<PAGE> 1
WEALTH-BUILDING OPPORTUNITY
OHIO NATIONAL
FUND, INC.
[LOGO]
ANNUAL REPORT
Ohio National
Variable Account B
Ohio National Fund, Inc.
December 31, 1997
<PAGE> 2
PRESIDENT'S MESSAGE
John J. Palmer photo
DEAR INVESTORS:
We are Pleased to provide you with an update of Ohio National Fund's
performance and investment activity for 1997. It was a very active and exciting
year, highlighted by the addition of several new portfolios and continued
strong growth in net assets, which now total more than $911 million as of
December 31.
LOOKING BACK
Against an economic backdrop of modest growth, low unemployment, and meager
inflation, U.S. stocks posted healthy gains for the third straight year, with
large stocks again leading the way. Nearly all of that performance came in the
first seven months, however, and the year was marked by heightened market
volatility. Internationally, stock market gains were generally respectable in
Europe, mixed in the Americans and dismal throughout the Asia/ Pacific region.
Fixed-income markets fared well as falling inflation and a stronger dollar
helped bonds bounce back in 1997 after posting weak returns during the previous
year.
NEW PORTFOLIOS
We welcomed seven new portfolios and three respected investment managers to Ohio
National Fund on January 3, 1997. Besides the S&P 500 Index and Social Awareness
portfolios, both managed by Ohio National Investments, Inc., they included the
Growth & Income Portfolio, managed by Robertson Stephens; the Core Growth
Portfolio, managed by Pilgrim Baxter & Associates; and the Relative Value,
Stellar and Strategic Income portfolios, all managed by Star Bank. The addition
of these portfolios significantly broaden the Fund's investment spectrum and
offers greater opportunities for diversification for our investors. Please note
that portfolio availability varies by contract.
LOOKING AHEAD
Entering 1998, Asia's turmoil continues to cloud the future. Economic and
currency volatility has hit Asian stocks hard and cast uncertainty over growth
prospects in the U.S. and elsewhere. In addition, the unprecedented three
consecutive years of greater than 20 percent returns experienced from 1995 to
1997 has put the domestic stock market in uncharted territory. But while the
short-term course of events is unknowable, our long-term commitment to our
fundamental investment principles -- careful selection and constant professional
management -- remains unchanged.
IN CLOSING
Information on your investments is contained in the following pages. We are
proud that Ohio National Fund is able to provide its investors with the sound
results documented herein. Please note in reviewing performance results that
rates of return under variable contracts differ depending on applicable charges
for mortality and expenses. Please contact your registered representative for
additional information on the financial protection and tax-deferred
accumulation options afforded by your variable annuity or variable universal
life insurance contract. As your needs change over time, he or she stands ready
to serve you.
Thank you for the confidence you have placed in Ohio National Fund as you
pursue your wealth-building endeavors. Be assured that we will make every
effort to continue to merit that confidence.
Best regards,
/s/ John J. Palmer
John J. Palmer
<PAGE> 3
EQUITY PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The principal investment objective of the Equity Portfolio is long-term capital
growth. Current income is a secondary objective.
PERFORMANCE AS OF DECEMBER 31, 1997
AVERAGE ANNUAL TOTAL RETURNS:
One-year 18.17%
Three-year 21.17%
Five-year 15.26%
Ten-year 13.61%
Since inception (1/14/71) 11.07%
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
The Equity Portfolio's performance for 1997 trailed that of the S&P 500 Index
for three primary reasons. First, the portfolio has maintained a 10% to 13% cash
position due to our concern with high stock prices (especially for large-cap
stocks) relative to expected earnings and growth. Second, even though our
largest holdings are mostly large-cap stocks, approximately two-thirds of the
portfolio's holdings consist of companies whose market capitalizations range
from $300 million to $5 billion. This area of the market has not kept pace with
the larger stocks, despite better valuations in relation to potential earnings
growth. Third, the portfolio didn't rebound from the October drop experienced by
nearly all equity markets. Although the S&P 500 Index recaptured most of its
earlier gains by year-end, a third of New York Stock Exchange issues and half of
Nasdaq Composite issues corrected 20% or more from their highs and did not
regain them. Areas that held back portfolio performance this period included
technology and energy. We expect these areas to rebound from their corrections
as their secular outlooks remain positive.
Looking forward, we expect continued volatility in the equity markets.
Continued strong cash flows into mutual funds could push markets higher.
Concerns about slowing profit growth and economic uncertainty in emerging growth
areas and its impact on the rest of the world could cause sharp sell-offs. We
expect equity returns to gravitate toward their long-term averages.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
1997
<S> <C>
Equity Portfolio $38,632
S&P 500 Index $54,170
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C> <C>
1. General Electric Corp 2.0
2. Cisco Systems Inc 1.7
3. American International Group 1.6
4. Camco International Inc. 1.5
5. Hewlett-Packard Co. 1.3
6. Intel Corp 1.3
7. Allied Signal Inc. 1.3
8. Texas Instruments Inc. 1.3
9. Monsanto Corp 1.2
10. Owens-Illinois Inc 1.2
</TABLE>
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Computer and Related 13.3
Oil, Energy, and Natural Gas 10.0
Electrical Equipment 6.5
Chemicals 5.5
Transportation and Equipment 4.9
</TABLE>
3
<PAGE> 4
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<S> <C> <C>
AEROSPACE (3.1%)
94,000 Allied Signal, Inc. $3,660,125
7,632 Boeing Co. 373,491
64,000 Raytheon Co. 3,232,000
31,350 Rockwell International Corp. 1,638,038
----------------
8,903,654
----------------
AUTOMOTIVE AND RELATED (3.2%)
22,500 Arvin Industries, Inc. 749,531
45,400 Cooper Tire & Rubber 1,106,625
31,000 Chrysler Corp. 1,090,813
29,400 Eaton Corp. 2,623,950
39,184 Ford Motor Co. 1,907,771
1 Meritor Automotive 20
20,000 Magna International, Inc. 1,256,250
47,000 Walbro Corp. 631,562
----------------
9,366,522
----------------
BANKING (4.3%)
26,460 Charter One Financial Inc. 1,670,288
36,000 First International Bancorp Inc. 436,500
42,000 First Union Corp. 2,152,500
40,000 * Flagstar Bancorp 791,876
35,000 Long Island Bancorp, Inc. 1,736,875
45,000 Mellon Bank Corp. 2,728,125
19,574 Nationsbank Corp. 1,190,344
11,000 Star Banc Corp. 631,125
30,750 Susquehanna Bancshares Inc. 1,176,187
----------------
12,513,820
----------------
BUSINESS SERVICES (4.0%)
64,000 * Alternative Resources Inc. 1,476,000
110,000 First Data Corp. 3,217,500
61,000 * Lo Jack 899,750
85,000 Manpower Inc. 2,996,250
76,000 Reynolds & Reynolds CL A 1,401,250
35,000 Standard Register Co. 1,216,250
23,000 Wackenhut Corp. Class B 485,875
----------------
11,692,875
----------------
CHEMICALS (5.5%)
35,000 E I DuPont De Nemours & Co. 2,102,187
96,000 Engelhard Corp. 1,668,000
50,000 Hercules Inc. 2,503,125
38,750 Hanson Trust PLC 893,672
28,000 Lubrizol Corp. 1,032,500
35,300 Mineral Technologies Inc. 1,603,944
85,000 Monsanto Co. 3,570,000
66,000 OM Group, Inc. 2,417,250
----------------
15,790,678
----------------
COMMUNICATIONS (2.1%)
138,250 Andrew Corp. 3,318,000
20,625 Mastec Inc. 471,797
40,000 Motorola Inc. 2,282,500
----------------
6,072,297
----------------
CONSUMER PRODUCTS (0.2%)
51,500 * Acorn Products 515,000
----------------
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------
<S> <C> <C>
COMPUTER AND RELATED (13.3%)
56,500 * 3Comm Corp. $1,973,969
34,500 * Banctec Inc. 925,031
90,000 Cisco Systems, Inc. 5,017,500
63,000 Computer Associates 3,331,125
30,000 * Computer Sciences Corp. 2,505,000
65,000 * Continental Circuits Corp. 905,938
60,000 Hewlett-Packard Co. 3,750,000
53,000 Intel Corp. 3,723,250
33,000 * LSI Logic 651,750
90,000 MacNeal-Schwendler Corp. 866,250
20,000 * Microsoft Corp. 2,585,000
47,058 * Seagate Technology 905,866
45,742 Solectron Corp. 1,901,152
80,000 * Sun Microsystems, Inc. 3,190,000
45,000 Symbol Technologies 1,698,750
80,000 Texas Instruments, Inc. 3,600,000
30,000 * Zebra Tech Corp., Cl. A 892,500
----------------
38,423,081
----------------
CONTAINERS (1.2%)
90,000 * Owens-Illinois, Inc. 3,414,375
----------------
DRUGS (1.1%)
61,000 * Applied Analytical Industries 1,006,500
32,000 Abbott Laboratories 2,098,000
----------------
3,104,500
----------------
ELECTRICAL EQUIPMENT (6.5%)
50,000 * Advanced Lighting 950,000
60,000 Analog Devices, Inc. 1,661,250
100,000 * Anixter Intl. Inc. 1,650,000
101,000 BMC Industries, Inc. 1,628,625
31,500 Federal Signal Corp. 681,188
80,000 General Electric Co. 5,870,000
19,000 Hubbell Inc. Class B Shares 936,937
45,000 * Richey Electronics Inc. 461,250
40,000 Varian Associates, Inc. 2,022,500
40,000 Xerox Corp. 2,952,500
----------------
18,814,250
----------------
ENTERTAINMENT AND LEISURE (0.7%)
75,000 Cedar Fair 1,940,625
----------------
FOOD AND RELATED (1.2%)
80,000 Food Lion Inc. 675,000
25,500 H.J. Heinz Co. 1,295,719
45,000 Panamerican Beverages, Inc. 1,468,125
----------------
3,438,844
----------------
FORESTRY AND PAPER PRODUCTS (0.8%)
68,000 Sonoco Products 2,358,750
----------------
HOTEL/LODGING (1.0%)
50,000 * Guest Supply Inc. 656,250
50,000 La Quinta Inns 965,625
60,000 * Mirage Resorts Inc. 1,365,000
----------------
2,986,875
----------------
</TABLE>
(continued)
4
<PAGE> 5
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ---------------------------------------------------------------
<S> <C> <C>
HOUSING, FURNITURE & RELATED (2.4%)
150,000 Clayton Homes, Inc. $2,700,000
64,000 Newell Co. 2,720,000
100,000 Shelby Williams 1,650,000
--------------
7,070,000
--------------
INDUSTRIAL SERVICES (1.8%)
22,500 Fluor Corp. 840,938
52,000 Mapics Inc. 565,500
20,500 * Medar Inc. 110,187
50,000 Regal Beloit 1,478,125
50,000 Waste Management Inc. 1,375,000
20,000 York International, Corp. 791,250
--------------
5,161,000
--------------
INSURANCE SERVICES (4.5%)
15,119 Aegon NV 1,355,040
42,187 American International Group 4,587,836
36,000 Chubb Corp. 2,722,500
40,000 Equitable Cos., Inc. 1,990,000
26,500 St. Paul Cos. 2,174,656
--------------
12,830,032
--------------
MACHINERY (3.1%)
48,000 Caterpillar, Inc. 2,331,000
30,000 Deere & Company 1,749,375
53,500 Hardinge Inc. 1,992,875
43,000 Modine Manufacturing Inc. 1,467,375
54,000 Stewart & Stevenson 1,377,000
--------------
8,917,625
--------------
MEDIA AND PUBLISHING (0.6%)
55,000 CBS 1,619,063
--------------
MEDICAL AND RELATED (4.6%)
35,000 Allegiance Corp. 1,240,313
37,500 Baxter International 1,891,406
41,500 * Cephalon Inc. 472,063
66,000 Columbia HCA Healthcare Corp. 1,955,250
50,700 * Foundation Health Corp. 1,134,412
30,000 * Humana Inc. 622,500
15,200 * National Healthcare-LP 851,200
76,313 Quorum Health Group Inc. 1,993,664
50,000 * Sola Industries 1,625,000
28,000 United Healthcare Corp. 1,391,250
--------------
13,177,058
--------------
METALS AND MINING (1.8%)
7,000 Amcast Industrial Corp. 160,563
25,000 Crown Cork & Seal Co. 1,253,125
16,000 Phelps Dodge Corp. 996,000
89,000 Worthington Industries 1,468,500
43,800 Wolverine Tube, Inc. 1,357,800
--------------
5,235,988
--------------
OIL, ENERGY AND NATURAL GAS (10.0%)
65,000 * Belco Oil & Gas 1,222,813
65,500 Camco International, Inc. 4,171,531
27,000 Chevron Corp. 2,079,000
13,000 Coastal Corp. 805,188
40,000 Kerr-McGee Corp. 2,532,500
125,000 * Louis Dreyfus Natural Gas 2,335,938
38,000 National Propane Partners 805,125
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ----------------------------------------------------------------
<S> <C> <C>
OIL, ENERGY AND NATURAL GAS (CONT.)
30,000 * Offshore Logistics Inc. $641,250
35,000 Pacific Gulf Properties 831,250
85,000 Santa Fe Energy Resources 956,250
40,000 Schlumberger, Ltd. 3,220,000
110,000 * Tesoro Petroleum 1,705,000
28,000 UGI Corp. 820,750
47,850 Ultramar Diamond Shamrock 1,525,218
45,000 Westcoast Energy, Inc. 1,035,000
102,000 Williams Cos. Inc. 2,894,250
92,500 Wiser Oil 1,306,562
----------------
28,887,625
----------------
REAL ESTATE AND LEASING (3.3%)
32,500 Berkshire Realty 390,000
28,000 Camden Property Trust REIT 868,000
76,000 Commercial Net Lease Realty 1,358,500
37,500 First Industrial Realty Trust 1,354,688
16,400 Great Lakes REIT 318,775
55,000 Healthcare Realty Trust 1,591,562
67,250 Liberty Property Trust 1,920,828
29,500 National Health Investors, Inc. 1,235,312
18,500 Regency Realty Corp. 512,219
----------------
9,549,884
----------------
RESTAURANTS (0.3%)
84,000 * Buffets, Inc. 787,500
----------------
RETAIL (0.1%)
35,000 * Ridgeview Inc. 218,750
----------------
TEXTILES AND RELATED (0.8%)
25,000 Oxford Industries, Inc. 812,500
47,000 Warnaco Group, Cl. A 1,474,625
----------------
2,287,125
----------------
TRANSPORTATION AND EQUIPMENT (4.9%)
44,000 * Atlas Air Inc. 1,056,000
48,000 * Avondale Industries Inc. 1,425,000
26,000 Burlington Northern, Inc. 2,416,375
30,000 CNF Transportation Inc. 1,151,250
29,649 Halter Marine Group Inc. 856,115
33,750 Illinois Central Corp. 1,149,609
75,000 Norfolk Southern Corp. 2,310,938
56,800 Trinity Industries 2,534,700
49,000 * Wisconsin Central Transportation 1,145,375
----------------
14,045,362
----------------
UTILITIES (0.6%)
27,500 FPL Group, Inc. 1,627,656
----------------
TOTAL COMMON STOCKS
(87.0%) (COST $144,544,465) $250,750,814
----------------
MARKET
SHARES WARRANTS VALUE
- ---------------------------------------------------------------------
95,000 Medar Warrants $6.86 $40,850
-------------
TOTAL WARRANTS
(0.0%) (COST $40,850) $40,850
-------------
</TABLE>
(continued)
5
<PAGE> 6
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- --------------------------------------------------------------
<S> <C> <C>
BANKING (0.3%)
30,000 National Australia Bank LTD $853,125
--------------
COMPUTER & RELATED (0.1%)
24,000 General Datacommunications 378,000
--------------
FINANCIAL SERVICES (0.1%)
11,000 Money Store 6.5% 242,688
--------------
METALS AND MINING (0.4%)
50,000 Freeport McMoRan Copper & Gold,
Series B 1,200,000
--------------
OIL AND GAS (0.3%)
15,000 Howell Corp., $3.50 Series A 828,750
--------------
REAL ESTATE (0.2%)
20,000 Oasis Residential Inc. Series A
cum., conv. 512,500
--------------
TOTAL PREFERRED STOCK
(1.4%) (COST $4,737,838) $4,015,063
--------------
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ----------------------------------------------------------------
<S> <C> <C>
BANKING (0.2%)
$400,000 First State Bancorp, 7.500%
conv. debentures, due 04-30-17 $519,500
--------------
ELECTRICAL EQUIPMENT (0.4%)
1,100,000 Richey Electric, 7.000%
conv. debentures, due 03-01-06 1,083,500
--------------
INDUSTRIAL SERVICES (0.1%)
475,000 Medar Inc. 12.95%
conv. debentures, due 06-30-05 434,150
--------------
METAL FABRICATING (0.3%)
900,000 INCO, Ltd., 7.750% conv.
subordinated debentures,
due 03-15-16 878,625
--------------
OIL, ENERGY AND NATURAL GAS (0.2%)
500,000 Offshore Log, 6.000%
debentures due 12-15-06 577,500
--------------
TOTAL CONVERTIBLE
(1.2%) (COST $3,334,150) $3,493,275
--------------
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (3.1%)
$3,000,000 Ford Motor ST
6.000% 01-07-98 $2,997,000
3,862,000 General Motors
5.900% 01-09-98 3,856,936
2,155,000 General Motors
6.160% 01-09-98 2,152,050
------------
9,005,986
------------
ELECTRICAL EQUIPMENT (0.6%)
1,705,000 G.E. Capital
5.920% 01-05-98 1,703,879
------------
FINANCIAL SERVICES (3.6%)
3,602,000 American Express
5.850% 01-06-98 3,599,073
1,401,000 CIT Group Holdings
5.550% 01-02-98 1,400,784
1,237,000 Heller Financial
6.150% 01-09-98 1,235,309
4,025,000 Household Finance
6.080% 01-02-98 4,024,320
------------
10,259,486
------------
INSURANCE SERVICES (1.3%)
3,895,000 Prudential Funding
6.010% 01-08-98 3,890,448
------------
RETAIL (1.8%)
5,144,000 Sears Roebuck
5.900% 01-09-98 5,137,256
-----------
TOTAL SHORT-TERM NOTES
(10.4%) (COST $29,997,056) $29,997,055
-----------
TOTAL HOLDINGS
(COST $182,654,359)(a) $288,297,057
============
</TABLE>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<S> <C>
ASSETS:
Investments in securities at market
value (note 1) (cost $182,654,359) ...... $288,297,057
Cash in bank ............................. 8,487
Receivable for fund shares sold........... 340,861
Receivable for fund securities sold....... 512,287
Dividends and accrued interest receivable 448,925
Other .................................... 16,212
-------------
Total assets ............................ 289,623,829
-------------
LIABILITIES:
Payable for securities purchased.......... 729,196
Payable for shares redeemed............... 634,602
Payable for investment management
services (note 3) ....................... 136,342
Other accrued expenses ................... 51,514
-------------
Total liabilities ....................... 1,551,654
-------------
Net assets at market value $288,072,175
=============
NET ASSETS CONSIST OF:
Par value, $1 per share .................. $8,129,279
Paid-in capital in excess of par value ... 174,223,941
Accumulated undistributed net realized
gain on investments .................... 73,823
Net unrealized appreciation on investments
(note 1)................................. 105,642,698
Undistributed net
investment income ....................... 2,434
-------------
Net assets at market value $288,072,175
=============
Shares outstanding (note 4)................ 8,129,279
Net asset value per share.................. $35.44
=============
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................. $1,953,815
Dividends............................ 3,627,716
-----------
Total investment income............. 5,581,531
-----------
EXPENSES:
Management fees (note 3)............. 1,431,415
Custodian fees (note 3).............. 53,800
Directors' fees (note 3) ............ 11,520
Professional fees.................... 34,560
Accounting and transfer agent fees... 195,403
Other................................ 54,729
-----------
Total expenses...................... 1,781,427
-----------
Net investment income............... $3,800,104
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investments .. $13,144,695
Net increase in unrealized
appreciation on investments ........ 26,148,841
-----------
Net gain on investments............ 39,293,536
-----------
Net increase in net
assets from operations............. $43,093,640
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
OHIO NATIONAL FUND, INC.
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
12-31-97 12-31-96
---------- ----------
<S> <C> <C>
From operations:
Net investment income .............................................................. $3,800,104 $3,269,213
Realized gain on investments ....................................................... 13,144,695 2,116,393
Unrealized gain on investments ..................................................... 26,148,841 29,110,600
----------- -----------
Net increase in assets from operations............................................ 43,093,640 34,496,206
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income .......................................... (4,788,921) (3,065,136)
Capital gains distributions ........................................................ (15,187,264) (5,341,756)
----------- -----------
Total dividends and distributions ................................................ (19,976,185) (8,406,892)
----------- -----------
From capital share transactions (note 4):
Received from shares sold .......................................................... 38,790,194 37,139,279
Received from dividends reinvested ................................................. 19,976,185 8,406,892
Paid for shares redeemed ........................................................... (26,588,013) (14,554,329)
----------- -----------
Increase in net assets derived from capital share transactions..................... 32,178,366 30,991,842
----------- -----------
Increase in net assets .......................................................... 55,295,821 57,081,156
Net Assets:
Beginning of period ................................................................ 232,776,354 175,695,198
----------- -----------
End of period (a) .................................................................. $288,072,175 $232,776,354
============ ============
(a) Includes undistributed net investment income of.................................. $2,434 $991,250
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period............................. $32.30 $28.58 $23.20 $23.90 $21.63
Income from investment operations:
Net investment income........................................... 0.51 0.47 0.50 0.45 0.41
Net realized and unrealized gain (loss) on investments ......... 5.24 4.58 5.65 (0.39) 2.57
------ ------ ------ ------ ------
Total income from investment operations........................ 5.75 5.05 6.15 0.06 2.98
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ........................... (0.63) (0.46) (0.39) (0.44) (0.42)
Distributions from net realized capital gains................... (1.98) (0.87) (0.38) (0.32) (0.29)
------ ------ ------ ------ ------
Total distributions............................................ (2.61) (1.33) (0.77) (0.76) (0.71)
------ ------ ------ ------ ------
Net asset value, end of period................................... $35.44 $32.30 $28.58 $23.20 $23.90
====== ====== ====== ====== ======
Total return..................................................... 18.17% 18.35% 27.20% 0.25% 14.09%
Ratios and supplemental data:
Ratio of expenses to average net assets ........................ 0.67% 0.73% 0.73% 0.62% 0.63%
Ratio of net investment income to average net assets ........... 1.43% 1.60% 1.90% 1.90% 1.91%
Portfolio turnover rate.......................................... 19% 11% 14% 8% 18%
Average commission rate (a) ..................................... $0.07 $0.07 NR NR NR
Net assets at end of period (millions)........................... $288.1 $232.8 $175.7 $123.3 $109.9
</TABLE>
(a) Represents the total dollar amount of commission paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
(NR) Not required prior to 1996.
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 9
OHIO NATIONAL FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -----------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (10.6%)
$1,080,000 Ford Motor Acceptance Corp.
5.510% 01-05-98 $1,079,339
1,021,000 General Motors Acceptance Corp.
5.580% 02-02-98 1,015,936
1,000,000 Hertz Corporation
5.530% 01-09-98 998,771
------------
3,094,046
------------
CHEMICALS (3.7%)
1,100,000 Monsanto
5.500% 04-01-98 1,084,875
------------
COMMUNICATIONS (3.4%)
1,006,000 AT&T Corp.
5.700% 01-21-98 1,002,814
------------
COMPUTER AND RELATED (3.4%)
613,000 International Business Machines
5.740% 01-26-98 610,557
380,000 International Business Machines
5.730% 02-04-98 377,944
------------
988,501
------------
CONTAINERS (1.1%)
310,000 Crown Cork & Seal
6.000% 03-12-98 306,383
------------
ELECTRICAL EQUIPMENT (11.8%)
1,250,000 Avnet, Inc.
5.780% 02-19-98 1,240,166
1,022,000 GE Capital
5.850% 01-28-98 1,017,516
1,194,000 GTE Capital
6.250% 02-06-98 1,186,394
------------
3,444,076
------------
ENTERTAINMENT AND LEISURE (2.6%)
747,000 Walt Disney
5.520% 01-02-98 746,885
------------
FOOD AND RELATED (3.8%)
1,100,000 Coca-Cola
5.660% 01-23-98 1,096,195
------------
INDUSTRIAL SERVICES (3.8%)
930,000 Fluor Corp.,
5.780% 01-30-98 925,670
190,000 Growmark Inc.
5.800% 01-05-98 189,877
------------
1,115,547
------------
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- -------------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES (20.9%)
$1,200,000 American Express Credit
5.750% 01-27-98 $1,195,017
276,000 Associates Corp.
5.750% 01-16-98 275,339
665,000 Cigna Corp.
5.900% 01-29-98 661,948
1,050,000 Heller Financial Services
5.620% 01-20-98 1,046,886
400,000 Household Finance Corp.
5.800% 01-09-98 399,484
810,000 Household Finance Corp.
5.540% 01-12-98 808,629
821,000 John Deere Capital Corp.
5.510% 01-07-98 820,246
900,000 LGE Capital Corp. (b)
5.750% 03-23-98 888,356
-------------
6,095,905
-------------
INSURANCE SERVICES (11.1%)
960,000 American General Finance
5.650% 02-12-98 953,672
1,100,000 MetLife Funding
5.690% 01-22-98 1,096,349
1,198,000 Prudential Funding Corp.
5.820% 01-08-98 1,196,644
-------------
3,246,665
-------------
MEDICAL AND RELATED (6.6%)
1,000,000 Allergan Inc.
6.050% 02-17-98 992,101
933,000 Schering Corp.
5.650% 02-03-98 928,168
-------------
1,920,269
-------------
RETAIL (10.3%)
1,126,000 Sears Roebuck Acceptance Corp.
5.650% 01-14-98 1,123,703
974,000 Southland
5.780% 01-20-98 971,029
919,000 Winn-Dixie
5.500% 01-06-98 918,298
-------------
3,013,030
-------------
UTILITIES (6.9%)
900,000 Houston Industries (b)
5.800% 01-09-98 898,840
1,108,000 Interstate Power
5.840% 01-13-98 1,105,843
-------------
2,004,683
-------------
TOTAL HOLDINGS
(COST $29,159,874) (a) $29,159,874
=============
</TABLE>
(a) Also represents cost for Federal income tax purposes.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period end,
the value of these securities amounted to $1,787,196 or 6.1% of net assets.
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 10
OHIO NATIONAL FUND, INC.
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $29,159,874)......... $29,159,874
Cash in bank .............................. 73
Receivable for fund shares sold............ 1,816,815
Other ..................................... 1,650
-------------
Total assets ............................. 30,978,412
-------------
Liabilities:
Payable for investment management
services (note 3) ........................ 6,125
Dividends payable ......................... 27
Payable for shares redeemed ............... 1,826,638
Other accrued expenses .................... 4,009
-------------
Total liabilities ........................ 1,836,799
-------------
Net assets at market value $29,141,613
=============
Net assets consist of:
Par value, $1 per share ................... $2,914,161
Paid-in capital in excess of par value .... 26,227,452
-------------
Net assets at market value $29,141,613
=============
Shares outstanding (note 4)................. 2,914,161
Net asset value per share................... $10.00
=============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<S> <C>
Investment income:
Interest............................ $1,331,745
-----------
Expenses:
Management fees (note 3)............ 71,176
Custodian fees (note 3)............. 5,000
Directors' fees (note 3)............ 960
Professional fees................... 2,963
Accounting and transfer agent fees.. 17,078
Other............................... 4,673
-----------
Total expenses..................... 101,850
Less fees waived (note 3) ......... (11,867)
-----------
Net expenses ..................... 89,983
-----------
Net investment income ............. $1,241,762
-----------
Net increase in net
assets from operations............ $1,241,762
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 11
OHIO NATIONAL FUND, INC.
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
12-31-97 12-31-96
---------- ----------
<S> <C> <C>
From operations:
Net investment income ............................................................. $1,241,762 $979,842
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income ......................................... (1,241,762) (979,842)
----------- -----------
From capital share transactions (note 4):
Received from shares sold ......................................................... 40,064,944 28,544,523
Received from dividends reinvested ................................................ 1,241,762 979,842
Paid for shares redeemed .......................................................... (37,676,423) (19,728,821)
----------- -----------
Increase in net assets derived from capital share transactions.................... 3,630,283 9,795,544
----------- -----------
Increase in net assets ......................................................... 3,630,283 9,795,544
Net Assets:
Beginning of period ............................................................... 25,511,330 15,715,786
----------- -----------
End of period...................................................................... $29,141,613 $25,511,330
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period................. $10.00 $10.00 $10.00 $10.00 $10.00
Income from investment operations:
Net investment income............................... 0.52 0.50 0.54 0.39 0.27
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ............... (0.52) (0.50) (0.54) (0.39) (0.27)
------ ------ ------ ------ ------
Net asset value, end of period....................... $10.00 $10.00 $10.00 $10.00 $10.00
====== ====== ====== ====== ======
Total return......................................... 5.37% 5.17% 5.62% 4.00% 2.71%
Ratios net of fees waived by advisor (a):
Ratio of expenses to average net assets ............ 0.38% 0.44% 0.44% 0.39% 0.53%
Ratio of net investment income to average net assets 5.11% 4.98% 5.39% 3.69% 2.71%
Ratios assuming no fees waived by advisor:
Ratio of expenses to average net assets ............ 0.43% 0.49% 0.55% 0.59% 0.63%
Ratio of net investment income to average net assets 5.06% 4.93% 5.27% 3.51% 2.60%
Net assets at end of period (millions)............... $29.1 $25.6 $15.7 $13.1 $19.1
</TABLE>
(a) On and after June 17, 1993, the advisor has waived part of the management
fee to the extent such fee exceeds an annual rate of 0.25% of the Money
Market Portfolio's daily net asset value.
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 12
BOND PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Bond Portfolio seeks to obtain a high level of income and opportunity for
capital appreciation consistent with preservation of capital.
PERFORMANCE AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS:
<S> <C>
One-year 9.28%
Three-year 10.45%
Five-year 7.48%
Ten-year 8.30%
Since inception (11/2/82) 8.70%
</TABLE>
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
The Bond Portfolio returned 9.28% in 1997 versus 7.87% for the Lehman Brothers
Government/Corporate Intermediate Bond Index. The portfolio has a slightly
longer maturity structure than the index and benefited from the overall decline
in interest rates during 1997.
The portfolio should perform in line with the index during 1998 if we are
correct in forecasting less volatility in interest rates than was the case in
1997. Remember that past performance is not necessarily predictive of future
results.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
1997
<S> <C>
Bond Portfolio $23,528
Lehman Bros. Government/Corp.
Index-Intermediate $24,271
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
% Net Assets
<S> <C>
1. Anixter 8.00% 09/15/2003 4.8
2. Colonial 8.05% 7/15/2006 4.5
3. Texas Utilities 7.48% 1/1/2017 3.4
4. Mississippi Chemical Corp 7.25% 11/15/2017 3.2
5. ITT Dest 6.75% 11/15/05 3.1
6. Mississippi Power & Light 8.80% 4/1/05 2.5
7. Pioneer 8.50% 08/01/2006 2.4
8. Northwest Airlines 8.07% 1/2/15 2.4
9. Great Lakes 8.90% 12/1/99 2.4
10. Mobile Energy 8.665% 1/1/17 2.4
</TABLE>
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Utilities 15.2
Oil, Energy, and Natural Gas 11.3
Electrical Equipment 9.2
Real Estate and Leasing 7.1
Transportation and Equipment 5.2
</TABLE>
13
<PAGE> 13
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (2.4%)
$500,000 U.S. Treasury Note
7.875% 11-15-99 $519,376
-------------
AUTOMOTIVE AND RELATED (2.9%)
100,000 Arvin Industries
10.000% 08-01-00 107,533
500,000 GMAC
8.400% 10-15-99 519,699
-------------
627,232
-------------
CHEMICALS (3.2%)
700,000 Mississippi Chemical Corp.
7.250% 11-15-17 702,849
-------------
COMMUNICATIONS (2.2%)
200,000 Comcast Cable Communications
8.375% 05-01-07 223,107
250,000 Tele-Communications, Inc.
8.250% 01-15-03 267,592
-------------
490,699
-------------
COMPUTER AND RELATED (2.1%)
300,000 Apple Computer Inc.
6.500% 02-15-04 250,500
200,000 Comdisco, Inc.
7.750% 09-01-99 205,163
-------------
455,663
-------------
CONSUMER GOODS (2.5%)
200,000 RJR Nabisco Inc.
8.750% 04-15-04 215,149
300,000 RJR Nabisco Inc.
8.625% 12-01-02 319,457
-------------
534,606
-------------
ELECTRICAL EQUIPMENT (9.2%)
1,000,000 Anixter Intl.
8.000% 09-15-03 1,051,395
500,000 Pioneer
8.500% 08-01-06 530,601
400,000 Tektronix Inc.
7.500% 08-01-03 416,960
-------------
1,998,956
-------------
FINANCIAL SERVICES (3.5%)
250,000 Aristar Inc.
5.750% 07-15-98 249,831
500,000 St. Paul Bancorp Inc.
7.125% 02-15-04 509,922
-------------
759,753
-------------
FORESTRY AND PAPER PRODUCTS (3.9%)
300,000 Boise Cascade Co.
9.850% 06-15-02 338,356
250,000 Champion International
7.700% 12-15-99 257,168
250,000 ITT Rayonier Inc.
7.500% 10-15-02 262,424
-------------
857,948
-------------
FOOD AND RELATED (2.3%)
500,000 Gruma, SA de C.V.
7.625% 10-15-07 492,329
-------------
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- ------- -------------------------------------------------------
<S> <C> <C>
GOVERNMENT (FOREIGN) (2.2%)
$200,000 British Columbia
7.000% 01-15-03 $207,976
250,000 Province of Quebec
8.625% 01-19-05 281,493
------------
489,469
------------
HOTEL/LODGING (4.6%)
700,000 ITT Destinations
6.750% 11-15-05 674,428
300,000 Marriott International
7.875% 04-15-05 323,937
------------
998,365
------------
HOUSING, FURNITURE AND RELATED (0.8%)
140,000 Armstrong World
9.750% 04-15-08 175,282
------------
INSURANCE (3.1%)
250,000 Continental Corp.
7.250% 03-01-03 258,340
400,000 Transamerica Finance Corp.
7.500% 03-15-04 420,482
------------
678,822
------------
MEDICAL AND RELATED (2.6%)
250,000 Bergen Brunswig
7.375% 01-15-03 261,052
300,000 Cardinal Health Inc.
6.500% 02-15-04 302,808
------------
563,860
------------
METALS AND MINING (2.3%)
500,000 Cyprus Minerals
6.625% 10-15-05 499,199
------------
OIL, ENERGY AND NATURAL GAS (11.3%)
200,000 Atlantic Richfield
8.550% 03-01-12 241,529
100,000 DeKalb Energy
9.875% 07-15-00 108,120
400,000 Dresser Industries, Inc.
6.250% 06-01-00 402,562
125,000 Marathon Oil
7.000% 06-01-02 127,516
480,937 Mobile Energy Services Co.
8.665% 01-01-17 519,297
400,000 PDV America, Inc.
7.875% 08-01-03 414,481
140,000 Shell Oil Co.
6.950% 12-15-98 141,423
500,000 System Energy
7.800% 08-01-00 508,059
------------
2,462,987
------------
REAL ESTATE (7.1%)
300,000 Avalon Properties Inc.
7.375% 09-15-02 308,221
900,000 Colonial Realty
8.050% 07-15-06 977,826
250,000 Sun Communities
7.625% 05-01-03 261,225
------------
1,547,272
------------
</TABLE>
(continued)
14
<PAGE> 14
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- -----------------------------------------------------------
<S> <C> <C>
RESTAURANTS (2.3%)
$500,000 Wendy's Inc.
6.350% 12-15-05 $495,750
-------------
TRANSPORTATION (5.2%)
250,000 American President Cos., Ltd.
7.125% 11-15-03 245,663
350,000 Illinois Central Gulf Railroad
6.750% 05-15-03 356,112
495,731 Northwest Airlines
8.070% 01-02-15 528,529
-------------
1,130,304
-------------
UTILITIES (15.2%)
200,000 Cleveland Electric Illum.
7.625% 08-01-02 206,800
500,000 Great Lakes Power Inc.
8.900% 12-01-99 523,246
250,000 Kansas Gas & Electric
8.290% 03-29-16 268,628
550,000 Mississippi Power & Light
8.800% 04-01-05 552,404
375,000 New Orleans Public Service Co.
8.670% 04-01-05 378,754
200,000 Old Dominion Electric Co-op
8.760% 12-01-22 228,161
200,000 Sprint Corp.
8.125% 07-15-02 214,800
700,000 Texas Utilities Electric Co.
7.480% 01-01-17 731,224
200,000 Toledo Edison Co.
7.875% 08-01-04 209,660
-------------
3,313,677
-------------
TOTAL LONG-TERM BONDS & NOTES
(90.9%) (COST $19,074,374) $19,794,398
-------------
<CAPTION>
MARKET
SHARES WARRANTS VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
500 Plastic Specialties $500
-------------
TOTAL WARRANTS
(0.0%) (COST $0) $500
-------------
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ---------------------------------------------------------------
<S> <C> <C>
UTILITIES (1.5%)
12,000 GTE Delaware, 8.750%, Series B $318,000
-------------
TOTAL PREFERRED STOCKS
(1.5%) (COST $300,000) $318,000
-------------
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (1.6%)
$200,000 Ford Motor Credit Co.
6.150% 01-02-98 $199,966
150,000 General Motors Acceptance
6.150% 01-06-98 149,872
-------------
349,838
-------------
FINANCE (2.9%)
378,000 American Express Credit
5.830% 01-08-98 377,571
263,000 Household Finance
6.100% 01-07-98 262,733
-------------
640,304
-------------
TOTAL SHORT-TERM NOTES
(4.5%) (COST $990,142) $990,142
-------------
TOTAL HOLDINGS
(COST $20,364,516)(A) $21,103,040
=============
</TABLE>
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 15
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $20,364,516)................. $21,103,040
Cash in bank ...................................... 1,165
Receivable for fund shares sold.................... 258,758
Dividends and accrued interest receivable ......... 420,082
Other ............................................. 1,377
-----------
Total assets ..................................... 21,784,422
-----------
Liabilities:
Payable for investment management
services (note 3) ................................ 11,513
Other accrued expenses ............................ 5,879
-----------
Total liabilities ................................ 17,392
-----------
Net assets at market value $21,767,030
===========
Net assets consist of:
Par value, $1 per share ........................... $2,038,526
Paid-in capital in excess of par value ............ 19,030,792
Accumulated undistributed net realized
loss on investments (note 1) ..................... (44,128)
Net unrealized appreciation on investments (note 1) 738,524
Undistributed net investment income ............... 3,316
------------
Net assets at market value $21,767,030
============
Shares outstanding (note 4)......................... 2,038,526
Net asset value per share........................... $10.68
============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<S> <C>
Investment income:
Interest................................ $1,469,892
Dividends............................... 42,699
----------
Total investment income................ 1,512,591
----------
Expenses:
Management fees (note 3)................ 121,188
Custodian fees (note 3)................. 5,000
Directors' fees (note 3)................ 840
Professional fees....................... 2,534
Accounting and transfer agent fees ..... 23,717
Other................................... 4,214
----------
Total expenses......................... 157,493
----------
Net investment income ................. $1,355,098
----------
Realized and unrealized gain on investments:
Net realized gain from investments ..... $38,573
Net increase in unrealized
appreciation on investments ........... 399,815
----------
Net gain on investments............... 438,388
----------
Net increase in net
assets from operations................ $1,793,486
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 16
OHIO NATIONAL FUND, INC.
BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
12-31-97 12-31-96
---------- ----------
<S> <C> <C>
From operations:
Net investment income ................................................................... $1,355,098 $1,278,401
Realized gain on investments ............................................................ 38,573 2,392
Unrealized gain (loss) on investments ................................................... 399,815 (518,569)
----------- -----------
Net increase in assets from operations................................................. 1,793,486 762,224
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income ............................................... (1,690,155) (1,230,887)
----------- -----------
From capital share transactions (note 4):
Received from shares sold ............................................................... 6,831,247 6,923,633
Received from dividends reinvested ...................................................... 1,690,155 1,230,887
Paid for shares redeemed ................................................................ (7,636,590) (4,971,363)
----------- -----------
Increase in net assets derived from capital share transactions.......................... 884,812 3,183,157
----------- -----------
Increase in net assets ............................................................... 988,143 2,714,494
Net Assets:
Beginning of period ..................................................................... 20,778,887 18,064,393
----------- -----------
End of period (a) ....................................................................... $21,767,030 $20,778,887
=========== ===========
(a) Includes undistributed net investment income of....................................... $3,316 $338,373
=========== ===========
</TABLE>
Financial Highlights
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1997 1996 1995 1994 1993
------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period........................... $10.62 $10.93 $9.70 $10.87 $10.45
Income (loss) from investment operations:
Net investment income......................................... 0.71 0.69 0.70 0.67 0.69
Net realized and unrealized gain (loss) on investments ....... 0.23 (0.32) 1.08 (1.07) 0.41
------ ------ ------ ----- ------
Total income (loss) from investment operations............... 0.94 0.37 1.78 (0.40) 1.10
------ ------ ------ ----- ------
Less distributions:
Dividends from net investment income ......................... (0.88) (0.68) (0.55) (0.69) (0.68)
Distributions from net realized capital gains................. 0.00 0.00 0.00 (0.08) 0.00
------ ------ ------ ----- ------
Total distributions.......................................... (0.88) (0.68) (0.55) (0.77) (0.68)
------ ------ ------ ----- ------
Net asset value, end of period................................. $10.68 $10.62 $10.93 $9.70 $10.87
====== ====== ====== ===== ======
Total return................................................... 9.28% 3.71% 18.90% 3.84% 10.69%
Ratios and supplemental data:
Ratio of expenses to average net assets ...................... 0.78% 0.79% 0.75% 0.63% 0.62%
Ratio of net investment income to average net assets ......... 6.67% 6.54% 6.76% 6.71% 6.33%
Portfolio turnover rate........................................ 10% 3% 4% 5% 13%
Net assets at end of period (millions)......................... $21.8 $20.8 $18.1 $13.1 $12.0
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 17
OMNI PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Omni Portfolio seeks a high level of long-term total rate of return
consistent with prudent investment risks. Total return consists of current
income and capital appreciation.
PERFORMANCE AS OF DECEMBER 31, 1997
AVERAGE ANNUAL TOTAL RETURNS:
One-year 18.15%
Three-year 18.78%
Five-year 13.47%
Ten-year 12.57%
Since inception (9/10/84) 12.05%
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
The Omni Portfolio's performance for 1997 trailed that of the S&P 500 Index for
three primary reasons. First, the portfolio's investments consist of common
stocks and their equivalent, corporate and Treasury bonds and cash. This
portfolio structure will not outperform the S&P 500 Index in a strong
large-cap-led stock market. Second, the common stock portion of the portfolio
(approximately 65%) consists of small-, medium- and large-capitalization stocks.
Small- and mid-sized equities have generally not kept pace with the larger
companies. Finally, the cash position of the portfolio (approximately 17%) both
helped and hurt its performance during the fourth quarter of the year. It
cushioned the effects of the stock market correction, but also didn't
participate in the year-end stock bounce or the bond rally during the quarter.
Looking forward, we expect continued volatility in the equity markets.
Continued strong cash flows into mutual funds could push markets higher.
Concerns about slowing profit growth and economic uncertainty in emerging growth
areas and its impact on the rest of the world could cause sharp sell-offs. We
expect equity returns to gravitate toward their long-term averages. Fixed-income
instruments should continue to provide steady results.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
OMNI PORTFOLIO S&P 500 INDEX
<S> <C> <C>
'88
'87
'88
'89
'90
'91
'92
'93
'94
'95
'96
'97 $31,687 $54,169
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
1. Camco International Inc. 1.5
2. Ford Motor Corp. 1.5
3. Owens-Illinois Inc 1.4
4. American International Group 1.4
5. Cisco Systems Inc 1.3
6. Chubb Corp 1.2
7. US Treasury Note 7.75% 2/15/2001 1.1
8. General Electric Corp 1.1
9. Allied Signal Inc. 1.0
10. Hewlett-Packard Co. 1.0
</TABLE>
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Oil, Energy, and Natural Gas 11.3
Computer and Related 7.9
Electrical Equipment 6.1
Banking 4.7
Insurance Services 4.6
</TABLE> 19
<PAGE> 18
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (1.8%)
$775,000 U.S. Treasury Note
6.375% 07-15-99 $783,477
500,000 U.S. Treasury Note
7.875% 11-15-99 519,376
2,005,000 U.S. Treasury Note
7.750% 02-15-01 2,122,168
----------
3,425,021
----------
AEROSPACE (0.3%)
500,000 AAR Corp.
7.250% 10-15-03 503,884
----------
BANKING (0.8%)
400,000 Citified Bancorp Inc.
8.250% 03-01-03 408,036
1,000,000 Green Tree Financial Cl. A6
8.700% 06-15-25 1,083,750
----------
1,491,786
----------
COMMUNICATIONS (1.1%)
1,600,000 Comcast Cable Communications
8.375% 05-01-07 1,784,859
300,000 Sprint
8.125% 07-15-02 322,201
----------
2,107,060
----------
COMPUTERS AND RELATED (0.3%)
700,000 Apple Computer, Inc.
6.500% 02-15-04 584,500
----------
CONSUMER GOODS (0.2%)
400,000 RJR Nabisco, Inc.
8.750% 04-15-04 430,298
----------
FOOD AND RELATED (0.4%)
740,000 Marsh Supermarkets Inc.
8.875% 04-01-07 749,250
----------
FORESTRY AND PAPER PRODUCTS (0.8%)
700,000 Boise Cascade Co.
9.850% 06-15-02 789,498
500,000 Champion International
9.875% 06-01-00 541,011
250,000 ITT Rayonier, Inc.
7.500% 10-15-02 262,424
----------
1,592,933
----------
HOUSING, FURNITURE AND RELATED (0.1%)
250,000 Armstrong World
9.750% 04-15-08 313,005
----------
INDUSTRIAL SERVICES (0.2%)
400,000 Medar Sr Sec Notes
12.950% 06-30-05 365,600
----------
INSURANCE (0.6%)
500,000 Continental Corp.
7.250% 03-01-03 516,681
600000 Transamerica Finance Corp.
7.500% 03-15-04 630,722
----------
1,147,403
----------
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
MACHINERY (0.2%)
$500,000 ABC Rail Products Corp.
9.125% 01-15-04 $485,000
----------
MEDICAL AND RELATED (0.8%)
500,000 Bergen Brunswig
7.375% 01-15-03 522,104
1,000,000 Tenet Healthcare Corp.
8.625% 01-15-07 1,052,200
----------
1,574,304
----------
METALS AND MINING (0.2%)
500,000 Cyprus Minerals
6.625% 10-15-05 499,199
----------
OIL, ENERGY AND NATURAL GAS (1.7%)
400,000 Dekalb Energy
9.875% 07-15-00 432,480
350,000 Dresser Industries, Inc.
6.250% 06-01-00 352,242
375,000 Marathon Oil
7.00% 06-01-02 382,547
600,000 PDV America, Inc.
7.875% 08-01-03 621,722
500,000 Petroleos Mexicanos Global
8.850% 09-15-04 496,250
500,000 United Refining Company
10.750% 06-15-07 527,500
500,000 Union Texas Petroleum
8.250% 11-15-99 518,000
----------
3,330,741
----------
TRANSPORTATION (0.5%)
500,000 American President Cos., Ltd.
7.125% 11-15-03 491,327
400,000 Illinois Central Gulf Railroad
6.750% 05-15-03 406,985
----------
898,312
----------
UTILITIES (1.6%)
400,000 Cleveland Electric Illum.
7.625% 08-01-02 413,600
1,000,000 Great Lakes Power
9.000% 08-01-04 1,104,987
500,000 Mississippi Power & Light
8.800% 04-01-05 502,185
400,000 Old Dominion Elec. Co.
8.760% 12-01-22 456,322
500,000 Texas New Mexico Power Co.
9.250% 09-15-00 528,954
----------
3,006,048
----------
TOTAL LONG-TERM BONDS & NOTES
(11.6%) (COST $21,565,177) $22,504,344
----------
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------------------------
AUTOMOTIVE AND RELATED (3.2%)
$3,283,000 General Motors Acceptance Corp.
5.900% 01-09-98 $3,277,031
2,871,000 Ford Motor
5.950% 01-12-98 2,867,236
----------
6,144,267
(continued)
</TABLE>
20
<PAGE> 19
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------------------------
FINANCE (9.5%)
<S> <C> <C>
$1,000,000 American Express Credit Corp.
6.000% 01-05-98 $999,333
2,494,000 American Express Credit Corp.
5.850% 01-05-98 2,492,379
4,234,000 CIT Group Holding
5.550% 01-02-98 4,233,347
2,500,000 General Electric Capital
6.02% 01-7-98 2,497,492
4,798,000 Heller Financial
6.150% 01-08-98 4,792,262
1,017,000 Household Finance
6.100% 01-09-98 1,015,621
2,469,000 John Deere Capital
6.080% 01-07-98 2,466,498
-----------
18,496,932
-----------
INSURANCE (1.9%)
3,697,000 Prudential Funding
5.950% 01-13-98 3,689,668
-----------
RETAIL (2.3%)
3,927,000 Sears Roebuck Acceptance Corp.
6.000% 01-06-98 3,923,728
500,000 Sears Roebuck Acceptance Corp.
6.070% 01-06-98 499,579
-----------
4,423,307
-----------
TOTAL SHORT-TERM NOTES
(16.9%) (COST $32,754,174) $32,754,174
-----------
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------------------
AEROSPACE (2.4%)
49,000 Allied Signal, Inc. $1,907,937
16,456 Boeing Co. 805,316
21,600 Raytheon Co. 1,090,800
17,350 Rockwell International Corp. 906,538
-----------
4,710,591
-----------
AUTOMOTIVE AND RELATED (3.1%)
7,500 Arvin Industries, Inc. 249,844
11,700 Chrysler Corp. 411,694
26,000 Cooper Tire & Rubber 633,750
8,000 Eaton Corp. 714,000
58,777 Ford Motor Co. 2,861,705
10,000 Magna International, Inc. 628,125
34,000 Walbro Corp. 456,875
-----------
5,955,993
-----------
BANKING (3.6%)
14,332 Charter One Financial, Inc. 904,708
25,000 Flagstar Bancorp 494,922
36,000 First International Bank 436,500
20,000 First Union Corp. 1,025,000
17,500 Long Island Bancorp, Inc. 868,437
22,500 Mellon Bank Corp. 1,364,063
13,050 Nations Bank Corporation 793,603
7,000 Star Banc 401,625
18,750 Susquehanna Bancshares, Inc. 717,188
-----------
7,006,046
-----------
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------------------
BUSINESS SERVICES (3.4%)
37,000 *Alternative Resources Co. $853,313
55,000 First Data Corp. 1,608,750
30,000 Hewlett-Packard Co. 1,875,000
30,000 *Lo Jack Corp. 442,500
45,000 Manpower, Inc. 1,586,250
5,000 Standard Register Co. 173,750
-----------
6,539,563
-----------
CHEMICALS (3.1%)
11,000 Chemitrol 242,000
5,000 E I DuPont DeNemours & Co. 300,312
18,000 Engelhard Corp. 312,750
25,625 Hanson Trust PLC 590,977
25,000 Hercules Inc. 1,251,563
12,000 Lubrizol Corp. 442,500
20,000 Minerals Technologies Inc. 908,750
15,000 Monsanto Co. 630,000
39,000 OM Group, Inc. 1,428,375
-----------
6,107,227
-----------
COMMUNICATIONS (0.9%)
65,000 Andrew Corp. 1,560,000
11,250 Mastec, Inc. 257,344
-----------
1,817,344
-----------
COMPUTER AND RELATED (7.5%)
28,000 *3Comm Corp. 978,250
45,000 Cisco Systems, Inc. 2,508,750
34,500 Computer Associates 1,824,188
6,600 *Computer Sciences Corp. 551,100
22,000 Intel Corp. 1,545,500
16,000 *LSI Logic 316,000
55,000 MacNeal-Schwendler Corp. 529,375
30,000 Mapics Inc. 326,250
10,000 *Microsoft Corp. 1,292,500
47,058 *Seagate Technology, Inc. 905,866
40,000 *Sun Microsystems, Inc. 1,595,000
36,000 Texas Instruments, Inc. 1,620,000
17,000 *Zebra Tech Corp. Cl. A 505,750
-----------
14,498,529
-----------
CONSUMER PRODUCTS (1.0%)
41,500 *Acorn Products 415,000
50,000 *Sola International 1,625,000
-----------
2,040,000
-----------
CONTAINERS (2.0%)
24,000 Crown Cork & Seal Co. 1,203,000
70,000 *Owens-Illinois, Inc. 2,655,625
-----------
3,858,625
-----------
DRUGS (1.2%)
32,000 *Applied Analytical 528,000
28,000 Abbott Laboratories 1,835,750
-----------
2,363,750
-----------
DURABLE GOODS (0.1%)
15,000 *Meadow Craft Inc. 176,250
-----------
ENTERTAINMENT & LEISURE (1.3%)
66,000 Cedar Fair 1,707,750
36,000 *Mirage Resorts Inc. 819,000
-----------
2,526,750
-----------
(continued)
</TABLE>
<PAGE> 20
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
ELECTRICAL EQUIPMENT (5.5%)
35,000 *Advanced Lighting $665,000
33,333 *Analog Devices, Inc. 922,907
52,500 *Anixter International, Inc. 866,250
52,000 BMC Industries Inc. 838,500
26,116 Federal Signal Corp. 564,759
28,000 General Electric Co. 2,054,500
18,900 *Hubbell Inc. Cl. B 932,006
18,000 Varian Associates, Inc. 910,125
40,000 Westinghouse Electric 1,177,500
22,500 Xerox Corp. 1,660,781
-----------
10,592,328
-----------
FOOD AND RELATED (1.0%)
50,000 Food Lion Inc. Cl. A 421,875
16,500 H.J. Heinz Co. 838,406
23,000 Pan American Beverages, Inc. 750,375
-----------
2,010,656
-----------
FORESTRY AND PAPER PRODUCTS (0.7%)
38,000 Sonoco Products Inc. 1,318,125
-----------
HOTEL/LODGING (0.4%)
25,000 *Guest Supply 328,125
23,000 La Quinta Inns 444,188
-----------
772,313
-----------
HOUSING, FURNITURE & RELATED (1.9%)
71,025 Clayton Homes 1,278,450
55,000 Haverty Furniture Co. 742,500
24,000 Newell Co. 1,020,000
35,000 Shelby Williams 577,500
-----------
3,618,450
-----------
INDUSTRIAL SERVICES (0.5%)
30,000 Clarcor 888,750
4,000 *Puretec Corp. 12,375
1,600 Regal Beloit 47,300
-----------
948,425
-----------
INSURANCE (4.0%)
8,983 Aegon NV 805,101
24,187 American International Group 2,630,336
30,000 Chubb Corp. 2,268,750
6 Cincinnati Financial Corp. 844
20,000 Equitable Cos., Inc. 995,000
12,500 St. Paul Cos. 1,025,781
-----------
7,725,812
-----------
MACHINERY (1.5%)
12,000 Caterpillar, Inc. 582,750
33,000 Hardinge Inc. 1,229,250
41,000 Stewart & Stevenson 1,045,500
-----------
2,857,500
-----------
MEDICAL AND RELATED (2.7%)
20,300 Allegiance Corp. 719,381
26,500 Baxter International 1,336,594
20,000 *Cephalon 227,500
32,500 *Foundation Health Corp. 727,188
18,000 *Humana, Inc. 373,500
37,500 *Quorum Health Group Inc. 979,687
19,000 United Healthcare Corp. 944,062
-----------
5,307,912
-----------
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------------------------------
METALS AND MINING (1.0%)
27,000 Amcast Industrial Corp. $619,313
4,000 Phelps Dodge Corp. 249,000
49,000 Worthington Industries 808,500
6,200 Wolverine Tube Inc. 192,200
-----------
1,869,013
-----------
OIL, ENERGY AND NATURAL GAS (8.6%)
32,500 *Belco Oil & Gas 611,406
45,500 Camco International, Inc. 2,897,781
23,000 Chevron Corp. 1,771,000
7,000 Coastal Corp. 433,562
20,000 Kerr McGee 1,266,250
60,000 *Louis Dreyfus Natural Gas 1,121,250
32,200 National Propane Partners 682,238
15,000 *Offshore Logistics Inc. 320,625
30,000 Pacific Gulf Properties 712,500
20,000 Schlumberger, Ltd. 1,610,000
60,300 *Tesoro Petroleum 934,650
24,150 Ultramar Diamond Shamrock, Inc. 769,781
23,200 WD-40 Co. 672,800
22,100 Westcoast Energy, Inc. 508,300
57,000 Williams Companies Inc. 1,617,375
46,000 Wiser Oil 649,750
-----------
16,579,268
-----------
REAL ESTATE (4.2%)
32,500 Berkshire Realty Co. 390,000
19,000 Camden Property Trust 589,000
76,300 Commercial Net Lease Realty 1,363,863
30,500 First Industrial Realty Trust 1,101,812
15,000 Great Lakes REIT 291,562
50,000 Healthcare Realty Trust 1,446,875
56,250 Liberty Property Trust 1,606,641
24,000 National Health Investors, Inc. 1,005,000
11,500 Regency Hotel Corp. 318,406
-----------
8,113,159
-----------
RESTAURANTS (0.2%)
50,000 *Buffets, Inc. 468,750
-----------
TEXTILES (0.5%)
30,000 Warnaco Group Cl. A 941,250
-----------
TRANSPORTATION AND EQUIPMENT (3.4%)
21,500 *Atlas Air Inc. 516,000
28,500 *Avondale Industries 846,094
14,000 Burlington Northern Santa Fe 1,301,125
15,000 CNF Transportation 575,625
10,962 Halter Marine Group 316,528
11,250 Illinois Central Corp. 383,203
30,000 Norfolk Southern Corp. 924,375
21,000 Trinity Industries 937,125
33,000 *Wisconsin Central Transportations 771,375
-----------
6,571,450
-----------
UTILITIES (0.8%)
15,000 FPL Group, Inc. 887,812
23,500 UGI Corp. 688,844
-----------
1,576,656
-----------
TOTAL COMMON STOCKS
(66.5%) (Cost $80,216,319) $128,871,735
-----------
(continued)
</TABLE>
22
<PAGE> 21
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES WARRANTS VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
80,000 *Medar Inc. Warrants $34,400
---------
TOTAL WARRANTS (0.0%)
(Cost $34,400) $34,400
---------
MARKET
SHARES PREFERRED STOCK VALUE
- --------------------------------------------------------------------------------
AUTOMOTIVE AND RELATED (0.1%)
8,000 Walbro Cap Trust $190,000
---------
BANKING (0.4%)
30,000 National Australia Bank 853,125
---------
COMPUTERS AND RELATED (0.1%)
16,000 General Datacommunications,
9.000% Pfd. 252,000
---------
FINANCIAL SERVICES (0.1%)
11,000 Money Store 6.50% 242,688
---------
FOOD & RELATED (0.3%)
20,000 Conagra Capital LC, 9.350% cum.,
conv. Series C 540,000
---------
METALS AND MINING (0.4%)
30,000 Freeport McMoRan Copper & Gold
cum., conv. 720,000
---------
OIL, ENERGY AND NATURAL GAS (0.8%)
41,000 Consumer Energy Financing II 1,032,687
10,000 Howell Corp., $3.50 Series A 552,500
---------
1,585,187
---------
MARKET
SHARES PREFERRED STOCK VALUE
- --------------------------------------------------------------------------------
REAL ESTATE (0.2%)
15,000 Oasis Residential , Inc., 9.000%
cum., conv. Series A $ 384,375
----------
UTILITIES (0.3%)
20,000 GTE Delaware 8.750%, Series B 530,000
----------
TOTAL PREFERRED STOCKS
(2.7%) (Cost $5,631,975) $5,297,375
----------
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- --------------------------------------------------------------------------------
BANKING (0.3%)
$400,000 First State Bancorp, 7.500% conv.
debentures due 04-30-17 $ 519,500
----------
ELECTRICAL EQUIPMENT (0.6%)
1,100,000 Richey Electric,7.000% conv.
debentures, due 03-01-06 1,083,500
----------
METALS AND MINING (0.3%)
600,000 INCO, Ltd., 7.750% conv. subordinated
debentures, due 03-15-16 585,750
----------
OIL, ENERGY AND NATURAL GAS (0.2%)
400,000 Offshore Logistics, Inc., 6.000%
conv. debentures, due 12-15-06 462,000
----------
TOTAL CONVERTIBLE DEBENTURES
(1.4%) (Cost $2,466,124) $2,650,750
----------
TOTAL HOLDINGS
(COST $142,668,169)(A) $192,112,778
------------
</TABLE>
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
23
<PAGE> 22
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Assets:
Investments in securities at market
<S> <C>
value (note 1) (cost $142,668,169)......... $192,112,778
Cash in bank ............................... 7,331
Receivable for fund shares sold............. 1,049,033
Receivable for securities sold.............. 233,156
Dividends and accrued interest receivable .. 726,915
Other ...................................... 15,620
--------------------
Total assets .............................. 194,144,833
--------------------
Liabilities:
Payable for securities purchased............ 287,346
Payable for shares redeemed................. 3,715
Payable for investment management
services (note 3) ......................... 92,641
Other accrued expenses ..................... 46,085
--------------------
Total liabilities ......................... 429,787
--------------------
Net assets at market value $193,715,046
====================
Net assets consist of:
Par value, $1 per share .................... $9,196,046
Paid-in capital in excess of par value ..... 135,033,103
Accumulated undistributed net realized
gain on investments ....................... 33,599
Net unrealized appreciation on investments
(note 1)................................... 49,444,609
Undistributed net
investment income ......................... 7,689
--------------------
Net assets at market value................... $193,715,046
====================
Shares outstanding (note 4).................. 9,196,934
Net asset value per share.................... $21.06
====================
STATEMENT OF OPERATIONS
Year ended December 31, 1997
Investment income:
Interest.................................... $3,422,217
Dividends................................... 2,372,650
--------------------
Total investment income.................... 5,794,867
--------------------
Expenses:
Management fees (note 3).................... 948,021
Custodian fees (note 3)..................... 38,000
Directors' fees (note 3).................... 11,320
Professional fees........................... 33,960
Accounting and transfer agent fees ......... 122,038
Other....................................... 45,917
--------------------
Total expenses............................. 1,199,256
--------------------
Net investment income...................... $4,595,611
--------------------
Realized and unrealized gain on investments:
Net realized gain from investments ......... $7,723,290
Net increase in unrealized
appreciation on investments ............... 15,465,006
--------------------
Net gain on investments................... 23,188,296
--------------------
Net increase in net
assets from operations.................... $27,783,907
===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE> 23
OHIO NATIONAL FUND, INC.
OMNI PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12-31-97 12-31-96
From operations: ------------ ------------
<S> <C> <C>
Net investment income .......................................................... $4,595,611 $3,688,175
Realized gain on investments ................................................... 7,723,290 1,460,737
Unrealized gain on investments ................................................. 15,465,006 13,387,967
------------ ------------
Net increase in assets from operations........................................ 27,783,907 18,536,879
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income....................................... (5,602,347) (3,564,088)
Capital gains distributions .................................................... (9,150,428) (1,956,755)
------------ ------------
Total dividends and distributions ............................................ (14,752,775) (5,520,843)
------------ ------------
From capital share transactions (note 4):
Received from shares sold ...................................................... 35,259,039 25,730,422
Received from dividends reinvested ............................................. 14,752,775 5,520,843
Paid for shares redeemed ....................................................... (14,795,590) (8,376,827)
------------ ------------
Increase in net assets derived from capital share transactions................. 35,216,224 22,874,438
------------ ------------
Increase in net assets ...................................................... 48,247,356 35,890,474
Net Assets:
Beginning of period ............................................................ 145,467,690 109,577,216
------------ ------------
End of period (a) ..............................................................$193,715,046 $145,467,690
============ ============
(a) Includes undistributed net investment income of.............................. $7,689 $1,014,424
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995 1994 1993
Per share data: -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $19.40 $17.60 $14.76 $15.38 $14.14
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income........................... 0.56 0.53 0.58 0.55 0.58
Net realized and unrealized gain (loss) on
investments ................................... 2.87 2.10 2.72 (0.63) 1.21
-------- -------- -------- -------- --------
Total income (loss) from investment operations. 3.43 2.63 3.30 (0.08) 1.79
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ........... (0.69) (0.52) (0.46) (0.54) (0.55)
Distributions from net realized capital gains .. (1.08) (0.31) 0.00 0.00 0.00
-------- -------- -------- -------- --------
Total distributions............................ (1.77) (0.83) (0.46) (0.54) (0.55)
-------- -------- -------- -------- --------
Net asset value, end of period................... $21.06 $19.40 $17.60 $14.76 $15.38
======== ======== ======== ======== ========
Total return..................................... 18.15% 15.54% 22.75% 0.53% 12.85%
Ratios and supplemental data:
Ratio of expenses to average net assets ........ 0.71% 0.76% 0.75% 0.62% 0.62%
Ratio of net investment income to average net
assets ........................................ 2.69% 2.89% 3.56% 3.67% 3.74%
Portfolio turnover rate.......................... 18% 12% 10% 7% 17%
Average commission rate (a) ..................... $0.07 $0.07 NR NR NR
Net assets at end of period (millions)........... $193.7 $145.5 $109.6 $85.0 $74.2
</TABLE>
(a) Represents the total dollar amount of commission paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
(NR) Not required prior to 1996.
The accompanying notes are an integral part of these financial statements.
25
<PAGE> 24
INTERNATIONAL PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The International Portfolio seeks long-term capital growth by investing
primarily in securities of foreign companies.
PERFORMANCE AS OF DECEMBER 31, 1997
AVERAGE ANNUAL TOTAL RETURNS:
One-year 2.11%
Three-year 9.43%
Since inception (5/3/93) 13.03%
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
Over the 12 months ended December 31, 1997, the International Portfolio slightly
outperformed the MSCI EAFE Index while generating disappointing returns in a
year characterized by major turmoil in Asia and highly volatile world markets.
While European holdings (approximately 37% of net assets at year-end) rose
along with local markets, the portfolio is overweighted in small capitalization
stocks which lagged major indices. The strength of the US dollar also lowered
returns, despite partial hedges in place throughout the year. In Asia, stocks
fell sharply in the wake of the severe crisis that developed in Southeast Asia
over the summer. Japanese equities (about 18% of net assets) were extremely poor
performers, particularly in the case of small capitalization stocks. A much
weaker yen further compounded the effect of sharply lower stock prices. Direct
Southeast Asian exposure was limited to less than 4% of net assets, but sharp
losses were registered in those markets. Finally, holdings in other emerging
markets were also negatively impacted by the consequences of the financial
crisis. Throughout the year, the portfolio maintained a defensive posture with
large cash holdings and assets diversified across many different countries.
CHANGE IN VALUE OF $10,000,000 INVESTMENT
1993 1994 1995 1996 1997
International Portfolio $10,000 $17,697
Morgan Stanley Capital
Intl. EAFE Index $10,000 $14,041
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
% of Net Assets
1. Secom Co., LTD 1.8
2. Fuji Photo Film-ORD 1.8
3. Buderus AG 1.7
4. Queensland Treasury 8.00% 9/14/07 1.6
5. Bank For Int'l. Settlements 1.5
6. Legrand ADP 1.5
7. Sika Finanz AG 1.3
8. Affichage 1.3
9. Kuehne & Nagel Intl AG 1.2
10. Tokio Marine Fire Ins. 1.2
TOP 5 COUNTRIES/REGIONS AS OF DECEMBER 31, 1997
% of Net Assets
Japan 16.7
France 10.6
Switzerland 7.9
Germany 5.5
United Kingdom 5.3
The risk associated with investing on a worldwide basis includes differences in
regulation of financial data and reporting and currency exchanges as well as
economic and political systems which may be different from those in the United
States. The prices of small company stocks are generally more volatile than the
prices of large company stocks.
27
<PAGE> 25
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO
Schedule of Investments December 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------------------------
JAPAN (16.7%)
<S> <C> <C>
250,000 Aida Engineering Limited (19) $826,209
70,700 Chofu Seisakusho (9) 927,018
350,000 Dai-Tokyo Fire Marine Ins. Co. Ltd. (18) 1,202,316
300,000 Dowa Fire & Marine Ins. Co. Ltd. (18) 894,836
75,000 Fuji Photo Film Co., Ltd. (9) 2,875,436
15,000 Hitachi Ltd. ADR (11) 1,037,813
400,000 *Iino Kaiun Kaisha (5) 591,956
35,000 Ito-Yokado Co. Ltd. (28) 1,784,687
200,000 Koa Fire & Marine Ins. Co., Ltd. (18) 751,447
50,000 Makita Corp. Ltd (19) 479,239
275,000 Nichido Fire & Marine Ins. Co., Ltd. (18) 1,433,884
250,000 Nisshinbo Industries Inc. (8) 1,054,327
150,000 Nittetsu Mining Co., Ltd. (22) 609,592
45,000 Secom Co., Ltd. (29) 2,877,736
85,000 Shimano Inc. (9) 1,564,237
115,000 Shiseido Company (9) 1,569,604
127,000 Sotoh Co. (31) 744,968
155,000 Shoei Co. (27) 1,127,899
15,000 Toho Co. (20) 1,598,742
165,000 Tokyo Marine & Fire Ins. Co. Ltd. (18) 1,872,485
15,000 Tsutsumi Jewelry Co. (9) 184,029
--------------
26,008,460
--------------
FRANCE (10.6%)
2,500 *C.E.E. (Continentale d'Equipments 30,957
Electriques) (10)
7,000 Compagnie Generale des Eaux (33) 977,312
8,387 *Compagnie Generale des Eaux 5,702
Nouvelle (Warrants)(33)
8,130 Crometal (5) 445,924
8,500 Elf Aquitaine (12) 988,947
17,500 Emin Leydier (24) 1,032,577
25,000 Eramet (22) 947,395
4,500 Eurafrance (34) 1,832,461
10,000 Gaumont SA (20) 727,167
3,500 La Brosse et DuPont (9) 269,924
18,500 Legrand ADP (10) 2,333,832
16,500 Marine Wendel (34) 1,875,841
12,000 CGDE Michelin 'B' (34) 604,338
6,396 NSC Groupe (19) 838,767
2,421 Promodes C.I. (28) 726,320
6,000 SAGA (Societe Anontme de Gerance et 1,316,380
d'Armement) (32)
1,000 Sucriere de Pithiviers-le-Vieil (1) 560,126
3,500 Taittinger (13) 1,046,539
--------------
16,560,509
--------------
GERMANY (5.5%)
1,500 Axel Springer Verlag AG (20) 1,009,202
40,000 Bayer AG (7) 927,882
12,000 Bertelsmann AG D.R.C. (25) 1,427,896
5,750 Buderus AG (5) 2,580,139
50,000 Gerresheimer Glas AG (4) 1,050,905
30,000 IVG Holding AG (27) 906,892
1,500 Suedzucker AG (8) 738,136
--------------
8,641,052
--------------
SWITZERLAND (7.9%)
375 Bank of Intl. Settlements (3) 2,340,544
5,500 Edipresse SA Bearer (20) 1,595,075
3,000 Kuehne & Nagel Intl. AG (32) 1,935,021
400 Lindt & Sprungli AG PC (9) $697,674
1,000 Nestle SA (9) 1,497,264
6,500 Sika Finanz AG Bearer (7) 2,062,928
5,500 Societe Generale d'Affichage (20) 2,012,654
726 Vetropack Holding AG PC (23) 131,097
--------------
12,272,257
--------------
NEW ZEALAND (3.2%)
975,549 Carter Holt Harvey Limited (14) 1,506,375
1,000,000 *Evergreen Forests Ltd. (14) 278,640
278,500 Independent Press Comm. (20) 1,293,354
1,601,500 Shortland Properties, Ltd. (27) 818,110
1,820,310 Tasman Agriculture Limited (1) 961,588
450,000 Wrightson Ltd. (1) 208,980
--------------
5,067,047
--------------
LATIN AMERICA (2.8%)
325,000 Antofagasta Holdings plc 21) 1,771,448
40,000 Banco Latinoamericano 'Bladex' (3) 1,655,000
681,944 Ledesma SA (1) 709,357
100,000 Siderca S.A.I.C. (12) 278,053
--------------
4,413,858
--------------
CANADA (2.5%)
50,000 Canadian Pacific Ltd. (34) 1,362,500
40,000 Franco-Nevada Mining Corp. (21 786,537
100,000 Noranda, Inc. (21) 1,721,423
--------------
3,870,460
--------------
UNITED KINGDOM (2.3%)
300,000 Berisford plc (34) 929,081
450,000 *McBride plc (10) 1,323,012
375,000 Royal Doulton plc (9) 1,322,392
--------------
3,574,485
--------------
HONG KONG (2.2%)
5,727,368 CDL Hotels Intl. Ltd. (16) 1,737,291
1,850,000 Shaw Brothers (Hong Kong) Ltd.(20) 1,373,059
500,000 South China Morning Post Holdings
Corp. (25) 351,735
--------------
3,462,085
--------------
SWEDEN (1.6%)
15,000 AssiDoman AB (14) 380,005
45,000 Bylock & Nordsjofrakt AB 'B' (32) 186,032
55,000 Gorthon Lines 'B' (32) 302,933
12,000 Investor AB Class B (34) 585,322
75,000 IRO AB (31) 1,096,533
--------------
2,550,825
--------------
ITALY (1.5%)
175,000 Arnoldo Mondadori Editore SpA (25) 1,375,032
1,500,000 Montedison non-conv. Savings SpA(34) 984,426
--------------
2,359,458
--------------
SINGAPORE (1.4%)
250,000 Clipsal Industries Ltd. (10) 320,000
500,000 Del Gro Corp. (35) 612,184
700,000 Intraco Ltd. (34) 328,678
200,000 Singapore Bus Service Ltd. (32) 72,511
525,000 Times Publishing Ltd. (25) 914,264
--------------
2,247,637
--------------
SPAIN (1.4%)
225,000 Energia e Ind. Aragonesas SA (33) 1,506,350
6,500 Corporation Financiera Alba SA (34) 684,749
--------------
2,191,099
--------------
</TABLE>
(continued)
28
<PAGE> 26
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS December 31, 1997
Market
Shares Common Stock Value
- --------------------------------------------------------------------------------
<S> <C>
NETHERLANDS (1.4%)
30,000 Apothekers Cooperatie OPG (17) $895,633
55,000 European City Estates NV (27) 746,361
8,500 Philips Electronics NV ADR (11) 514,250
------------
2,156,244
------------
MEXICO (1.3%)
1,000,000 Grupo Fernandez Editores SA de CV(25) 235,674
400,000 Industrias Penoles SA de CV (21) 1,781,195
------------
2,016,869
------------
AUSTRIA (1.0%)
17,500 VAE AG (26) 1,537,822
------------
BELGIUM (0.9%)
7,500 Deceuninck Plastics Ind. SA (4) 1,473,918
------------
NORWAY (0.8%)
70,000 Schibsted AS (25) 1,201,004
------------
DENMARK (0.6%)
10,000 Carlsberg International A/S Class'B'(9) 537,234
3,500 Kobenhavns Lufthavne (32) 421,539
------------
958,773
------------
SOUTH AFRICA (0.4%)
28,000 Anglo American Platinum Corp.(22) 373,985
50,000 JCI Ltd. (22) 223,467
------------
597,452
------------
FINLAND (0.4%)
7,000 Vaisala Oy A (5) 591,075
------------
ISRAEL (0.2%
50,000 *Israel Land Development Co. Ltd. (34) 262,719
------------
AUSTRALIA (0.2%)
185,000 Eltin Ltd. (22) 139,812
100,000 Motors Holdings Ltd. (2) 51,468
------------
191,280
------------
PORTUGAL (0.1%)
10,000 Companhia de Celulose do Cairna (1) 121,283
------------
GREECE (0.1%)
48,200 H. Benrubi & Fils SA (9) 113,921
------------
MISCELLANEOUS (2.0%)
65,000 North European Oil Royalty Tr. (12) 1,048,125
50,000 Minorco ADR (34) 837,500
850,000 Lonrho plc (34) 1,305,669
------------
3,191,294
------------
Total Common Stock
(69.0%) (Cost $122,534,492) $107,632,886
------------
MARKET
SHARES PREFERRED STOCK VALUE
- -------------------------------------------------------------------------------
INDONESIA (0.9%)
11,500 Freeport McMoRan Pfd. 'B' (22) $276,000
22,500 Freeport McMoRan Pfd. 'C' (22) 511,875
30,000 Freeport McMoRan Pfd. 'D' (22) 581,250
------------
1,369,125
------------
GERMANY (0.9%)
20,000 Hornbach Holdings AG Pfd. (28) $1,378,965
------------
Total Preferred Stock
(1.8%) (Cost $3,461,265) $2,748,090
------------
MARKET
SHARES CONVERTIBLE DEBENTURES VALUE
- -------------------------------------------------------------------------------
U.S. DOLLAR (2.2%)
$1,000,000 PT Inti Indorayon Utama 7.000%
due 05-02-06 (24) $560,000
950,000 Cheil Foods & Chemicals Co 3.000%
due 12-31-06 (9) 1,003,438
250,000 Sincere Navigation 3.750%
due 05-26-03 (32) 286,250
250,000 Medya International Ltd. 10.000%
due 06-28-01 (20) 190,000
1,350,000 Scandinavian Broadcasting
7.250% due 08-01-05 (20) 1,350,000
------------
$3,389,688
------------
NON U.S. DOLLAR (2.4%)
4,000,000 FF Alcatel Alstholm 2.500%
due 01-01-04 (11) 821,075
687,150 FF Gaumont SA 3.750%
due 01-01-03 (20) 134,007
5,200,000 FF Immobiliere Hoteliere
due 01-01-01 (33) 598,355
550,000 GBPBerisford plc 5.000%
due 01-31-15 (9) 778,983
500,000 GBPBAA plc 5.750%
due 03-29-06 (32) 880,563
55,000,000 JPYNippon Yusen 2.000%
due 09-29-00 (32) 432,274
320,000 NZ Shortland Properties Inc. 7.500%
due 12-31-98 (27) 165,326
------------
$3,810,583
------------
Total Convertible Subordinated
Debentures (4.6%) (Cost $7,575,708) $7,200,271
------------
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
- -------------------------------------------------------------------------------
U.S. DOLLAR (1.5%)
$1,250,000 Federal Republic Of Brazil 6.875%
due 04-15-24 (15) $1,028,125
216,000 Republic of Argentina 6.687%
due 03-31-05 (15) 193,374
500,000 United Mexican States 'A'
6.867% due 12-31-19 (15) 463,750
500,000 United Mexican States 'B'
6.617% 12-31-19 (15) 463,750
250,000 United Mexican States 'C'
6.718% 12-31-19 (15) 231,875
------------
$2,380,874
------------
</TABLE>
(continued)
29
<PAGE> 27
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
International Portfolio (Continued)
Schedule of Investments December 31, 1997
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
- ----------------------------------------------------------------------------------
NON-U.S. DOLLAR (2.4%)
<S> <C>
$3,500,000 AU Queensland Treasury 8.00%
due 09-14-07 (11) $2,557,802
1,000,000 NZ Republic of New Zealand 10.000%
due 03-15-02 (15) 635,740
1,000,000 NZ Trans Power Finance Ltd. 8.00%
due 03-15-02 (15) 580,394
----------
3,773,936
----------
TOTAL NON-CONVERTIBLE BONDS
(3.9%) (Cost $5,782,696) $6,154,810
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOBILE AND RELATED (1.6%)
$2,536,000 Fiat Financing
6.15% 01-12-98 $2,531,234
----------
APPLIANCES (3.6%)
5,656,000 Maytag Corp.
