<PAGE> 1
File No. 2-91214*
811-1979
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933** /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 22 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 27 /X/
(Exact Name of Registrant)
OHIO NATIONAL VARIABLE ACCOUNT B
(Name of Depositor)
THE OHIO NATIONAL LIFE INSURANCE COMPANY
(Address of Depositor's Principal Executive Offices)
One Financial Way
Cincinnati, Ohio 45242
(Depositor's Telephone Number)
(513) 794-6100
(Name and Address of Agent for Service)
Ronald L. Benedict, Corporate Vice President, Counsel and Secretary
The Ohio National Life Insurance Company
P.O. Box 237
Cincinnati, Ohio 45201
Notice to:
W. Randolph Thompson, Esq.
Of Counsel
Jones & Blouch L.L.P.
Suite 405 West
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
Approximate Date of Proposed Public Offering: As soon after the effective date
of this amendment as is practicable.
It is proposed that this filing will become effective (check appropriate space):
immediately upon filing pursuant to paragraph (b)
---
on (date) pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)(i)
---
X on May 1, 1998 pursuant to paragraph (a)(i) of Rule 485.
---
If appropriate, check the following box:
___ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE> 2
* The prospectus contained in this registration statement also relates to
variable annuity contracts no longer being sold but for which additional
purchase payments are accepted and which are covered by earlier registration
statements under Files No. 2-36591, 2-73471, 2-68456 and 2-78653.
** Certain contracts filed pursuant to Files No. 2-73471 and 2-68456 contain a
Guarantee of the Depositor. The value of the contracts to which the Guarantee
relates is undeterminable. Pursuant to Rule 456(m) under the 1933 Act, no
separate fee is being paid for the Guarantee.
OHIO NATIONAL VARIABLE ACCOUNT B
N-4 Item Caption in Prospectus
- -------- ---------------------
1 Cover Page
2 Glossary of Special Terms
3 Not applicable
4 Accumulation Unit Values
5 The Ohio National Companies
6 Deductions and Expenses
7 Description of Variable Annuity Contracts
8 Annuity Period
9 Death Benefit
10 Accumulation Period
11 Surrender and Partial Withdrawal
12 Federal Tax Status
13 Not applicable
14 Table of Contents
Caption in Statement of Additional Information
----------------------------------------------
15 Cover Page
16 Table of Contents
17 Not applicable
18 Custodian
Independent Certified Public Accountants
19 See Prospectus (Distribution of Variable Annuity
Contracts)
20 Underwriter
21 Calculation of Money Market Subaccount Yield
<PAGE> 3
Total Return
22 See Prospectus (Annuity Period)
23 Financial Statements
Caption in Part C
-----------------
24 Financial Statements and Exhibits
25 Directors and Officers of the Depositor
26 Persons Controlled by or Under Common Control with
the Depositor or Registrant
27 Number of Contractowners
28 Indemnification
29 Principal Underwriter
30 Location of Accounts and Records
31 Not applicable
32 Not applicable
<PAGE> 4
PART A
PROSPECTUS
<PAGE> 5
PROSPECTUS
FLEXIBLE PURCHASE PAYMENT
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
OHIO NATIONAL VARIABLE ACCOUNTS A AND B
THE OHIO NATIONAL LIFE INSURANCE COMPANY
ONE FINANCIAL WAY
CINCINNATI, OHIO 45242
TELEPHONE (513) 794-6452
This prospectus offers multiple funded, flexible purchase payment, individual
variable annuity contracts that provide for the accumulation of values and the
payment of annuity benefits on a variable and/or fixed basis. Unless
specifically stated otherwise, only provisions relating to the variable portion
of the contracts are described in this prospectus. The fixed portion
("Guaranteed Account") is briefly described in an appendix to the Statement of
Additional Information.
Variable annuities are designed to provide lifetime annuity payments which will
vary with the investment results of the investment vehicle chosen. The
accumulation value of a contract will vary with the investment performance of
Ohio National Fund, Inc. (the "Fund"), prior to the annuity payout date, and the
amount of each annuity payment will vary with the Fund's investment performance
subsequent to the commencement of annuity payments. There can be no assurance
that the value of a contract during the years prior to the annuity payout date
or the aggregate amount of annuity payments received after such date will equal
or exceed the purchase payments made therefor.
The variable annuity contracts offered by this prospectus are designed for (1)
annuity purchase plans adopted by public school systems and certain tax-exempt
organizations described in Section 501(c)(3) of the Internal Revenue Code (the
"Code"), qualifying for tax-deferred treatment pursuant to Section 403(b) of the
Code, (2) other employee pension or profit-sharing trusts or plans qualifying
for tax-deferred treatment under Section 401(a), 401(k) or 403(a) of the Code,
(3) individual retirement annuities qualifying for tax-deferred treatment under
Section 408 or 408A of the Code, (4) state and municipal deferred compensation
plans and (5) non-tax-qualified plans.
The minimum purchase payment is $25. Payments after the first payment may be
made at any time. Ohio National Life reserves the right to restrict total
purchase payments in excess of $1,000,000.
Purchase payments are allocated to one or more (but not more than 10 variable)
subaccounts of Ohio National Variable Account A ("VAA") for tax-qualified
contracts or Ohio National Variable Account B ("VAB") for non-tax-qualified
contracts in such portion as the contract owner may choose. VAA and VAB are
separate accounts established by The Ohio National Life Insurance Company ("Ohio
National Life"). The assets of VAA and VAB are invested in shares of the Fund, a
mutual fund having 13 portfolios in which the contracts' assets may be invested:
Equity Portfolio, Money Market Portfolio, Bond Portfolio, Omni Portfolio,
International Portfolio, Capital Appreciation Portfolio, Small Cap Portfolio,
Global Contrarian Portfolio, Aggressive Growth Portfolio, Core Growth Portfolio,
Growth & Income Portfolio, S&P 500 Index Portfolio and Social Awareness
Portfolio. (See the accompanying prospectus of the Fund which also contains
information about other portfolios that are not available for the contracts
offered herein.)
All or part of the contract's accumulation value may be withdrawn before the
annuity payout date. Amounts withdrawn may be subject to federal income tax
penalties, and a contingent deferred sales charge may be assessed equal to
7-3/4% of total purchase payments made during the 96 months immediately
preceding the withdrawal, or 7-3/4% of the amount withdrawn, if less. After the
first year, up to 10% of the accumulation value may be withdrawn each year
without this charge. Exercise of contract rights may be subject to the terms of
any qualified employee trust or annuity plan under which a contract is
purchased. This prospectus contains no information concerning such trusts or
plans. The contracts offered hereby may be revoked by the purchaser without
penalty within 20 days of their delivery.
THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE. IT SETS FORTH THE
INFORMATION ABOUT VAA, VAB AND THE VARIABLE ANNUITY CONTRACTS OFFERED BY THIS
PROSPECTUS THAT YOU SHOULD KNOW BEFORE INVESTING. ADDITIONAL INFORMATION ABOUT
VAA AND VAB HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN
STATEMENTS OF ADDITIONAL INFORMATION DATED MAY 1, 1998. THE STATEMENTS OF
ADDITIONAL INFORMATION FOR EACH OF VAA AND VAB ARE INCORPORATED HEREIN BY
REFERENCE AND ARE AVAILABLE UPON REQUEST AND WITHOUT CHARGE BY WRITING OR
CALLING OHIO NATIONAL LIFE AT THE ABOVE ADDRESS. THE TABLE OF CONTENTS FOR THE
STATEMENTS OF ADDITIONAL INFORMATION IS ON PAGE 2.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE ACCOMPANIED BY THE CURRENT PROSPECTUS OF OHIO NATIONAL
FUND, INC.
MAY 1, 1998
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
January 3, 1997............................................1
Fee Table..................................................3
Accumulation Unit Values (a)...............................5
Financial Statements..................................8
The Ohio National Companies................................8
Ohio National Life....................................8
Ohio National Variable Accounts A and B ..............8
Ohio National Fund, Inc...............................9
Distribution of Variable Annuity Contracts ................9
Deductions and Expenses...................................10
Contingent Deferred Sales Charge ....................10
Contract Administration Charge.......................10
Deduction For Administrative Expenses ...............10
Deduction For Risk Undertakings......................10
Transfer Fee.........................................11
Deduction For State Premium Tax......................11
Fund Expenses........................................11
Description of Variable Annuity Contracts ................11
20-Day Free Look.....................................11
Accumulation Period..................................11
Annuity Period.......................................14
Contract Owner Inquiries.............................17
Performance Data.....................................17
Federal Tax Status........................................18
Prior Contracts...........................................21
Accumulation Unit Values For Prior Contracts .............22
IRA Disclosure Statement..................................26
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION
Custodian
Independent Certified Public Accountants
Underwriter
Calculation of Money Market Subaccount Yield
Total Return
Transfer Limitations
The Year 2000 Issue
Appendix: Loans Under Tax-Sheltered Annuities (VAA only)
Guaranteed Account
Financial Statements for Ohio National Life and VAA or VAB
GLOSSARY OF SPECIAL TERMS
ACCUMULATION PERIOD - The period prior to the annuity payout date and during the
lifetime of the annuitant.
ACCUMULATION UNIT - A unit of measure used to determine the value of contracts
during the accumulation period.
ACCUMULATION VALUE - The cash value of an annuity contract before the annuity
payout date.
ANNUITANT - Any natural person who is to receive or is receiving annuity
payments and upon whose continuation of life annuity payments with life
contingencies depend.
ANNUITY PAYOUT DATE - The date on which annuity payments are to begin.
ANNUITY PAYMENTS - Periodic payments made to an annuitant pursuant to an annuity
contract.
ANNUITY UNIT - A unit of measure used to determine the second and subsequent
variable annuity payments and reflecting the investment performance of the
Fund.
FUND SHARES - Shares of Ohio National Fund, Inc., or shares of another
registered open-end investment company substituted therefor.
OWNER- During the lifetime of the designated annuitant and prior to the
specified annuity payout date, the owner is the person in whose name the
contract is registered. On and after the annuity payout date the annuitant
becomes the owner. After the death of the annuitant, the beneficiary
becomes the owner.
PURCHASE PAYMENTS - The amount of payments made by the owner or on his behalf
under the annuity contract.
SETTLEMENT - The application of the accumulation value of an annuity contract
under the settlement provisions contained therein.
SUBACCOUNT - Subdivisions of VAA or VAB, each of which invests exclusively in
shares of a designated portfolio of the Fund.
VALUATION PERIOD - The period of time from one determination of accumulation
unit and annuity unit values to their next determination. Such
determination is made at the same time that the net asset value of Fund
Shares is determined. See "Purchase and Redemption of Shares" in the
accompanying Fund prospectus.
1940 ACT - The Investment Company Act of 1940, as amended, or any similar
successor federal legislation.
2
<PAGE> 7
FEE TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
Contractowner Transaction Expenses
Deferred Sales Load (as a percentage of
lesser of payments made
in the prior 8 yrs, or amount surrendered) 7.75%
(Thereafter) 0%
Exchange (transfer) Fee $ 3(currently no charge for the first 4 transfers per year)
Annual Contract Fee $30
VAA AND VAB ANNUAL EXPENSES (as a percentage
of average account value)
Mortality and Expense Risk Fees*** 0.85%
Account Fees and Expenses 0.25%
-----
Total VAA and VAB Annual Expenses 1.10%
</TABLE>
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES (after fee waiver*) (as a percentage of the Fund's average net assets)
MANAGEMENT OTHER TOTAL FUND
FEES EXPENSES EXPENSES
---- -------- --------
<S> <C> <C> <C>
Equity 0.53% 0.14% 0.67%
Money Market* 0.25% 0.13% 0.38%
Bond 0.60% 0.18% 0.78%
Omni 0.55% 0.16% 0.71%
International 0.90% 0.32% 1.22%
Capital Appreciation 0.80% 0.15% 0.95%
Small Cap 0.80% 0.14% 0.94%
Global Contrarian 0.90% 0.42% 1.32%
Aggressive Growth 0.80% 0.17% 0.97%
Core Growth 0.95% 0.16% 1.11%
Growth & Income 0.85% 0.10% 0.95%
S&P 500 Index 0.40% 0.12% 0.52%
Social Awareness 0.60% 0.35% 0.95%
</TABLE>
EXAMPLE - If you surrendered your contract at the end of the applicable time
period, you would pay the following aggregate expenses on a $1,000 investment in
each subaccount, assuming 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity $97 $133 $179 $219
Money Market* 94 124 164 188
Bond 98 136 184 231
Omni 97 134 181 223
International 102 149 206 276
Capital Appreciation 99 141 193 248
Small Cap 99 141 192 247
Global Contrarian 103 152 211 286
Aggressive Growth 100 142 194 250
Core Growth 101 146 201 265
Growth & Income 99 141 193 248
S&P 500 Index 95 129 171 203
Social Awareness 99 141 193 248
</TABLE>
3
<PAGE> 8
EXAMPLE - If you do not surrender your contract at the end of the applicable
time period, you would pay the following aggregate expenses on the same
investment:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity $19 $59 $101 $219
Money Market* 16 50 86 188
Bond 20 62 107 231
Omni 19 60 103 223
International 25 75 129 276
Capital Appreciation 22 67 115 248
Small Cap 22 67 115 247
Global Contrarian 26 78 134 286
Aggressive Growth 22 68 116 250
Core Growth 23 72 124 265
Growth & Income 22 67 115 248
S&P 500 Index 17 54 93 203
Social Awareness 22 67 115 248
</TABLE>
The purpose of the above table is to help you to understand the costs and
expenses that a variable annuity contractowner will bear directly or indirectly.
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Note that the
expense amounts shown in the examples are aggregate amounts for the total number
of years indicated. Neither the table nor the examples reflect any premium taxes
that may apply to a contract, which currently range from 0% to 3.5%. The above
table and examples reflect only the charges for contracts currently offered by
this prospectus and not other contracts that may be offered by Ohio National
Life. For further details, see Deduction For State Premium Tax, page 11.
*For the Money Market Portfolio, management fees in excess of 0.25% are
presently being waived by the Fund's investment adviser. Without the waiver, the
Money Market Portfolio's Management Fee would be 0.30%, its Total Fund Annual
Expenses would be 0.43%, and its expenses would total $94 for a $1,000
investment surrendered at the end of 1 year, $126 if surrendered at the end of 3
years, $166 if surrendered at the end of 5 years or $193 if surrendered at the
end of 10 years. For a $1,000 contract not surrendered, the expenses without the
waiver would be $17 for 1 year, $51 for 3 years, $89 for 5 years or $193 for 10
years.
***The Mortality and Expense risk fees may be changed at any time, but may not
be increased to more than 1.55%. Ohio National Life has agreed that the fees
will not be increased on any contract issued pursuant to this prospectus. See
Deduction for Risk Undertakings, page 11.
