realized capital gains............. 0.00 0.00 (0.83) (0.54) 0.00
------ ------ ------ ------ ------
Total distributions..................................... 0.00 0.00 (0.83) (0.54) (0.07)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $27.56 $20.70 $18.72 $18.03 $15.85
====== ====== ====== ====== ======
Total return................................................ 33.25%(b) 10.57% 8.47% 17.71% 33.01%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 0.88%(a) 0.91% 0.94% 0.96% 0.96%
Ratio of net investment loss to average net assets........ (0.62)%(a) (0.30)% (0.11)% (0.48)% (0.11)%
Portfolio turnover rate..................................... 83% 99% 80% 70% 75%
Net assets at end of period (millions)...................... $103.9 $ 75.6 $ 58.3 $ 38.5 $ 16.0
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
38
<PAGE> 39
INTERNATIONAL SMALL COMPANY PORTFOLIO (a)
OHIO NATIONAL FUND, INC.
OBJECTIVE
The International Small Company seeks to provide long-term capital growth by
investing primarily in equity securities of foreign companies having a market
capitalization at the time of purchase of $1.5 billion or less.
PERFORMANCE AS OF JUNE 30, 1999
AVERAGE ANNUAL TOTAL RETURNS:
<TABLE>
<S> <C>
One-year 21.20%
Three-year 13.65%
Since inception (3/31/95) 14.15%
</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 MARKET
International small cap stocks have improved since the start of the year by
gaining 9.1% in the second quarter and 12.2% year-to-date, as measured by the
MSCI World, ex-US, Small Cap Index. Small cap markets were largely up, with
winners outnumbering losers two to one, reversing the trend observed in the
first quarter. The Asia/Pacific region continued to produce the highest
year-to-date returns (+29.4%) in the small cap world. By most signs now
available, Asian countries seem to have turned the corner toward recovery and
are rebuilding their economies through much-needed restructuring. The
introduction of the Euro in January fueled expectations that the new currency
would dominate global commerce. However, since then, the Euro has fallen
steadily. Technically, this makes Euro members' goods less expensive for
exportation. Surprisingly though, we have not seen a pickup in the Euro
countries' economies and export figures.
The Ohio National International Small Company Portfolio posted second quarter
gains of 25.3% and year-to-date gains of 24.3%. The gains produced in the second
quarter resulted from the extensive portfolio restructuring performed in the
first quarter of this year.
Global economies may have turned the corner sooner and faster than generally
expected, but generalizations must be avoided. Many countries continue to
improve, while others are just beginning to join the next economic wave. We
continue to follow our investment philosophy of investing in local consumption
stocks and secondary beneficiaries of global trade.
STRATEGY
- - Neutral weight in Europe
- - Overweight consumption stocks in Europe
- - Seek out Internet-related stocks and downstream beneficiaries
- - Underweight "Euroland" markets, particularly France, Germany and the
Netherlands
- - Overweight Asia/Pacific, with strategic positions in Japan, Korea, Hong Kong
and Singapore
- - Underweight Latin America
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
INTERNATIONAL SMALL COMPANY
PORTFOLIO (COMMENCED OPERATIONS MORGAN STANLEY CAPTL. INTL. WORLD
MARCH 31, 1995) INDEX
------------------------------- ---------------------------------
<S> <C> <C>
10,000.00 10,000.00
10,421.00 10,427.00
'95 10,890.00 11,533.30
11,945.20 12,349.90
'96 12,206.80 13,087.20
13,407.90 15,100.00
'97 13,630.50 15,048.60
14,466.00 17,244.20
'98 14,110.20 18,263.30
17,531.90 19,817.60
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. JOT Automation Group Oyj 1.67
2. Don Quijote Co. Ltd. 1.55
3. ARM Holdings plc, ADR 1.47
4. PT Indofood Sukses Makmur 1.41
5. China Everbright Ltd. 1.41
6. Trafficmaster PLC 1.39
7. Fanci Corp. 1.28
8. Yamada Denki 1.21
9. PT Astra International 1.15
10. Mafalan 1.12
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Business & Public Services 12.21
2. Electronic Components,
Instruments 9.05
3. Electrical & Electronics 7.99
4. Merchandising 7.46
5. Telecommunications 6.40
</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.
(a) Prior to 5/1/99 the portfolio was known as The Global Contrarian Portfolio.
39
<PAGE> 40
OHIO NATIONAL FUND, INC.
INTERNATIONAL SMALL COMPANY PORTFOLIO (B)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
JAPAN (20.4%)
3,000 Arc Land Sakamoto Co Ltd. (28)..... $ 40,385
6,000 Arrk Corp (22)..................... 175,909
5,000 Daiken Corp. (17).................. 22,587
5,000 Daiwabo Information Systems (9).... 73,502
1,400 Don Quijote Co Ltd. (28)........... 352,067
1,600 Fanci Corp. (10)................... 290,705
1,000 Fast Retailing Co Ltd. (28)........ 107,363
300 Funai Electric Co. Ltd. (11)....... 59,462
7,000 Fuso Lexel Inc. (27)............... 92,497
1,000 Goldcrest Co Ltd. (27)............. 179,213
2,000 Happinet Corp. (14)................ 99,104
22,000 Japan Radio (11)................... 203,312
800 Kadokawa Shoten Publishing (23).... 163,191
400 OBIC Co. Ltd. (9).................. 109,345
200 Medical Support Co (25)............ 6,029
1,000 Megachips Corp. (12)............... 107,363
6,000 Mitsumi Electric (12).............. 167,486
1,900 Mycal Card Inc. (15)............... 86,303
2,060 Nichii Gakkan Co. (29)............. 224,570
24,000 Nippon Thompson Co Ltd. (21)....... 148,854
2,800 Nissin Co. Ltd. (15)............... 133,889
2,000 Nitori Co. (28).................... 47,074
5,000 Nitto Kohki Co. Ltd. (21).......... 94,975
30 Okinawa Cellular Telephone (8)..... 80,522
2,000 Pasona Softbank Inc. (29).......... 68,382
24,000 Rengo Co. Ltd. (17)................ 123,682
3,000 Ricoh Leasing Co. Ltd. (15)........ 75,567
3,000 Saizeriya Co Ltd. (16)............. 215,551
3,800 Sanyo Electric Credit Co. (15)..... 88,657
4,000 Sumisho Computer Systems (9)....... 170,128
4,000 Sysmex Corp. (24).................. 123,880
6,000 Toyo Corp. (12).................... 121,898
1,400 Trans Cosmos (9)................... 101,747
1,200 Trend Micro Inc. (9)............... 202,172
5,000 Yamada Denki (28).................. 273,775
-----------
4,631,146
-----------
HONG KONG (13.1%)
54,000 Asia Satellite Telecom Hdlg. (8)... 127,019
682,000 Bejing Yanhua Petro (7)............ 153,827
100,000 CDL Hotels (19).................... 41,889
321,000 *China Everbright Ltd. (28)........ 320,640
96,000 China Everbright Ltd. Warrant
(28).............................. 41,450
41,000 China Intl. Marine Containers
(35).............................. 37,519
394,000 China Pharmaceutical Ent. (24)..... 79,727
440,000 *China Southern Airlines (32)...... 112,287
817,000 *China Shipping Development (32)... 188,489
89,415 China Vanke Co. Ltd. (27).......... 60,043
1,722,000 Chongquing Iron & Steel Co. (25)... 166,458
222,000 City Telecom Ltd. (8).............. 69,387
112,000 Cosco Pacific Ltd. (32)............ 93,108
119,500 Eastern Communications Co. B
(11).............................. 121,890
223,800 Giordano Intl. Ltd. (28)........... 158,648
198,000 HKR Intl. Ltd. (27)................ 170,982
111,000 *Hainan Airlines Co. B (32)........ 52,392
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
HONG KONG, CONTINUED
215,000 Hong Kong Construction (27)........ $ 138,554
94,000 Kerry Properties (27).............. 124,183
108,000 Legend Holdings Ltd. (9)........... 103,703
45,000 LI & Fung Ltd. (34)................ 107,879
4,000 *Pacific Century Insurance (20).... 3,238
118,000 *Shandong Intl. Power Development
(33).............................. 82,280
121,000 *Shanghai Dazhong Taxi (32)........ 26,615
80,000 *Shanghai Matsuoka Co. B (10)...... 67,627
99,000 Shaw Bros. (14).................... 58,240
382,000 *South Sea Development Co. (27).... 32,988
620,000 *Stone Electronics Tech (9)........ 111,075
61,400 Wuxi Little Swan Co. B (10)........ 58,561
148,000 Zhejiang Southeast Electric-B
(13).............................. 65,416
-----------
2,976,114
-----------
SINGAPORE & MALAYSIAN (12.0%)
128,000 *CSE Systems & Engineering (9)..... 133,059
47,000 Datacraft Asis Ltd. (8)............ 204,920
80,000 Flextech Holdings Ltd. (12)........ 112,762
52,000 GB Holdings (32)................... 39,091
155,000 GES International Ltd. (9)......... 167,499
44,000 Inchcape Motors Ltd. (2)........... 70,805
110,000 Informatics Holdings Ltd. (11)..... 81,400
59,000 Jack Chia MPH (36)................. 40,195
21,000 Keppel Land Ltd. (27).............. 39,467
93,000 Keppel Telecom & Transport (8)..... 131,086
27,000 Natsteel Broadway Ltd. (26)........ 52,380
71,000 Natsteel Ltd. (36)................. 124,262
150,000 Neptune Orient Lines (32).......... 183,238
210,000 Omni Industries ltd. (26).......... 199,800
120,000 *Osprey Maritime Ltd. (32)......... 82,457
28,000 Pacific Century Regional Devep.
(27).............................. 119,223
253,000 *PCI Ltd. (12)..................... 132,986
186,000 Popular Holdings Ltd. (23)......... 87,937
303,000 Samudera Shipping Line Ltd. (32)... 153,039
26,000 *Sembcorp Logistics Ltd. (32)...... 102,308
41,000 SNP Corp. Ltd. (23)................ 46,233
109,000 *ST Computer System & Service
(9)............................... 169,642
290,000 *Teamsphere Ltd. (25).............. 136,254
109,000 Vickers Ballas Holdings (15)....... 105,626
-----------
2,715,669
-----------
UNITED KINGDOM (7.7%)
9,600 *Arm Holdings PLC ADR (12)......... 334,800
12,900 *Baltimore Tech Zergo Hdlg. PLC
(9)............................... 146,416
5,000 Capital Radio PLC (23)............. 66,169
2,000 *Euromoney Publications PLC (23)... 54,386
7,000 F.I. Group PLC (11)................ 35,973
10,600 Guardian It PLC (29)............... 94,410
18,100 Matalan PLC (28)................... 253,229
10,000 Nestor Healthcare Group (24)....... 65,894
16,500 RM PLC (9)......................... 130,053
12,000 Skillsgroup (9).................... 55,899
53,000 *Taylor Nelson Sofres PLC (23)..... 132,008
</TABLE>
(continued)
40
<PAGE> 41
OHIO NATIONAL FUND, INC.
INTERNATIONAL SMALL COMPANY PORTFOLIO (B) (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
UNITED KINGDOM, CONTINUED
46,000 *Trafficmaster PLC (8)............. $ 316,525
10,000 Ultraframe PLC (4)................. 60,140
-----------
1,745,902
-----------
INDONESIA (5.7%)
570,000 *PT Astra Intl. Inc. (2)........... 262,117
56,000 PT Daya Guna Samudera (16)......... 32,496
475,000 *PT Dynaplast (26)................. 74,544
87,000 *PT HM Sampoerna (10).............. 200,672
48,000 *PT Indah Kiat Pulp & Paper (17)... 22,423
235,000 *PT Indofood Sukses Mak (16)....... 322,482
940,500 *PT Jakarta Intl. Hotels (19)...... 92,677
50,000 *PT Jaya Real Property (27)........ 7,847
1,484,000 *PT Lippo Securities (15).......... 81,241
115,000 PT Medco Energi Corp. (13)......... 59,179
200,000 *PT Mulia Industrindo TBK (4)...... 24,816
49,000 PT Semen Gresik (4)................ 107,299
-----------
1,287,793
-----------
GERMANY (4.8%)
230 Ce Consumer Electronic (12)........ 113,762
600 *GFT Ges Fuer Technologies (9)..... 33,943
800 *Intershop Communications (9)...... 192,076
200 Intertainment AG (23).............. 49,049
4,406 Kamps AG (16)...................... 177,066
477 *Medion AG (34).................... 136,644
1,645 *Tecis Holdings AG-ORD (15)........ 155,948
9,600 *Zapf Creation AG (10)............. 227,523
-----------
1,086,011
-----------
CANADA (4.4%)
10,600 *Canadian Hunter Exploration
(13).............................. 160,071
7,600 *Canadian Medical Labs (23)........ 75,219
3,600 Four Seasons Hotels Inc. (19)...... 157,459
11,600 *Microforum Inc. (9)............... 42,609
15,200 *Newfoundland Cap Corp. Ltd. A
(23).............................. 105,462
12,100 Nexfor Onc. (17)................... 74,900
4,700 Pacific Internet Ltd. (9).......... 222,663
16,500 *Slocan Forest Products Ltd.
(17).............................. 120,094
5,000 *Tembec Inc. (17).................. 40,303
-----------
998,780
-----------
AUSTRALIA (4.4%)
39,500 APN News & Media Ltd. (23)......... 78,299
10,509 Aristocrat Leisure Ltd. (14)....... 79,507
18,500 *Bourse Data Ltd. (9).............. 13,080
21,840 Challenger Intl. Ltd. (15)......... 111,694
10,000 Computershare Ltd. (9)............. 117,805
102,000 *Ixla Ltd. (9)..................... 223,756
137,610 One Tel Ltd. (8)................... 91,835
95,170 *Sausage Software Ltd. (9)......... 138,973
150,000 *Secure Network Solutions (9)...... 138,262
-----------
993,211
-----------
SOUTH KOREA (4.2%)
1,300 Cheil Communications Inc. (23)..... 84,233
4,806 Hanjin Shipping Rights (32)........ 42,766
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
SOUTH KOREA, CONTINUED
7,500 Hyundai Merchant Marine (32)....... $ 97,840
1,610 Iljin Corp. (11)................... 42,284
840 Korea Chemical (3)................. 75,473
2,600 Korea Data System (9).............. 75,922
4,070 Korea Zinc Co. (25)................ 123,067
5,300 LG Cable & Machinery (11).......... 103,940
105 Samsung Securities Co. Ltd. (15)... 5,624
5,700 Taihan Electric Wire Co. (11)...... 98,488
3,200 Trigem Computer (9)................ 124,406
2,800 Woongjin Publishing (23)........... 84,666
-----------
958,709
-----------
SWITZERLAND (3.1%)
800 Distefora Interdiscount Hdlg.
(12).............................. 82,260
48 *Kudelski SA Bearer (12)........... 171,203
300 Publicigroupe SA (23).............. 163,876
200 Selecta Group -- Reg. (28)......... 79,689
400 SEZ Holdings AG (12)............... 130,844
650 Tag Heuer Intl. SA -- Reg. (28).... 67,671
-----------
695,543
-----------
SOUTH AFRICA (2.6%)
400 Amalg Beverage Ind. (16)........... 3,281
113,400 B.O.E. Corp. (15).................. 90,205
389,900 Iscor Ltd. (15).................... 122,121
216,200 Metro Cash & Carry Ltd. (34)....... 179,144
9,400 OZZ Ltd. (36)...................... 18,849
172,100 Protca Furnishers Ltd. (10)........ 132,050
5,800 Specialized Outsourcing Ltd.
(15).............................. 40,562
-----------
586,212
-----------
SWEDEN (2.4%)
1,850 Entra Data AB CL A (9)............. 36,607
4,650 *Framitidsfabriken AB (9).......... 92,011
3,600 *Icon Medialab Intl. AB (9)........ 130,597
6,500 Industrial & Financial Systems
(9)............................... 63,161
2,500 *Modern Times Group B (23)......... 54,327
2,100 Modul 1 Data AB (9)................ 14,099
10,000 *Switchore AB (8).................. 65,958
15,650 *Teligent AB (8) 80,183
-----------
536,943
-----------
FINLAND (1.9%)
4,850 *Eimo OYJ (13)..................... 98,704
13,500 *Perlos OYJ (12)................... 197,537
3,464 *Rapala Normark OYJ (14)........... 24,451
8,900 Talentum OY B (23)................. 135,731
-----------
456,423
-----------
ISRAEL (1.9%)
4,200 Audiocodes Ltd. (8)................ 113,400
6,800 Backweb Technologies Ltd. (9)...... 186,150
5,400 Nice Systems Ltd. ADR (8).......... 148,838
-----------
448,388
-----------
</TABLE>
(continued)
41
<PAGE> 42
OHIO NATIONAL FUND, INC.
INTERNATIONAL SMALL COMPANY PORTFOLIO (B) (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
FRANCE (1.9%)
900 Clarins (10)....................... $ 86,481
854 Groupe GTM (4)..................... 91,520
155 Intercall (12)..................... 3,961
550 Leon De Bruxelles (16)............. 25,504
350 Neopost SA (29).................... 81,148
400 NRJ SA (8)......................... 89,979
3,320 Remy Cointreau (16)................ 64,351
-----------
442,944
-----------
BELGIUM (1.7%)
9,382 JOT Automation Group (21).......... 379,940
-----------
GREECE (1.2%)
3,900 *Folli Folli (28).................. 108,107
400 *Interamerican Life Ins. (20)...... 8,881
1,650 Rokas (21)......................... 45,162
5,400 Rergo Investment SA (15)........... 36,651
4,000 Teletypos SA (8)................... 71,044
430 Unisoft SA (8)..................... 4,773
-----------
274,618
-----------
BRAZIL (1.2%)
62,000,000 Tele Centro Oeste Cellular (8)..... 72,240
56,000 Usinas Sider Minas Gerais (25)..... 190,045
-----------
262,285
-----------
NETHERLANDS (0.6%)
5,150 *Be Semiconductor Ind. (12)........ 53,599
4,750 *Doc Data (22)..................... 45,520
1,727 *Unit 4 (9)........................ 34,079
-----------
133,198
-----------
AUSTRIA (0.6%)
2,400 Do & Co Restaurants & Catering
(16).............................. 132,310
-----------
DENMARK (0.5%)
1,000 Neg Micon (13)..................... 35,333
1,000 *Vestas Wind Systems (13).......... 87,987
-----------
123,320
-----------
MEXICO (0.2%)
12,000 *Corporacion Geo SA (27)........... 50,382
-----------
TURKEY (0.0%)
49,807 Tofas Turk Rights (2).............. 14
-----------
TOTAL FOREIGN COMMON STOCK (96.5%)
(COST $17,976,683)................ $21,915,855
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
COMMUNICATIONS (0.8%)
5,000 *DSP Group Inc. ................... $ 180,000
-----------
TOTAL U.S. COMMON STOCK (0.8%)
(COST $142,929)................... 180,000
-----------
TOTAL COMMON STOCK (97.3%) (COST
$18,119,612)...................... $22,095,855
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
BRAZIL (0.2%)
2,700,000 Gerdau SA (25)..................... $ 44,287
-----------
GERMANY (0.6%)
2,700 Sixt AG (2)........................ 144,675
-----------
TOTAL FOREIGN PREFERRED STOCK
(0.8%) (COST $193,068)............ $ 188,962
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL (1.0%)
$ 229,000 SSB Repo 3.5% 07/01/99............. $ 229,000
-----------
TOTAL REPURCHASE AGREEMENTS (1.0%)
(COST $229,000)................... $ 229,000
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES CALL-OPTION VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUSTRALIA (0.0%)
8,400 Ixla Ltd. 03/31/00................. $ 16,650
-----------
TOTAL CALL-OPTION (0.0%)
(COST $17,281).................... $ 16,650
-----------
TOTAL HOLDINGS (99.2%)
(COST $18,558,961) (A)............ $22,530,467
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (0.8%)................ 191,309
-----------
TOTAL NET ASSETS (100.0%).......... $22,721,776
===========
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
(b) Prior to 5/1/99 the portfolio was known as the Global Contrarian Portfolio.
* Non-income producing securities.
42
<PAGE> 43
OHIO NATIONAL FUND, INC.
INTERNATIONAL SMALL COMPANY PORTFOLIO (B) (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Industry Classifications
<TABLE>
<C> <S>
(1) Aerospace
(2) Automotive
(3) Banking
(4) Building/Construction
(5) Capital Goods
(6) Cement
(7) Chemicals
(8) Communications
(9) Computer Products
(10) Consumer Products
(11) Electrical Products
(12) Electronics
(13) Energy and Oil
(14) Entertainment & Leisure
(15) Finance
(16) Food & Beverage
(17) Forest & Paper Products
(18) Governmental
(19) Hotels
(20) Insurance
(21) Machinery
(22) Manufacturing
(23) Media & Publishing
(24) Medical & Health Care
(25) Metal & Mining
(26) Plastics
(27) Real Estate
(28) Retailing
(29) Services
(30) Steel
(31) Textile
(32) Transportation
(33) Utilities
(34) Wholesale
(35) Miscellaneous
(36) Diversified
</TABLE>
The accompanying notes are an integral part of these financial statements.
43
<PAGE> 44
OHIO NATIONAL FUND, INC.
INTERNATIONAL SMALL COMPANY PORTFOLIO (A)
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $18,558,961)............. $22,530,467
Cash in bank.............................. 524,427
Unrealized gain on forward currency
contracts (note 5)...................... 14,573
Receivable for securities sold............ 1,246,341
Receivable for fund shares sold........... 12,080
Dividends and accrued interest
receivable.............................. 78,515
Other..................................... 87,039
-----------
Total assets............................ 24,493,442
-----------
Liabilities:
Unrealized loss on forward currency
contracts (note 5)...................... 21,802
Payable for securities purchased.......... 1,718,998
Payable for shares redeemed............... 2,972
Payable for investment management services
(note 3)................................ 17,359
Other accrued expenses.................... 10,535
-----------
Total liabilities....................... 1,771,666
-----------
Net assets at market value.................. $22,721,776
===========
Net assets consist of:
Par value, $1 per share................... $ 1,700,868
Paid-in capital in excess of par value.... 17,585,301
Accumulated net realized loss on
investments and foreign currency
transactions (note 1)................... (99,756)
Net unrealized appreciation (depreciation)
on:
Investments (note 1).................... 3,971,506
Foreign currency related transactions... (137,785)
Forward currency contracts (note 5)..... (28,823)
Undistributed net investment income....... (269,535)
-----------
Net assets at market value.................. $22,721,776
===========
Shares outstanding (note 4)................. 1,700,868
Net asset value per share................... $ 13.36
===========
</TABLE>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest................................... $ 7,455
Dividends (net of $8,047 foreign taxes
withheld)................................ 103,697
----------
Total investment income.................. 111,152
----------
Expenses:
Management fees (note 3)................... 91,666
Accounting, custody, and transfer agent
fees (note 3)............................ 35,275
Directors' fees (note 3)................... 348
Professional fees.......................... 1,438
Printing, postage, and proxy fees.......... 1,508
Other...................................... 621
----------
Total expenses........................... 130,856
----------
Net investment loss...................... $ (19,704)
----------
Realized and unrealized gain (loss) on
investments and foreign currency:
Net realized loss from:
Investments.............................. $ (99,756)
Forward currency related transactions.... (218,173)
Net increase in unrealized appreciation
(depreciation) on:
Investments............................ 4,962,304
Foreign currency related
transactions........................ (147,973)
----------
Net gain on investments................ 4,496,402
----------
Net increase in net assets from
operations.......................... $4,476,698
==========
</TABLE>
- ---------------
(a) Prior to 5/1/99 the portfolio was known as the Global Contrarian Portfolio.
The accompanying notes are an integral part of these financial statements.
44
<PAGE> 45
OHIO NATIONAL FUND, INC.
INTERNATIONAL SMALL COMPANY PORTFOLIO (D)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- -----------
<S> <C> <C>
From operations:
Net investment income (loss).............................. $ (19,704) $ 479,653
Realized gain (loss) on investments and foreign currency
transactions............................................ (317,929) 1,799,973
Unrealized gain (loss) on investments and foreign currency
transactions............................................ 4,814,331 (1,711,464)
----------- -----------
Net increase in net assets from operations............ 4,476,698 568,162
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. 0 (479,631)
Capital gains and foreign currency related transaction
distributions........................................... 0 (1,831,630)
----------- -----------
Total dividends and distributions..................... 0 (2,311,261)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 1,401,836 4,215,794
Received from dividends reinvested........................ 0 2,311,261
Paid for shares redeemed.................................. (2,974,972) (2,989,242)
----------- -----------
Increase (decrease) in net assets derived from capital
share transactions................................... (1,573,136) 3,537,813
----------- -----------
Increase in net assets............................. 2,903,562 1,794,714
Net Assets:
Beginning of period....................................... 19,818,214 18,023,500
----------- -----------
End of period (a)......................................... $22,721,776 $19,818,214
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31, 4-1-95
6-30-99 -------------------------------- TO
(UNAUDITED) 12-31-98 12-31-97 12-31-96 12-31-95
----------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period....................... $10.76 $11.73 $11.66 $10.80 $10.00
Income from investment operations:
Net investment income (loss)............................. (0.01) 0.29 0.29 0.28 0.13
Net realized & unrealized gain on investments & foreign
currency transactions.................................. 2.61 0.12 1.03 1.00 0.75
------ ------ ------ ------ ------
Total income from investment operations................ 2.60 0.42 1.32 1.28 0.88
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income..................... 0.00 (0.29) (0.38) (0.24) (0.08)
Distributions from net realized capital gains & foreign
currency related transactions.......................... 0.00 (1.10) (0.87) (0.18) 0.00
------ ------ ------ ------ ------
Total distributions.................................... 0.00 (1.39) (1.25) (0.42) (0.08)
------ ------ ------ ------ ------
Net asset value, end of period............................. $13.36 $10.76 $11.73 $11.66 $10.80
====== ====== ====== ====== ======
Total return............................................... 24.25%(b) 3.53% 11.67% 12.09% 8.89%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets.................. 1.33%(a) 1.30% 1.32% 1.29% 1.58%(a,c)
Ratio of net investment income to average net assets..... 0.20%(a) 2.48% 2.33% 2.44% 1.64%(a,c)
Portfolio turnover rate.................................... 318% 55% 29% 18% 6%
Net assets at end of period (millions)..................... $ 22.7 $ 19.8 $ 18.0 $ 11.3 $ 4.4
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
(c) The advisor has reimbursed certain operating expenses of the International
Small Company 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%.
(d) Prior to 5/1/99 the portfolio was known as the Global Contrarian Portfolio.
The accompanying notes are an integral part of these financial statements.
45
<PAGE> 46
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, 1999
<TABLE>
<S> <C>
TOTAL RETURNS:
One-year (5.19)%
Three-year 5.72%
Since inception (3/31/95) 9.56%
</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 market broadening finally arrived in the second quarter! The large-cap
growth stocks that had previously appeared untouchable finally took a breather.
Market leadership rotated dramatically to sectors that have languished for some
time such as industrial cyclicals and energy. In April, for example, industrial
cyclicals had their largest one-month gain in the last 50 years. This provided a
big gust of wind to sails of value managers and propelled the Russell 3000 Value
Index ahead of the Russell 3000 Growth Index for the first time in six quarters.
Market sentiment turned sour in May, as the consumer price report for April
showed that inflation grew at the fastest pace in nine years. Armed with
evidence of inflationary pressure, the Fed began applying the brakes by formally
adopting a directive towards raising short term interest rates. The angst
abided, as the May CPI number painted a much more benign inflationary picture
leading many to believe that the April number may have been an anomaly. The
quarter ended on a strong note with most investors believing that the Fed
action, which finally came on the last day of the quarter, was more akin to a
"flu shot".
Consistent with the performance of our benchmark, the Fund's performance
improved in the second quarter following a difficult first quarter. However, our
second quarter and year-to-date returns trail those of our benchmark. No single
issue explains our disappointing start in 1999. Rather, it is a culmination of
several factors. Our emphasis has been on dependable growth companies whose
returns have been consistent, yet trailed in an environment where, the more
speculative the investment, the better the performance has been. Retail was the
only sector that had a negative return for the quarter. Underweights in
semiconductor and telecommunication equipment hindered that Fund relative to its
benchmark, as those industries flourished in the second quarter. Investments in
securities that are undervalued but not yet recognized by the marker provide
good upward potential for the coming quarter.
The Fund is currently overweight in retail, capital equipment, and cyclical
stocks relative to the benchmark. Technology and financials have a slight
underweight, while energy and healthcare are in-line with the benchmark.
Our outlook for the general market is mixed. On the positive side, corporate
earnings are improving and our area of emphasis, small to mid-caps, is beginning
to perform much better. Offsetting this are, a higher interest rate environment
and high valuations for large company shares. Looking forward, we plan to
emphasize those sectors of the economy with the strongest growth outlook.