7.000% 01-12-98 5,654,900
----------
CHEMICALS (2.2%)
3,438,000 DuPont Ei De Nemours
5.700% 01-16-98 3,429,835
----------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
ELECTRONICS (2.6%)
$4,038,000 Motorola Inc.
5.750% 01-21-98 $4,025,101
----------
FINANCIAL (7.3%)
4,509,000 Goldman Sachs Group, LP
5.750% 01-05-98 4,506,119
2,641,000 Merrill Lynch
6.00% 01-07-98 2,638,360
4,235,000 Prudential Funding
5.800% 01-02-98 4,234,319
------------
11,378,798
TRANSPORTATION (1.9%) ------------
$3,013,000 CSX Corp
5.970% 01-06-98 3,010,502
------------
TOTAL SHORT-TERM NOTES
(19.2%) (Cost $22,413,822) $30,030,370
------------
TOTAL HOLDINGS
(COST $161,767,983) (A) $153,766,427
============
</TABLE>
(a) Also represents cost for Federal income tax purposes.
* Non-income producing securities.
Foreign Currencies
NZ - New Zealand Dollar
FF - French Franc
GBP - British Pound
JPY - Japanese Yen
AU - Austrailian Dollar
Industry Classifications
(1) Agriculture (18) Insurance
(2) Automotive (19) Machinery
(3) Banking (20) Media
(4) Building Products (21) Metal (non-ferrous)
(5) Capital Goods (22) Mining
(6) Cement (23) Packaging
(7) Chemicals (24) Paper
(8) Computer Products (25) Publishing
(9) Consumer Products (26) Rail Equipment
(10) Electrical Products (27) Real Estate
(11) Electronics (28) Retailing
(12) Energy and Oil (29) Services
(13) Food & Beverage (30) Steel
(14) Forest Products (31) Textile
(15) Governmental (32) Transportation
(16) Hotels (33) Utilities
(17) Health Care (34) Miscellaneous
(35) Holding Companies
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 28
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $161,767,983) ....................... $ 153,766,427
Cash in bank .............................................. 252,408
Unrealized gain on forward currency
contracts (note 5) ....................................... 3,033,417
Receivable for securities sold ............................ 355,716
Receivable for fund shares sold ........................... 82,918
Dividends and accrued interest receivable ................. 480,617
Other ..................................................... 1,278
-------------
Total assets ............................................. 157,972,781
-------------
Liabilities:
Unrealized loss on forward currency
contracts (note 5) ....................................... 451,032
Payable for securities purchased .......................... 31,060
Payable for shares redeemed ............................... 1,277,923
Payable for investment management
services (note 3) ........................................ 119,954
Other accrued expenses .................................... 62,710
-------------
Total liabilities ........................................ 1,942,679
-------------
Net assets at market value ................................. $ 156,030,102
=============
Net assets consist of:
Par value, $1 per share ................................... $ 11,648,458
Paid-in capital in excess of par value .................... 149,809,500
Net unrealized appreciation (depreciation) on:
Investments (note 1) ..................................... (8,001,556)
Foreign currency related transactions .................... (9,364)
Forward currency contracts (note 5) ...................... 2,582,385
Undistributed net investment income ....................... 679
-------------
Net assets at market value ................................. $ 156,030,102
=============
Shares outstanding (note 4) ................................ 11,648,458
Net asset value per share .................................. $ 13.39
=============
STATEMENT OF OPERATIONS Year ended December 31, 1997
Investment income:
Interest (net of $5,861 foreign taxes withheld) ........... $ 1,919,290
Dividends (net of $306,413 foreign taxes withheld) ........ 2,829,043
-------------
Total investment income .................................. 4,748,333
-------------
Expenses:
Management fees (note 3) .................................. 1,416,777
Custodian fees (note 3) ................................... 411,452
Directors' fees (note 3) .................................. 7,480
Professional fees ......................................... 22,440
Other ..................................................... 46,808
-------------
Total expenses ........................................... 1,904,957
-------------
Net investment income .................................... $ 2,843,376
=============
Realized and unrealized gain (loss) on
investments and foreign currency:
Net realized gain from:
Investments .............................................. $ 10,515,619
Forward currency related transactions .................... 6,742,661
Net increase (decrease) in unrealized
appreciation (depreciation) on:
Investments ............................................. (18,741,860)
Foreign currency related transactions ................... 935,907
-------------
Net loss on investments ................................. (547,673)
-------------
Net increase in net
assets from operations .................................. $ 2,295,703
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE> 29
OHIO NATIONAL FUND, INC.
INTERNATIONAL PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12-31-97 12-31-96
---------- ----------
From operations:
<S> <C> <C>
Net investment income ................................................................. $2,843,376 $1,901,178
Realized gain on investments and foreign currency transactions......................... 17,258,280 7,010,378
Unrealized gain (loss) on investments and foreign currency transactions ............... (17,805,953) 5,979,693
------------ ------------
Net increase in assets from operations............................................... 2,295,703 14,891,249
------------ ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income.............................................. (3,725,344) (1,817,864)
Capital gains and foreign currency related transaction distributions .................. (21,388,818) (4,571,191)
------------ ------------
Total dividends and distributions ................................................... (25,114,162) (6,389,055)
------------ ------------
From capital share transactions (note 4):
Received from shares sold ............................................................. 37,696,255 37,362,568
Received from dividends reinvested .................................................... 25,114,162 6,389,055
Paid for shares redeemed .............................................................. (21,251,055) (5,558,345)
------------ ------------
Increase in net assets derived from capital share transactions........................ 41,559,362 38,193,278
------------ ------------
Increase in net assets ............................................................. 18,740,903 46,695,472
Net Assets:
Beginning of period ................................................................... 137,289,199 90,593,727
------------ ------------
End of period (a) .....................................................................$156,030,102 $137,289,199
============ ============
(a)Includes undistributed net investment income of...................................... $679 $882,647
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
4-30-93
Years Ended December 31, to
1997 1996 1995 1994 12-31-94
------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning ..................... $15.49 $14.38 $13.30 $12.48 $10.00
Income from investment operations:
Net investment income ......................... 0.28 0.25 0.31 0.16 0.02
Net realized and unrealized gain on investments
and foreign currency transactions ............ 0.08 1.76 1.28 0.84 2.47
------ ----- ------ ------ ------
Total income from investment operations ..... 0.36 2.01 1.59 1.00 2.49
------ ----- ------ ------ ------
Less distributions:
Dividends from net investment income .......... (0.37) (0.25) (0.28) (0.12) (0.01)
Distributions from net realized capital gains
and foreign currency related transaction ..... (2.09) (0.65) (0.23) (0.06) 0.00
------ ----- ------ ------ ------
Total distributions .......................... (2.46) (0.90) (0.51) (0.18) (0.01)
------ ----- ------ ------ ------
Net asset value, end of period ................. $13.39 $15.49 $14.38 $13.30 $12.48
====== ====== ====== ====== ======
Total return ................................... 2.11% 14.48% 12.10% 8.07% 24.96%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets ....... 1.22% 1.15% 1.12% 1.05% 1.13%(a,d)
Ratio of net investment income to average
net assets ................................... 1.82% 1.64% 2.29% 1.23% 0.41%(a,d)
Portfolio turnover rate ........................ 24% 14% 7% 16% 8%
Average commission rate (c) .................... $ 0.02 $ 0.03 NR NR NR
Net assets at end of period (millions).......... $156.0 137.3 $ 90.6 $ 62.9 $ 17.5
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commission paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
(d) The advisor has reimbursed certain operating expenses of the International
Portfolio for the period ended December 31, 1993. Had the adviser not
reimbursed such expenses, the annualized ratio of expenses to average net
assets would have been 1.39% and the annualized ratio of net investment
income to average net assets would have been 0.15%.
(NR) Not required prior to 1996.
The accompanying notes are an integral part of these financial statements.
32
<PAGE> 30
CAPITAL APPRECIATION PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Capital Appreciation Portfolio seeks maximum capital growth by investing
primarily in common stocks.
PERFORMANCE AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
AVERAGE ANNUAL TOTAL RETURNS:
One-year 15.19%
Three-year 17.80%
Since inception (4/30/94) 15.73%
</TABLE>
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
The Capital Appreciation Portfolio advanced strongly in 1997, but its cautious
strategy could not keep up with the broad market. During the year's few periods
of market difficulty, however, the performance was outstanding.
Media stocks continued as a stellar area of investment, with both New York Times
and Washington Post being important contributors to performance. They remain
large holdings, although we have substantially reduced the Times position. We
also trimmed two of our big winners, Automatic Data Processing convertible bonds
and FirstEnergy. Our biggest disappointments were the plummeting gold mining
stocks. An unusual fixed-income purchase - putable Tennessee Valley Authority
bonds - is now one of our top five holdings. In return for their favorable
risk/return characteristics we give up a portion of current income - a
reasonable tradeoff given the uncertainty and potential magnitude of possible
future interest rate changes.
While the economy still looks fine, corporate earnings growth in 1998 is
unlikely to match of 1997. We consider valuation to be the most significant
negative facing the stock market, just as it was 12 months ago. Historic
yardsticks like price/earnings ratios and dividend yields are off the charts,
and we are skeptical of the underlying accounting.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
'94 '95 '96 '97
<S> <C> <C> <C> <C>
Capital Appreciation Portfolio $22,8??
S&P 500 Index $17,6??
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
1. FirstEnergy Corp 5.3
2. Amerada Hess Corp 3.3
3. Genetech Com SPL 3.1
4. Automatic Data 3.0
5. Tennessee Valley Authority 5.88% 4/1/36 2.8
6. Loews Corp 2.8
7. Unicom Corp 2.6
8. Washington Post CL B 2.2
9. New York Times Co 2.1
10. Time Warner Inc. 1.9
</TABLE>
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Oil, Energy, and Natural Gas 10.6
Media and Publishing 9.7
Government 7.6
Electrical 5.5
Industrial Services 4.9
</TABLE>
<PAGE> 31
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT (7.6%)
$ 400,000 FNMA
6.375% 01-16-02 $ 406,395
102,000 Instit Pen CV
5.000% 06-28-01 125,460
600,000 Tennessee Valley Authority
6.235% 07-15-45 614,910
1,600,000 Tennessee Valley Authority
5.880% 04-01-36 1,643,029
125,000 U.S. Treasury Note
6.250% 06-30-98 125,547
200,000 U.S. Treasury Note
6.250% 04-30-01 203,188
250,000 U.S. Treasury Note
6.125% 07-31-00 252,578
1,000,000 U.S. Treasury Note
5.500% 02-28-99 998,438
250,000 U.S. Treasury Note
6.750% 05-31-99 253,672
----------
4,623,217
----------
COMMUNICATIONS (0.9%)
500,000 Bellsouth Telecomm
5.850% 11-15-45 502,744
----------
DRUGS (0.2%)
100,000 Merck and Company
5.760% 05-03-37 102,853
----------
FINANCE (1.0%)
100,000 Federal National Mtg. Assoc.
5.370% 02-07-01 98,639
450,000 Tennessee Valley Authority
5.980% 04-01-36 452,544
50,000 UBS Finance
2.000% 12-15-00 48,337
----------
599,520
----------
FOREIGN (0.6%)
200,000 Peninsula & Oriental
7.250% 05-19-03 383,378
----------
INSURANCE (0.4%)
150,000 Grand Metropolitan
6.500% 01-31-00 209,208
----------
TOTAL LONG-TERM BONDS & NOTES
(10.7%) (COST $6,279,229) $6,420,920
----------
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ------------------------------------------------------------------
FINANCIAL SERVICES (2.5%)
$1,500,000 Bell Atlantic Financial Services
5.850% 01-27-98 $1,493,663
----------
FOOD AND RELATED (3.7%)
1,000,000 Campbell Soup Company
5.520% 01-27-98 996,013
1,250,000 Coca-Cola Co.
5.560% 02-09-98 1,242,471
----------
2,238,484
----------
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ------------------------------------------------------------------
GOVERNMENT (5.4%)
$3,053,000 Federal Home Loan Mortgage
4.750% 01-02-98 $3,052,597
154,000 U.S.T-Bill
5.155% 01-22-98 153,537
----------
3,206,134
----------
MEDICAL AND RELATED (1.7%)
1,000,000 Abbot Laboratories
5.800% 01-07-98 999,033
----------
METALS AND MINING (2.1%)
1,000,000 Minnesota Mining
5.530% 01-21-98 996,928
269,000 Minnesota Mining
5.800% 01-09-98 268,653
----------
1,265,581
----------
Total Short Term Notes
(15.4%) (Cost $9,202,895) $9,202,895
----------
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ------------------------------------------------------------------
AUTOMOTIVE AND RELATED (0.8%)
$ 100,000 The Pep Boys conv.
4.000% due 09-01-99 $ 98,875
700,000 The Pep Boys MM&J Lyons, zero
coupon contracts due 09-20-11 374,500
473,375
----------
BUSINESS SERVICES (3.0%)
2,225,000 Automatic Data Process, zero
coupon contracts due 02-20-12 1,766,094
----------
DRUGS (1.6%)
1,700,000 Alza Corp., zero coupon
contracts due 07-14-14 788,375
200,000 Mckesson Co., 4.500% conv.
suborinated debentures
due 03-01-04 182,110
----------
970,485
----------
ENTERTAINMENT AND LEISURE (0.1%)
50,000 Ogden Corp. conv.
5.750% due 10-20-02 48,125
----------
FOREIGN (0.5%)
200,000 Lonrho 6.000% conv. subordinated
debenture, due 02-27-04 286,300
----------
HOTEL/LODGING (0.6%)
525,000 Marriott International, zero
coupon contracts due 03-25-11 341,906
----------
INDUSTRIAL SERVICES (3.0%)
1,800,000 Roche Holdings, conv. zero
coupon contracts due 05-06-12 839,250
1,150,000 WMX Technologies
2.000% due 01-24-05 983,250
----------
1,822,500
----------
MEDICAL AND RELATED (1.0%)
675,000 Chiron Corp., conv.
1.900% due 11-17-00 617,625
----------
(continued)
</TABLE>
34
<PAGE> 32
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
MEDIA AND PUBLISHING (2.9%)
$ 900,000 News America Hldgs Lyons
zero coupons contracts due 03-11-13 $ 420,750
50,000 Thomas Nelson Cl. B
5.750% due 11-30-99 48,125
400,000 Times Mirror New, zero coupon
contracts due 04-15-17 171,500
2,200,000 Time Warner, zero coupon
contracts due 06-22-13 1,113,750
-----------
1,754,125
-----------
METALS AND MINING (1.7%)
450,000 Homestake Mining
5.500% due 06-23-00 418,500
50,000 Inco Ltd. conv.
7.750% due 03-15-16 48,813
580,000 Inco Ltd. conv.
5.750% due 07-01-04 553,900
-----------
1,021,213
-----------
OIL, ENERGY, AND NATURAL GAS (1.1%)
630,000 Enserch Corp.
6.375% due 04-01-02 655,200
-----------
REAL ESTATE (1.1%)
625,000 Rouse Co., 5.750% conv. suborinated
debentures, due 07-23-02 654,688
-----------
RETAIL (0.4%)
375,000 Office Depot, zero coupon
contracts due 11-01-08 244,687
-----------
UTILITIES (1.3%)
250,000 Potomac Electricity & Power Co.,
5.000% conv. subordinated
debentures, due 09-01-02 245,312
1,500,000 US Cellular Lyons, zero coupon
contracts due 06-15-15 541,875
-----------
787,187
-----------
TOTAL CONVERTIBLE DEBENTURES
(19.1%) (COST $10,556,725) $11,443,510
-----------
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------
BANKING (0.1%)
13 Bank for International Settlements $ 81,331
-----------
COMPUTER AND RELATED (0.8%)
4,800 IBM Corp. 501,900
-----------
CHEMICALS (2.0%)
21,500 Great Lakes Chemical Corp. 964,813
5,250 Hanson Trust PLC ADR 121,078
5,000 Millenium Chemicals 117,812
-----------
1,203,703
-----------
CONSUMER PRODUCTS (1.9%)
18,000 Philip Morris Cos., Inc. 815,625
6,000 Polaroid Corp. 292,125
-----------
1,107,750
-----------
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------
DRUGS (3.6%)
31,000 *Genetech Special Common $ 1,879,375
4,000 Schering - Plough Corp. 248,500
-----------
2,127,875
-----------
DURABLE GOODS (0.1%)
3,000 A T Cross Co. 30,375
-----------
ELECTRICAL EQUIPMENT (5.5%)
4,000 Exide Corp. 103,500
110,000 *Firstenergy Corp. 3,190,000
-----------
3,293,500
-----------
FINANCE (2.1%)
2,800 American Express 249,900
3,200 Federal Nat'l Mortgage Assn. 182,600
4,500 Fund American Enterprise 544,500
8,000 Leucadia National Corp. 276,000
-----------
1,253,000
-----------
FOOD AND RELATED (0.6%)
12,500 McCormick & Company, Inc. 350,000
FOREIGN (0.7%)
275,000 Lonrho PLC 420,805
-----------
FORESTRY AND PAPER PRODUCTS (2.5%)
1,000 Deltic Timber Corp. 27,375
2,500 International Paper Co. 107,813
21,000 Johns-Manville Corp. 211,312
9,500 Louisiana Pacific Corp. 180,500
47,000 MacMillan Bloedel 499,375
9,000 Weyerhaeuser Co. 441,563
-----------
1,467,938
-----------
INDUSTRIAL SERVICES (1.9%)
8,000 Corning Inc. 297,000
51,500 Wheelabrator Technologies 827,219
-----------
1,124,219
-----------
INSURANCE (4.0%)
15,500 Loews Corp. 1,644,938
5,500 Unitrin, Inc. 355,437
31,500 Willis Corroon Group plc 387,844
-----------
2,388,219
-----------
MEDIA AND PUBLISHING (6.8%)
17,000 Chris-Craft Ind., Inc. 889,313
10,000 Meredith Corp. 356,875
19,000 New York Times Co. Class A 1,256,375
8,000 Readers Digest 195,000
2,800 Washington Post Class B 1,362,200
-----------
4,059,763
-----------
MEDICAL AND RELATED (0.6%)
1,500 Pharmacia & Upjohn 54,938
110,000 Smith & Nephew 325,789
-----------
380,727
-----------
METALS AND MINING (2.1%)
26,000 Homestake Mining Co. 230,750
29,000 Newmont Mining Corp. 851,875
29,500 Prime Resources Group 200,969
-----------
1,283,594
-----------
(continued)
</TABLE>
35
<PAGE> 33
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -----------------------------------------------------------------
<S> <C> <C>
OIL, ENERGY AND NATURAL GAS (9.5%)
36,000 Amerada Hess Corp. $ 1,975,500
6,000 Atlantic Richfield Co. 480,750
8,500 The Energy Group Pls ADR 379,313
1,500 Kerr McGee 94,969
18,700 Mitchell Energy & Development 544,637
14,000 Murphy Oil Corp. 758,625
16,330 Texaco, Inc. 887,943
28,000 Union Texas Petroleum 582,750
-----------
5,704,487
-----------
RETAIL (1.5%)
12,000 *Hill Stores Co. 38,250
8,000 Limited Inc. 204,000
150,000 *Petrie Stores- Liq. Trust Unit 448,500
2,100 *Toys R' Us 66,018
4,300 Wal-Mart Stores, Inc. 169,581
-----------
926,349
-----------
TRANSPORTATION (0.8%)
16,000 Overseas Shipholding Inc. 349,000
4,000 Ryder System, Inc. 131,000
-----------
480,000
-----------
UTILITIES (3.4%)
45,000 *Niagara Mohawk Power 472,500
50,000 Unicom Corp. 1,537,500
-----------
2,010,000
-----------
TOTAL COMMON STOCK
(50.5%) (COST $24,590,650) $30,195,535
-----------
MARKET
SHARES PREFERRED STOCK VALUE
- -----------------------------------------------------------------
FINANCE (0.6%)
7,000 Kemper Co., 5.750% Series E $ 364,000
-----------
FORESTRY AND PAPER PRODUCTS (0.1%)
500 International Paper 24,430
-----------
REAL ESTATE (1.1%)
13,000 Rouse Co. conv. Series B 650,000
-----------
MARKET
SHARES PREFERRED STOCK VALUE
- -----------------------------------------------------------------
UTILITIES (1.9%)
265 Cleveland Electric 9.000% $ 284,554
150 Cleveland Electric 8.800% 159,313
4,940 Cleveland Electric Adj. Rate 469,300
2,894 Entergy Gulf Series B 144,339
1,000 Niagara Mohawk Power Series B 23,250
3,200 Niagara Mohawk Power Series C 76,800
-----------
1,157,556
-----------
TOTAL PREFERRED STOCK
(3.7%) (COST $1,936,523) $ 2,195,986
-----------
PUT OPTION PURCHASES MARKET
SHARES STOCK/EXPIRATION/EXERCISE PRIC VALUE
- -----------------------------------------------------------------
15 Automatic Data/Feb/$55.00 $ 1,031
15 Automatic Data/May/$60.00 4,312
5 Grand Met/Jan/$45.00 3,812
10 HFS/Jan/$65.00 0
10 IBM/Jan/$95 625
15 IBM/Jan/$100 1,875
10 IBM/Jan/$105 3,750
15 IBM/Jan/$115 15,750
15 IBM/Jul/$120 28,875
10 Limited Inc/Feb/$25 1,188
15 Pharmacia & Upjohn/Apr/$40 6,188
6 Poloroid/Apr/$60 5,625
25 Schering-Plough/Feb/$55 937
10 Schering-Plough/Feb/$65 6,750
15 Schering-Plough/Aug/$65 9,375
15 Texaco/Apr/$70 15,188
15 Walmart/Jun/$42.50 8,625
-----------
TOTAL PUT OPTION PURCHASE
(0.2%) (COST $201,997) $ 113,906
-----------
TOTAL HOLDINGS
(COST $52,768,019) (a) $59,572,752
===========
</TABLE>
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
<PAGE> 34
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $52,768,019) .......................... $59,572,752
Cash in bank ................................................. 1,545
Receivable for fund shares sold .............................. 490,274
Receivable for securities sold ............................... 22,599
Dividends and accrued interest receivable .................... 265,003
Other ........................................................ 2,469
-----------
Total assets ............................................... 60,354,642
-----------
Liabilities:
Payable for investment management
services (note 3) .......................................... 467,709
Payable for securities purchased ............................. 41,460
Other accrued expenses ....................................... 14,379
-----------
Total liabilities .......................................... 523,548
-----------
Net assets at market value ...................................... $59,831,094
===========
Net assets consist of:
Par value, $1 per share ...................................... $4,420,939
Paid-in capital in excess of par value ....................... 48,601,647
Net unrealized appreciation on investments (note 1)........... 6,804,733
Undistributed net
investment income .......................................... 3,775
-----------
Net assets at market value ...................................... $59,831,094
===========
Shares outstanding (note 4) ..................................... 4,420,939
Net asset value per share ....................................... $ 13.53
===========
STATEMENTS OF OPERATIONS
Year ended December 31, 1997
Investment income:
Interest ..................................................... $ 1,141,028
Dividends .................................................... 708,387
-----------
Total investment income ..................................... 1,849,415
-----------
Expenses:
Management fees (note 3) .................................... 386,595
Custodian fees (note 3) ..................................... 13,000
Directors' fees (note 3) .................................... 2,320
Professional fees ........................................... 6,960
Accounting and transfer agent fees .......................... 40,596
Other ....................................................... 9,444
-----------
Total expenses .............................................. 458,915
-----------
Net investment income ....................................... $ 1,390,500
-----------
Realized and unrealized gain on investments:
Net realized gain from investments ............................ $ 2,209,729
Net increase in unrealized
appreciation on investments .................................. 3,325,188
-----------
Net gain on investments ..................................... 5,534,917
-----------
Net increase in net
assets from operations ...................................... $ 6,925,417
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
37
<PAGE> 35
OHIO NATIONAL FUND, INC.
CAPITAL APPRECIATION PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12-31-97 12-31-96
---------- ----------
<S> <C> <C>
From operations:
Net investment income ................................................$ 1,390,500 $ 1,121,488
Realized gain on investments ......................................... 2,209,729 1,168,575
Unrealized gain on investments ....................................... 3,325,188 2,026,474
----------- ------------
Net increase in assets from operations.............................. 6,925,417 4,316,537
----------- ------------
Dividends and distributions to shareholders:
Dividends paid from net investment income............................. (1,682,334) (969,506)
Capital gains distributions .......................................... (3,070,931) (655,102)
----------- ------------
Total dividends and distributions .................................. (4,753,265) (1,624,608)
----------- ------------
From capital share transactions (note 4):
Received from shares sold ............................................ 17,953,371 16,614,123
Received from dividends reinvested ................................... 4,753,265 1,624,608
Paid for shares redeemed ............................................. (3,328,937) (1,969,700)
----------- ------------
Increase in net assets derived from capital share transactions ......19,377,699 16,269,031
----------- ------------
Increase in net assets ........................................... 21,549,851 18,960,960
Net Assets:
Beginning of period .................................................. 38,281,243 19,320,283
----------- ------------
End of period (a) ....................................................$59,831,094 $ 38,281,243
=========== ============
(a) Includes undistributed net investment income of.....................$ 3,775 $ 295,609
=========== ============
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
5-1-94
Years Ended December 31, to
1997 1996 1995 12-31-94
---- ---- ---- --------
<S> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period.....................$12.93 $11.99 $10.25 $10.00
Income from investment operations:
Net investment income.................................. 0.39 0.48 0.39 0.22
Net realized and unrealized gain on investments ....... 1.48 1.31 1.85 0.23
------ ------ ------ ------
Total income from investment operations.............. 1.87 1.79 2.24 0.45
------ ------ ------ ------
Less distributions:
Dividends from net investment income ..................(0.46) (0.44) (0.29) (0.20)
Distributions from net realized capital gains .........(0.81) (0.41) (0.21) 0.00
------ ------ ------ ------
Total distributions..................................(1.27) (0.85) (0.50) (0.20)
------ ------ ------ ------
Net asset value, end of period...........................$13.53 $12.93 $11.99 $10.25
====== ====== ====== ======
Total return..............................................15.19% 15.75% 22.62% 4.53%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets ............... 0.95% 0.97% 0.96% 0.98%(a,d)
Ratio of net investment income to average net assets .. 2.88% 3.90% 3.47% 3.24%(a,d)
Portfolio turnover rate................................... 41% 37% 32% 20%
Average commission rate (c) ............................. $ 0.04 $ 0.05 NR NR
Net assets at end of period (millions)....................$ 59.8 $ 38.3 $ 19.3 $ 6.8
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commission paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
(d) The advisor has reimbursed certain operating expenses of the Capital
Apprciation Portfolio for the period ending December 31, 1994. Had the
advisor not reimbursed such expenses, the annualized ratio of expenses to
average net assets would have been 1.05% and the annualized ratio of net
investment income to average net assets would have been 3.18%.
(NR) Not required prior to 1996.
The accompanying notes are an integral part of these financial statements.
38
<PAGE> 36
SMALL CAP PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Small Cap Portfolio seeks maximum capital growth by investing primarily in
common stocks of small- and medium- size companies
PERFORMANCE AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS:
<S> <C>
One-year 8.47%
Three-year 19.31%
Since inception (4/30/94) 21.76%
</TABLE>
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
The second half of 1997 continued the trend of volatility set in the first half.
The third quarter was strong but followed by a weak fourth quarter, primarily
due to concerns over the Asian crisis and its effects on corporate profit
growth. The positives of 1997 were better than expected profits and a declining
inflation rate which led to lower interest rates. Unfortunately, the concern
over global growth resulted in investors favoring large cap investments.
We would expect 1998 to be more of the same at this point. The economies of
Europe and the Americas are healthy albeit growing slowly. Interest rates
continue to trend down as does inflation which is a good environment for
financial assets. The primary concern is the Asian crisis which will have a
deflationary effect and cause some slowdown in global growth. The uncertainty
over the magnitude of the Asian crisis and its impact will likely lead to
continued volatility across all global stock markets. We believe however that
the US is in particularly good shape with declining interest rates and a good
global competitive position. Small company stocks are at very attractive
valuations and with their higher growth rates should perform well in the current
environment.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
'94 '95 '96 '97
<S> <C> <C> <C> <C>
Small Cap Portfolio $20,684
Russell 2000 Index $18,343
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
1. JP Foodservice Inc 2.1
2. Fairfield Communities Inc 2.1
3. Watson Pharmaceuticals Inc. 2.0
4. Wolverine World Wide 1.8
5. Helen of Troy 1.6
6. HBO & Co 1.6
7. Documentum 1.6
8. HNC Software 1.6
9. US Office Products 1.5
10. Pre Paid Legal Services 1.5
</TABLE>
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1997
% of Net Assets
[S] [C]
Computer and Related 17.1
Medical and Related 10.2
Business Services 6.7
Retail 5.5
Electronics 5.0
The prices of small company stocks are generally more volatile than the prices
of large company stocks.
39
<PAGE> 37
OHIO NATIONAL FUND, INC.
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL (14.2%)
$8,290,000 Star Bank 5.500% 01-02-98
repurchase price $8,292,533
collateralized by GNMA certificates
pool #8359
due 01-20-24 (cost $8,290,00 $8,290,000
----------
TOTAL REPURCHASE AGREEMENTS
(14.2%) (Cost $8,290,000) $8,290,000
----------
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------------------
AEROSPACE (0.7%)
14,250 *Tracor Inc. $432,844
---------
AUTOMOTIVE AND RELATED (0.5%)
10,700 OEA Inc. 309,631
---------
BUSINESS SERVICES (6.7%)
17,075 *Checkfree 461,025
20,000 *Concord EFS, Inc. 497,500
2,850 *Metzler Group 114,356
6,000 National Data Corp. 216,750
24,975 *Pre Paid Leagal Services Inc. 853,833
14,000 *Sylvan Learning Systems Inc. 546,000
44,625 *US Office Products 875,766
15,575 *Vestcom International 348,491
---------
3,913,721
---------
CHEMICALS (1.2%)
12,875 Crompton & Knowles Corp. 341,187
9,475 OM Group 347,022
---------
688,209
---------
CIRCUITS (0.6%)
12,025 Sipex Corporation 363,756
---------
COLLECTIBLES (0.5%)
7,600 *Action Performance Co. Inc. 287,850
---------
COMMUNICATIONS (4.3%)
8,100 *Cellular Communication Intl. 378,676
20,300 *Digital Microwave Corp. 294,350
9,125 *Genesys Telecomm. Labs 290,859
23,200 *Intelect Communications Inc. 118,899
11,975 *Nextlink Communications 255,217
15,400 *P-Com Inc. 265,650
5,625 *Pacific Gateway Exchange 302,695
19,225 *Periphonics Corp. 168,219
19,475 *Smartalk Teleservices 443,056
---------
2,517,621
---------
CONSUMER PRODUCTS (3.6%)
58,400 Helen of Troy 941,700
10,550 *JR Cigar 263,750
11,750 *Ocular Sciences 308,438
14,375 *Samsonite 454,609
4,950 Windmere 111,684
---------
2,080,181
---------
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------------------
COMPUTER AND RELATED (17.1%)
18,075 *Aspen Technology $ 619,069
7,275 *Avant! Corp. 121,856
16,350 *CDW Computer Centers Inc. 852,244
22,125 *Documentum 932,016
5,750 *Electronic Arts 217,422
42,350 *Geoworks 407,619
21,625 *HNC Software 929,875
20,625 Harbinger Corp. 579,991
19,987 Insight Enterprises Inc. 734,522
13,325 Keane Inc. 541,328
8,450 *MMC Networks Inc. 141,511
23,650 *Mastech Corporation 750,887
11,500 *Radisys Corp. 428,375
16,925 *SanDisk Corp. Designs 343,789
8,575 *Security Dynamics Tech. 306,556
24,125 *Simione Central 217,125
6,000 *Sterling Commerce Inc. 230,625
23,500 *Summit Design Inc. 243,812
14,825 *Transaction System Arch. 563,350
18,025 *Transition Systems 398,803
13,650 *Zebra 406,088
----------
9,966,863
----------
Drugs (3.0%)
17,400 Parexel International Corp. 643,800
33,900 *Watson Pharmaceuticals Inc. 1,099,630
----------
1,743,430
----------
ELECTRONICS (5.0%)
27,750 Berg Electronics Corp. 631,313
11,746 PRI Automation Inc. 339,166
7,275 *Powerwave Technologies 122,311
21,512 Remec Inc. 484,020
10,475 *Sanmina Corp. 709,681
11,400 *Sawtek Inc. 300,675
7,325 *Speedfam International Inc. 194,112
3,300 Vitesse Semiconductor Corp. 124,575
----------
2,905,853
----------
ENTERTAINMENT AND LEISURE (0.4%)
12,425 *Midway Games 225,980
----------
FINANCE (0.2%)
2,500 Banco Latinoamericano 103,438
----------
FOOD AND RELATED (2.1%)
32,675 *JP Foodservice Inc. 1,206,933
----------
HEALTH CARE AND RELATED (1.5%)
10,425 *Access Health Inc. 306,234
2,125 *Envoy Corporation 61,891
30,050 *Orthodontic Centers of America 499,581
----------
867,706
----------
HOTEL/LODGING (4.0%)
15,650 *Capstar Hotel Co. 536,991
6,475 *Promus Hotel Corp. 271,950
23,162 Signature Resorts Inc. 506,669
29,025 *Silverleaf Resorts Inc. 711,113
13,300 *Vistana 305,900
----------
2,332,623
----------
(continued)
</TABLE>
40
<PAGE> 38
OHIO NATIONAL FUND, INC.
SMALL CAP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------------------
INDUSTRIAL SERVICES (2.0%)
<S> <C> <C>
14,500 *Brooks Automation $266,438
9,000 Harsco Corp. 388,125
13,350 *USA Waste 523,987
---------
1,178,550
---------
INSURANCE (1.9%)
7,375 Executive Risk Inc. 514,867
14,200 Reliastar Financial Corp. 584,863
1,099,730
---------
INVESTMENT MANAGEMENT (0.5%)
10,725 *Affiliated Managers Group Inc. 311,025
---------
MACHINERY (0.8%)
18,325 *Rental Service Corp. 450,108
---------
MEDICAL AND RELATED (10.2%)
9,300 *Advance Paradigm 295,275
15,500 *Covance 308,062
19,100 *ESC Medical Systems 740,125
28,475 *FPA Medical Management 530,347
19,470 HBO & Company 934,560
12,125 *Healthcare Compare 619,891
13,375 *Henry Schein Inc. 468,125
23,450 *Medical Manager Corp. 422,100
9,800 *NCS Healthcare Inc. 258,475
5,075 *R.P. Scherer 309,575
17,700 Rexall Sundown Inc. 534,319
12,175 *Sunrise Assisted Living Inc. 525,048
---------
5,945,902
---------
METALS AND MINING (0.7%)
10,525 IMCO Recycling 169,058
14,250 *NSS Group 244,031
---------
413,089
---------
OIL, ENERGY, AND NATURAL GAS (0.7%)
1,250 Patterson Energy 48,359
15,000 UTI Energy 388,125
---------
436,484
---------
PRINTING (0.9%)
13,000 Mail-Well Inc. 526,500
---------
REAL ESTATE (2.0%)
27,100 Fairfield Communities Inc. 1,195,788
---------
RENTAL AUTO/EQUIPMENT (0.4%)
11,800 *United Rentals Inc. 227,888
---------
RESTAURANTS (1.4%)
19,000 CKE Restaurants 800,375
---------
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------------------
RETAIL (5.5%)
12,000 Fred Meyer $ 436,500
22,700 Proffitt's Inc. 645,531
16,850 *Stage Stores 629,769
12,475 *The Men's Wearhouse Inc. 433,506
46,575 Wolverine World Wide 1,053,759
-----------
3,199,065
RETIREMENT/AGED CARE (0.8%)
42,000 *Capital Senior Living 438,375
-----------
TELECOM SERVICES (2.8%)
10,900 *Echostar Communications 182,575
33,900 *Premiere Technologies 936,542
41,625 *Westell Technologies Inc. A 532,271
-----------
1,651,388
-----------
TEXTILES (0.6%)
11,000 Warnaco Group Cl A 345,125
-----------
TRANSPORTATION (1.5%)
39,625 *Offshore Logistics 846,984
-----------
TOTAL U.S. COMMON STOCK
(84.1%) (COST $41,121,629) $49,013,015
-----------
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------------------
BRITIAN (1.4%)
MEDIA
39,600 *Flextech Plc $ 340,124
MISCELLANEOUS
83,770 Wetherspoon (J.D.) 458,993
-----------
TOTAL BRITIAN 799,117
-----------
NETHERLANDS (1.1%)
MISCELLANEOUS
8,160 *Hunter Douglas NV 285,789
TRANSPORTATION
7,100 *IHC Caland 368,444
-----------
TOTAL NETHERLANDS 654,233
-----------
TOTAL FOREIGN COMMON STOCK
(2.5%) (COST $968,846) $ 1,453,350
-----------
TOTAL HOLDINGS
(COST $50,380,475)(A) $58,756,365
===========
</TABLE>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
41
<PAGE> 39
OHIO NATIONAL FUND, INC.
SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $50,380,475).......... $58,756,365
Cash in bank ............................... 845
Receivable for fund shares sold............. 615,474
Receivable for securities sold ............. 583,480
Dividends and accrued interest receivable .. 3,657
Other ...................................... 2,406
-----------
Total assets .............................. 59,962,227
-----------
Liabilities:
Payable for securities purchased ........... 1,607,040
Payable for investment management
services (note 3) ......................... 39,867
Other accrued expenses ..................... 10,751
-----------
Total liabilities ......................... 1,657,658
-----------
Net assets at market value $58,304,569
===========
Net assets consist of:
Par value, $1 per share .................... $3,114,834
Paid-in capital in excess of par value ..... 46,812,884
Accumulated undistributed net realized
gain on investments (note 1)............... 961
Net unrealized appreciation on investments
(note 1)................................... 8,375,890
-----------
Net assets at market value $58,304,569
===========
Shares outstanding (note 4).................. 3,114,834
===========
Net asset value per share.................... $ 18.72
===========
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<S> <C>
Investment income:
Interest................................ $ 100,415
-----------
Dividends............................... 293,792
-----------
Total investment income................ 394,207
-----------
Expenses:
Management fees (note 3)................ 378,436
Custodian fees (note 3)................. 10,000
Directors' fees (note 3)................ 2,120
Professional fees....................... 6,360
Fund accounting fees ................... 35,496
Other................................... 9,310
-----------
Total expenses......................... 441,722
Net investment loss ................... ($47,515)
-----------
Realized and unrealized gain on investments:
Net realized gain from investments ..... $2,695,780
Net increase in unrealized
appreciation on investments ........... 1,661,151
-----------
Net gain on investments............... 4,356,931
-----------
Net increase in net
assets from operations................ $4,309,416
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
42
<PAGE> 40
OHIO NATIONAL FUND, INC.
SMALL CAP PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12-31-97 12-31-96
---------- ----------
<S> <C> <C>
From operations:
Net investment loss ............................................................. ($47,515) ($127,376)
Realized gain (loss) on investments ............................................. 2,695,780 (234,049)
Unrealized gain on investments .................................................. 1,661,151 4,808,722
----------- -----------
Net increase in assets from operations......................................... 4,309,416 4,447,297
----------- -----------
Dividends and distributions to shareholders:
Capital gains distributions ..................................................... (2,462,490) (542,566)
----------- -----------
From capital share transactions (note 4):
Received from shares sold ....................................................... 21,480,666 19,468,827
Received from dividends reinvested .............................................. 2,462,490 542,566
Paid for shares redeemed ........................................................ (5,950,001) (1,490,446)
----------- -----------
Increase in net assets derived from capital share transactions.................. 17,993,155 18,520,947
----------- -----------
Increase in net assets ....................................................... 19,840,081 22,425,678
Net Assets:
Beginning of period ............................................................. 38,463,709 16,038,031
----------- -----------
End of period (a) ............................................................... $58,303,790 $38,463,709
=========== ===========
(a) Includes undistributed net investment loss of................................. ($198,942) ($151,428)
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION> 5-1-94
Years Ended December 31, to
1997 1996 1995 12-31-94
---- ---- ---- --------
<S> <C> <C> <C> <C>
Per share data:
Net asset value, beginning of period..............$18.03 $15.85 $11.99 $10.00
Income (loss) from investment operations:
Net investment income (loss) .................... (0.02) (0.08) (0.02) 0.18
Net realized and unrealized gain on investments . 1.54 2.80 3.95 1.94
------ ------ ------ ------
Total income from investment operations......... 1.52 2.72 3.93 2.12
------ ------ ------ ------
Less distributions:
Dividends from net investment income............. 0.00 0.00 (0.07) (0.13)
Distributions from net realized capital gains ... (0.83) (0.54) 0.00 0.00
------ ------ ------ ------
Total distributions............................. (0.83) (0.54) (0.07) (0.13)
------ ------ ------ ------
Net asset value, end of period....................$18.72 $18.03 $15.85 $11.99
====== ====== ====== ======
Total return...................................... 8.47% 17.71% 33.01% 21.26%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets ......... 0.94% 0.96% 0.96% 0.91%(a,d)
Ratio of net investment income to average net
assets ........................................ (0.11%) (0.48%) (0.11%) 3.27%(a,d)
Portfolio turnover rate........................... 80% 70% 75% 22%
Average commission rate (c) ...................... $0.05 $0.06 NR NR
Net assets at end of period (millions)............ $58.3 $38.5 $16.0 $3.3
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commission paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
(d) The advisor has reimbursed certain operating expenses of the Small Cap
Portfolio for the period ending December 31, 1994. Had the advisor not
reimbursed such expenses, the annualized ratio of expenses to average net
assets would have been 0.95% and the annualized ratio of net investment
income to average net assets would have been 3.24%.
(NR) Not required prior to 1996
The accompanying notes are an integral part of these financial statements.
43
<PAGE> 41
GLOBAL CONTRARIAN PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
The Global Contrarian Portfolio seeks to provide long-term growth of capital by
investing in foreign and domestic securities that are undervalued or presently
out of favor with other investors but have positive prospects for eventual
appreciation.
PERFORMANCE AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
AVERAGE ANNUAL TOTAL RETURNS:
One-year 11.67%
Since inception (3/31/95) 11.93%
</TABLE>
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
Over the 12 months ended December 31, 1997, the Global Contrarian Portfolio
underperformed the MSCI World Index. This was due to several factors. First, a
fairly substantial percentage (approximately 17%) of net assets is invested in
various commodity-related securities (i.e., gold, forest products, base metals,
sugar) which declined markedly while the Asian crisis unfolded. Second, most
non-Asian world markets performed well in the first half of the year, but
displayed considerable volatility in the second half. While large capitalization
stocks recovered, small capitalization stocks lagged major indices. Because the
portfolio tends to be overweighted in smaller stocks, this hurt relative returns
for our US as well as foreign holdings. Third, the portfolio held a fairly large
cash position throughout the year (approximately 23% of net assets) which earned
meager returns in a low interest rate environment.
The portfolio has reduced its exposure to commodities-related securities over
the last six months as weaker global economic growth is anticipated in the
near-term following the Asian crisis. Simultaneously, the portfolio has started
cautiously buying stocks and bonds on a selective basis in a few Asian
countries. There is value to be found in certain depressed situations following
recent price collapses in that region.
CHANGE IN VALUE OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
'95 '96 '97
<S> <C> <C> <C>
Global Contrarian Portfolio $10,000 $15,049
Morgan Stanley Capt. Ind. Worl Index $10,000 $13,630
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
1. Edipresse Sa Br New 1.8
2. CDL Hotels 1.7
3. Franklin Electric Co Inc 1.7
4. Rep of Argentina FRN 1.7
5. Makita Corp 1.6
6. Manpower 1.6
7. Industrias Penoles 1.5
8. San Juan Basin Royalty 1.5
9. Kaneb Services, Inc 1.4
10. Secom Co., LTD 1.4
</TABLE>
<TABLE>
<CAPTION>
TOP 5 COUNTRIES AS OF DECEMBER 31, 1997
% of Net Assets
<S> <C>
United States 33.4
Japan 6.8
Switzerland 6.5
South America 5.3
France 4.6
</TABLE>
The risk associated with investing on a worldwide basis includes differences in
regulation of financial data and reporting and currency exchanges as well as
economic and political systems which may be different from those in the United
States. The prices of small company stocks are generally more volatile than the
prices of large company stocks.
45
<PAGE> 42
OHIO NATIONAL FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------------
<S> <C> <C>
BUILDING MATERIALS (0.8%)
10,000 Justin Industries Inc. $136,250
----------
CAPITAL GOODS (4.9%)
3,000 Bandag Inc. Class 'A' 143,625
8,000 Blount International Inc. Cl 'A' 213,500
4,700 Franklin Electric Co., Inc. 301,975
12,000 Woodhead Industries, Inc. 225,000
----------
884,100
----------
CHEMICALS (0.6%)
10,000 Lawter International Inc. 108,750
----------
COMPUTER AND RELATED (2.8%)
5,000 NCR Corporation 139,063
8,000 Teltrend, Inc. 137,000
10,000 Wang Laboratories, Inc. 221,250
----------
497,313
----------
CONSUMER PRODUCTS (3.3%)
1,000 Allen Organ Co. Class 'B' 41,500
3,000 Dole Foods Company, Inc. 137,250
5,000 Furniture Brands International Inc. 102,500
8,000 Gibson Greetings, Inc. 175,000
10,000 Hancock Fabrics 145,000
----------
601,250
----------
ELECTRICAL EQUIPMENT (1.8%)
20,000 BEI Electronics, Inc. 82,500
20,000 BEI Technologies, Inc. 245,000
----------
327,500
----------
ENERGY AND OIL (4.1%)
50,000 Kaneb Services Inc. 259,375
8,000 North European Oil Royalty Trust 129,000
1,700 Rochester & Pittsburgh Coal Co. 75,650
30,000 San Juan Basin Royalty Trust 277,500
----------
741,525
----------
FINANCE (3.2%)
8,000 *Classic Bankshares Inc. 134,000
5,000 *East Texas Financial Services 118,750
8,000 *First Federal Financial Services 129,000
8,500 Redwood Financial Inc. 110,500
5,000 Southern Banc Co., Inc. 87,500
----------
579,750
----------
FORESTRY PRODUCTS (1.7%)
1,000 Georgia Pacific Corp. 60,750
1,000 Georgia Pacific Corp. Timber Group 22,687
5,000 Greif Brothers Corp. Class 'A' 167,500
1,500 Rayonier Inc. 63,843
----------
314,780
----------
MEDIA (0.0%)
5,000 *Integrity Music, Inc. Class 'A' 6,250
----------
METALS AND MINING (0.7%)
60 Case Pomeroy, Inc. Class A 63,000
1,000 Reynolds Metals Co. 60,000
----------
123,000
----------
REAL ESTATE (0.3%)
2,000 Alico, Inc. 46,500
----------
SERVICES (2.6%)
10,000 Borg-Warner Security Corp. $176,250
8,000 Manpower Inc. 282,000
----------
458,250
----------
TRANSPORTATION (0.7%)
3,500 Kenan Transport Company 128,187
----------
UTILITIES (0.9%)
5,000 Montana Power Co. 159,063
----------
MISCELLANEOUS (3.6%)
5,000 Chemed Corp. 207,188
15,000 *Kaiser Ventures Inc. 180,000
4,000 UniFirst Corp. 112,250
5,200 Zero Corporation 154,050
----------
653,488
----------
TOTAL U.S. COMMON STOCK
(32.0%) (COST $4,475,049) $5,765,956
----------
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------------
JAPAN (6.8%)
20,000 Dai Tokyo Fire & Marine Ins. Co. (18) $68,704
12,000 Dowa Fire & Marine Ins. Co. (18) 35,793
2,500 Fuji Photo Film Co. Ltd. (9) 95,848
2,500 Fuji Photo Film Co. Ltd. ADR (9) 95,469
8,000 Koekisha Co. Ltd. (29) 130,046
30,000 Makita Corp. 287,544
7,000 Nittetsu Mining Co., Ltd. (22) 28,448
4,000 Secom Co., Ltd. (29) 255,799
1,000 Toho Co. (20) 106,583
25,000 Yomeishu Seizo Co. Ltd. 129,394
----------
1,233,628
----------
SWITZERLAND (6.5%)
40 Bank of Intl. Settlements (3) 249,658
1,100 Edipresse SA, Bearer (25) 319,015
300 Kuehne & Nagel Intl. AG (32) 193,502
500 Sika Finanz AG Bearer (7) 158,687
700 Societe Generale d'Affichage DRC (20) 256,156
----------
1,177,018
----------
FRANCE (4.3%)
3,000 Emin-Leydier (14) 177,013
2,000 Eramet (14) 75,792
300 Eurafrance (34) 122,164
1,000 Legrand ADP (10) 126,153
1,000 Marine Wendel (34) 113,687
800 Groupe NSC (19) 104,911
900 Rougier SA (14) 44,877
----------
764,597
----------
LATIN AMERICA (3.0%)
10,000 Antofagasta Holdings plc (21) 54,506
62,500 Industrias Penoles, SA de CV (1) 278,312
75,000 Ledesma SA (1) 78,015
515,000 Grupo Fernandez Editors (25) 121,372
----------
532,205
----------
</TABLE>
(continued)
46
<PAGE> 43
OHIO NATIONAL FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------------
<S> <C> <C>
HONG KONG (2.1%)
999,606 CDL Hotels Intl. Ltd. (16) $303,212
100,000 Shaw Brothers (Hong Kong) Ltd.(20) 74,219
-----------
377,431
-----------
SOUTH AFRICA (1.9%)
50,000 Avgold Ltd. (22) 39,042
22,500 Driefontein ADR (22) 149,063
35,000 Vaal Reefs Exploration Ltd. (22) 134,531
2,500 Western Areas Gold Mining Ltd. (22) 13,768
-----------
336,404
-----------
GERMANY (1.6%)
100 Axel Springer Verlag AG (20) 67,280
500 Buderus AG (5) 224,360
-----------
291,640
-----------
MALAYSIA (1.1%)
80,000 Genting Berhad 200,463
-----------
SINGAPORE (0.9%)
13,000 DelGro Corp. Ltd. 15,917
85,000 Intraco Ltd. (34) 39,911
6,500 Singapore Bus Service Ltd. (32) 2,357
200,000 Thakral Corp. Ltd. 104,000
-----------
162,185
-----------
BELGIUM (0.6%)
700 Engrais Rosier SA (34) 114,732
-----------
NEW ZEALAND (0.5%)
60,000 Carter Holt Harvey Limited (14) 92,648
-----------
CANADA (0.5%)
5,000 Noranda, Inc. (21) 86,071
-----------
SPAIN (0.4%)
12,000 Energia e Industrias Aragonesas (7) 80,339
-----------
THAILAND (0.4%)
20,000 Oriental Hotel (16) 80,258
-----------
NETHERLANDS (0.4%)
1,300 Bosch & Keuning NV (20) 40,415
2,080 German City Estates NV (27) 28,226
-----------
68,641
-----------
SWEDEN (0.3%)
5,000 Bylock & Nordsjofrakt AB 'B'(32) 20,670
5,000 Gorthon Lines (32) 27,539
-----------
48,209
-----------
PHILIPPINES (0.1%)
70,000,000 Manila Mining Corp. 'B' (22) 22,469
-----------
INDONESIA (0.1%)
200,000 PT Komatsu Rigs Tender 19,091
-----------
MISCELLANEOUS (0.9%)
100,000 Lonrho plc (34) 153,608
-----------
TOTAL FOREIGN COMMON STOCK
(32.4%) (COST $6,595,959) $5,841,637
-----------
TOTAL COMMON STOCKS
(64.4%) (COST $11,071,008) $11,607,593
-----------
MARKET
SHARES U.S. PREFERRED STOCK VALUE
- -------------------------------------------------------------------
MEDIA (0.8%)
2,000 Cowles Media Co., Non voting $ 152,000
-----------
TOTAL U.S. PREFERRED STOCK
(0.8%) (COST $46,250) $ 152,000
-----------
MARKET
SHARES FOREIGN PREFERRED STOCK VALUE
- -------------------------------------------------------------------
INDONESIA (1.3%)
6,000 Freeport McMoRan Pfd. 'C' (22) $ 136,500
5,000 Freeport McMoRan Pfd. 'D' (22) 96,876
-----------
233,376
-----------
NEW ZEALAND (0.9%)
35,000 Independent Press Communications (25) 162,540
-----------
TOTAL FOREIGN PREFERRED STOCK
(2.2%) (COST $474,511) $ 395,916
-----------
TOTAL PREFERRED STOCK
(3.0%) (COST $520,761) $ 547,916
-----------
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- --------------------------------------------------------------------
U.S. DOLLAR (4.0%)
$124,000 Air & Water Technology Corp.
8.000% due 05-15-15 (29) $ 101,525
50,000 Cheil Jedang
3.000% due 12-31-06 (9) 52,813
155,000 IRSA
4.500% due 08-02-03 (4) 164,881
250,000 Tipco Asphalt Co.
2.750% due 09-19-06 (6) 185,000
100,000 Samsung Electronics Co. Ltd
due 12-31-07 (11) 70,375
200,000 ICTSI
1.750% due 03-13-04 (6) 148,500
-----------
723,094
-----------
NON-U.S. DOLLAR (0.3%)
2,000 FF Immobiliere Hoteliere
5.000% due 01-01-01 (16) 59,835
-----------
TOTAL CONVERTIBLE DEBENTURES
(4.3%) (Cost $831,064) $ 782,929
-----------
(continued)
</TABLE>
47
<PAGE> 44
OHIO NATIONAL FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT NON-CONVERTIBLE BONDS VALUE
- --------------------------------------------------------------------
<S> <C> <C>
U.S. DOLLAR (5.0%)
$50,000 Cemex SA
9.500% due 09-20-01 (6) $ 51,485
147,000 Federal Republic Of Brazil
6.687% due 04-15-06 (15) 127,155
200,000 Grupo Televisa
13.250% due 05-15-08 (20) 149,760
336,000 Republic of Argentina FRB
6.687% due 03-31-05 (15) 300,804
238,095 Republic of Venezuela
6.812% due 12-18-07 (15) 213,690
50,000 PT Pabrik Kertas Tjiwi Kimia
13.250% due 08-01-01 (14) 50,008
-----------
892,902
-----------
TOTAL NON-CONVERTIBLE BONDS
(5.0%) (COST $772,266) $892,902
-----------
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------------
APPLIANCES (2.8%)
$500,000 Maytag Corp.
7.00% 01-02-98 $499,903
-----------
AUTOMOTIVE AND RELATED (2.6%)
472,000 Fiat Finance Inc.
6.150% 01-12-98 471,112
-----------
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------------
CHEMICALS (4.3%)
$769,000 DuPont Ei De Nemours
5.700% 01-16-98 $767,174
-----------
ELECTRICAL (0.5%)
100,000 Motorola, Inc.
5.750% 01-21-98 99,681
-----------
FINANCIAL (7.3%)
507,000 Merrill Lynch
6.000% 01-02-98 506,916
804,000 Prudential Funding
5.800% 01-02-98 803,870
-----------
1,310,786
-----------
TRANSPORTATION (4.0%)
722,000 CSX Corp.
5.970% 01-06-98 721,401
-----------
TOTAL SHORT-TERM NOTES
(21.5%) (COST $3,870,057) $3,870,057
-----------
TOTAL HOLDINGS
(COST $17,065,156)(a) $17,701,397
===========
</TABLE>
(a) Also represents cost for Federal Income tax purposes.
* Non-income producing securities.
Foreign Currencies
FF - French Franc
<TABLE>
<CAPTION>
Industry Classifications
<S> <C> <C>
(1) Agriculture (12) Energy and Oil (23) Packaging
(2) Automotive (13) Food & Beverage (24) Paper
(3) Banking (14) Forest Products (25) Publishing
(4) Building Products (15) Governmental (26) Rail Equipment
(5) Capital Goods (16) Hotels (27) Real Estate
(6) Cement (17) Health Care (28) Retailing
(7) Chemicals (18) Insurance (29) Services
(8) Computer Products (19) Machinery (30) Steel
(9) Consumer Products (20) Media (31) Textile
(10) Electrical Products (21) Metal (non-ferrous) (32) Transportation
(11) Electronics (22) Mining (33) Utilities
(34) Miscellaneous
</TABLE>
The accompanying notes are an integral part of these financial statements.
48
<PAGE> 45
OHIO NATIONAL FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<S> <C>
ASSETS:
Investments in securities at market
value (note 1) (cost $17,065,156) ......................... $ 17,701,397
Cash in bank ............................................... 37,676
Unrealized gain on forward currency
contracts (note 5) ........................................ 95,207
Receivable for fund shares sold ............................ 205,087
Receivable for securities sold ............................. 43,433
Dividends and accrued interest receivable .................. 81
------------
Total assets ............................................. 18,082,881
------------
LIABILITIES:
Unrealized loss on forward currency
contracts (note 5) ........................................ 28,959
Payable for investment management
services (note 3) ......................................... 13,139
Other accrued expenses ..................................... 17,283
------------
Total liabilities ........................................ 59,381
------------
Net assets at market value .................................. $ 18,023,500
============
Net assets consist of:
Par value, $1 per share .................................... $ 1,536,703
Paid-in capital in excess of par value ..................... 15,784,767
Net unrealized appreciation (depreciation) on:
Investments (note 1) ...................................... 636,241
Foreign currency related transactions ..................... (459)
Forward currency contracts (note 5) ....................... 66,248
------------
Net assets at market value .................................. $ 18,023,500
============
Shares outstanding (note 4) ................................. 1,536,703
Net asset value per share ................................... $ 11.73
============
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
INVESTMENT INCOME:
Interest ................................................... $ 298,935
Dividends (net of $12,353 foreign taxes withheld) .......... 230,313
------------
Total investment income ................................... 529,248
------------
EXPENSES:
Management fees (note 3) ................................... 130,704
Custodian fees (note 3) .................................... 53,119
Directors' fees (note 3) ................................... 680
Professional fees .......................................... 2,047
Other ...................................................... 4,398
------------
Total expenses ........................................... 190,948
------------
Net investment income .................................... $ 338,300
------------
Realized and unrealized gain on
investments and foreign currency:
Net realized gain from:
Investments ............................................... $ 739,161
Forward currency related transactions ..................... 184,137
Net increase in unrealized appreciation on:
Investments .............................................. 192,139
Foreign currency related transactions .................... 20,818
------------
Net gain on investments .................................. 1,136,255
------------
Net increase in net
assets from operations ................................... $ 1,474,555
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
49
<PAGE> 46
OHIO NATIONAL FUND, INC.
GLOBAL CONTRARIAN PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12-31-97 12-31-96
---------- ----------
<S> <C> <C>
From operations:
Net investment income ....................................................................... $338,300 $189,661
Realized gain on investments and foreign currency transactions............................... 923,298 275,381
Unrealized gain on investments and foreign currency transactions ............................ 212,957 327,989
----------- -----------
Net increase in assets from operations..................................................... 1,474,555 793,031
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income.................................................... (430,394) (142,005)
Capital gains and foreign currency related transaction distributions ........................ (1,126,860) (108,638)
----------- -----------
Total dividends and distributions ......................................................... (1,557,254) (250,643)
----------- -----------
From capital share transactions (note 4):
Received from shares sold ................................................................... 7,002,064 7,880,959
Received from dividends reinvested .......................................................... 1,557,254 250,643
Paid for shares redeemed .................................................................... (1,742,872) (1,804,832)
----------- -----------
Increase in net assets derived from capital share transactions........................... 6,816,446 6,326,770
----------- -----------
Increase in net assets ................................................................ 6,733,747 6,869,158
Net Assets:
Beginning of period ......................................................................... 11,289,753 4,420,595
=========== ===========
End of period (a) ........................................................................... $18,023,500 $11,289,753
=========== ===========
(a) Includes undistributed (overdistributed) net investment income of.......................... ($22) $92,072
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Year Year 4-1-95
Ended Ended to
12-31-96 12-31-96 12-31-95
-------- -------- --------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period...................................................... $11.66 $10.80 $10.00
Income from investment operations:
Net investment income................................................................... 0.29 0.28 0.13
Net realized and unrealized gain on investments
and foreign currency transactions .................................................... 1.03 1.00 0.75
------ ------ ------
Total income from investment operations............................................. 1.32 1.28 0.88
------ ------ ------
Less distributions:
Dividends from net investment income.................................................... (0.38) (0.24) (0.08)
Distributions from net realized capital gains
and foreign currency related transactions............................................. (0.87) (0.18) 0.00
------ ------ ------
Total distributions................................................................. (1.25) (0.42) (0.08)
------ ------ ------
Net asset value, end of period............................................................ $11.73 $11.66 $10.80
====== ====== ======
Total return.............................................................................. 11.67% 12.09% 8.89%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets ................................................ 1.32% 1.29% 1.58%(a,d)
Ratio of net investment income to average net assets ................................... 2.33% 2.44% 1.64%(a,d)
Portfolio turnover rate................................................................... 29% 18% 6%(a)
Average commission rate (c) .............................................................. $0.01 $ 0.03 NR
Net assets at end of period (millions).................................................... $18.0 $ 11.3 $4.4
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commission paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
(d) The advisor has reimbursed certain operating expenses of the Global
Contrarian Portfolio for the period ended December 31, 1995. Had the
advisor not reimbursed such expenses, the annualized ratio of expenses to
average net assets would have been 1.90% and the annualized ratio of net
investment income to average net assets would have been 1.32%.
(NR) Not required prior to 1996.
The accompanying notes are an integral part of these financial statements.
50
<PAGE> 47
AGGRESSIVE GROWTH PORTFOLIO
OHIO NATIONAL FUND, INC.
Objective
The principal investment objective of the Aggressive Growth Portfolio is to seek
capital growth. The portfolio invests in a diversified collection of securities
believed to represent attractive growth opportunities.
Performance as of December 31, 1997
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS:
<S> <C>
One-year 12.53%
Since inception (3/31/95) 14.17%
</TABLE>
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
Comments
The US stock market finished the year much in the same way it began - with a
liquidity-driven rally in the large-cap, blue chip companies. We maintained our
focus on smaller growth companies, while the market experienced a "flight to
quality," mainly in large-cap and interest-sensitive issues. Our emphasis on
growth companies kept the portfolio underweighted in two outperforming sectors,
banks and utilities. In addition, a key holding, Danka Business Systems, lost
more than half of its market value with the release of unexpected disappointing
news in the fourth quarter.
Several years of utopian market conditions have been disrupted by Asian
financial crises, including severe currency devaluations necessitating IMF
bailouts. These events have raised prospects of worldwide over-capacity, price
cuts, diminished US exports and generally reduced economic growth and corporate
profits. Moreover, recent market volatility may dampen investor enthusiasm for
stocks in general.
In this environment we believe dependable growth companies will attract premium
valuations. The portfolio already emphasizes such companies, and we will
continue to upgrade our holdings with this focus in mind. Our strategy is to
proceed cautiously. Although the current environment is less certain than the
past, we believe there are ample opportunities to invest in companies that can
achieve attractive results.
Change in Value of $10,000 Investment
<TABLE>
<CAPTION>
'95 '96 '97
<S> <C> <C> <C>
Aggressive Growth Portfolio $14,396
NASDAQ Composite Index $19,216
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
Top 10 Holdings as of December 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C> <C>
1. Budget Group Inc. 3.3
2. Ocean Energy Inc. 2.7
3. Central Garden and Pet 2.6
4. Union Pacific Resources Grp Inc. 2.4
5. Sybron International Corp-Wis 2.3
6. TCF Financial Corp 2.2
7. Universal Outdoor Holdings Inc. 2.1
8. Danka 2.0
9. Black Box Corp 1.8
10. IBM 1.6
</TABLE>
Top 5 Industries as of December 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Retail 16.5
Business Services 12.2
Oil, Energy, and Natural Gas 10.6
Medical and Related 9.1
Computer and Related 6.8
</TABLE>
The prices of small company stocks are generally more volatile than the prices
of large company stocks.
51
<PAGE> 48
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------
<S> <C> <C>
AEROSPACE (0.8%)
650 Boeing Co. $ 31,809
5,050 *Hexcel Corp. 125,934
---------
157,743
---------
AUTOMOTIVE AND RELATED (1.4%)
5,700 Harley-Davidson, Inc. 156,038
11,500 *Miller Industries Inc. 123,625
---------
279,663
---------
BANKING (4.6%)
875 BankAmerica Corp. 63,875
1,104 Chase Manhattan Corp. 120,888
1,300 Citicorp 164,369
1,200 Household International, Inc. 153,075
12,300 TCF Financial Corp. 417,431
---------
919,638
---------
BUSINESS SERVICES (12.2%)
5,673 *Accustaff Inc. 130,479
6,350 *Cendant Corp 218,281
800 *Ceridian Corporation 36,650
1,700 *Checkfree Corporation 45,900
4,300 *Consolidated Graphics, Inc. 200,488
24,400 Danka Business Systems ADR 388,875
4,250 *Equity Corporation International 98,281
975 *Fiserv Inc. 47,897
2,000 *Lamalie Associates 40,000
9,075 *Lason Holdings Inc. 241,622
1,800 *Mac-Gray Corp. 28,125
4,113 *Outdoor Systems Inc. 157,836
9,800 *Pierce Leahy Corp 200,900
4,250 Pittston Brink's Group 171,063
7,950 *Universal Outdoor Holdings 413,400
---------
2,419,797
---------
COMPUTER AND RELATED (6.8%)
925 *America Online, Inc. 82,498
1,700 *Aware Inc. 17,425
9,750 *Black Box Corp. 344,906
1,612 Computer Associates Intl. Inc. 85,235
4,275 *Hummingbird Communication Ltd. 134,930
3,100 IBM 324,144
4,400 *Phoenix International Ltd 64,900
1,400 *Sterling Commerce Inc. 53,812
3,400 *Storage Technology Corp. 210,588
500 *Tecnomatix Techno. Ltd. 16,875
1,700 *USWEB Corp. 15,937
---------
1,351,250
---------
COMMUNICATIONS (0.9%)
2,400 *Communications Central Inc. 24,150
1,000 *Mobile Telecomm. Tech. Corp. 22,000
2,400 *Sinclair Broadcasting Group 111,900
1,200 *Versant Object Tech. 16,575
---------
174,625
---------
CONSUMER PRODUCTS (3.0%)
6,100 *800-JR CIGAR INC. 152,500
2,700 Fingerhut Companies 57,713
2,600 Philip Morris Companies, Inc. 117,812
4,300 *Rocky Shoes & Boots Inc. 65,575
5,400 Service Corporation International 199,463
---------
593,063
---------
DRUGS (1.1%)
27,300 *Halsey Drug Co. Inc. 42,656
1,450 McKesson Corp. 156,872
700 *Pharmacopeia 11,200
---------
210,728
---------
DURABLE GOODS (1.1%)
3,100 Applied Power Inc. Cl. A 213,900
---------
213,900
---------
ELECTRICAL EQUIPMENT (3.6)
11,550 Berg Electronics Corp. 262,763
2,950 *General Cable Corp. 106,753
3,525 Harman International Industries Inc. 149,592
6,100 *Kent Electronics Corp. 153,263
600 Xerox Corp. 44,287
---------
716,658
---------
ENTERTAINMENT AND
LEISURE (4.3%)
3,000 *Action Performance Co. 113,625
15,800 *American Skiing Corp. 235,025
8,000 *Bally Total Fitness Holding Corp. 175,000
3,350 *Host Marriott Corp 65,744
5,600 International Game Technology 141,400
7,062 SCP Pool Corp. 135,943
---------
866,737
---------
FINANCE (2.4%)
1,550 American Express Co. 138,338
3,050 Associates First Capital Corp. 216,931
2,650 Block, H&R Inc. 118,753
---------
474,022
---------
FOOD & RELATED (0.4%)
800 *JP Foodservice, Inc. 29,550
925 Lancaster Colony Corp. 52,147
---------
81,697
---------
HOTEL/LODGING (0.7%)
4,600 *Candlewood Hotel Co. Inc. 40,250
2,205 *Promus Hotel Corp. 92,610
---------
132,860
---------
INDUSTRIAL SERVICES (1.3%)
8,000 *Coinmach Laundry Corp. 196,000
2,100 Waste Management Corp 57,750
---------
253,750
---------
INSURANCE (1.6%)
2,150 Conesco, Inc. 97,691
3,450 MGIC Investment Corp. 229,425
---------
327,116
---------
MEDIA AND PUBLISHING (1.7%)
2,700 CBS Corporation 79,481
2,000 *Clear Channel Communications 158,875
4,250 *Getty Communications PLC ADR 63,219
2,400 *Metro Goldwyn Mayer Inc. 48,000
---------
349,575
---------
MEDICAL AND RELATED (9.1%)
1,025 *Arterial Vascular Engineer, Inc. 66,625
4,050 *Boston Scientific Corp. 185,794
9,600 *Cohr Inc. 122,400
3,100 *Covance Inc. 61,612
1,500 *Datascope 38,813
2,400 Dentsply International Inc. 73,200
3,100 *Gulf South Medical Supply, Inc. 115,475
(continued)
</TABLE>
52
<PAGE> 49
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ---------------------------------------------------------------
<S> <C> <C>
MEDICAL AND RELATED (CONT.)
8,208 *Henry Schein Inc. $287,280
500 *Molecular Dynamics inc. 8,125
550 *Sabratek Corp. 15,812
2,850 *Steris Corp. 137,513
13,400 *Suburban Ostomy Supply Co. 155,775
9,375 *Sybron International Corp.-Wis. 440,039
4,425 *United Dental Care Inc. 47,569
2,200 *VWR Corp. 62,150
-----------
1,818,182
-----------
OIL, ENERGY AND NATURAL GAS (10.6%)
725 *Cooper Cameron Corp. 44,225
4,050 *Ensco International Inc. 135,675
2,650 *Global Marine Inc. 64,925
350 Helmerich & Payne Inc. 23,756
8,700 *Marine Drilling Company Inc. 180,525
4,200 *Nabors Industries Inc. 132,038
10,500 *Noble Drilling Corp. 321,562
10,675 *Ocean Energy Inc. 526,411
250 *Rowan Companies, Inc. 7,625
650 Santa Fe International corp. 26,447
2,050 Schlumberger Ltd. 165,025
18,250 Union Pacific Resources Group Inc. 442,563
650 Wicor Inc. 30,184
-----------
2,100,961
-----------
REAL ESTATE AND LEASING (0.5%)
5,400 Sunstone Hotel Investors Inc. 93,150
-----------
RESTAURANTS (1.5%)
2,400 *Casa Ole' Restaurants Inc. 8,400
2,400 *Logan's Roadhouse 37,200
4,800 *PJ America Inc. 72,000
5,450 *Rainforest Cafe Inc. 179,850
-----------
297,450
-----------
TRANSPORTATION & EQUIPMENT (2.6%)
1,875 Burlington Northern Sante Fe 174,258
7,300 *Hub Group Inc. Cl A 217,175
3,150 Rollins Truck Leasing Corp 56,306
3,350 *Wisconsin Central Transportation Corp 78,305
-----------
526,044
-----------
RETAIL (16.5%)
9,100 *Avis Rent A Car Inc. $290,631
18,900 *Budget Group Inc. 653,231
19,950 *Central Garden and Pet Co. 523,688
4,925 Cole National Corp. 147,442
4,000 Consolidated Stores Corp. 175,750
10,350 *Eagle Hardware & Garden Co. 200,531
2,900 *Goody's Family Clothing Co. 78,844
4,800 Hertz Corp. Cl A 193,200
3,150 *Just For Feet Inc. 41,344
2,100 *MSC Industrial Direct Co. CIA 88,988
26,000 *Movie Gallery Inc. 76,375
4,200 Regis Corp Minn RJQ 105,525
8,300 *Renters Choice Inc. 170,150
2,300 Rite Aid Corp. 134,981
4,800 *Staples Inc. 133,200
6,100 *Wilmar Industries Inc. 145,637
5,250 *Zale Corp. 120,750
-----------
3,280,267
-----------
Total Common Stock
(88.7%)
(Cost $16,775,198) $17,638,876
-----------
FACE MARKET
AMOUNT SHORT-TERM OBLIGATIONS VALUE
- -----------------------------------------------------
GOVERNMENT (0.5%)
$100,000 US Treasury Note
4.94% 01/29/1998 $ 99,664
----------
TOTAL SHORT-TERM
OBLIGATIONS
(0.5%) (COST $98,724) $ 99,664
----------
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -----------------------------------------------------
FINANCIAL (0.8%)
$174,000 Star Bank 5.50% due 01-02-98
repurchase price $174,053
collateralized by GNMA certificates
pool#8359
due 01-20-24
(cost $174,000) $ 174,000
-----------
TOTAL REPURCHASE AGREEMENTS
(0.8%) (COST $174,000) $ 174,000
-----------
TOTAL HOLDINGS
(COST $17,047,922) (a) $17,912,540
===========
</TABLE>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
53
<PAGE> 50
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $17,047,922)...... $17,912,540
Cash in bank .............................. 367
Receivable for fund shares sold............ 453,659
Receivable for securities sold ............ 1,557,751
Dividends and accrued interest receivable . 9,709
Other ..................................... 2,108
-----------
Total assets .......................... 19,936,134
-----------
Liabilities:
Payable for investment management
services (note 3) ..................... 13,861
Payable for securities purchased .......... 24,210
Other accrued expenses .................... 5,356
-----------
Total liabilities ..................... 43,427
-----------
Net assets at market value.......................... $19,892,707
===========
Net assets consist of:
Par value, $1 per share ................... $1,794,410
Paid-in capital in excess of par value .... 17,199,380
Accumulated undistributed net realized
gain on investments (note 1) .......... 34,299
Net unrealized appreciation on investments 864,618
-----------
Net assets at market value $19,892,707
===========
Shares outstanding (note 4)......................... 1,794,410
Net asset value per share........................... $11.09
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year ended December 31, 1997
<S> <C>
Investment income:
Interest............................... $27,656
Dividends.............................. 61,349
----------
Total investment income............. 89,005
----------
Expenses:
Management fees (note 3)............... 125,073
Custodian fees (note 3)................ 5,001
Directors' fees (note 3)............... 680
Professional fees...................... 2,240
Accounting and transfer agent fees .... 14,387
Other.................................. 3,344
----------
Total expenses...................... 150,725
----------
Net investment loss ................ ($61,720)
----------
Realized and unrealized gain on investments:
Net realized gain from investments .... $1,523,817
Net increase in unrealized
appreciation on investments ........ 318,599
----------
Net gain on investments......... 1,842,416
Net increase in net
assets from operations.......... $1,780,696
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
54
<PAGE> 51
OHIO NATIONAL FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Year Ended Year Ended
12-31-97 12-31-96
----------- -----------
<S> <C> <C>
From operations:
Net investment income (loss) ................................................... ($61,720) $1,259,285
Realized gain (loss) on investments ............................................ 1,523,817 (1,358,319)
Unrealized gain on investments ................................................. 318,599 377,912
----------- -----------
Net increase in assets from operations........................................ 1,780,696 278,878
----------- -----------
Dividends and distributions to shareholders:
Dividends paid from net investment income ...................................... (172,523) (1,271,325)
Capital gains distributions..................................................... (65,296) 0
----------- -----------
Total dividends and distributions............................................. (237,819) (1,271,325)
----------- -----------
From capital share transactions (note 4):
Received from shares sold ...................................................... 8,136,995 8,883,382
Received from dividends reinvested ............................................. 237,819 1,271,325
Paid for shares redeemed ....................................................... (2,034,563) (1,158,142)
----------- -----------
Increase in net assets derived from capital share transactions................. 6,340,251 8,996,565
----------- -----------
Increase in net assets ...................................................... 7,883,128 8,004,118
Net Assets:
Beginning of period ............................................................ 12,009,579 4,005,461
----------- -----------
End of period (a) .............................................................. $19,892,707 $12,009,579
=========== ===========
(a) Includes undistributed net investment income (loss) of....................... ($61,720) $172,523
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Year Year 4-1-95
Ended Ended to
12-31-97 12-31-96 12-31-95
-------- -------- --------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning of period..................... $10.03 $11.84 $10.00
Income from investment operations:
Net investment income (loss) ........................... (0.05) 1.64 1.56
Net realized and unrealized gain (loss) on investments . 1.29 (1.59) 1.08
------ ------ ------
Total income from investment operations................ 1.24 0.05 2.64
------ ------ ------
Less distributions:
Dividends from net investment income ................... (0.14) (1.86) (0.80)
Distributions from net realized capital gains........... (0.04) 0.00 0.00
------ ------ ------
Total distributions................................... (0.18) (1.86) (0.80)
------ ------ ------
Net asset value, end of period........................... $11.09 $10.03 $11.84
====== ====== ======
Total return............................................. 12.53% 0.76% 26.95%(b)
Ratios and supplemental data:
Ratio of expenses to average net assets ................ 0.97% 1.01% 1.02%(a)
Ratio of net investment income to average net assets ... (0.40%) 15.81% 18.18%(a)
Portfolio turnover rate.................................. 193% 1987% 1488%
Average commission rate (c) ............................. $0.06 $0.03 NR
Net assets at end of period (millions)................... $19.9 $12.0 $4.0
</TABLE>
(a) Annualized
(b) Calculated on an aggregate basis (not annualized)
(c) Represents the total dollar amount of commission paid on equity security
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
(NR) Not required prior to 1996.