4
<PAGE> 9
ACCUMULATION UNIT VALUES (a)
EQUITY SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C>
1988 $16.023258 $18.231104 310,512
1989 18.231104 22.218759 376,442
1990 22.218759 21.128705 589,220
1991 21.128705 25.116964 802,548
1992 25.116964 26.717609 1,048,285
1993 26.717609 30.151694 1,181,609
1994 30.151694 29.897240 1,288,052
1995 29.897240 37.616119 1,394,001
1996 37.616119 44.033562 1,505,499
1997 44.033562 51.466766 1,554,930
---- --------- --------- ---------
</TABLE>
MONEY MARKET SUBACCOUNT OF VAA (b)
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1988 $11.931210 $12.642674 28,514
1989 12.642674 13.616583 53,959
1990 13.616583 14.530988 92,671
1991 14.530988 15.168901 58,620
1992 15.168901 15.479601 42,940
1993 15.479601 15.731262 50,340
1994 15.731262 16.181828 69,638
1995 16.181828 16.904534 130,218
1996 16.904534 17.584720 175,232
1997 17.584720 18.327573 122,725
---- --------- --------- -------
</TABLE>
BOND SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1988 $13.640773 $14.402246 29,427
1989 14.402246 15.771471 28,554
1990 15.771471 16.819063 34,836
1991 16.819063 18.791755 53,151
1992 18.791755 19.989232 83,991
1993 19.989232 21.885503 118,872
1994 21.885503 20.817057 118,724
1995 20.817057 24.481177 130,720
1996 24.481177 25.112262 139,016
1997 25.112262 27.144385 128,523
---- --------- --------- -------
</TABLE>
OMNI SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1988 $13.379880 $15.223726 575,788
1989 15.223726 17.385702 620,509
1990 17.385702 17.525899 690,864
1991 17.524899 20.479652 689,306
1992 20.479652 21.999497 853,840
1993 21.999497 24.557054 1,156,731
1994 24.557054 24.162172 1,248,250
1995 24.162172 29.337035 1,272,672
1996 29.337035 33.527373 1,384,658
1997 33.527373 39.180721 1,431,184
---- --------- --------- ---------
</TABLE>
5
<PAGE> 10
INTERNATIONAL SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1993(c) $10.000000 $12.404596 387,372
1994 12.404596 13.259582 1,626,139
1995 13.259582 14.702847 1,803,630
1996 14.702847 16.648702 2,157,623
1997 16.648702 16.815722 2,305,256
---- --------- --------- ---------
</TABLE>
CAPITAL APPRECIATION SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1995(c) $10.000000 $11.370573 126,633
1996 11.370573 13.018249 379,717
1997 13.018249 14.832378 550,059
---- --------- --------- -------
</TABLE>
SMALL CAP SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1995(c) $10.000000 $12.201273 154,063
1996 12.201273 14.205207 454,045
1997 14.205207 15.240569 649,957
---- --------- --------- -------
</TABLE>
GLOBAL CONTRARIAN SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1995(c) $10.000000 $10.125502 3,870
1996 10.125502 11.226306 68,964
1997 11.226306 12.399654 115,590
---- --------- --------- -------
</TABLE>
AGGRESSIVE GROWTH SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1995(c) $10.000000 $10.499375 9,491
1996 10.499375 10.463801 107,442
1997 10.463801 11.646359 178,651
---- --------- --------- -------
</TABLE>
CORE GROWTH SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
<S> <C> <C> <C> <C>
1997(c) $10.000000 $ 9.586403 146,611
---- --------- --------- -------
</TABLE>
GROWTH & INCOME SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
<S> <C> <C> <C> <C>
1997(c) $10.000000 $13.509406 146,772
---- --------- --------- -------
</TABLE>
S&P 500 INDEX SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
<S> <C> <C> <C> <C>
1997(c) $10.000000 $13.031676 152,864
---- --------- --------- -------
</TABLE>
SOCIAL AWARENESS SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
<S> <C> <C> <C> <C>
1997(c) $10.000000 $12.426744 22,600
---- --------- --------- -------
</TABLE>
EQUITY SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1988 $16.408525 $18.669469 $ 191,700
1989 18.669469 22.753001 212,938
1990 22.753001 21.636728 262,249
1991 21.636728 25.720884 312,047
1992 25.720884 27.360011 388,812
1993 27.360011 30.876667 499,176
1994 30.876667 30.616106 561,394
1995 30.616106 38.520577 622,321
1996 38.520577 45.092323 680,118
1997 45.092323 52.704246 695,574
---- --------- --------- -------
</TABLE>
6
<PAGE> 11
MONEY MARKET SUBACCOUNT OF VAB (b)
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1988 $12.032975 $12.750508 10,731
1989 12.750508 13.732719 28,714
1990 13.732719 14.654912 37,310
1991 14.654912 15.298267 38,997
1992 15.298267 15.611622 15,107
1993 15.611622 15.865417 10,933
1994 15.865417 16.319825 43,614
1995 16.319825 17.048698 43,415
1996 17.048698 17.734674 83,494
1997 17.734674 18.483863 80,528
</TABLE>
BOND SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1988 $12.622887 $13.327541 22,679
1989 13.327541 14.594592 23,798
1990 14.594592 15.564009 20,973
1991 15.564009 17.389500 27,244
1992 17.389500 18.497622 39,037
1993 18.497622 20.252393 79,658
1994 20.252393 19.263675 84,726
1995 19.263675 22.654830 94,683
1996 22.654830 23.238374 100,642
1997 23.238374 25.118862 103,698
</TABLE>
OMNI SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1988 $13.307185 $15.141013 319,173
1989 15.141013 17.291232 302,288
1990 17.291232 17.429676 317,239
1991 17.429676 20.368389 314,428
1992 20.368389 21.879988 396,691
1993 21.879988 24.423644 607,420
1994 24.423644 24.030898 658,067
1995 24.030898 29.177631 646,847
1996 29.177631 33.345205 703,470
1997 33.345205 38.967842 744,774
</TABLE>
INTERNATIONAL SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1993(c) $10.000000 $12.404596 269,335
1994 12.404596 13.259582 909,768
1995 13.259582 14.702847 909,290
1996 14.702847 16.648702 1,186,643
1997 16.648702 16.815772 1,230,232
</TABLE>
CAPITAL APPRECIATION SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1995(c) $10.000000 $11.370573 130,970
1996 11.370573 13.018249 312,799
1997 13.018249 14.832378 372,993
</TABLE>
7
<PAGE> 12
SMALL CAP SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1995 (c) $10.000000 $12.201273 15,532
1996 12.201273 14.205207 147,557
1997 14.205207 15.240569 212,467
</TABLE>
GLOBAL CONTRARIAN SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1995 (c) $10.000000 $10.125502 10,852
1996 10.125502 11.226306 60,596
1997 11.226306 12.399654 106,262
</TABLE>
AGGRESSIVE GROWTH SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1995 (c) $10.000000 $10.499375 9,448
1996 10.499375 10.463801 68,715
1997 10.463801 11.646359 109,334
</TABLE>
CORE GROWTH SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1997 (c) $10.000000 $ 9.586403 89,830
</TABLE>
GROWTH & INCOME SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1997(c) $10.000000 $13.509406 144,903
</TABLE>
S&P 500 INDEX SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1997(c) $10.000000 $13.031676 103,761
</TABLE>
SOCIAL AWARENESS SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1997(c) $10.000000 $12.426744 25,632
</TABLE>
(a) Current series of variable annuity contracts commenced September 10, 1984.
For earlier series, see pages 21-26.
(b) The current annualized yield of the Money Market subaccount for the seven
days ended on December 31, 1997, was 4.39%.
(c) International subaccount commenced on April 30, 1993. Capital Appreciation
and Small Cap subaccounts commenced on March 31, 1995. Global Contrarian and
Aggressive Growth subaccounts commenced on October 2, 1995. Core Growth,
Growth & Income, S&P 500 Index and Social Awareness subaccounts commenced
on January 3, 1997.
FINANCIAL STATEMENTS
The complete financial statements of VAA or VAB, and of Ohio National Life, and
the Independent Auditors' Reports thereon, may be found in the Statements of
Additional Information for VAA and VAB.
THE OHIO NATIONAL COMPANIES
OHIO NATIONAL LIFE
Ohio National Life was organized under the laws of Ohio in 1909 as a stock life
insurance company and became a mutual life insurance company in 1959. It writes
life, accident and health insurance and annuities in 47 states, the District of
Columbia and Puerto Rico. Currently it has assets in excess of $6.3 billion and
equity in excess of $600 million. Its home office is located at One Financial
Way, Cincinnati, Ohio 45242.
OHIO NATIONAL VARIABLE ACCOUNTS A AND B
VAA and VAB were established in 1969 by Ohio National Life as separate accounts
under Ohio law for the purpose of funding variable annuity contracts. Purchase
payments for the variable annuity contracts are allocated to one or more
subaccounts of VAA or VAB. However, contract values may not be allocated to more
than 10 variable subaccounts at any one time. Income, gains and losses, whether
or not realized, from assets allocated to VAA and VAB are, as provided in the
contracts, credited to or charged against VAA or VAB without regard to other
income, gains or losses of Ohio National Life. The assets maintained in VAA and
VAB will not be charged with any liabilities arising out of any other business
conducted by Ohio National Life. Nevertheless, all obligations arising under the
contracts, including the commitment to make annuity payments, are general
corporate obligations of Ohio National Life. Accordingly, all of Ohio National
Life's assets are available to meet its obligations under the contracts. VAA and
VAB are registered as unit investment trusts under the 1940 Act.
The assets of each subaccount of VAA and VAB are invested at net asset value
(without an initial sales charge) in shares of a corresponding portfolio of the
Fund: the Equity Portfolio, Money Market Portfolio, Bond Portfolio, Omni
Portfolio (a flexible portfolio fund), International Portfolio, Capital
Appreciation Portfolio, Small Cap Portfolio, Global Contrarian Portfolio,
Aggressive Growth Portfolio, Core Growth Portfolio, Growth & Income Portfolio,
S&P 500 Index Portfolio or Social Awareness Portfolio.
8
<PAGE> 13
OHIO NATIONAL FUND, INC.
The Fund is a diversified, open-end, management investment company registered
under the 1940 Act. The value of the Fund's investments fluctuates daily and is
subject to the risk of changing economic conditions as well as the risk inherent
in the ability of management to anticipate changes necessary in such investments
to meet changes in economic conditions. The Fund receives investment advice, for
a fee, from its investment adviser, Ohio National Investments, Inc., and from
Societe Generale Asset Management Corp. (sub-adviser to the International and
Global Contrarian Portfolios), T. Rowe Price Associates, Inc. (sub-adviser to
the Capital Appreciation Portfolio), Founders Asset Management LLC
(sub-adviser to the Small Cap Portfolio), Strong Capital Management, Inc.
(sub-adviser to the Aggressive Growth Portfolio), Pilgrim Baxter & Associates,
Ltd. (sub-adviser to the Core Growth Portfolio), and Robertson Stephens
Investment Management, L.P. (sub-adviser to the Growth & Income Portfolio). For
additional information concerning the Fund, including the investment objectives
of each of its portfolios, see the attached Fund prospectus. Read the Fund
prospectus carefully before investing. The Fund prospectus contains information
about other portfolios that are not available for the contracts offered herein.
In addition to being offered to VAA and VAB, Fund shares are currently offered
to other separate accounts of Ohio National Life in connection with variable
annuity contracts and a separate account of Ohio National Life Assurance
Corporation in connection with variable life insurance contracts. In the future,
Fund shares may be offered to other insurance company separate accounts. It is
conceivable that in the future it may become disadvantageous for both variable
life and variable annuity separate accounts to invest in the Fund. Although
neither Ohio National Life nor the Fund currently foresees any such
disadvantage, the Board of Directors of the Fund will monitor events in order to
identify any material conflict between variable life and variable annuity
contractowners and to determine what action, if any, should be taken in response
thereto, including the possible withdrawal of VAA's and/or VAB's participation
in the Fund. Material conflicts could result from such things as (1) changes in
state insurance law; (2) changes in federal income tax law; (3) changes in the
investment management of any portfolio of the Fund; or (4) differences between
voting instructions given by variable life and variable annuity contractowners.
VOTING RIGHTS
Ohio National Life shall vote Fund shares held in VAA and VAB at meetings of
Fund shareholders in accordance with voting instructions received from contract
owners. The number of Fund shares for which an owner is entitled to give
instructions will be determined by Ohio National Life in the manner described
below, not more than 90 days prior to the meeting of shareholders. Fund proxy
material will be distributed to each owner together with appropriate forms for
giving voting instructions. Fund shares held in VAA and VAB, for which no timely
instructions are received, will be voted by Ohio National Life in proportion to
the instructions which are received with respect to all contracts participating
in VAA and VAB, respectively.
During the accumulation period, the number of Fund shares for which instructions
may be given to Ohio National Life is determined by dividing the variable
accumulation value of a subaccount of the contract by the net asset value of a
share of the corresponding Fund portfolio as of the same date. During the
annuity payment period, the number of Fund portfolio shares for which such
instructions may be given is determined by dividing the actuarial liability for
variable annuities in the course of payment by the net asset value of a Fund
portfolio share as of the same date. Generally, the number of votes tends to
decrease as annuity payments progress.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The variable annuity contracts are sold by Ohio National Life insurance agents
who are also registered representatives (a) of The O.N. Equity Sales Company
("ONESCO"), a wholly-owned subsidiary of Ohio National Life, registered under
the Securities Exchange Act of 1934, and a member of the National Association of
Securities Dealers, Inc. or (b) of other broker-dealers that have entered into
distribution agreements with Ohio National Equities, Inc. ("ONEQ," another
wholly-owned subsidiary of Ohio National Life), which is the principal
underwriter of the contracts. Ohio
9
<PAGE> 14
National Life pays ONEQ 6.75% of purchase payments during the first contract
year and 5.5% of purchase payments made after the contract has been in effect
for more than a year. ONEQ then pays a portion of that amount to ONESCO and the
other broker dealers as compensation for their sales efforts. ONESCO and the
other broker-dealers will remunerate their registered representatives from their
own funds. Purchase payments on which no compensation is paid to registered
representatives may not be included in amounts on which the sales compensation
will be paid to ONEQ. To the extent that the amount of the contingent deferred
sales charge received by Ohio National Life is not sufficient to recover the fee
paid to ONEQ, any deficiency will be made up from Ohio National Life's general
account assets which include, among other things, any profit from the mortality
and expense risk charges.
DEDUCTIONS AND EXPENSES
CONTINGENT DEFERRED SALES CHARGE No deduction for sales expense is made from
purchase payments. A contingent deferred sales charge may be assessed by Ohio
National Life when a contract is surrendered or a partial withdrawal is made to
defray expenses relating to the sale of the contract, including compensation to
sales personnel, cost of sales literature and prospectuses, and other expenses
related to sales activity. Such charge equals the lesser of (a) 7-3/4% of the
total purchase payments made during the 96 months immediately preceding the
surrender or partial withdrawal, or (b) 7-3/4% of the amount being surrendered
or withdrawn. On or after the first contract anniversary, a partial withdrawal
of not more than 10% of the accumulation value (as of the date the partial
withdrawal is requested) may be made once each contract year without the
imposition of the contingent deferred sales charge. The charge does not apply to
surrenders or withdrawals from contracts issued in connection with Ohio National
Life's executive officers' and directors' voluntary deferred compensation plan.
The charge will not be imposed when the values of one or more contracts owned by
the trustee of a retirement plan qualifying under Section 401, 403(b) or 457 of
the Code are transferred to a group annuity contract issued by Ohio National
Life. If the contract owner uses values of at least $250,000 from an Ohio
National Life fixed annuity to provide the purchase payment for a contract
offered by this prospectus, this contract will be treated (for purposes of
determining the contingent deferred sales charge) as if it were issued at the
same time as the fixed annuity and as if the purchase payment made for the
fixed annuity had been made for this contract.
CONTRACT ADMINISTRATION CHARGE
Each year on the contract anniversary (or at the time of surrender of the
contract), Ohio National Life will deduct a contract administration charge of
$30 from the accumulation value to reimburse it for the expenses relating to the
maintenance of the contract. Such charge is not designed to produce a profit and
Ohio National Life does not expect to recover from such charge any amount in
excess of accumulated administrative expenses. Ohio National Life guarantees not
to change the contract administration charge. The charge is not made after the
annuity payout date.
DEDUCTION FOR ADMINISTRATIVE EXPENSES
A deduction is made at the end of each valuation period equal to 0.25% on an
annual basis of the contract value for administrative expenses. This deduction
is not designed to produce a profit but to reimburse Ohio National Life for
expenses incurred for accounting, auditing, legal, contract owner services,
reports to regulatory authorities and contract owners, contract issue, etc., not
covered by the contract administration charge.
DEDUCTION FOR RISK UNDERTAKINGS
Prior to the annuity payout date, Ohio National Life guarantees that the
accumulation value of all contracts will not be affected by any excess of sales
and administrative expenses over the deductions provided therefor. Ohio National
Life also guarantees to pay a death benefit in the event of the annuitant's
death prior to the annuity payout date (see Death Benefit, page 12). After the
annuity payout date, Ohio National Life guarantees that variable annuity
payments will not be affected by adverse mortality experience or expenses.