Examples include technology and financial services. We will also look to
capitalize on turning points in opportunistic industries, such as energy.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO NASDAQ COMPOSITE INDEX
(COMMENCED OPERATIONS MARCH 31, ----------------------
1995)
-------------------------------
<S> <C> <C>
10,000.00 10,000.00
11,027.00 11,422.00
'95 12,695.40 12,873.70
12,474.50 14,499.70
'96 12,792.60 15,797.40
13,448.80 17,645.70
'97 14,395.60 19,216.20
15,547.30 23,186.20
'98 15,524.00 26,833.40
14,740.00 32,871.00
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. AT&T Corp. 4.36
2. Central Garden & Pet Company 4.13
3. Sykes Enterprises, Incorporated 2.96
4. ITT Educational Services, Inc. 2.59
5. Coinmatch Laundry Corporation 2.56
6. AMFM Inc. 2.56
7. Sybron International
Corporation 2.37
8. Sunglass Hut International,
Inc. 2.15
9. The Hertz Corporation 2.05
10. Viacom Inc. -- Cl. B 1.97
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Retail 15.66
2. Computer and Related 13.06
3. Business Services 7.67
4. Entertainment and Leisure 7.36
5. Medical and Related 7.11
</TABLE>
The prices of small company stocks are generally more volatile than the prices
of large company stocks.
46
<PAGE> 47
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (0.3%)
8,800 *Avteam Inc. CL A.................. $ 64,350
-----------
ADVERTISING (2.4%)
2,000 *Lamar Advertising Co. CL A........ 81,875
11,403 *Outdoor Systems Inc. ............. 416,210
2,875 *Valassis Communications Inc. ..... 105,297
-----------
603,382
-----------
AUTOMOTIVE & RELATED (0.4%)
1,900 Harley-Davidson Inc. .............. 103,313
-----------
BANKING (2.7%)
2,500 Bank One Corp. .................... 148,906
4,110 Household Intl. Inc. .............. 194,711
11,800 TCF Financial Corp. ............... 328,925
-----------
672,542
-----------
BROADCASTING & CABLE TV (7.5%)
4,600 *Adelphia Communications CL A...... 292,675
11,600 *Chancellor Media Corp. CL A....... 639,450
6,200 *Clear Channel Communications...... 427,413
3,600 *Infinity Broadcasting Corp. ...... 107,100
5,500 *MediaOne Group Inc. .............. 409,062
-----------
1,875,700
-----------
BUSINESS SERVICES (6.0%)
1,000 *Acxiom Corp. ..................... 24,938
2,100 *CSG Systems Intl Inc. ............ 54,994
7,100 *Consolidated Graphics Inc. ....... 355,000
3,600 *Fiserv Inc. ...................... 112,725
3,300 *Lason Holdings Inc. .............. 163,762
15,425 *Pierce Leahy Corp. ............... 380,805
7,625 Services Master Corp. ............. 142,969
3,100 *United Stationers................. 68,200
3,100 Xerox Corp. ....................... 183,094
-----------
1,486,487
-----------
COMPUTER & RELATED (13.2%)
2,700 *Cisco Systems Inc. ............... 174,150
5,600 *Electronics for Imaging Inc. ..... 287,700
10,875 *Global Imaging Systems Inc. ...... 198,469
2,650 Hewlett-Packard Co. ............... 266,325
9,300 *Insight Enterprises Inc. ......... 230,175
3,450 IBM................................ 445,913
7,200 *Lexmark Intl. Group Inc. CL A..... 475,650
1,550 *Microsoft Corp. .................. 139,791
2,700 *Oracle Corp. ..................... 100,238
4,500 *Security Dynamics Tech Inc. ...... 95,625
3,600 *Sungard Data Systems Inc. ........ 124,200
22,150 *Sykes Enterprises Inc. ........... 739,257
-----------
3,277,493
-----------
CONSUMER SERVICES (7.4%)
16,600 *Carriage Services Inc. CL A....... 311,250
50,225 *Coinmatch Laundry Corp. .......... 637,230
8,250 Hertz Corp. CL A................... 511,500
16,050 Rent-A-Center Inc. ................ 385,200
-----------
1,845,180
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
COMMUNICATIONS (7.4%)
19,500 AT&T Corp. ........................ $ 1,088,344
2,300 *American Tower Corp. CL A......... 55,200
23,254 Davel Communications Inc. ......... 124,990
1,100 *MCI Worldcom Inc. ................ 94,875
16,700 *Pinnacle Holdings Inc. ........... 409,150
2,000 Teleglobe Inc. .................... 59,500
-----------
1,832,059
-----------
DRUGS (0.4%)
2,700 Jones Pharma Inc. ................. 106,312
-----------
EDUCATIONAL PRODUCTS & SERVICES (2.7%)
750 *Advantage Learning Systems
Inc. ............................. 16,594
24,800 *ITT Educational Services Inc. .... 646,350
-----------
662,944
-----------
ELECTRICAL EQUIPMENT (3.7%)
1,100 *Applied Material Inc. ............ 81,262
6,400 *Kent Electronics Corp. ........... 126,800
3,900 Methods Electronics CL A........... 89,213
1,500 *Microchip Technology Inc. ........ 71,062
2,300 *Pri Automation Inc. .............. 83,375
20,675 *Rayovac Corp. .................... 469,064
-----------
920,776
-----------
ENTERTAINMENT & LEISURE (7.3%)
3,575 *Action Performance Co. ........... 117,975
13,875 *Bally Total Fitness Holding
Corp. ............................ 393,703
5,300 *Mandalay Resort Group............. 111,962
41,300 *Park Place Entertainment.......... 400,094
11,393 *SCP Pool Corp. ................... 294,794
11,200 *Viacom Inc. CL B.................. 492,800
-----------
1,811,328
-----------
FINANCE (4.1%)
3,950 Associates First Capital Corp. .... 175,034
7,126 Citigroup.......................... 338,509
2,000 Dime Bancorp Inc. ................. 40,250
5,100 Nova Corp. ........................ 127,500
12,000 Waddle & Reed Financial Inc. A..... 329,250
-----------
1,010,543
-----------
FOOD & RELATED (1.3%)
26,300 *Mercer American Corp. ............ 249,850
1,550 *US Foodservice.................... 66,069
-----------
315,919
-----------
INDUSTRIAL SERVICES (4.6%)
18,100 *Allied Waste Industries Inc. ..... 357,475
4,600 *Casella Waste Systems Inc.-A...... 119,600
1,200 *KTI Inc. ......................... 17,100
12,925 *Republic Services Inc. CL A....... 319,894
3,050 *Superior Services Inc. ........... 81,397
1,750 Tyco International Ltd. ........... 165,812
1,500 Waste Management Inc. ............. 80,625
-----------
1,141,903
-----------
INSURANCE (0.5%)
3,599 Protective Life.................... 118,800
-----------
</TABLE>
(continued)
47
<PAGE> 48
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
MACHINERY (0.3%)
2,800 Applied Power Inc. CL. A........... $ 76,475
-----------
MEDICAL & RELATED (7.1%)
5,825 *Covance Inc. ..................... 139,436
1,625 *Cytyc Corp. ...................... 31,687
7,200 *Hanger Orthopedic Group Inc. ..... 102,150
2,900 *Lincare Holdings Inc. ............ 72,500
900 Medtronic Inc. .................... 70,087
11,300 *Ocular Sciences Inc. ............. 196,338
15,250 *PSS World Medical Inc. ........... 170,609
2,000 *Renal Care Group Inc. ............ 51,750
10,700 *Schein Henry Inc. ................ 339,056
21,500 *Sybron Intl. Corp.-Wis............ 592,594
-----------
1,766,207
-----------
OIL, ENERGY & NATURAL GAS (5.0%)
7,700 *BJ Services Co. .................. 226,669
3,900 *Cooper Cameron Corp. ............. 144,544
3,600 *Marine Drilling Co. Inc. ......... 49,275
14,100 *Nabors Industries Inc. ........... 344,569
7,225 *Noble Drilling Corp. ............. 142,242
35,700 *Ocean Energy Inc. ................ 343,612
-----------
1,250,911
-----------
REAL ESTATE INVESTMENT TRUSTS (0.8%)
23,700 Sunstone Hotel Investors Inc. ..... 201,450
-----------
RESTAURANTS (0.8%)
1,225 *Papa Johns Intl. Inc. ............ 54,742
28,900 *Rainforest Cafe Inc. ............. 146,306
-----------
201,048
-----------
RETAIL (13.3%)
1,850 *Best Buy Co. Inc. ................ 124,875
100,700 *Central Garden and Pet Co. ....... 1,032,175
1,400 *Federated Department Stores....... 74,112
41,200 *Movie Gallery Inc. ............... 221,450
10,750 *Office Depot Inc. ................ 237,172
11,325 Pier 1 Imports Inc. ............... 127,406
35,050 Regis Corp. Minn RJQ............... 672,522
16,700 *School Specialty Inc. ............ 268,244
31,300 *Sun Glass Hut International....... 537,967
-----------
3,295,923
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
TRANSPORTATION & EQUIPMENT (0.5%)
4,150 Burlington Northern Sante Fe....... $ 128,650
-----------
TOTAL COMMON STOCKS (99.7%) (COST
$24,021,009)...................... $24,769,695
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM OBLIGATIONS VALUE
- -------------------------------------------------------------
<C> <S> <C>
GOVERNMENT (0.5%)
$ 125,000 US Treasury Bills 4.600%
09/23/99.......................... $ 123,676
-----------
TOTAL SHORT-TERM OBLIGATIONS (0.5%)
(COST $123,658)................... $ 123,676
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL (1.7%)
$ 429,000 Star Bank 3.30% due 07/01/99
repurchase price $429,039
collateralized by GNMA
certificates pool # 8375 due
02/20/24 (Cost $123,658).......... $ 429,000
-----------
TOTAL REPURCHASE AGREEMENTS (1.7%)
(COST $429,000)................... $ 429,000
-----------
TOTAL HOLDINGS (101.9%) (COST
$24,573,668) (A).................. $25,322,371
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (-1.9%)............... (463,196)
-----------
TOTAL NET ASSETS (100.0%).......... $24,859,175
===========
</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.
48
<PAGE> 49
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $24,573,668)............. $25,322,371
Cash in bank.............................. 988
Receivable for securities sold............ 320,357
Receivable for fund shares sold........... 32,427
Dividends and accrued interest
receivable.............................. 8,441
Other..................................... 866
-----------
Total assets............................ 25,685,450
-----------
Liabilities:
Payable for securities purchased.......... 772,673
Payable for shares redeemed............... 7,323
Payable for investment management services
(note 3)................................ 16,042
Other accrued expenses.................... 28,986
-----------
Total liabilities....................... 825,024
-----------
Net assets at market value.................. $24,860,426
===========
Net assets consist of:
Par value, $1 per share................... $ 2,348,002
Paid-in capital in excess of par value.... 22,880,527
Accumulated net realized loss on
investments (note 1).................... (1,116,806)
Net unrealized appreciation on investments
(note 1)................................ 748,703
-----------
Net assets at market value.................. $24,860,426
===========
Shares outstanding (note 4)................. 2,348,002
Net asset value per share................... $ 10.59
===========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................. $ 13,654
Dividends................................. 94,602
-----------
Total investment income................. 108,256
-----------
Expenses:
Management fees (note 3).................. 98,722
Custodian fees (note 3)................... 2,376
Directors' fees (note 3).................. 522
Professional fees......................... 2,089
Accounting and transfer agent fees........ 9,562
Other..................................... 3,175
-----------
Total expenses.......................... 116,446
-----------
Net investment loss..................... $ (8,190)
-----------
Realized and unrealized loss on investments:
Net realized loss from:
Investments............................. $ (167,623)
Futures contracts....................... (641,947)
Net increase (decrease) in unrealized
appreciation (depreciation) on:
Investments............................. (457,573)
Futures contracts....................... (33,150)
-----------
Net loss on investments................. (1,300,293)
-----------
Net decrease in net assets from
operations............................ $(1,308,483)
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
49
<PAGE> 50
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- -----------
<S> <C> <C>
From operations:
Net investment loss....................................... $ (8,190) $ (21,640)
Realized gain (loss) on investments and futures
contracts............................................... (809,570) 1,441,462
Unrealized gain (loss) on investments and futures
contracts............................................... (490,723) 374,808
----------- -----------
Net increase (decrease) in net assets from
operations........................................... (1,308,483) 1,794,630
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. 0 0
Capital gains distributions............................... 0 (1,782,997)
----------- -----------
Total dividends and distributions..................... 0 (1,782,997)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 2,714,133 7,546,285
Received from dividends reinvested........................ 0 1,782,997
Paid for shares redeemed.................................. (2,992,373) (2,786,473)
----------- -----------
Increase (decrease) in net assets derived from capital
share transactions................................... (278,240) 6,542,809
----------- -----------
Increase (decrease) in net assets.................. (1,586,723) 6,554,442
Net Assets:
Beginning of period....................................... 26,447,149 19,892,707
----------- -----------
End of period............................................. $24,860,426 $26,447,149
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED APRIL 1,
6-30-99 ---------------------------------- 1995 TO
(UNAUDITED) 12-31-98 12-31-97 12-31-96 DEC. 31, 1995
---------------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period.................. $11.15 $11.09 $10.03 $11.84 $10.00
Income (loss) from investment operations:
Net investment income (loss)........................ 0.00 (0.01) (0.05) 1.64 1.56
Net realized and unrealized gain (loss) on
investments....................................... (0.56) 0.88 1.29 (1.59) 1.08
------ ------ ------ ------ ------
Total income (loss) from investment operations.... (0.56) 0.87 1.24 0.05 2.64
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (loss)......... 0.00 0.00 (0.14) (1.86) (0.80)
Distributions from net realized capital gains....... 0.00 (0.81) (0.04) 0.00 0.00
------ ------ ------ ------ ------
Total distributions............................... 0.00 (0.81) (0.18) (1.86) (0.80)
------ ------ ------ ------ ------
Net asset value, end of period........................ $10.59 $11.15 $11.09 $10.03 $11.84
====== ====== ====== ====== ======
Total return.......................................... (5.05)%(b) 7.84% 12.53% 0.76% 26.95%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets............. 0.93%(a) 0.94% 0.97% 1.01% 1.02%(a)
Ratio of net investment income (loss) to average net
assets............................................ 0.07%(a) (0.09)% (0.40)% 15.81% 18.18%(a)
Portfolio turnover rate............................... 108% 203% 193% 1987% 1488%
Net assets at end of period (millions)................ $ 24.9 $ 26.4 $ 19.9 $ 12.0 $ 4.0
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
50
<PAGE> 51
CORE GROWTH PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The objective of the Core Growth Portfolio is to provide long-term capital
appreciation.
PERFORMANCE AS OF JUNE 30, 1999
TOTAL RETURN:
<TABLE>
<S> <C>
One-year 15.85%
Since inception (1/3/97) 10.52%
</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 Ohio National Fund Core Growth Portfolio returned 10.64% for the 2nd
quarter, 1999 and 21.59% for the six months ending June 30, 1999. This compares
with the Russell Mid Cap Growth Index returns of 10.42% and 14.19% respectively
for the same periods. Favorable sector weightings and stock selection are the
two major factors, which lead to the large outperformance. The Fund's most
heavily weighted sector, at nearly 40%, is technology. For the first half, this
sector has contributed well over half of the Fund's positive performance and
there has been broad strength among the holdings. Semiconductors,
telecommunication equipment, Internet services and contract manufacturing
companies all participated in this rally due to robust expectations for first
and second quarter earnings. The portfolio's representation in software is small
due to concerns over Year 2000 demand imbalances. The consumer cyclical sector,
which comprises mostly retailers, is the next largest contributor to Fund
performance in the first half. No one stock drove the overall performance, but
again, strength was broad among holdings. Health care and business services were
the only sectors to produce negative returns during the first half and their
effect was minimal.
U.S. economic outlook continues to be positive by most measures. The GDP report
for the first quarter of 1999 surprised everyone when it came in at a healthy
4.5%. At 4.3%, unemployment remains near a 30-year low. Despite the continued
tight labor market, wage inflation does not appear to be a significant threat,
according to the employment cost index. Productivity remains high. After a scare
in May, the CPI number release in June was zero. At its June 30th Open Market
Committee meeting, the Federal Reserve raised interest rates one-quarter point
and adopted "a directive that included no predilection about near-term policy
action".
Although large capitalization stocks have surpassed their smaller brethren
year-to-date, the second quarter provided an environment where small stocks beat
mid-size stocks which beat large caps. Growth stocks, other than having a tough
May, have led the market higher for the year across all capitalizations.
The business outlook for technology firms can change quickly. We believe that
investment managers need to be able to react quickly to, as well as anticipate,
the changing landscape of this sector. At no time is this more likely to be true
than in 1999, when Year 2000 issues will cause more opportunities and more
disappointments than in a typical year. The Fund will continue to be actively
managed and repositioned as the evidence unfolds.
We continue to like the long-term prospects of the all-cap growth companies we
own. Superior technologies, services, balance sheets, business models and
ability to execute are all characteristics commonly found in top quality growth
companies that we believe contribute to sustained, above-average growth rates.
Many investors have been anxiously waiting for the rebound in small/mid
capitalization stocks. We are encouraged with their recent outperformance and
there is much evidence to suggest their relative performance will continue to be
strong.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
CORE GROWTH PORTFOLIO (COMMENCED
OPERATIONS JANUARY 3, 1997) RUSSELL 3000 INDEX
-------------------------------- ------------------
<S> <C> <C>
'96 10,000.00 10,000.00
10,080.00 11,776.00
'97 9,691.92 13,169.10
11,069.10 15,145.80
'98 10,546.70 16,312.00
12,823.70 18,165.10
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Cisco Systems, Inc. 3.88
2. Xilinx, Inc. 3.23
3. Clear Channel Communications,
Inc. 2.62
4. Outdoor Systems, Inc. 2.51
5. Premier Parks, Inc. 2.35
6. MedImmune, Inc. 2.29
7. Kohl's Corporation 2.28
8. Corning Incorporated 2.19
9. MiniMed Inc. 2.11
10. MedQuist, Inc. 2.07
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Medical and Related 11.11
2. Computer and Related 9.07
3. Retail 9.05
4. Electrical Equipment 8.25
5. Communications 7.52
</TABLE>
51
<PAGE> 52
OHIO NATIONAL FUND, INC.
CORE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
ADVERTISING (4.6%)
9,200 *Lamar Advertising Co. ............... $ 376,625
12,800 *Outdoor Systems Inc. ................ 467,200
-----------
843,825
-----------
AUTOMOTIVE & RELATED (0.9%)
3,200 Harley Davidson Inc. ................. 174,000
-----------
BROADCASTING & CABLE TV (6.2%)
2,300 *Citadel Communications............... 83,231
7,059 *Clear Channel Communications......... 486,673
2,900 *MediaOne Group Inc. ................. 215,687
5,200 *Univision Communications............. 343,200
-----------
1,128,791
-----------
COMMUNICATIONS (9.2%)
8,500 *American Tower Corp. ................ 204,000
7,400 *Amdocs Ltd. ......................... 168,350
2,500 *Aware Inc/Mass....................... 115,312
5,700 *Cienna Corp. ........................ 172,069
2,300 *E-Tek Dynamics Inc. ................. 109,394
4,421 *Global Crossing...................... 188,169
4,600 *L-3 Communications Inc. ............. 222,237
4,000 *MCI Worldcom Inc. ................... 345,000
4,300 *Metromedia Fiber Network............. 154,531
-----------
1,679,062
-----------
COMPUTER & RELATED (9.5%)
6,800 *EMC Corp/Mass........................ 374,000
5,100 *I2 Technologies Inc. ................ 219,300
3,800 *Macromedia Inc. ..................... 133,950
5,800 *Psinet Inc. ......................... 253,750
2,300 *Sun Microsystems Inc. ............... 158,412
3,000 *Verisign Inc. ....................... 258,750
3,500 *Veritas Software Corp. .............. 332,281
-----------
1,730,443
-----------
ELECTRICAL EQUIPMENT (8.0%)
8,500 *Celestica Inc. ...................... 368,156
4,800 *Jabil Circuit Inc. .................. 216,600
3,900 *Powerwave Technologies Inc. ......... 125,775
4,700 *Sanmina Corp. ....................... 356,612
4,200 *Teradyne Inc. ....................... 301,350
1,600 *Waters Corp. ........................ 85,000
-----------
1,453,493
-----------
ELECTRONICS/SEMICONDUCTORS (9.5%)
2,900 *Conexant Systems Inc. ............... 168,381
5,000 *LSI Logic Corp Designs............... 230,625
2,400 *PMC-Sierra Inc. ..................... 141,450
2,400 *SDL Inc. ............................ 122,550
4,650 *Transwitch Corp. .................... 220,294
1,800 *Uniphase Corp. ...................... 298,800
9,500 *Xilinx Inc. ......................... 543,875
-----------
1,725,975
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT & LEISURE (4.9%)
8,900 *Cinar Films Inc. .................... $ 218,050
5,100 Carnival Corp. ....................... 247,350
11,900 *Premier Parks........................ 437,325
-----------
902,725
-----------
FINANCIAL SERVICES (1.6%)
1,400 Goldman Sachs Group Inc. ............. 101,150
1,800 The Charles Schwab Corp. ............. 197,775
-----------
298,925
-----------
INTERNET SERVICE PROVIDER (4.7%)
2,400 *America Online....................... 265,200
4,300 *Infospace.com........................ 202,100
2,800 *Network Solutions.................... 221,550
2,300 *Verio Inc. .......................... 159,850
-----------
848,700
-----------
MACHINERY (3.4%)
3,200 *Applied Materials Inc. .............. 236,400
2,300 Danaher Corp. ........................ 133,687
8,900 *United Rentals Inc. ................. 262,550
-----------
632,637
-----------
MANUFACTURING (2.2%)
5,800 Corning Inc. ......................... 406,725
-----------
MEDICAL & RELATED (12.1%)
2,900 *Express Scripts...................... 174,544
5,400 Guidant Corp. ........................ 277,763
6,300 *Medimmune Inc. ...................... 426,825
8,800 *Medquist Inc. ....................... 385,000
5,100 *Minimed Inc. ........................ 392,381
4,300 *Quintiles Transnational Corp. ....... 180,600
4,700 *Visx Inc. ........................... 372,181
-----------
2,209,294
-----------
NETWORK PRODUCTS & SERVICES (6.8%)
3,300 *Check Point Software Tech............ 176,963
8,599 *Cisco Systems........................ 554,659
700 *Emulex Corp. ........................ 77,831
9,900 *Newbridge Networks................... 284,625
3,300 *New Era of Networks Inc. ............ 144,994
-----------
1,239,072
-----------
OIL, ENERGY & NATURAL GAS (1.6%)
8,000 *BJ Services Co. ..................... 235,500
1,700 *Hanover Compress..................... 54,613
-----------
290,113
-----------
RETAIL (9.2%)
6,500 *Duane Reade Inc. .................... 199,063
4,500 Home Depot Inc. ...................... 289,969
5,500 *Kohl's Corp. ........................ 424,531
5,500 *Linens N Things Inc. ................ 240,625
7,650 *Staples Inc. ........................ 236,672
6,000 Tandy Corp. .......................... 293,250
-----------
1,684,110
-----------
</TABLE>
(continued)
52
<PAGE> 53
OHIO NATIONAL FUND, INC.
CORE GROWTH PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
TRANSPORTATION (0.8%)
7,850 *Motivepower Industries Inc. ......... $ 139,338
-----------
TOTAL COMMON STOCK
(95.2%) (COST $13,260,323)........... $17,387,228
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL (5.4%)
$987,000 Star Bank 3.3% due 07/01/99
repurchase price $987,089
collateralized by GNMA certificates
pool # 837 due 02-20-24 (cost
$987,000)........................... $ 987,000
-----------
TOTAL REPURCHASE AGREEMENTS (5.4%)
(COST $987,000)..................... $ 987,000
-----------
TOTAL HOLDINGS (100.6%)
(COST $14,247,323) (A).............. $18,374,228
-----------
CASH & RECEIVABLES,
NET OF LIABILITIES (-0.6%).......... (110,989)
-----------
TOTAL NET ASSETS (100.0%)............ $18,263,239
===========
</TABLE>
- ---------------
* Non income producing security.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
53
<PAGE> 54
OHIO NATIONAL FUND, INC.
CORE GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $14,247,323)............. $18,374,228
Cash in bank.............................. 283
Receivable for securities sold............ 218,468
Receivable for fund shares sold........... 43,711
Dividends and accrued interest
receivable.............................. 425
Other..................................... 13
-----------
Total assets............................ 18,637,128
-----------
Liabilities:
Payable for securities purchased.......... 355,964
Payable for shares redeemed............... 62
Payable for investment management services
(note 3)................................ 13,390
Other accrued expenses.................... 4,473
-----------
Total liabilities....................... 373,889
-----------
Net assets at market value.................. $18,263,239
===========
Net assets consist of:
Par value, $1 per share................... $ 1,425,897
Paid-in capital in excess of par value.... 12,625,630
Accumulated net realized gain on
investments (note 1).................... 84,807
Net unrealized appreciation on investments
(note 1)................................ 4,126,905
-----------
Net assets at market value.................. $18,263,239
===========
Shares outstanding (note 4)................. 1,425,897
Net asset value per share................... $ 12.81
===========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest................................... $ 21,383
Dividends.................................. 4,994
----------
Total investment income.................. 26,377
----------
Expenses:
Management fees (note 3)................... 73,025
Custodian fees (note 3).................... 2,362
Directors' fees (note 3)................... 170
Professional fees.......................... 760
Accounting and transfer agent fees......... 4,242
Other...................................... 1,093
----------
Total expenses........................... 81,652
----------
Net investment loss...................... $ (55,275)
----------
Realized and unrealized gain on investments:
Net realized gain from investments......... $1,717,617
Net increase in unrealized appreciation on
investments.............................. 1,488,863
----------
Net gain on investments.................. 3,206,480
----------
Net increase in net assets from
operations............................. $3,151,205
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
54
<PAGE> 55
OHIO NATIONAL FUND, INC.
CORE GROWTH PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- -----------
<S> <C> <C>
From operations:
Net investment loss....................................... $ (55,275) $ (62,638)
Realized gain (loss) on investments....................... 1,717,617 (1,185,242)
Unrealized gain on investments............................ 1,488,863 2,239,047
----------- -----------
Net increase (decrease) in net assets from
operations........................................... 3,151,205 991,167
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. 0 0
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 4,887,391 4,380,111
Received from dividends reinvested........................ 0 0
Paid for shares redeemed.................................. (1,556,944) (3,133,724)
----------- -----------
Increase in net assets derived from capital share
transactions......................................... 3,330,447 1,246,387
----------- -----------
Increase in net assets............................. 6,481,652 2,237,554
Net Assets:
Beginning of period....................................... 11,781,587 9,544,033
----------- -----------
End of period............................................. $18,263,239 $11,781,587
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED
SIX MONTHS ENDED DECEMBER 31,
6-30-99 ----------------
(UNAUDITED) 1998 1997
---------------- ------ ------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $10.54 $ 9.68 $10.00
Income (loss) from investment operations:
Net investment loss....................................... (0.04) (0.06) (0.02)
Net realized and unrealized gain (loss) on investments.... 2.31 0.92 (0.30)
------ ------ ------
Total income (loss) from investment operations.......... 2.27 0.86 (0.32)
------ ------ ------
Net asset value, end of period.............................. $12.81 $10.54 $ 9.68
====== ====== ======
Total return................................................ 21.59%(b) 8.82% 3.08%
Ratios and supplemental data:
Ratio of expenses to average net assets..................... 1.06%(a) 1.13% 1.11%
Ratio of net investment loss to average net assets........ (0.72)%(a) (0.62)% (0.18)%
Portfolio turnover rate..................................... 76% 134% 65%
Net assets at end of period (millions)...................... $ 18.3 $ 11.8 $ 9.5
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
55
<PAGE> 56
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, 1999
TOTAL RETURN:
<TABLE>
<S> <C>
One-year 22.83%
Since inception (1/3/97) 25.92%
</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 Ohio National Growth & Income portfolio produced positive returns in the
second quarter, increasing 14.86% versus a 10.86% increase in the Russell MidCap
benchmark and a 10.42% increase in the Russell MidCap Growth benchmark. For the
first six months of 1999, the portfolio increased 21.47% against a 10.34% rise
in the Russell Midcap benchmark and a 14.19 increase in the Russell Midcap
Growth index.
We benefited from a continued broadening of investor interest in mid and small
cap stocks. While most small and mid cap benchmarks increased at double digit
rates in the second quarter, the S&P 500 rose "only" 7.03%, a slowing of past
quarter's strong showing.