The accompanying notes are an integral part of these financial statements.
55
<PAGE> 52
CORE GROWTH PORTFOLIO
OHIO NATIONAL FUND, INC.
Objective
The objective of the Core Growth Portfolio is to provide long-term capital
appreciation.
Performance as of December 31, 1997
<TABLE>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C>
Since inception (1/3/97) -3.08%
</TABLE>
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
Comments
The top 30 companies in the Russell 3000 Growth Index represent 47% of the
index's market capitalization. While they are growing at above-average rates, we
believe that there are many smaller companies with higher earnings growth. Over
the next three to five years, we expect the Core Growth Portfolio companies to
grow earnings at 38% versus 14% for the Russell 3000 Growth Index companies.
The NMSGI Index, consisting of the 500 fastest growing small stocks, aims to
eliminate the large cap bias of the NASDAQ in which Intel and Microsoft account
for 20% of the market. The index advanced just 7.3% for 1997 despite the fact
that 75% of its companies met or beat estimates. Additionally, earnings growth
in the index registered a 58% gain for the year versus a 10% gain for the S&P
500, illustrating the point that small companies grow faster than large ones.
Except for a few months in mid-1997, investors were unwilling to pay for
high-quality, high-earnings growth companies. Currently, uncertainty centered on
Asia has kept investors at bay. We believe that steadfast investors in this
style will be rewarded. In virtually all past periods, remaining invested in
this style has proven to be beneficial when the style returns to favor.
<TABLE>
<CAPTION>
Change in Value of $10,000 Investment
1/97 12/97
<S> <C> <C>
Core Growth Portfolio $10,000 $ 9,592
Russell 2000 Index $10,000 $13,169
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
Top 10 Holdings as of December 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C> <C>
1. Clear Channel Comm 2.5
2. Apollo Group A 2.4
3. HBO & Co 2.4
4. Cambridge Technology Partners 2.1
5. Parexel International 2.1
6. Visio Software 2.1
7. Advanced Fibre Communications 2.0
8. Associates 1st Cap Co. 2.0
9. Gartner Group 1.9
10. DST Systems Inc. 1.7
</TABLE>
Top 5 Industries as of December 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Computer and Related 22.3
Business Services 11.6
Oil, Energy, and Natural Gas 7.8
Electrical Equipment 6.7
Communications 6.7
</TABLE>
The prices of small company stocks are generally more volatile than the prices
of large company stocks.
57
<PAGE> 53
OHIO NATIONAL FUND, INC.
CORE GROWTH PORTFOLIO
Schedule of Investments
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- ----------------------------------------------------------------
<S> <C> <C>
FINANCIAL (21.5%)
$2,051,000 Star Bank 5.500% due 01-02-98
repurchase price $2,051,627
collateralized by GNMA certificates
pool #8359
due 01-20-24 (cost $2,051,000) $2,051,000
-----------
TOTAL REPURCHASE AGREEMENTS
(21.5%) (COST $2,051,000) $2,051,000
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ----------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (1.8%)
6,000 Harley Davidson $164,250
700 *Miller Industries Inc. 7,525
-----------
171,775
-----------
BUSINESS SERVICES (11.6%)
500 *Abacus Direct 20,500
6,200 *Accustaff Inc. 142,600
4,800 *Apollo Group 226,800
1,442 *Cendant Technology Partners 49,564
4,900 *Cambridge Technology Partners 203,963
1,500 *Documentum Inc. 63,187
4,800 *Gartner Group 178,800
5,900 *RWD Technologies 106,200
5,650 US Office Products Corp. 110,881
-----------
1,102,495
-----------
COMMUNICATIONS (6.7%)
6,600 Advanced Fibre Communications 192,225
2,000 *Intl Telcomm Data 64,000
5,000 *JD Edwards & Co. 147,500
900 Level One Communications 25,425
1,700 Tekelec 51,850
3,000 *Tellabs Inc. 158,625
-----------
639,625
-----------
COMPUTER AND RELATED (22.3%)
3,200 Aspen Technology 109,600
5,400 *Bea Systems Inc. 93,488
2,000 Cadence Design 49,000
1,500 *CDW Computer Centers Inc. 78,187
5,900 *Cognex Corp. 160,775
200 Complete Business Solutions 8,700
4,300 *Daou Systems 134,375
1,800 Dell Computers 151,200
3,900 *DST Systems Inc. 166,481
800 Electronics for Imaging 13,300
2,900 *Galileo Technology 83,738
4,700 HBO & Co. 225,600
3,100 Manugistics Inc. 138,337
1,300 *McAffe Associates 68,738
2,400 *Parametric Technology Corp. 113,700
1,800 *Remedy Corp. 37,800
2,200 *Security Dynamics 78,650
3,400 *Sterling Commercial 130,687
8,600 *Summit Design 89,225
5,100 *Vision Software 195,713
-----------
2,127,294
-----------
CONSUMER PRODUCTS (1.2%)
3,950 Blyth Industries Inc. $118,253
DRUGS (3.7%)
3,300 *Dura Pharmacy 151,388
5,400 Parexel International 199,800
-----------
351,188
-----------
ELECTRICAL EQUIPMENT (6.7%)
4,300 *Helix Technologies 83,850
1,200 *Lernout and Hausp 55,800
1,700 Linear Tech 97,963
1,000 Micrel Inc. 28,750
4,300 Microchip Technology 129,000
1,700 *Powerwave Technologies Inc. 28,581
2,100 *Speed Fam Intl 55,650
1,700 *Thermo Electronics 75,650
1,000 *United Video Satellite 28,750
2,100 UTI Energy Corp. 54,337
-----------
638,331
-----------
ENTERTAINMENT AND LEISURE (1.3%)
3,600 *American Skiing Corp. 53,550
1,800 *Cinar Films Inc. 69,975
-----------
123,525
-----------
FINANCIAL SERVICES (4.8%)
2,700 Associates First Capital Co. 192,038
1,700 *Seacor Smit Inc. 102,425
7,800 The Money Store 163,800
-----------
458,263
-----------
FOOD AND RELATED (1.6%)
1,900 *Suiza Foods 113,169
800 *Whole Food Market 40,900
-----------
154,069
-----------
HOTEL/LODGING (1.7%)
3,400 *Capstar Hotel Co. 116,663
2,250 Signature Resorts 49,218
-----------
165,881
-----------
HOUSING, FURNITURE, AND RELATED (0.8%)
3,900 *Comfort Systems 77,025
-----------
INDUSTRIAL SERVICES (0.5%)
700 *Eastern Environmental Services 15,400
200 Mail-Well Inc. 8,100
700 *United States Filter Corp. 20,956
-----------
44,456
-----------
MACHINERY (2.1%)
3,200 Applied Material 96,400
1,600 Asyst Technologies Inc. 34,800
1,500 *Hanover Compress 30,656
1,300 *Lam Research 38,025
-----------
199,881
-----------
MEDIA AND PUBLISHING (4.7%)
900 *Consol Graphics 41,963
3,000 *Clear Channel Communications 238,312
3,100 *Jacor Communications 164,688
-----------
444,963
-----------
</TABLE>
(continued)
58
<PAGE> 54
OHIO NATIONAL FUND, INC.
CORE GROWTH PORTFOLIO (CONTINUED)
Schedule of Investments
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -------------------------------------------------------------
<S> <C> <C>
MEDICAL AND RELATED (5.5%)
6,200 *FPA Medical Management $115,475
2,800 Health Management Associates 70,700
2,600 Healthsouth Corp. 72,150
2,300 *NCS Healthcare 60,663
3,000 Omnicare Inc. 93,000
1,400 *Pediatrix Medical 59,850
900 Safeskin Corp. 51,075
-----------
522,913
-----------
OIL, ENERGY AND NATURAL GAS (7.8%)
1,400 Camco International 89,163
200 *Dril-Quip Inc. 7,025
2,800 Ensco International 93,800
1,100 EVI Inc. 56,925
2,800 Friede Goldman 83,650
1,200 *Global Industries 20,400
1,000 Helmerch and Payn 67,875
2,200 *IRI International Corp. 30,800
2,400 New Park Res Inc. 42,000
2,700 *Pool Energy Service 60,075
1,200 Sante Fe International 48,825
6,600 Varco International 141,487
-----------
742,025
-----------
RETAIL (1.3%)
1,600 *Coldwater Creek $54,000
3,400 *Hibbett Sporting Goods 74,800
-----------
128,800
-----------
TEXTILES AND RELATED (1.4%)
3,200 *Jones Apparel 137,600
-----------
TRANSPORTATION (1.9%)
700 *Coach USA Inc. 23,450
3,200 *Hvide Marine A 82,400
3,300 *Motivepower Industries 76,724
-----------
182,574
-----------
TOTAL COMMON STOCK
(89.4%) (COST $8,131,941) $8,530,936
-----------
TOTAL HOLDINGS
(COST $10,182,941) $10,581,936
===========
</TABLE>
(a) Also represents cost for Federal income tax purposes.
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
59
<PAGE> 55
OHIO NATIONAL FUND, INC.
CORE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
DECEMBER 31, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $10,182,941 .......................... $ 10,581,936
Cash in bank ............................................... 920
Receivable for fund shares sold ............................ 297,999
Dividends and accrued interest receivable .................. 389
------------
Total assets .............................................. 10,881,244
------------
Liabilities:
Payable for securities purchased ........................... 1,326,150
Payable for investment management
services (note 3) ......................................... 7,677
Other accrued expenses ..................................... 3,384
------------
Total liabilities ......................................... 1,337,211
------------
Net assets at market value .................................. $ 9,544,033
============
Net assets consist of:
Par value, $1 per share .................................... $ 985,506
Paid-in capital in excess of par value ..................... 8,610,638
Accumulated undistributed net realized
loss on investments (note 1) .............................. (447,567)
Net unrealized appreciation on investments (note 1) ........ 398,995
Overdistributed net investment income ...................... (3,539)
------------
Net assets at market value .................................. $ 9,544,033
============
Shares outstanding (note 4) ................................. 985,506
Net asset value per share ................................... $ 9.68
============
STATEMENT OF OPERATIONS
JANUARY 3, 1997 TO DECEMBER 31, 1997
Investment income:
Interest ................................................... $ 3,699
Dividends .................................................. 61,000
------------
Total investment income ................................... 64,699
------------
Expenses:
Management fees (note 3) ................................... 62,237
Custodian fees (note 3) .................................... 5,000
Directors' fees (note 3) ................................... 400
Professional fees .......................................... 1,200
Accounting and transfer agent fees ......................... 6,627
Other ...................................................... 1,127
------------
Total expenses ............................................ 76,591
------------
Net investment income ..................................... ($11,892)
------------
Realized and unrealized gain (loss) on investments:
Net realized loss from investments ......................... ($447,567)
Net increase in unrealized
appreciation on investments ............................... 398,995
------------
Net loss on investments .................................. (48,572)
------------
Net decrease in net assets
from operations .......................................... ($60,464)
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
60
<PAGE> 56
OHIO NATIONAL FUND, INC.
CORE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
From operations:
Net investment loss........................................................ ($11,892)
Realized loss on investments .............................................. (447,567)
Unrealized gain on investments ............................................ 398,995
----------
Net decrease in assets from operations................................... (60,464)
----------
Dividends and distributions to shareholders:
Dividends paid from net investment income.................................. (3,539)
----------
From capital share transactions (note 4):
Received from shares sold ................................................. 12,368,097
Received from dividends reinvested ........................................ 3,539
Paid for shares redeemed .................................................. (2,763,600)
----------
Increase in net assets derived from capital share transactions............ 9,608,036
----------
Increase in net assets ................................................. 9,544,033
Net Assets:
Beginning of period ....................................................... 0
----------
End of period (a) ......................................................... $9,544,033
==========
(a) Includes undistributed net investment loss of............................. ($11,892)
==========
FINANCIAL HIGHLIGHTS
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
Per share data:
Net asset value, beginning of period........................................ $10.00
Loss from investment operations:
Net investment loss........................................................ (0.02)
Net realized and unrealized loss on investments ........................... (0.30)
----------
Total loss from investment operations..................................... (0.32)
----------
Net asset value, end of period.............................................. $9.68
==========
Total return................................................................ (3.08%)
Ratios and supplemental data:
Ratio of expenses to average net assets.................................... 1.11%
Ratio of net investment loss to average net assets......................... (0.18%)
Portfolio turnover rate..................................................... 65%
Average commission rate (a) ................................................ $ 0.05
Net assets at end of period (millions)...................................... $ 9.5
</TABLE>
(a) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold by
the portfolio.
The accompanying notes are an integral part of these financial statements.
61
<PAGE> 57
GROWTH & INCOME PORTFOLIO
OHIO NATIONAL FUND, INC.
Objective
The Growth & Income Portfolio's investment objective is long-term total return.
Performance as of December 31, 1997
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C>
Since inception (1/3/97) 36.58%
</TABLE>
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
Comments
We were pleased with the Growth & Income Portfolio's performance in 1997.
Despite a terrible November, our overweighting in the oil service sector helped
our performance dramatically. We ended the year with approximately 13% of our
assets in oil service. Despite the large gains we've seen over the last two
years, we do not think the cycle is over. The cable television sector is another
of our favorites and accounted for a large portion of our summer gains. At year
end we continued to maintain a significant weighting in the group.
In our opinion, small and mid-cap stocks remain undervalued relative to the
overall market. We still believe that many small-cap stocks offer higher
earnings growth potential in 1998 with less foreign exposure than most large-cap
multinationals. The biggest economic news of 1997 was the turmoil in Asia. The
big question for 1998 is what it will mean for the US economy. In all likelihood
it may mean a flood of imports to the US by spring, a reduction in GDP growth
and pressure on corporate earnings. Pricing power has not been good in general
and should become more negative for companies exposed to Asian competition.
Change in Value of $10,000 Investment
<TABLE>
<CAPTION>
1/97 12/97
<S> <C>
Growth & Income Portfolio $13,637
Russell 2000 Index $12,226
</TABLE>
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
Top 10 Holdings as of December 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C> <C>
1. Cooper Cameron Corp 2.1
2. Houston Industries Inc. 1.7
3. Nabors Industries Inc. 1.7
4. EVI Inc. 1.7
5. Dress Barn Inc. 1.6
6. Walter Industry Inc. 1.3
7. Perclose Inc. 1.2
8. U.S. West Media Group 1.2
9. Tele Communications TCI Group-Ser A 1.2
10. Camco International Inc. 1.2
</TABLE>
Top 5 Industries as of December 31, 1997
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Oil, Energy, and Natural Gas 14.7
Electrical Equipment 8.2
Computer and Related 8.0
Medical and Related 7.7
Industrial Services 5.9
</TABLE>
63
<PAGE> 58
OHIO NATIONAL FUND, INC.
GROWTH AND INCOME PORTFOLIO
Schedule of Investments
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -----------------------------------------------------------
<S> <C> <C>
FINANCIAL (9.1%)
$1,705,000 Star Bank 5.50%, Due 01-02-98
repurchase price $1,705,521
collateralized by GNMA certificates
pool #8359
due 01-20-24 (cost $1,705,000) $1,705,000
----------
TOTAL REPURCHASE AGREEMENTS
(9.1%) (COST $1,705,000) $1,705,000
----------
MARKET
SHARES COMMON STOCK VALUE
- -----------------------------------------------------------
AEROSPACE (1.0%)
3,500 *Alliant Techsystems Inc. $195,125
----------
BANKING (4.0%)
5,000 Compass Bancshares Inc. 218,750
4,000 Cape Cod Bank & Trust Co. 158,000
3,000 Long Island Bancorp Inc. 148,875
2,000 Mellon Bank Corp. 121,250
3,000 TCF Financial Corp. 101,813
----------
748,688
----------
CHEMICALS (0.9%)
2,500 Imperial Chemicals Ind. 162,344
----------
COMMUNICATIONS (5.2%)
5,500 Cincinnati Bell 170,500
5,000 Comsat Corp. 121,250
10,000 *DIGI International 170,000
3,500 GTE Corp. 182,875
3,500 *LCI International Inc. 107,625
8,000 *Tele Communications TCI Grp 223,500
----------
975,750
----------
COMPUTER & RELATED (6.3%)
11,500 *Concentric Network Corp. 102,063
10,000 *Data General Corp. 174,375
18,000 *Egghead Inc. 117,000
5,000 *Filenet Corp. 150,625
9,000 *Intersolv Inc. 182,250
4,000 *Platinum Technology Inc. 113,000
5,000 Sunguard Data Systems Inc. 155,000
2,750 *Synopsis 98,313
10,250 *System Software Assoc. Inc. 89,688
----------
1,182,313
----------
CONSUMER PRODUCTS (2.4%)
3,500 Philip Morris Cos. Inc. 158,594
2,000 Ralston Purina SAILS 139,250
3,500 Sunbeam 147,437
----------
445,281
----------
ELECTRICAL EQUIPMENT (8.2%)
5,000 *Advanced Lighting Tech. 95,000
8,000 *Antec Corporation 125,000
3,000 CMS Energy Corp. 132,187
3,000 Duke Energy Corp. 166,125
4,500 GPU Inc. 189,562
12,000 Houston Industries 320,250
6,500 Southern Co. 168,187
8,000 *U.S. West Media 231,000
2,500 Union Electric Co. 108,125
----------
1,535,436
----------
ENTERTAINMENT & LEISURE (0.2%)
6,800 *Brilliant Digital Entertainment $31,875
----------
FINANCIAL SERVICES (1.6%)
3,000 Fannie Mae 171,188
4,637 *Tele Comm. New TCI A 131,285
----------
302,473
----------
FOOD & RELATED (3.6%)
3,000 Albertsons Inc. 142,125
6,000 Cadbury Schweppes PLC 60,567
5,000 International Multi-Foods Corp. 141,563
5,000 *JP Foodservice Inc. 184,687
7,750 Tasty Baking Company 149,672
----------
678,614
----------
HOUSING, FURNITURE & RELATED (2.3%)
4,000 Herman Miller 218,250
7,600 *Toll Brothers Inc. 203,300
----------
421,550
----------
INDUSTRIAL SERVICES (5.3%)
11,500 *Agribiotech Inc. 196,219
5,000 *Giant Cement Holding 115,625
5,300 Medusa Corp. 221,606
5,000 *Primark Corp. 203,438
12,000 *Walter Industry Inc. 247,500
----------
984,388
----------
INSURANCE SERVICES (1.6%)
2,500 American General Corp. 135,156
3,500 Hartford Life Inc. 158,594
----------
293,750
----------
MEDICAL & RELATED (6.2%)
8,500 *Beverly Enterprises 110,500
8,700 *Dusa Pharmaceuticals 100,050
5,000 *Guilford Pharmaceuticals 100,625
3,000 *Genentech Inc. 181,875
8,500 *Millennium Pharmaceuticals 161,500
7,000 *Neurex Corporation 97,125
128 *Pharmerica Inc. 1,328
12,000 *Perclose Inc. 231,000
3,500 *Spine-Tech Inc. 180,031
----------
1,164,034
----------
MEDIA & PUBLISHING (0.7%)
4,000 Comcast Corp. 126,250
----------
MUSIC/CLUBS (0.4%)
5,000 *N2K Inc. 73,125
----------
OIL, ENERGY & NATURAL GAS (14.7%)
7,000 AGL Resources Inc. 143,063
4,900 Artisan Corporation 37,665
30,000 *Bonus Resource Service Corp. 123,687
3,000 Burlington Resources Inc. 134,438
6,500 Cooper Cameron 396,500
3,500 Camco International 222,906
6,000 EVI Inc. 310,500
10,000 *Nabors Industries 314,375
5,000 Occidental Petroleum Corp. 146,563
3,000 *Oryx Energy Co. 76,500
4,500 Patterson Energy 174,094
</TABLE>
(continued)
64
<PAGE> 59
OHIO NATIONAL FUND, INC.
GROWTH AND INCOME PORTFOLIO (CONTINUED)
Schedule of Investments
<TABLE>
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- --------------------------------------------------------
<S> <C> <C>
OIL, ENERGY & NATURAL GAS (CONT.)
5,000 *Rowan Companies Inc. $162,500
6,300 Southern Union Co. 150,410
10,000 Virginia Gas Co. 85,000
2,000 Western Atlas Inc. 148,000
5,000 William Companies, Inc. 141,875
-----------
2,758,076
-----------
RETAIL (2.2%)
10,500 *Dress Barn Inc. 297,938
5,000 *Gadzooks Inc. 105,000
-----------
402,938
-----------
TELECOMMUNICATIONS (0.9%)
9,000 *Nextlevel Systems Inc. 160,875
-----------
TEXTILES & RELATED (1.1%)
14,000 *Vans Inc. 211,750
-----------
TRANSPORTATION (0.7%)
3,000 *Genesee & Wyoming Inc. Cl A 70,125
2,500 *Hvide Marine Corp. 64,375
-----------
134,500
-----------
UTILITIES (0.6%)
12,120 *Citizen Utilities 116,655
-----------
TOTAL COMMON STOCK
(70.1%) (COST $12,075,897) $13,105,790
-----------
REAL ESTATE MARKET
SHARES INVESTMENT TRUSTS VALUE
- --------------------------------------------------------
8,600 CRIIMI Mae Inc. $129,000
4,000 Walden Residential 102,000
-----------
231,000
-----------
TOTAL REAL ESTATE INVESTMENT
TRUSTS (1.2%) (COST $235,856) $231,000
-----------
MARKET
SHARES PREFERRED STOCK VALUE
- --------------------------------------------------------
AEROSPACE (0.7%)
2,000 Trans World Airlines $129,500
-----------
COMMUNICATIONS (0.5%)
2,500 Cablevision Systems 8.500% 96,250
-----------
ENTERTAINMENT AND LEISURE (1.4%)
3,500 Metromedia Intl 7.25% 158,375
2,000 Royal Caribbean Cruises 106,066
-----------
264,441
-----------
FINANCIAL SERVICES (2.0%)
2,500 Conseco Fin Trust 7.0% 128,125
2,500 Merril Lynch & Co 84,688
3,200 Newell Fina Tr 5.25% 167,200
-----------
380,013
-----------
METALS & MINING (0.5%)
7,000 C'oer D'Alene Mines 84,875
-----------
TRANSPORTATION & EQUIPMENT (0.9%)
5,000 TWA 8.000% $177,500
-----------
UTILITIES (0.9%)
3,000 Houston Industries 171,187
-----------
TOTAL PREFERRED STOCK
(6.9%) (COST $1,161,926) $1,303,766
-----------
FACE MARKET
AMOUNT CONVERTIBLE DEBENTURES VALUE
- --------------------------------------------------------
BUSINESS SERVICES (0.2%)
$50,000 Corestaff Inc Note
2.94% 08-15-2004 $41,688
-----------
COMMUNICATIONS (0.9%)
175,000 P-Com Inc.
4.25% 11-15-2002 161,437
-----------
COMPUTER AND RELATED (1.7%)
50,000 Apple Computer
6.00% 06-01-01 40,563
125,000 Read-Rite Corp.
6.50% 09-01-04 105,625
200,000 System Software Associates
7.00% 09-15-02 178,500
-----------
324,688
-----------
FOOD AND RELATED (0.3%)
75,000 Boston Chicken Inc.
7.750% 05-01-04 48,281
-----------
INDUSTRIAL SERVICES (0.6%)
100,000 Alternative Living Services
5.250% 12-15-02 113,000
-----------
MEDICAL AND RELATED (1.5%)
125,000 Assisted Living Concepts
6.00% 11-01-02 135,625
100,000 American Retirement Corp.
5.75% 10-01-02 100,750
35,000 Sunrise Assisted Living
5.500% 06-15-02 46,200
-----------
282,575
-----------
METALS AND MINING (0.7%)
125,000 Loews Corp.
3.125% 09-15-07 124,375
-----------
RETAIL (0.9%)
100,000 Cellstar Corp.
5.00% 10-15-02 73,750
100,000 Charming Shoppes
7.50% 07-15-06 94,875
-----------
168,625
-----------
TOTAL CONVERTIBLE DEBENTURES
(6.8%) (COST $1,316,052) $1,264,669
-----------
TOTAL HOLDINGS
(COST $16,494,731)(a) $17,610,225
===========
</TABLE>
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
65
<PAGE> 60
OHIO NATIONAL FUND, INC.
GROWTH & INCOME PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $16,494,731) ..................................... $17,610,225
Cash in bank ........................................................... 845
Receivable for fund shares sold ........................................ 979,953
Receivable for securities sold ......................................... 397,358
Dividends and accrued interest receivable .............................. 26,897
Other .................................................................. 332
------------
Total assets .......................................................... 19,015,610
============
Liabilities:
Payable for securities purchased ....................................... 294,743
Payable for investment management
services (note 3) ..................................................... 11,978
Other accrued expenses ................................................. 2,609
------------
Total liabilities ..................................................... 309,330
------------
Net assets at market value .............................................. $ 18,706,280
============
Net assets consist of:
Par value, $1 per share ................................................ $ 1,455,364
Paid-in capital in excess of par value ................................. 16,136,858
Accumulated overdistributed net realized
income on investments ................................................. (1,436)
Net unrealized appreciation on investments (note 1) .................... 1,115,494
------------
Net assets at market value .............................................. $ 18,706,280
============
Shares outstanding (note 4) ............................................. 1,455,364
Net asset value per share ............................................... $ 12.85
============
Statement of Operations
January 3, 1997 to December 31, 1997
Investment income:
Interest ............................................................... $ 64,302
Dividends .............................................................. 95,642
------------
Total investment income ............................................... 159,944
------------
Expenses:
Management fees (note 3) ............................................... 61,464
Custodian fees (note 3) ................................................ 5,001
Directors' fees (note 3) ............................................... 400
Professional fees ...................................................... 1,200
Accounting and transfer agent fees ..................................... 6,960
Other .................................................................. 1,133
------------
Total expenses ........................................................ 76,158
------------
Net investment income ................................................. $ 83,786
------------
Realized and unrealized gain on investments:
Net realized gain from investments ..................................... $ 879,953
Net increase in unrealized
appreciation on investments ........................................... 1,115,494
------------
Net gain on investments .............................................. 1,995,447
------------
Net increase in net
assets from operations ............................................... $ 2,079,233
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
66
<PAGE> 61
OHIO NATIONAL FUND, INC.
GROWTH & INCOME PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
For the period from January 3, 1997 to December 31, 1997
<S> <C>
From operations:
Net investment income ......................................... $ 83,786
Realized income on investments ................................ 879,953
Unrealized gain on investments ................................ 1,115,494
------------
Net increase in assets from operations ...................... 2,079,233
------------
Dividends and distributions to shareholders:
Dividends paid from net investment income ..................... (83,966)
Capital gains distributions ................................... (881,389)
------------
Total dividends and distributions ........................... (965,355)
------------
From capital share transactions (note 4):
Received from shares sold ..................................... 17,263,935
Received from dividends reinvested ............................ 965,355
Paid for shares redeemed ...................................... (636,888)
------------
Increase in net assets derived from capital share transactions 17,592,402
------------
Increase in net assets ..................................... 18,706,280
Net Assets:
Beginning of period ........................................... 0
------------
End of period (a) ............................................. $ 18,706,280
============
(a) Includes overdistributed net investment income of .......... ($180)
============
FINANCIAL HIGHLIGHTS
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
Per share data:
Net asset value, beginning of period ........................... $ 10.00
Income from investment operations:
Net investment income ......................................... 0.11
Net realized and unrealized gain on investments ............... 3.52
------------
Total income from investment operations ...................... 3.63
------------
Less distributions:
Dividends from net investment income .......................... (0.11)
Distributions from net realized capital gains ................. (0.67)
------------
Total distributions .......................................... (0.78)
------------
Net asset value, end of period ................................. $ 12.85
============
Total return ................................................... 36.58%
Ratios and supplemental data:
Ratio of expenses to average net assets ....................... 0.95%
Ratio of net investment income to average net assets .......... 1.04%
Portfolio turnover rate ........................................ 185%
Average commission rate (a) .................................... $ 0.06
Net assets at end of period (millions) ......................... $ 18.7
</TABLE>
(a) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold by
the portfolio.
The accompanying notes are an integral part of these financial statements.
67
<PAGE> 62
S&P 500 INDEX PORTFOLIO OHIO NATIONAL FUND, INC.
OBJECTIVE
- ---------
The S&P 500 Index Portfolio seeks total return approximating that of the S&P 500
Index, including reinvestment of dividends, at a risk level consistent with that
of the S&P 500 Index.
PERFORMANCE AS OF DECEMBER 31, 1997
- -----------------------------------
AVERAGE ANNUAL TOTAL RETURN:
Since inception (1/3/97) 31.75%
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
- --------
The S&P 500 Index Portfolio began on January 3, 1997 with a few simple, but
critical goals: hold down expenses to enhance returns; invest new cash quickly;
and match the S&P 500 Index returns. Outperforming the actual index is a
difficult goal because funds incur operating expenses that an index does not.
Using regression analysis, industry weightings, market capital weightings, and
individual stock analysis, the portfolio was managed with only about 40 stock
holdings, and with S&P 500 stock index futures contracts hedged by commercial
paper and/or treasuries. This strategy did allow the portfolio to hold down
expenses, quickly invest cash and match the S&P 500 Index with very little
variance.
From January 3, 1997 through year-end the S&P 500 Index, with dividends
reinvested, rose 31.85%. Your S&P 500 Index Portfolio rose 31.75%, nearly
matching the "dividends reinvested" Index return even after portfolio expenses.
Expectations for 1998 are high, with average corporate earnings expected to grow
about 8% or better. However, the ongoing impact of the Asian recession, which
has reduced earnings forecasts for many American companies, has dampened
expectations. We look for the stock market to be flat to 10% higher in 1998.
CHANGE IN VALUE OF $10,000 INVESTMENT
- -------------------------------------
1/97 12/97
---- -----
S&P 500 Fund Portfolio $10,000 $13,175
S&P 500 Index 10,000 13,338
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
- ---------------------------------------
% of Net Assets
1. S&P 500 Depository Shares 4.1
2. Merck & Co Inc. 2.7
3. Johnson & Johnson 2.2
4. Ameritech Corp 2.2
5. General Electric Corp 2.1
6. Microsoft Corp. 1.8
7. Royal Dutch Petrol. Co. NY Registry 1.8
8. Exxon Corp 1.8
9. Rayonier Timberlands Cl A LP 1.5
10. Fifth Third Bancorp 1.5
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1997
- ----------------------------------------
% of Net Assets
Computer & Related 5.8
Communications 4.9
Banking 4.2
Consumer Products 4.1
S&P 500 Depository Shares 4.1
69
<PAGE> 63
OHIO NATIONAL FUND, INC.
S&P 500 INDEX PORTFOLIO
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- --------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE & RELATED (5.7%)
$256,000 Ford Motor Credit Corp.
6.150% 01-02-98 $255,956
1,000,000 General Motors Acceptance Corp.
6.130% 01-09-98 998,638
----------
1,254,594
----------
FINANCIAL (21.3%)
297,000 American Express Credit
6.100% 01-07-98 296,698
553,000 American General Finance
5.900% 01-12-98 552,003
950,000 Associates Corp.
5.820% 01-06-98 949,232
700,000 CIT Group Holding
6.000% 01-06-98 699,417
400,000 G.E. Capital
6.020% 01-07-98 399,599
500,000 Heller Financial
6.050% 01-21-98 498,319
442,000 Heller Financial
6.050% 01-05-98 441,703
680,000 Household Finance
6.000% 01-08-98 679,207
178,000 Household Finance
6.100% 01-08-98 177,788
----------
4,693,966
----------
INSURANCE SERVICES (4.5%)
1,000,000 Prudential Funding
5.850% 01-20-98 996,913
----------
MACHINERY (4.3%)
943,000 John Deere Capital Corp.
5.750% 01-14-98 941,042
----------
OIL, ENERGY, & NATURAL GAS (4.1%)
905,000 Chevron USA Inc.
5.800% 01-14-98 902,959
----------
RETAIL (4.0%)
900,000 Sears Roebuck Acceptance Corp.
5.950% 01-13-98 898,215
----------
TOTAL SHORT-TERM NOTES
(43.9%) (COST $9,687,689) $9,687,689
----------
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------
AEROSPACE (1.4%)
3,100 Allied Signal $120,706
3,700 Boeing Co. 181,069
----------
301,775
----------
AUTOMOTIVE & RELATED (0.9%)
4,000 Ford Motor 194,750
----------
BANKING (4.2%)
3,200 BankBoston Corp. $300,600
2,600 Chase Manhattan 284,700
4,100 Fifth Third Bancorp 335,175
----------
920,475
----------
CHEMICALS (1.0%)
4,900 Monsanto Corp. 205,800
800 Solutia 21,350
----------
227,150
----------
COMMUNICATIONS (4.9%)
4,800 AT&T Corp. 294,000
4,000 *Airtouch Communications 166,250
6,000 Ameritech Corp. 483,000
2,400 Motorola Corp. 136,950
----------
1,080,200
----------
COMPUTER & RELATED (5.8%)
4,650 Cisco Systems 259,238
3,300 Compaq Computer 186,244
2,900 Intel Corp. 203,725
2,100 International Business Machine 219,581
3,100 *Microsoft Corp. 400,675
----------
1,269,463
----------
CONSUMER PRODUCTS (4.1%)
7,500 Johnson & Johnson 494,063
3,700 Philip Morris Co. 167,656
3,200 Procter & Gamble 255,400
----------
917,119
----------
DRUGS (3.0%)
1,300 *Amgen Corp. 70,363
5,500 Merck & Co. 584,375
----------
654,738
----------
ELECTRICAL EQUIPMENT (2.1%)
6,300 General Electric 462,263
----------
ENTERTAINMENT & LEISURE (0.8%)
1,700 Walt Disney 168,406
----------
FINANCIAL SERVICES (1.4%)
3,600 American Express 321,300
----------
FOOD & RELATED (3.4%)
5,600 Campbell Soup 325,500
5,000 Coca-Cola 333,125
2,000 Intl. Flavors & Fragrances Inc. 103,000
----------
761,625
----------
FORESTRY & PAPER PRODUCTS (1.9%)
32,600 Rayonier Timberlands 338,225
1,700 Weyerhaeuser 83,405
----------
421,630
----------
INSURANCE SERVICES (1.0%)
2,000 American Intl. Group 217,500
----------
MACHINERY (0.4%)
1,700 Caterpillar 82,555
----------
(continued)
</TABLE>
70
<PAGE> 64
OHIO NATIONAL FUND, INC.
S&P 500 INDEX PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------
<S> <C> <C>
MEDICAL & RELATED (0.5%)
1,900 *Boston Scientific $87,163
400 United Healthcare 19,874
----------
107,037
----------
OIL, ENERGY & NATURAL GAS (3.5%)
6,300 Exxon 385,481
7,300 Royal Dutch Petroleum 395,569
----------
781,050
----------
RESTAURANTS (0.3%)
1,200 McDonald's Corp. 57,300
----------
RETAIL (1.5%)
2,400 Home Depot 141,300
4,800 Wal-Mart Stores 189,300
----------
330,600
----------
TEXTILES & RELATED (0.6%)
5,000 Guilford Mills Inc. 136,876
----------
TRANSPORTATION & EQUIPMENT (0.3%)
2,400 Norfolk Southern Corp. $73,950
----------
UTILITIES (1.3%)
5,200 Duke Energy Corp. 287,950
----------
TOTAL COMMON STOCKS
(44.3%) (COST $9,552,913) $9,775,712
----------
DEPOSITARY MARKET
SHARES SHARES VALUE
- ------------------------------------------------------------
FINANCIAL (4.1%)
9,405 S&P 500 Depository Shares $911,697
----------
TOTAL DEPOSITORY SHARES
(4.1%) (COST $904,778) $911,697
----------
TOTAL HOLDINGS
(COST $20,145,380) (a) $20,375,098
===========
* Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
</TABLE>
The accompanying notes are an integral part of these financial statements.