For assuming these risks, Ohio National Life, in determining the accumulation
unit values and the annuity unit values for each subaccount, makes a deduction
from the applicable investment results equal to 0.85% of the contract value on
an annual basis. Such deduction may be decreased by Ohio National Life at any
time and may be increased not more frequently than annually to not more than
1.55% on an annual basis. However, Ohio National Life has agreed that the
deduction for these risk undertakings for contracts purchased on and after
November 1, 1997 shall not be increased to more than the rate in effect at the
time the contract is issued. Ohio National Life may discontinue this limitation
on its right to increase the deduction, but only as to contracts purchased after
notice of such discontinuance. Although Ohio National Life views the risk charge
as an indivisible whole, of the amount currently being deducted, it has
estimated that a reasonable allocation would be 0.35% for mortality risk, and
0.5% for expense risk. Although Ohio National Life hopes to realize a profit
10
<PAGE> 15
from this charge, if the deduction is insufficient to cover the actual risk
involved, the loss will fall on Ohio National Life; conversely, if the deduction
proves more than sufficient, the excess will be a gain to Ohio National Life.
TRANSFER FEE
A transfer fee of $3 (which may be increased to $15) is made for each transfer
from one subaccount to another. The fee is charged against the subaccount from
which the transfer is effected. Currently, no fee is charged for the first four
transfers each year.
DEDUCTION FOR STATE PREMIUM TAX
Most states do not presently charge a premium tax for these contracts. Where a
tax applies, the rates for tax-qualified contracts are presently 0.5% in
California, 1.0% in Puerto Rico and West Virginia, 2.0% in Kentucky and 2.25% in
the District of Columbia. For non-tax-qualified contracts, the rates are 1.0% in
Puerto Rico, West Virginia and Wyoming, 1.25% in South Dakota, 2.0% in Kansas,
Kentucky and Maine, 2.25% the District of Columbia, 2.35% in California and 3.0%
in Nevada. The deduction for premium taxes will be made when incurred. Normally,
that is not until annuity payments begin. However, in Kansas, South Dakota and
Wyoming, they are presently being deducted from purchase payments.
FUND EXPENSES
There are deductions from, and expenses paid out of, the assets of the Fund.
These are described in the attached Fund prospectus.
DESCRIPTION OF VARIABLE ANNUITY CONTRACTS
20-DAY FREE LOOK
The contract owner may revoke the contract at any time until the end of 20 days
after receipt of the contract and receive a refund of the entire purchase price.
To revoke, the owner must return the contract to Ohio National Life within the
20 day period. In those states where required by state law, the value of the
contract as of the date of cancellation will be returned in lieu of the entire
purchase price in case of revocation during the 20 day free look period.
ACCUMULATION PERIOD
PURCHASE PAYMENT PROVISIONS
The contracts provide for minimum purchase payments of $25. Ohio National Life
reserves the right to restrict total purchase payments in excess of $1,000,000.
Subject to these limits, payments may be made at any time. Failure to make
payments shall not constitute a default, but could result in involuntary
termination (see Ohio National Life's Right to Terminate, page 12).
ACCUMULATION UNITS
Prior to the annuity payout date, the contract value is measured by accumulation
units. Each purchase payment results in the crediting of accumulation units to
the contract (see Crediting Accumulation Units, below). The number of
accumulation units so credited remains constant but the dollar value of
accumulation units will vary depending upon the investment results of the
particular subaccount to which payments are allocated.
CREDITING ACCUMULATION UNITS
Application forms or orders, together with the first purchase payment, are
forwarded to the home office of Ohio National Life for acceptance. Upon
acceptance, a contract is issued to the contract owner, and the first purchase
payment is then credited to the contract in the form of accumulation units.
Initial purchase payments are credited not later than two business days after
receipt if all information necessary for issuing a contract and processing the
purchase payment are complete. If this cannot be done within five business
days, the purchase payment will be returned immediately to the applicant unless
the applicant specifically consents to having Ohio National Life retain the
purchase payment until the necessary information is completed. After that, the
purchase payment will be credited within two
11
<PAGE> 16
business days. Subsequent purchase payments are sent directly to the home office
of Ohio National Life and are applied to provide that number of accumulation
units (for each subaccount) determined by dividing the amount of the purchase
payment by the value of the appropriate accumulation unit next computed after
the payment is received at the home office of Ohio National Life.
ALLOCATION OF PURCHASE PAYMENTS
You may direct the allocation of your purchase payments among up to 10 variable
subaccounts of VAA or VAB and the Guaranteed Account. The amount allocated to
any subaccount or the Guaranteed Account must equal a whole percentage. The
allocation of future purchase payments may be changed at any time upon written
notice to the home office of Ohio National Life.
ACCUMULATION UNIT VALUE AND ACCUMULATION VALUE
The accumulation unit value of each subaccount of VAA and VAB was set at $10
when the first payment for these contracts was allocated to each subaccount. The
accumulation unit value for any subsequent valuation period is determined by
multiplying the accumulation unit value for the immediately preceding valuation
period by the net investment factor (described below) for such subsequent
valuation period. The accumulation value is determined by multiplying the total
number of accumulation units (for each subaccount) credited to the contract by
the accumulation unit value (for such subaccount) for the valuation period for
which the accumulation value is being determined.
NET INVESTMENT FACTOR
The net investment factor is a quantitative measure of the investment results of
each subaccount of VAA and VAB. The net investment factor for each subaccount
for any valuation period is determined by dividing (a) by (b), then subtracting
(c) from the result, where:
(a) is -
(1) the net asset value of a share in the appropriate portfolio of the Fund
determined as of the end of a valuation period, plus
(2) The per share amount of any dividends or other distributions declared
for that portfolio by the Fund if the "ex- dividend" date occurs during
the valuation period, plus or minus
(3) per share charge or credit for any taxes paid or reserved for which is
determined by Ohio National Life to result from the maintenance or
operation of that subaccount of VAA or VAB; (No federal income taxes
are applicable under present law.)
(b) is the net asset value of a share in the appropriate portfolio of the Fund
determined as the end of the preceding valuation period; and
(c) is the deduction for administrative and sales expenses and risk
undertakings. (See Deduction for Administrative Expenses, page 10, and,
Deduction for Risk Undertakings, page 10.)
OHIO NATIONAL LIFE'S RIGHT TO TERMINATE
Ohio National Life may, at its option, require surrender of a contract on any
anniversary when the accumulation value is less than the lesser of (a) $1,000 or
(b) $250 times the number of years the contract has been in force. Such
termination could have adverse tax consequences. (See Federal Tax Status, page
18.) Such termination will not be made on an individual retirement annuity (IRA)
if a purchase payment has been made during the preceding two years, nor will it
be made on an annuity funding a Section 403(b) salary reduction agreement.
SURRENDER AND PARTIAL WITHDRAWAL
Prior to the annuity payout date, the owner of a contract may surrender (totally
withdraw the value of) his or her contract for its accumulation value or elect a
partial (at least $100) withdrawal therefrom. These transactions may be subject
to the contingent deferred sales charge described on page 10. Such charge is a
percentage of the total amount withdrawn. For example, if a partial withdrawal
of $100 is requested, Ohio National Life would pay you $100, but the total
amount deducted from the accumulation value would be $108.40 (i.e., $108.40 x
7-3/4% = $8.40). Unless
12
<PAGE> 17
otherwise specified, the withdrawal will be made pro-rata from the values of
each subaccount. The amount available for withdrawal is the sum of the
subaccount values less the contingent deferred sales charge, if any. In the case
of a complete surrender, the amount payable is also reduced by the amount of the
contract administration charge. Payment by Ohio National Life shall be made
within seven days from the date of receipt of the request for such payment
except as it may be deferred under the circumstances described below. Surrenders
and partial withdrawals are limited or not permitted in connection with certain
tax-qualified retirement plans. See Texas Optional Retirement Program, page 14,
and Tax Deferred Annuities, page 19. For tax consequences of a surrender or
withdrawal, see Federal Tax Status, page 18.
Occasionally Ohio National Life may receive a request for a surrender or partial
withdrawal which includes contract values derived from purchase payments which
have not cleared the banking system. Ohio National Life may delay mailing that
portion which relates to such payments until the check for the purchase payment
has cleared. Ohio National Life requires the return of the contract in the case
of a complete surrender.
The right to withdraw may be suspended or the date of payment postponed (1) for
any period during which the New York Stock Exchange is closed (other than
customary weekend and holiday closings) or during which trading on the Exchange,
as determined by the Securities and Exchange Commission, is restricted; (2) for
any period during which an emergency, as determined by the Commission, exists as
a result of which disposal of securities held in the Fund is not reasonably
practical, or it is not reasonably practical to determine the value of the
Fund's net assets; or (3) or such other periods as the Commission may by order
permit for the protection of security holders.
TRANSFERS AMONG SUBACCOUNTS
Contract values may be transferred from one subaccount to another upon the
request of the owner. Transfers may be made at any time during the accumulation
period. The amount of any such transfer must be at least $300 (or the entire
value of the contract's interest in a subaccount, if less). Ohio National
reserves the right to limit the number, frequency, method or amount of
transfers. Transfers from any portfolio of the Fund on any one day may be
limited to 1% of the previous day's total net assets of that portfolio if Ohio
National Life or the Fund in its or their discretion, believes that the
portfolio might otherwise be damaged. After the annuity payout date, transfers
among subaccounts can only be made once each calendar quarter. Such transfers
may then be made without a transfer fee. (See Transfer Fee, page 11, and
Transfers After Annuity Payout Date, page 16). Not more than 20% of a
contract's guaranteed accumulation value (or $1,000, if greater) as of the
beginning of a contract year may be transferred to variable subaccounts during
that contract year.
SCHEDULED TRANSFERS (DOLLAR COST AVERAGING)
Ohio National Life administers a scheduled transfer ("DCA") program enabling you
to preauthorize automatic monthly or quarterly transfers of a specified dollar
amount of at least $300, (a) from any variable subaccount(s) to any other
subaccount(s), including the Guaranteed Account, or (b) from the Guaranteed
Account to any variable subaccount(s) if the DCA program is established at the
time the contract is issued, the DCA program is scheduled to begin within 6
months of contract issue and the term of the DCA program does not exceed 2
years. For transfers from variable subaccounts, at least 12 transfers must be
scheduled and the term of the DCA program may not exceed 5 years. No transfer
fee is charged for DCA transfers. Ohio National Life may discontinue the DCA
program at any time. You may also discontinue further DCA transfers by giving
Ohio National Life written notice at least 7 business days before the next
scheduled transfer.
DCA generally has the effect of reducing the risk of purchasing at the top, and
selling at the bottom, of market cycles. DCA transfers from the Guaranteed
Account or from a fund with a stabilized net asset value, such as the Money
Market subaccount, will generally reduce the average total cost of indirectly
purchasing Fund shares because greater numbers of shares will be purchased when
the share prices are lower than when prices are higher. However, DCA does not
assure you of a profit, nor does it protect against losses in a declining
market. Moreover, for transfers from a subaccount not having a stabilized net
asset value, DCA will have the effect of reducing the average price of the
shares being redeemed. DCA might also be used to systematically transfer
accumulation values from variable subaccounts to the Guaranteed Account, in
anticipation of retirement, in order to reduce the risk of making a single
transfer during a low market.
13
<PAGE> 18
TELEACCESS
If the contract owner first submits a pre-authorization form to Ohio National
Life, contract and unit values and interest rates can be checked and transfers
may be made by telephoning Ohio National Life between 7:00 a.m. and 7:00 p.m.
(Eastern time) on days that it is open for business, at 1-800-366-6654, #8. Ohio
National Life will honor pre-authorized telephone transfer instructions from
anyone who is able to provide the personal identifying information requested via
TeleAccess. Telephone transfer requests will not be honored after the
annuitant's death. For added security, transfers are confirmed in writing sent
to the owner on the next business day. However, if a transfer cannot be
completed as requested, a customer service representative will contact the owner
in writing sent within 48 hours of the TeleAccess request.
DEATH BENEFIT
In the event of the death of the annuitant and any contingent annuitant prior to
the annuity payout date, the contract provides a death benefit to be paid to a
designated beneficiary. (This death benefit is not available on any contract
purchased through a bank in Puerto Rico.) The amount of the death benefit will
be determined as of the end of the valuation period in which written notice of
death of the annuitant is received by Ohio National Life. It will be paid in
one sum into an interest-bearing checking account established in the
beneficiary's name with Bank One, Springfield, Illinois, unless the owner or
beneficiary elects settlement under one or more of the settlement options
provided in the contract. The checking account will bear interest based upon
then current money market rates. The beneficiary will then be able to write
checks against such account at any time and in any amount up to the total in
the account. Such checks must be for a minimum of $250. The amount of death
benefit is the accumulation value of the contract or, if greater, the total
purchase payments made less any partial withdrawals.
OHIO NATIONAL LIFE EMPLOYEE DISCOUNT
Ohio National Life and its affiliated companies offer a credit on the purchase
of contracts by any of their employees, directors or retirees, or their spouse
or the surviving spouse of a deceased retiree, covering any of the foregoing or
any of their minor children, or any of their children ages 18 to 21 who is
either (i) living in the purchaser's household or (ii) a full-time college
student being supported by the purchaser, or any of the purchaser's minor
grandchildren under the Uniform Gifts to Minors Act. This credit is treated as
additional income under the contract. The amount of the credit equals 3.2% of
all purchase payments made in the first contract year and 5.5% of purchase
payments made in the second through sixth contract years. Ohio National Life
credits the Guaranteed Accumulation Account of the eligible person's contract in
the foregoing amounts at the time of each payment made by the eligible person.
TEXAS STATE OPTIONAL RETIREMENT PROGRAM
Under the Texas State Optional Retirement Program (the "Program"), purchase
payments may be excluded from the gross income of state employees for federal
tax purposes to the extent that such purchase payments do not exceed the
exclusion allowance provided by the Code. The Attorney General of Texas has
interpreted the Program as prohibiting any participating state employee from
receiving the surrender value of a contract funding benefits under the Program
prior to termination of employment or the state employee's retirement, death or
total disability. Therefore, no surrender or partial withdrawal by a participant
in the Program will be allowed until the first of these events occurs.
ANNUITY PERIOD
ANNUITY PAYOUT DATE
Annuity payments under a contract will begin on the annuity payout date. This
date is selected by the owner at the time the contract is issued and must be at
least 30 days after the contract date. It may be changed from time to time by
the owner so long as the annuity payout date selected is the first day of any
month at least 30 days after the date of such change. The contract restricts the
annuity payout date to not later than the first of the month following the
annuitant's 90th birthday; however, this restriction may be modified by
applicable state law or it may be waived by mutual agreement between Ohio
National Life and the owner.
14
<PAGE> 19
The contracts include Ohio National Life's assurance (except for option 1(e),
below) that annuity payments will be paid for the lifetime of the annuitant (and
joint annuitant, if any) in accordance with the annuity rates contained in the
contract, regardless of actual mortality experience.
Other than in connection with annuity option 1(e), described below, once
annuity payments commence, the contract cannot be surrendered for cash except
that, upon the death of the annuitant, the beneficiary shall be entitled to
surrender the contract for the commuted value of any remaining period- certain
payments. Surrenders and partial withdrawals from option 1(e) are permitted at
any time.
ANNUITY OPTIONS
The owner may elect one or more of the following annuity options, and may change
such election anytime before the annuity payout date.
Option 1(a): Life Annuity with installment payments for the lifetime
of the annuitant (under this option it is possible for the
annuitant to receive only one payment; this could happen if
the annuitant should die before receiving the second payment;
there is no residual value of the contract after annuitant's
death).
Option 1(b): Life Annuity with installment payments guaranteed for
five years and continuing thereafter during the remaining
lifetime of the annuitant.
Option 1(c): Life Annuity with installment payments guaranteed for
ten years and continuing thereafter during the remaining
lifetime of the annuitant.
Option 1(d): Installment Refund Life Annuity with payments guaranteed
for a period certain and continuing thereafter during the
remaining lifetime of the annuitant. The number of
period-certain payments is equal to the amount applied under
this option divided by the amount of the first payment.
Option 1(e): Installment Refund Annuity with payments guaranteed for a
fixed number (up to thirty) of years and the remaining
annuity values may be commuted (surrendered) at any time.
This option is available for variable annuity payments only.
Although the deduction for risk undertakings is taken from
annuity unit values, Ohio National Life has no mortality
risk during the annuity payout period under this option.
Option 2(a): Joint & Survivor Life Annuity with installment payments
during the lifetime of an annuitant and continuing during the
lifetime of a designated contingent annuitant (under this
option it is possible for the annuitant and contingent
annuitant to receive only one payment; this could happen if
both were to die before receiving the second payment).