We continued our strategy of running the portfolio in a broadly diversified
manner. We maintained our strong weighting to technology, focusing on a range of
technology subsectors including telecom services, wireless, and semiconductors.
We also continue to mine the broad cable area, a sector our research process led
us to back in 1997 and 1998, ahead of many investors. We continue to realize
strong gains from a number of holdings in this sector as investors recognize the
return potential in companies involved in wiring the home for telephone, TV, and
internet communications.
Outside of overweighted exposure to technology, we maintained our commitment to
the energy services sector. Despite the volatility of many energy service
companies, we remain convinced this sector provides excellent long-term
potential.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO RUSSELL 2000 INDEX
(COMMENCED OPERATIONS JANUARY 3, ------------------
1997)
--------------------------------
<S> <C> <C>
'96 10,000 10,000
11,334 11,020
'97 13,657 12,227
14,452 12,871
'98 14,626 11,953
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. First Sierra Financial, Inc. 2.78
2. EchoStar Communications
Corporation 2.08
3. CapRock Communications Corp. 1.92
4. The Montana Power Company 1.91
5. MediaOne Group, Inc. 1.72
6. Startec Global Communications
Corporation 1.70
7. Comdisco, Inc. 1.67
8. Florida Rock Industries, Inc. 1.67
9. Century Communications
Corp. -- CIA 1.56
10. Galileo International, Inc. 1.45
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
1. Communications 13.72
2. Oil, Energy, and Natural Gas 13.22
3. Electrical Equipment 11.46
4. Computer and Related 10.62
5. Retail 4.87
</TABLE>
56
<PAGE> 57
OHIO NATIONAL FUND, INC.
GROWTH AND INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE & RELATED (2.8%)
22,500 *Avis Rent A Car Inc. ............. $ 655,312
25,000 Fleetwood Enterprises Inc. ........ 660,938
32,500 *Pep Boys - Manny, Moe, & Jack..... 702,813
-----------
2,019,063
-----------
BANKING (1.8%)
15,000 Fleet Financial Group Inc. ........ 665,625
27,500 Golden State Bancorp............... 605,000
-----------
1,270,625
-----------
BROADCASTING & CABLE TV (7.3%)
25,000 *Century Communications CL A....... 1,150,000
10,000 *Echostar Communications Corp. CL
A................................. 1,534,375
11,000 *Gemstar Intl. Group Ltd. ......... 717,750
16,000 *Mediaone Group Inc. .............. 1,190,000
11,000 *Univison Communications CL A...... 726,000
-----------
5,318,125
-----------
BUSINESS SERVICES (6.4%)
60,000 *Administaff Inc. ................. 960,000
50,000 Comdisco Inc. ..................... 1,281,250
13,000 First Data Corp. .................. 636,188
20,000 Galileo Intl. Inc. ................ 1,068,750
17,000 *Quintiles Transnational Corp. .... 714,000
-----------
4,660,188
-----------
COMMUNICATIONS (17.7%)
12,000 *ADC Telecom Inc. ................. 546,750
10,000 *Associated Group Inc. CL B........ 651,875
23,500 AT&T Corp. Liberty Media Group-A... 863,625
35,000 *Caprock Comm Corp. ............... 1,417,500
20,000 *Ciena Corp. ...................... 603,750
133,800 *Condor Technology Solutions....... 627,187
60,000 *Dset Corp. ....................... 836,250
25,000 *Excel Switching Corp. ............ 748,437
2,500 *ICO Global Communications Ltd. ... 15,078
17,500 *ICG Communications Inc. .......... 374,063
65,000 *Picturetel Corp. ................. 520,000
40,000 *Primus Telecom Group Inc. ........ 897,500
12,500 *RCN Corp. ........................ 520,313
12,000 *RF Micro Devices Inc. ............ 895,500
35,000 *Research in Motion Ltd. .......... 708,750
2,500 *Sprint Corp. (PCS GRP)............ 142,812
103,300 *Startec Global Comm. Corp. ....... 1,252,513
4,000 *Uniphase Corp. ................... 664,000
20,500 *Western Wireless Corp. CL A....... 553,500
-----------
12,839,403
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
COMPUTER & RELATED (7.0%)
25,000 *Adaptec Inc. ..................... $ 882,812
9,000 *Comverse Technology Inc. ......... 679,500
16,500 *Concentric Network Corp. ......... 655,875
5,750 *Intuit Inc. ...................... 518,219
16,500 *Macromedia Inc. .................. 581,625
30,000 *Novell Inc. ...................... 795,000
33,500 *Peoplesoft Inc. .................. 577,875
26,200 *SalesLogix Corp. ................. 389,725
-----------
5,080,631
-----------
CONSUMER PRODUCTS (0.8%)
16,500 Dial Corp.......................... 613,594
-----------
CHEMICALS (0.9%)
45,000 Seminis Inc. ...................... 677,812
-----------
DURABLE GOODS (1.7%)
27,000 Florida Rock Industries............ 1,228,500
-----------
ELECTRICAL EQUIPMENT (9.8%)
20,500 *Altera Corp. ..................... 754,656
48,500 *American Power Conversion
Corp. ............................ 976,062
22,500 *DSP Communications Inc. .......... 649,687
20,000 EG&G Inc. ......................... 712,500
21,000 *Jabil Circuit Inc. ............... 947,625
15,000 *Lam Research Corp. ............... 700,313
7,500 Motorola Inc. ..................... 710,625
12,500 *Teradyne Inc. .................... 896,875
35,500 *Wesco Intl. Inc. ................. 727,750
-----------
7,076,093
-----------
ENTERTAINMENT & LEISURE (1.7%)
100,000 Kushner-Locke Co. ................. 650,000
8,500 *SFX Entertainment Inc. ........... 565,781
-----------
1,215,781
-----------
FINANCIAL SERVICES (2.8%)
82,000 *First Sierra Financial Inc. ...... 2,050,000
-----------
FORESTRY & PAPER PRODUCTS (0.8%)
13,000 Mead Corp. ........................ 542,750
-----------
INDUSTRIAL SERVICES (5.4%)
16,500 *Simpson Manufacturing Co. Inc. ... 783,750
40,000 *Republic Services Inc CL A........ 990,000
18,500 Texas Industries................... 716,875
8,000 Tyco International Inc. ........... 758,000
13,000 *Waste Management Inc. ............ 698,750
-----------
3,947,375
-----------
MACHINERY (2.1%)
40,000 JLG Industries Inc. ............... 815,000
17,500 Millipore Corp. ................... 709,844
-----------
1,524,844
-----------
</TABLE>
(continued)
57
<PAGE> 58
OHIO NATIONAL FUND, INC.
GROWTH AND INCOME PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
MEDICAL & RELATED (4.3%)
35,000 *Cephalon Inc. .................... $ 608,125
51,500 *Endocardial Solutions Inc. ....... 486,031
50,000 *Guilford Pharmaceuticals Inc. .... 637,500
10,000 *Minimed Inc. ..................... 769,375
12,150 *TLC The Laser Center Inc. ........ 583,200
-----------
3,084,231
-----------
TRANSPORTATION (0.5%)
20,000 Knightsbridge Tanker Ltd. ......... 350,000
-----------
OIL, ENERGY & NATURAL GAS (10.7%)
18,500 Anadarko Petroleum Corp. .......... 681,031
22,000 Apache Corp. ...................... 858,000
20,000 *BJ Services Co. .................. 588,750
20,000 Baker & Hughes..................... 670,000
400,000 *Bonus Resource Service............ 608,089
38,500 Ensco International Inc. .......... 767,594
25,000 *Noble Drilling Corp. ............. 492,187
30,000 *Rowan Companies Inc. ............. 553,125
18,500 Tidewater inc. .................... 564,250
23,000 Tosco Corp. ....................... 596,563
15,000 *Weatherford Intl. ................ 549,375
20,000 William Companies Inc. ............ 851,250
-----------
7,780,214
-----------
RETAIL (4.9%)
12,000 *American Eagle Outfitters Inc. ... 546,000
45,000 *J Jill Group Inc. ................ 658,125
18,000 *Linens 'n Things Inc. ............ 787,500
15,000 *Payless ShoeSource Inc. .......... 802,500
15,000 Tandy Corp. ....................... 733,125
-----------
3,527,250
-----------
UTILITIES (3.0%)
20,000 Montana Power Co. ................. 1,410,000
26,500 Potomac Electric Power Co. ........ 780,094
-----------
2,190,094
-----------
TOTAL COMMON STOCK (92.4%) (COST
$56,453,838)...................... $66,996,573
-----------
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
TRANSPORTATION & EQUIPMENT (1.2%)
1,500 TWA 8% Conv. (144A)................ $ 29,250
17,500 TWA $4.625 Conv. .................. 595,000
3,500 TWA Series A 8% Conv. ............. 214,500
-----------
TOTAL PREFERRED STOCK (1.2%) (COST
$1,178,951)....................... $ 838,750
-----------
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------
COMPUTER & RELATED (1.3%)
$ 500,000 Adaptec Inc. 4.750% 02/01/04....... $ 476,875
1,250,000 System Software Associates 7.000%
09/15/02.......................... 448,438
-----------
925,313
-----------
INDUSTRIAL SERVICES (0.4%)
750,000 HMT Technology 5.750% 01/15/04..... 284,062
-----------
OIL, ENERGY & NATURAL GAS (0.3%)
250,000 Offshore Logistics Inc. 6.000%
12/15/03.......................... 215,000
-----------
TEXTILES & RELATED (0.2%)
250,000 Sportsline (144A) 5.000%
04/01/06.......................... 181,875
-----------
TRANSPORTATION & EQUIPMENT (0.4%)
500,000 Halter Marine Inc. 4.500%
09/15/04.......................... 310,625
-----------
TOTAL CONVERTIBLE DEBENTURES (2.6%)
(COST $2,324,002)................. $ 1,916,875
-----------
MARKET
SHARES SHORT OPTIONS VALUE
- -------------------------------------------------------------
(100) Echostar Comm.-A/July/$155......... $ (87,500)
-----------
TOTAL SHORT OPTIONS (-0.1%) (COST
$71,046).......................... $ (87,500)
-----------
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
FINANCIAL (4.5%)
$3,246,000 Star Bank 3.3%, Due 07/01/99
repurchase price $3,246,293
collateralized by GNMA
certificates pool # 8375 due
02/20/24 (cost $3,246,000)........ $ 3,246,000
-----------
TOTAL REPURCHASE AGREEMENTS (4.5%)
(COST $3,246,000)................. $ 3,246,000
-----------
TOTAL HOLDINGS (100.6%) (COST
$63,131,745) (a).................. $72,910,698
-----------
CASH & RECEIVABLES,
NET OF LIABILITIES (-0.6%)........ (438,537)
-----------
TOTAL NET ASSETS (100.0%).......... $72,472,161
===========
</TABLE>
- ---------------
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
(144A) 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 buyers. At the period end, the value
of these securities amounted to $211,125 or 0.3% net assets. These
securities were deemed liquid pursuant to procedures approved by the
Board of Directors.
The accompanying notes are an integral part of these financial statements.
58
<PAGE> 59
OHIO NATIONAL FUND, INC.
GROWTH & INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $63,131,745)............. $72,910,698
Cash in bank.............................. 315
Receivable for securities sold............ 2,602,027
Receivable for fund shares sold........... 186,202
Dividends and accrued interest
receivable.............................. 90,344
Other..................................... 2,179
-----------
Total assets............................ 75,791,765
-----------
Liabilities:
Payable for securities purchased.......... 3,222,141
Payable for shares redeemed............... 7,038
Payable for investment management services
(note 3)................................ 47,413
Other accrued expenses.................... 7,876
Dividends payable......................... 35,136
-----------
Total liabilities....................... 3,319,604
-----------
Net assets at market value.................. $72,472,161
===========
Net assets consist of:
Par value, $1 per share................... $ 4,391,992
Paid-in capital in excess of par value.... 52,859,041
Accumulated net realized income on
investments (note 1).................... 5,401,593
Net unrealized appreciation on investments
(note 1)................................ 9,778,953
Undistributed net investment income....... 40,582
-----------
Net assets at market value.................. $72,472,161
===========
Shares outstanding (note 4)................. 5,447,823
Net asset value per share................... $ 13.30
===========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................. $ 158,812
Dividends................................. 268,987
-----------
Total investment income................. 427,799
-----------
Expenses:
Management fees (note 3).................. 252,387
Custodian fees (note 3)................... 4,538
Directors' fees (note 3).................. 680
Professional fees......................... 3,028
Accounting and transfer agent fees........ 17,417
Other..................................... 4,180
-----------
Total expenses.......................... 282,230
-----------
Net investment income................... $ 145,569
-----------
Realized and unrealized gain on investments:
Net realized gain from investments........ $ 8,408,126
Net increase in unrealized appreciation on
investments............................. 3,531,093
-----------
Net gain on investments................. 11,939,219
-----------
Net increase in net assets from
operations............................ $12,084,788
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
59
<PAGE> 60
OHIO NATIONAL FUND, INC.
GROWTH & INCOME PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEARS ENDED
(UNAUDITED) 12/31/98
---------------- -----------
<S> <C> <C>
From operations:
Net investment income..................................... $ 145,569 $ 410,653
Realized gain (loss) on investments....................... 8,408,126 (3,005,094)
Unrealized gain on investments............................ 3,531,093 5,132,366
----------- -----------
Net increase in net assets from operations............ 12,084,788 2,537,925
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (104,002) (411,458)
Capital gains distributions............................... 0 0
----------- -----------
Total dividends and distributions..................... (104,002) (411,458)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 14,698,286 35,505,173
Received from dividends reinvested........................ 104,002 411,458
Paid for shares redeemed.................................. (5,684,419) (5,375,872)
----------- -----------
Increase in net assets derived from capital share
transactions......................................... 9,117,869 30,540,759
----------- -----------
Increase in net assets............................. 21,098,655 32,667,226
Net Assets:
Beginning of period....................................... 51,373,506 18,706,280
----------- -----------
End of period............................................. $72,472,161 $51,373,506
=========== ===========
(a) Includes undistributed net investment income of......... $ 40,582 $ 0
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED
SIX MONTHS ENDED DECEMBER 31,
6-30-99 ------------------
(UNAUDITED) 1998 1997
---------------- ------ ------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $13.63 $12.85 $10.00
Income from investment operations:
Net investment income..................................... 0.04 0.14 0.11
Net realized and unrealized gain on investments........... 2.86 0.77 3.52
------ ------ ------
Total income from investment operations................. 2.90 0.91 3.63
------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.03) (0.13) (0.11)
Distributions from net realized capital gains............. 0.00 0.00 (0.67)
------ ------ ------
Total distributions..................................... (0.03) (0.13) (0.78)
------ ------ ------
Net asset value, end of period.............................. $16.50 $13.63 $12.85
====== ====== ======
Total return................................................ 21.38%(b) 7.09% 36.58%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 0.94%(a) 0.97% 0.95%
Ratio of net investment income to average net assets...... 0.48%(a) 1.09% 1.04%
Portfolio turnover rate..................................... 240% 286% 185%
Net assets at end of period (millions)...................... $ 72.5 $ 51.4 $ 18.7
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
60
<PAGE> 61
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, 1999
<TABLE>
<S> <C>
TOTAL RETURN:
One-year 23.98%
Since inception (1/3/97) 30.07%
</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
1998 turned out to be a very volatile, but yet another good year for the S&P 500
Index and for your Ohio National S&P Fund. The Ohio National Index Fund mirrored
volatile ups and downs in the stock market, leading all index funds in return
most of the year. An accomplishment we are most proud of, your Ohio National
Index Fund won the 1998 Lipper Award for being the best performing index fund in
the country. The Ohio National fund finished the year with a total return after
expenses of 30.00%, or 1.42% higher than the actual index.
At June 30, 1999 your fund is still on track. After expenses, the Ohio National
fund is returning 12.38% for the first six months of the year, which exactly
equals the S&P 500 Index return. Per Lipper's published reports, this puts the
Ohio National fund as fourth best returning index fund on a year to date basis,
and as the best returning fund over the twelfth month period June 30, 1998
through June 30, 1999. Just as importantly, since inception (January 3, 1997)
the Ohio National Fund has tracked the S&P 500 Index returns on a monthly basis
with a correlation of 98.98% (with 100% being a perfect matching of the S&P 500
Index monthly ups and downs).
Looking ahead a bit to July 31, 1999 the Ohio National fund's year to date
return has dropped to 9.10%, after the S&P 500 Index dropped by more than 3.0%
during the month of July. However, as of July 31, 1999 the Ohio National fund
after expenses, is out performing the S&P 500 Index by 22 basis points, or is
returning year to date 9.10% versus 8.88% for the S&P 500 Index. This should put
the Ohio National Fund at or very near the top of all index funds in performance
year to date, and for the past twelve months.
We are currently experiencing the typical "summer doldrums" in the stock market,
with fear of rising interest rates fueling large drops in the index. However,
economic growth is good, and GDP growth will remain strong for 1999. Weak Asian
and South American economies have already begun rebounding. A few "Y2K" problems
at year end could send the markets materially, although temporarily lower.
Ultimately though, I expect to be discussing stock market gains with you nine to
twelve months from now.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
S&P INDEX PORTFOLIO (COMMENCED
OPERATIONS JANUARY 3, 1997) S&P 500 INDEX
------------------------------ -------------
<S> <C> <C>
'96 10,000.00 10,000.00
12,058.00 12,060.00
'97 13,174.60 13,336.00
15,524.90 15,697.70
'98 17,127.10 17,146.70
19,247.40 19,269.40
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Cisco Systems, Inc. 2.69
2. Microsoft Corporation 2.49
3. Merck & Co., Inc. 1.98
4. Oracle Corporation 1.96
5. AT&T Corp. 1.87
6. American Express Company 1.68
7. SBC Communications Inc. 1.63
8. Johnson & Johnson 1.61
9. Intel Corporation 1.59
10. The Chase Manhattan Corporation 1.50
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
1. Computer & Related 11.37
2. Communications 5.32
3. Banking 3.89
4. Oil, Energy and Natural Gas 3.06
5. Consumer Products 3.05
</TABLE>
61
<PAGE> 62
OHIO NATIONAL FUND, INC.
S&P 500 INDEX PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (1.2%)
14,700 Allied Signal Inc. ................ $ 926,100
28,000 Boeing Co. ........................ 1,237,250
-----------
2,163,350
-----------
AUTOMOTIVE & RELATED (0.6%)
18,000 Ford Motor Co. .................... 1,015,875
-----------
BANKING (3.9%)
23,800 Bank One Corp. .................... 1,417,587
33,000 BankBoston Corp. .................. 1,687,125
29,500 Chase Manhattan Corp. ............. 2,555,438
18,500 Fifth Third Bancorp. .............. 1,231,406
-----------
6,891,556
-----------
CABLE TV (0.9%)
22,000 *MediaOne Group Inc. .............. 1,636,250
-----------
CHEMICALS (0.7%)
32,000 Monsanto Corp. .................... 1,262,000
-----------
COMMUNICATIONS (5.2%)
57,000 AT&T Corp. ........................ 3,181,312
25,000 Ameritech Corp. ................... 1,837,500
48,000 SBC Communications Inc. ........... 2,784,000
7,500 Vodafone Airtouch.................. 1,477,500
-----------
9,280,312
-----------
COMPUTER & RELATED (10.4%)
71,000 *Cisco Systems..................... 4,579,500
51,100 Compaq Computer Corp. ............. 1,210,431
11,000 Computer Associates................ 605,000
47,100 *Dell Computer Corp. .............. 1,742,700
45,500 Intel Corp. ....................... 2,707,250
47,000 *Microsoft Corp. .................. 4,238,812
90,000 *Oracle Corp. ..................... 3,341,250
-----------
18,424,943
-----------
CONSUMER PRODUCTS (3.1%)
28,000 Johnson & Johnson.................. 2,744,000
24,000 Philip Morris Co. Inc. ............ 964,500
19,000 Procter & Gamble Co. .............. 1,695,750
-----------
5,404,250
-----------
DRUGS (3.0%)
10,500 *Amgen Inc. ....................... 639,188
45,500 Merck & Co. Inc. .................. 3,367,000
25,100 Schering-Plough.................... 1,330,300
-----------
5,336,488
-----------
DURABLE GOODS (0.3%)
12,000 Gillette Co. ...................... 492,000
-----------
ELECTRICAL EQUIPMENT (2.5%)
13,000 *Applied Materials................. 960,375
31,000 Edison International............... 829,250
20,000 General Electric Co. .............. 2,260,000
6,500 Thomas & Betts Corp. .............. 307,125
-----------
4,356,750
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT & LEISURE (1.0%)
55,000 Disney Walt Co. ................... $ 1,694,688
-----------
FINANCIAL SERVICES (3.0%)
22,000 American Express Co. .............. 2,862,750
36,500 Associates First Capital Corp. CL
A................................. 1,617,406
14,000 Lehman Brothers Hldg. Inc. ........ 871,500
-----------
5,351,656
-----------
FOOD & RELATED (1.9%)
17,000 Campbell Soup Co. ................. 788,375
29,000 Coca-Cola Co. ..................... 1,812,500
38,000 Sara Lee Corp. .................... 862,125
-----------
3,463,000
-----------
FORESTRY & PAPER PRODUCTS (0.2%)
6,000 Weyerhaeuser Co. .................. 412,500
-----------
INSURANCE SERVICES (0.9%)
13,000 *American Intl. Group Inc. ........ 1,521,813
-----------
INTERNET PRODUCTS & SERVICES (0.1%)
1,000 America Online Inc. ............... 110,500
-----------
MACHINERY (0.3%)
5,800 Tyco International Ltd. ........... 549,550
-----------
MEDICAL & RELATED (1.6%)
29,000 *Boston Scientific Corp. .......... 1,274,188
22,000 Warner-Lambert Co. ................ 1,526,250
-----------
2,800,438
-----------
OIL, ENERGY & NATURAL GAS (3.1%)
33,000 Exxon Corp. ....................... 2,545,125
28,500 Royal Dutch Petroleum Co. ......... 1,717,125
8,000 Schlumberger Ltd. ................. 509,500
2,000 USX-Marathon Group................. 651,250
-----------
5,423,000
-----------
RESTAURANTS (0.3%)
14,000 McDonald's Corp. .................. 578,375
-----------
RETAIL (2.7%)
15,500 Dayton Hudson Corp. ............... 1,007,500
28,000 Home Depot Inc. ................... 1,804,250
14,250 The Gap Inc. ...................... 717,844
27,000 Wal-Mart Stores Inc. .............. 1,302,750
-----------
4,832,344
-----------
SERVICES (0.7%)
24,000 *Kroger Co. ....................... 670,500
8,000 Xerox Corp. ....................... 472,500
-----------
1,143,000
-----------
TRANSPORTATION & EQUIPMENT (0.2%)
14,000 Norfolk Southern Corp. ............ 421,750
-----------
UTILITIES (0.6%)
20,000 Duke Energy Corp. ................. 1,087,500
-----------
TOTAL COMMON STOCKS (48.4%) (COST
$71,552,531)...................... $85,653,888
-----------
</TABLE>
(continued)
62
<PAGE> 63
OHIO NATIONAL FUND, INC.
S&P 500 INDEX PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES DEPOSITORY SHARES VALUE
- -------------------------------------------------------------
<C> <S> <C>
UNIT INVESTMENT TRUST (0.9%)
11,600 S&P 500 Depository Shares.......... $ 1,588,656
-----------
TOTAL DEPOSITORY SHARES (0.9%)
(COST $1,538,516)................. $ 1,588,656
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
AUTOMOTIVE & RELATED (3.3%)
$3,515,000 Hertz Corp, 5.060% 08/05/99....... $ 3,497,708
2,313,000 Hertz Corp. 4.800% 07/08/99....... 2,310,819
------------
5,808,527
------------
COMMUNICATIONS (2.1%)
3,676,000 AT&T Corp. 4.780% 07/06/99........ 3,673,559
------------
FINANCIAL SERVICES (18.0%)
1,921,000 American Express Credit Corp.
4.920% 07/14/99.................. 1,917,587
4,596,000 American General Finance 5.100%
07/27/99......................... 4,579,071
3,089,000 American Honda Finance 4.820%
07/09/99......................... 3,085,691
4,153,000 Associates First Capital 4.970%
07/19/99......................... 4,142,680
5,301,000 Ford Motor Credit 5.130%
07/29/99......................... 5,279,849
1,785,000 Heller Financial 4.900%
07/12/99......................... 1,782,327
5,145,000 Heller Financial 5.000%
07/01/99......................... 5,145,000
1,880,000 Motorola Credit 5.000 %
08/03/99......................... 1,871,383
4,055,000 Prudential Funding 4.900%
07/23/99......................... 4,042,858
------------
31,846,446
------------
FOOD & RELATED (6.2%)
1,894,000 Albertson's Inc. 5.030%
07/22/99......................... 1,888,443
4,388,000 Archer Daniels 4.900% 07/28/99.... 4,371,874
4,814,000 Coca Cola 4.850% 07/15/99......... 4,804,920
------------
11,065,237
------------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL SERVICES (2.8%)
$2,104,000 Dupont De Nemours & Co. 4.860%
07/21/99......................... $ 2,098,319
2,945,000 PHH Corp. 5.180% 07/02/99......... 2,944,576
------------
5,042,895
------------
INSURANCE (7.4%)
1,639,000 AETNA Services 5.020% 07/16/99.... 1,635,572
5,000,000 AETNA Services 5.050% 07/20/99.... 4,986,674
4,070,000 Safeco Credit 4.830% 07/07/99..... 4,066,724
2,463,000 Safeco Credit 5.250% 08/04/99..... 2,450,787
------------
13,139,757
------------
MEDICAL & RELATED (2.3%)
4,032,000 Warner Lambert 5.120% 07/30/99.... 4,015,370
------------
OIL, ENERGY & NATURAL GAS (1.5%)
2,643,000 Chevron USA Inc. 5.060%
07/26/99......................... 2,633,714
------------
RETAIL (1.9%)
3,433,000 Sears Roebuck 4.870% 07/13/99..... 3,427,427
------------
TOTAL SHORT-TERM NOTES (45.5%)
(COST $80,652,932)............... $ 80,652,932
------------
TOTAL HOLDINGS (94.8%) (COST
$153,743,979) (A)................ $167,895,476
------------
CASH & RECEIVABLES, NET OF
LIABILITIES (5.2%)............... 9,284,228
------------
TOTAL NET ASSETS (100.0%)......... $177,179,704
============
</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.
63
<PAGE> 64
OHIO NATIONAL FUND, INC.
S&P 500 INDEX PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $153,743,979)........... $167,895,476
Cash in bank............................. 1,035
Receivable for securities sold........... 933,740
Receivable for fund shares sold.......... 3,303,636
Receivable from brokers (note 1)......... 7,035,833
Dividends and accrued interest
receivable............................. 91,657
Other.................................... 1,005
------------
Total assets........................... 179,262,382
------------
Liabilities:
Payable for securities purchased......... 1,101,506
Payable for shares redeemed.............. 51,798
Payable for investment management
services (note 3)...................... 38,869
Other accrued expenses................... 890,504
------------
Total liabilities...................... 2,082,677
------------
Net assets at market value................. $177,179,705
============
Net assets consist of:
Par value, $1 per share.................. $ 11,131,305
Paid-in capital in excess of par value... 140,655,025
Accumulated net realized income on
investments (note 1)................... 6,908,070
Net unrealized appreciation on:
Investments (note 1)................... 14,151,497
Futures contracts (note 1)............. 3,353,463
Undistributed net investment income...... 980,345
------------
Net assets at market value................. $177,179,705
============
Shares outstanding (note 4)................ 11,131,305
Net asset value per share.................. $ 15.92
============
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................. $ 1,542,285
Dividends................................. 396,139
-----------
Total investment income................. 1,938,424
-----------
Expenses:
Management fees (note 3).................. 258,996
Custodian fees (note 3)................... 6,972
Directors' fees (note 3).................. 1,366
Professional fees......................... 5,594
Accounting and transfer agent fees........ 25,967
Other..................................... 7,979
-----------
Total expenses.......................... 306,874
-----------
Net investment income................... $ 1,631,550
-----------
Realized and unrealized gain on investments:
Net realized gain from:
Investments............................. $ 2,602,960
Futures contracts....................... 4,267,803
Net increase in unrealized appreciation
on:
Investments............................. 6,333,849
Futures contracts....................... 1,262,964
-----------
Net gain on investments................. 14,467,576
-----------
Net increase in net assets from
operations............................ $16,099,126
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
64
<PAGE> 65
OHIO NATIONAL FUND, INC.