71
<PAGE> 65
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
S&P 500 PORTFOLIO
- ---------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- ---------------------------------------------------------------
DECEMBER 31, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $20,145,380) .......... $20,375,098
Cash in bank ................................ 2,661
Receivable for fund shares sold.............. 821,755
Receivable from brokers (note 1) ............ 817,476
Dividends and accrued interest receivable ... 179,793
Other ....................................... 204
-----------
Total assets ............................... 22,196,987
-----------
Liabilities:
Payable for securities purchased ............ 113,960
Payable for investment management
services (note 3) .......................... 7,140
Other accrued expenses ...................... 3,547
-----------
Total liabilities .......................... 124,647
-----------
Net assets at market value $22,072,340
===========
Net assets consist of:
Par value, $1 per share ..................... $1,882,466
Paid-in capital in excess of par value ...... 19,954,093
Accumulated overdistributed net realized
gain on investments ........................ (108,075)
Net unrealized appreciation on:
Investments (note 1)........................ 229,718
Futures Contracts (note 1).................. 109,325
Undistributed net
investment income .......................... 4,813
-----------
Net assets at market value $22,072,340
===========
Shares outstanding (note 4)................... 1,882,466
Net asset value per share..................... $11.73
===========
- ---------------------------------------------------------------
STATEMENT OF OPERATIONS
- ---------------------------------------------------------------
JANUARY 3, 1997 TO DECEMBER 31, 1997
Investment income:
Interest....................................... $260,134
Dividends...................................... 417,795
-----------
Total investment income....................... 677,929
-----------
Expenses:
Management fees (note 3)....................... 43,376
Custodian fees (note 3)........................ 5,000
Directors' fees (note 3) ...................... 560
Professional fees.............................. 1,680
Accounting and transfer agent fees ............ 7,689
Other.......................................... 1,630
-----------
Total expenses................................ 59,935
-----------
Net investment income......................... $617,994
-----------
Realized and unrealized gain on investments and
futures contracts:
Net realized gain from:
Investments................................... $826,787
Futures contracts............................. 660,125
Net increase in unrealized appreciation on:
Investments................................... 229,718
Futures contracts............................. 109,325
-----------
Net gain on investments...................... 1,825,955
-----------
Net increase in net
assets from operations....................... $2,443,949
===========
</TABLE>
72
<PAGE> 66
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
S&P 500 Portfolio
- --------------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
From operations:
Net investment income ................................................................................. $617,994
Realized gain on investments and futures contracts..................................................... 1,486,912
Unrealized gain on investments and futures contracts................................................... 339,043
-----------
Net increase in assets from operations............................................................... 2,443,949
-----------
Dividends and distributions to shareholders:
Dividends paid from net investment income ............................................................. (613,181)
Capital gains distributions............................................................................ (1,486,912)
Capital gains distributions in excess of realized gains................................................ (108,075)
-----------
Total dividends and distributions.................................................................... (2,208,168)
-----------
From capital share transactions (note 4):
Received from shares sold ............................................................................. 20,644,767
Received from dividends reinvested .................................................................... 2,208,168
Paid for shares redeemed .............................................................................. (1,016,376)
-----------
Increase in net assets derived from capital share transactions ...................................... 21,836,559
-----------
Increase in net assets ............................................................................ 22,072,340
-----------
Net Assets:
Beginning of period ............................................................................... 0
-----------
End of period (a) .................................................................................$22,072,340
===========
a) Includes undistributed net investment income of....................................................... $4,813
===========
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
Per share data:
Net asset value, beginning of period..................................................................... $10.00
Income from investment operations:
Net investment income.................................................................................. (0.45)
Net realized and unrealized gain on investments ....................................................... (2.70)
-----------
Total income from investment operations.............................................................. (3.15)
-----------
Less distributions:
Dividends from net investment income .................................................................. (0.45)
Distributions from net realized capital gains.......................................................... (0.91)
Distributions from excess realized capital gains....................................................... (0.06)
-----------
Total distributions.................................................................................. (1.42)
-----------
Net asset value, end of period........................................................................... $11.73
===========
Total return............................................................................................. 31.75%
Ratios and supplemental data:
Ratio of expenses to average net assets................................................................ 0.52%
Ratio of net investment income to average net assets................................................... 5.29%
Portfolio turnover rate.................................................................................. 445%
Average commission rate (a) ............................................................................. $0.04
Net assets at end of period (millions)................................................................... $22.1
<FN>
(a) Represents the total dollar amount of commissions paid on equity security transactions divided by the total number
of shares purchased and sold by the portfolio.
</TABLE>
The accompanying notes are an integral part of these financial statements.
73
<PAGE> 67
SOCIAL AWARENESS PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
- ---------
The objective of the Social Awareness Portfolio is to provide long-term growth
of capital by investing primarily in the common stocks and other equity
securities of companies that, in the Adviser's opinion, conduct their business
in a way that enhances society's quality of life. The portfolio's social concern
criteria will necessarily limit the universe of securities that may be selected
for this portfolio. However, the Adviser believes the portfolio's objective of
long-term capital growth can be achieved despite this limitation.
PERFORMANCE AS OF DECEMBER 31, 1997
- -----------------------------------
AVERAGE ANNUAL TOTAL RETURN:
Since inception (1/3/97) 25.63%
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
- --------
Financial markets displayed increasing volatility during 1997, as sentiment
shifted dramatically. The Social Awareness Portfolio outperformed the Russell
2000 Index and a peer group of funds using social criteria, aided by strong
performance in the second and third quarters of the year. The largest sector
contributions to performance came from the Consumer Cyclical, Capital Goods and
Financial Services sectors.
We expect volatility in the overall market to continue, driven by concerns over
economic turmoil and the outlook for corporate profits. Companies selected for
the Social Awareness Portfolio have strong fundamentals, pass social criteria
and sell at a discount to estimated growth rates. We will take a disciplined
approach, using heightened volatility to establish positions with favorable
risk-reward characteristics.
CHANGE IN VALUE OF $10,000 INVESTMENT
- -------------------------------------
1/97 12/97
Social Awareness Portfolio $10,000 $12,583
Russell 2000 Index 10,000 12,227
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
- ---------------------------------------
% of Net Assets
1. Recycling Industries Inc. 3.7
2. Buffetts 2.6
3. Sola International 2.5
4. Atlas Air Inc. 2.5
5. First Data Corp 2.5
6. Santa Fe Energy Resources 2.4
7. Wolverine Tube Inc. 2.4
8. Tupperware 2.4
9. Alternative Resource 2.4
10. Andrew Corp. 2.4
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1997
- ----------------------------------------
% of Net Assets
Oil, Energy, and Natural Gas 14.0
Business Services 9.6
Industrial Services 8.4
Metals and Mining 7.3
Consumer Products 6.0
75
<PAGE> 68
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
SOCIAL AWARENESS PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
FACE MARKET
AMOUNT SHORT-TERM NOTES VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE AND RELATED (6.8%)
$160,000 Ford Motor Credit
6.050% 01-02-98 $159,973
171,000 General Motors Acceptance Corp.
6.000% 01-07-98 170,829
----------------
330,802
----------------
RETAIL (2.6%)
125,000 Sears Roebuck
6.000% 01-05-98 124,917
----------------
TOTAL SHORT-TERM NOTES
(9.4%) (COST $455,719) $455,719
----------------
<CAPTION>
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL SERVICES (0.5%)
$25,000 Medar Inc. Sr. Sub. Notes
12.950% 06-30-05 $22,850
----------------
TOTAL LONG-TERM BONDS & NOTES
(0.5%) (COST $22,850) $22,850
----------------
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
BANKING (2.1%)
4,600 First International Bank Corp. $55,775
2,600 * Telebanc Financial 46,150
----------------
101,925
----------------
BUSINESS SERVICES (9.6%)
5,000 * Alternative Resources 115,313
4,100 First Data Corp. 119,925
7,900 * LoJack Corp. 116,525
3,200 Manpower 112,800
----------------
464,563
----------------
CHEMICALS (2.4%)
2,300 Hercules Inc. 115,144
----------------
COMMUNICATIONS (4.8%)
3,300 * 3Comm 115,294
4,800 * Andrew Corp. 115,200
----------------
230,494
----------------
COMPUTER & RELATED (4.0%)
4,800 * Continental Circuits Corp. 66,900
5,400 * Mapinfo 64,125
4,100 * Rand A Technology Can Mutual Fund 63,032
----------------
194,057
----------------
CONSUMER PRODUCTS (6.0%)
5,500 * Acorn Products 55,000
3,700 * Sola International 120,250
4,200 Tupperware 117,075
----------------
292,325
----------------
CONTAINERS (1.2%)
1,600 Sonoco Products 55,500
----------------
DRUGS (1.5%)
3,500 Mylan Laboratories 73,281
----------------
DURABLE GOODS (2.3%)
3,700 Polaris Industries 113,081
----------------
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
ELECTRICAL EQUIPMENT (5.8%)
3,000 * Advanced Lighting $57,000
6,800 * Anixter International 112,200
7,000 BMC Industries 112,875
----------------
282,075
----------------
ENTERTAINMENT AND LEISURE (1.3%)
7,000 * Livent Inc. 60,375
----------------
HOTEL/LODGING (1.3%)
4,800 * Guest Supply 63,000
----------------
HOUSING, FURNITURE & RELATED (3.3%)
6,300 Clayton Homes Inc. 113,400
3,300 Haverty Furniture Cos. Inc. 44,550
----------------
157,950
----------------
INDUSTRIAL SERVICES (7.9%)
3,500 Imco Recycling 56,219
5,900 * Medar Inc. 31,712
3,400 Millipore Corp. 115,388
30,000 * Recycling Industries 180,000
----------------
383,319
----------------
INSURANCE SERVICES (0.9%)
1,300 Blanch EW 44,769
----------------
MEDICAL & RELATED (4.2%)
4,910 * Foundation Health 109,861
700 National Healthcare 39,200
2,000 * Quorum Health 52,250
----------------
201,311
----------------
METALS & MINING (4.9%)
7,100 Worthington Industries 117,150
3,800 Wolverine Tube Inc. 117,800
----------------
234,950
----------------
OIL, ENERGY & NATURAL GAS (14.0%)
6,100 * Belco Oil & Gas Corp. 114,756
1,800 Kerr Mc Gee 113,962
6,000 * Louis Dreyfus Natural Gas 112,125
16,400 * Newstar Resources 57,400
10,500 Santa Fe Energy Resources 118,125
3,300 Ultramar Diamond Shamrock 105,188
4,100 Wizer Oil Co. 57,912
---------------
679,468
---------------
REAL ESTATE AND LEASING (1.2%)
5,200 Bando McGlocklin Capital Corp. 58,500
----------------
RESTAURANTS (4.9%)
13,500 * Buffets 126,563
13,100 * Ryan's Family Steak House 112,168
----------------
238,731
----------------
TEXTILES AND RELATED (1.2%)
9,400 * Ridgeview Inc. 58,750
----------------
TRANSPORTATION & EQUIPMENT (3.4%)
5,000 * Atlas Air Inc. 120,000
2,700 Greenbrier Cos. Inc. 46,744
----------------
166,744
----------------
TOTAL COMMON STOCK
(88.2%) (COST $4,157,951) $4,270,312
----------------
(continued)
</TABLE>
76
<PAGE> 69
<TABLE>
OHIO NATIONAL FUND, INC.
SOCIAL AWARENESS PORTFOLIO (CONTINUED)
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
INSURANCE SERVICES (1.1%)
900 Allstate Exchangeable Notes 6.764% $54,000
--------------------
METALS AND MINING (2.4%)
4,800 Freeport McMoran Copper & Gold 115,200
--------------------
TOTAL PREFERRED STOCK
(3.5%) (Cost $175,104) $169,200
--------------------
MARKET
SHARES WARRANTS VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
5,000 Medar Inc. Warrants @ $6.86 $2,150
--------------------
TOTAL WARRANTS
(0.0%) (COST $2,150) $2,150
--------------------
TOTAL HOLDINGS
(COST $4,813,774) (A) $4,920,231
====================
<FN>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 70
OHIO NATIONAL FUND, INC.
SOCIAL AWARENESS PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31,1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $4,813,774) ............. $4,920,231
Cash in bank .................................. 507
Receivable for fund shares sold................ 156,268
Dividends and accrued interest receivable ..... 4,485
----------
Total assets ................................. 5,081,491
----------
Liabilities:
Payable for shares purchased .................. 234,419
Payable for investment management
services (note 3) ............................ 2,280
Other accrued expenses ........................ 2,962
----------
Total liabilities ............................ 239,661
----------
Net assets at market value $4,841,830
Net assets consist of:
Par value, $1 per share ....................... $424,689
Paid-in capital in excess of par value ........ 4,310,684
Net unrealized appreciation on investments
(note 1)....................................... 106,457
----------
Net assets at market value $4,841,830
Shares outstanding (note 4)..................... 424,689
Net asset value per share....................... $11.40
----------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------
JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
Investment income:
Interest....................................... $15,614
Dividends...................................... 33,280
----------
Total investment income....................... 48,894
----------
Expenses:
Management fees (note 3)....................... 16,529
Custodian fees (note 3)... .................... 5,000
Directors' fees (note 3) . .................... 183
Professional fees......... .................... 615
Accounting and transfer agent fees ............ 4,496
Other.......................................... 452
----------
Total expenses................................ 27,275
----------
Net investment income......................... $21,619
----------
Realized and unrealized gain on investments:
Net realized gain from investments............. $406,600
Net increase in unrealized
appreciation on investments .................. 106,457
----------
Net gain on investments...................... 513,057
----------
Net increase in net
assets from operations....................... $534,676
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
78
<PAGE> 71
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
SOCIAL AWARENESS PORTFOLIO
- -----------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------------
<S> <C>
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
From operations:
Net investment income ................................................ $21,619
Realized gain on investments.......................................... 406,600
Unrealized gain on investments........................................ 106,457
------------
Net increase in assets from operations........................ 534,676
------------
Dividends and distributions to shareholders:
Dividends paid from net investment income............................. (21,672)
Capital gains distributions........................................... (406,600)
------------
Total dividends and distributions............................. (428,272)
------------
From capital share transactions (note 4):
Received from shares sold ............................................ 4,461,187
Received from dividends reinvested ................................... 428,272
Paid for shares redeemed ............................................. (154,033)
------------
Increase in net assets derived from capital share transactions ... 4,735,426
------------
Increase in net assets ................................... 4,841,830
Net Assets:
Beginning of period .................................................. 0
------------
End of period (a) .................................................... $4,841,830
============
(a) Includes undistributed net investment income of................... ($53)
============
<CAPTION>
- ----------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
Per share data:
Net asset value, beginning of period...................................... $10.00
Income from investment operations:
Net investment income................................................. 0.09
Net realized and unrealized gain on
investments and foreign currency transactions..................... 2.47
------------
Total income from investment operations....................... 2.56
------------
Less distributions:
Dividends from net investment income ................................. (0.07)
Distributions from net realized capital gains......................... (1.09)
------------
Total distributions........................................... (1.16)
------------
Net asset value, end of period............................................ $11.40
============
Total return.............................................................. 25.63%
Ratios and supplemental data:
Ratio of expenses to average net assets............................... 0.95%
Ratio of net investment income to average net assets.................. 0.75%
Portfolio turnover rate................................................... 40%
Average commission rate (a) .............................................. $0.07
Net assets at end of period (millions).................................... $4.8
(a) Represents the total dollar amount of commissions paid on equity security transactions
divided by the total number of shares purchased and sold by the portfolio.
The accompanying notes are an integral part of these financial statements.
</TABLE>
79
<PAGE> 72
STRATEGIC INCOME PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
- ---------
The Strategic Income Portfolio seeks to generate high current income by
investing at least 80% of its assets in income-producing securities, including
at least 40% of assets in a core group of U.S. government and corporate
fixed-income securities, and the remainder in other income-producing securities.
PERFORMANCE AS OF DECEMBER 31, 1997
- -----------------------------------
Average Annual Total Return:
Since inception (1/3/97) 8.74%
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
- --------
For the last half of 1997, investors were presented with strong returns and
numerous surprises across all domestic asset classes. Strong returns were
recorded in bonds, REITs and the stock market despite international turmoil.
Bonds in particular were the beneficiary of market uncertainty.
Looking ahead, we expect a slowing world economy and dampened inflation
expectations for 1998. Thus, the bond market should become the performance
leader in 1998 owing to diminished issuance and strong demand. Earnings problems
related to an economic slowdown are likely to keep equity returns sub-par. The
Strategic Income Portfolio is positioned to take advantage of this situation by
focusing on longer maturity bond investments, and corporate issuers that derive
their earnings from domestic activities, as well as utilizing risk-management
strategies to mitigate any downturn in the equity markets.
CHANGE IN VALUE OF $10,000 INVESTMENT
- -------------------------------------
1/97 12/97
Strategic Income Portfolio $10,000 $10,873
Lehman Bros. Government/Corp. 10,000 10,777
Bond Index-Intermediate
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
- ---------------------------------------
% of Net Assets
1. FNMA 9.00% 4/01/16 8.7
2. Occidental Petroleum 10.125% 9/15/09 4.0
3. Noble Affiliates 8.00% 4/01/27 3.5
4. Lockheed Corp 7.875% 3/15/23 3.3
5. Merrill Lynch 7.00% 4/27/08 3.2
6. Phillip Morris 7.125% 8/15/02 3.2
7. Lehman Bros 7.125% 9/15/03 3.2
8. Duke Power 7.875% 5/01/24 3.2
9. FNMA 7.5% 7/15/21 3.1
10. FNMA 7.00% 9/01/27 3.1
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1997
- ----------------------------------------
% of Net Assets
US Government 16.8
Oil, Energy, and Natural Gas 14.6
REIT's 14.0
Financial Services 9.9
Utilities 6.2
81
<PAGE> 73
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO
- -----------------------------------------------------------
SCHEDULE OF INVESTMENTS December 31, 1997
- -----------------------------------------------------------
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- -----------------------------------------------------------
<S> <C> <C>
FINANCIAL (5.6%)
$181,000 Star Bank 5.500% due 01-02-98
repurchase price 181,055
collateralized by GNMA certificates
pool #8359
due 01-20-24 (Cost $181,000) $181,000
---------
TOTAL REPURCHASE AGREEMENTS
(5.6%) (COST $181,000) $181,000
---------
<CAPTION>
Face Market
Amount Long-Term Bonds & Notes Value
- -----------------------------------------------------------
<S> <C> <C>
GOVERNMENT (16.8%)
$267,011 FNMA 9.000% 04-01-16 $284,032
59,629 FNMA 7.250% 02-25-17 59,726
100,000 FNMA 7.500% 07-15-21 101,998
99,767 FNMA 7.000% 09-1-27 100,577
---------
546,333
---------
BANKING (1.4%)
45,000 Nationsbank Corp.
6.375% 02-21-06 44,819
---------
CONSUMER PRODUCTS (3.2%)
100,000 Phillip Morris Co.
7.125% 08-15-02 102,924
---------
FINANCIAL SERVICES (7.9%)
50,000 Donaldson Lufkin
6.875% 11-01-05 50,765
100,000 Lehman Brothers Holdings
7.125% 09-15-03 102,736
100,000 Merrill Lynch & Co.
7.000% 04-27-08 103,567
---------
257,068
---------
FORESTRY & PAPER PRODUCTS (1.0%)
30,000 International Paper Co.
7.625% 01-15-07 32,557
---------
INDUSTRIAL SERVICES (4.0%)
25,000 Fort James Corp. NT
6.625% 09-15-04 25,095
100,000 Lockheed Corp.
7.875% 03-15-23 106,559
---------
131,654
---------
MEDICAL & RELATED (4.6%)
50,000 Columbia/HCA Healthcare
8.700% 02-10-10 55,563
90,000 Manor Care Inc.
7.500% 06-15-16 95,824
---------
151,387
---------
OIL, ENERGY & NATURAL GAS (10.5%)
100,000 Noble Affiliates, Inc.
8.000% 04-01-27 112,208
100,000 Occidental Petroleum
10.125% 09-15-09 129,205
75,000 Transcanada Pipeline
9.875% 01-01-21 99,750
---------
341,163
---------
REAL ESTATE & LEASING (3.0%)
$95,000 Meditrust NT
7.600% 07-15-01 $98,288
---------
RETAIL (2.5%)
75,000 JC Penny Inc.
9.450% 07-15-02 80,734
---------
UTILITIES (4.8%)
100,000 Duke Power Co.
7.875% 05-01-24 102,685
50,000 GTE Corp.
7.830% 05-01-23 52,420
---------
155,105
---------
TOTAL LONG-TERM BONDS & NOTES
(59.7%) (COST $1,901,646) $1,942,032
---------
<CAPTION>
MARKET
SHARES COMMON STOCK VALUE
- -----------------------------------------------------------
<S> <C> <C>
CHEMICALS (1.6%)
2,000 Lyondell Petrochemicals $53,000
---------
OIL, ENERGY, AND NATURAL GAS (0.9%)
1,000 Occidental Pete. Corp. 29,313
---------
UTILITIES (1.4%)
1,000 Central & South West Corp. 27,062
500 DTE Energy 17,343
---------
44,405
---------
TOTAL COMMON STOCK
(3.9%) (COST $113,415) $126,718
---------
<CAPTION>
MARKET
SHARES PREFERRED STOCK VALUE
- -----------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES (2.0%)
2,500 Travelers Cap Pfd. $65,313
---------
OIL, ENERGY & NATURAL GAS (3.2%)
3,000 Enron Capital Trust 1 78,563
1,000 Transcanada Pipeline 8.5% 25,937
---------
104,500
---------
REAL ESTATE & LEASING (2.0%)
2,500 Kimco Realty Corp. Pfd. 8.500% 64,062
---------
TOTAL PREFERRED STOCK
(7.2%) (COST $227,595) $233,875
---------
<CAPTION>
CLOSED-END MARKET
SHARES INVESTMENT COMPANIES VALUE
- -----------------------------------------------------------
<S> <C> <C>
6,900 First Commonwealth Fund $83,231
11,000 Kleinwort Benson Australian Fund 84,563
---------
167,794
---------
TOTAL INVESTMENT COMPANIES
(5.2%) (COST $184,077) $167,794
---------
</TABLE>
(continued)
82
<PAGE> 74
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO (CONTINUED)
- -------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- -------------------------------------------------------------------
DECEMBER 31, 1997
REAL ESTATE MARKET
SHARES INVESTMENT TRUSTS VALUE
- --------------------------------------------------------
<S> <C> <C>
1,000 Capstead Mortgage Corp. $19,938
2,000 Dynex Cap Inc. 26,625
190 Hospitality Properties Trust 6,246
500 INMC Mortgage Holdings 11,719
2,544 Imperial Credit Mortgage Hold. 45,465
3,300 LTC Properties Inc. 68,475
2,300 Omega Healthcare Investments 88,837
644 Pennsylvania Real Estate Inv. 15,818
3,400 Summit Properties Inc. 71,825
2,500 Thornburg Mtg. Asset Corp. 41,250
4,600 Winston Hotels Inc. 60,662
----------
456,860
----------
TOTAL REAL ESTATE INVEST. TRUSTS
(14.0%) (COST $468,327) $456,860
----------
TOTAL HOLDINGS
(COST $3,076,060) (a) $3,108,279
==========
<FN>
(a) Also represents cost for Federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
</TABLE>
83
<PAGE> 75
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------------------------------------------------
<S> <C>
DECEMBER 31, 1997
Assets:
Investments in securities at market
value (note 1) (cost $3,076,060) ................. $3,108,279
Cash in bank .......................................... 923
Receivable for fund shares sold........................ 5,345
Receivable for securities sold......................... 98,252
Dividends and accrued interest receivable ............. 43,383
----------
Total assets ..................................... 3,256,182
----------
Liabilities:
Payable for investment management
services (note 3) ................................ 2,158
Other accrued expenses ................................ 3,533
----------
Total liabilities ................................ 5,691
----------
Net assets at market value $3,250,491
==========
Net assets consist of:
Par value, $1 per share ............................... $319,915
Paid-in capital in excess of par value ................ 2,896,524
Accumulated undistributed net realized
gain on investments .............................. 1,157
Net unrealized appreciation on investments (note 1).... 32,219
Undistributed net investment income.................... 676
----------
Net assets at market value $3,250,491
==========
Shares outstanding (note 4)................................. 319,915
Net asset value per share................................... $10.16
==========
<CAPTION>
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -----------------------------------------------------------------------------
<S> <C>
JANUARY 3, 1997 TO
DECEMBER 31, 1997
Investment income:
Interest............................................... $107,663
Dividends.............................................. 89,380
----------
Total investment income........................... 197,043
----------
Expenses:
Management fees (note 3)............................... 18,318
Custodian fees (note 3)................................ 5,001
Directors' fees (note 3) .............................. 306
Professional fees...................................... 1,026
Accounting and transfer agent fees .................... 5,261
Other.................................................. 685
Total expenses.................................... 30,597
----------
Net investment income............................. $166,446
----------
Realized and unrealized gain on investments:
Net realized gain from investments ................... $3,690
Net increase in unrealized
appreciation on investments ...................... 32,219
----------
Net gain on investments........................... 35,909
----------
Net increase in net
assets from operations............................ $202,355
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
84
<PAGE> 76
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
STRATEGIC INCOME PORTFOLIO
- ----------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
From operations:
Net investment income ............................................... $166,446
Realized gain on investments......................................... 3,690
Unrealized gain on investments....................................... 32,219
-----------
Net increase in assets from operations............................. 202,355
-----------
Dividends and distributions to shareholders:
Dividends paid from net investment income............................ (165,770)
Capital gains distributions.......................................... (2,533)
-----------
Total dividends and distributions.................................. (168,303)
-----------
From capital share transactions (note 4):
Received from shares sold ........................................... 3,110,382
Received from dividends reinvested .................................. 168,303
Paid for shares redeemed ............................................ (62,246)
-----------
Increase in net assets derived from capital share transactions ..... 3,216,439
-----------
Increase in net assets ........................................... 3,205,491
Net Assets:
Beginning of period ................................................. 0
-----------
End of period (a) ................................................... $3,205,491
===========
(a) Includes undistributed net investment income of................... $676
===========
- ----------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
Per share data:
Net asset value, beginning of period.................................. $10.00
Income from investment operations:
Net investment income................................................ 0.71
Net realized and unrealized gain on investments...................... 0.13
-----------
Total income from investment operations............................. 0.84
-----------
Less distributions:
Dividends from net investment income ................................ (0.67)
Distributions from net realized capital gains........................ (0.01)
-----------
Total distributions................................................ (0.68)
-----------
Net asset value, end of period........................................ $10.16
===========
Total return.......................................................... 8.74%
Ratios and supplemental data:
Ratio of expenses to average net assets.............................. 1.30%
Ratio of net investment income to average net assets................. 7.04%
Portfolio turnover rate............................................... 102%
Average commission rate (a) .......................................... $0.04
Net assets at end of period (millions)................................ $3.2
(a) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold by the portfolio.
</TABLE>
The accompanying notes are an integral part of these financial statements.
85
<PAGE> 77
STELLAR PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
- ---------
The Stellar Portfolio seeks to maximize total return by investing approximately
15% to 25% of its assets in each of the following categories: domestic equities,
domestic bonds, foreign securities, real estate securities, and precious metal
and/or money market securities.
PERFORMANCE AS OF DECEMBER 31, 1997
- -----------------------------------
Average Annual Total Return:
Since inception (1/3/97) 9.70%
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
- --------
The latter half of 1997 was an ideal environment for the Stellar Portfolio. The
stock market advance stalled in early August, giving way to the formation of a
trading range in the broad indices. The Stellar Portfolio's asset mix served to
insulate investors from much of the volatility which enveloped the market. This
is the type of market for which the portfolio was intended. The REIT, bond and
cash-equivalent segments of the portfolio generated positive returns for the
period which served to offset the weakness in the domestic and international
equity holdings. The portfolio's allocation to fixed-income instruments rose the
second half of the year at the expense of international securities and cash
equivalents.
CHANGE IN VALUE OF $10,000 INVESTMENT
- -------------------------------------
1/97 12/97
Stellar Portfolio $10,000 $10,969
Lehman Bros. Government/Corp.
Index-Intermediate $10,000 10,777
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
- ---------------------------------------
% of Net Assets
1. FNMA 6.21% 11/07/07 3.6
2. Duke Energy Capital Trust Pfd 7.20% 2.4
3. John Hancock Patriot Premium
Dividend Fund II 2.1
4. US Treasury 7.5% 11/15/16 2.1
5. US Treasury 7.25% 5/15/04 1.9
6. US Treasury 6.75% 5/31/99 1.8
7. US Treasury 6.25% 7/31/98 1.8
8. American Express 1.4
9. Merrill Lynch Capital Trust II PFD 8% 1.4
10. New Jersey Economic Development
Auth. PFD. 7.6% 1.4
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1997
- ----------------------------------------
% of Net Assets
REIT's 20.3
US Treasuries 11.2
Closed-End Investment Companies 7.6
Utilities 4.6
Banking 4.0
87
<PAGE> 78
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
STELLAR PORTFOLIO
- ----------------------------------------------------------
SCHEDULE OF INVESTMENTS December 31, 1997
- ----------------------------------------------------------
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS VALUE
- ----------------------------------------------------------
<S> <C> <C>
FINANCIAL (19.8%)
$555,000 Star Bank 5.50% 01-02-98
repurchase price $555,170
collateralized by GNMA certificates
pool #8359
due 01-20-24 (Cost $555,000) $555,000
-----------
TOTAL REPURCHASE AGREEMENTS
(19.8%) (COST $555,000) $555,000
-----------
FACE MARKET
AMOUNT LONG-TERM BONDS & NOTES VALUE
- ----------------------------------------------------------
GOVERNMENT (11.2%)
$100,000 FNMA
6.210% 11-07-07 $101,100
50,000 US Treasury Bond
7.500% 11-15-16 58,344
50,000 US Treasury Note
6.250% 07-31-98 50,219
50,000 US Treasury Note
6.750% 05-31-99 50,734
50,000 US Treasury Note
7.250% 05-15-04 53,986
-----------
314,383
-----------
TOTAL LONG-TERM BONDS & NOTES
(11.2%) (COST $307,165) $314,383
-----------
- ----------------------------------------------------------
MARKET
SHARES U.S. COMMON STOCK VALUE
- ----------------------------------------------------------
<S> <C> <C>
AEROSPACE (0.3%)
150 BOEING CO. $7,341
-----------
AUTOMOTIVE AND RELATED (0.4%)
200 Paccar Inc. 10,500
-----------
BANKING (2.2%)
116 Banc One Corp. 6,300
100 Bankamerica Corp. 7,300
100 Bankboston Corp. 9,394
105 Charter One Financial Inc. 6,628
165 First Financial Bancorp 7,961
130 Fleet Financial 9,742
125 Popular Inc. 6,187
75 US Bancorp 8,395
-----------
61,907
-----------
BUSINESS SERVICES (0.2%)
150 Deluxe Corp. 5,175
-----------
CHEMICALS (0.5%)
100 Dow Chemical Co. 10,150
125 Lyondell Petro Chemical Co. 3,312
-----------
13,462
-----------
COMMUNICATIONS (0.2%)
150 MCI Communications Corp. 6,421
-----------
CONSUMER PRODUCTS (0.4%)
200 Alberto Culver Co. Cl. B 6,412
130 Snap On Inc. 5,671
-----------
12,083
-----------
<CAPTION>
- ----------------------------------------------------------
SHARES U.S. COMMON STOCK VALUE
- ----------------------------------------------------------
<S> <C> <C>
COMPUTER AND RELATED (2.3%)
450 *Cisco Systems Inc. $25,087
400 *Continental Circuits Corp. 5,575
100 Honeywell Inc. 6,850
300 Intel Corp. 21,075
100 *Seagate Technology 1,925
300 *Sybase Inc. 3,994
-----------
64,506
-----------
CONTAINERS (0.3%)
100 Aluminum Co. Amer. 7,037
-----------
DRUGS (0.3%)
75 Warner Lambert Co. 9,300
-----------
DURABLE GOODS (0.9%)
225 Nabisco Holdings Corp. CL A 10,898
300 Parker Hannifin Corp. 13,763
-----------
24,661
-----------
ELECTRICAL EQUIPMENT (0.9%)
150 *Altera Corporation 4,969
100 Johnson Controls Inc. 4,775
125 Sony Corp. 11,344
100 Thomas & Betts Corp. 4,725
-----------
25,813
-----------
FINANCIAL SERVICES (2.0%)
450 American Express Co. 40,162
50 Household Financial 6,378
150 Dean Whitter Discover 8,869
-----------
55,409
-----------
FOOD AND RELATED (0.7%)
300 Flemming Cos. 4,031
75 General Mills Inc. 5,372
150 Pepsico Inc. 5,466
100 Sara Lee Corp. 5,631
-----------
20,500
-----------
200 HOTELS/LODGING (0.2%)
Hilton Hotels Corp. 5,950
-----------
HOUSING, FURNITURE & RELATED (0.2%)
200 Sherwin Williams Co. 5,550
-----------
INDUSTRIAL SERVICES (0.3%)
130 Ecolab Inc. 7,207
-----------
INSURANCE SERVICES (0.6%)
112 AON Corp. 6,566
75 ITT Hartford 7,017
100 Ohio Casualty Corp. 4,463
-----------
18,046
-----------
MEDIA AND PUBLISHING (0.2%)
100 Times Mirror Co. 6,150
-----------
MEDICAL AND RELATED (0.9%)
300 *Quorum Health Group 7,837
150 *Sofamore/Danek Group Inc. 9,759
225 *Tenet Healthcare Corp. 7,453
-----------
25,049
-----------
METALS AND MINING (0.2%)
350 AK Steel Holding Corp. 6,191
-----------
</TABLE>
(continued)
88
<PAGE> 79
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
STELLAR PORTFOLIO (CONTINUED)
- -------------------------------------------------------------
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------
MARKET
SHARES U.S. COMMON STOCK VALUE
- -------------------------------------------------------------
<S> <C> <C>
OIL, ENERGY AND NATURAL GAS (2.9%)
475 *BJ Services Co. $34,170
100 Diamond Offshore Drilling 4,813
200 Ensco International Inc. 6,700
300 *Global Marine Inc. 7,350
200 *Rowan Cos. Inc. 6,100
150 Santa Fe Pacific Pipeline LP 6,862
200 Texaco Inc. 10,875
125 Unocal Corp. 4,852
-----------
81,722
-----------
RESTAURANTS (0.0%)
15 *Tricon Global Restaurants 436
-----------
RETAIL (1.8%)
200 American Stores Co. 4,113
125 Dayton Hudson Corp. 8,437
188 Gap Inc. 6,644
548 Pier 1 Imports Inc. 12,387
6,500 *Roberds Inc. 19,500
-----------
51,081
-----------
TRANSPORTATION (0.6%)
700 *Genesee & Wyoming Inc. 16,363
-----------
TOTAL COMMON STOCK
(19.5%) (COST $488,369) $ 547,860
-----------
- -------------------------------------------------------------
REAL ESTATE MARKET
SHARES INVESTMENT TRUSTS VALUE
- -------------------------------------------------------------
<S> <C> <C>
650 Avalon Properties Inc. $20,109
750 Bay Apartment Communities 29,250
500 Camden Property 15,500
700 Centerpoint Properties Corp. 24,588
600 Federal Realty Investments 15,450
1,000 Glimcher Realty 22,562
900 Highwoods Property 33,469
800 Kilroy Realty Corp. 23,000
700 Kimco Realty Corp. 24,675
675 Liberty Property 19,280
900 LTC Properties Inc. 18,675
525 Mack Cali Realty Corp. 21,525
850 Manufactured Home Communities 22,950
450 Meditrust 16,481
800 New Plan Realty 20,400
550 Omega Healthcare Investments 21,244
800 Reckson Assoc. Realty Corp. 20,300
1,050 RFS Hotel Investments 20,934
885 Security Capital Pacific Trust 21,461
700 Simon DeBartolo Group Inc. 22,881
1,200 Sizeler Property Investments 12,600
600 Starwood Lodging 34,725
650 Storage Trust Realty 17,103
350 Storage USA Inc. 13,978
800 Summit Property Inc. 16,900
600 Sun Communities 21,563
400 Weingarten Realty Investments 17,925
-----------
569,528
-----------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(20.3%) (COST $511,888) $ 569,528
-----------
- -------------------------------------------------------------
CLOSED-END MARKET
SHARES INVESTMENT COMPANIES VALUE
- -------------------------------------------------------------
<S> <C> <C>
500 Argentina Fund Inc. $6,531
300 Brazil Fund Inc. 6,300
800 Chile Fund Inc. 14,250
875 First Commonwealth Fund Inc. 10,555
5,000 Hancock Patriot Prem. Div. Fd. II 59,062
2,200 *Japan Webs Index Series 21,725
5,000 Kleinworth Benson Austral. Inc. Fd. 38,437
650 Mexico Fund Inc. 13,366
300 Templeton Emerging Mkts. Fd. 5,119
5,000 Templeton Global Govts. Fund 36,562
-----------
211,907
-----------
TOTAL CLOSED END INVESTMENT CO.
(7.6%) (COST $226,200) $211,907
-----------
<CAPTION>
- -------------------------------------------------------------
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -------------------------------------------------------------
<S> <C> <C>
ARGENTINA (0.2%)
200 YPF Sociedad Anonima Spon ADR $6,838
-----------
AUSTRALIA (0.9%)
350 Nat'l. Australia Bank LTD ADR 24,719
-----------
CANADA (1.9%)
500 Alcan Aluminum Ltd. 13,813
775 Canadian Pacific Ltd. 21,119
550 Seagram Co. Ltd. 17,772
-----------
52,704
-----------
DENMARK (1.3%)
500 Novo-Nordisk AS ADR 36,188
-----------
FINLAND (0.2%)
100 Nokia Corp. Sponsored ADR 7,000
-----------
GERMANY (0.6%)
250 Daimler Benz AG Spon ADR 18,062
-----------
GREAT BRITAIN (1.3%)
850 Cable & Wireless Pub. Ltd. 23,109
175 Vodafone Group Spon. ADR 12,688
-----------
35,797
-----------
HOLLAND (2.1%)
350 Phillips NV 21,175
700 Royal Dutch Petroleum Co. 37,931
-----------
59,106
-----------
ITALY (0.4%)
175 Luxottica Group ADR 10,938
-----------
JAPAN (0.3%)
100 Hitachi Ltd. ADR 6,919
-----------
NORWAY (0.6%)
350 Norsk Hydro AS Spon ADR 17,850
-----------
SPAIN (1.6%)
250 Banco de Santander ADR 8,141
850 Repsol SA Spon. ADR 36,178
-----------
44,319
-----------
(continued)
</TABLE>
89
<PAGE> 80
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
STELLAR PORTFOLIO (CONTINUED)
- -----------------------------------------------------------
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
- -----------------------------------------------------------
MARKET
SHARES FOREIGN COMMON STOCK VALUE
- -----------------------------------------------------------
<S> <C> <C>
Sweden (0.7%)
737 Volvo Aktiebolaget Ser B ADR $19,899
----------
TOTAL FOREIGN COMMON STOCK
(12.1%) (COST $302,115) $340,339
----------
MARKET
SHARES PREFERRED STOCK VALUE
- ----------------------------------------------------------
<S> <C> <C>
BANKING (1.8%)
1,000 Banco Bilbao Vizcaya 8.000% $26,000
1,000 BankUnited Cap II 9.600% 26,188
----------
52,188
----------
FINANCIAL SERVICES (1.4%)
1,500 Merrill Lynch Cap Trust II 8.000% 40,125
----------
GOVERNMENT (1.4%)
1,500 New Jersey Economic Dev. 7.600% 39,000
----------
MARKET
SHARES PREFERRED STOCK VALUE
- ----------------------------------------------------------
<S> <C> <C>
UTILITIES (4.6%)
2,600 Duke Energy Cap Trust I $66,300
1,200 HL&P Cap Trust I 8.125% 30,975
1,200 Northern States Power 7.875% 31,200
----------
128,475
----------
TOTAL PREFERRED STOCK
(9.2%) (COST $250,000) $259,788
----------
<CAPTION>
- ----------------------------------------------------------
MARKET
SHARES WARRANTS VALUE
- ----------------------------------------------------------
<S> <C> <C>
46 Security Cap GRP-B $242
----------
TOTAL WARRANTS
(0.0%) (COST $242) $242
----------
TOTAL HOLDINGS
(COST $2,640,979) $2,799,049
==========
<FN>
*Non-income producing securities.
(a) Also represents cost for Federal income tax purposes.
</TABLE>
The accompanying notes are an integral part of these financial statements.