Option 2(b): Joint & Survivor Life Annuity with installment payments
guaranteed for ten years and continuing thereafter during the
remaining lifetime of the annuitant or a designated contingent
annuitant.
Other settlement options are available as agreed to by Ohio National Life.
Unless the contract owner directs otherwise, as of the annuity payout date the
contract values will be applied to provide annuity payments pro-rata from each
subaccount in the same proportion as the contract values immediately prior to
the annuity payout date.
If no election is in effect on the annuity payout date, the accumulation value
of the contract will be applied under Option 1(c) (except that certain contracts
might require a Joint and Survivor Annuity pursuant to the Pension Reform Act of
1974, as amended) with the beneficiary as payee for any remaining period-certain
installments payable after the death of the annuitant. Options 2(a) and 2(b) are
available only with the consent of Ohio National Life if the contingent
annuitant is not related to the annuitant.
The Internal Revenue Service has not ruled on the tax treatment of a commutable
variable annuity. If you select Option 1(e), it is possible that the IRS could
determine that the entire value of the annuity is fully taxable at the time you
elect Option 1(e) or that variable annuity payments under this option should not
be taxed under the annuity rules (see Federal Tax Status, page 18), which could
result in your payments being fully taxable to you. Should the IRS so rule, Ohio
National Life may be required to tax report up to the full value of the annuity
to you as taxable income.
15
<PAGE> 20
DETERMINATION OF AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
The first variable annuity payment is determined by applying the accumulation
value for each subaccount in accordance with the settlement option tables
contained in the contract. The rates contained in those tables depend upon the
annuitant's (and any contingent annuitant's) age and sex and the option
selected. Contracts issued to plans sponsored by employers subject to Title VII
of the Civil Rights Act of 1964 or similar state statutes use annuity tables
which do not vary with annuitant's sex. The accumulation value to be applied is
determined at the end of a valuation period (selected by Ohio National Life and
uniformly applied) not more than 10 valuation periods before the annuity payout
date.
If the amount to be applied under an option is less than $5,000, the option
shall not be available and the accumulation value shall be paid in a single sum
to the annuitant. If the first periodic payment under any option would be less
than $25, Ohio National Life reserves the right to change the frequency of
payments so that the first such payment is at least $25.
ANNUITY UNIT AND THE DETERMINATION OF SUBSEQUENT PAYMENTS
Subsequent variable annuity payments will vary to reflect the investment
performance of each applicable subaccount. The amount of each subsequent payment
is determined by annuity units. The number of annuity units for each subaccount
is determined by dividing the dollar amount of the first annuity payment from
each subaccount by the value of the subaccount annuity unit for the same
valuation period used to determine the accumulation value of the contract
applied to provide annuity payments. This number of annuity units remains fixed
during the annuity payment period unless changed as provided below.
The annuity unit value for each subaccount was set at $10 for the valuation
period as of which the first variable annuity payable from each subaccount of
VAA and VAB was calculated. The annuity unit value for each subsequent valuation
period equals the annuity unit value for the immediately preceding valuation
period multiplied by the net investment factor (see page 12) for such subsequent
valuation period and by a factor (0.9998925 for a one-day valuation period) to
neutralize the assumed interest rate discussed below.
The dollar amount of each subsequent variable annuity payment is equal to the
fixed number of annuity units for each subaccount multiplied by the value of the
annuity unit for the valuation period.
The annuity rate tables contained in the contracts are based on the Progressive
Annuity Mortality Table with compound interest at the effective rate of 4% per
year. A higher interest assumption would mean a higher initial annuity payment
but a more slowly rising series of subsequent annuity payments if annuity unit
values were increasing (or a more rapidly falling series of subsequent annuity
payments if annuity unit values were decreasing). A lower interest assumption
would have the opposite effect. If the actual net investment rate were equal to
the assumed interest rate, annuity payments would be level.
TRANSFERS AFTER ANNUITY PAYOUT DATE
After annuity payments have been made for at least 12 months, the annuitant can,
once each calendar quarter, change the subaccount(s) on which variable annuity
payments are based. On at least 30 days written notice to Ohio National Life at
its home office, that portion of the periodic variable annuity payment directed
by the annuitant will be changed to reflect the investment results of a
different subaccount. The annuity payment immediately after such change will be
the amount that would have been paid without such change. Subsequent payments
will reflect the new mix of subaccount allocation.
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<PAGE> 21
OTHER CONTRACT PROVISIONS
ASSIGNMENT
Any amount payable in settlement of the contracts may not be commuted,
anticipated, assigned or otherwise encumbered, or pledged as loan collateral to
any person other than Ohio National Life. To the extent permitted by law, no
such amounts shall be subject in any way to any legal process to subject them to
payment of any claims against an annuitant before the annuity payout date. A
tax-qualified contract may not, but a non-tax-qualified contract may, be
collaterally assigned before the annuity payout date. Ownership of a contract
may not be transferred except to (1) the annuitant, (2) a trustee or successor
trustee of a pension or profit-sharing trust which is qualified under Section
401 of the Code, or (3) the employer of the annuitant provided that the contract
after transfer is maintained under the terms of a retirement plan qualified
under Section 403(a) of the Code for the benefit of the annuitant, or (4) as
otherwise permitted by laws and regulations governing plans for which the
contract may be issued. Ownership of a non-tax-qualified contract may be
transferred.
PERIODIC REPORTS
Ohio National Life will furnish each owner, once each six months prior to the
annuity payout date, a statement showing the number of accumulation units
credited to the contract by subaccount and the accumulation unit value of each
unit as of the end of the preceding half year. In addition, as long as the
contract remains in effect, Ohio National Life will forward such periodic
reports as may be furnished it by the Fund.
SUBSTITUTION FOR FUND SHARES
If investment in the Fund is no longer possible or in Ohio National Life's
judgment becomes inappropriate to the purposes of the contract, Ohio National
Life may substitute one or more other mutual funds. Substitution may be made
with respect to both existing investments and the investment of future purchase
payments. However, no such substitution will be made without any necessary
approval of the Securities and Exchange Commission. We may also add other
investment portfolios of the Fund or of additional mutual funds as eligible
investments of VAA or VAB.
CONTRACT OWNER INQUIRIES
Any questions from contract owners should be directed to Ohio National Life,
Variable Annuity Administration, P.O. Box 2669, Cincinnati, Ohio 45201;
telephone 1-800-366-6654 (8:30 a.m. to 4:30 p.m., Eastern time).
PERFORMANCE DATA
Ohio National Life may advertise performance data for the various Fund
portfolios showing the percentage change in the value of an accumulation unit
based on the performance of the applicable portfolio over a period of time
(usually a calendar year). Such percentage change is determined by dividing the
increase (or decrease) in value for the unit by the accumulation unit value at
the beginning of the period. This percentage figure will reflect the deduction
of any asset-based charges under the contract but will not reflect the deduction
of any applicable contract administration charge or contingent deferred sales
charge. The deduction of any applicable contract administration charge or
contingent deferred sales charge would reduce any percentage increase or make
greater any percentage decrease.
Any such advertising will also include average annual total return figures
calculated as shown in the Statement of Additional Information. The average
annual total return figures will reflect the deduction of applicable contract
administration charges and contingent deferred sales charges as well as
applicable asset-based charges.
Ohio National Life may also distribute sales literature comparing separate
account performance to the Consumer Price Index or to such established market
indexes as the Dow Jones Industrial Average, the Standard & Poor's 500 Stock
Index, IBC's Money Fund Reports, Lehman Brothers Bond Indices, the Morgan
Stanley Europe Australia Far East Index, Morgan Stanley World Index, Russell
2000 Index, or other variable annuity separate accounts or mutual funds with
investment objectives similar to those of the subaccounts.
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<PAGE> 22
FEDERAL TAX STATUS
The following discussion of federal income tax treatment of amounts received
under a variable annuity contract is not exhaustive, does not purport to cover
all situations, and is not intended as tax advice. A qualified tax adviser
should always be consulted with regard to the application of law to individual
circumstances. Tax laws can change, even with respect to contracts that have
already been issued. Tax law revisions, with unfavorable consequences to
contracts offered by this prospectus, could have retroactive effect on
previously issued contracts or on subsequent voluntary transactions in
previously issued contracts.
Ohio National Life is taxed as a life insurance company under Subchapter L of
the Internal Revenue Code (the "Code"). Since the operations of VAA and VAB are
a part of, and are taxed with, the operations of Ohio National Life, VAA and VAB
are not separately taxed as "regulated investment companies" under Subchapter M
of the Code.
As to tax-qualified contracts, no federal income tax is payable under present
law on dividend income or capital gains distributions from Fund Shares held in
VAA or upon capital gains realized by VAA on redemption of Fund Shares. When a
non-tax-qualified contract is issued in connection with a deferred compensation
plan or arrangement, all rights, discretions and powers relative to the contract
are vested in the employer and you must look only to your employer for the
payment of deferred compensation benefits. Generally, in that case, an annuitant
will have no "investment in the contract" and amounts received by you from your
employer under a deferred compensation arrangement will be taxable in full as
ordinary income in the year of receipt.
The contracts described in this prospectus are considered annuity contracts
under Section 72 of the Code, which generally provides for taxation of
annuities. Under existing provisions of the Code, any increase in the
accumulation value of the contract is not taxable to you as the owner or
annuitant until you receive it, either in the form of annuity payments, as
contemplated by the contract, or in some other form of distribution (provided
that the owner of a non-tax qualified contract must be a natural person for this
purpose). With certain exceptions, where the owner of a non-tax qualified
contract is a non-natural person (corporation, partnership or trust) any
increase in the accumulation value of the contract attributable to purchase
payments made after February 28, 1986 will be treated as ordinary income
received or accrued by the contract owner during the current tax year.
When annuity payments commence under the contract each payment is taxable under
Section 72 of the Code as ordinary income in the year of receipt if the
annuitant has neither paid any portion of the purchase payments for the contract
nor has previously been taxed on any portion of the purchase payments. If any
portion of the purchase payments has been paid from or included in your taxable
income, this aggregate amount will be considered your "investment in the
contract." You will be entitled to exclude from your taxable income a portion of
each annuity payment equal to your "investment in the contract" divided by the
period of expected annuity payments, determined by your life expectancy and the
form of annuity benefit. Once your "investment in the contract" is recovered,
the entire portion of each annuity payment will be included in your taxable
income.
If an election is made to receive the accumulated value in a single sum in lieu
of annuity payments, any amount received or withdrawn in excess of the
"investment in the contract" will normally be taxed as ordinary income in the
year received. A partial withdrawal of contract values is taxable as income to
the extent that the accumulated value of the contract immediately before the
payment exceeds the "investment in the contract." Such a withdrawal is treated
as a distribution of earnings first and only second as a recovery of your
"investment in the contract." Any part of the value of the contract that is
assigned or pledged to secure a loan will be taxed as if it had been a partial
withdrawal and may be subject to a penalty tax.
There is a penalty tax equal to 10% of any amount that must be included in gross
income for tax purposes. The penalty will not apply to a redemption that is (1)
received on or after the taxpayer reaches age 59-1/2; (2) made to a beneficiary
on or after the death of the annuitant; (3) attributable to the taxpayer's
becoming disabled; (4) made as a series of substantially equal periodic payments
for the life of the annuitant (or joint lives of the annuitant and beneficiary);
(5)
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<PAGE> 23
from a contract that is a qualified funding asset for purposes of a structured
settlement; (6) made under an annuity contract that is purchased with a single
premium and with an annuity payout date not later than a year from the purchase
of the annuity; (7) incident to divorce, or (8) taken from an IRA for a
qualified first-time home purchase (up to $10,000) or qualified education
expense. If an election is made not to have withholding apply to the early
withdrawal or if an insufficient amount is withheld, the contract owner may be
responsible for payment of estimated tax. You may also incur penalties under the
estimated tax rules if the withholding and estimated tax payments are not
sufficient. Failure to provide your taxpayer identification number will
automatically subject any payments under the contract to withholding.
TAX-DEFERRED ANNUITIES
Under the provisions of Section 403(b) of the Code, purchase payments made for
annuity contracts purchased for employees by public educational institutions and
certain tax-exempt organizations which are described in Section 501(c)(3) of the
Code are excludable from the gross income of such employees to the extent that
the aggregate purchase payments plus any other amounts contributed to the
purchase of a contract and toward benefits under qualified retirement plans do
not exceed the exclusion allowance determined for the employee as set forth in
Sections 403(b) and 415 of the Code. Employee contributions are, however,
subject to social security (FICA) tax withholding. All amounts received by an
employee under a contract, either in the form of annuity payments or cash
withdrawal, will be taxed under Section 72 of the Code as ordinary income for
the year received, except for exclusion of any amounts representing "investment
in the contract." Under certain circumstances, amounts received may be used to
make a "tax-free rollover" into one of the types of individual retirement
arrangements permitted under the Code. Amounts received that are eligible for
"tax-free rollover" will be subject to an automatic 20% withholding unless such
amounts are directly rolled over from the tax-deferred annuity to the individual
retirement arrangement.
With respect to earnings accrued and purchase payments made after December 31,
1988, pursuant to a salary reduction agreement under Section 403(b) of the Code,
distributions may be paid only when the employee (a) attains age 59-1/2, (b)
separates from the employer's service, (c) dies, (d) becomes disabled as defined
in the Code, or (e) incurs a financial hardship as defined in the Code. In the
case of hardship, cash distributions may not exceed the amount of such purchase
payments. These restrictions do not affect rights to transfer investments among
the subaccounts and do not limit the availability of transfers between
tax-deferred annuities.
QUALIFIED PENSION OR PROFIT-SHARING PLANS
Under present law, purchase payments made by an employer or trustee, pursuant to
a plan or trust qualified under Section 401(a) or 403(a) of the Code, are
generally excludable from gross income of the employee. The portion, if any, of
the purchase payments made by the employee, or which is considered taxable
income to the employee in the year such payments are made, constitutes an
"investment in the contract" under Section 72 of the Code for the employee's
annuity benefits. Salary reduction payments to a profit sharing plan qualifying
under Section 401(k) of the Code are generally excludable from gross income of
the employee.
The Code requires that plans must prohibit any distribution to a plan
participant prior to age 59-1/2, except in the event of death, total disability
or separation from service (special rules apply for plan terminations).
Distributions must commence no later than April 1 of the calendar year
following the year in which the participant reaches age 70-1/2. Premature
distribution of benefits or contributions in excess of those permitted by the
Code may result in certain penalties under the Code.
If an employee, or one or more of the beneficiaries, receives the total amounts
payable with respect to an employee within one taxable year after age 59-1/2 on
account of the employee's death or separation from service of the employer, any
amount received in excess of the employee's "investment in the contract" may be
taxed under special 5-year forward averaging rules. Five-year averaging will no
longer be available after 1999 except for certain grandfathered individuals. The
taxpayer can elect to have that portion of a lump-sum distribution attributable
to years of participation prior to January 1, 1974 given capital gains
treatment. The percentage of pre-74 distribution subject to capital gains
treatment decreases as follows: 100%, 1987; 95%, 1988; 75%, 1989; 50%, 1990; and
25%, 1991. For tax years 1992 and thereafter no capital gains treatment is
available (except that taxpayers who were age 50 before 1986 may still elect
capital gains treatment). The employee receiving such a distribution may be able
to make a "tax-
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<PAGE> 24
free rollover" of the distribution less the employee's "investment in the
contract" into another qualified plan in which the employee is a participant or
into one of the types of individual retirement arrangements permitted under the
Code. An employee's surviving spouse receiving such a distribution may be able
to make a tax-free rollover to one of the types of individual retirement
arrangements permitted under the Code. Amounts received that are eligible for
"tax-free rollover" will be subject to an automatic 20% withholding unless such
amounts are directly rolled over to another qualified plan or individual
retirement arrangement.
INDIVIDUAL RETIREMENT ANNUITIES (IRA) Section 408(b) of the Code
provides that an individual may invest an amount up to $2,000 per year of
earned income in an IRA and claim it as a personal tax deduction if such person
is not an "active participant" in an employer maintained qualified retirement
plan or such person has adjusted gross income which does not exceed the
"applicable dollar limit." For a single taxpayer, the applicable dollar
limitation is $30,000, with the amount of IRA contribution which may be
deducted reduced proportionately for Adjusted Gross Income between
$30,000-$40,000. For married couples filing jointly, the applicable dollar
limitation is $50,000, with the amount of IRA contribution which may be
deducted reduced proportionately for Adjusted Gross Income between
$50,000-$60,000. There is no deduction allowed for IRA contributions when
Adjusted Gross Income reaches $40,000 for individuals and $60,000 for married
couples filing jointly. In the alternative, an individual otherwise qualified
for an IRA may elect to contribute to an IRA for the individual and for the
individual's non-working spouse, with the total deduction limited to $4,000.