S&P 500 PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12/31/98
---------------- -----------
<S> <C> <C>
From operations:
Net investment income..................................... $ 1,631,550 $ 1,535,339
Realized gain on investments and futures contracts........ 6,870,763 3,954,160
Unrealized gain on investments and futures contracts...... 7,596,813 9,569,105
------------ -----------
Net increase in net assets from operations............ 16,099,126 15,058,604
------------ -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (671,993) (1,519,364)
Capital gains distributions............................... 0 (4,001,278)
------------ -----------
Total dividends and distributions..................... (671,993) (5,520,642)
------------ -----------
From capital share transactions (note 4):
Received from shares sold................................. 76,452,037 61,751,546
Received from dividends reinvested........................ 671,993 5,520,642
Paid for shares redeemed.................................. (9,528,869) (4,725,079)
------------ -----------
Increase in net assets derived from capital share
transactions......................................... 67,595,161 62,547,109
------------ -----------
Increase in net assets............................. 83,022,294 72,085,071
Net Assets:
Beginning of period....................................... 94,157,411 22,072,340
------------ -----------
End of period (a)......................................... $177,179,705 $94,157,411
============ ===========
(a) Includes undistributed net investment income of......... $ 980,345 $ 20,788
============ ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED
SIX MONTHS ENDED DECEMBER 31,
6-30-99 -----------------
(UNAUDITED) 1998 1997
---------------- ------ ------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $ 14.23 $11.73 $10.00
Income (loss) from investment operations:
Net investment income (loss).............................. 0.18 0.38 (0.45)
Net realized and unrealized gain (loss) on investments.... 1.58 3.09 (2.70)
------- ------ ------
Total income (loss) from investment operations.......... 1.76 3.47 (3.15)
------- ------ ------
Less distributions:
Dividends from net investment income...................... (0.07) (0.33) (0.45)
Distributions from net realized capital gains............. 0.00 (0.64) (0.91)
Distributions in excess realized capital gains............ 0.00 0.00 (0.06)
------- ------ ------
Total distributions..................................... (0.07) (0.97) (1.42)
------- ------ ------
Net asset value, end of period.............................. $ 15.92 $14.23 $11.73
======= ====== ======
Total return................................................ 12.38%(b) 30.00% 31.75%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 0.46%(a) 0.49% 0.52%
Ratio of net investment income to average net assets...... 2.43%(a) 2.89% 5.29%
Portfolio turnover rate..................................... 50% 115% 445%
Net assets at end of period (millions)...................... $177.22 $94.20 $22.10
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
65
<PAGE> 66
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, 1999
TOTAL RETURN:
<TABLE>
<S> <C>
One-year (18.31%)
Since inception (1/3/97) 0.75%
</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 Social Awareness Fund has performed much better over the last six months,
particularly during the second quarter of 1999. During the last six months when
the S & P 500 Index was up approximately 12.4%, your fund was up 4.5%. However,
during the second quarter of 1999 when the S & P 500 Index was up approximately
7.1%, your fund was up 17.4%. The volatility that we expected in the stock
market over the last six months had a profound effect on the fund's performance
The portfolio exhibited greater volatility than the overall market due to a
larger weighting in smaller, value-oriented companies. Smaller companies didn't
offer any support during last year's market correction, even though their
valuations would have suggested otherwise. We hung onto these positions
throughout the market turbulence in anticipation of future returns. These
companies began to show improvement recently along with the capital goods,
cyclical and energy sectors.
As a result of the fund's volatility and disappointing returns, management of
the fund has taken steps to rectify the situation. The fund is now under new
management. We are confident that the management of the fund will better reflect
the fund's objective and its performance will more closely align with its peer
group. Under this new direction, the fund has a better focus on growth names and
larger companies with excellent prospects.
The fund will focus on sectors believed to offer the best potential for capital
appreciation. Those sectors currently include: communication services, consumer
staples, financials and technology. As always, the portfolio will only select
companies which have superior earnings potential with strong management teams
combined with a positive outlook.
Due to the recent strength of the stock market, valuation has become an even
greater concern with many securities. Your fund has participated greatly with
the recent market highs, tempered slightly by higher interest rates. We look for
sustained strong performance but we must contend with many issues that we will
continue to monitor over the next year. We are concerned with sustained earnings
growth, year-2000 issues and inflation fears. Regardless of these concerns, your
fund will stay fully invested, as we are not market-timers.
In conclusion, markets in 1999 will still experience volatility. Economic
conditions world wide are uncertain, but look to be mending. Expectations for
corporate profitability could also be too high. We are hopeful smaller and
medium capitalization issues will recover to reasonable valuation levels.
Clearly, short term results for the Social Awareness Portfolio have been
unacceptable. However, prospects remain solid and we are taking some measures
which would mitigate some of the fluctuations experienced during the past year.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
SOCIAL AWARENESS PORTFOLIO RUSSELL 2000 INDEX
(COMMENCED OPERATIONS JANUARY 3, ------------------
1997)
--------------------------------
<S> <C> <C>
'96 10,000 10,000
11,321 11,020
'97 12,563 12,227
12,462 12,871
'98 9,748 11,953
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Louis Dreyfus Natural Gas Corp 4.15
2. General Electric Company 3.20
3. Bell Atlantic Corporation 3.14
4. The Home Depot, Inc. 2.92
5. Capital Senior Living
Corporation 2.69
6. MapInfo Corporation 2.63
7. Polaroid Corporation 2.58
8. Xerox Corporation 2.51
9. Electronic Processing, Inc. 2.49
10. MCI WorldCom, Inc. 2.44
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Consumer Products 11.07
2. Oil, Energy, and Natural Gas 7.96
3. Computer & Related 7.30
4. Communications 6.99
5. Banking 6.46
</TABLE>
66
<PAGE> 67
OHIO NATIONAL FUND, INC.
SOCIAL AWARENESS PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
BANKING (6.5%)
1,200 Bank One Corp. ....................... $ 71,475
1,000 Bank America Corp. ................... 73,312
3,000 Firstar Corp. ........................ 84,000
----------
228,787
----------
BUSINESS SERVICES (5.5%)
3,000 Manpower.............................. 67,875
2,900 Reynolds & Reynolds................... 67,606
4,200 *Source Information Mgmt. Co. ........ 56,700
----------
192,181
----------
BROADCAST RADIO & TV (1.7%)
2,000 *Infinity Broadcast................... 59,500
----------
COMMUNICATIONS (9.5%)
1,200 AT&T Corp. ........................... 66,975
1,700 Bell Atlantic Corp. .................. 111,138
1,000 *MCI Worldcom Inc. ................... 86,250
1,200 SBC Communications.................... 69,600
----------
333,963
----------
COMPUTER & RELATED (7.3%)
8,500 *Electronic Processing Inc. .......... 88,188
1,300 Intel Corp. .......................... 77,350
4,900 *Mapinfo.............................. 93,100
----------
258,638
----------
CONSUMER PRODUCTS (11.1%)
1,900 *Dell Computer Corp. ................. 70,300
700 Minnesota Mining...................... 60,856
3,300 Polaroid.............................. 91,163
1,600 Home Depot Inc. ...................... 103,100
1,600 The Mead Corp. ....................... 66,800
----------
392,219
----------
DRUGS (4.2%)
3,000 Mylan Laboratories.................... 79,500
900 Merck & Co. Inc. ..................... 66,600
----------
146,100
----------
ELECTRICAL EQUIPMENT (11.6%)
3,500 *American Power Conv. ................ 70,438
1,000 CTS Corp. ............................ 70,000
1,000 General Electric Co. ................. 113,000
1,500 Pentair Inc. ......................... 68,625
1,500 Xerox Corp. .......................... 88,594
----------
410,657
----------
FINANCIAL SERVICES (2.0%)
1,500 Citigroup Inc. ....................... 71,250
----------
FOOD & RELATED (4.0%)
6,000 Food Lion Inc. ....................... 69,375
3,200 Interstate Bakeries................... 71,800
----------
141,175
----------
HOUSING, FURNITURE & RELATED (3.7%)
5,900 Clayton Homes Inc. ................... 67,481
1,000 Southdown Inc. ....................... 64,250
----------
131,731
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL SERVICES (3.8%)
3,800 IMCO Recycling........................ $ 65,075
1,100 Schlumberger Ltd. .................... 70,056
----------
135,131
----------
INSURANCE SERVICES (1.9%)
1,400 MGIC Investment Corp. ................ 68,075
----------
MEDICAL & RELATED (2.7%)
9,500 *Capital Senior Living Corp. ......... 95,000
----------
OIL, ENERGY & NATURAL GAS (8.0%)
1,500 Burlington Resources.................. 64,875
1,400 Kerr Mc Gee........................... 70,262
6,800 *Louis Dreyfus Natural Gas............ 146,625
----------
281,762
----------
TEXTILES & RELATED (1.8%)
2,400 The Warnaco Group..................... 64,200
----------
TRANSPORTATION & EQUIPMENT (2.2%)
2,450 *Atlas Air Inc. ...................... 79,012
----------
TOTAL COMMON STOCK (87.5%) (COST
$2,733,460).......................... $3,089,381
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
METALS & MINING (1.1%)
2,300 Freeport McMoran Copper & Gold........ $ 36,656
----------
TOTAL PREFERRED STOCK (1.1%) (COST
$48,656)............................. $ 36,656
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL SERVICES (0.7%)
$ 25,000 Medar Inc. Sr. Sub. Notes 12.950%
06/30/05............................. $ 25,000
----------
TOTAL LONG-TERM BONDS & NOTES (0.7%)
(COST $22,850)....................... $ 25,000
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (10.4%)
$124,000 American Express Credit 5.350%
07/02/99............................. $ 123,982
134,000 Cigna Corp. 5.250% 07/06/99........... 133,902
110,000 Sears Roebuck Acceptance 4.950%
07/01/99............................. 110,000
----------
TOTAL SHORT-TERM NOTES (10.4%) (COST
$367,884)............................ $ 367,884
----------
TOTAL HOLDINGS (99.7%) (COST
$3,172,850) (A)...................... $3,518,921
----------
CASH & RECEIVABLES, NET OF LIABILITIES
(0.3%)............................... 10,599
----------
TOTAL NET ASSETS (100.0%)............. $3,529,520
==========
</TABLE>
- ---------------
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
67
<PAGE> 68
OHIO NATIONAL FUND, INC.
SOCIAL AWARENESS PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $3,172,850)............... $ 3,518,921
Cash in bank............................... 519
Receivable for securities sold............. 204,388
Receivable for fund shares sold............ 6,305
Dividends and accrued interest
receivable............................... 3,802
-----------
Total assets............................. 3,733,935
-----------
Liabilities:
Payable for securities purchased........... 178,215
Payable for shares redeemed................ 11,896
Payable for investment management services
(note 3)................................. 1,775
Other accrued expenses..................... 6,369
Dividends payable.......................... 6,160
-----------
Total liabilities........................ 204,415
-----------
Net assets at market value................... $ 3,529,520
===========
Net assets consist of:
Par value, $1 per share.................... $ 385,024
Paid-in capital in excess of par value..... 5,276,142
Accumulated net realized loss on
investments (note 1)..................... (2,484,181)
Net unrealized appreciation on investments
(note 1)................................. 346,071
Undistributed net investment income........ 6,464
-----------
Net assets at market value................... $ 3,529,520
===========
Shares outstanding (note 4).................. 385,024
Net asset value per share.................... $ 9.17
===========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................. $ 8,327
Dividends................................. 33,292
-----------
Total investment income................. 41,619
-----------
Expenses:
Management fees (note 3).................. 14,554
Custodian fees (note 3)................... 2,343
Directors' fees (note 3).................. 177
Professional fees......................... 772
Accounting and transfer agent fees........ 3,133
Other..................................... 1,029
-----------
Total expenses.......................... 22,008
-----------
Net investment income................... $ 19,611
-----------
Realized and unrealized gain (loss) on
investments:
Net realized loss from investments........ $(1,862,161)
Net increase in unrealized appreciation on
investments............................. 1,738,517
-----------
Net loss on investments................. (123,644)
-----------
Net decrease in net assets from
operations............................ $ (104,033)
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
68
<PAGE> 69
OHIO NATIONAL FUND, INC.
SOCIAL AWARENESS PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- -----------
<S> <C> <C>
From operations:
Net investment income..................................... $ 19,611 $ 36,638
Realized loss on investments.............................. (1,862,161) (622,020)
Unrealized gain (loss) on investments..................... 1,738,517 (1,498,903)
----------- -----------
Net decrease in net assets from operations............ (104,033) (2,084,285)
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (13,014) (36,718)
Capital gains distributions............................... 0 0
----------- -----------
Total dividends and distributions..................... (13,014) (36,718)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 553,731 5,521,237
Received from dividends reinvested........................ 13,014 36,718
Paid for shares redeemed.................................. (3,511,445) (1,687,515)
----------- -----------
Increase (decrease) in net assets derived from capital
share transactions................................... (2,944,700) 3,870,440
----------- -----------
Increase (decrease) in net assets.................. (3,061,747) 1,749,437
Net Assets:
Beginning of period....................................... 6,591,267 4,841,830
----------- -----------
End of period (a)......................................... $ 3,529,520 $ 6,591,267
=========== ===========
(a) Includes undistributed net investment income of......... $ 6,464 $ 0
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED
SIX MONTHS ENDED DECEMBER 31,
6-30-99 ------------------
(UNAUDITED) 1998 1997
---------------- ------- ------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $ 8.80 $ 11.40 $10.00
Income (loss) from investment operations:
Net investment income..................................... 0.03 0.05 0.09
Net realized and unrealized gain (loss) on investments.... 0.36 (2.60) 2.47
------ ------- ------
Total income (loss) from investment operations.......... 0.39 (2.55) 2.56
------ ------- ------
Less distributions:
Dividends from net investment income...................... (0.02) (0.05) (0.07)
Distributions from net realized capital gains............. 0.00 0.00 (1.09)
------ ------- ------
Total distributions..................................... (0.02) (0.05) (1.16)
------ ------- ------
Net asset value, end of period.............................. $ 9.17 $ 8.80 $11.40
====== ======= ======
Total return................................................ 4.45%(b) (22.41)% 25.63%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 0.88%(a) 0.81% 0.95%
Ratio of net investment income (loss) to average net
assets.................................................. 0.79%(a) 0.55% 0.75%
Portfolio turnover rate..................................... 59% 71% 40%
Net assets at end of period (millions)...................... $ 3.5 $ 6.6 $ 4.8
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
69
<PAGE> 70
STRATEGIC INCOME PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Strategic Income Portfolio seeks to generate high current income by
investing at least 80% of its assets in income-producing securities, including
at least 40% 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, 1999
TOTAL RETURN:
<TABLE>
<S> <C>
One-year (2.29)%
Since inception (1/3/97) 2.69%
</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 Strategic Income Portfolio has maintained its unique, conservative approach
to producing high and stable levels of income through a difficult year. From
late 1998 through the first half of 1999 interest rates increased significantly.
The corresponding fall in bond prices is reflected in the negative total return
of this portfolio. Real Estate Investment Trusts (REITs) values increased in the
second quarter of 1999, and the portfolio's REIT holdings have helped it
generate solid performance relative to other bond funds while maintaining a high
dividend yield. Mortgage-backed securities have been among the best performing
securities in the portfolio over the past year.
We believe bond yields are near their peak for 1999. We still advocate an
overweight position in corporate fixed-income and mortgage-backed securities.
Mortgage-related bonds performed well in the first half of 1999. While we
believe this sector will complete the year with top performance, we have been
reducing risk exposure by moving into lower coupon bonds which will perform
better should interest rates decline.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
STRATEGIC INCOME PORTFOLIO
(COMMENCED OPERATIONS JANUARY 3, LEHMAN BROS. GOVT./CORP. BOND INDEX
1997) -INTERMEDIATE
-------------------------------- -----------------------------------
<S> <C> <C>
'96 10,000 10,000
10,296 10,274
'97 10,902 10,777
10,962 11,147
'98 10,748 11,681
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Prentiss Properties Trust 6.16
2. Bedford Property Investors,
Inc. 4.69
3. GNMA Pool #436197X, 7.00%
02/15/08 4.10
4. Occidental Petroleum
Corporation 3.04
5. Duke Energy Corporation 2.72
6. NB CAP TRUST 8.25%, 04/15/27 2.71
7. Zurich Cap Trust 144A 8.376%
06/01/37 2.68
8. ABM-AMRO Bank N.V. 7.75%
05/15/23 2.67
9. Philip Morris 2.66
10. Noble Affiliates, Inc. 2.65
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. REIT 24.89
2. Government 17.25
3. Financial Services 14.31
4. Oil, Energy, and Natural Gas 10.62
5. Banking 7.90
</TABLE>
70
<PAGE> 71
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
GOVERNMENT (17.3%)
$ 40,288 FNMA 7.500% 09/01/28.................. $ 40,796
100,000 FNMA 6.500% 04/18/25.................. 95,405
87,771 FNMA 9.000% 04/01/16.................. 93,096
62,036 FNMA 7.000% 09/01/27.................. 61,489
33,327 FNMA 7.500% 07/15/21.................. 33,789
78,186 FNMA 7.500% 10/01/24.................. 79,171
56,922 GNMA 7.500% 06/15/27.................. 57,629
158,070 GNMA 7.000% 02/15/28.................. 156,398
----------
617,773
----------
AUTOMOTIVE & RELATED (2.1%)
75,000 Ford Motor Co. 7.500% 08/01/26........ 74,814
----------
BANKING (7.9%)
100,000 ABM-ARM Bank NV 7.750% 05/15/23....... 101,662
75,000 Bank One Corp. 8.000% 04/29/27........ 77,964
100,000 Nations Bank Capital Trust 8.250%
04/15/27............................. 103,264
----------
282,890
----------
CONSUMER PRODUCTS (2.8%)
100,000 Phillip Morris Co. 7.125% 08/15/02.... 101,269
----------
FINANCIAL SERVICES (8.4%)
100,000 Lehman Brothers Holdings 7.125%
09/15/03............................. 100,012
100,000 Merrill Lynch & Co. NT 7.000%
04/27/08............................. 99,330
100,000 Zurich Capital Trust (144A) 8.376%
06/01/37............................. 102,209
----------
301,551
----------
FORESTRY & PAPER PRODUCTS (0.9%)
30,000 International Paper Co. 7.625%
01/15/07............................. 30,915
----------
INDUSTRIAL SERVICES (3.5%)
25,000 Fort James Corp. NT 6.625% 09/15/04... 24,915
100,000 Lockheed Corp. NT 7.875% 03/15/23..... 99,917
----------
124,832
----------
OIL, ENERGY & NATURAL GAS (8.6%)
100,000 Noble Affiliates, Inc. 8.000%
04/01/27............................. 100,901
100,000 Occidental Petroleum 10.125%
09/15/09............................. 115,749
75,000 Transcanada Pipeline 9.875%
01/01/21............................. 91,690
----------
308,340
----------
REAL ESTATE & LEASING (5.2%)
95,000 Meditrust NT 7.600% 07/15/01.......... 89,789
100,000 Spieker Properties Inc. 7.125%
12/01/06............................. 96,966
----------
186,755
----------
RETAIL (4.9%)
75,000 JC Penny Inc. 9.450% 07/15/02......... 76,586
100,000 Sears Roebuck Acceptance Global 7.000%
06/15/07............................. 99,919
----------
176,505
----------
UTILITIES (4.3%)
100,000 Duke Power Co. 7.875% 05/01/24........ 103,685
50,000 GTE Corp. 7.830% 05/01/23............. 49,583
----------
153,268
----------
TOTAL LONG-TERM BONDS & NOTES (65.9%)
(COST $2,448,715).................... $2,358,912
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES REAL ESTATE INVESTMENT TRUSTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
2,000 American Health Properties Inc. ...... $ 40,250
1,000 Avalonbay Communities Inc. ........... 37,000
10,000 Bedford Property Invs. Inc. .......... 178,750
1,000 Equity Office Properties Trust........ 25,625
1,375 Glimcher Realty Trust SBI............. 22,344
603 Healthcare Realty Trust Inc. ......... 12,663
1,000 Highwoods Properties Inc. ............ 27,437
190 Hospitality Properties Trust.......... 5,154
1,000 Kimco Realty Corp. ................... 39,125
3,581 LTC Properties Inc. .................. 46,553
1,500 National Health Investors Inc. ....... 34,219
2,300 Omega Healthcare Investments Inc...... 59,369
644 Pennsylvania Real Estate Invs. ....... 13,483
10,000 Prentiss Properties Invs. Inc. ....... 235,000
3,000 Sizeler Property Ins. Inc. ........... 26,250
3,400 Summit Properties Inc. ............... 67,150
4,600 Winston Hotels Inc. .................. 48,300
TOTAL REAL ESTATE INVEST. TRUSTS
(25.7%)
(COST $998,499)...................... $ 918,672
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES CLOSED-END INVESTMENT COMPANIES VALUE
- -------------------------------------------------------------
<C> <S> <C>
6,900 First Commonwealth Fund Inc. ......... $ 72,881
11,000 Kleinwort Benson Australian Fund...... 74,250
----------
147,131
----------
TOTAL INVESTMENT COMPANIES (4.1%)
(COST $184,077)...................... $ 147,131
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
ELECTRICAL EQUIPMENT (1.1%)
4,000 Texas Utilities Co. ................. $ 41,250
-----------
HOTEL/LODGING (1.4%)
4,000 RFS Hotels Invs. Inc. ............... 50,250
-----------
OIL, ENERGY & NATURAL GAS (0.6%)
1,000 Occidental Pete. Corp. .............. 21,125
-----------
TOTAL COMMON STOCK (3.1%)
(COST $112,281)..................... $ 112,625
-----------
</TABLE>
(continued)
71
<PAGE> 72
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (3.2%)
$ 2,500 Citigroup Cap I...................... $ 62,813
2,000 PLC Capital Trust I 8.25%............ 50,875
-----------
113,688
-----------
OIL, ENERGY & NATURAL GAS (1.4%)
2,000 Enron Capital Trust I 8.3%........... 50,750
-----------
REAL ESTATE & LEASING (1.4%)
2,000 Kimco Realty Corp. 8.5%.............. 49,250
-----------
UTILITIES (1.7%)
2,500 Detroit Edison Co. 7.375%............ 60,937
-----------
TOTAL PREFERRED STOCK (7.7%)
(COST $279,084)..................... $ 274,625
-----------
TOTAL HOLDINGS (106.5%)
(COST $4,022,656) (a)............... $ 3,811,965
-----------
CASH & RECEIVABLES,
NET OF LIABILITIES (-6.5%).......... (231,562)
-----------
TOTAL NET ASSETS (100.0%)............ $ 3,580,403
===========
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
(144A) 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 buyers. At the period end, the value
of these securities amounted to $102,209 or 2.9% of net assets. These
securities were deemed liquid pursuant to procedures approved by the
Board of Directors.
The accompanying notes are an integral part of these financial statements.
72
<PAGE> 73
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $4,022,656)............... $ 3,811,965
Cash in bank............................... 0
Receivable for securities sold............. 0
Receivable for fund shares sold............ 63,803
Dividends and accrued interest
receivable............................... 50,376
-----------
Total assets............................. 3,926,144
-----------
Liabilities:
Accounts payable........................... 273,125
Payable for shares redeemed................ 76
Payable for investment management services
(note 3)................................. 2,339
Other accrued expenses..................... 6,398
Dividends payable.......................... 63,803
-----------
Total liabilities........................ 345,741
-----------
Net assets at market value................... $ 3,580,403
===========
Net assets consist of:
Par value, $1 per share.................... $ 391,429
Paid-in capital in excess of par value..... 3,566,276
Accumulated net realized loss on
investments (note 1)..................... (232,200)
Net unrealized depreciation on investments
(note 1)................................. (210,691)
Undistributed net investment income........ 65,589
-----------
Net assets at market value................... $ 3,580,403
===========
Shares outstanding (note 4).................. 391,429
Net asset value per share.................... $ 9.15
===========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................... $ 95,946
Dividends................................... 59,956
---------
Total investment income................... 155,902
---------
Expenses:
Management fees (note 3).................... 15,146
Custodian fees (note 3)..................... 2,336
Directors' fees (note 3).................... 170
Professional fees........................... 783
Accounting and transfer agent fees.......... 4,113
Other....................................... 1,035
---------
Total expenses............................ 23,583
---------
Net investment income..................... $ 132,319
---------
Realized and unrealized loss on investments:
Net realized loss from investments.......... $(135,170)
Net increase in unrealized depreciation on
investments............................... (12,840)
---------
Net loss on investments................... (148,010)
---------
Net decrease in net assets from
operations.............................. $ (15,691)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
73
<PAGE> 74
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12/31/98
---------------- ----------
<S> <C> <C>
From operations:
Net investment income..................................... $ 132,319 $ 268,867
Realized loss on investments.............................. (135,170) (97,030)
Unrealized loss on investments............................ (12,840) (230,070)
---------- ----------
Net decrease in net assets from operations............ (15,691) (58,233)
---------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (66,588) (269,685)
Capital gains distributions............................... 0 (1,157)
---------- ----------
Total dividends and distributions..................... (66,588) (270,842)
---------- ----------
From capital share transactions (note 4):
Received from shares sold................................. 200,761 1,160,301
Received from dividends reinvested........................ 66,588 270,842
Paid for shares redeemed.................................. (624,180) (333,046)
---------- ----------
Increase (decrease) in net assets derived from capital
share transactions................................... (356,831) 1,098,097
---------- ----------
Increase (decrease) in net assets.................. (439,110) 769,022
Net Assets:
Beginning of period....................................... 4,019,513 3,250,491
---------- ----------
End of period (a)......................................... $3,580,403 $4,019,513
========== ==========
(a) Includes undistributed net investment income of......... $ 65,589 $ 0
========== ==========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED
SIX MONTHS ENDED DECEMBER 31,
6-30-99 ------------------
(UNAUDITED) 1998 1997
---------------- ------ ------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $ 9.34 $10.16 $10.00
Income (loss) from investment operations:
Net investment income..................................... 0.32 0.68 0.71
Net realized and unrealized gain (loss) on investments.... (0.35) (0.82) 0.13
------ ------ ------
Total income (loss) from investment operations.......... (0.03) (0.14) 0.84
------ ------ ------
Less distributions:
Dividends from net investment income...................... (0.16) (0.68) (0.67)
Distributions from net realized capital gains............. 0.00 0.00 (0.01)
------ ------ ------
Total distributions..................................... (0.16) (0.68) (0.68)
------ ------ ------
Net asset value, end of period.............................. $ 9.15 $ 9.34 $10.16
====== ====== ======
Total return................................................ (0.34)%(b) (1.42)% 8.74%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 1.24%(a) 1.18% 1.30%
Ratio of net investment income to average net assets...... 6.95%(a) 7.12% 7.04%
Portfolio turnover rate..................................... 25% 104% 102%
Net assets at end of period (millions)...................... $ 3.6 $ 4.0 $ 3.2
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
74
<PAGE> 75
FIRSTAR GROWTH & INCOME (a)
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Firstar Growth & Income seeks to provide both reasonable income and
long-term capital appreciation by investing in income producing securities,
including dividend paying common and preferred stock as well as fixed income
securities.
PERFORMANCE AS OF JUNE 30, 1999
TOTAL RETURN:
<TABLE>
<S> <C>
One-year 3.71%
Since inception (1/3/97) 6.40%
</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 Growth and Income Portfolio invests exclusively in high quality companies
that must pay a dividend. This results in a portfolio which has a lower
allocation to technology companies than what is found within the Standard &
Poor's 500 stock index, as most of these companies pay little or no dividend.
Technology has been driving performance during the first seven months of 1999,
making the portfolio's small investment in that area a drag on relative
performance. Specifically, the technology sector is the largest area of the S&P
500, and has returned 24% during the first seven months of 1999. During periods
of speculation such as the current internet mania, the Growth and Income
Portfolio will typically lag in relative performance. The goal of the portfolio
is not to capture all the return in such periods, but to ?lose less? when the
market weakens. Historically, the dividend requirement has helped the portfolio
achieve favorable performance with a lower level of return volatility.
Our view on the current market environment is one of caution. The steep rise in
interest rates in 1999 has made bonds very attractive compared to stocks. The
technology stocks referenced above routinely trade at more that 50 times
expected earnings, making them vulnerable to a market decline. The Growth and
Income Portfolio has large investments in the consumer cyclical, health care,
and financial areas. These holdings are trading at reasonable valuations and
have strong earnings growth prospects for the year 2000. Our research efforts
are also focused on those companies not among the very largest. The most
expensive area of the market is in the largest companies, providing outstanding
opportunities in the smallest 450 companies within the S&P 500.