90
<PAGE> 81
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
STELLAR PORTFOLIO
- ---------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- ---------------------------------------------------------------------
DECEMBER 31, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $2,640,979) ....................... $2,799,047
Cash in bank ............................................ 574
Dividends and accrued interest receivable ............... 12,993
----------
Total assets ........................................... 2,812,614
----------
Liabilities:
Payable for investment management
services (note 3) ...................................... 2,497
Other accrued expenses .................................. 3,569
----------
Total liabilities ...................................... 6,066
----------
Net assets at market value $2,806,548
==========
Net assets consist of:
Par value, $1 per share ................................. $263,528
Paid-in capital in excess of par value .................. 2,396,631
Accumulated undistributed net realized
loss on investments (note 1) ........................... (11,917)
Net unrealized appreciation on investments (note 1)...... 158,068
Undistributed net investment income ..................... 238
----------
Net assets at market value $2,806,548
==========
Shares outstanding (note 4)............................... 263,528
Net asset value per share................................. $10.65
==========
<CAPTION>
- ---------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ---------------------------------------------------------------------
<S> <C>
JANUARY 3, 1997 TO
DECEMBER 31, 1997
Investment income:
Interest................................................ $42,646
Dividends............................................... 67,220
----------
Total investment income................................ 109,866
----------
Expenses:
Management fees (note 3)................................ 23,440
Custodian fees (note 3)................................. 5,001
Directors' fees (note 3) ............................... 306
Professional fees....................................... 1,026
Accounting and transfer agent fees ..................... 6,261
Other................................................... 676
----------
Total expenses......................................... 36,710
----------
Net investment income ................................. $73,156
----------
Realized and unrealized gain (loss) on investments:
Net realized loss from investments ..................... ($11,917)
Net increase in unrealized
appreciation on investments ........................... 158,068
----------
Net gain on investments............................... 146,151
----------
Net increase in net
assets from operations................................ $219,307
==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
91
<PAGE> 82
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
STELLAR PORTFOLIO
- ---------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
From operations:
Net investment income ............................................. $73,156
Realized loss on investments....................................... (11,917)
Unrealized gain on investments..................................... 158,068
------------
Net increase in assets from operations........................... 219,307
------------
Dividends and distributions to shareholders:
Dividends paid from net investment income.......................... (72,918)
------------
From capital share transactions (note 4):
Received from shares sold ......................................... 2,644,507
Received from dividends reinvested ................................ 72,918
Paid for shares redeemed .......................................... (57,267)
------------
Increase in net assets derived from capital share transactions ... 2,660,158
------------
Increase in net assets ......................................... 2,806,548
Net Assets:
Beginning of period ............................................... 0
------------
End of period (a) ................................................. $2,806,548
============
(a) Includes undistributed net investment income of................... $238
============
<CAPTION>
- ---------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
Per share data:
Net asset value, beginning of period................................ $10.00
Income from investment operations:
Net investment income.............................................. 0.32
Net realized and unrealized gain on investments ................... 0.64
------------
Total income from investment operations........................... 0.96
------------
Less distributions:
Dividends from net investment income .............................. (0.31)
------------
Net asset value, end of period...................................... $10.65
============
Total return........................................................ 9.70%
Ratios and supplemental data:
Ratio of expenses to average net assets............................ 1.54%
Ratio of net investment income to average net assets............... 3.07%
Portfolio turnover rate............................................. 17%
Average commission rate (a)......................................... $0.18
Net assets at end of period (millions).............................. $2.8
(a) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold by
the portfolio.
The accompanying notes are an integral part of these financial statements.
</TABLE>
92
<PAGE> 83
RELATIVE VALUE PORTFOLIO
OHIO NATIONAL FUND, INC.
OBJECTIVE
- ---------
The Relative Value Portfolio seeks the highest total return as is consistent
with reasonable risk by investing in stocks deemed to represent characteristics
with low volatility, above-average yields and are undervalued relative to the
stocks comprising the S&P Composite Stock Index.
PERFORMANCE AS OF DECEMBER 31, 1997
- -----------------------------------
Average Annual Total Return:
Since inception (1/3/97) 28.28%
Returns represent past performance, which is no guarantee of future results.
Investment return and principal value will vary so that shares, when redeemed,
may be worth more or less than their original cost. Actual results for variable
annuity and variable universal life contracts will be lower due to contract
charges. Consult your contract for applicable charges for mortality and
expenses.
COMMENTS
- --------
The Relative Value Portfolio posted performance in line with the S&P 500 Index
during the latter half of 1997. This was achieved despite the stock market
turmoil caused by economic events in Asia. The most notable effect on the
portfolio's holdings were sharp price declines in technology and energy related
issues.
The portfolio is well positioned for the market conditions prevailing at the
start of 1998 as investors are displaying a distinct preference for large,
stable companies with visible earnings potential for the current year. The
portfolio continues to focus on the successful themes of the last two years,
consolidation trends in financial services and the impact of an aging population
on health care and services spending.
CHANGE IN VALUE OF $10,000 INVESTMENT
- -------------------------------------
1/97 12/97
Relative Value Portfolio $10,000 $12,828
S&P 500 Index $10,000 $13,996
Hypothetical illustration based on past performance. Future performance will
vary. All returns reflect reinvested dividends. The portfolio's holdings may
differ significantly from the securities in the index. The index is unmanaged
and therefore does not reflect the cost of portfolio management or trading.
Neither the portfolio nor the index is open to direct investment.
TOP 10 HOLDINGS AS OF DECEMBER 31, 1997
- ---------------------------------------
% of Net Assets
1. Proctor & Gamble 4.6
2. IBM 4.6
3. Intel 4.5
4. Dow Chemical 4.4
5. Smithkline Beecham 3.6
6. Texaco 3.3
7. AT&T 3.2
8. Phillip Morris 3.0
9. Bristol Myers Squibb 3.0
10. Merck & Co. Inc 3.0
TOP 5 INDUSTRIES AS OF DECEMBER 31, 1997
- ----------------------------------------
% of Net Assets
Oil, Energy, and Natural Gas 12.9
Drugs 11.9
Consumer Products 10.9
Computer and Related 10.5
Communications 9.3
93
<PAGE> 84
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
RELATIVE VALUE PORTFOLIO
- ----------------------------------------------------------------
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
- ----------------------------------------------------------------
Face Market
Amount Repurchase Agreements Value
- ----------------------------------------------------------------
<S> <C> <C>
Financial (14.6%)
$836,000 Star Bank 5.50% due 01-02-98
repurchase price $836,255
collateralized by GNMA certificates
pool #8359
due 01-20-24 (cost $836,000) $836,000
-----------
TOTAL REPURCHASE AGREEMENTS
(14.6) (COST $836,000) $836,000
-----------
<CAPTION>
- ----------------------------------------------------------------
MARKET
SHARES COMMON STOCK VALUE
- ----------------------------------------------------------------
<S> <C> <C>
AEROSPACE (5.3%)
2,000 Allied Signal Inc. $77,875
1,500 Lockheed Martin Corp. 147,750
1,500 Raytheon Co. Class B 75,469
-----------
301,094
-----------
AUTOMOTIVE & RELATED (4.4%)
1,500 Ford Motor Co. 73,031
1,000 General Motors Corp. 60,625
1,900 Goodyear Tire & Rubber Co. 120,887
-----------
254,543
-----------
BANKING (4.5%)
250 Citicorp 31,609
440 First Financial Bancorp 21,230
1,000 Mellon Bank Corp. 60,861
250 National Australia Bank Ltd. ADR 17,656
1,000 Nationsbank Corp. 60,813
2,000 TCF Financial Corp. 67,875
-----------
260,044
-----------
CHEMICALS (5.8%)
2,500 Dow Chemical Co. 253,750
3,000 Lyondell Petrochemical Co. 79,500
-----------
333,250
-----------
COMMUNICATIONS (9.3%)
3,000 AT&T Corp. 183,750
4,500 Cincinnati Bell Inc. 139,500
800 Cable & Wireless Co. ADR 21,750
500 Lucent Technologies Inc. 39,938
2,000 Motorola Inc. 114,083
500 Vodafone Group PLC ADR 36,250
-----------
535,271
-----------
COMPUTER & RELATED (10.5%)
1,200 Honeywell Inc. 82,082
3,700 Intel Corp. 259,925
2,500 International Business Machines 261,406
-----------
603,413
-----------
<CAPTION>
- ----------------------------------------------------------------
MARKET
SHARES COMMON STOCK VALUE
- ----------------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS (10.9%)
1,000 Fortune Brands $37,062
1,400 Gillette Co. 150,228
3,800 Philip Morris Cos. Inc. 172,188
3,300 Procter & Gamble Co. 263,381
-----------
622,859
-----------
DRUGS (11.9%)
1,800 American Home Products Corp. 137,700
1,800 Bristol Myers Squibb Co. 170,325
1,600 Merck & Co. Inc. 170,000
4,000 Smithkline Beecham PLC ADR 205,750
-----------
683,775
-----------
ELECTRICAL EQUIPMENT (3.3%)
1,900 General Electric Co. 139,595
1,000 Johnson Controls Inc. 47,750
64 Raytheon Co. Class A 3,157
-----------
190,502
-----------
FINANCIAL SERVICES (3.5%)
1,100 American Express Co. 98,175
2,000 Lehman Brothers Holdings Inc. 102,000
-----------
200,175
-----------
INSURANCE SERVICES (5.7%)
1,500 American Bankers Ins. Group Inc. 68,906
450 Cincinnati Financial Corp. 63,337
1,700 Ohio Casualty Corp. 75,862
2,200 Travelers Group Inc. 118,525
-----------
326,630
-----------
OIL, ENERGY & NATURAL GAS (12.9%)
2,500 Ashland Inc. 134,219
2,600 Halliburton Co. 135,038
2,000 Mobil Corp. 144,375
2,500 Royal Dutch Petroleum 135,469
3,500 Texaco Inc. 190,312
-----------
739,413
-----------
RETAIL (4.6%)
2,500 JC Penny Inc. 150,781
2,500 Sears Roebuck & Co. 113,125
-----------
263,906
-----------
TRANSPORTATION & EQUIPMENT (1.0%)
200 Burlington Northern Santa Fe Corp. 18,587
1,500 Comair Holdings Inc. 36,187
-----------
54,774
-----------
UTILITIES (4.1%)
2,500 GPU Inc. 105,313
2,200 GTE Corp. 114,950
300 Ohio Gas Corp. 13,406
-----------
233,669
-----------
TOTAL COMMON STOCK
(97.7%) (COST $4,839,264) $5,603,318
-----------
TOTAL HOLDINGS
(COST $5,675,264) (a) $6,439,318
===========
(a) Also represents cost for Federal income tax purposes.
</TABLE>
The accompanying notes are an integral part of these financial statements.
94
<PAGE> 85
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
RELATIVE VALUE PORTFOLIO
- --------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------
DECEMBER 31, 1997
<S> <C>
Assets:
Investments in securities at market
value (note 1) (cost $5,675,264) ....................... $6,439,318
Cash in bank ............................................ 520
Receivable for fund shares sold.......................... 5,240
Dividends and accrued interest receivable ............... 8,756
----------
Total assets ........................................... 6,453,834
----------
Liabilities:
Payable for securities purchased......................... 713,206
Payable for investment management
services (note 3) ...................................... 4,408
Other accrued expenses .................................. 2,923
----------
Total liabilities ...................................... 720,537
----------
Net assets at market value $5,733,297
==========
Net assets consist of:
Par value, $1 per share ................................. $452,268
Paid-in capital in excess of par value .................. 4,519,245
Accumulated undistributed net realized
loss on investments (note 1) ........................... (2,446)
Net unrealized appreciation on investments (note 1)...... 764,054
Undistributed net investment income ..................... 176
----------
Net assets at market value $5,733,297
==========
Shares outstanding (note 4)............................... 452,268
Net asset value per share................................. $12.68
==========
<CAPTION>
- --------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------
JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
Investment income:
Interest............................................. $27,295
Dividends............................................ 62,497
----------
Total investment income............................. 89,792
----------
Expenses:
Management fees (note 3)............................. 30,639
Custodian fees (note 3).............................. 5,001
Directors' fees (note 3) ............................ 306
Professional fees.................................... 1,026
Accounting and transfer agent fees .................. 4,261
Other................................................ 718
----------
Total expenses...................................... 41,951
----------
Net investment income............................... $47,841
----------
Realized and unrealized gain (loss) on investments:
Net realized loss from investments .................. ($2,446)
Net increase in unrealized
appreciation on investments ........................ 764,054
----------
Net gain on investments............................ 761,608
----------
Net increase in net
assets from operations............................. $ 809,449
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
95
<PAGE> 86
<TABLE>
<CAPTION>
OHIO NATIONAL FUND, INC.
RELATIVE VALUE PORTFOLIO
- ---------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
From operations:
Net investment income ................................................ $47,841
Realized loss on investments.......................................... (2,446)
Unrealized gain on investments........................................ 764,054
------------
Net increase in assets from operations.............................. 809,449
------------
Dividends and distributions to shareholders:
Dividends paid from net investment income............................. (47,665)
------------
From capital share transactions (note 4):
Received from shares sold ............................................ 5,066,632
Received from dividends reinvested ................................... 47,665
Paid for shares redeemed ............................................. (142,784)
------------
Increase in net assets derived from capital share transactions ...... 4,971,513
------------
Increase in net assets ............................................ 5,733,297
Net Assets:
Beginning of period .................................................. 0
------------
End of period (a) .................................................... $5,733,297
============
(a) Includes undistributed net investment income of...................... $176
============
<CAPTION>
- ---------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------
FOR THE PERIOD FROM JANUARY 3, 1997 TO DECEMBER 31, 1997
<S> <C>
Per share data:
Net asset value, beginning of period..................................... $10.00
Income from investment operations:
Net investment income................................................. 0.16
Net realized and unrealized gain on investments....................... 2.66
------------
Total income from investment operations.............................. 2.82
------------
Less distributions:
Dividends from net investment income ................................. (0.14)
------------
Net asset value, end of period........................................... $12.68
============
Total return............................................................. 28.28%
Ratios and supplemental data:
Ratio of expenses to average net assets............................... 1.18%
Ratio of net investment income to average net assets.................. 1.35%
Portfolio turnover rate.................................................. 7%
Average commission rate (a) ............................................. $0.24
Net assets at end of period (millions)................................... $5.7
(a) Represents the total dollar amount of commissions paid on equity security
transactions divided by the total number of shares purchased and sold by
the portfolio.
</TABLE>
The accompanying notes are an integral part of these financial statements.
96
<PAGE> 87
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
(1) BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Ohio National Fund, Inc. (Fund) is registered under the Investment Company
Act of 1940 as amended (the "1940 Act"), as a diversified, open-end
management investment company. The Fund is a series investment company which
consists of sixteen separate investment portfolios that seek the following
investment objectives:
EQUITY PORTFOLIO - long-term growth of capital by investing principally in
common stocks or other equity securities. Current income is a secondary
objective.
MONEY MARKET PORTFOLIO - maximum current income consistent with preservation
of capital and liquidity by investing in high quality money market
instruments.
BOND PORTFOLIO - high level of return consistent with preservation of
capital by investing primarily in high quality intermediate and long-term
debt securities.
OMNI PORTFOLIO - high level of long-term total return consistent with
preservation of capital by investing in stocks, bonds, and money market
instruments.
INTERNATIONAL PORTFOLIO - long-term capital growth by investing primarily in
common stocks of foreign companies.
CAPITAL APPRECIATION PORTFOLIO - maximum capital growth by investing
primarily in common stocks that are (1) considered to be undervalued or
temporarily out of favor with investors, or (2) expected to increase in
price over the short term.
SMALL CAP PORTFOLIO - maximum capital growth by investing primarily in
common stocks of small- and medium-sized companies.
GLOBAL CONTRARIAN PORTFOLIO - long-term growth of capital by investing in
foreign and domestic securities believed to be undervalued or presently out
of favor.
AGGRESSIVE GROWTH PORTFOLIO - capital growth.
The following portfolios commenced operations on January 3, 1997:
CORE GROWTH PORTFOLIO - long-term capital appreciation.
GROWTH & INCOME PORTFOLIO - long-term total return by investing in equity
and debt securities focusing on small- and mid-cap companies that offer
potential for capital appreciation, current income, or both.
S&P 500 INDEX PORTFOLIO - total return that approximates that of the
Standard & Poor's 500 Index ("S&P 500") by investing in common stocks and in
stock index futures contracts hedged by U.S. Government obligations,
investment grade corporate bonds and cash equivalents.
SOCIAL AWARENESS PORTFOLIO - long-term capital growth by investing primarily
in common stocks and other equity securities of companies that, in the
Advisor's opinion, conduct their business in a way that enhances society's
quality of life.
STRATEGIC INCOME PORTFOLIO - high current income by investing at least 40%
of its assets in a core group of U.S. government and corporate fixed income
securities and the remainder in other income producing securities.
STELLAR PORTFOLIO - maximum total return by investing in domestic and
foreign securities (equity and fixed income), real estate, precious metal
securities, and money market securities.
RELATIVE VALUE PORTFOLIO - maximum total return consistent with reasonable
risk by investing primarily in equity securities.
The following is a summary of significant accounting policies:
Investments in the Money Market Portfolio are valued at amortized cost in
accordance with Rule 2a-7, which approximates market value. All net
investment income of the Money Market Portfolio is declared and paid daily
as a dividend to shareholders immediately before the computation of the net
asset value of Money Market Portfolio shares. Dividends are automatically
reinvested in additional Money Market Portfolio shares at the net asset
value immediately following such computation. Distributions arising from net
investment income from the remaining portfolios are declared and paid to
shareholders quarterly and are recorded on the ex-dividend date.
Distributions arising from accumulated net realized capital gains are
recorded on the ex-dividend date and are distributed to shareholders at
least once a year.
For all other portfolios, securities which are traded on U.S. and foreign
stock exchanges or in the over-the-counter markets are valued at the last
sale price or, if there has been no sale that day, at the last bid reported
as of 4:00 p.m. Eastern time on each day the New York Stock Exchange is open
for unrestricted trading. Over-the-counter securities are valued at the last
bid price as of the close of trading on the Exchange. Short-term investments
(investments with remaining maturities of 60 days or less) are valued at
amortized cost and fixed income securities are valued by using market
quotations, or independent pricing services which use prices provided by
market makers or estimates of market value obtained
97
<PAGE> 88
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997
from yield data relating to instruments or securities with similar
characteristics. All investments and cash quoted in foreign currencies are
valued daily in U.S. dollars on the basis of the foreign currency exchange rates
prevailing at the time of such valuation.
Foreign currency exchange rates are generally determined prior to 4:00 p.m.
Eastern time. Occasionally, events affecting the value of foreign investments
and such exchange rates occur between the time at which they are determined and
the time of valuation, which in the case of the International, Small Cap, Global
Contrarian, Aggressive Growth, and Stellar Portfolios, would not be reflected in
the computation of the portfolios' net asset value. If events materially
affecting the value of such securities or currency exchange rates occurred
during such time period, the securities are valued at their fair value as
determined in good faith by or under the direction of the Fund's Board of
Directors.
In connection with purchases and sales of securities denominated in foreign
currencies, the Fund may enter into forward foreign currency exchange contracts
(forward contracts). A forward contract is a commitment to purchase or sell a
foreign currency at a future date, at a negotiated rate. Additionally, the Fund
may enter into such contracts to hedge certain other foreign currency
denominated investments. These contracts are recorded at market value, and the
related realized and unrealized foreign exchange gains and losses are included
in the statement of operations. In the event that counterparties fail to settle
these currency contracts or the related foreign security trades, the Fund could
be exposed to foreign currency fluctuations.
Each portfolio other than the Money Market Portfolio may (a) write call options
traded on a registered national securities exchange if such portfolio owns the
underlying securities subject to such options, and purchase call options for the
purpose of closing out positions it has written, (b) purchase put options on
securities owned, and sell such options in order to close its positions in put
options, (c) purchase and sell financial futures and options thereon, and (d)
purchase and sell financial index options; provided, however, that no option or
futures contract shall be purchased or sold if, as a result, more than one-third
of the total assets of the portfolio would be hedged by options or futures
contracts, and no more than 5% of any portfolio's total assets, at market value,
may be used for premiums on open options and initial margin deposits on futures
contracts. Options are recorded at market value, and the related realized and
unrealized gains and losses are included in the statement of operations. The
portfolios making use of options bear the market risk of an unfavorable change
in the price of any security underlying the options.
The Fund may invest in two kinds of financial futures contracts: stock index
futures contracts and interest rate futures contracts. Stock index futures
contracts are contracts developed by and traded on national commodity exchanges
whereby the buyer will, on a specified future date, pay or receive a final cash
payment equal to the difference between the actual value of the stock index on
the last day of the contract and the value of the stock index established by the
contract multiplied by the specific dollar amount set by the exchange. Futures
contracts may be based on broad-based stock indexes such as the Standard &
Poor's 500 Index or on narrow-based stock indexes. A particular index will be
selected according to Ohio National Investments, Inc.'s ("ONI's"), the
investment advisor to the Fund, investment strategy for the particular
portfolio. The Fund may enter into such contracts to reduce the risk of
fluctuation of portfolio securities values or to take advantage of expected
market fluctuations.
The S&P 500 Index Portfolio currently holds investments in S&P 500 Index Futures
Contracts. The contracts in the S&P 500 Index Portfolio are fully hedged with
commercial paper and/or US Treasuries. The futures contracts in the S&P 500
Index Portfolio at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
EXPIRATION UNDERLYING FACE UNREALIZED CASH DEPOSITED
PURCHASED DATE AMOUNT AT VALUE GAIN AS MARGIN REQUIREMENT
--------- ---- --------------- ---- ---------------------
<S> <C> <C> <C> <C>
45 S&P 500 Index Contracts March `98 $11,014,875 $109,325 $452,250
</TABLE>
Securities transactions are recorded on a trade date basis. Dividend income is
recognized on the ex-dividend date (except in the case of foreign securities in
the International, Small Cap, Global Contrarian, Aggressive Growth, and Stellar
Portfolios, in which dividends are recorded as soon after the ex-dividend date
as the fund becomes aware of such dividends), and interest income is accrued
daily as earned. Net realized gain or loss on investments and foreign exchange
transactions are determined using the first-in, first-out method except in the
case of the Aggressive Growth and Growth and Income Portfolios in which the
identified cost basis is used.
98
<PAGE> 89
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31,1997
The books and records of all the portfolios are maintained in U.S. dollars.
Foreign currency amounts in the International, Small Cap, Global Contrarian,
Aggressive Growth and Stellar Portfolios are translated into U.S. dollars on the
following basis:
(1) market value of investments, other assets and liabilities--at exchange rates
prevailing at the end of the period.
(2) purchases and sales of investments, income and expenses--at the rates of
exchange prevailing on the respective dates of such transaction.
Although the net assets and the market value of the portfolios are presented at
the foreign exchange rates at the end of the period, the portfolios do not
generally isolate the effect of fluctuations in foreign exchange rates from the
effect of changes in the market price of the investments. However, for tax
purposes, the portfolios do isolate the effect of fluctuations in foreign
exchange rates when determining the gain or loss upon sale or maturity of
foreign-currency denominated debt obligations pursuant to Federal income tax
regulations.
Foreign investment and currency transactions may involve certain considerations
and risks not typically associated with investing in U.S. companies and the U.S.
Government. These risks, including re-evaluation of currency and future adverse
political and economic developments, could cause investments and their markets
to be less liquid and prices more volatile than those of comparable U.S.
companies and the U.S. Government.
Each portfolio may acquire repurchase agreements from member banks of the
Federal Reserve System which ONI deems creditworthy under guidelines approved by
the Board of Directors, subject to the seller's agreement to repurchase such
securities at a mutually agreed upon date and price. The repurchase price
generally equals the price paid by the portfolio plus interest negotiated on the
basis of current short-term rates, which may be more or less than the rate on
the underlying portfolio securities. The seller, under a repurchase agreement,
is required to maintain as collateral for the repurchase transaction securities
in which the portfolio has a perfected security interest with a value not less
than 100% of the repurchase price (including accrued interest). Securities
subject to repurchase agreements are held by the Fund's custodian or another
qualified custodian or in the Federal Reserve/Treasury book-entry system.
Repurchase agreements are considered to be loans by the portfolio under the 1940
Act.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily due to wash sales and net
operating losses. The character of distributions made during the period from net
investment income or net realized gains, if any, may differ from their ultimate
characterization for federal income tax purposes. On the statement of assets and
liabilities, as a result of permanent book-to-tax differences, the following
reclassifications were made in the Small Cap, Aggressive Growth, and Core Growth
Portfolios: accumulated net investment loss has been decreased by $47,515,
$61,720, and $11,892, respectively, resulting in a reclassification adjustment
to decrease Paid-in capital in excess of par value by $47,515, $61,720, $11,892
respectively. This reclassification has no effect on net assets or net asset
value per share.
For Federal income tax purposes, the Bond, Core Growth, Stellar, and Relative
Value Portfolios had capital loss carryovers of $44,128, $447,567, $11,917, and
$2,446 respectively, at December 31, 1997. If not offset by capital gains,
$44,128 will expire in 2003 in the Bond Portfolio and $447,567, $11,917 and
$2,446 will expire in 2005 in the Core Growth , Stellar, and Relative Value
Portfolios, respectively. The Board of Directors does not intend to authorize a
distribution of any net realized gain for a portfolio until the capital loss
carryover has been offset or expires.
It is the policy of the Fund to distribute to its shareholders substantially all
of its taxable income, thus gaining relief from Federal income taxes under
provisions of current tax regulations applicable to investment companies of this
type. Accordingly, no provision for Federal income taxes has been made.
Most expenses of the Fund can be directly attributed to a portfolio. Expenses
which cannot be directly attributed are allocated among the portfolios in the
Fund based on average net assets.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates.
99
<PAGE> 90
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997
The gross unrealized appreciation and depreciation on investments in each
portfolio as of December 31, 1997 were as follows:
<TABLE>
<CAPTION>
CAPITAL
EQUITY BOND OMNI INTERNATIONAL APPRECIATION
------ ---- ---- ------------- ------------
Gross unrealized:
<S> <C> <C> <C> <C> <C>
Appreciation ................ $ 112,741,538 $ 867,745 $ 53,608,168 $ 12,386,726 $ 8,034,627
Depreciation ................ (7,098,840) (129,221) (4,163,559) (20,388,282) (1,229,894)
Net Unrealized:
Appreciation (Depreciation) 105,642,698 738,524 49,444,609 (8,001,556) 6,804,733
<CAPTION>
SMALL GLOBAL AGGRESSIVE CORE GROWTH &
CAP CONTRARIAN GROWTH GROWTH INCOME
--- ---------- ------ ------ ------
Gross unrealized:
Appreciation ................ $ 10,883,929 $ 1,963,452 $ 2,090,950 $ 965,041 $ 1,538,146
Depreciation ................ (2,508,818) (1,327,211) (1,226,332) (566,046) (422,652)
Net Unrealized:
Appreciation .............. 8,375,111 636,241 864,618 398,995 1,115,494
<CAPTION>
SOCIAL STRATEGIC RELATIVE
S&P 500 AWARENESS INCOME STELLAR VALUE
------- --------- ------ ------- -----
Gross unrealized:
<S> <C> <C> <C> <C> <C>
Appreciation ................ $ 551,681 $ 373,344 $ 83,912 $ 235,848 $ 773,749
Depreciation ................ (321,963) (266,887) (51,693) (77,780) (9,695)
Net Unrealized:
Appreciation .............. 229,718 106,457 32,219 158,068 764,054
</TABLE>
100
<PAGE> 91
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term
securities) for the year ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
CAPITAL
EQUITY BOND OMNI INTERNATIONAL APPRECIATION
------ ---- ---- ------------- ------------
<S> <C> <C> <C> <C> <C>
Stocks & Bonds:
Purchases ................... $ 59,212,911 $ 1,893,703 $ 44,555,591 $ 35,070,994 $ 28,652,383
Sales ....................... 43,527,581 174,282 25,737,517 31,113,950 16,673,986
U.S. Government
Obligations:
Purchases ................... -- -- -- -- 325,518
Sales ....................... -- 500,000 -- -- 200,000
<CAPTION>
SMALL GLOBAL AGGRESSIVE CORE GROWTH &
CAP CONTRARIAN GROWTH GROWTH INCOME
--- ---------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Stocks & Bonds:
Purchases ................... $ 40,854,656 $ 7,779,954 $ 33,548,156 $ 12,743,178 $ 28,887,177
Sales ....................... 33,177,017 3,014,504 29,031,056 4,163,673 14,975,341
U.S. Government
Obligations:
Purchases ................... -- -- 152,392 -- 27,891
Sales ....................... -- -- 53,918 -- 31,597
<CAPTION>
SOCIAL STRATEGIC RELATIVE
S&P 500 AWARENESS INCOME STELLAR VALUE
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Stocks & Bonds:
Purchases ................... $ 42,242,336 $ 5,887,582 $ 4,555,901 $ 3,526,140 $ 4,916,888
Sales ....................... 32,912,078 1,939,957 2,238,696 314,967 244,172
U.S. Government
Obligations:
Purchases ................... -- -- 714,609 721,054 --
Sales ....................... -- -- 140,399 -- --
</TABLE>
(3) INVESTMENT ADVISORY AGREEMENT, SUB-ADVISORY AGREEMENTS AND
TRANSACTIONS WITH AFFILIATED PERSONS
The Fund has an investment advisory agreement with Ohio National
Investments, Inc. ("ONI") a wholly owned subsidiary of Ohio National Life
Insurance Company (ONLIC), under the terms of which ONI provides portfolio
management and investment advice to the Fund and administers its other
affairs, subject to the supervision of the Fund's Board of Directors. As
compensation for its services, ONI receives from the Fund annual fees on the
basis of each portfolio's average daily net assets based on the following
schedule: (a) for each of the Equity, Bond, Omni and Social Awareness
Portfolios, 0.60% of the first $100 million of each Portfolio's net assets,
0.50% of the next $150 million of net assets, 0.45% of the next $250 million
of net assets, 0.40% of the next $500 million of net assets, 0.30% of the
next $1 billion of net assets, and 0.25% of net assets over $2 billion; (b)
for the Money Market Portfolio, 0.30% of the first $100 million of net
assets, 0.25% of the next $150 million of net assets, 0.23% of the net $250
million of net assets, 0.20% of the next $500 million of net assets, and
0.15% of net assets over $1 billion; (c) for the International, Global
Contrarian, and Relative Value Portfolios, 0.90% of each Portfolio's net
assets; (d) for the Capital Appreciation, Small Cap, Aggressive Growth and
Strategic Income Portfolios, 0.80% of each Portfolio's net assets, (e) for
the Core Growth Portfolio, 0.95% of the first $150 million of net assets,
and 0.80% of net assets over $150 million; (f) for the Growth & Income
Portfolio, 0.85% of the first $200 million of net assets and 0.80% of net
assets over $200 million, (g) for the S&P 500 Index Portfolio, 0.40% of the
first $100 million of
101
<PAGE> 92
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997
net assets, 0.35% of the next $150 million of net assets, and 0.33% of net
assets over $250 million; and (h) for the Stellar Portfolio, 1.00% of that
Portfolio's net assets. However, as to the Money Market Portfolio, the
Advisor is presently waiving any of its fee in excess of 0.25%.
Under the Investment Advisory Agreement, the Fund authorizes ONI to retain
sub-advisors for the International, Capital Appreciation, Small Cap, Global
Contrarian, Aggressive Growth, Core Growth, Growth & Income, Strategic
Income, Stellar and Relative Value Portfolios, subject to the approval of
the Fund's Board of Directors. ONI has entered into Sub-Advisory Agreements
with Societe Generale Asset Management Corp. ("SGAM"), T. Rowe Price
Associates, Inc. ("TRPA"), Founders Asset Management, Inc. ("FAM"), Strong
Capital Management, Inc. ("SCM"), Pilgrim Baxter & Associates, Ltd. ("PBA"),
Robertson Stephens Investment Management, L.P. ("RSIM"), and Star Bank, N.A.
("Star"), respectively, to manage the investment and reinvestment of those
Portfolios' assets, subject to the supervision of ONI. As compensation for
their services, (a) SGAM receives from ONI fees at the annual rate of 0.75%
of the International and Global Contrarian Portfolios' average daily net
assets during the quarter for which the fee is paid, (b) TRPA receives from
ONI a fee at an annual rate of 0.70% of the first $5 million, and 0.50% over
average daily net asset value in excess of $5 million, of the Capital
Appreciation Portfolio, (c) FAM receives from ONI a fee at an annual rate of
0.65% of the first $75 million, 0.60% of the next $75 million, and 0.55% of
the average daily net asset value in excess of $150 million of the Small Cap
Portfolio; (d) SCM receives from ONI a fee at an annual rate of 0.70% of the
first $50 million, and 0.50% of average daily net asset value in excess of
$50 million of the Aggressive Growth Portfolio; (e) PBA receives from ONI a
fee at an annual rate of 0.75% of the first $50 million, 0.70% of the next
$100 million, and 0.50% of average daily net assets in excess of $150
million of the Core Growth Portfolio: (f) RSIM receives from ONI a fee at an
annual rate of 0.60% of the first $100 million, 0.55% of the next $100
million, and 0.50% of average daily net assets in excess of $200 million of
the Growth & Income Portfolio; and (g) Star receives from ONI fees at an
annual rate of (i) 0.55% of the first $50 million and 0.50% of average daily
net assets in excess of $50 million of the Strategic Income Portfolio, (ii)
0.75% of the $50 million and 0.70% of average daily net assets in excess of
$50 million of the Stellar Portfolio and (iii) 0.65% of the first $50
million and 0.60% of average daily net assets in excess of $50 million of
the Relative Value Portfolio.
Each director who is not an officer of the Fund or an employee of ONI or its
corporate affiliates is paid a quarterly retainer fee of $2,000 plus $400
for each meeting attended.
The Fund's transfer agent and dividend paying agent is American Data
Services, Inc., The Hauppauge Corporate Center, 150 Motor Parkway, Suite
109, Hauppauge, New York. The Fund's custodian for those portfolios other
than the International and Global Contrarian Portfolios is Star Bank, N.A.,
425 Walnut Street, Cincinnati. Ohio. The custodian for the International and
Global Contrarian Portfolios is Investors Fiduciary Trust Company, 801
Pennsylvania, Kansas City, Missouri. For International and Global Contrarian
Portfolio assets held outside the United States, Star Bank and Investors
Fiduciary Trust Company enter into subcustodial agreements, subject to
approval by the Board of Directors.
(4) CAPITAL SHARE TRANSACTIONS Capital share transactions for the years ended
December 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
EQUITY MONEY MARKET BOND
------ ------------ ----
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales................ 1,099,809 1,251,722 4,006,494 2,854,453 644,662 654,067
Capital shares issued
on reinvested dividends ....... 574,786 296,586 124,176 97,983 161,245 118,018
Capital shares redeemed ......... 752,158 488,195 3,767,642 1,972,882 723,200 469,144
<CAPTION>
OMNI INTERNATIONAL CAPITAL APPRECIATION
---- ------------- --------------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales ............... 1,691,998 1,421,502 2,422,039 2,498,593 1,350,471 1,370,341
Capital shares issued
on reinvested dividends ....... 715,507 312,746 1,742,189 437,139 359,011 137,455
Capital shares redeemed ......... 709,824 461,070 1,377,360 372,436 249,388 158,593
</TABLE>
102
<PAGE> 93
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997
<TABLE>
<CAPTION>
SMALL CAP GLOBAL CONTRARIAN AGGRESSIVE GROWTH
--------- ----------------- -----------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales ....... 1,170,240 1,175,931 579,754 694,759 767,314 849,211
Capital shares issued
on reinvested dividends 131,550 35,538 132,202 22,442 23,559 124,213
Capital shares redeemed . 320,642 89,525 143,586 158,086 193,560 114,532
<CAPTION>
CORE GROWTH & SOCIAL STRATEG. RELATIVE
GROWTH INCOME S&P 500 AWARE. INCOME STELLAR VALUE
------ ------ ------- ------ ------ ------- -----
1997 1997 1997 1997 1997 1997 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Capital shares
issued on sales ....... 1,272,254 1,436,044 1,782,577 399,740 309,296 262,250 460,646
Capital shares issued
on reinvested dividends 419 75,471 187,990 37,565 16,810 6,971 3,973
Capital shares redeemed . 287,167 56,151 88,101 12,616 6,191 5,693 12,351
</TABLE>
The Fund is authorized to issue 250,000,000 of its capital shares.
20,000,000 shares each have been allocated to the Equity, Omni, and
International Portfolios, and 10,000,000 are allocated to each of the other
portfolios. The remaining 60,000,000 are unallocated at this time.
(5) COMMITMENTS
As of December 31, 1997, the International and Global Contrarian Portfolios
had entered into forward currency contracts, as set forth below, summarized
by currency:
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
SETTLE CURRENCY TO BE DELIVERED U.S. $ VAL. CURRENCY TO BE RECEIVED U.S. $ VAL. UNREALIZED
DATES AMOUNT TYPE AT 12/31/97 AMOUNT TYPE AT 12/31/97 GAIN LOSS
----- ------ ---- ----------- ------ ---- ----------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
06/11/98 3,628,000 Australian Dollar 2,355,660 2,469,382 U.S. Dollar 2,469,382 $113,722
01/08/98 8,021,000 Swiss Franc 5,487,446 5,635,892 U.S. Dollar 5,635,892 148,446
06/10/98 713,000 Swiss Franc 496,276 497,854 U.S. Dollar 497,854 1,578
01/15/98 12,626,000 Deutsche Mark 7,024,396 7,528,828 U.S. Dollar 7,528,828 504,432
01/15/98 1,423,901 U.S. Dollar 1,423,901 2,499,000 Deutsche Mark 1,390,303 $(33,598)
06/17/98 2,012,000 Deutsche Mark 1,128,973 1,173,986 U.S. Dollar 1,173,986 45,013
01/22/98 18,411,000 French Franc 3,063,089 3,238,292 U.S. Dollar 3,238,292 175,203
01/22/98 507,800 U.S. Dollar 507,800 3,001,000 French Franc 499,285 (8,515)
06/03/98 60,730,000 French Franc 10,177,473 9,793,922 U.S. Dollar 9,793,922 (383,551)
01/29/98 706,997,000 Japanese Yen 5,438,648 6,304,748 U.S. Dollar 6,304,748 866,100
01/29/98 274,593 U.S. Dollar 274,593 32,398,000 Japanese Yen 249,225 (25,368)
06/24/98 1,383,471,000 Japanese Yen 10,878,482 11,752,072 U.S. Dollar 11,752,072 873,590
04/03/98 6,571,000 New Zld Dollar 3,840,092 4,145,425 U.S. Dollar 4,145,425 305,333
------------- ------------- ------------- -------------
52,096,829 54,679,214 $3,033,417 $(451,032)
============== ============= ============= =============
</TABLE>
103
<PAGE> 94
OHIO NATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997
GLOBAL CONTRARIAN PORTFOLIO
<TABLE>
<CAPTION>
SETTLE CURRENCY TO BE DELIVERED U.S. $ VAL. CURRENCY TO BE RECEIVED U.S. $ VAL. UNREALIZED
DATES AMOUNT TYPE AT 12/31/97 AMOUNT TYPE AT 12/31/97 GAIN LOSS
----- ------ ---- ----------- ------ ---- ----------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01/08/98 34,000 Swiss Franc 23,261 23,690 U.S. Dollar 23,690 $429
01/08/98 24,119 U.S. Dollar 24,119 34,000 Swiss Franc 23,261 $(858)
06/10/98 564,000 Swiss Franc 392,566 410,152 U.S. Dollar 410,152 17,586
01/15/98 220,000 Deutsche Mark 122,396 131,595 U.S. Dollar 131,595 9,199
01/15/98 129,465 U.S. Dollar 129,465 220,000 Deutsche Mark 122,396 (7,069)
06/17/98 140,000 Deutsche Mark 78,557 78,873 U.S. Dollar 78,873 316
06/03/98 1,756,000 French Franc 294,280 281,604 U.S. Dollar 281,604 (12,676)
06/24/98 79,012,000 Japanese Yen 621,285 675,841 U.S. Dollar 675,841 54,556
06/24/98 153,668 U.S. Dollar 153,668 18,480,000 Japanese Yen 145,312 (8,356)
11/13/98 18,480,000 Japanese Yen 163,663 173,147 U.S. Dollar 173,147 9,484
01/08/98 125,000 Dutch Guilder 61,692 65,329 U.S. Dollar 65,329 3,637
---------------- -------------- ------------ -----------
2,064,952 2,131,200 $95,207 $(28,959)
================ ============== ============ ===========
</TABLE>
104
<PAGE> 95
OHIO NATIONAL FUND, INC. December 31, 1997
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Ohio National Fund, Inc.:
We have audited the accompanying statements of assets and liabilities and the
schedules of investments of Ohio National Fund, Inc. (comprising, respectively,
the Equity, Money Market, Bond, Omni, International, Capital Appreciation, Small
Cap, Global Contrarian, Aggressive Growth, Core Growth, Growth & Income, S&P 500
Index, Social Awareness, Stategic Income, Stellar and Relative Value Portfolios)
as of December 31, 1997, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and financial highlights are the
responsibility of the funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1997, by correspondence with
the custodian and brokers, and where replies are not received, we carried out
other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios comprising Ohio National Fund, Inc. as of December 31, 1997,
and the results of their operations, the changes in their net assets and their
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Cincinnati, Ohio
January 30, 1998
Directors and Officers of Ohio National Fund, Inc.