Individuals are permitted to make non-deductible IRA contributions to the extent
they are ineligible to make deductible IRA contributions. Any amount received
from another qualified plan (including another individual retirement
arrangement) which is eligible as a "tax-free rollover" may be invested in an
IRA, and is not counted toward the overall contribution limit. Earnings on
nondeductible IRA contributions are not subject to tax until they are withdrawn.
The combined limit on designated nondeductible and deductible contributions for
a tax year is the lesser of 100% of compensation or $2,000 ($4,000 in the case
of an additional contribution to a spousal IRA).
Generally, distributions (all or part) made prior to age 59-1/2 (except in the
case of death or disability) will result in a penalty tax of 10% plus ordinary
income tax treatment of the amount received. Additionally, there is an excise
tax of 6% of the amount contributed in excess of either the deductible limit or
nondeductible limit, as indicated above, if such amount is not withdrawn prior
to the filing of the income tax return for the year of contribution or applied
as an allowable contribution for a subsequent year. The excise tax will continue
to apply each year until the excess contribution is corrected. Distributions
after age 59-1/2 are treated as ordinary income at the time received.
Distributions must commence before April 1 following the year in which the
individual reaches age 70-1/2. A 50% nondeductible excise tax is imposed on the
excess in any tax year of the amount that should have been distributed over the
amount actually distributed.
Section 408A of the Code provides for a special type of IRA called a Roth IRA.
No tax deduction is allowed for contributions to a Roth IRA, but assets grow on
a tax deferred basis. Under certain circumstances, withdrawals from a Roth IRA
can be excludable from income. Eligibility for a Roth IRA is based on adjusted
gross income and filing status. Special rules apply which allow traditional
IRAs to be rolled over or converted to a Roth IRA.
SIMPLIFIED EMPLOYEE PENSION PLANS (SEPPS)
Under Section 408 of the Code, employers may establish SEPPs for their
employees. Under these plans the employer may contribute on behalf of an
employee to an individual retirement account or annuity. The amount of the
contribution is excludable from the employee's income.
Certain employees who participate in a SEPP will be entitled to elect to have
the employer make contributions to a SEPP on their behalf or to receive the
contributions in cash. If the employee elects to have contributions made on the
employee's behalf to a SEPP, it is not treated as current taxable income to the
employee. Elective deferrals under a SEPP are subject to an inflation-indexed
limit which is $10,000 for 1998. Salary-reduction SEPPs are available only if at
least 50% of the employees elect to have amounts contributed to the SEPP and if
the employer has 25 or fewer employees at all times during the preceding year.
New salary-reduction SEPPs may not be established after 1996.
An employee may also take a deduction for individual contributions to the IRA,
subject to the limits applicable to IRAs in general. Withdrawals from the IRAs
to which the employer contributes must be permitted. These withdrawals, however,
are subject to the general rules with respect to withdrawals from IRAs.
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<PAGE> 25
WITHHOLDING ON DISTRIBUTION
Distributions from tax-deferred annuities or qualified pension or profit sharing
plans that are eligible for "tax-free rollover" will be subject to an automatic
20% withholding unless such amounts are directly rolled over to an individual
retirement arrangement or another qualified plan. Federal income tax withholding
on annuity payments is required. However, recipients of annuity payments are
allowed to elect not to have the tax withheld. Such an election may be revoked
at any time with respect to annuity payments and thereafter withholding would
commence. Failure to provide your taxpayer identification number will
automatically subject any payments under the contract to withholding.
PRIOR CONTRACTS
ANNUAL PAYMENT VARIABLE ANNUITY
Prior to December 15, 1981, Ohio National Life, VAA and VAB issued Annual
Payment Variable Annuity contracts, some of which by their terms remain active
and under which payments may still be made. These contracts called for
deductions from purchase payments in the following amounts:
<TABLE>
<CAPTION>
DEDUCTION FOR DEATH TOTAL*
PORTION OF TOTAL DEDUCTION FOR ADMINISTRATIVE BENEFIT COMBINED
PURCHASE PAYMENTS SALES EXPENSE EXPENSE PREMIUM DEDUCTIONS
----------------- ------------- ------- ------- ----------
<S> <C> <C> <C> <C> <C>
First $10,000 6.3% 2.2% 0.5% 9.0%
Next $15,000 5.5% 2.0% 0.5% 8.0%
Next $25,000 4.8% 1.7% 0.5% 7.0%
Next $50,000 4.0% 1.5% 0.5% 6.0%
Balance over $100,000 3.3% 1.2% 0.5% 5.0%
*Plus 50(cent) per payment
</TABLE>
These deductions are in lieu of any contingent deferred sales charge, contract
administration charge and deduction for administrative expense as provided for
in the contracts described in this prospectus. The deduction for mortality and
expense risk undertakings is 1% of the contract value on an annual basis. Such
deduction may be decreased by Ohio National Life at any time and may be
increased not more frequently than annually to not more than 1.5% on an annual
basis.
These prior contracts provide for annuity payments on a 3-1/2% assumed interest
rate which results in a somewhat smaller initial annuity payment, but one that
rises more rapidly in a rising market and falls more slowly in a declining
market. These contracts provide for accumulation of values only in what now
constitutes the Equity subaccounts of VAA and VAB and/or on a fixed-dollar
guaranteed basis within the general assets of Ohio National Life with limited
transfer privileges between such fixed-dollar accumulation and the Equity
subaccount.
VARIABLE INTEREST ANNUITY
From July 15, 1981 until November 2, 1982 Ohio National Life and the Variable
Interest Account, a separate account of Ohio National Life funded by the Money
Market Portfolio of the Fund, issued Variable Interest Annuity contracts. Under
the terms of these contracts, purchase payments can be continued until the
annuity commencement date specified therein. These contracts are substantially
the same as the contracts described in this prospectus except that there is no
right to transfer the contract values to any other underlying funding media.
These contracts also included a guarantee of the investment performance. Such
investment guarantee is regarded as a separate security offered by Ohio National
Life. The deduction for mortality, expense and investment risk undertaking is
1.3% of the contract value on an annual basis. Such deduction may be decreased
by Ohio National Life at any time and may be increased not more frequently than
annually to not more than 2% on an annual basis. These contracts do not provide
for a deduction from contract value for administrative expense. They do provide
for a contract administration charge and a contingent deferred sales charge.
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<PAGE> 26
FLEXIBLE PAYMENT COMBINATION ANNUITY
From December 1, 1981 until November 2, 1982, Ohio National Life, VAA and VAB
issued Flexible Payment Combination Annuity contracts. Under the terms of these
contracts purchase payments can be continued until the annuity commencement date
specified therein. These contracts are substantially the same as the contracts
described in this prospectus except that values can be accumulated only in what
now constitute the Equity subaccounts of VAA or VAB and/or within the general
assets of Ohio National Life on a fixed-dollar guaranteed basis. A deduction is
made at the end of each valuation period for the administrative expense and
mortality and expense risk undertakings equal to 1.1% on an annual basis. Such
deduction may be decreased by Ohio National at any time and may be increased not
more frequently than annually to not more than 1.75% on an annual basis.
Although these contracts provide for limited transfer of values between the
Equity subaccount and the general assets of Ohio National Life, such transfer is
only permitted during the accumulation period.
MULTIPLE FUNDED COMBINATION ANNUITY
From November 2, 1982 to September 10, 1984, Ohio National Life, VAA and VAB
issued Multiple Funded Combination Annuity contracts substantially the same as
the contracts described in this prospectus. However, such prior contracts
include a guarantee of the investment performance of the Money Market subaccount
and a deduction therefor at the end of each valuation period equal to 0.2% of
Money Market assets on an annual basis. Such investment guarantee is regarded as
a separate security offered by Ohio National Life. In addition, the rate for the
contingent deferred sales charge for such prior contracts is 5% and the
deduction for risk undertakings is 1.3%.
ACCUMULATION UNIT VALUES FOR PRIOR CONTRACTS
ANNUAL PAYMENT VARIABLE ANNUITY
EQUITY SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1988 $40.991340 $46.658707 63,667
1989 46.685707 56.953326 57,461
1990 56.953326 54.213096 54,987
1991 54.213096 64.510143 51,310
1992 64.510143 68.689335 45,754
1993 68.689335 77.594885 43,892
1994 77.594885 77.016062 40,537
1995 77.016062 96.995665 36,620
1996 96.995665 113.656777 35,244
1997 113.656777 132.974317 29,341
---- --------- ---------- ------
</TABLE>
EQUITY SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1988 $43.451334 $49.487430 37,867
1989 49.487430 60.371234 34,866
1990 60.371234 57.466552 36,191
1991 57.466552 68.381552 33,557
1992 68.381552 72.811547 30,548
1993 72.811547 82.251550 25,610
1994 82.251550 81.637986 24,924
1995 81.637986 102.816617 24,630
1996 102.816617 120.477605 22,849
1997 120.477605 140.954452 22,582
---- ---------- ---------- ------
</TABLE>
22
<PAGE> 27
VARIABLE INTEREST ANNUITY
MONEY MARKET SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1988 $18.096347 $19.137568 118,912
1989 19.137568 20.571199 105,231
1990 20.571199 21.909036 94,135
1991 21.909036 22.825685 76,406
1992 22.825685 23.247080 49,465
1993 23.247080 23.578345 36,485
1994 23.578345 24.205890 30,702
1995 24.205890 25.237165 23,519
1996 25.237165 26.200345 19,866
1997 26.200345 27.253241 17,074
---- --------- --------- ------
</TABLE>
MONEY MARKET SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1988 $18.096347 $19.137568 117,383
1989 19.137568 20.571199 91,600
1990 20.571199 21.909036 70,747
1991 21.909036 22.825685 54,444
1992 22.825685 23.247080 44,016
1993 23.247080 23.578345 35,017
1994 23.578345 24.205890 30,075
1995 24.205890 25.237165 29,059
1996 25.237165 26.200345 28,910
1997 26.200345 27.253241 27,553
</TABLE>
FLEXIBLE PAYMENT COMBINATION ANNUITY
EQUITY SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1988 $23.264908 $26.470588 29,585
1989 26.470588 32.260450 27,395
1990 32.260450 30.677737 24,226
1991 30.677737 36.468472 23,107
1992 36.468472 38.792521 22,601
1993 38.792521 43.778639 22,887
1994 43.778639 43.409203 20,039
1995 43.409203 54.616584 20,564
1996 54.616584 63.934367 20,212
1997 63.934367 74.726955 20,567
---- --------- --------- ------
</TABLE>
EQUITY SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1988 $22.402511 $25.489364 3,873
1989 25.489364 31.071251 3,584
1990 31.071251 29.546880 3,439
1991 29.546880 35.124150 3,428
1992 35.124150 37.362530 1,864
1993 37.362530 42.164841 1,849
1994 42.164841 41.809023 1,833
1995 41.809023 52.603280 1,095
1996 52.603280 61.577580 1,109
1997 61.577580 71.972334 1,121
</TABLE>
23
<PAGE> 28
MULTIPLE FUNDED COMBINATION ANNUITY
EQUITY SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C> <C>
1988 $18.619731 $21.185355 278,998
1989 21.185355 25.819181 240,896
1990 25.819181 24.552478 227,378
1991 24.552478 29.187005 209,706
1992 29.187005 31.047017 195,926
1993 31.047017 35.037574 189,725
1994 35.037574 34.741902 183,889
1995 34.741902 43.711561 185,550
1996 43.711561 51.168913 183,969
1997 51.168913 59.806603 172,235
---- --------- --------- -------
</TABLE>
MONEY MARKET SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1988 $13.712006 $14.500960 72,078
1989 14.500960 15.587258 75,856
1990 15.587258 16.600960 66,701
1991 16.600960 17.295517 53,715
1992 17.295517 17.614815 40,163
1993 17.614815 17.865828 32,193
1994 17.865828 18.341334 33,908
1995 18.341334 19.122749 26,823
1996 19.122749 19.852565 19,326
1997 19,852565 20.650358 17,640
---- --------- --------- ------
</TABLE>
BOND SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1988 $15.082231 $15.924172 46,186
1989 15.924172 17.438080 41,465
1990 17.438080 18.596379 43,782
1991 18.596379 20.777538 38,147
1992 20.777538 22.101548 40,781
1993 22.101548 24.198199 33,461
1994 24.198199 23.016849 32,609
1995 23.016849 27.068171 30,431
1996 27.068171 27.765946 26,417
1997 27.765946 30.128230 19,546
---- --------- --------- ------
</TABLE>
OMNI SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1988 $13.410537 $15.258611 141,188
1989 15.258611 17.425546 134,346
1990 17.425546 17.565065 143,084
1991 17.565065 20.526604 136,984
1992 20.526604 22.049934 138,165
1993 22.049934 24.613344 151,630
1994 24.613344 24.217555 140,851
1995 24.217555 29.404272 134,309
1996 29.404272 33.604216 133,427
1997 33.604216 39.270518 127,406
---- --------- --------- -------
</TABLE>
INTERNATIONAL SUBACCOUNT OF VAA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1993* $10.000000 $12.404596 36,879
1994 12.404596 13.259582 103,976
1995 13.259582 14.702847 112,362
1996 14.702847 16.648702 116,301
1997 16.648702 16.815772 100,572
---- --------- --------- -------
</TABLE>
24
<PAGE> 29
<TABLE>
<CAPTION>
CAPITAL APPRECIATION SUBACCOUNT OF VAA
YEAR ENDED UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
DECEMBER 31 BEGINNING OF YEAR END OF YEAR AT END OF YEAR
----------- ----------------- ----------- --------------
<S> <C> <C> <C>
1995* $10.000000 $11.370573 8,261
1996 11.370573 13.018249 11,321
1997 13.018249 14.832378 21,166
---- --------- --------- ------
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP SUBACCOUNT OF VAA
<S> <C> <C> <C>
1995* $10.000000 $12.201273 16,139
1996 12.201273 14.205207 21,891
1997 14.205207 15.240569 21,377
---- --------- --------- ------
</TABLE>
<TABLE>
<CAPTION>
EQUITY SUBACCOUNT OF VAB
<S> <C> <C> <C>
1988 $19.446105 $22.125593 50,489
1989 22.125593 26.965078 40,668
1990 26.965078 25.642156 37,320
1991 25.642156 30.482379 34,831
1992 30.482379 32.424943 31,442
1993 32.424943 36.592684 31,997
1994 36.592684 36.283811 30,805
1995 36.283811 45.651565 22,160
1996 45.651565 53.439888 22,720
1997 53.439888 62.460938 23,678
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET SUBACCOUNT OF VAB
<S> <C> <C> <C>
1988 $13.722624 $14.512201 91,090
1989 14.512201 15.599344 77,381
1990 15.599344 16.613832 74,879
1991 16.613832 17.308925 71,106
1992 17.308925 17.628473 67,360
1993 17.628473 17.879672 17,645
1994 17.879672 18.355539 11,948
1995 18.355539 19.137562 5,896
1996 19.137562 19.867953 6,004
1997 19.867953 20.666372 6,102
</TABLE>
<TABLE>
<CAPTION>
BOND SUBACCOUNT OF VAB
<S> <C> <C> <C>
1988 $15.073082 $15.914517 4,337
1989 15.914517 17.427516 3,751
1990 17.427516 18.585115 5,481
1991 18.585115 20.764956 4,532
1992 20.764956 22.088165 4,261
1993 22.088165 24.183549 3,921
1994 24.183549 23.002903 3,679
1995 23.002903 27.051775 3,601
1996 27.051775 27.749128 3,122
1997 27.749128 29.994642 723
</TABLE>
<TABLE>
<CAPTION>
OMNI SUBACCOUNT OF VAB
<S> <C> <C> <C>
1988 $13.391588 $15.237044 48,061
1989 15.237044 17.400912 45,355
1990 17.400912 17.540233 46,036
1991 17.540233 20.497592 46,892
1992 20.497592 22.018769 48,792
1993 22.018769 24.578556 53,581
1994 24.578556 24.183329 52,580
1995 24.183329 29.362718 53,357
1996 29.362718 33.556721 53,263
1997 33.556721 39.215015 52,426
</TABLE>
25
<PAGE> 30
INTERNATIONAL SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1993* $10.000000 $12.404596 1,427
1994 12.404596 13.259582 13,999
1995 13.259582 14.702847 17,006
1996 14.702847 16.648702 18,085
1997 16.648702 16.815772 15,613
</TABLE>
CAPITAL APPRECIATION SUBACCOUNT OF VAB
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1995* $10.000000 $11.370573 456
1996 11.370573 13.018249 786
1997 13.018249 14.832378 1,426
</TABLE>
*International Subaccount added April 30, 1993. Capital Appreciation and Small
Cap Subaccounts were added March 31, 1995.