CHANGE IN VALUE OF $10,000 INVESTMENT
[STELLAR PORTFOLIO LINE GRAPH]
<TABLE>
<CAPTION>
STELLAR PORTFOLIO (COMMENCED LEHMAN BROS. GOVT./CORP. INDEX -
OPERATIONS JANUARY 3, 1997) INTERMEDIATE
---------------------------- --------------------------------
<S> <C> <C>
'96 10,000 10,000
10,531 10,274
'97 10,969 10,777
11,253 11,147
'98 11,289 11,681
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Tyco International Ltd. 4.32
2. ALLTEL Corporation 3.26
3. The Interpublic Group of
Companies, Inc. 2.96
4. The Bank of New York Company,
Inc. 2.82
5. Bristol-Myers Squibb Company 2.41
6. Wells Fargo & Company 2.32
7. Northern Trust Corporation 2.21
8. CVS Corporation 2.19
9. The Gap, Inc. 2.05
10. The McGraw-Hill Companies, Inc. 2.00
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
1. Medical and Related 14.42
2. Financial Services 9.89
3. Retail 8.69
4. Banking 6.81
5. Household Products 5.71
</TABLE>
- ---------------
(a) Prior to 5/1/99 the portfolio was known as The Stellar Portfolio.
75
<PAGE> 76
OHIO NATIONAL FUND, INC.
FIRSTAR GROWTH & INCOME PORTFOLIO (b)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
ADVERTISING (3.0%)
1,200 Interpublic Group of Companies
Inc. ................................ $ 103,950
----------
AEROSPACE (0.2%)
100 United Technologies Corp. ............ 7,168
----------
BANKING (9.0%)
2,700 Bank of New York Inc. ................ 99,056
1,600 Mellon Bank Corp. .................... 58,200
800 Northern Trust Corp. ................. 77,600
1,900 Wells Fargo Co. ...................... 81,225
----------
316,081
----------
BUILDING & CONSTRUCTION (0.8%)
1,000 Masco Corp. .......................... 28,875
----------
BUSINESS SERVICES (1.0%)
800 Automatic Data Processing Inc. ....... 35,200
----------
CHEMICALS (0.4%)
400 Valspar Corp. ........................ 15,200
----------
COMMUNICATIONS (4.6%)
1,600 ALLTEL Corp. ......................... 114,400
600 AT&T Corp. ........................... 33,488
200 Ameritech Corp. ...................... 14,700
0 MCI Worldcom Inc. .................... 50
----------
162,638
----------
COMPUTER & RELATED (1.5%)
200 International Business Machines....... 25,850
400 Lucent Technologies Inc. ............. 26,975
----------
52,825
----------
CONSUMER PRODUCTS (12.5%)
600 Avery Dennison Corp. ................. 36,225
1,000 Avon Products Inc. ................... 55,500
200 Clorox Co. ........................... 21,362
1,000 Estee Lauder Co. Inc. ................ 50,125
200 Gillette Co. ......................... 8,200
500 Johnson & Johnson..................... 49,000
400 Kimberly-Clark Corp. ................. 22,800
1,300 Mattel Inc. .......................... 34,369
800 Maytag Corp. ......................... 55,750
1,100 Newell Rubbermaid Inc. ............... 51,150
600 Proctor & Gamble Co. ................. 53,550
----------
438,031
----------
DRUGS (7.1%)
600 Abbott Laboratories................... 27,300
800 American Home Products Corp. ......... 46,000
1,200 Bristol-Myers Squibb Co. ............. 84,525
500 Pfizer Inc. .......................... 54,875
500 Warner Lambert Co. ................... 34,688
----------
247,388
----------
ELECTRICAL EQUIPMENT (2.7%)
600 Tandy Corp. .......................... 29,325
1,100 Xerox Corp. .......................... 64,969
----------
94,294
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (10.1%)
300 American Express Co. ................. $ 39,037
800 American General Corp. ............... 60,300
1,200 Equifax Inc. ......................... 42,825
400 Freddie Mac........................... 23,200
1,100 H&R Block Inc. ....................... 55,000
700 Household International Inc. ......... 33,163
800 MBIA Inc. ............................ 51,800
400 Pitney Bowes Inc. .................... 25,700
300 Salomon Inc. ......................... 23,100
----------
354,125
----------
FOOD & RELATED (3.4%)
500 Albertsons Inc. ...................... 25,781
1,500 McCormick & Co. Inc. ................. 47,344
1,150 PepsiCo Inc. ......................... 44,491
----------
117,616
----------
INDUSTRIAL SERVICES (3.8%)
1,000 Ecolab Inc. .......................... 43,625
200 Illinois Tool Works Inc. ............. 16,400
700 Martin Marietta Material Inc. ........ 41,300
1,700 Service Master Co. ................... 31,875
----------
133,200
----------
INSURANCE SERVICES (1.8%)
500 Marsh & McLennan Cos. Inc. ........... 37,750
600 Provident Cos. Inc. .................. 24,000
----------
61,750
----------
MACHINERY (1.4%)
400 Black & Decker Corp. ................. 25,250
700 Dover Corp. .......................... 24,500
----------
49,750
----------
MANUFACTURING (6.0%)
900 Pentair Inc. ......................... 41,175
400 Teleflex Inc. ........................ 17,375
1,600 Tyco International Ltd. .............. 151,600
----------
210,150
----------
MEDICAL & RELATED (2.8%)
700 Baxter International Inc. ............ 42,438
700 Medtronic Inc. ....................... 54,512
----------
96,950
----------
MULTI-MEDIA (2.9%)
400 CBS Corp. ............................ 17,375
1,300 McGraw-Hill Cos. Inc. ................ 70,119
200 Time Warner Inc. ..................... 14,700
----------
102,194
----------
</TABLE>
(continued)
76
<PAGE> 77
OHIO NATIONAL FUND, INC.
FIRSTAR GROWTH & INCOME PORTFOLIO (b) (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
OIL, ENERGY & NATURAL GAS (4.7%)
700 Enron Corp. .......................... $ 57,225
500 Mobil Corp. .......................... 49,500
400 Nisource Inc. ........................ 10,325
600 Phillips Petroleum Co. ............... 30,188
300 Texaco Inc. .......................... 18,750
----------
165,988
----------
PUBLISHING (3.4%)
900 Houghton Mifflin...................... 42,356
200 Knight Ridder Inc. ................... 10,981
1,800 New York Times Co. ................... 66,263
----------
119,600
----------
RETAIL (6.9%)
1,500 CVS Corp. ............................ 76,688
1,425 GAP Inc. ............................. 71,784
900 Hannafrod Bros. Co. .................. 48,150
1,000 Longs Drug Stores Corp. .............. 34,562
200 Wal-Mart Stores Inc. ................. 9,650
----------
240,834
----------
UTILITIES (0.5%)
700 Western Resources Inc. ............... 18,637
----------
TOTAL COMMON STOCK (90.5%) (COST
$3,116,753).......................... $3,172,444
----------
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE MARKET
SHARES INVESTMENT TRUSTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
900 AMB Property Corp. ................... $ 21,150
500 Boston Properties Inc. ............... 17,938
700 Post Properties....................... 28,700
----------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(1.9%) (COST $65,804)................ $ 67,788
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
FOOD & RELATED (1.0%)
700 Seagram Ltd. Conv. 7.50%.............. $ 34,956
----------
TOTAL PREFERRED STOCK (1.0%) (COST
$35,088)............................. $ 34,956
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL (7.1%)
$250,000 Star Bank 3.3% 07/01/99 repurchase
price $250,023 collateralized by GNMA
certificates pool # 8375 due 02/20/24
(Cost $250,000)...................... $ 250,000
----------
TOTAL REPURCHASE AGREEMENTS (7.1%)
(COST $250,000)...................... $ 250,000
----------
TOTAL HOLDINGS (100.6%) (COST
$3,467,645).......................... $3,525,188
----------
CASH & RECEIVABLES, NET OF LIABILITIES
(-0.6%).............................. (21,023)
----------
TOTAL NET ASSETS (100.0%)............. $3,504,165
==========
</TABLE>
- ---------------
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
(b) Prior to 5/1/99 the portfolio was known as the Stellar Portfolio.
The accompanying notes are an integral part of these financial statements.
77
<PAGE> 78
OHIO NATIONAL FUND, INC.
FIRSTAR GROWTH & INCOME PORTFOLIO (a)
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $3,467,645)............... $3,525,188
Cash in bank............................... 986
Receivable for fund shares sold............ 9,707
Dividends and accrued interest
receivable............................... 4,556
----------
Total assets............................. 3,540,437
----------
Liabilities:
Payable for securities sold................ 17,978
Payable for shares redeemed................ 49
Payable for investment management services
(note 3)................................. 2,544
Other accrued expenses..................... 5,994
Dividends payable.......................... 9,707
----------
Total liabilities........................ 36,272
----------
Net assets at market value................... $3,504,165
==========
Net assets consist of:
Par value, $1 per share.................... $ 323,577
Paid-in capital in excess of par value..... 2,994,329
Accumulated net realized gain on
investments (note 1)..................... 117,602
Net unrealized appreciation on investments
(note 1)................................. 57,543
Undistributed net investment income........ 11,114
----------
Net assets at market value................... $3,504,165
==========
Shares outstanding (note 4).................. 323,577
Net asset value per share.................... $ 10.83
==========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest..................................... $ 23,147
Dividends.................................... 38,607
--------
Total investment income.................... 61,754
--------
Expenses:
Management fees (note 3)..................... 17,014
Custodian fees (note 3)...................... 2,338
Directors' fees (note 3)..................... 170
Professional fees............................ 798
Accounting and transfer agent fees........... 3,390
Other........................................ 1,029
--------
Total expenses............................. 24,739
--------
Net investment income...................... $ 37,015
--------
Realized and unrealized gain (loss) on
investments:
Net realized gain from investments........... $123,923
Net decrease in unrealized depreciation on
investments................................ (46,182)
--------
Net gain on investments.................... 77,741
--------
Net increase in net assets from
operations............................... $114,756
========
</TABLE>
- ---------------
(a) Prior to 5/1/99 the portfolio was known as the Stellar Portfolio.
The accompanying notes are an integral part of these financial statements.
78
<PAGE> 79
OHIO NATIONAL FUND, INC.
FIRSTAR GROWTH & INCOME PORTFOLIO (c)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12/31/98
---------------- ----------
<S> <C> <C>
From operations:
Net investment income..................................... $ 37,015 $ 115,681
Realized gain on investments.............................. 123,923 20,231
Unrealized gain (loss) on investments..................... (46,182) (54,343)
---------- ----------
Net increase in net assets from operations............ 114,756 81,569
---------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (27,674) (114,147)
Capital gains distributions............................... 0 (14,635)
---------- ----------
Total Distributions................................... (27,674) (128,782)
---------- ----------
From capital share transactions (note 4):
Received from shares sold................................. 284,975 1,063,702
Received from dividends reinvested........................ 27,674 128,782
Paid for shares redeemed.................................. (500,542) (346,843)
---------- ----------
Increase (decrease) in net assets derived from capital
share transactions................................... (187,893) 845,641
---------- ----------
Increase (decrease) in net assets.................. (100,811) 798,428
Net Assets:
Beginning of period....................................... 3,604,976 2,806,548
---------- ----------
End of period (a)......................................... $3,504,165 $3,604,976
========== ==========
(a) Includes undistributed net investment income of......... $ 11,114 $ 1,772
========== ==========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED
SIX MONTHS ENDED DECEMBER 31,
6-30-99 ------------------
(UNAUDITED) 1998 1997
---------------- ------ ------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $10.56 $10.65 $10.00
Income from investment operations:
Net investment income..................................... 0.11 0.37 0.32
Net realized and unrealized gain (loss) on investments.... 0.24 (0.07) 0.64
------ ------ ------
Total income from investment operations................. 0.35 0.30 0.96
------ ------ ------
Less distributions:
Dividends declared........................................ (0.08) (0.35) (0.31)
Distributions from net realized capital gains............. 0.00 (0.04) 0.00
------ ------ ------
Total distributions..................................... (0.08) (0.39) (0.31)
------ ------ ------
Net asset value, end of period.............................. $10.83 $10.56 $10.65
====== ====== ======
Total return................................................ 3.38%(b) 2.92% 9.70%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 1.40%(a) 1.43% 1.54%
Ratio of net investment income to average net assets...... 2.09%(a) 3.53% 3.07%
Portfolio turnover rate..................................... 143% 81% 17%
Net assets at end of period (millions)...................... $ 3.5 $ 3.6 $ 2.8
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
(c) Prior to 5/1/99 the portfolio was known as the Stellar Portfolio.
The accompanying notes are an integral part of these financial statements.
79
<PAGE> 80
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 deemed 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, 1999
<TABLE>
<S> <C>
TOTAL RETURN:
One-year 19.52%
Since inception (1/3/97) 23.60%
</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
For the past two years, "value" investing has been out of favor. We believe that
recent strength in cyclical stocks and the energy sector are indicators that
"value" stocks may be returning to favor. The favorable interest rate
environment we expect for the remainder of this year would allow a continued
emphasis on financial issues which are normally "value" stocks. For the twelve
months ending May 31, 1999 the Relative Value Portfolio produced a rate of
return in excess of 15% on a net asset value basis. This exceeded the return for
the average growth and income fund as reported by Lipper Analytical Services
Inc., 11.4%, by over 400 basis points.
Our outlook for the remainder 1999 anticipates the pace of domestic economic
growth to slow towards a more moderate level. We expect inflation will remain
under 2.5% for the year, as commodity prices are signaling little inflationary
pressure, and the dollar remains strong. These factors should be positive for
stocks. Relative Value's diversified portfolio of high quality, large cap stocks
should perform well, as the diversification helps reduce the risk caused by any
potential market rotations.
CHANGE IN VALUE OF $10,000 INVESTMENT
[RELATIVE VALUE LINE GRAPH]
<TABLE>
<CAPTION>
RELATIVE VALUE PORTFOLIO (COMMENCED
OPERATIONS JANUARY 3, 1997) S&P 500 INDEX
----------------------------------- -------------
<S> <C> <C>
'96 10,000 10,000
11,628 12,060
'97 12,828 13,336
14,213 15,698
'98 15,486 17,147
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. International Business Machines
Corporation 7.17
2. Intel Corporation 5.16
3. The Proctor & Gamble Company 4.25
4. Lucent Technologies Inc. 4.09
5. Cincinnati Bell Inc. 3.67
6. Texaco Inc. 3.25
7. Citigroup Inc. 3.24
8. General Electric Company 3.23
9. Bristol-Myers Squibb Company 3.05
10. Merck & Co. Inc. 2.89
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Computer & Related 13.82
2. Communications 11.72
3. Banking 11.55
4. Drugs 10.79
5. Oil, Energy, and Natural Gas 10.45
</TABLE>
80
<PAGE> 81
OHIO NATIONAL FUND, INC.
RELATIVE VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (3.1%)
2,000 Allied Signal Inc................. $ 126,000
4,000 Lockheed Martin Corp.............. 149,000
1,100 Raytheon Co. CL B................. 77,412
------------
352,412
------------
AUTOMOTIVE & RELATED (3.8%)
1,048 Delphi Automotive Systems Corp.... 19,461
2,500 Ford Motor Co..................... 141,094
1,500 General Motors Corp............... 99,000
3,000 Goodyear Tire & Rubber Co......... 176,437
------------
435,992
------------
BANKING (11.6%)
6,000 Bank New York Inc................. 220,125
5,000 Bank One Corp..................... 297,812
2,000 Bank of America Corp.............. 146,625
3,000 First American Corp............... 124,687
5,000 First Financial Bancorp........... 113,125
3,000 First Tennessee Natl.............. 114,937
4,000 Mellon Bank Corp.................. 145,500
2,000 PNC Bank Corp..................... 115,250
2,000 TCF Financial Corp................ 55,750
------------
1,333,811
------------
COMMUNICATIONS (10.1%)
5,000 AT&T Corp......................... 279,062
17,000 Cincinnati Bell Inc............... 423,938
7,000 Lucent Technologies Inc........... 472,063
------------
1,175,063
------------
COMPUTER & RELATED (14.0%)
1,500 Honeywell Inc..................... 173,812
10,000 Intel Corp........................ 595,000
6,400 IBM Corp.......................... 827,200
------------
1,596,012
------------
CONSUMER PRODUCTS (10.0%)
1,000 Eastman Kodak Co.................. 67,750
4,000 Gillette Co....................... 164,000
8,000 Philip Morris Cos. Inc............ 321,500
5,500 Procter & Gamble Co............... 490,875
2,000 Whirlpool Corp.................... 148,000
------------
1,192,125
------------
DIVERSIFIED (1.8%)
5,000 Monsanto Co....................... 197,188
------------
DRUGS (7.8%)
4,000 American Home Products Corp....... 230,000
5,000 Bristol Myers Squibb Co........... 352,187
4,500 Merck & Co. Inc................... 333,000
------------
915,187
------------
ELECTRICAL EQUIPMENT (3.8%)
3,300 General Electric Co............... 372,900
1,000 Johnson Controls Inc.............. 69,313
------------
442,213
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
INSURANCE SERVICES (3.7%)
5,000 Cincinnati Financial Corp......... $ 187,812
6,500 Ohio Casualty Corp................ 234,813
------------
422,625
------------
FINANCIAL SERVICES (6.5%)
1,500 American Express Co............... 195,187
7,875 Citigroup Inc..................... 374,063
4,000 Union Planters Corp............... 178,750
------------
748,000
------------
OIL, ENERGY & NATURAL GAS (9.0%)
3,000 Atlantic Richfield Co............. 250,688
3,000 Mobil Corp........................ 297,000
6,000 Texaco Inc........................ 375,000
2,500 Texas Utilities Co................ 103,125
------------
1,025,813
------------
RETAIL (4.1%)
4,000 Federated Department Stores....... 211,750
5,500 Sears Roebuck & Co................ 245,094
------------
456,844
------------
UTILITIES (3.9%)
3,500 Cinergy Corp...................... 112,000
3,000 GPU Inc........................... 126,563
3,000 GTE Corp.......................... 227,250
------------
465,813
------------
TOTAL U.S. COMMON STOCK (93.2%)
(COST $8,309,138)................ $ 10,759,098
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
UNITED KINGDOM (4.5%)
COMMUNICATIONS (1.5%)
1,000 Cable & Wireless Pub Co. Ltd.
ADR.............................. $ 39,625
700 Vodafone Group PLC ADR............ 137,900
------------
177,525
------------
DRUGS (3.0%)
5,000 SmithKline Beecham PLC ADR CL A... 330,313
------------
TOTAL UNITED KINGDOM.............. 507,838
------------
NETHERLANDS (1.5%)
OIL, ENERGY AND NATURAL GAS
3,000 Royal Dutch Pete Co NY Reg 1.25... 180,750
------------
TOTAL FOREIGN COMMON STOCK (6.0%)
(COST $483,597).................. $ 688,588
------------
</TABLE>
(continued)
81
<PAGE> 82
OHIO NATIONAL FUND, INC.
RELATIVE VALUE PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL (0.8%)
$ 94,000 Star Bank 3.30% due 07/01/99
repurchase price $94,008
collateralized by GNMA
certificates pool # 8375 due
02/20/24 (cost $94,000)........... $ 94,000
-----------
TOTAL REPURCHASE AGREEMENTS (0.8%)
(COST $94,000).................... $ 94,000
-----------
TOTAL HOLDINGS (100.0%) (COST
$8,886,735) (a)................... $11,541,686
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (0.0%)................ 3,618
-----------
TOTAL NET ASSETS (100.0%).......... $11,545,304
===========
</TABLE>
- ---------------
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
82
<PAGE> 83
OHIO NATIONAL FUND, INC.
RELATIVE VALUE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $8,886,735).............. $11,541,686
Cash in bank.............................. 130
Receivable for fund shares sold........... 21,831
Dividends and accrued interest
receivable.............................. 17,687
-----------
Total assets............................ 11,581,334
-----------
Liabilities:
Payable for shares redeemed............... 432
Payable for investment management services
(note 3)................................ 8,280
Other accrued expenses.................... 5,487
Dividends payable......................... 21,831
-----------
Total liabilities....................... 36,030
-----------
Net assets at market value.................. $11,545,304
===========
Net assets consist of:
Par value, $1 per share................... $ 704,222
Paid-in capital in excess of par value.... 8,143,445
Accumulated net realized income on
investments (note 1).................... 19,094
Net unrealized appreciation on investments
(note 1)................................ 2,654,951
Undistributed net investment income....... 23,592
-----------
Net assets at market value.................. $11,545,304
===========
Shares outstanding (note 4)................. 704,222
Net asset value per share................... $ 16.39
===========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest..................................... $ 12,400
Dividends.................................... 88,277
--------
Total investment income.................... 100,677
--------
Expenses:
Management fees (note 3)..................... 47,432
Custodian fees (note 3)...................... 2,338
Directors' fees (note 3)..................... 177
Professional fees............................ 767
Accounting and transfer agent fees........... 3,772
Other........................................ 1,033
--------
Total expenses............................. 55,519
--------
Net investment income...................... $ 45,158
--------
Realized and unrealized gain on investments:
Net realized gain from investments........... $ 29,455
Net increase in unrealized appreciation on
investments................................ 911,182
--------
Net gain on investments.................... 940,637
--------
Net increase in net assets from
operations............................... $985,795
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
83
<PAGE> 84
OHIO NATIONAL FUND, INC.
RELATIVE VALUE PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
6-30-99 YEAR ENDED
(UNAUDITED) 12-31-98
---------------- -----------
<S> <C> <C>
From operations:
Net investment income..................................... $ 45,158 $ 105,388
Realized gain on investments.............................. 29,455 83,624
Unrealized gain on investments............................ 911,182 979,715
----------- -----------
Net increase in assets from operations................ 985,795 1,168,727
----------- -----------
Dividends and distributions to shareholders:
Dividends declared from net investment income............. (21,399) (105,730)
Capital gains distributions............................... 0 (91,539)
----------- -----------
Total dividends and distributions..................... (21,399) (197,269)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 1,632,036 6,696,273
Received from dividends reinvested........................ 21,399 197,269
Paid for shares redeemed.................................. (1,081,500) (3,589,324)
----------- -----------
Increase in net assets derived from capital share
transactions......................................... 571,935 3,304,218
----------- -----------
Increase in net assets............................. 1,536,331 4,275,676
Net Assets:
Beginning of period....................................... 10,008,973 5,733,297
----------- -----------
End of period (a)......................................... $11,545,304 $10,008,973
=========== ===========
(a) Includes undistributed net investment income of......... $ 23,592 $ (166)
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED
SIX MONTHS ENDED DECEMBER 31,
6-30-99 --------------------
UNAUDITED 1998 1997
---------------- ------ ------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................ $15.02 $12.68 $10.00
Income from investment operations:
Net investment income..................................... 0.07 0.15 0.16
Net realized and unrealized gain on investments........... 1.38 2.48 2.66
------ ------ ------
Total income from investment operations................. 1.45 2.63 2.82
------ ------ ------
Less distributions:
Dividends declared........................................ (0.08) (0.15) (0.14)
Distributions from net realized capital gains............. 0.00 (0.14) 0.00
------ ------ ------
Total distributions..................................... (0.08) (0.29) (0.14)
------ ------ ------
Net asset value, end of period.............................. $16.39 $15.02 $12.68
====== ====== ======
Total return................................................ 9.52%(b) 20.72% 28.28%
Ratios and supplemental data:
Ratio of expenses to average net assets................... 1.05%(a) 1.08% 1.18%
Ratio of net investment income to average net assets...... 0.85%(a) 1.19% 1.35%
Portfolio turnover rate..................................... 3% 54% 7%
Net assets at end of period (millions)...................... $11.50 $10.00 $ 5.70
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated on an aggregate basis (not annualized).
The accompanying notes are an integral part of these financial statements.
84
<PAGE> 85
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, 1999
<TABLE>
<S> <C>
TOTAL RETURN:
One-Year 14.29%
Since inception (5/1/98) 13.18%
</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 six month period ended June 30th was a strong continuation of the bull
market with the S&P 500 returning 12.39%. The period started as 1998 had
finished: strong market returns during the first quarter were provided by a
handful of large capitalization growth stocks. However, things shifted
dramatically in April. Sparked by surprisingly strong first quarter earnings, a
revival in oil prices and signs of a global economic recovery, market leadership
rotated to a broader group of cyclical, commodity and smaller capitalization
stocks. After three years of returns being dominated by a limited list of large
capitalization growth stocks, the perceived revival of global economic activity
benefited areas of the market which had not been the "safe havens" from the
global economic turmoil of the past two years and whose earnings should benefit
with a marked increase in global growth. Due to this dramatic improvement in
market breadth, the second quarter provided the average active equity manager
the best performance relative to the S&P 500 in quite some time.
Your fund provided a return of 11.77% for the six-month period, underperforming
the S&P 500 but outperforming the Lipper Growth & Income fund, which returned
10.93%. Aiding relative performance for the six-month period was favorable
security performance in the Health Care, Capital Goods and Consumer Cyclicals
sectors. Detracting from relative performance were underweight positions in the
strong performing Technology and Communication Services sectors, as well as
unfavorable security performance in the Basic Materials sector.
Our stock market outlook remains basically unchanged -- the market appears
overvalued by all traditional measures, but no visible catalyst is positioned to
change this. Relative to interest rates, the markets are extremely overvalued.
Real interest rates are extremely high as the bond market believes that
inflation is around the corner. However, the equity markets, fueled by the Fed's
late June neutral stance towards monetary policy, believe that technology and
continued growth in productivity will keep inflation at bay. We believe that the
valuation disparities between ultra-large growth stocks and the rest of the
market, combined with a strong near-term earnings outlook, can fuel a
continuation of the market's rotation towards a broader array of value and
smaller capitalization stocks.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
BLUE CHIP PORTFOLIO (COMMENCED
OPERATIONS MAY 1, 1998) S&P 500 INDEX
------------------------------ -------------
<S> <C> <C>
5/98 10,000.00 10,000.00
6/98 10,024.00 10,143.00
12/98 10,254.50 11,079.20
6/99 11,456.40 12,450.80
</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 HOLDINGS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Sun Microsystems, Inc. 2.70
2. Conseco, Inc. 2.41
3. Kimberly-Clark Corporation 1.94
4. First Data Corporation 1.79
5. GTE Corporation 1.78
6. UnitedHealth Group 1.64
7. Pharmacia & Upjohn, Inc. 1.64
8. The Boeing Company 1.62
9. Bank of America Corporation 1.53
10. C.I.T. Group Inc CLA 1.51
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Computer & Related 8.25
2. Insurance Services 7.27
3. Oil, Energy, and Natural Gas 7.03
4. Consumer Products 6.83
5. Utilities 5.59
</TABLE>
85
<PAGE> 86
OHIO NATIONAL FUND, INC.
BLUE CHIP PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AGRICULTURE (2.2%)
2,810 Archer-Daniels Midland Co............. $ 43,379
1,300 Corn Products Intl. Inc............... 39,569
----------
82,948
----------
AEROSPACE (2.8%)
700 AlliedSignal Inc...................... 44,100
1,400 Boeing Company........................ 61,863
----------
105,963
----------
AUTOMOTIVE & RELATED (1.9%)
800 Cooper Tire & Rubber.................. 18,900
489 Delphi Automotive Systems............. 9,081
700 General Motors Corp................... 46,200
----------
74,181
----------
BANKING (4.3%)
800 Bank of America Corp.................. 58,650
700 Bank One Corp......................... 41,694
400 Republic New York Corp................ 27,275
1,000 Washington Mutual Inc................. 35,375
----------
162,994
----------
BUSINESS SERVICES (1.8%)
1,400 First Data Corp....................... 68,513
----------
COMMUNICATIONS (7.0%)
800 AT&T Corp............................. 44,650
500 BellSouth Corp........................ 23,438
900 GTE Corp.............................. 68,175
400 Motorola Inc.......................... 47,375
500 SBC Communications Inc................ 34,800
800 U.S. West Inc......................... 47,000
----------
265,438
----------
COMPUTER & RELATED (9.7%)
600 *Computer Sciences Corp............... 41,512
1,000 Electronic Data Systems Corp.......... 56,563
800 Galileo International Inc............. 42,750
400 IBM CO................................ 51,700
200 Lexmark Intl. Group CL A.............. 13,212
1,300 *Seagate Technology Inc............... 33,312
1,200 *Storage Technology Corp.............. 27,300
1,500 *Sun Microsystems Inc................. 103,313
----------
369,662
----------
CONSUMER PRODUCTS (6.3%)
400 Eastman Kodak Co...................... 27,100
1,300 Kimberly-Clark Corp................... 74,100
1,100 Liz Claiborne Inc..................... 40,150
900 Phillip Morris Co. Inc................ 36,169
500 RJ Reynolds Tobacco Holdings.......... 15,750
1,600 UST Inc............................... 46,800
----------
240,069
----------
CONTAINERS (0.7%)
1,000 Crown Cork & Seal Co. Inc............. 28,500
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
DRUGS (5.2%)
900 Abbott Laboratories................... $ 40,950
700 Bristol-Myers Squibb Co............... 49,306
600 Merck & Co. Inc....................... 44,400
1,100 Pharmacia & Upjohn Inc................ 62,494
----------
197,150
----------
ENTERTAINMENT & LEISURE (2.7%)
800 Brunswick Corp........................ 22,300
1,000 *King Word Prod Inc................... 34,813
1,000 Viacom Inc. CL A...................... 44,125
----------
101,238
----------
FINANCIAL SERVICES (4.0%)
1,040 Bear Stearns Co. Inc.................. 48,620
2,000 CIT Group Inc. CL A................... 57,750
700 MBIA Inc.............................. 45,325
----------
151,695
----------
FOOD & RELATED (2.8%)
600 Anheuser Busch Co. Inc................ 42,562
1,500 Nabisco Group Holdings................ 29,344
1,600 Sara Lee Corp......................... 36,300
----------
108,206
----------
INDUSTRIAL SERVICES (2.6%)
1,000 Nucor Corp............................ 47,438
952 Waste Management Inc.................. 51,170
----------
98,608
----------
INSURANCE SERVICES (8.6%)
1,400 Allstate Corp......................... 50,225
600 CIGNA Corp............................ 53,400
3,024 Conseco Inc........................... 92,043
800 Lincoln National Corp................. 41,850
500 Loews Corp............................ 39,563
700 Marsh & McLennan Co. Inc.............. 52,850
----------
329,931
----------
MACHINERY (1.8%)
90 Deere & Co............................ 35,662
500 Ingersoll-Rand Co..................... 32,313
----------
67,975
----------
MANUFACTURING (4.4%)
700 Johnson Controls Inc.................. 48,519
700 Parker Hannifin Corp.................. 32,025
1,600 Tenneco Inc........................... 38,200
533 Tyco International Ltd................ 50,502
----------
169,246
----------
MEDICAL & RELATED (4.5%)
600 Baxter International Inc.............. 36,375
2,800 Healthsouth Corp...................... 41,825
2,000 Oxford Health Plans Inc............... 31,125
1,000 United Healthcare Corp................ 62,625
----------
171,950
----------
</TABLE>
(continued)
86
<PAGE> 87
OHIO NATIONAL FUND, INC.