APPENDIX A
IRA DISCLOSURE STATEMENT
This statement is designed to help you understand the requirements of federal
tax law which apply to your individual retirement annuity (IRA), your simplified
employee pension IRA (SEPP-IRA) for employer contributions, your Savings
Incentive Match Plan For Employees (SIMPLE) IRA, or to one you purchase for your
spouse (see "IRA for Non-working Spouse", page 24). You can obtain more
information regarding your IRA either from your sales representative or from any
district office of the Internal Revenue Service.
FREE LOOK PERIOD
The annuity contract offered by this prospectus gives you the opportunity to
return the contract for a full refund within 20 days after it is delivered (see
page 8). This is a more liberal provision than is required in connection with
IRA's. To exercise this "free-look" provision write or call the address shown
below:
The Ohio National Life Insurance Company
Variable Annuity Administration
P. O. Box 2669
Cincinnati, Ohio 45201
Telephone: 1-800-366-6654 - 8:30 a.m. - 4:30 p.m. (Eastern Time Zone)
ELIGIBILITY REQUIREMENTS
IRAs are intended for all persons with earned compensation whether or not they
are covered under other retirement programs. Additionally if you have a
non-working spouse (and you file a joint tax return), you may establish an IRA
on behalf of your non-working spouse. A working spouse may establish his or her
own IRA. A divorced spouse receiving taxable alimony (and no other income) may
also establish an IRA.
CONTRIBUTIONS AND DEDUCTIONS
Contributions to your IRA will be deductible if you are not an "active
participant" in an employer maintained qualified retirement plan or you have
Adjusted Gross Income which does not exceed the "applicable dollar limit". IRA
(or SEPP-IRA) contributions must be made by no later than the time you file your
income tax return for that year. For a single taxpayer, the applicable dollar
limitation is $30,000, with the amount of IRA contribution which may be deducted
reduced proportionately for Adjusted Gross Income between $30,000-$40,000. For
married couples filing jointly, the applicable dollar limitation is $50,000,
with the amount of IRA contribution which may be deducted reduced
proportionately for Adjusted Gross Income between $50,000-$60,000. There is no
deduction allowed for IRA contributions when Adjusted Gross Income reaches
$40,000 for individuals and $60,000 for married couples filing jointly.
26
<PAGE> 31
Contributions made by your employer to your SEPP-IRA are excludable from your
gross income for tax purposes in the calendar year for which the amount is
contributed. Certain employees who participate in a SEPP-IRA will be entitled to
elect to have their employer make contributions to their SEPP-IRA on their
behalf or to receive the contributions in cash. If the employee elects to have
contributions made on the employee's behalf to the SEPP, those funds are not
treated as current taxable income to the employee. Elective deferrals under a
SEPP-IRA are subject to an inflation-adjusted limit which is $10,000 for 1998.
Salary-reduction SEPP-IRAs (also called "SARSEPs") are available only if at
least 50% of the employees elect to have amounts contributed to the SEPP-IRA and
if the employer has 25 or fewer employees at all times during the preceding
year. New salary-reduction SEPPs may not be established after 1996.
The IRA maximum annual contribution and your tax deduction is limited to the
lesser of: (1) $2,000 or (2) 100% of your earned compensation. Contributions in
excess of the deduction limits may be subject to penalty. See below.
Under a SEPP-IRA agreement, the maximum annual contribution which your employer
may make on your behalf to a SEPP-IRA contract which is excludable from your
income is the lesser of 15% of your salary or $24,000. An employee who is a
participant in a SEPP-IRA agreement may make after-tax contributions to the
SEPP-IRA contract, subject to the contribution limits applicable to IRAs in
general. Those employee contributions will be deductible subject to the
deductibility rules described above.
The maximum tax deductible annual contribution that a divorced spouse with no
other income may make to an IRA is the lesser of (1) $2,000 or (2) 100% of
taxable alimony.
If you or your employer should contribute more than the maximum contribution
amount to your IRA or SEPP-IRA, the excess amount will be considered an "excess
contribution". You are permitted to withdraw an excess contribution from your
IRA or SEPP-IRA before your tax filing date without adverse tax consequences.
If, however, you fail to withdraw any such excess contribution before your tax
filing date, a 6% excise tax will be imposed on the excess for the tax year of
contribution.
Once the 6% excise tax has been imposed, an additional 6% penalty for the
following tax year can be avoided if the excess is (1) withdrawn before the end
of the following year, or (2) treated as a current contribution for the
following year. (See Pre-mature Distributions, page 28, for penalties imposed on
withdrawal when the contribution exceeds $2,200).
IRA FOR NON-WORKING SPOUSE
If you establish an IRA for yourself, you may also be eligible to establish an
IRA for your "non-working" spouse. In order to be eligible to establish such a
spousal IRA, you must file a joint tax return with your spouse and if your
non-working spouse has compensation, his/her compensation must be less than your
compensation for the year. Contributions of up to $2,000 each may be made to
your IRA and the spousal IRA if the combined compensation of you and your spouse
is at least equal to the amount contributed. If requirements for deductibility
(including income levels) are met, you will be able to deduct an amount equal to
the least of (i) the amount contributed to the IRA's; (ii) $4,000; or (iii) 100%
of your combined gross income.
Contributions in excess of the contribution limits may be subject to penalty.
See above under "Contributions and Deductions". If you contribute more than the
allowable amount, the excess portion will be considered an excess contribution.
The rules for correcting it are the same as discussed above for regular IRAs.
Other than the items mentioned in this section, all of the requirements
generally applicable to IRAs are also applicable to IRAs established for
non-working spouses.
27
<PAGE> 32
ROLLOVER CONTRIBUTION
Once every year, you are permitted to withdraw any portion of the value of your
IRA or SEPP-IRA and reinvest it in another IRA or bond. Withdrawals may also be
made from other IRAs and contributed to this contract. This transfer of funds
from one IRA to another is called a "rollover" IRA. To qualify as a rollover
contribution, the entire portion of the withdrawal must be reinvested in another
IRA within 60 days after the date it is received. You will not be allowed a
tax-deduction for the amount of any rollover contribution.
A similar type of rollover to an IRA can be made with the proceeds of a
qualified distribution from a qualified retirement plan or tax-sheltered
annuity. Properly made, such a distribution will not be taxable until you
receive payments from the IRA created with it. Unless you were a self-employed
participant in the distributing plan, you may later rollover such a contribution
to another qualified retirement plan as long as you have not mixed it with IRA
(or SEPP-IRA) contributions you have deducted from your income. (You may roll
less than all of a qualified distribution into an IRA, but any part of it not
rolled over will be currently includable in your income without any capital
gains treatment.)
PRE-MATURE DISTRIBUTIONS
At no time can your interest in your IRA or SEPP-IRA be forfeited. To insure
that your contributions will be used for your retirement, the federal tax law
does not permit you to use your IRA or SEPP-IRA as security for a loan.
Furthermore, as a general rule, you may not sell or assign your interest in your
IRA or SEPP-IRA to anyone. Use of an IRA (or SEPP-IRA) as security or assignment
of it to another will invalidate the entire annuity. It then will be includable
in your income in the year it is invalidated and will be subject to a 10%
penalty tax if you are not at least age 59-1/2 or totally disabled unless you
comply with special rules requiring distributions to be made at least annually
over your life expectancy.
The 10% penalty tax does not apply to the withdrawal of an excess contribution
as long as the excess is withdrawn before the due date of your tax return.
Withdrawals of excess contributions after the due date of your tax return will
generally be subject to the 10% penalty unless the excess contribution results
from erroneous information from a plan trustee making an excess rollover
contribution or unless you are over age 59-1/2 or are disabled.
DISTRIBUTION AT RETIREMENT
Once you have attained age 59-1/2. (or have become totally disabled), you may
elect to receive a distribution of your IRA (or SEPP-IRA) regardless of when you
actually retire. You may elect to receive the distribution in either one sum or
under any one of the periodic payment options available under the contract. The
distributions from your IRA under any one of the periodic payment options or in
one sum will be treated as ordinary income as you receive them.
INADEQUATE DISTRIBUTIONS - 50% TAX
Your IRA or SEPP-IRA is intended to provide retirement benefits over your
lifetime. Thus, federal law requires that you either (1) receive a lump-sum
distribution of your IRA by April 1 of the year following the year in which you
attain age 70-1/2. or (2) start to receive periodic payments by that date. If
you elect to receive periodic payments, those payments must be sufficient to pay
out the entire value of your IRA during your life expectancy (or over the joint
life expectancies of you and your spouse). If the payments are not sufficient to
meet these requirements, an excise tax of 50% will be imposed on the amount of
any underpayment.
28
<PAGE> 33
DEATH BENEFITS
If you, (or your surviving spouse) die before receiving the entire value of your
IRA (or SEPP-IRA), the remaining interest must be distributed to your
beneficiary (or your surviving spouse's beneficiary) in one lump-sum within 5
years of death, or applied to purchase an immediate annuity for the beneficiary.
This annuity must be payable over the life expectancy of the beneficiary
beginning within one year after your or your spouse's death. If your spouse is
the designated beneficiary, he or she is treated as the owner of the IRA. If
minimum required distributions have begun, the entire amount must be distributed
at least as rapidly as if the owner had survived. A distribution of the balance
of your IRA upon your death will not be considered a gift for federal tax
purposes, but will be included in your gross estate for purposes of federal
estate taxes.
ROTH IRAS
Section 408A of the Code now permits eligible individuals to contribute to a
type of IRA known as a "Roth IRA." Contributions may be made to a Roth IRA by
taxpayers with adjusted gross incomes of less than $160,000 for married
individuals filing jointly and less than $100,000 for single individuals.
Married individuals filing separately are not eligible to contribute to a Roth
IRA. The maximum amount of contributions allowable for any taxable year to all
Roth IRAs maintained by an individual is generally the lesser of $2,000 and 100%
of compensation for that year (the $2,000 limit is phased out for incomes
between $150,000 and $160,000 for married and between $95,000 and $110,000 for
singles). The contribution limit is reduced by the amount of any contributions
made to a non-Roth IRA. Contributions to a Roth IRA are not deductible.
For taxpayers with adjusted gross income of $100,000 or less, all or part of
amounts in a non-Roth IRA may be converted, transferred or rolled over to a Roth
IRA. Some or all of the IRA value will typically be includable in the taxpayer's
gross income. If such a rollover, transfer or conversion occurs before 1/1/99,
the portion of the amount includable in gross income must be included in income
ratably over the next four years beginning with the year in which the
transaction occurred. Provided a rollover contribution meets the requirements
for IRAs under Section 408(d)(3) of the Code, a rollover may be made from a Roth
IRA to another Roth IRA.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLL OVER, TRANSFER OR
CONVERT ALL OR PART OF A NON-ROTH IRA TO A ROTH IRA. PERSONS CONSIDERING A
ROLLOVER, TRANSFER OR CONVERSION SHOULD CONSULT THEIR OWN TAX ADVISOR.
"Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements: (1)
the distribution must be made (a) after the owner of the IRA attains age 59 1/2;
(b) after the owner's death; (c) due to the owner's disability; or (d) for a
qualified first time homebuyer distribution within the meaning of Section
72(t)(2)(F) of the Code; and (2) the distribution must be made in the year that
is at least five years after the first year for which a contribution was made to
any Roth IRA established for the owner or five years after a rollover, transfer
or conversion was made from a non-Roth IRA to a Roth IRA. Distributions from a
Roth IRA that are not qualified distributions will be treated as made first from
contributions and then from earnings, and taxed generally in the same manner as
distributions from a non-Roth IRA.
Distributions from a Roth IRA need not commence at age 70 1/2. However, if the
owner dies before the entire interest in a Roth IRA is distributed, any
remaining interest in the contract must be distributed by December 31 of the
calendar year containing the fifth anniversary of the owner's death subject to
certain exceptions.
PROTOTYPE STATUS
The Internal Revenue Service has been requested to review the format of your
SEPP, and to issue an opinion letter to Ohio National Life stating that your IRA
qualifies as a prototype SEPP.
REPORTING TO THE IRS
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for pre-mature distributions or 50% for under
payments), you must file Form 5329 with the Internal Revenue Service. The form
is to be attached to your federal income tax return for the tax year in which
the penalty applies. Normal contributions and distributions must be shown on
your income tax return for the year to which they relate.
ILLUSTRATION OF IRA FIXED ACCUMULATIONS
<TABLE>
<CAPTION>
AGE 60 AGE 65 AGE 70
GUARANTEED GUARANTEED GUARANTEED
SURRENDER VALUE SURRENDER VALUE SURRENDER VALUE
$2,000 $2,000 $2,000
$1,000 ONE TIME $1,000 ONE TIME $1,000 ONE TIME
CONTRACT ANNUAL LUMP SUM ANNUAL LUMP SUM ANNUAL LUMP SUM
ANNIVERSARY CONTRIBUTIONS CONTRIBUTION CONTRIBUTIONS CONTRIBUTION CONTRIBUTIONS CONTRIBUTION
----------- ------------- ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $933 $1,895 $933 $1,895 $933 $1,895
2 1,917 1,955 1,917 1,955 1,.917 1,955
3 2,933 2,006 2,933 2,006 2,933 2,006
4 3,990 2,058 3,990 2,058 3,990 2,058
5 5,089 2,116 5,089 2,116 5,089 2,116
6 6,234 2,177 6,234 2,177 6,234 2,177
7 7.435 2,240 7,435 2,240 7,435 2,240
8 8,686 2,306 8,686 2,306 8,868 2,306
9 10,069 2,529 10,069 2,529 10,069 2,529
10 11,506 2,600 11,506 2,600 11,506 2,600
15 19,604 3,001 19,604 3,001 19,604 3,001
20 29,456 3,489 29,456 3,489 29,456 3,489
25 41,442 4,082 41,442 4,082 41,442 4,082
30 56,026 4,804 56,026 4,804 56,026 4,804
35 73,769 5,683 73,769 5,683 73,769 5,683
40 95,356 6,751 95,356 6,751 95,356 6,751
45 121,620 8,051 121,620 8,051 121,620 8,051
50 153,574 9,633 153,574 9,633 153,574 9,633
55 192,451 11,558 192,451 11,558 192,451 11,558
60 239,751 13,900 239,751 13,900 239,751 13,900
65 297,298 16,748 297,298 16,748
70 367,313 20,215 367,313 20,215
</TABLE>
- - Guaranteed Interest Rate: 3.25% is applicable to each contract anniversary.
- - The Surrender Value is the Accumulation Values less the Contingent Deferred
Sales Charge.
29
<PAGE> 34
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 35
OHIO NATIONAL VARIABLE ACCOUNT B
OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY
One Financial Way
Cincinnati, Ohio 45242
Telephone (513) 794-6452
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1998
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the prospectus for Ohio National Variable Account B ("VAB")
flexible purchase payment individual non-tax qualified variable annuity
contracts dated May 1, 1998. To obtain a free copy of the VAB prospectus, write
or call The Ohio National Life Insurance Company ("Ohio National Life") at the
above address.
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Custodian ................................... 2
Independent Certified Public Accountants .... 2
Underwriter ................................. 2
Calculation of Money Market Subaccount Yield 3
Total Return ................................ 3
Transfer Limitations ........................ 4
The Year 2000 Issue.......................... 4
Appendix: Guaranteed Account................ 5
Financial Statements ........................ 6
</TABLE>
"TOP TRADITION" NON-TAX QUALIFIED
<PAGE> 36
CUSTODIAN
Ohio National Life has executed an agreement with Star Bank, N.A. ("the Bank"),
Cincinnati, Ohio, pursuant to which the shares of Ohio National Fund, Inc.
("Fund") and other assets credited to VAB will be held in the custody of the
Bank. The agreement provides that the Bank will purchase Fund shares at their
net asset value determined as of the end of the valuation period of VAB during
which the purchase payment is received by Ohio National Life for outstanding
contracts or, in the case of new contracts, the value determined as of the end
of the valuation period during which the contract is issued. The Bank effects
redemptions of Fund shares held by VAB upon instructions from Ohio National Life
at net asset value determined as of the end of the valuation period of VAB
during which a redemption request is received or made by Ohio National Life. In
addition, the Bank maintains appropriate records with respect to all
transactions in Fund shares relative to VAB.
The agreement requires the Bank to have at all times an aggregate capital,
surplus and undivided profit of not less than $2 million and prohibits
resignation by the Bank until (a) a successor custodian bank having the
qualifications enumerated above shall have agreed to serve as custodian, or (b)
VAB has been completely liquidated and the proceeds of such liquidation properly
distributed. Subject to these conditions the agreement of custodianship may be
terminated by either party upon sixty days written notice. For its services as
custodian, the Bank will be paid a fee to be agreed upon from time to time by
the Bank and Ohio National Life.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The financial statements of VAB as of December 31, 1997 and for the periods
indicated herein and Ohio National Life's consolidated financial statements
as of December 31, 1997 and 1996 and for the periods indicated herein have been
included herein in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
UNDERWRITER
The offering of the contracts is continuous. Prior to May 1, 1997,
The O.N. Equity Sales Company ("ONESCO"), a wholly-owned subsidiary of Ohio
National Life, was the principal underwriter of the contracts. The aggregate
amount of underwriting commissions paid to ONESCO with respect to contracts
issued by VAB, and the amounts retained by ONESCO, for each of the last three
years have been:
<TABLE>
<CAPTION>
Aggregate Retained
Year Commissions Commissions
---- ----------- -----------
<S> <C> <C> <C>
1997
1996 1,691,331 164,905
---- ---------- --------
1995 821,577 75,503
</TABLE>
-2-
<PAGE> 37
Since May 1, 1997, Ohio National Equities, Inc., another
wholly-owned subsidiary of Ohio National Life, has been the principal
underwriter of the contracts. Its aggregate and retained commissions have been:
Aggregate Retained
Year Commissions Commissions
---- ----------- -----------
1997 $ $
CALCULATION OF MONEY MARKET SUBACCOUNT YIELD
The current yield of the Money Market subaccount for the seven days ended on
December 31, 1997, was 4.39%. This was calculated by determining the net change,
exclusive of capital changes, in the value of a hypothetical pre-existing
account having a balance of one accumulation unit of the subaccount at the
beginning of the seven-day period, dividing the net change in subaccount value
by the value of the subaccount at the beginning of the base period to obtain the
base period return, and multiplying the difference by 365/7. The resulting
figure is carried to the nearest hundredth of one percent.
TOTAL RETURN
The average annual compounded rate of return for a contract with respect to a
particular subaccount over a given period is found by equating the initial
amount invested to the ending redeemable value using the following formula:
P(1 + T)n = ERV
where: P = a hypothetical initial payment of $1,000,
T = the average annual total return,
n = the number of years, and
ERV = the ending redeemable value of a hypothetical $1,000
beginning-of-period payment at the end of the period
(or fractional portion thereof).
For this purpose, it should be noted that the current series of contracts were
initially offered September 10, 1984. Hypothetical results based upon the
performance of the subaccounts prior to that date assume that the same charges
and deductions applicable to the current contracts were in effect from the
inception of each corresponding portfolio of the Fund. Note also that, for
purposes of these calculations, the annual contract administration charge of $30
has been converted to an annualized percentage charge of 0.10%. This is based
upon an estimated average accumulation value of $29,100 for contracts in this
series. The actual effect that the contract administration charge would have on
total returns would be less than that percentage for contracts having a higher
accumulation value and greater than that percentage for contracts having a lower
accumulation value.
The average annual total returns for current contracts in each of the
subaccounts from the inception of the subaccount and for the one-, five- and
ten-year periods ending on December 31,
-3-
<PAGE> 38
1997, and assuming surrender of the contract on the latter date, are as follows:
<TABLE>
<CAPTION>
One Five Ten From Inception
Year Years Years Inception Date
---- ----- ----- --------- ----
<S> <C> <C> <C> <C> <C>
Equity 16.88% 14.01% 12.38% 9.86% 10-06-69
Money Market 4.22% 3.44% 4.39% 6.13% 03-20-80
Bond 8.09% 6.31% 7.12% 7.51% 11-02-82
Omni 16.86% 12.24% 11.34% 10.85% 10-84
International 1.00% N/A N/A 11.80% 04-30-93
Capital Appreciation 13.94% N/A N/A 14.47% 05-01-94
Small Cap 7.29% N/A N/A 20.44% 05-01-94
Global Contrarian 10.45% N/A N/A 10.71% 03-31-95
Aggressive Growth 11.30% N/A N/A 12.92% 03-31-95
Core Growth N/A N/A N/A (4.14)% 01-03-97
Growth & Income N/A N/A N/A 35.36% 01-03-97
S&P 500 Index N/A N/A N/A 30.54% 01-03-97
Social Awareness N/A N/A N/A 24.27% 01-03-97
</TABLE>
TRANSFER LIMITATIONS
To the extent that transfers, surrenders, partial withdrawals and annuity
payments from a subaccount exceed net purchase payments and transfers into that
subaccount, securities of the corresponding portfolio of the Fund may have to be
sold. Excessive sales of a portfolio's securities on short notice could be
detrimental to that portfolio and to contractowners with values allocated to the
corresponding subaccount. To protect the interests of all contractowners, Ohio
National Life reserves the right to limit the number, frequency, method or
amount of transfers. Transfers from any portfolio of the Fund on any one day may
be limited to 1% of the previous day's total net assets of that portfolio if
Ohio National Life or the Fund, in its or their discretion, believes that the
portfolio might otherwise be damaged.
If and when transfers must be so limited, some transfer requests will not be
made. In determining which requests will be made, scheduled transfers (that is,
those pursuant to a pre-existing dollar cost averaging program) will be made
first, followed by mailed written requests in the order postmarked and, lastly,
telephone and facsimile requests in the order received. Contractowners whose
transfer requests are not made will be so notified. Current SEC rules preclude
Ohio National Life from processing at a later date those requests that were not
made. Accordingly, a new transfer request would have to be submitted in order to
make a transfer that was not made because of these limitations.
THE YEAR 2000 ISSUE
Ohio National Life has considered the impact on its business of "Year 2000"
issues. It has developed a remedial plan for its computer systems and
applications. Conversion activities are presently in process and Ohio National
Life expects conversion testing and implementation to be completed by December
31, 1998. While Ohio National Life has been assured by suppliers of financial
services (including underlying mutual funds, custodians, transfer agents and
accounting agents) that their systems either are already compliant or will be so
by December 31, 1998, Ohio National Life's internal auditors and independent
public accountants intend to independently test those systems (other than
systems of unaffiliated mutual funds and their suppliers) to verify their
compliance. The failure of Ohio National Life or one of its suppliers to achieve
timely and complete compliance could materially impair Ohio National Life's
ability to conduct its business, including its ability to accurately and timely
value interests in the contracts.
-4-
<PAGE> 39
APPENDIX
GUARANTEED ACCOUNT
The Guaranteed Account guarantees a fixed return for a specified period of time
and guarantees the principal against loss. Any portion of a contract relating
to the Guaranteed Account is not registered under the Securities Act of 1933.
The Guaranteed Account is not registered as an investment company under the
1940 Act. Accordingly, neither the Guaranteed Account nor any interests in it
are subject to the provisions or restrictions of either such Act, and the
disclosures in this appendix have not been reviewed by the staff of the
Securities and Exchange Commission.
The Guaranteed Account consists of all of Ohio National Life's general assets
other than those allocated to a separate account. Purchase payments and
accumulation values under a contract will be allocated between the Guaranteed
Account and VAB. The allocation will be as elected by the owner at the time
of purchase or as subsequently changed.
Ohio National Life will invest its general assets in its discretion as allowed
by applicable state law. Investment income from Ohio National Life's general
assets will be allocated to those contracts having guaranteed accumulation
values in accordance with the terms of such contracts.
The amount of investment income allocated to the contracts will vary from year
to year in Ohio National Life's sole discretion. However, Ohio National Life
guarantees that it will credit interest at a rate of not less than 3.25% per
year, compounded annually, to contract values allocated to the Guaranteed
Account. Ohio National Life may credit interest at a rate in excess of 3.25%,
but any such excess interest credit will be in Ohio National Life's sole
discretion.
Ohio National Life guarantees that the guaranteed accumulation value of a
contract will never be less than (a) the amount of purchase payments allocated
to, and transfers into, the Guaranteed Account, plus (b) interest credited at
the rate of 3.25% per year compounded annually, plus (c) any additional excess
interest Ohio National Life may credit to guaranteed accumulation values, and
less (d) any partial withdrawals and transfers from the guaranteed accumulation
values, and less (e) any contingent deferred sales charges on partial
withdrawals, state premium taxes, transfer fees, and the portion of the $30
annual contract administration charge allocable to the Guaranteed Account. No
deductions are made from the Guaranteed Account for administrative expenses or
risk undertakings. (See "Deductions and Expenses" in the prospectus.)
Not more than 20% of the guaranteed accumulation value of a contract (or
$1,000, if greater), as of the beginning of any contract year, may be
transferred to one or more variable subaccounts during that contract year. As
provided by applicable state law, Ohio National Life reserves the right to
defer the payment of amounts withdrawn from the Guaranteed Account for a
period not to exceed six months from the date written request for such
withdrawal is received by Ohio National Life.
-5-
<PAGE> 40
OHIO NATIONAL VARIABLE ACCOUNT B
FORM N-4
PART C
OTHER INFORMATION
<PAGE> 41
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements of the Registrant are to be included in Part
B of this Registration Statement and will be furnished by a post-effective
amendment hereto:
Independent Auditors' Report of KPMG Peat Marwick LLP dated January 30,
1998
Statements of Assets and Contract Owners' Equity dated December 31, 1997
Statement of Operations and Changes in Contract Owners' Equity for the
Years Ended December 31, 1997 and 1996
Notes to Financial Statements dated December 31, 1997
Schedules of Changes in Unit Values for the Years Ended December 31, 1997
and 1996
The following consolidated financial statements of the Depositor and its
subsidiaries are also to be included in Part B of this Registration Statement
and will be furnished by a post-effective amendment hereto:
Independent Auditors' Report of KPMG Peat Marwick LLP dated February __,
1998
Consolidated Balance Sheets dated December 31, 1997 and 1996
Consolidated Statements of Income for the Years Ended December 31, 1997,
1996 and 1995
Consolidated Statements of Equity for the Years Ended December 31, 1997,
1996 and 1995
Consolidated Statements of Cash Flows for the Years Ended December 31,
1997, 1996 and 1995
Notes to Consolidated Financial Statements dated December 31, 1997, 1996
and 1995
The following financial information is included in Part A of this Registration
Statement:
Accumulation Unit Values
Accumulation Unit Values for Prior Contracts
Consents of the Following Persons:
Not applicable
Exhibits:
All relevant exhibits, which have previously been filed with the Commission
and are incorporated herein by reference, are as follows:
(1) Resolution of Board of Directors of the Depositor authorizing
establishment of the Registrant was filed as Exhibit A(1) of the
Registrant's registration statement on Form S-6 on August 3, 1982
(File no. 2-78653).
-1-
<PAGE> 42
(3)(a) Principal Underwriting Agreement for Variable Annuities
between the Depositor and Ohio National Equities, Inc. was
filed as Exhibit (3)(a) of Form N-4, Post-effective Amendment
no. 21 of Ohio National Variable Account A (File no. 2-91213).
(3)(b) Registered Representative's Sales Contract with Variable Annuity
Supplement was filed as Exhibit (3)(b) of the Registrant's Form
N-4, Post-effective Amendment no. 9 on February 27, 1991 (File no.
2-91214).
(3)(c) Variable Annuity Sales Commission Schedule was filed as Exhibit
A(3)(c) of the Registrant's registration statement on Form S-6 on
May 18, 1984 (File no. 2-91214).
(4) Combination Annuity Contract, Form 90-VB-1, was filed as Exhibit
(4) of the Registrant's Form N-4, post effective Amendment no. 9 on
February 27, 1991 (File No. 2-91214).
(5)(a) Variable Annuity Application, Form V-4890B, was filed as Exhibit
(5)(a) of the Registrant's Form N-4, Post-effective Amendment no.
18 on April 25, 1996 (File No. 2-91214).
(6)(a) Articles of Incorporation of the Depositor were filed as Exhibit
A(6)(a) of Ohio National Variable Interest Account registration
statement on Form N-8B-2 on July 11, 1980 (File no. 811-3060).
(6)(b) Code of Regulations (by-laws) of the Depositor were filed as
Exhibit A(6)(b) of Ohio National Variable Interest Account A
registration statement on Form N-8B-2 on July 11, 1980 (File no.
811-3060).
(8) Powers of Attorney by certain Directors of the Depositor were filed
as Exhibit (8) of Post-effective Amendment no. 22 of Ohio National
Variable Account A registration statement on Form N-4.
(File no. 2-91213).
(13) Computation of Performance Data was filed as Exhibit (13) of the
Registrant's Form N-4, Post-effective Amendment no. 20 on
February 28, 1997.
-2-
<PAGE> 43
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- --------------
<S> <C>
Neil A. Armstrong Director
4635 Drakewood
Cincinnati, Ohio 45243
Trudy K. Backus* Vice President, Individual Insurance Services
Thomas A. Barefield* Senior Vice President, Institutional Sales
Howard C. Becker* Senior Vice President, Individual Insurance & Corporate Services
Ronald L. Benedict* Corporate Vice President, Counsel and Secretary
Michael A. Boedeker* Vice President, Fixed Income Securities
Robert A. Bowen* Senior Vice President Information Systems
Roylene M. Broadwell* Vice President and Treasurer
Joseph P. Brom* Senior Vice President & Chief Investment Officer
Dale P. Brown Director
36 East Seventh Street
Cincinnati, Ohio 45202
Jack E. Brown Director
50 E. Rivercenter Blvd.
Covington, Kentucky 41011
William R. Burleigh Director
One West Fourth Street
Suite 1100
Cincinnati, Ohio 45202
Victoria B. Buyniski Director
2343 Auburn Avenue
Cincinnati, Ohio 45219
Raymond R. Clark Director
201 East Fourth Street
Cincinnati, Ohio 45202
David W. Cook* Senior Vice President and Actuary
Dr. Alvin H. Crawford Director
Children's Hospital Medical Center
Department of Orthopedics
Elland and Bethesda Avenues
Cincinnati, Ohio 45229
Robert M. DiTommaso* Vice President, Career Marketing
Ronald J. Dolan* Senior Vice President and Chief Financial Officer
Michael J. Ferry* Vice President Financial, Information Systems
Michael F. Haverkamp* Vice President and Counsel
John A. Houser III* Vice President, Claims
</TABLE>
-3-
<PAGE> 44
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- --------------
<S> <C>
Bannus B. Hudson Director
One Eastwood Drive
Cincinnati, Ohio 45227
David G. McClure* Vice President, Variable Product Sales
Charles S. Mechem, Jr. Director
One East Fourth Street
Cincinnati, Ohio 45202
James I. Miller II* Vice President, Marketing Support
James W. Nethercott Director
8431 Concord Hills Circle
Cincinnati, Ohio 45243
Thomas O. Olson* Vice President, Underwriting
David B. O'Maley* Director, Chairman, President and Chief Executive Officer
John J. Palmer* Senior Vice President, Strategic Initiatives
George B. Pearson, Jr.* Vice President, PGA Marketing
Dallas L. Pennington* Vice President, Information Systems
J. Donald Richardson* Senior Regional Vice President
D. Gates Smith* Senior Vice President, Sales
Michael D. Stohler* Vice President, Mortgages and Real Estate
Stuart G. Summers* Senior Vice President and General Counsel
Oliver W. Waddell Director
425 Walnut Street
Cincinnati, Ohio 45202
Bradley L. Warnemunde Director and Chairman Emeritus
250 William Howard Taft Road
Cincinnati, Ohio 45219
Dr. David S. Williams* Vice President and Medical Director
Stephen T. Williams* Vice President, Equity Investments
</TABLE>
*The principal business address for these individuals is One Financial Way,
Cincinnati, Ohio 45242.