BLUE CHIP PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
RESTAURANTS (1.1%)
800 *Tricon Global Restaurants Inc........ $ 43,300
----------
OIL, ENERGY & NATURAL GAS (5.9%)
1,200 Ashland Inc........................... 48,150
1,100 Diamond Offshore Drilling............. 31,213
400 Exxon Corp............................ 30,850
300 Mobil Corp............................ 29,700
600 Schlumberger Ltd...................... 38,212
700 Sunoco Inc............................ 21,131
800 USX-Marathon Group.................... 26,050
----------
225,306
----------
RETAIL (5.4%)
1,500 Dillards Inc. CL A.................... 52,687
1,800 *K Mart Corp.......................... 29,587
1,100 Sherwin-Williams Co................... 30,525
2,400 *Toys "R" Us Inc...................... 49,650
900 Wal-Mart Stores Inc................... 43,425
----------
205,874
----------
TRANSPORTATION & EQUIPMENT (0.7%)
1,100 Ryder Systems Inc..................... 28,600
----------
UTILITIES (5.5%)
1,200 Entergy Corp.......................... 37,500
600 FPL Group Inc......................... 32,775
1,000 PG&E Corp............................. 32,500
900 Peco Energy Co........................ 37,687
900 Public Service Enterprises Group...... 36,787
1,200 Reliant Energy Inc.................... 33,150
----------
210,399
----------
TOTAL U.S. COMMON STOCK (92.0%) (COST
$3,086,492).......................... $3,507,746
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
NETHERLANDS (2.1%)
ELECTRICAL EQUIPMENT (1.0%)
368 Philips Electronics................... $ 37,122
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
OIL, ENERGY & NATURAL GAS (1.1%)
700 Royal Dutch Petroleum Co. ADR......... $ 42,175
----------
TOTAL NETHERLANDS..................... 79,297
----------
SWEDEN (1.0%)
ELECTRICAL EQUIPMENT
2,900 ABB AB Sponsored ADR.................. 39,512
----------
TOTAL FOREIGN COMMON STOCK (3.1%)
(COST $101,477)...................... $ 118,809
----------
TOTAL COMMON STOCK (95.1%) (COST
$3,187,969).......................... $3,626,555
----------
AUSTRALIA (1.3%)
MEDIA & PUBLISHING
1,600 News Corp. Ltd. ADR................... $ 50,500
----------
TOTAL FOREIGN PREFERRED STOCK (1.3%)
(COST $38,358)....................... $ 50,500
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL (3.8%)
$145,000 Star Bank 3.30% due 07/01/99
repurchase price $145,013
collateralized by GNMA certificates
pool # 8375 due 02/20/24 (cost
$145,000)............................. $ 145,000
----------
TOTAL REPURCHASE AGREEMENTS (3.8%)
(COST $145,000)....................... $ 145,000
----------
TOTAL HOLDINGS (100.2%)
(COST $3,371,327) (a)................. $3,822,055
----------
CASH & RECEIVABLES,
NET OF LIABILITIES (-0.2%)............ (7,438)
----------
TOTAL NET ASSETS (100.0%)............. $3,814,617
==========
</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.
87
<PAGE> 88
OHIO NATIONAL FUND, INC
BLUE CHIP PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $3,371,324)............... $3,822,055
Cash in bank............................... 391
Receivable for securities sold............. 6,416
Receivable for fund shares sold............ 18,864
Dividends and accrued interest
receivable............................... 4,444
----------
Total assets............................. 3,852,170
----------
Liabilities:
Payable for securities purchased........... 22,161
Payable for investment management services
(note 3)................................. 3,011
Other accrued expenses..................... 4,362
Dividends payable.......................... 8,019
----------
Total liabilities........................ 37,553
----------
Net assets at market value................... $3,814,617
==========
Net assets consist of:
Par value, $1 per share.................... $ 334,119
Paid-in capital in excess of par value..... 3,023,716
Accumulated net realized loss on
investments (note 1)..................... (2,142)
Net unrealized appreciation on investments
(note 1)................................. 450,728
Undistributed net investment income........ 8,196
----------
Net assets at market value................... $3,814,617
==========
Shares outstanding (note 4).................. 334,119
Net asset value per share.................... $ 11.42
==========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest..................................... $ 2,019
Dividends.................................... 30,270
--------
Total investment income.................... 32,289
--------
Expenses:
Management fees (note 3)..................... 14,446
Custodian fees (note 3)...................... 2,368
Directors' fees (note 3)..................... 170
Professional fees............................ 737
Accounting and transfer agent fees........... 2,768
Other........................................ 1,027
--------
Total expenses............................. 21,516
--------
Net investment income...................... $ 10,773
--------
Realized and unrealized gain on investments:
Net realized gain from investments........... $ 16,129
Net increase in unrealized appreciation on
investments................................ 340,627
--------
Net gain on investments.................... 356,756
--------
Net increase in net assets from
operations............................... $367,529
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
88
<PAGE> 89
OHIO NATIONAL FUND, INC
BLUE CHIP PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED 5-1-98
6-30-99 TO
(UNAUDITED) 12-31-98
---------------- ----------
<S> <C> <C>
From operations:
Net investment income..................................... $ 10,773 $ 3,914
Realized gain (loss) on investments....................... 16,129 (18,271)
Unrealized gain on investments............................ 340,627 110,101
---------- ----------
Net increase in net assets from operations............ 367,529 95,744
---------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (2,376) (4,115)
---------- ----------
From capital share transactions (note 4):
Received from shares sold................................. 755,906 2,842,759
Received from dividends reinvested........................ 2,376 4,115
Paid for shares redeemed.................................. (187,931) (59,390)
---------- ----------
Increase in net assets derived from capital share
transactions......................................... 570,351 2,787,484
---------- ----------
Increase in net assets............................. 935,504 2,879,113
---------- ----------
Net Assets:
Beginning of period....................................... 2,879,113 0
---------- ----------
End of period............................................. $3,814,617 $2,879,113
========== ==========
(a) Includes undistributed net income of.................... $ 8,196 $ 0
========== ==========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED 5-1-98
6-30-99 TO
(UNAUDITED) 12-31-98
---------------- --------
<S> <C> <C>
Per share data:
Net asset value, beginning of period........................ $10.22 $10.00
Income from investment operations:
Net investment income..................................... 0.04 0.00
Net realized and unrealized gain on investments........... 1.17 0.23
------ ------
Total income from investment operations................. 1.21 0.23
------ ------
Less distributions:
Dividends declared........................................ (0.01) (0.01)
------ ------
Net asset value, end of period.............................. $11.42 $10.22
====== ======
Total return (b)............................................ 11.72% 2.34%
Ratios and supplemental data (a & c):
Ratios net of fees reimbursed by advisor:
Expenses................................................ 1.33% 1.84%
Net investment income................................... 0.67% 0.25%
Ratios assuming no fees reimbursed by advisor:
Expenses................................................ 1.33% 2.26%
Net investment income................................... 6.70% 0.17%
Portfolio turnover rate..................................... 14% 32%
Net assets at end of period (millions)...................... $ 3.8 $ 2.9
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated since inception, May 1, 1998. (not annualized).
(c) The advisor has elected to reimburse certain operating expenses of the Blue
Chip portfolio.
The accompanying notes are an integral part of these financial statements.
89
<PAGE> 90
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, 1999
<TABLE>
<S> <C>
TOTAL RETURN:
One Year 15.51%
Since inception (5/1/98) 16.50%
</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 stock market in the second quarter was marked by dramatic reversals in
leadership based on market capitalization, investment style (i.e., value versus
growth), and sector. Through March, the largest companies in the S&P 500
dominated. In the second quarter, small capitalization stocks outperformed large
capitalization stocks by 8.5%, as reported by Ned Davis Research. There was also
a sudden reversal in investment style. Since the fourth quarter of 1997, growth
stocks had provided excess return relative to value stocks. Ned Davis also
reports that in this most recent quarter, large capitalization value stocks
outperformed large capitalization growth stocks by 7.5%. These shifts were
accompanied by rapid sector rotation, as technology, financial and
pharmaceutical groups lagged while the beleaguered basic materials and
industrial cyclical sectors surged.
The broadening in what had been until recently a narrow market was due to the
increasing perception that overseas economies were improving, while the United
States economy continued to be robust. This strength caused concern in the bond
market, where the 30-year Treasury bond yield rose from its October 1998 low of
4.7% to over 6.0% by the end of June 1999 in what was the largest percentage
move upward in yields during the low-inflation decade of the 1990s. Therefore,
when the Federal Reserve raised short term interest rates by 0.25% in late June,
the first increase since March 1997, the markets were much more focused on the
Federal Reserve's stated inclination not to raise rates further, having well
anticipated the June rate hike.
For the quarter, the S&P 500 returned 7.05%. Your Ohio National Equity Income
Fund returned 7.64%, lagging the 9.23% return of the average equity income fund,
as reported by Lipper Analytical Services. However, on a year-to-date basis, the
Fund's total return of 10.41% is still nicely ahead of the 8.98% return of the
average equity income fund.
Stock market returns for the balance of the year will depend on positive
earnings growth and a benign interest rate environment. With regard to earnings
prospects, economic improvement in Asia has begun to benefit technology,
chemical and manufacturing companies. The economic expansion in the United
States is now 100 months old, making it the longest peacetime cycle. Still,
inflation is not evident. On the cost side, productivity improvements have
allowed our economy to grow without inflation. Meanwhile, on the revenue side,
intense global competition has made it difficult for companies to raise prices.
This low inflation, coupled with increasing evidence of a slowdown in our
economy's growth, would likely prevent the Federal Reserve from further rate
increases. Such an environment would be bullish for stocks.
Current Strategy:
Whether value stocks will retain their leadership as compared to growth stocks
will depend on improving earnings in the value-oriented sectors. In the case of
the Basic Materials sector there are good signs in the paper products and
chemicals groups, but still poor conditions for iron and steel, metals mining
and gold companies. Leadership could shift back to growth just as quickly as it
shifted away during this past quarter. Your Fund attempts to smooth this
volatility by seeking superior equity and convertible securities on a
sector-neutral basis. Your Fund holds a blend of growth and value securities
with a middle-to-large capitalization bias. We will continue to seek common
stocks of market-leading companies that have a long history of growing
dividends. We will also maintain a healthy component of higher-yielding
convertible bonds and preferred stocks, for their income and for their
relatively defensive attributes in market downturns.
CHANGE IN VALUE OF $10,000 INVESTMENT
[EQUITY INCOME PORTFOLIO]
<TABLE>
<CAPTION>
EQUITY INCOME PORTFOLIO (COMMENCED
OPERATIONS MAY 1, 1998) S&P 500 INDEX
---------------------------------- -------------
<S> <C> <C>
5/98 10,000 10,000
6/98 9,993 10,143
12/98 10,550 11,079
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. International Business Machines
Corporation 2.55
2. GTE Corporation 2.49
3. The Home Depot, Inc., Sub. Note 2.29
4. Bristol-Myers Squibb Company 2.08
5. Electronic Data Systems
Corporation 2.04
6. Sprint Corporation 1.91
7. Citigroup Inc. 1.87
8. BANK ONE CORPORATION 1.76
9. Abbott Laboratories 1.64
10. Mobil Corporation 1.63
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Computer & Related 11.31
2. Communications 10.65
3. Banking 6.91
4. Drugs 5.95
5. Medical & Related 5.78
</TABLE>
90
<PAGE> 91
OHIO NATIONAL FUND, INC.
EQUITY INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (1.0%)
800 Lockheed Martin Corp. ................ $ 29,800
----------
AUTOMOTIVE & RELATED (1.9%)
1,300 Cooper Tire and Rubber Co. ........... 30,712
500 Ford Motor Co. ....................... 28,219
----------
58,931
----------
BANKING (6.9%)
900 Bank One Corp. ....................... 53,606
400 Bank of America Corp. ................ 29,325
400 Chase Manhattan Corp. ................ 34,650
600 First Union Corp. .................... 28,200
800 Mellon Bank Corp. .................... 29,100
1,100 WBK Strypes Trust..................... 35,613
----------
210,494
----------
CHEMICALS (1.1%)
500 de Pont (EI) de Nemours & Co. ........ 34,156
----------
COMMUNICATIONS (11.9%)
600 Ameritech Corp. ...................... 44,100
300 AT&T Corp. ........................... 16,744
1,000 GTE Corp. ............................ 75,750
497 *MCI WorldComm Inc. .................. 42,866
400 Motorola Inc. ........................ 37,900
1,100 Sprint Corp. (FON Group).............. 58,094
850 *Sprint Corp. (PCS Group)............. 48,556
600 *Tellabs Inc. ........................ 40,538
----------
364,548
----------
COMPUTER & RELATED (10.4%)
927 *Apple Computer Inc. ................. 42,942
200 *Cisco Systems Inc. .................. 12,900
1,100 Electronic Data Systems............... 62,219
600 IBM CO. .............................. 77,550
600 *Lexmark Intl Group Inc. CL A......... 39,637
1,200 Storage Technology.................... 27,300
700 *Sun Microsystems Inc. ............... 48,213
800 *Western Digital Corp. ............... 5,200
----------
315,961
----------
CONSUMER PRODUCTS (4.7%)
600 Kimberly Clark Corp. ................. 34,200
600 Phillip Morris Co. Inc. .............. 24,112
400 Procter & Gamble Co. ................. 35,700
1,200 PepsiCo Inc. ......................... 46,425
132 R.J. Reynolds Tobacco Holdings
Inc. ................................ 4,189
----------
144,626
----------
DRUGS (7.8%)
1,100 Abbott Laboratories................... 50,050
800 American Home Products Corp. ......... 46,000
900 Bristol-Myers Squibb Co. ............. 63,394
600 Merck & Co. Inc. ..................... 44,400
500 Warner-Lambert Co. ................... 34,687
----------
238,531
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT & LEISURE (1.3%)
1,300 The Walt Disney Co. .................. $ 40,056
----------
ELECTRICAL EQUIPMENT (3.5%)
400 Emerson Electric Co. ................. 25,150
400 General Electric Co. ................. 45,200
600 Intel Corp. .......................... 35,700
----------
106,050
----------
FINANCIAL SERVICES (2.0%)
600 H&R Block Inc. ....................... 30,000
300 Morgan Stanley, Dean Witter........... 30,750
----------
60,750
----------
FOOD & RELATED (3.9%)
500 Albertsons Inc. ...................... 25,781
600 General Mills Inc. ................... 48,225
700 HJ Heinz Co. ......................... 35,088
400 Nabisco Group Holdings Corp. ......... 7,825
----------
116,919
----------
FOREIGN (1.1%)
300 British Petro ADR UK.................. 32,550
----------
HOUSING & FURNITURE RELATED (1.0%)
400 Whirlpool Corp. ...................... 29,600
----------
INDUSTRIAL SERVICES (3.3%)
700 Halliburton Co. ...................... 31,675
500 Textron Inc. ......................... 41,156
1,900 Usec Inc. ............................ 28,262
----------
101,093
----------
INSURANCE SERVICES (4.2%)
700 Allstate Corp. ....................... 25,113
200 Chubb Corp. .......................... 13,900
1,200 Citigroup Inc. ....................... 57,000
200 Lincoln National...................... 10,462
300 Marsh & McLennan Co. Inc. ............ 22,650
----------
129,125
----------
MEDIA & PUBLISHING (1.0%)
800 New York Times Co. CL A............... 29,450
----------
MEDICAL & RELATED (2.5%)
800 Baxter International Inc. ............ 48,500
300 Johnson & Johnson..................... 29,400
----------
77,900
----------
OFFICE EQUIPMENT (2.2%)
500 Pitney Bowes Inc. .................... 32,125
600 Xerox Corp. .......................... 35,438
----------
67,563
----------
OIL, ENERGY & NATURAL GAS (4.0%)
500 Enron Corp. .......................... 40,875
400 Exxon Corp. .......................... 30,850
500 Mobil Corp. .......................... 49,500
----------
121,225
----------
</TABLE>
(continued)
91
<PAGE> 92
OHIO NATIONAL FUND, INC.
EQUITY INCOME PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
RETAIL (0.9%)
600 JC Penny Inc. ........................ $ 29,138
----------
REAL ESTATE INVESTMENT TRUSTS (1.3%)
1,000 Post Properties Inc. ................. 41,000
----------
TRANSPORTATION & EQUIPMENT (0.8%)
600 CNF Transportation Inc. .............. 23,025
----------
TOTAL COMMON STOCK (78.7%)
(COST $2,065,871).................... $2,402,491
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCKS VALUE
- -------------------------------------------------------------
<C> <S> <C>
CHEMICALS (0.9%)
700 Monsanto Co. 6.5% Conv. .............. $ 28,088
----------
CONSUMER PRODUCTS (0.8%)
500 Ralston Purina Co. 7% Conv. .......... 23,250
----------
CONTAINERS (1.1%)
1,200 Crown Cork & Seal..................... 32,175
----------
FINANCIAL SERVICES (0.8%)
200 Jefferson Pilot $5.25 Conv. .......... 24,600
----------
FOOD & RELATED (0.8%)
400 Suiza Foods Corp. 5.5% Conv. ......... 14,850
300 Suiza Foods Corp. $2.75 Conv. ........ 11,213
----------
26,063
----------
INSURANCE SERVICES (2.1%)
1,200 Conseco Inc. Prides Ser. F Conv. ..... 48,225
600 Lincoln Natl. Corp. $1.938 Conv. ..... 16,312
----------
64,537
----------
MACHINERY (1.5%)
1,500 Ingresoll Rand Co. 6.75% Conv. ....... 45,000
----------
UTILITIES (1.6%)
900 Texas Utilities $4.625 Conv. ......... 49,500
----------
TOTAL PREFERRED STOCKS (9.6%)
(COST $308,783)...................... $ 293,213
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------
<C> <S> <C>
COMPUTER & RELATED (4.0%)
$ 5,000 America Online 4.000% due 11/15/02.... $ 42,244
50,000 Citrix Systems Inc. Zero coupon
contract due 03/22/19 (144A)......... 22,750
10,000 EMC Corp. 3.250% due 03/15/02......... 49,325
50,000 Western Digital Corp. Zero coupon
contract due 02/18/18................ 8,750
----------
123,069
----------
ELECTRICAL EQUIPMENT (0.8%)
15,000 LSI Logic Corp. 4.250% 03/15/04
(144A)............................... 24,563
----------
RETAIL (2.3%)
25,000 Home Depot Inc. 3.250% due 10/01/01... 69,655
----------
TOTAL CONVERTIBLE DEBENTURES (7.1%)
(COST $125,700)...................... $ 217,287
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL (4.4%)
$133,000 Star Bank 3.30% due 07/01/99
repurchase price $133,012
collateralized by GNMA certificates
pool # 8375 due 02/20/24 (cost
$133,000)............................ $ 133,000
----------
TOTAL REPURCHASE AGREEMENTS (4.4%)
(COST $133,000)...................... $ 133,000
----------
TOTAL HOLDINGS (99.8%)
(COST $2,633,354) (a)................ $3,045,991
----------
CASH & RECEIVABLES,
NET OF LIABILITIES (0.2%)............ 6,242
----------
TOTAL NET ASSETS (100.0%)............. $3,052,233
==========
</TABLE>
- ---------------
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
(144A) 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 buyers. At the period end, the value
of these securities amounted to $47,313 or 1.6% net assets. These
securities were deemed liquid pursuant to procedures approved by the
Board of Directors.
The accompanying notes are an integral part of these financial statements.
92
<PAGE> 93
OHIO NATIONAL FUND, INC.
EQUITY INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $2,633,354)............... $3,045,991
Cash in bank............................... 243
Receivable for fund shares sold............ 16,006
Dividends and accrued interest
receivable............................... 4,057
----------
Total assets............................. 3,066,297
----------
Liabilities:
Payable for investment management services
(note 3)................................. 1,844
Other accrued expenses..................... 4,345
Dividends payable.......................... 7,875
----------
Total liabilities........................ 14,064
----------
Net assets at market value................... $3,052,233
==========
Net assets consist of:
Par value, $1 per share.................... $ 262,510
Paid-in capital in excess of par value..... 2,432,841
Accumulated net realized loss on
investments (note 1)..................... (63,944)
Net unrealized appreciation on investments
(note 1)................................. 412,637
Undistributed net investment income........ 8,189
----------
Net assets at market value................... $3,052,233
==========
Shares outstanding (note 4).................. 262,510
Net asset value per share.................... $ 11.63
==========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest.................................... $ 2,905
Dividends................................... 27,352
--------
Total investment income................... 30,257
--------
Expenses:
Management fees (note 3).................... 9,113
Custodian fees (note 3)..................... 2,368
Directors' fees (note 3).................... 170
Professional fees........................... 737
Accounting and transfer agent fees.......... 2,636
Other....................................... 1,027
--------
Total expenses............................ 16,051
--------
Net investment income..................... $ 14,206
--------
Realized and unrealized gain (loss) on
investments:
Net realized loss from investments.......... $(58,230)
Net increase in unrealized appreciation on
investments............................... 294,616
--------
Net gain on investments................... 236,386
--------
Net increase in net assets from
operations.............................. $250,592
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
93
<PAGE> 94
OHIO NATIONAL FUND, INC.
EQUITY INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED 5-1-98
6-30-99 TO
(UNAUDITED) 12-31-98
---------------- ----------
<S> <C> <C>
From operations:
Net investment income..................................... $ 14,206 $ 13,678
Realized loss on investments.............................. (58,230) (5,714)
Unrealized gain on investments............................ 294,616 118,021
---------- ----------
Net increase in net assets from operations............ 250,592 125,985
---------- ----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (5,913) (13,781)
---------- ----------
From capital share transactions (note 4):
Received from shares sold................................. 612,557 2,160,574
Received from dividends reinvested........................ 5,913 13,781
Paid for shares redeemed.................................. (30,730) (66,745)
---------- ----------
Increase in net assets derived from capital share
transactions......................................... 587,740 2,107,610
---------- ----------
Increase in net assets............................. 832,419 2,219,814
Net Assets:
Beginning of period....................................... 2,219,814 0
---------- ----------
End of period............................................. $3,052,233 $2,219,814
========== ==========
(a) Includes undistributed net income of.................... $ 8,189 $ 0
========== ==========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED 5-1-98
6-30-99 TO
(UNAUDITED) 12-31-98
---------------- --------
<S> <C> <C>
Per share data:
Net asset value, beginning of period........................ $10.53 $10.00
Income from investment operations:
Net investment income..................................... 0.06 0.07
Net realized and unrealized gain on investments........... 1.04 0.53
------ ------
Total income from investment operations................. 1.10 0.60
------ ------
Less distributions:
Dividends declared........................................ (0.03) (0.07)
------ ------
Net asset value, end of period.............................. $11.60 $10.53
====== ======
Total return (b)............................................ 10.36% 5.92%
Ratios and supplemental data (a & c):
Ratios net of fees reimbursed by advisor:
Expenses................................................ 1.28% 1.77%
Net investment income................................... 1.13% 1.04%
Ratios assuming no fees reimbursed by advisor:
Expenses................................................ 0.00% 2.41%
Net investment income................................... 0.00% 0.40%
Portfolio turnover rate..................................... 23% 38%
Net assets at end of period (millions)...................... $ 3.1 $ 2.2
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated since inception, May 1, 1998, (not annualized).
(c) The advisor has elected to reimburse certain operating expenses of the Blue
Chip portfolio.
The accompanying notes are an integral part of these financial statements.
94
<PAGE> 95
HIGH INCOME 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, 1999
TOTAL RETURNS:
<TABLE>
<S> <C>
One-year 0.81%
Since inception (5/1/98) 1.78%
</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
High yield bonds delivered excellent relative returns for the six months ending
June 30, 1999. These returns were driven by continued strong domestic economic
growth which resulted in narrower yield spreads between high yield bonds and
Treasuries. The basic material sectors were standouts while healthcare was a
noticeable laggard. Credit risk was rewarded as CCCs outperformed BBs and Bs.
For the period, the Lehman Brothers High Yield Bond Index returned 2.20% versus
- -1.37% for the Lehman Brothers Aggregate Bond Index.
The fund outperformed the index (adjusted for expenses). On the positive side,
the fund was overweight the telecommunication sector, which outperformed, and
underweight healthcare. Specific holdings in Fox/Liberty, Metronet, Triton PCS,
Telesystems International and Teligent outperformed. On the negative side, the
fund was underweight the basic material sectors. Also, positions in KCS Energy,
Paging Network and Stena Lines underperformed because of disappointing financial
performance.
For the balance of 1999, we believe high yield bonds offer attractive relative
returns, given the strong domestic economic outlook. From a portfolio
perspective, we continue to be overweight the telecommunications sector given
the powerful secular growth characteristics of the sector. We remain biased to
modestly decreasing interest rate risk and increasing credit risk, given the
strong economic conditions.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
HIGH INCOME BOND PORTFOLIO
(COMMENCED OPERATIONS MAY 1, 1998) MERRILL LYNCH HIGH-YIELD BOND INDEX
---------------------------------- -----------------------------------
<S> <C> <C>
5/98 10,000 10,000
6/98 10,090 10,118
12/98 9,959 10,036
- ---------------------------------------------------------------------------------------------------------------------------------
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Nextel Communications, Inc. Sr.
Nt 0% until 2/03 then 9.95%
2/15/08 2.43
2. Chancellor Media Corp. 8.125%
12/15/07 2.13
3. Tenet Healthcare Corporation,
Sr. Sub 144a 8.125% 12/01/08 2.09
4. NTL Incorporated, Sr Deferred
0% Coupon until 4/1/03 then
9.75% 4/1/08 1.97
5. Level 3 Communications, Inc.,
Sr. Note 9.125% 5/01/08 1.96
6. Premier Parks, Inc. 0% Coupon
until 4/1/03 then 10.00% 4/1/08 1.91
7. Sinclair Broadcast Group, Inc.
8.75% 12/15/07 1.72
8. Polymer Group, Inc. 8.75%
3/1/08 1.67
9. Revlon Consumer Products Corp.
8.625% 2/1/08 1.67
10. Allied Waste Industries, Inc.
Sr. Notes, Ser B 7.625% 1/1/06 1.65
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
Telecommunications &
1. Cellular 19.75
2. Cable Television 10.99
3. Consumer Products 8.27
4. Broadcast Radio & TV 7.94
5. Medical & Related 5.88
</TABLE>
95
<PAGE> 96
OHIO NATIONAL FUND, INC.
HIGH INCOME BOND PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
AEROSPACE (0.4%)
$ 50,000 Anteon Corp.