-4-
<PAGE> 45
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
THE OHIO NATIONAL LIFE INSURANCE COMPANY/CINCINNATI
A MUTUAL LIFE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF OHIO
- --------------------------------------------------------------------------------
<S> <C>
- ------------------------------- -----------------------------
ENTERPRISE PARK, INC. OHIO NATIONAL EQUITIES INC.
A GEORGIA CORPORATION A BROKER/DEALER
REAL ESTATE DEVELOPMENT COMPANY CAPITALIZED BY ONLI @ $30,000
CAPITALIZED BY ONLI $50,000
- ------------------------------- --------------------------------
Pres. & Dir. M. Stohler Chm. & Dir. D. O'Maley
V.P. & Dir. J. Brom Pres. & Dir. J. Palmer
Secy. & Dir. J. Fischer VP & Dir. T. Backus
Treas. & Dir. P. Bergmann VP & Dir. J. Miller
Secretary & Dir. R. Benedict
Treasurer K. Jaeger
Compliance Officer J. Dunn
Asst. Secy. M. Haverkamp
- ------------------------------- --------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
THE OHIO NATIONAL LIFE INSURANCE COMPANY/CINCINNATI
A MUTUAL LIFE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF OHIO
- -------------------------------------------------------------------------------------------------------------------
S E P A R A T E A C C O U N T S
--------------------------------
A B C D E F
--------------------------------
<S> <C> <C>
- ------------------------------- ------------------------------ -------------------------------------
OHIO NATIONAL INVESTMENTS, INC. THE O.N. EQUITY SALES COMPANY OHIO NATIONAL LIFE
ASSURANCE CORPORATION
AN INVESTMENT ADVISER AN OHIO CORPORATION AN OHIO CORPORATION
CAPITALIZED BY ONLI @ $10,000 A BROKER/DEALER A STOCK LIFE INSURANCE COMPANY
CAPITALIZED BY ONLI @ $790,000 CAPITALIZED BY ONLI @ $32,000,000
INCORPORATED UNDER THE LAWS OF OHIO
- ------------------------------- ------------------------------ ------------------------------------
Chm. & Dir. D. O'Maley Chm./Pres/.CEO & Dir. D. O'Maley
Pres. & Dir. J. Brom Sr. VP & Dir. R. Dolan
Pres. & Dir. J. Palmer Sr. VP & Dir. J. Palmer
VP & Dir. M. Boedeker Sr. VP & Dir. S. Summers
V.P. & Dir. M. Haverkamp Sr. VP & Dir. J. Brom
VP & Dir. M. Stohler Sr. Vice Pres. D. Cook
Secy. & Dir. R. Benedict Sr. Vice Pres. G. Smith
VP & Dir. S. Williams Vice Pres. & Treas. R. Broadwell
Director B. DiTommaso Vice President M. Boedeker
Treasurer D. Taney Vice President R. DiTommaso
Treasurer K. Jaeger Vice President T. Backus
Secretary R. Benedict Vice President G. Pearson
Compliance Director J. Dunn Vice President D. Pennington
VP K. Hanson Vice President M. Stohler
Vice Pres. J. Houser
VP D. Hundley Secy. R. Benedict
Asst. Secy. J. Fischer
VP J. Martin Asst. Actuary K. Flischel
- ------------------------------- ------------------------------ ------------------------------------
SEPARATE ACCOUNT
-------------------------------------
R
---
<CAPTION>
<= Advisor to Advisor to =>
--------------------------------------------------------
<S> <C> <C>
- ----------------------------- -------------------------------- --------------------------------
ONE FUND, INC. O.N. INVESTMENT MANAGEMENT CO. OHIO NATIONAL FUND
A MARYLAND CORPORATION AN OHIO CORPORATION A MARYLAND CORPORATION
AN OPEN END DIVISIFIED A FINANCIAL ADVISORY SERVICE AN OPEN END DIVERSIFIED
MANAGEMENT INVESTMENT COMPANY CAPITALIZED BY ONESCO @ $145,000 MANAGEMENT INVESTMENT COMPANY
- ----------------------------- -------------------------------- --------------------------------
Pres. & Dir. J. Palmer Pres. & Dir. J. Brom Pres. & Dir. J. Palmer
Vice. Pres. M. Boedeker ----- Vice President M. Boedeker
Vice Pres. J. Brom VP & Dir. M. Boedeker Vice President J.Brom
Vice Pres. D. McClure Vice President S. Williams
Vice Pres. S. Williams VP & Dir. D. McClure Treasurer D. Taney
Treasurer D. Taney -------- Secy. & Dir. R. Benedict
Secy. & Dir. R. Benedict VP & Dir. S. Willams Director R. Love
Director R. Love Director G. Castrucci
Director G. Castrucci Treasurer D. Taney Director G. Vredeveld
Director G. Vredeveld
Secretary R. Benedict
Asst. Secy. B. Hopewell
- --------------------------------- -------------------------------- ---------------------------------
</TABLE>
<PAGE> 46
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Organization Chart showing the relationships among the Depositor, the
Registrant and their affiliated entities is on page 4A hereof.
ITEM 27. NUMBER OF CONTRACTOWNERS
As of February 16, 1998 the Registrant's contracts were owned by 8,253 owners.
ITEM 28. INDEMNIFICATION
The sixth article of the Depositor's Articles of Incorporation, as amended,
provides as follows:
Each former, present and future Director, Officer or Employee of the
Corporation (and his heirs, executors or administrators), or any such
person (and his heirs, executors or administrators) who serves at the
Corporation's request as a director, officer, partner, member or employee
of another corporation, partnership or business organization or
association of any type whatsoever shall be indemnified by the Corporation
against reasonable expenses, including attorneys' fees, judgments, fine
and amounts paid in settlement actually and reasonably incurred by him in
connection with the defense of any contemplated, pending or threatened
action, suit or proceeding, civil, criminal, administrative or
investigative, other than an action by or in the right of the corporation,
to which he is or may be made a party by reason of being or having been
such Director, Officer, or Employee of the Corporation or having served at
the Corporation's request as such director, officer, partner, member or
employee of any other business organization or association, or in
connection with any appeal therein, provided a determination is made by
majority vote of a disinterested quorum of the Board of Directors (a) that
such a person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation, and (b)
that, in any matter the subject of criminal action, suit or proceeding,
such person had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself create a presumption that the person did
not act in good faith in any manner which he reasonably believed to be in
or not opposed to the best interests of the Corporation, and with respect
to any criminal action or proceeding, he had reasonable cause to believe
that his conduct was unlawful. Such right of indemnification shall not be
deemed exclusive of any other rights to which such person may be entitled.
The manner by which the right to indemnification shall be determined in
the absence of a disinterested quorum of the Board of Directors shall be
set forth in the Code of Regulations or in such other manner as permitted
by law. Each former, present, and future Director, Officer or Employee of
the Corporation (and his heirs, executors or administrators) who serves at
the Corporation's request as a director, officer, partner, member or
employee of another corporation, partnership or business organization or
association of any type whatsoever shall be indemnified by the Corporation
against reasonable expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense or settlement of
any contemplated, pending or threatened action, suit or proceeding, by or
in the right of the Corporation to procure a judgment in its favor, to
which he is or may be a party by reason of being or having been such
Director, Officer or Employee of the Corporation or having served at the
Corporation's request as such director, officer, partner, member or
employee of any other business organization or association, or in
connection with any appeal therein, provided a determination is made by
majority vote of a disinterested quorum of the Board of Directors (a) that
such person was not, and has not been adjudicated to have been negligent
or guilty of misconduct in the performance of his duty to the Corporation
or to such other business organization or association, and (b) that such
person acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation.
-5-
<PAGE> 47
Such right of indemnification shall not be deemed exclusive of any other
rights to which such person may be entitled. The manner by which the right
of indemnification shall be determined in the absence of a disinterested
quorum of the Board of Directors shall be as set forth in the Code of
Regulations or in such other manner as permitted by law.
In addition, Article XII of the Depositor's Code of Regulations states as
follows:
If any director, officer or employee of the Corporation may be entitled to
indemnification by reason of Article Sixth of the Amended Articles of
Corporation, indemnification shall be made upon either (a) a determination
in writing of the majority of disinterested directors present, at a
meeting of the Board at which all disinterested directors present
constitute a quorum, that the director, officer or employee in question
was acting in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of this Corporation or of such other
business organization or association in which he served at the
Corporation's request, and that, in any matter which is the subject of a
criminal action, suit or proceeding, he had no reasonable cause to believe
that his conduct was unlawful and in an action by or in the right of the
Corporation to procure a judgment in its favor that such person was not
and has not been adjudicated to have been negligent or guilty of
misconduct in the performance of his duty to the Corporation or to such
other business organization or association; or (b) if the number of all
disinterested directors would not be sufficient at any time to constitute
a quorum, or if the number of disinterested directors present at two
consecutive meetings of the Board has not been sufficient to constitute a
quorum, a determination to the same effect as set forth in the foregoing
clause (a) shall be made in a written opinion by independent legal counsel
other than an attorney, or a firm having association with it an attorney,
who has been retained by or who has performed services for this
Corporation, or any person to be indemnified within the past five years,
or by the majority vote of the policyholders, or by the Court of Common
Pleas or the court in which such action, suit or proceeding was brought.
Prior to making any such determination, the Board of Directors shall first
have received the written opinion of General Counsel that a number of
directors sufficient to constitute a quorum, as named therein, are
disinterested directors. Any director who is a party to or threatened with
the action, suit or proceeding in question, or any related action, suit or
proceeding, or has had or has an interest therein adverse to that of the
Corporation, or who for any other reason has been or would be affected
thereby, shall not be deemed a disinterested director and shall not be
qualified to vote on the question of indemnification. Anything in this
Article to the contrary notwithstanding, if a judicial or administrative
body determines as part of the settlement of any action, suit or
proceeding that the Corporation should indemnify a director, officer or
employee for the amount of the settlement, the Corporation shall so
indemnify such person in accordance with such determination. Expenses
incurred with respect to any action, suit or proceeding which may qualify
for indemnification may be advanced by the Corporation prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
director, officer or employee to repay such amount if it is ultimately
determined hereunder that he is not entitled to indemnification or to the
extent that the amount so advanced exceeds the indemnification to which he
is ultimately determined to be entitled.
ITEM 29. PRINCIPAL UNDERWRITERS
The principal underwriter of the Registrant's securities is Ohio National
Equities, Inc. ("ONEQ"). ONEQ is a wholly-owned subsidiary of the
Depositor. ONEQ also serves as the principal underwriter of securities
issued by Ohio National Variable Accounts A and D, other separate accounts of
the Depositor which are registered as unit investment trusts; and Ohio National
Variable Account R, a separate account of the Depositor's subsidiary, Ohio
National Life Assurance Corporation, which separate account is also registered
as a unit investment trust; and ONE Fund, Inc., an open-end investment company
of the management type.
-6-
<PAGE> 48
The directors and officers of ONEQ are:
Name Position with ONEQ
---- -----------------------
David B. O'Maley Chairman and Director
John J. Palmer President & Chief Executive Officer and
Director
Thomas A. Barefield Senior Vice President
Trudy K. Backus Vice President and Director
Joni L. Dunn Vice President and Compliance Officer
Ronald L. Benedict Secretary and Director
Kenneth M. Jaeger Treasurer
James I. Miller II Vice President and Director
The principal business address of each of the foregoing is One Financial Way,
Cincinnati, Ohio 45242.
During the last fiscal year, ONEQ received the following commissions and other
compensation, directly or indirectly, from the Registrant:
<TABLE>
<CAPTION>
Net Underwriting Compensation
Discounts and on Redemption Brokerage
Commissions or Annuitization Commissions Compensation
- ----------- ---------------- ----------- ------------
<S> <C> <C> <C>
$ None None None
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The books and records of the Registrant which are required under Section 31(a)
of the 1940 Act and Rules thereunder are maintained in the possession of the
following persons:
(1) Journals and other records of original entry:
The Ohio National Life Insurance Company ("Depositor")
One Financial Way
Cincinnati, Ohio 45242
Star Bank, N.A. ("Custodian")
425 Walnut Street
Cincinnati, Ohio 45202
-7-
<PAGE> 49
(2) General and auxiliary ledgers:
Depositor and Custodian
(3) Securities records for portfolio securities:
Custodian
(4) Corporate charter, by-laws and minute books:
Registrant has no such documents.
(5) Records of brokerage orders:
Not applicable.
(6) Records of other portfolio transactions:
Custodian
(7) Records of options:
Not applicable
(8) Records of trial balances:
Custodian
(9) Quarterly records of allocation of brokerage orders and commissions:
Not applicable
(10) Records identifying persons or group authorizing portfolio
transactions:
Depositor
(11) Files of advisory materials:
Not applicable
(12) Other records
Custodian and Depositor
ITEM 3L. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS AND REPRESENTATIONS
Not applicable.
-8-
<PAGE> 50
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
l940, the registrant, Ohio National Variable Account B has caused this
post-effective amendment to the registration statement to be signed on its
behalf in the City of Cincinnati and the State of Ohio on this 25th day of
February, 1998.
OHIO NATIONAL VARIABLE ACCOUNT B
(Registrant)
By THE OHIO NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By /s/ John J. Palmer
_____________________________________________
John J. Palmer, Senior Vice President,
Strategic Initiatives
Attest:
/s/Ronald L. Benedict
____________________________________
Ronald L. Benedict
Corporate Vice President, Counsel
and Secretary
As required by the Securities Act of 1933 and the Investment Company Act of
l940, the depositor, The Ohio National Life Insurance Company, has caused this
post-effective amendment to the registration statement to be signed on its
behalf in the City of Cincinnati and the State of Ohio on the 25th day of
February, 1998.
THE OHIO NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By /s/John J. Palmer
_______________________________________________
John J. Palmer, Senior Vice President,
Strategic Initiatives
Attest:
/s/Ronald L. Benedict
_________________________________
Ronald L. Benedict
Corporate Vice President, Counsel
and Secretary
<PAGE> 51
As required by the Securities Act of 1933, this post-effective amendment to the
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
s/David B. O'Maley Chairman, President, February 25, 1998
------------------------------
David B. O'Maley Chief Executive Officer
and Director
*s/Neil A. Armstrong Director February 25, 1998
- ------------------------------
Neil A. Armstrong
*s/Dale P. Brown Director February 25, 1998
_______________________________
Dale P. Brown
*s/Jack E. Brown Director February 25, 1998
_______________________________
Jack E. Brown
*s/William R. Burleigh Director February 25, 1998
_______________________________
William R. Burleigh
*s/Victoria B. Buyniski Director February 25, 1998
_______________________________
Victoria B. Buyniski
*s/Raymond R. Clark Director February 25, 1998
_______________________________
Raymond R. Clark
*s/Alvin H. Crawford Director February 25, 1998
_______________________________
Alvin H. Crawford
*s/Bannus B. Hudson Director February 25, 1998
_______________________________
Bannus B. Hudson
*s/Charles S. Mechem, Jr. Director February 25, 1998
_______________________________
Charles S. Mechem, Jr.
*s/James W. Nethercott Director February 25, 1998
_______________________________
James W. Nethercott
</TABLE>
<PAGE> 52
<TABLE>
<S> <C> <C>
*s/Oliver W. Waddell Director February 25, 1998
_______________________________
Oliver W. Waddell
*s/Bradley L. Warnemunde Chairman Emeritus and February 25, 1998
________________________ Director
Bradley L. Warnemunde
</TABLE>
By s/ John J. Palmer
________________________
John J. Palmer, Attorney in Fact pursuant to Powers of Attorney, copies
of which have previously been filed as exhibits to the Registrant's
registration statement.
<PAGE> 53
INDEX OF CONSENTS AND EXHIBITS
Page Number in
Exhibit Sequential
Number Description Numbering System
Not Applicable.