12.000% 05/15/09 (144A)............. $ 49,500
-----------
ADVERTISING (0.4%)
50,000 Lamar Advertising Co.
8.625% 09/15/07..................... 50,500
-----------
AUTOMOTIVE & RELATED (2.7%)
50,000 Avis Rent A Car Inc.
11.000% 05/01/09 (144A)............. 51,000
50,000 Aftermarket Technology Series D
12.000% 08/01/04.................... 52,375
50,000 American Axle & Manufacturing
9.750% 03/01/09..................... 50,375
50,000 Collins & Aikman Products
11.500% 04/15/06.................... 50,750
50,000 J.L. French Automotive
11.500% 06/01/09 (144A)............. 51,250
50,000 Motor Coach Industries
11.250% 05/01/09 (144A)............. 50,250
-----------
306,000
-----------
BROADCAST RADIO/TV (7.5%)
100,000 ACME Television
10.875% 09/30/04.................... 83,500
100,000 Big City Radio Inc.
due 03/15/05 0% till 3/15/01
then 11.250%........................ 71,250
250,000 Chancellor Media Corp.
8.125% 12/15/07..................... 242,500
100,000 Chancellor Media Corp.
9.000% 10/01/08..................... 102,000
50,000 Cumulus Media Inc.
10.375% 07/01/08.................... 53,250
150,000 Fox/Liberty Networks LLC
due 08/15/07 0% till 08/01/02
then 9.750%......................... 117,750
200,000 Sinclair Broadcast Group
8.750% 12/15/07..................... 195,500
-----------
865,750
-----------
BUSINESS SERVICES (3.2%)
75,000 Dialog Corp. PLC
11.000% 11/15/07.................... 68,250
100,000 Fisher Scientific Intl.
9.000% 02/01/08..................... 95,500
100,000 Sitel Corp. NT
9.250% 03/15/06..................... 85,750
50,000 URS Corp.
12.250% 05/01/09 (144A)............. 50,750
100,000 US Office Products Co.
9.750% 06/15/08..................... 63,500
-----------
363,750
-----------
BANKING (0.4%)
50,000 GS Escrow Corp.
7.125% 08/01/05..................... 48,517
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
BUILDING & CONSTRUCTION (0.9%)
$ 50,000 Formica Corp.
10.875% 03/01/09 (144A)............. $ 48,500
50,000 Juno Lighting Inc.
11.875% 07/01/09 (144A)............. 50,875
-----------
99,375
-----------
CABLE TV (11.4%)
175,000 CSC Holdings
9.250% 11/01/05..................... 181,125
125,000 Diamond Cable Comm. PLC
due 02/15/07 0% till 02/15/02
then 10.750%........................ 98,125
100,000 Echostar DBS Corp.
9.375% 02/01/09 (144A).............. 152,625
100,000 Lenfest Communication
8.375% 11/01/05..................... 104,750
325,000 NTL Inc.
due 04/01/08 0% till 04/01/03
then 9.750%......................... 224,250
75,000 NTL Inc.
Due 10/01/08 0% 10/01/03 then
12.375%............................. 51,750
100,000 Pegasus Communications Series B
9.625% 10/15/05..................... 99,500
50,000 RCN Corp. Series B
due 02/15/08 0% 02/15/03 then
9.800%.............................. 31,750
125,000 Rogers Cablesystems Ltd.
10.000% 03-15-05.................... 135,625
175,000 Telewest Communications PLC
due 10/01/07 0% till 10-01-00
then 11.000%........................ 157,062
125,000 United Intl. Holdings Series B
due 02/15/08 0% till 02/15/03
then 10.750%........................ 83,750
-----------
1,320,312
-----------
CHEMICALS (3.7%)
50,000 Huntsman Corp.
9.500% 07/01/07..................... 48,000
50,000 Huntsman ICI Chemicals
10.125% 07/01/09 (144A)............. 50,687
50,000 Lyondell Chemical Co.
10.875% 05/01/09 (144A)............. 51,750
200,000 Polymer Group Inc.
8.750% 03/01/08..................... 190,500
50,000 Sterling Chemicals
11.750% 08/15/06.................... 38,750
50,000 Texas Petrochemicals Corp.
11.125% 07/01/06.................... 44,750
-----------
424,437
-----------
CONSUMER PRODUCTS (8.3%)
75,000 Albecca Inc.
10.750% 08/15/08.................... 61,875
100,000 Amscan Holdings Inc.
9.875% 12/15/07..................... 83,000
</TABLE>
(continued)
96
<PAGE> 97
OHIO NATIONAL FUND, INC.
HIGH INCOME BOND PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
CONSUMER PRODUCTS, CONTINUED
$100,000 Chattem Inc. Series B
8.875% 04/01/08..................... $ 96,500
100,000 NBTY Inc.
8.625% 09/15/07..................... 86,750
100,000 Playtex Family Products Corp.
9.000% 12/15/03..................... 102,000
200,000 Revlon Consumer Products Corp.
8.625% 02/01/08..................... 190,000
50,000 Scotts Co.
8.625% 01/15/09 (144A).............. 49,250
125,000 Sealy Mattress Co. Series B due
12/05/07
0% till 12/15/02 then 10.875%....... 81,875
50,000 Simmons Co.
10.250% 03/15/09 (144A)............. 51,125
50,000 Sleepmaster L.L.C.
11.000% 05/15/09 (144A)............. 51,500
50,000 United Industries Corp.
9.870% 04/01/09 (144A).............. 45,375
50,000 Volume Services America
11.250% 03/01/09 (144A)............. 55,250
-----------
954,500
-----------
CONTAINERS (0.8%)
50,000 Russell Stanley Holdings
10.875% 02/15/09 (144A)............. 49,000
50,000 Tenki-Plex Inc.
9.250% 03/01/08..................... 48,750
-----------
97,750
-----------
ELECTRONICS (1.3%)
50,000 Cherokee Intl.
10.500% 05/01/09 (144A)............. 49,500
100,000 Telecom Techniques
9.750% 05/15/08..................... 99,000
-----------
148,500
-----------
ENTERTAINMENT & LEISURE (3.6%)
100,000 AMF Bowling WW Inc.
due 03/15/06 0% till 03/15/01
then 12.250%........................ 61,500
50,000 Loews Cineplex Entertainment
8.875% 08/01/08..................... 48,000
325,000 Premier Parks Inc.
due 04/01/08
0% till 04/01/03 then 10.000%....... 217,344
100,000 Regal Cinemas Inc.
9.500% 06/01/08..................... 94,500
-----------
421,344
-----------
FORESTRY & PAPER PRODUCTS (0.4%)
50,000 Packaging Corp. of America
9.625% 04/01/09 (144A).............. 51,000
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
FOOD & RELATED (5.0%)
$ 50,000 Agrilink Foods Inc.
11.875% 11/01/08.................... $ 51,875
150,000 Ameriserve Food Distribution Inc.
10.125% 07/15/07.................... 128,250
100,000 Aurora Foods Inc.
9.875% 02/15/07..................... 104,250
50,000 Dominos Inc.
10.375% 01/15/09.................... 50,625
100,000 Eagle Family Foods
8.750% 01/15/08..................... 89,500
100,000 International Home Foods
10.375% 11/01/06.................... 106,000
50,000 Triarc Consumer Products
10.250% 01/15/09 (144A)............. 49,500
-----------
580,000
-----------
HOTEL/LODGING (1.4%)
50,000 Florida Panthers Holdings
9.875% 04/15/09..................... 47,750
125,000 HMH Properties Inc.
Series B 7.875% 08/01/08............ 115,938
-----------
163,688
-----------
INDUSTRIAL SERVICES (3.8%)
200,000 Allied Waste N.A.
Series B 7.625% 01/01/06............ 187,500
100,000 Amphenol Corp.
9.875% 05/15/07..................... 102,500
50,000 Neenah Corp.
11.125% 05/01/07 (144A)............. 49,250
100,000 Wesco Distributions Inc.
9.125% 06/01/08..................... 98,000
-----------
437,250
-----------
MACHINERY (2.0%)
50,000 Fairchild Corp.
10.750% 04/15/09 (144A)............. 49,500
75,000 National Equipment Services
10.000% 11/30/04.................... 76,500
50,000 Untied Rentals Inc.
9.250% 01/15/09..................... 49,500
50,000 Untied Rentals Inc.
9.000% 04/01/09 (144A).............. 49,375
-----------
224,875
-----------
METAL & MINING (0.6%)
75,000 AEI Resources Inc.
11.500% 12/15/06.................... 74,063
-----------
MEDIA, PRINTING & PUBLISHING (1.3%)
100,000 Hollinger Intl. Publishing
9.250% 02/01/06..................... 103,250
50,000 Cadmus Communications Corp.
9.750% 06/01/09 (144A).............. 50,375
-----------
153,625
-----------
</TABLE>
(continued)
97
<PAGE> 98
OHIO NATIONAL FUND, INC.
HIGH INCOME BOND PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
MEDICAL & RELATED (5.9%)
$ 75,000 Columbia HCA Healthcare
6.910% 06/15/06..................... $ 69,398
100,000 Conmed Corp.
9.000% 03/15/08..................... 99,500
50,000 Dade International Inc. Series B
11.12% 05/01/06..................... 53,125
50,000 Genesis Health Ventures
9.25% 10/01/06...................... 39,750
100,000 Hudson Respiratory Care Inc.
9.125% 04/15/08..................... 83,500
50,000 Kinetic Concepts Inc.
9.62% 11/01/07...................... 44,500
250,000 Tenet Health Corp.
8.125% 12/01/08..................... 237,500
50,000 Triad Hospitals Holdings
11.000% 05/15/09 (144A)............. 51,125
-----------
678,398
-----------
OIL, ENERGY & NATURAL GAS (4.3%)
100,000 Chiles Offshore LLC
10.000% 05/01/08.................... 85,500
100,000 Dailey International
9.500% 02/15/08..................... 64,000
100,000 Nuevo Energy Co.
8.875% 06/01/08..................... 97,500
100,000 Pride Petroleum Services
9.375% 05/01/07..................... 99,500
50,000 R&B Falcon Corp.
12.25% 03/15/06 (144A).............. 51,500
150,000 Universal Compression Inc.
due 02/15/08 0% till 02/15/03
then 9.875%......................... 95,625
-----------
493,625
-----------
TEXTILES & RELATED (1.8%)
50,000 GFSI Inc. Series B
9.625% 03/01/07..................... 42,250
75,000 Glenoit Corp.
11.000% 04/15/07.................... 66,375
100,000 Pillowtex Corp.
10.000% 11/15/06.................... 100,750
-----------
209,375
-----------
TRANSPORTATION & EQUIPMENT (1.7%)
50,000 Allied Holdings Inc.
8.625% 10/01/07..................... 47,750
50,000 Railworks Corp.
11.500% 04/15/09 (144A)............. 50,625
125,000 Stena Line AB
10.625% 06/01/08.................... 94,688
-----------
193,063
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS (21.3%)
$ 50,000 American Cellular Corp.
10.500% 05/15/08.................... $ 51,500
50,000 Arch Communications Group
12.750% 07/01/07.................... 43,000
150,000 Call-Net Enterprises Inc.
due 08/15/07 0% till 8/15/02
then 9.270%......................... 96,000
100,000 Crown Castle International
due 05/15/11 0% till 05/15/04
then 10.375%........................ 59,125
50,000 Centennial Cellular Corp.
10.750% 12/15/08 (144A)............. 52,125
50,000 Hermes Europe Railtel B.V.
11.50% 08/15/07..................... 52,625
50,000 Hermes Europe Railtel B.V.
10.375% 01/15/09.................... 50,750
150,000 ICG Services Inc.
due 05/01/08 0% till 05/03/03
then 9.875%......................... 82,536
200,000 Intermedia Communications
8.600% 06/01/08..................... 187,000
50,000 IXC Communications Inc.
9.000% 04/15/08..................... 48,063
225,000 Level 3 Communication Inc.
9.125% 05/01/08..................... 223,031
100,000 Level 3 Communication Inc.
due 012/01/08 0% till 12/01/03
then 10.500%........................ 62,125
225,000 Mcleod USA Inc.
due 03/01/07 0% till 03/01/02
then 10.500%........................ 173,813
200,000 Metronet Communications
due 06/15/08 0% till 06/15/03
then 9.950%......................... 149,000
100,000 Millicom International
due 06/01/06 0% till 06/01/01
then 13.500%........................ 73,500
400,000 Nextel Communications
due 02/15/08 0% till 02/15/03
then 9.950%......................... 277,000
150,000 Nextlink Communications
due 04/15/08 0% 04/15/03
then 9.450%......................... 91,125
100,000 Nextlink Communications
10.750% 06/01/09.................... 103,500
100,000 Paging Network
10.125% 08/01/07.................... 77,500
100,000 Psinet Inc.
10.000% 02/15/05.................... 100,000
175,000 Qwest Communications Intl.
due 10/15/07 0% 10/15/02
then 9.470%......................... 136,062
</TABLE>
(continued)
98
<PAGE> 99
OHIO NATIONAL FUND, INC.
HIGH INCOME BOND PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS, CONTINUED
$150,000 Telesystem Intl. Wireless Ser. B
due 06/30/07 0% till 06/30/02
then 13.250%........................ $ 77,250
75,000 Teligent Inc.
11.500% 12/01/07.................... 75,375
100,000 Triton Pcs. Inc.
due 05/01/08 0% till 05/01/03
then 11.000%........................ 65,000
75,000 Viatel Inc.
due 04/15/08 0% till 04/15/03
then 00.000%........................ 48,375
-----------
2,455,380
-----------
UTILITIES (0.8%)
50,000 Caithness Coso Fund Corp.
9.050% 12/15/09 (144A).............. 49,750
50,000 Niagara Mohawk Power
due 07/01/10 0% till 07/01/03
then 8.500%......................... 37,591
-----------
87,341
-----------
TOTAL LONG-TERM BONDS & NOTES (94.9%)
(COST $11,303,837).................. $10,951,918
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
COMMUNICATIONS (0.3%)
50 Benedek Communications
11.500% 05/18/08.................... $ 38,250
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
MEDIA & PUBLISHING (1.1%)
1,300 Primedia Inc. Series H
8.625% 04/01/10..................... $ 123,988
-----------
TOTAL PREFERRED STOCKS (1.4%) (COST
$179,025)........................... $ 162,238
-----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
<C> <S> <C>
FINANCIAL (2.3%)
$263,000 Star Bank 3.30%
due 07/01/99 repurchase price
$263,022 collateralized by GNMA
certificates, pool #8375 due
02/20/24 (cost $263,000)............ $ 263,000
-----------
TOTAL REPURCHASE AGREEMENTS (2.3%)
(COST $263,000)..................... $ 263,000
-----------
TOTAL HOLDINGS (98.6%) (COST
$11,745,862) (a).................... $11,377,156
-----------
CASH & RECEIVABLES, NET OF
LIABILITIES (1.4%).................. 167,044
-----------
TOTAL NET ASSETS (100.0%)............ $11,544,200
===========
</TABLE>
- ---------------
(a) Also represents cost for Federal Income tax purposes.
(144A) 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 buyers. At the period end, the value
of these securities amounted to $1,586,375 or 13.7% of net assets. These
securities were deemed liquid pursuant to procedures approved by the
Board of Directors
The accompanying notes are an integral part of these financial statements.
99
<PAGE> 100
OHIO NATIONAL FUND, INC.
HIGH INCOME BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1)(cost $70,508,450).............. $11,377,156
Cash in bank.............................. 721
Receivable for fund shares sold........... 163,353
Dividends and accrued interest
receivable.............................. 196,754
Other..................................... 53
-----------
Total assets............................ 11,738,037
-----------
Liabilities:
Payable for investment management services
(note 3)................................ 7,011
Other accrued expenses.................... 27,902
Dividends payable......................... 158,924
-----------
Total liabilities....................... 193,837
-----------
Net assets at market value.................. $11,544,200
===========
Net assets consist of:
Par value, $1 per share................... $ 1,194,917
Paid-in capital in excess of par value.... 10,692,399
Accumulated net realized loss on
investments (note 1).................... (136,936)
Net unrealized depreciation on investments
(note 1)................................ (368,706)
Undistributed net investment income....... 162,526
-----------
Net assets at market value.................. $11,544,200
===========
Shares outstanding (note 4)................. 1,194,917
Net asset value per share................... $ 9.66
===========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest................................... $ 383,781
Dividends.................................. 5,606
----------
Total investment income.................. 389,387
----------
Expenses:
Management fees (note 3)................... 40,747
Custodian fees (note 3).................... 23,319
Directors' fees (note 3)................... 171
Professional fees.......................... 879
Accounting and transfer agent fees......... 11,429
Other...................................... 946
----------
Total expenses........................... 77,491
----------
Net investment income.................... $ 311,896
----------
Realized and unrealized gain (loss) on
investments:
Net realized loss from investments......... $ (136,936)
Net increase in unrealized appreciation on
investments.............................. 47,560
----------
Net loss on investments.................. (89,376)
----------
Net increase in net assets from
operations............................. $ 222,520
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
100
<PAGE> 101
OHIO NATIONAL FUND, INC.
HIGH INCOME BOND PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED 5-1-98
6-30-99 TO
(UNAUDITED) 12-31-98
---------------- -----------
<S> <C> <C>
From operations:
Net investment income..................................... $ 311,896 $ 385,649
Realized gain (loss) on investments....................... (136,936) 18,061
Unrealized gain (loss) on investments..................... 47,560 (416,266)
----------- -----------
Net increase (decrease) in net assets from
operations........................................... 222,520 (12,556)
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income................. (148,984) (386,035)
Capital gains distributions............................... 0 (18,061)
----------- -----------
Total dividends and distributions..................... (148,984) (404,096)
----------- -----------
From capital share transactions (note 4):
Received from shares sold................................. 1,046,568 10,451,643
Received from dividends reinvested........................ 148,984 404,096
Paid for shares redeemed.................................. (155,635) (8,340)
----------- -----------
Increase in net assets derived from capital share
transactions......................................... 1,039,917 10,847,399
----------- -----------
Increase in net assets............................. 1,113,453 10,430,747
Net Assets:
Beginning of period....................................... 10,430,747 0
----------- -----------
End of period (a)......................................... $11,544,200 $10,430,747
=========== ===========
(a) Includes undistributed net investment income of......... $ 162,526 $ 0
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED 5-1-98
6-30-99 TO
(UNAUDITED) 12-31-98
---------------- --------
<S> <C> <C>
Per share data:
Net asset value, beginning of period........................ $ 9.59 $10.00
Income (loss) from investment operations:
Net investment income..................................... 0.28 0.38
Net realized and unrealized loss on investments........... (0.07) (0.40)
------ ------
Total Income (loss) from investment operations.......... 0.21 (0.02)
------ ------
Less distributions:
Dividends declared........................................ (0.14) (0.37)
Distributions from net realized capital gains............. 0.00 (0.02)
------ ------
Total distributions..................................... (0.14) (0.39)
------ ------
Net asset value, end of period.............................. $ 9.66 $ 9.59
====== ======
Total return (b)............................................ 2.14% 0.20%
Ratios and supplemental data:
Ratio of expenses to average net assets (a)............... 1.41% 1.20%
Ratio of net investment income to average net assets
(a)..................................................... 5.69% 5.79%
Portfolio turnover rate..................................... 14% 11%
Net assets at end of period (millions)...................... $ 11.5 $ 10.4
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated since inception, May 1, 1998. (not annualized).
The accompanying notes are an integral part of these financial statements.
101
<PAGE> 102
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, 1999
<TABLE>
<S> <C>
TOTAL RETURN:
One-Year 89.82%
Since inception (5/1/98) 77.80%
</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 enjoyed another strong quarter of investment performance in the second
quarter. The Ohio National Small Cap Growth portfolio increased 21.09% against a
14.75% increase in the benchmark Russell 2000 Growth. At the mid year point, the
portfolio is up 78.22% versus an increase of 12.82% in the Russell 2000 Growth.
Small Cap stock performance improved in the second quarter as investors returned
to small and midcap stocks. The small stock Russell 2000 benchmark return
exceeded the larger cap S&P 500 Composite by nearly 8% in the second quarter
while the Russell midcap benchmark exceeded the S&P 500 by some 4%. We view this
advance in small and midcap stocks as a positive sign that investors may be
starting to broaden their equity interest beyond a handful of large growth
stocks.
Strong interest in small cap stocks led to broad advances in many small cap
sectors. However, we continue to see keen interest in fast growing, high P/E
multiple stocks. We sliced the benchmark Russell 2000 Growth into five market
cap bands and looked at absolute returns of the stocks that fell into those
bands.
- - The Russell 2000 Growth market band that includes companies with market caps
between $1 billion -- $5 billion includes 486 stocks and constitutes over 37%
of the benchmark as of June 30, 1999. This marketcap band produced a return of
19.94% through the first two quarters of 1999.
- - The market cap band that includes 412 companies with market caps between $500
million -- $1 billion and constitutes more than 31% of the benchmark produced
a return of 7.56% in 1999.
- - Similar trends develop when slicing the benchmark based on growth
characteristics. We found many stocks with the fastest growth rates and
highest P/Es (or no earnings) have outperformed the broad benchmark returns.
Thus the marketplace seems most interested in the fast growing companies on
which we traditionally focus. Within this universe, the market seems interested
in larger companies in certain sectors, bidding up both stock price and market
cap of a short list of names. Fortunately, we have been well positioned and
realized gains from a number of companies in technology, telecom, and other
emerging growth sectors.
We have also been very active in the IPO market in 1999. While Spring is
typically an active IPO season, the IPO flow, particularly in technology and
internet companies has continued at a very strong pace through the summer. We
continue to devote significant research energy to the IPO front, and have
participated in many new issues for the portfolio. The large number of IPOs in
the portfolio, is typically a source of supply, not performance, in the
investment process. Ultimately we look for some of these IPO companies to become
key holdings for us into the future.
We are pleased to achieve such powerful results and caution that while we are
optimistic looking forward, we don't expect returns like these to continue over
time.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
SMALL CAP GROWTH RUSSELL 2000 INDEX
---------------- ------------------
<S> <C> <C>
5/98 10,000.00 10,000.00
6/98 9,706.00 9,450.00
12/98 10,339.80 8,776.22
6/99 18,424.50 9,590.65
</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, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Caterpillar Inc. 11.57
2. Concentric Network Corporation 3.94
3. Gemstar International Group
Limited 2.50
4. Vignette Corporation 1.56
5. EchoStar Communications
Corporation 1.47
6. Power Integrations, Inc. 1.40
7. Alpha Industries, Inc. 1.37
8. Lamar Advertising Company 1.24
9. Cree Research, Inc. 1.23
10. Amazon.com, Inc. 1.20
</TABLE>
TOP 5 INDUSTRIES AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
% of Net Assets
<C> <S> <C>
1. Internet Software 11.53
2. Computer and Related 6.60
3. Telecommunication Services 4.71
4. Computer Software 4.18
5. Communications 4.07
</TABLE>
102
<PAGE> 103
OHIO NATIONAL FUND, INC.
SMALL CAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
ADVERTISING (2.4%)
400 *Doulbeclick Inc. .................. $ 36,700
1,900 *Lamar Advertising Co. ............. 77,781
900 *TMP Worldwide Inc. ................ 31,750
----------
146,231
----------
BROADCAST RADIO & TV (3.1%)
700 *ACTV Inc. ......................... 9,712
1,550 *Citadel Communications Corp. ...... 56,091
0 *Clear Channel Communications....... 13
400 *Emmis Broadcasting Corp. CL A...... 19,750
1,000 *Infinity Broadcasting Corp. CL A... 29,750
400 *Radio One Inc. .................... 18,600
800 *Univision Communications Inc. ..... 52,800
----------
186,716
----------
BUSINESS SERVICES (2.9%)
200 *Careerbuilder Inc. ................ 2,625
900 *Labor Ready Inc. .................. 29,250
500 Macrovision Corp. .................. 37,438
1,600 *@Plan.Inc. ........................ 24,000
1,000 *Professional Detailing............. 23,500
1,100 *On Assignment Inc. ................ 28,738
1,200 *Towne Services Inc. ............... 9,450
1,400 *Nextera Enterprises Inc. .......... 9,012
600 *USWEB Corp. ....................... 13,312
----------
177,325
----------
COMMUNICATIONS (13.8%)
1,200 *Allegiance Telecom Inc. ........... 65,850
1,100 *American Tower Corp. .............. 26,400
1,000 *Caprock Communication Corp. ....... 40,500
300 *Concord Communications............. 13,500
50 *Copper Mountain Networks Inc. ..... 3,862
800 *Covad Communications............... 42,650
850 *Destia Communication Inc. ......... 10,519
900 *Ditech Communication Corp. ........ 18,000
1,500 *DSET Corp. ........................ 20,906
600 *Echostar Communications Corp. CL
A.................................. 92,062
2,900 *Electric Lightwave Inc. CL A....... 37,700
300 *International Network Services..... 12,112
1,600 *ICG Communications Inc. ........... 34,200
800 *ITC DeltaCom Inc. ................. 22,400
700 *McLeodUSA Inc. CL A................ 38,500
800 *Metromedia Ficer Network-A......... 28,750
900 *Panamsat Corp. .................... 35,044
2,400 *Pinacle Holdings................... 58,800
2,600 *Primus Telecommunications.......... 58,338
2,000 *Research In Motion................. 40,500
800 *RF Micro Devices Inc. ............. 59,700
400 *Teligent Inc. ..................... 23,925
250 *Time Warner Telecom CL A........... 7,250
800 *Viatel Inc. ....................... 44,900
----------
836,368
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
COMPUTER & RELATED (10.3%)
450 *Advent Software Inc. .............. $ 30,150
600 *Allaire............................ 40,950
1,300 *Answerthink Consulting Group....... 32,825
300 *Bea Systems Inc. .................. 8,569
800 *Bindveiw Development Corp. ........ 19,000
600 *Check Point Software Tech Ltd. .... 32,175
50 *Clarent Corp. ..................... 750
1,350 *Cybear Inc. ....................... 18,816
1,800 *ESPS Inc. ......................... 13,387
800 *ISS Group Inc. .................... 30,200
200 *Intuit Inc. ....................... 18,025
1,100 *Macromedia Inc. ................... 38,775
1,500 *Mastech Corp. ..................... 27,937
1,200 *Mercury Interactive Corp. ......... 42,450
100 *Micromuse Inc. .................... 4,987
1,500 *Netegrity.......................... 13,200
1,100 *Network Appliance Inc. ............ 61,462
800 *Nvidia Corp. ...................... 15,300
2,600 *Peregrine Systems Inc. ............ 66,788
1,900 *Pervasive Software Inc. ........... 47,262
1,300 *Sagent Technology Inc. ............ 11,213
1,500 *TSI Intl Software Ltd. ............ 42,562
100 *Verity Inc. ....................... 5,419
----------
622,202
----------
FINANCIAL SERVICES (3.8%)
150 *DLJ Direct......................... 4,425
1,500 *Doral Financial Corp. ............. 25,875
200 *E-loan Inc. ....................... 7,712
1,100 *Financial Federal Corp. ........... 24,200
578 *Investment Technology Group........ 18,713
1,000 *Knight/Trimark Group Inc. ......... 60,312
100 MBIA Inc. .......................... 6,475
300 MBNA Corp. ......................... 9,187
2,300 Micro Financial Inc. ............... 32,919
50 *Nextcard Inc. ..................... 1,697
800 Waddell & Reed...................... 21,950
550 *WIT Capital Group Inc. ............ 18,700
----------
232,165
----------
EDUCATION/SCHOOLS (0.9%)
2,000 *Education Management Corp. ........ 41,500
500 *ITT Educational Services Inc. ..... 13,031
----------
54,531
----------
ELECTRONICS/SEMICONDUCTORS (7.4%)
1,800 *Alpha Industries Inc. ............. 85,725
400 *Applied Micro Circuits............. 32,900
700 *Conexant Systems................... 40,644
1,000 *Cree Research Inc. ................ 76,938
1,000 *Genesis Microchip Inc. ............ 23,625
1,200 *Power Integrations Inc. ........... 87,750
800 *Sawtek Inc. ....................... 36,700
1,300 *Transwitch Corp. .................. 61,588
----------
445,870
----------
</TABLE>
(continued)
103
<PAGE> 104
OHIO NATIONAL FUND, INC.
SMALL CAP GROWTH PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
HOTEL/LODGING (1.2%)
2,400 *Extended Stay America Inc. ........ $ 28,800
1,000 Four Seasons Hotels Inc. ........... 44,063
----------
72,863
----------
INDUSTRIAL SERVICES (0.9%)
700 *Superior Services Inc. ............ 18,681
1,800 *U.S. Liquids Inc. ................. 37,575
----------
56,256
----------
INSURANCE SERVICES (0.5%)
600 Nationwide Financial Services
Inc. .............................. 27,150
----------
INTERNET & RELATED (16.8%)
450 *About.com Inc. .................... 23,344
50 *Ask Jeeves Inc. ................... 700
900 *Cais Internet Inc. ................ 16,537
6,200 *Concentric Network Corp. .......... 246,450
150 *Cybersource Corp. ................. 2,212
200 *Drkoop.com Inc. ................... 3,187
400 *Earthlink Network Inc. ............ 24,575
2,000 *Edgar Online....................... 16,000
400 *Exodus Communications.............. 47,975
1,300 *F5 Networks Inc. .................. 53,300
150 *High Speed Access Corp. ........... 3,844
300 *Inktomi Corp. ..................... 39,169
750 *Juno Online Services Inc. ......... 17,250
800 *Mpath Interactive Inc. ............ 17,600
500 *Market Watch.com Inc. ............. 29,438
1,100 *Media Metrik Inc. ................. 58,575
600 *Mindspring Enterprises Inc. ....... 26,588
600 *Netopia Inc. ...................... 13,650
200 *Network Solutions.................. 15,825
850 *Nfront Inc. ....................... 12,909
700 *North Point Communications......... 25,550
1,100 *Psinet Inc. ....................... 48,125
150 *Phone.com Inc. .................... 8,400
300 *Ramp Networks Inc. ................ 4,294
400 *Realnetworks Inc. ................. 27,550
450 *Scient Corp. ...................... 21,403
200 *Silknet Software Inc. ............. 8,100
150 *Sotware.com Inc. .................. 3,478
1,400 *Sportsline USA Inc. ............... 50,225
100 *The Street.com Inc. ............... 3,600
700 *Verio Inc. ........................ 48,650
100 *Viant Corp. ....................... 3,500
1,300 *Vignette Corp. .................... 97,500
----------
1,019,503
----------
PERSONAL SERVICES (3.7%)
1,100 *Coinstar Inc. ..................... 31,556
2,400 *Gemstar Intl. Group Ltd. .......... 156,600
500 *Prepaid Legal Services Inc. ....... 13,594
2,650 *Student Advantage Inc. ............ 25,175
----------
226,925
----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
MEDICAL & RELATED (5.4%)
2,000 *Biomatrix Inc. .................... $ 43,250
800 *Cytyc Corp. ....................... 15,600
1,600 *Eclipse Surgical Tech Inc. ........ 17,300
600 *Incyte Pharmaceuticals Inc. ....... 15,863
900 *Laser Vision Centers Inc. ......... 56,700
500 *Medimmune Inc. .................... 33,875
700 *Sabratek Corp. .................... 15,312
1,400 *Summit Technology Inc. ............ 30,800
3,500 *Surmodics Inc. .................... 57,313
100 *TLC The Laser Center............... 4,800
200 *Visx Inc. ......................... 15,838
400 *Xomed Surgical Products Inc. ...... 19,475
----------
326,126
----------
PRINTING & PUBLISHING (0.5%)
200 *Consolidation Graphics Inc. ....... 10,000
750 *Playboy Enterprises CL B........... 19,922
----------
29,922
----------
REAL ESTATE AND LEASING (0.5%)
600 *CB Richard Ellis Services.......... 14,925
1,000 *Trammell Crow Co. ................. 16,438
----------
31,363
----------
RESTAURANTS (1.8%)
2,900 *Consolidated Products Inc. ........ 52,200
2,900 *Garden Fresh Restaurant Co. ....... 54,375
100 *P.J. America Inc. ................. 2,118
----------
108,693
----------
RETAIL (7.0%)
1,000 *Abercrombie & Fitch Co. CL A....... 48,000
50 *Alloy Online Inc. ................. 572
600 *Amazon. Com Inc. .................. 75,075
1,100 *American Eagle Outfitters Inc. .... 50,050
800 *Bebe Stores Inc. .................. 27,200
1,400 *Beyond.Com Corp. .................. 40,163
1,600 *Goto.com Inc. ..................... 44,800
1,600 *J. Jill Group Inc. ................ 23,400
400 *Jakks Pacific Inc. ................ 11,925
2,250 *Pacific Sunwear of California...... 54,844
1,050 *Quicksilver Inc. .................. 27,366
50 *Stamps.com Inc. ................... 875
500 *Usinternetworking Inc. ............ 21,000
50 *Value America Inc. ................ 950
----------
426,220
----------
TRANSPORTATION & RELATED (0.6%)
700 *Forward Air Corp. ................. 19,688
600 *Skywest Inc. ...................... 14,962
----------
34,650
----------
TOTAL U.S. COMMON STOCK (83.5%)
(COST $3,561,888).................. $5,061,079
----------
</TABLE>
(continued)
104
<PAGE> 105
OHIO NATIONAL FUND, INC.
SMALL CAP GROWTH PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<C> <S> <C>
UNITED KINGDOM (0.4%)
COMPUTER SERVICES (0.3%)
900 *Ecsoft Group PLC................... $ 14,119
----------
BUSINESS SERVICES (0.1%)
300 *Select Appointments Hldgs PLC
ADR................................ 7,200
----------
TOTAL UNITED KINGDOM................ 21,319
----------
FRANCE (0.9%)
COMPUTER SERVICES (0.9%)
1,500 *Business Objects SA ADR............ 54,750
----------
TOTAL FOREIGN COMMON STOCK
(1.3%) (COST $84,310).............. $ 76,069
----------
TOTAL COMMON STOCK
(84.8%) (COST $3,646,198).......... $5,137,148
----------
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------
FINANCIAL (18.9%)
$1,143,000 Star Bank 3.30% due 07/01/99
repurchase price $1,143,103
collateralized by GNMA certificates
pool # 8375 due 02/20/24 (cost
$1,143,000)........................ $1,143,000
----------
TOTAL REPURCHASE AGREEMENTS
(18.9%) (COST $1,143,000).......... $1,143,000
----------
TOTAL HOLDINGS (103.7%)
(COST $4,789,198) (a).............. $6,280,148
----------
CASH & RECEIVABLES,
NET OF LIABILITIES (-3.7%)......... (222,616)
----------
TOTAL NET ASSETS (100.0%)........... $6,057,532
==========
</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.
105
<PAGE> 106
OHIO NATIONAL FUND, INC.
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value
(note 1) (cost $4,789,198).............. $ 6,280,148
Cash in bank.............................. 977
Receivable for securities sold............ 31,760
Dividends and accrued interest
receivable.............................. 371
-----------
Total assets............................ 6,313,256
-----------
Liabilities:
Payable for securities purchased.......... 79,720
Payable for shares redeemed............... 168,630
Payable for investment management services
(note 3)................................ 4,049
Other accrued expenses.................... 3,325
-----------
Total liabilities....................... 255,724
-----------
Net assets at market value.................. $ 6,057,532
===========
Net assets consist of:
Par value, $1 per share................... $ 324,652
Paid-in capital in excess of par value.... 3,568,026
Accumulated net realized income on
investments (note 1).................... 706,679
Net unrealized appreciation on investments
(note 1)................................ 1,490,950
Undistributed net investment (loss)....... (32,775)
-----------
Net assets at market value.................. $ 6,057,532
===========
Shares outstanding (note 4)................. 324,652
Net asset value per share................... $ 18.66
===========
</TABLE>
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest................................... $ 6,241
Dividends.................................. 1,927
----------
Total investment income.................. 8,168
----------
Expenses:
Management fees (note 3)................... 16,212
Custodian fees (note 3).................... 2,368
Directors' fees (note 3)................... 170
Professional fees.......................... 737
Accounting and transfer agent fees......... 2,837
Other...................................... 1,027
----------
Total expenses........................... 23,351
----------
Net investment income.................... $ (15,183)
----------
Realized and unrealized gain on investments:
Net realized gain from investments......... $1,121,601
Net increase in unrealized appreciation on
investments.............................. 934,323
----------
Net gain on investments.................. 2,055,924
----------
Net increase in net assets from
operations............................. $2,040,741
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
106
<PAGE> 107
OHIO NATIONAL FUND, INC.
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTH ENDED 5-1-98
6-30-99 TO
(UNAUDITED) 12-31-98
---------------- ----------
<S> <C> <C>
From operations:
Net investment loss....................................... $ (15,183) $ (17,592)
Realized gain (loss) on investments....................... 1,121,601 (414,923)
Unrealized gain on investments............................ 934,323 556,627
---------- ----------
Net increase in net assets from operations............ 2,040,741 124,112
---------- ----------
From capital share transactions (note 4):
Received from shares sold................................. 2,064,242 2,148,414
Paid for shares redeemed.................................. (318,524) (1,453)
---------- ----------
Increase in net assets derived from capital share
transactions......................................... 1,745,718 2,146,961
---------- ----------
Increase in net assets............................. 3,786,459 2,271,073
Net Assets:
Beginning of period....................................... 2,271,073 0
---------- ----------
End of period............................................. $6,057,532 $2,271,073
========== ==========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTH ENDED 5-1-98
6-30-99 TO
(UNAUDITED) 12-31-98
---------------- --------
<S> <C> <C>
Per share data:
Net asset value, beginning of period........................ $10.47 $10.00
Income from investment operations:
Net investment loss....................................... (0.06) (0.09)
Net realized and unrealized gain on investments........... 8.25 0.56
------ ------
Total income from investment operations................. 8.19 0.47
------ ------
Net asset value, end of period.............................. $18.66 $10.47
====== ======
Total return (b)............................................ 78.19% 4.62%
Ratios and supplemental data (a & c):
Ratios net of fees reimbursed by advisor:
Expenses................................................ 1.23% 1.96%
Net investment income................................... (0.80)% 1.47%
Ratios assuming no fees reimbursed by advisor:
Expenses................................................ 0.00% 2.72%
Net investment income................................... 0.00% 2.23%
Portfolio turnover rate..................................... 103% 121%
Net assets at end of period (millions)...................... $ 6.1 $ 2.3
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated since inception, May 1, 1998. (not annualized).
(c) The advisor has elected to reimburse certain operating expenses of the Small
Cap Growth portfolio.
The accompanying notes are an integral part of these financial statements.
107
<PAGE> 108
OHIO NATIONAL FUND, INC. June 30, 1999 (Unaudited)
NOTES TO FINANCIAL STATEMENTS
(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.
- International Small Company Portfolio -- long-term growth of capital by
investing primarily in equity securities of foreign companies having a
market capitalization at time of purchase of $1.5 billion or less.
- 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.
- Firstar Growth and Income Portfolio -- reasonable income and long-term
capital appreciation by investing in income producing securities including
dividend-paying common, preferred stocks and fixed-income securities.
- Relative Value Portfolio -- maximum total return consistent with reasonable
risk by investing primarily in equity securities.
- 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.
108
<PAGE> 109
OHIO NATIONAL FUND, INC. June 30, 1999 (Unaudited)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- 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 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,
International Small Company, Aggressive Growth, Firstar Growth & Income, Blue
Chip, and Small Cap Growth Portfolios would not be reflected in the
computation of the portfolios' net asset value. If events materially
affecting the value of such securities or currency exchange rates occurred
during such time period, the securities are valued at their fair value as
determined in good faith by or under the direction of the Fund's Board of
Directors.
In connection with purchases and sales of securities denominated in foreign
currencies, the Fund may enter into forward foreign currency exchange
contracts (forward 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 and S&P 500 Index
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.
109
<PAGE> 110
OHIO NATIONAL FUND, INC. June 30, 1999 (Unaudited)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
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 Aggressive Growth
Portfolio currently holds investments in S&P 500 Index Future Contracts. The
futures contracts in the S&P 500 Index Portfolio and the Aggressive Growth
Portfolio at June 30, 1999 are as follows:
<TABLE>
<CAPTION>
EXPIRATION UNDERLYING FACE UNREALIZED CASH DEPOSITED AS
PORTFOLIO PURCHASED DATE AMOUNT AT VALUE GAIN/LOSS MARGIN REQUIREMENT
--------- --------- ---------- --------------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
S&P 500 253 S&P 500 Index Contracts Sept '99 $87,392,525 $3,353,463 $3,682,371
Agg Gr. 3 S&P 500 Index Contracts Sept '99 1,036,275 (43,275) 56,250
</TABLE>
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, International Small Company,
Aggressive Growth, Firstar Growth & Income, Blue Chip, and Small Cap Growth
Portfolios, in which dividends are recorded as soon after the ex-dividend
date as the fund becomes aware of such dividends), and interest income is
accrued daily as earned. Net realized gain or loss on investments and foreign
exchange transactions are determined 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, International Small
Company, Aggressive Growth, Firstar Growth & Income, Blue Chip and Small Cap
Growth 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
110
<PAGE> 111
OHIO NATIONAL FUND, INC. June 30, 1999 (Unaudited)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Cap, International Small Company, Aggressive Growth, Core Growth and Small
Cap Growth Portfolios: accumulated net investment loss has been decreased by
$262,118, $19,704, $8,190, $55,275 and $15,183 respectively, resulting in a
reclassification adjustment to decrease Paid-in capital in excess of par
value by $262,118, $19,704, $8,190, $55,275 and $15,183 respectively. This
reclassification has no effect on net assets or net asset value per share.
For Federal income tax purposes, the Bond, Omni, Small Cap, Core Growth,
Growth and Income, Social Awareness, Strategic Income, Blue Chip, Equity
Income and Small Cap Growth Portfolios had capital loss carryovers of
$274,501, $681,856, $4,198,422, $1,632,809, $3,005,094, $622,020, $97,030,
$18,271, $5,714 and $414,923 respectively, at June 30, 1999. If not offset by
capital gains, $41,235 will expire in 2003 in the Bond Portfolio, $2,893 and
$447,567 will expire in 2005 in the Bond and Core Growth Portfolios,
respectively and $230,373, $681,856, $4,198,422, $1,185,242, $3,005,094,
$622,022, $97,030, $18,271, $5,714 and $414,923 will expire in 2006 in the
Bond, Omni, Small Cap, Core Growth, Growth and Income, Social Awareness,
Strategic Income, Blue Chip, Equity Income and Small Cap Growth Portfolios,
respectively. The Board of Directors does not intend to authorize a
distribution of any net realized gain for a portfolio until the capital loss
carryover has been offset or expires.
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.
Expenses directly attributable to a portfolio are charged to that portfolio.
Expenses not directly attributed to a portfolio are allocated on the basis of
relative 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, 1999 were as follows:
<TABLE>
<CAPTION>
CAPITAL
EQUITY BOND OMNI INTERNATIONAL APPRECIATION
------------ ------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Gross unrealized:
Appreciation............................. $145,905,727 $ 367,921 $71,223,393 $ 9,921,060 $ 7,756,159
Depreciation............................. (5,550,520) (748,109) (4,813,307) (3,976,914) (2,613,663)
Net unrealized:
Appreciation (Depreciation).............. 140,355,207 (380,188) 66,410,086 5,944,147 5,142,496
</TABLE>
<TABLE>
<CAPTION>
SMALL INTERNATIONAL AGGRESSIVE CORE GROWTH &
CAP SMALL COMPANY GROWTH GROWTH INCOME
------------ ------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Gross unrealized:
Appreciation............................. $ 35,462,702 $4,325,970 $ 2,688,611 $ 4,410,185 $12,475,329
Depreciation............................. (1,795,608) (354,464) (1,936,501) (160,383) (2,769,503)
Net unrealized:
Appreciation............................. 33,667,094 3,971,506 752,109 4,249,802 9,705,826
</TABLE>
<TABLE>
<CAPTION>
FIRSTAR
SOCIAL STRATEGIC GROWTH & RELATIVE
S&P 500 AWARENESS INCOME INCOME VALUE
------------ ------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Gross unrealized:
Appreciation............................. $ 16,986,511 $ 435,226 $ 22,837 $ 125,614 $ 2,827,967
Depreciation............................. (1,936,501) (94,697) (233,528) (68,243) (173,016)
Net Unrealized:
Appreciation (Depreciation).............. 15,347,680 340,529 (210,691) 57,371 2,654,950
</TABLE>
111
<PAGE> 112
OHIO NATIONAL FUND, INC. June 30, 1999 (Unaudited)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
EQUITY HIGH INCOME SMALL CAP
BLUE CHIP INCOME BOND GROWTH
----------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Gross unrealized:
Appreciation............................ $ 588,090 $ 497,991 $ 209,600 $ 1,626,372
Depreciation............................ (137,362) (85,354) (578,307) (134,170)
Net Unrealized:
Appreciation (Depreciation)............. 450,728 412,637 (368,707) 1,492,202
</TABLE>
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term
securities) for the year ended June 30, 1999 were as follows:
<TABLE>
<CAPTION>
CAPITAL
EQUITY BOND OMNI INTERNATIONAL APPRECIATION
----------- ------------- ----------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Stocks & Bonds:
Purchases............................... $60,431,666 $ 0 $34,133,364 $304,316,799 $ 12,513,318
Sales................................... 72,481,752 1,600,608 40,480,741 316,609,593 15,437,146
U.S. Government Obligations:
Purchases............................... -- -- -- -- --
Sales................................... -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL SMALL AGGRESSIVE CORE GROWTH &
CAP COMPANY GROWTH GROWTH INCOME
----------- ------------- ----------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Stocks & Bonds:
Purchases............................... $67,379,184 $63,706,122 $27,905,492 $ 14,246,801 $148,722,046
Sales................................... 67,420,618 60,312,159 26,467,319 10,856,775 140,070,697
U.S. Government Obligations:
Purchases............................... -- -- -- -- --
Sales................................... -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
FIRSTAR
SOCIAL STRATEGIC GROWTH & RELATIVE
S&P 500 AWARENESS INCOME INCOME VALUE
----------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Stocks & Bonds:
Purchases................................ $63,987,890 $ 2,630,649 $ 1,034,363 $ 4,049,718 $ 1,501,243
Sales.................................... 35,778,926 5,863,524 947,450 3,703,514 292,594
U.S. Government Obligations:
Purchases................................ -- -- -- -- --
Sales.................................... -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
HIGH INCOME EQUITY SMALL CAP
BLUE CHIP BOND INCOME GROWTH
----------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Stocks & Bonds:
Purchases............................... $ 985,859 $ 2,697,766 $ 1,048,282 $ 4,341,033
Sales................................... 443,026 1,395,759 549,682 3,454,982
U.S. Government Obligations:
Purchases............................... -- -- -- --
Sales................................... -- -- -- --
</TABLE>
112
<PAGE> 113
OHIO NATIONAL FUND, INC. June 30, 1999 (Unaudited)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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, Firstar Growth & Income, 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 International Small
Company 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%. In addition, after January 1, 1999, the advisor began
waiving any fees in excess of 0.85% in the International Portfolio.
Under the Investment Advisory Agreement, the Fund authorizes ONI to retain
sub-advisors for the International, Capital Appreciation, Small Cap,
International Small Company, Aggressive Growth, Core Growth, Growth & Income,
Small Cap Growth, Strategic Income, Firstar Growth & Income, 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 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"), Firstar Bank, N.A. ("Firstar"), Firstar Investment Research
and Management Co., L.L.C. ("Firmco"), 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) TRPA receives from ONI a fee at an annual rate of 0.50%
of average daily net assets of the Capital Appreciation Portfolio, (b) FAM
receives from ONI a fee at an annual rate of 0.625% of the first $75 million,
0.55% of the next $75 million, 0.50% between $150 and $300 million, and 0.40%
of the average daily net asset value in excess of $300 million of the Small
Cap Portfolio; (c) SCM receives from ONI a fee at an annual rate of 0.55% of
the first $50 million, and 0.45% of average daily net asset value in excess
of $50 million of the Aggressive Growth Portfolio; (d) PBA receives from ONI
a fee at an annual rate of 0.65% of the first $50 million, 0.60% of the next
$100 million, and 0.50% of average daily net assets in excess of $150 million
of the Core Growth Portfolio: (e) 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; (f) Firstar 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) 0.65% of the first $50 million and 0.60% of average daily net
assets in excess of $50 million of the Relative Value Portfolio; (g) Firmco
receives from ONI fees at an annual rate of 0.65% of the first $50 million
and 0.60% of average daily assets in excess of $50 million of the First
Growth & Income Portfolio; and (h) FIC receives from ONI fees at an annual
rate of (i) 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, (ii) 0.50% of the first $30
million, 0.40% of the next $20 million, 0.30% of the next $25 million, and
0.25% of the average daily net assets in excess of $75 million of the High
Income Bond Portfolio, (iii) 0.40% of the first $200 million and 0.35% of
average daily net assets in excess of $200 million of the International
Portfolio, and (iv) 0.75% of the first $100 million and 0.65% of average
daily net assets in excess of $100 million of the International Small Company
Portfolio.
Effective January 1, 1999 FIC replaced SGAM as the sub-advisor for the
International and Global Contrarian Portfolios. As compensation for their
services FIC will receive from ONI fees at an annual rate of (i) 0.40% of the
first $200 million and 0.35% of average net assets in excess of $200 million
of the International Portfolio and (ii) 0.75% of the first $100 million and
0.65% of the average daily net assets in excess of $100 million of the Global
Contrarian Portfolio.
113
<PAGE> 114
OHIO NATIONAL FUND, INC. June 30, 1999 (Unaudited)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 1999 and the
year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
EQUITY MONEY MARKET BOND
---------------------- ---------------------- ----------------------
6 MONTHS YEAR 6 MONTHS YEAR 6 MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6-30-99 12-31-98 6-30-99 12-31-98 6-30-99 12-31-98
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales........... 118,331 675,941 6,741,257 6,102,024 299,878 986,062
Capital shares issued on reinvested
dividends.............................. 13,920 254,451 107,990 164,506 42,587 150,778
Capital shares redeemed.................. 1,011,417 883,690 6,721,759 4,740,526 457,499 486,752
</TABLE>
<TABLE>
<CAPTION>
OMNI INTERNATIONAL CAPITAL APPRECIATION
---------------------- ---------------------- ----------------------
6 MONTHS YEAR 6 MONTHS YEAR 6 MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6-30-99 12-31-98 6-30-99 12-31-98 6-30-99 12-31-98
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales........... 242,303 1,413,338 144,246 848,791 395,571 1,366,055
Capital shares issued on reinvested
dividends.............................. 58,668 264,859 -- 855,911 38,393 580,235
Capital shares redeemed.................. 1,162,234 872,309 1,992,566 2,444,300 910,215 443,155
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP INT'L SMALL COMPANY AGGRESSIVE GROWTH
---------------------- ---------------------- ----------------------
6 MONTHS YEAR 6 MONTHS YEAR 6 MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6-30-99 12-31-98 6-30-99 12-31-98 6-30-99 12-31-98
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales........... 470,963 918,465 122,315 346,731 262,810 667,591
Capital shares issued on reinvested
dividends.............................. -- 47 -- 211,017 -- 159,625
Capital shares redeemed.................. 352,311 381,989 263,725 252,173 287,220 249,214
</TABLE>
<TABLE>
<CAPTION>
CORE GROWTH GROWTH & INCOME S&P 500
---------------------- ---------------------- ----------------------
6 MONTHS YEAR 6 MONTHS YEAR 6 MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6-30-99 12-31-98 6-30-99 12-31-98 6-30-99 12-31-98
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales........... 445,996 447,717 999,360 2,697,893 5,118,034 4,704,361
Capital shares issued on reinvested
dividends.............................. -- 0 7,223 31,748 45,058 394,979
Capital shares redeemed.................. 138,116 315,206 383,395 416,202 646,953 366,640
</TABLE>
<TABLE>
<CAPTION>
SOCIAL AWARENESS STRATEGIC INCOME FIRSTAR GROWTH & INCOME
---------------------- ---------------------- ------------------------
6 MONTHS YEAR 6 MONTHS YEAR 6 MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6-30-99 12-31-98 6-30-99 12-31-98 6-30-99 12-31-98
--------- --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales........... 64,850 491,246 21,779 116,213 26,860 98,689
Capital shares issued on reinvested
dividends.............................. 1,665 3,763 7,386 27,950 2,673 12,199
Capital shares redeemed.................. 430,568 170,620 67,914 33,901 47,399 32,973
</TABLE>
114
<PAGE> 115
OHIO NATIONAL FUND, INC. June 30, 1999 (Unaudited)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
RELATIVE VALUE BLUE CHIP EQUITY INC.
---------------------- ---------------------- ----------------------
6 MONTHS YEAR 6 MONTHS YEAR 6 MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6-30-99 12-31-98 6-30-99 12-31-98 6-30-99 12-31-98
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales........... 105,876 486,057 70,239 287,536 54,639 216,229
Capital shares issued on reinvested
dividends.............................. 1,398 13,803 227 403 546 1,309
Capital shares redeemed.................. 69,531 285,649 18,011 6,276 2,792 6,719
</TABLE>
<TABLE>
<CAPTION>
HIGH INCOME S. CAP G.
---------------------- ----------------------
6 MONTHS YEAR 6 MONTHS YEAR
ENDED ENDED ENDED ENDED
6-30-99 12-31-98 6-30-99 12-31-98
--------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Capital shares issued on sales........... 107,301 1,046,722 127,381 217,195
Capital shares issued on reinvested
dividends.............................. 15,304 42,369 -- --
Capital shares redeemed.................. 15,924 855 19,738 186
</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.
(5) COMMITMENTS
As of June 30, 1999, the International and Global Contrarian Portfolios had
entered into forward currency contracts, as set forth below, summarized by
currency:
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
CURRENCY TO BE DELIVERED CURRENCY TO BE RECEIVED UNREALIZED
SETTLE --------------------------------- U.S. $ VAL. ------------------------------ U.S. $ VAL. ----------
DATES AMOUNT TYPE AT 06/30/99 AMOUNT TYPE AT 06/30/99 GAIN
------ ------------- ----------------- ----------- ------------- -------------- ----------- ----------
<C> <C> <S> <C> <C> <C> <C> <C>
07/15/99.. 4,422,000 Australian Dollar 2,918,741 2,769,587 U.S. Dollar 2,769,587
07/15/99.. 2,810,181 U.S. Dollar 2,810,181 4,422,000 Australian 2,918,741 $ 108,560
Dollar
07/08/99.. 804,000 Deutsche Mark 423,771 490,274 U.S. Dollar 490,274 66,503
07/08/99.. 480,143 U.S. Dollar 480,143 804,000 Deutsche Mark 423,771
07/01/99.. 28,932,000 French Franc 4,544,948 5,243,204 U.S. Dollar 5,243,204 698,256
07/01/99.. 5,152,673 U.S. Dollar 5,152,673 28,932,000 French Franc 4,544,948
07/29/99.. 1,215,749,000 Japanese Yen 10,074,572 10,702,016 U.S. Dollar 10,702,016 627,444
07/29/99.. 10,952,694 U.S. Dollar 10,952,694 1,215,749,000 Japanese Yen 10,074,572
10/05/01.. 3,650,000 New Zld Dollar 1,929,208 1,750,175 U.S. Dollar 1,750,175
10/05/01.. 1,942,165 U.S. Dollar 1,942,165 3,650,000 New Zld Dollar 1,929,208
----------- ----------- ----------
$41,229,096 $40,846,496 $1,500,763
=========== =========== ==========
<CAPTION>
UNREALIZED
SETTLE -----------
DATES LOSS
------ -----------
<C> <C>
07/15/99 $ (149,154)
07/15/99
07/08/99
07/08/99 (56,372)
07/01/99
07/01/99 (607,725)
07/29/99
07/29/99 (878,122)
10/05/01 (179,033)
10/05/01 (12,957)
-----------
$(1,883,363)
===========
</TABLE>
INTERNATIONAL SMALL COMPANY
<TABLE>
<CAPTION>
CURRENCY TO BE DELIVERED CURRENCY TO BE RECEIVED UNREALIZED
SETTLE --------------------------------- U.S. $ VAL. ------------------------------ U.S. $ VAL. ----------
DATES AMOUNT TYPE AT 06/30/99 AMOUNT TYPE AT 06/30/99 GAIN
------ ------------- ----------------- ----------- ------------- -------------- ----------- ----------
<C> <C> <S> <C> <C> <C> <C> <C>
07/29/99.. 11,356,000 Japanese Yen 94,104 99,965 U.S. Dollar 99,965 $ 5,861
07/29/99.. 102,306 U.S. Dollar 102,306 11,356,000 Japanese Yen 94,104
11/13/00.. 18,480,000 Japanese Yen 164,435 173,147 U.S. Dollar 173,147 8,712
11/13/00.. 280,341 U.S. Dollar 178,035 18,480,000 Japanese Yen 164,435
----------- ----------- ----------
$ 538,880 $ 531,651 $ 14,573
=========== =========== ==========
<CAPTION>
UNREALIZED
SETTLE -----------
DATES LOSS
------ -----------
<C> <C>
07/29/99
07/29/99 $ (8,202)
11/13/00
11/13/00 (13,600)
-----------
$ (21,802)
===========
</TABLE>
115
<PAGE> 116
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116