- --------------------------------------------------------------------------------
John J. Palmer, President and Director
Ronald L. Benedict, Secretary and Director
George E. Castrucci, Director
Ross Love, Director
George M. Vredeveld, Director
Joseph P. Brom, Vice President
Michael A. Boedeker, Vice President
Stephen T. Williams, Vice President
Dennis R. Taney, Treasurer
Theresa M. Brunsman, Assistant Secretary
This report may be used as sales literature only when accompanied or preceded by
an effective prospectus of Ohio National Fund, Inc. which relates sales expense
and other pertinent information.
105
<PAGE> 96
OHIO NATIONAL VARIABLE ACCOUNT B December 31, 1997
INDEPENDENT AUDITORS' REPORT
The Board of Directors
The Ohio National Life Insurance Company
The Contract Owners
Ohio National Variable Account B
We have audited the accompanying statements of assets and contract owners'
equity of Ohio National Variable Account B (comprising, respectively, the
Equity, Money Market, Bond, Omni, International, Capital Appreciation, Small
Cap, Global Contrarian, Aggressive Growth, S&P 500 Index, Social Awareness, Core
Growth and Growth & Income Subaccounts) as of December 31, 1997, and the related
statements of operations and changes in contract owners' equity and schedules of
changes in unit values for each of the periods indicated herein. These financial
statements are the responsibility of the Companys' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1997, by examination of the
underlying mutal fund. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ohio National Variable Account
B at December 31, 1997, and the results of their operations, changes in contract
owners' equity and changes in unit values for each of the periods indicated
herein, in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Cincinnati, Ohio
January 30, 1998
<PAGE> 97
OHIO NATIONAL VARIABLE ACCOUNT B
Statements of Assets and Contract Owners' Equity December 31, 1997
<TABLE>
<CAPTION>
MONEY CAPITAL
EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets - Investments
at market value
(note 2) ............. $51,199,589 $3,296,562 $3,888,175 $39,806,649 $32,359,723 $11,070,741 $7,980,968
=========== =========== =========== =========== =========== =========== ===========
Contract owners' equity
Contracts in
accumulation
period (note 3) .... $50,006,347 $3,221,154 $3,850,378 $39,448,261 $32,359,723 $11,070,741 $7,980,968
Annuity reserves for
for contract in
payment period ..... 1,193,242 75,408 37,797 358,388 0 0 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total contract
owners' equity ....... $51,199,589 $3,296,562 $3,888,175 $39,806,649 $32,359,723 $11,070,741 $7,980,968
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
GLOBAL AGGRESSIVE S&P 500 SOCIAL CORE GROWTH &
CONTRARIAN GROWTH INDEX AWARENESS GROWTH INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets - Investments
at market value
(note 2) ............. $4,202,319 $2,826,414 $2,875,685 $511,112 $1,607,251 $3,887,307
========== ========== ========== ========== ========== ==========
Contract owners' equity
Contracts in
accumulation
period (note 3) .... $4,202,319 $2,826,414 $2,875,685 $511,112 $1,607,251 $3,887,307
Annuity reserves for
for contract in
payment period ..... 0 0 0 0 0 0
---------- ---------- ---------- ---------- ---------- ----------
Total contract
owners' equity ....... $4,202,319 $2,826,414 $2,875,685 $511,112 $1,607,251 $3,887,307
========== ========== ========== ========== ========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE> 98
OHIO NATIONAL VARIABLE ACCOUNT B
<TABLE>
<CAPTION>
Statements of Operations and Changes in Contract Owners' Equity For the Years Ended December 31, 1997 and 1996
---------------------------------------------------------------
EQUITY MONEY MARKET
SUBACCOUNT SUBACCOUNT
1997 1996 1997 1996
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ......... $ 854,845 $ 550,497 $ 167,169 $ 121,100
Risk and administrative
expense (note 4) ........... (532,799) (401,473) (59,121) (5,651)
------------ ------------ ------------ ------------
Net investment activity .. 322,046 149,024 108,048 115,449
------------ ------------ ------------ ------------
Realized and Unrealized gain
(loss) on investments:
Reinvested capital gains ... 2,703,014 963,553 0 0
Realized gain (loss) ....... 679,349 552,072 (4,268) (4,810)
Unrealized gain (loss) ..... 3,497,534 4,088,878 0 0
------------ ------------ ------------ ------------
Net gain (loss) on
investments .............. 6,879,897 5,604,503 (4,268) (4,810)
------------ ------------ ------------ ------------
Net increase in contract
owners' equity from
operations 7,201,943 5,753,527 103,780 110,639
------------ ------------ ------------ ------------
Equity transactions:
Sales:
Contract purchase payments . 4,371,038 5,951,661 1,565,251 1,871,868
Transfers from fixed and
other subaccounts ........ 2,566,242 1,520,335 2,417,431 687,467
------------ ------------ ------------ ------------
6,937,280 7,471,996 3,982,682 2,559,335
------------ ------------ ------------ ------------
Redemptions:
Withdrawals and surrenders
(note 4) ................. 2,215,297 1,462,881 80,128 39,602
Annuity and death benefit
payments ................. 855,124 580,928 81,867 7,858
Transfers to fixed and
other subaccounts ........ 1,819,043 923,992 3,918,605 1,369,352
------------ ------------ ------------ ------------
4,889,464 2,967,801 4,080,600 1,416,812
------------ ------------ ------------ ------------
Net equity transactions .. 2,047,816 4,504,195 (97,918) 1,142,523
------------ ------------ ------------ ------------
Net change in contract
owners' equity 9,249,759 10,257,722 5,862 1,253,162
Contract owners' equity:
Beginning of period .......... 41,949,830 31,692,108 3,290,700 2,037,538
------------ ------------ ------------ ------------
End of period ................ $ 51,199,589 $ 41,949,830 $ 3,296,562 $ 3,290,700
============ ============ ============ ============
<CAPTION>
---------------------------------------------------------------
BOND OMNI
SUBACCOUNT SUBACCOUNT
1997 1996 1997 1996
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ......... $ 304,389 $ 226,135 $ 1,160,217 $ 747,014
Risk and administrative
expense (note 4) ........... (37,277) (36,260) (366,772) (280,432)
------------ ------------ ------------ ------------
Net investment activity .. 267,112 189,875 793,445 466,582
------------ ------------ ------------ ------------
Realized and Unrealized gain
(loss) on investments:
Reinvested capital gains ... 0 0 1,890,389 412,872
Realized gain (loss) ....... 9,585 2,900 336,734 257,649
Unrealized gain (loss) ..... 9,839 (90,712) 2,383,188 2,449,471
------------ ------------ ------------ ------------
Net gain (loss) on
investments .............. 19,424 (87,812) 4,610,311 3,119,992
------------ ------------ ------------ ------------
Net increase in contract
owners' equity from
operations 286,536 102,063 5,403,756 3,586,574
------------ ------------ ------------ ------------
Equity transactions:
Sales:
Contract purchase payments . 603,328 1,155,848 5,250,592 4,888,382
Transfers from fixed and
other subaccounts ........ 269,253 131,700 2,044,821 758,248
------------ ------------ ------------ ------------
872,581 1,287,548 7,295,413 5,646,630
------------ ------------ ------------ ------------
Redemptions:
Withdrawals and surrenders
(note 4) ................. 388,407 165,387 1,339,733 1,071,876
Annuity and death benefit
payments ................. 94,120 152,376 755,570 513,108
Transfers to fixed and
other subaccounts ........ 411,379 811,891 1,143,175 422,833
------------ ------------ ------------ ------------
893,906 1,129,654 3,238,478 2,007,817
------------ ------------ ------------ ------------
Net equity transactions .. (21,325) 157,894 4,056,935 3,638,813
------------ ------------ ------------ ------------
Net change in contract
owners' equity 265,211 259,957 9,460,691 7,225,387
Contract owners' equity:
Beginning of period .......... 3,622,964 3,363,007 30,345,958 23,120,571
------------ ------------ ------------ ------------
End of period ................ $ 3,888,175 $ 3,622,964 $ 39,806,649 $ 30,345,958
============ ============ ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE> 99
OHIO NATIONAL VARIABLE ACCOUNT B
<TABLE>
Statements of Operations and Changes in Contract Owners' Equity For the Years Ended December 31, 1997 and 1996
<CAPTION>
----------------------------- -----------------------------
International Capital Appreciation
Subaccount Subaccount
1997 1996 1997 1996
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .......... $ 2,244,641 $ 981,345 $ 322,567 $ 180,951
Risk and administrative
expense (note 4) ............ (347,234) (257,125) (92,618) (54,570)
------------ ------------ ------------ ------------
Net investment activity 1,897,407 724,220 229,949 126,381
------------ ------------ ------------ ------------
Realized and Unrealized gain
(loss) on investments:
Reinvested capital gains .... 3,070,013 333,798 582,279 109,158
Realized gain (loss) ........ 190,288 79,728 84,309 30,377
Unrealized gain (loss) ...... (4,866,712) 1,719,537 343,154 504,086
------------ ------------ ------------ ------------
Net gain (loss) on
investments ............ (1,606,411) 2,133,063 1,009,742 643,621
------------ ------------ ------------ ------------
Net increase in contract
owners' equity from
operations .. 290,996 2,857,283 1,239,691 770,002
------------ ------------ ------------ ------------
Equity transactions:
Sales:
Contract purchase payments .. 5,276,398 8,429,938 2,516,544 3,315,552
Transfers from fixed and
other subaccounts ......... 2,309,643 1,863,354 914,954 751,976
------------ ------------ ------------ ------------
7,586,041 10,293,292 3,431,498 4,067,528
------------ ------------ ------------ ------------
Redemptions:
Withdrawals and surrenders
(note 4) .................. 1,642,899 548,297 331,493 147,548
Annuity and death benefit
payments .................. 346,407 61,829 163,057 70,615
Transfers to fixed and
other subaccounts ......... 3,450,498 495,366 720,874 223,703
------------ ------------ ------------ ------------
5,439,804 1,105,492 1,215,424 441,866
------------ ------------ ------------ ------------
Net equity transactions .. 2,146,237 9,187,800 2,216,074 3,625,662
------------ ------------ ------------ ------------
Net change in contract
owners' equity . 2,437,233 12,045,083 3,455,765 4,395,664
Contract owners' equity:
Beginning of period ........... 29,922,490 17,877,407 7,614,976 3,219,312
------------ ------------ ------------ ------------
End of period ................. $ 32,359,723 $ 29,922,490 $ 11,070,741 $ 7,614,976
============ ============ ============ ============
<CAPTION>
---------------------------------------------------------------
Small Cap Global Contrarian
Subaccount Subaccount
1997 1996 1997 1996
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .......... $ 0 $ 0 $ 156,117 $ 39,174
Risk and administrative
expense (note 4) ............ (67,341) (36,692) (35,068) (13,771)
------------ ------------ ------------ ------------
Net investment activity (67,341) (36,692) 121,049 25,403
------------ ------------ ------------ ------------
Realized and Unrealized gain
(loss) on investments:
Reinvested capital gains .... 340,215 72,856 225,190 2,863
Realized gain (loss) ........ 224,164 32,011 16,821 19,118
Unrealized gain (loss) ...... 15,964 532,154 (21,916) 76,648
------------ ------------ ------------ ------------
Net gain (loss) on
investments ............ 580,343 637,021 220,095 98,629
------------ ------------ ------------ ------------
Net increase in contract
owners' equity from
operations .. 513,002 600,329 341,144 124,032
------------ ------------ ------------ ------------
Equity transactions:
Sales:
Contract purchase payments .. 2,017,304 2,996,882 1,251,164 2,082,521
Transfers from fixed and
other subaccounts ......... 1,420,443 633,847 170,573 359,416
------------ ------------ ------------ ------------
3,437,747 3,630,729 1,421,737 2,441,937
------------ ------------ ------------ ------------
Redemptions:
Withdrawals and surrenders
(note 4) .................. 199,300 25,917 73,776 3,208
Annuity and death benefit
payments .................. 114,225 17,894 10,451 653
Transfers to fixed and
other subaccounts ......... 1,533,908 463,197 305,705 76,474
------------ ------------ ------------ ------------
1,847,433 507,008 389,932 80,335
------------ ------------ ------------ ------------
Net equity transactions .. 1,590,314 3,123,721 1,031,805 2,361,602
------------ ------------ ------------ ------------
Net change in contract
owners' equity . 2,103,316 3,724,050 1,372,949 2,485,634
Contract owners' equity:
Beginning of period ........... 5,877,652 2,153,602 2,829,370 343,736
------------ ------------ ------------ ------------
End of period .................. $ 7,980,968 $ 5,877,652 $ 4,202,319 $ 2,829,370
============ ============ ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE> 100
OHIO NATIONAL VARIABLE ACCOUNT B
<TABLE>
<CAPTION>
Statements of Operations and Changes in Contract Owners' Equity For the Years Ended December 31, 1997 and 1996
--------------------------- --------------------------- ----------------------------
S&P 500 SOCIAL CORE GROWTH &
AGGRESSIVE GROWTH INDEX AWARENESS GROWTH INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
1997 1996 1997 (a) 1997 (a) 1997 (a) 1997 (a)
--------------------------- --------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............ $ 24,960 $ 206,544 $ 80,558 $ 1,543 $ 677 $ 17,879
Risk and administrative
expense (note 4) .............. (22,884) (12,377) (13,199) (893) (12,251) (15,025)
----------- ----------- ----------- ----------- ----------- -----------
Net investment activity .... 2,076 194,167 67,359 650 (11,574) 2,854
----------- ----------- ----------- ----------- ----------- -----------
Realized and Unrealized gain
(loss) on investments:
Reinvested capital gains ...... 9,445 0 214,773 41,906 0 188,226
Realized gain (loss) .......... (3,600) (18,436) 18,269 3,569 (1,492) 15,141
Unrealized gain (loss) ........ 251,639 (147,209) (1,444) (48,651) (10,224) 252,549
----------- ----------- ----------- ----------- ----------- -----------
Net gain (loss) on
investments .............. 257,484 (165,645) 231,598 (3,176) (11,716) 455,916
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
contract owners' equity
from operations .. 259,560 28,522 298,957 (2,526) (23,290) 458,770
----------- ----------- ----------- ----------- ----------- -----------
Equity transactions:
Sales:
Contract purchase payments .... 918,978 1,164,982 1,870,709 209,214 1,316,710 2,115,562
Transfers from fixed and
other subaccounts ........... 487,071 261,060 993,810 371,231 1,012,047 1,542,997
----------- ----------- ----------- ----------- ----------- -----------
1,406,049 1,426,042 2,864,519 580,445 2,328,757 3,658,559
----------- ----------- ----------- ----------- ----------- -----------
Redemptions:
Withdrawals and surrenders
(note 4) .................... 156,262 2,702 42,369 926 35,495 31,579
Annuity and death benefit
payments .................... 18,510 5,982 1,497 903 4,808 7,519
Transfers to fixed and
other subaccounts ........... 401,846 300,897 243,925 64,978 657,913 190,924
----------- ----------- ----------- ----------- ----------- -----------
576,618 309,581 287,791 66,807 698,216 230,022
----------- ----------- ----------- ----------- ----------- -----------
Net equity transactions .... 829,431 1,116,461 2,576,728 513,638 1,630,541 3,428,537
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity ... 1,088,991 1,144,983 2,875,685 511,112 1,607,251 3,887,307
Beginning of period ............. 1,737,423 592,440 0 0 0 0
----------- ----------- ----------- ----------- ----------- -----------
End of period ................... $ 2,826,414 $ 1,737,423 $ 2,875,685 $ 511,112 $ 1,607,251 $ 3,887,307
=========== =========== =========== =========== =========== ===========
<FN>
(a) Period from January 3, 1997, date of commencement of operations.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE> 101
OHIO NATIONAL VARIABLE ACCOUNT B
Notes to Financial Statements
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ohio National Variable Account B (the Account) is a separate account of The
Ohio National Life Insurance Company (ONLIC) and all obligations arising
under variable annuity contracts are general corporate obligations of
ONLIC. The account has been registered as a unit investment trust under the
Investment Company Act of 1940.
Assets of the Account are invested in shares of Ohio National, Fund, Inc.
(The Fund), a diversified open-end management investment company. The
Fund's investments are subject to varying degrees of market, interest and
financial risks; the issuers' abilities to meet certain obligations may be
affected by economic developments in their respective industries.
Annuity reserves are computed for currently payable contracts according to
the Progressive Annuity Mortality Table. The assumed interest rate is 3.5
or 4.0 percent depending on the contract selected by the annuitant. Charges
to annuity reserves for adverse mortality and express risk experience are
reimbursed to the Account by ONLIC. Such amounts are included in risk and
administrative expenses.
Investments are valued at the net asset value of fund shares held at
December 31, 1997. Share transactions are recorded on the trade date.
Income and capital gain distributions are recorded on the ex-dividend date.
Net realized capital gains of loss is determined on the basis of average
cost.
ONLIC performs investment advisory services on behalf of the Ohio National
Fund, Inc. in which the Account invests. For these services, the Company
receives fees from the mutual funds. These fees are paid to an affiliate of
the Company.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(2) INVESTMENTS
At December 31, 1997 the aggregate cost and number of shares of Ohio
National Fund, Inc. owned by the respective subaccounts were:
<TABLE>
<CAPTION>
MONEY CAPITAL
EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Cost . $35,920,635 $ 3,296,562 $ 3,813,437 $30,768,380 $33,918,351 $10,032,515 $ 7,159,096
Number of Shares 1,444,602 329,656 364,129 1,889,706 2,415,806 817,995 426,357
<CAPTION>
GLOBAL AGGRESSIVE S&P 500 SOCIAL CORE GROWTH &
CONTRARIAN GROWTH INDEX AWARENESS GROWTH INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Cost . $ 4,140,024 $ 2,702,970 $ 2,877,129 $ 559,763 $ 1,617,474 $ 3,634,758
Number of Shares 358,284 254,930 245,261 44,838 165,970 302,467
</TABLE>
(3) CONTRACTS IN ACCUMULATION PERIOD
At December 31, 1997 the accumulation units and value per unit of the
respective subaccounts and products were:
<TABLE>
<CAPTION>
ACCUMULATION UNITS VALUE PER UNIT
------------------ --------------
EQUITY SUBACCOUNT
<S> <C> <C>
Combination .......... 22,582.1410 140.954452
Back Load ............ 1,120.6840 71.972334
Top I ................ 23,678.459 62.460938
Top Tradition ........ 695,573.8834 52.704246
Top Plus ............. 488,395.8933 17.616774
</TABLE>
<PAGE> 102
OHIO NATIONAL VARIABLE ACCOUNT B
Notes to Financial Statements (Continued)
<TABLE>
<CAPTION>
ACCUMULATION UNITS VALUE PER UNIT
------------------ --------------
<S> <C> <C>
MONEY MARKET SUBACCOUNT
VIA .......................... 27,552.7660 27.253241
Top I ........................ 6,101.7720 20.666372
Top Tradition ................ 80,527.6445 18.483863
Top Plus ..................... 72,534.2486 11.797028
BOND SUBACCOUNT
Top I ........................ 722.6030 29.994642
Top Tradition ................ 103,697.5488 25.118862
Top Plus ..................... 98,783.8579 12.390067
OMNI SUBACCOUNT
Top I ........................ 52,425.6340 39.215015
Top Tradition ................ 744,774.0613 38.967842
Top Plus ..................... 513,133.5481 16.311837
INTERNATIONAL SUBACCOUNT
Top I ........................ 15,613.3480 16.815772
Top Tradition ................ 1,230,232.2118 16.815772
Top Plus ..................... 770,711.8882 14.804324
CAPITAL APPRECIATION SUBACCOUNT
Top I ........................ 1,425.9570 14.832378
Top Tradition ................ 372,993.0477 14.832378
Top Plus ..................... 333,644.8079 16.536198
SMALL CAP SUBACCOUNT
Top Tradition ................ 212,466.8746 15.240569
Top Plus ..................... 238,023.2495 19.926004
GLOBAL CONTRARIAN SUBACCOUNT
Top Tradition ................ 106,262.4426 12.399654
Top Plus ..................... 216,927.7044 13.297985
AGGRESSIVE GROWTH SUBACCOUNT
Top Tradition ................ 109,334.2537 11.646359
Top Plus ..................... 110,591.6656 14.043267
S&P 500 INDEX SUBACCOUNT
Top Tradition ................ 103,760.9007 13.031676
Top Plus ..................... 116,679.1507 13.057227
SOCIAL AWARENESS SUBACCOUNT
Top Tradition ................ 25,631.8618 12.426744
Top Plus ..................... 15,467.7703 12.451138
CORE GROWTH SUBACCOUNT
Top Tradition ................ 89,829.5054 9.586403
Top Plus ..................... 77,677.1403 9.605255
GROWTH & INCOME SUBACCOUNT
Top Tradition ................ 144,903.1720 13.509406
Top Plus ..................... 142,565.2860 13.535914
</TABLE>
<PAGE> 103
OHIO NATIONAL VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) RISK AND ADMINISTRATIVE EXPENSE
ONLIC charges the Account's assets at the end of each day, equal to 0.25%
on an annual basis, of the contract value for administrative expenses,
based on premiums established at the time the contracts are issued.
Although variable annuity payments differ according to the investment
performance of the Accounts, they are not affected by mortality or expense
experience because ONLIC assumes the expense risk and the mortality risk
under the contracts. ONLIC charges the Accounts' assets for assuming those
risks, based on the contract value at a rate presently ranging from 0.65%
to 1.05% for mortality and expense risk on an annual basis.
The expense risk assumed by ONLIC is the risk that the deductions for sales
and administrative expenses provided for in the variable annuity contracts
may prove insufficient to cover the cost of those terms.
The mortality risk results from a provision in the contract in which ONLIC
agrees to make annuity payments regardless of how long a particular
annuitant or other payee lives and how long all annuitants or other payees
as a class live if payment options involving life contingencies are chosen.
Those annuity payments are determined in accordance with annuity purchase
rate provisions established at the time the contracts are issued.
(5) CONTRACT CHARGES
No deduction for a sales charge is made from purchase payments. A
contingent deferred sales charge ranging from 0% to 6% may be assessed by
ONLIC when a contract is surrendered or a partial withdrawal of
accumulation value is made before the annuity payout date.
A transfer fee is charged for each transfer from one subaccount to another.
The fee is charged against the contract owner's equity in the subaccount
from which the transfer is effected.
State premium taxes presently range from 0% to 2 1/2% for these contracts.
In those jurisdictions permitting, such taxes will be deducted when annuity
payments begin. Elsewhere, they will be deducted from purchase payments.
Each year on the contract anniversary (or at the time of surrender of the
contract), ONLIC will deduct a contract administration charge of $35 from
the accumulation value to reimburse it for the expenses relating to the
maintenance of the contract. Total contract charges for the Account
amounted to approximately $80,000 during 1997.
(6) FEDERAL INCOME TAXES
Operations of the Account form a part of, and are taxed with, operations of
ONLIC which is taxed as a life insurance company under the Internal Revenue
Code. Taxes are the responsibility of the contract owner upon termination
or withdrawal. No Federal income taxes are payable under the present law on
dividend income or capital gains distribution from the Fund shares held in
the Account or on capital gains realized by the Account on redemption of
the Fund shares.
(7) NOTE TO SCHEDULE 1
Schedule 1 presents the components of the change in the unit values, which
are based on average unit values and are the basis for determining contract
owners' equity. This schedule is presented for each series, as applicable,
in the following format:
- Beginning unit value
- Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to capital gain
and dividend distributions from the underlying mutual fund.)
- Unrealized gain (loss)
This amount reflects the increase (decrease) in the unit value resulting
from the market appreciation (depreciation) of the fund.)
- Expenses
(This amount reflects the decrease in the unit value due to Risk and
Administrative Expenses discussed in note 4 to the financial
statements.)
- Ending unit value
- Percentage increase (decrease) in unit value
<PAGE> 104
OHIO NATIONAL VARIABLE ACCOUNT B For the Years Ended December 31, 1997 and 1996
SCHEDULES OF CHANGES IN UNIT VALUES SCHEDULE 1
<TABLE>
<CAPTION>
EQUITY SUBACCOUNT B
-------------------
TOP
1997 COMBINATION BACK LOAD TOP I TRADITION TOP PLUS
<S> <C> <C> <C> <C> <C>
Beginning unit value ........................... 120.477605 61.577580 53.439888 45.092323 15.042658
Reinvested capital gains and dividends ......... 10.208326 5.106364 4.528857 3.823418 1.281131
Realized and unrealized gain ................... 11.600238 6.037046 5.260339 4.336844 1.443261
Expenses ....................................... -1.331717 -0.748656 -0.768146 -0.548339 -0.150276
Ending unit value .............................. 140.954452 71.972334 62.460938 52.704246 17.616774
Percentage increase in unit value* ............. 17.0% 16.9% 16.9% 16.9% 17.1%
<CAPTION>
TOP
1996 COMBINATION BACK LOAD TOP I TRADITION TOP PLUS
<S> <C> <C> <C> <C> <C>
Beginning unit value ........................... 102.816617 52.603280 45.651565 38.520577 12.824740
Reinvested capital gains and dividends ......... 4.730442 2.472551 2.098892 1.774973 0.594240
Realized and unrealized gain ................... 14.044744 7.129052 6.332974 5.256615 1.749688
Expenses ....................................... -1.114198 -0.627303 -0.643543 -0.459842 -0.126010
Ending unit value .............................. 120.477605 61.577580 53.439888 45.092323 15.042658
Percentage increase in unit value* ............. 17.2% 17.1% 17.1% 17.1% 17.3%
</TABLE>
* An annualized rate of return cannot be determined as expenses do not
include the contract charges discussed in note (5)
<TABLE>
<CAPTION>
MONEY MARKET SUBACCOUNT B
-------------------------
TOP
1997 VIA TOP I TRADITION TOP PLUS
<S> <C> <C> <C> <C>
Beginning unit value ........................... 26.200345 19.867953 17.734674 11.296489
Reinvested dividends ........................... 1.400130 1.102329 0.948293 0.604483
Expenses ....................................... -0.347234 -0.303910 -0.199104 -0.103944
Ending unit value .............................. 27.253241 20.666372 18.483863 11.797028
Percentage increase in unit value* ............. 4.0% 4.0% 4.2% 4.4%
<CAPTION>
TOP
1996 VIA TOP I TRADITION TOP PLUS
<S> <C> <C> <C> <C>
Beginning unit value ........................... 25.237165 19.137562 17.048698 10.837896
Reinvested dividends ........................... 1.297471 1.022907 0.877627 0.558622
Expenses ....................................... -0.334291 -0.292516 -0.191651 -0.100029
Ending unit value .............................. 26.200345 19.867953 17.734674 11.296489
Percentage increase in unit value* ............. 3.8% 3.8% 4.0% 4.2%
<FN>
* An annualized rate of return cannot be determined as expenses do not
include the contract charges discussed in note (5)
</TABLE>
<TABLE>
<CAPTION>
BOND SUBACCOUNT B
-----------------
TOP TOP
TOP I TRADITION TOP PLUS TOP I TRADITION TOP PLUS
1997 1997 1997 1996 1996 1996
<S> <C> <C> <C> <C> <C> <C>
Beginning unit value ....................... 27.749128 23.238374 11.439849 27.051775 22.654830 11.130129
Reinvested capital gains and dividends ..... 2.357086 2.009537 0.990649 1.733738 1.569071 0.714445
Realized and unrealized gain (loss) ........ 0.255215 0.135333 0.066183 -0.686463 -0.717650 -0.304915
Expenses ................................... -0.366787 -0.264382 -0.106614 -0.349922 -0.267877 -0.099810
Ending unit value .......................... 29.994642 25.118862 12.390067 27.749128 23.238374 11.439849
Percentage increase in unit value* ......... 8.1% 8.1% 8.3% 2.6% 2.6% 2.8%
<FN>
* An annualized rate of return cannot be determined as expenses do not
include the contract charges discussed in note (5)
</TABLE>
<TABLE>
<CAPTION>
OMNI SUBACCOUNT B
-----------------
TOP TOP
TOP I TRADITION TOP PLUS TOP I TRADITION TOP PLUS
1997 1997 1997 1996 1996 1996
<S> <C> <C> <C> <C> <C> <C>
Beginning unit value ....................... 33.556721 33.345205 13.930650 29.362718 29.177631 12.165280
Reinvested capital gains and dividends ..... 3.191565 3.175753 1.337575 1.374026 1.365954 0.572930
Realized and unrealized gain ............... 2.944887 2.849373 1.182291 3.226767 3.143948 1.309928
Expenses ................................... -0.478158 -0.402489 -0.138679 -0.406790 -0.342328 -0.117488
Ending unit value .......................... 39.215015 38.967842 16.311837 33.556721 33.345205 13.930650
Percentage increase in unit value* ......... 16.9% 16.9% 17.1% 14.3% 14.3% 14.5%
<FN>
* An annualized rate of return cannot be determined as expenses do not
include the contract charges discussed in note (5)
</TABLE>
(continued)
<PAGE> 105
OHIO NATIONAL VARIABLE ACCOUNT B For the Years Ended December 31, 1997 and 1996
SCHEDULES OF CHANGES IN UNIT VALUES SCHEDULE 1 (CONTINUED)
<TABLE>
<CAPTION>
INTERNATIONAL SUBACCOUNT B
--------------------------
TOP TOP
TOP I TRADITION TOP PLUS TOP I TRADITION TOP PLUS
1997 1997 1997 1996 1996 1996
<S> <C> <C> <C> <C> <C> <C>
Beginning unit value ....................... 16.648702 16.648702 14.628252 14.702847 14.702847 12.892796
Reinvested capital gains and dividends ..... 2.764188 2.768733 2.437006 0.851068 0.851804 0.751086
Realized and unrealized gain (loss) ........ -2.370177 -2.409394 -2.122495 1.301686 1.269443 1.110911
Expenses ................................... -0.226941 -0.192269 -0.138439 -0.206899 -0.175392 -0.126541
Ending unit value .......................... 16.815772 16.815772 14.804324 16.648702 16.648702 14.628252
Percentage increase in unit value* ......... 1.0% 1.0% 1.2% 13.2% 13.2% 13.5%
<FN>
* An annualized rate of return cannot be determined as expenses do not
include the contract charges discussed in note (5)
</TABLE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION SUBACCOUNT B
---------------------------------
TOP TOP
TOP I TRADITION TOP PLUS TOP I TRADITION TOP PLUS
1997 1997 1997 1996 1996 1996
<S> <C> <C> <C> <C> <C> <C>
Beginning unit value ....................... 13.018249 13.018249 14.484990 11.370573 11.370573 12.626458
Reinvested capital gains and dividends ..... 1.459371 1.353678 1.510988 0.636859 0.651286 0.721507
Realized and unrealized gain ............... 0.547579 0.612984 0.679532 1.169741 1.130864 1.258902
Expenses ................................... -0.192821 -0.152533 -0.139312 -0.158924 -0.134474 -0.121877
Ending unit value .......................... 14.832378 14.832378 16.536198 13.018249 13.018249 14.484990
Percentage increase in unit value* ......... 13.9% 13.9% 14.2% 14.5% 14.5% 14.7%
<FN>
* An annualized rate of return cannot be determined as expenses do not
include the contract charges discussed in note (5)
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP SUBACCOUNT B
----------------------
TOP TOP
TRADITION TOP PLUS TRADITION TOP PLUS
1997 1997 1996 1996
- -------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Beginning unit value ....................... 14.205207 18.535631 12.201273 15.889068
Reinvested capital gains and dividends ..... 0.712729 0.925742 0.250703 0.322062
Realized and unrealized gain ............... 0.481686 0.633671 1.901925 2.480816
Expenses ................................... -0.159053 -0.169040 -0.148694 -0.156315
Ending unit value .......................... 15.240569 19.926004 14.205207 18.535631
Percentage increase in unit value* ......... 7.3% 7.5% 16.4% 16.7%
<FN>
* An annualized rate of return cannot be determined as expenses do not
include the contract charges discussed in note (5)
</TABLE>
<TABLE>
<CAPTION>
GLOBAL CONTRARIAN SUBACCOUNT B
------------------------------
TOP TOP
TRADITION TOP PLUS TRADITION TOP PLUS
1997 1997 1996 1996
<S> <C> <C> <C> <C>
Beginning unit value ............................ 11.226306 12.015818 10.125502 10.816003
Reinvested capital gains and dividends .......... 1.258838 1.342953 0.306810 0.328881
Realized and unrealized gain .................... 0.047914 0.055657 0.914409 0.976558
Expenses ........................................ -0.133404 -0.116443 -0.120415 -0.105624
Ending unit value ............................... 12.399654 13.297985 11.226306 12.015818
Percentage increase in unit value* .............. 10.5% 10.7% 10.9% 11.1%
<FN>
* An annualized rate of return cannot be determined as expenses do not
include the contract charges discussed in note (5)
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH SUBACCOUNT B
------------------------------
TOP TOP
TRADITION TOP PLUS TRADITION TOP PLUS
1997 1997 1996 1996
<S> <C> <C> <C> <C>
Beginning unit value ............................ 10.463801 12.592390 10.499375 12.610012
Reinvested capital gains and dividends .......... 0.166508 0.199675 1.647013 1.986612
Realized and unrealized gain (loss) ............. 1.139120 1.371956 -1.570429 -1.893528
Expenses ........................................ -0.123070 -0.120754 -0.112158 -0.110706
Ending unit value ............................... 11.646359 14.043267 10.463801 12.592390
Percentage increase (decrease) in unit value* ... 11.3% 11.5% -0.3% -0.1%
<FN>
* An annualized rate of return cannot be determined as expenses do not
include the contract charges discussed in note (5)
</TABLE>
(continued)
<PAGE> 106
OHIO NATIONAL VARIABLE ACCOUNT B For the Years Ended December 31, 1997 and 1996
SCHEDULES OF CHANGES IN UNIT VALUES SCHEDULE 1 (CONTINUED)
<TABLE>
<CAPTION>
S&P 500 INDEX B SOCIAL AWARENESS B
--------------- ------------------
** TOP ** TOP
1997 TRADITION **TOP PLUS TRADITION **TOP PLUS
<S> <C> <C> <C> <C>
Beginning unit value ............................ 10.000000 10.000000 10.000000 10.000000
Reinvested capital gains and dividends .......... 2.499495 2.490086 4.834445 4.828324
Realized and unrealized gain (loss) ............. 0.668057 0.677904 -2.269135 -2.263938
Expenses ........................................ -0.135876 -0.110763 -0.138566 -0.113248
Ending unit value ............................... 13.031676 13.057227 12.426744 12.451138
Percentage increase in unit value* .............. 30.3% 30.6% 24.3% 24.5%
<FN>
* An annualized rate of return cannot be determined as expenses do not
include the contract charges discussed in note (5)
** Period from January 3, 1997, date of commencement of operations
</TABLE>
<TABLE>
<CAPTION>
CORE GROWTH B GROWTH & INCOME B
------------- -----------------
** TOP ** TOP
1997 TRADITION **TOP PLUS TRADITION **TOP PLUS
<S> <C> <C> <C> <C>
Beginning unit value ............................ 10.000000 10.000000 10.000000 10.000000
Reinvested capital gains and dividends .......... 0.005109 0.005028 1.535845 1.544030
Realized and unrealized gain (loss) ............. -0.309975 -0.312071 2.111071 2.104988
Expenses ........................................ -0.108731 -0.087702 -0.137510 -0.113104
Ending unit value ............................... 9.586403 9.605255 13.509406 13.535914
Percentage increase (decrease) in unit value* ... -4.1% -3.9% 35.1% 35.4%
<FN>
* An annualized rate of return cannot be determined as expenses do not
include the contract charges discussed in note (5)
** Period from January 3, 1997, date of commencement of operations
</TABLE>
THE ACCOMPANYING NOTES ARE A INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE> 107
Ohio National Fund, Inc. THIRD CLASS BULK
Post Office Box 371 U.S. POSTAGE PAID
Cincinnati, Ohio 54201 CINCINNATI, OH
Permit No. 117
Form 1323 Rev. 1/98
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 1
<NAME> EQUITY
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 35,920,635
<INVESTMENTS-AT-VALUE> 51,199,589
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51,199,589
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,193,242
<TOTAL-LIABILITIES> 1,193,242
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,231,351
<SHARES-COMMON-PRIOR> 1,132,263
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 50,006,347
<DIVIDEND-INCOME> 854,845
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (532,799)
<NET-INVESTMENT-INCOME> 322,046
<REALIZED-GAINS-CURRENT> 679,349
<APPREC-INCREASE-CURRENT> 3,497,534
<NET-CHANGE-FROM-OPS> 7,201,943
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,937,280
<NUMBER-OF-SHARES-REDEEMED> 4,889,464
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,249,759
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 2
<NAME> MONEY MARKET
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<S> <C>
<PERIOD-TYPE> YEAR
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<INVESTMENTS-AT-COST> 3,296,562
<INVESTMENTS-AT-VALUE> 3,296,562
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<OTHER-ITEMS-LIABILITIES> 75,408
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<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 186,716
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<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,221,154
<DIVIDEND-INCOME> 167,169
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (59,121)
<NET-INVESTMENT-INCOME> 108,048
<REALIZED-GAINS-CURRENT> (4,268)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 103,780
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 3,982,682
<NUMBER-OF-SHARES-REDEEMED> 4,080,600
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,862
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 3
<NAME> BOND
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<PERIOD-TYPE> YEAR
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<INVESTMENTS-AT-COST> 3,888,175
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<SHARES-COMMON-STOCK> 203,204
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<NET-ASSETS> 3,850,378
<DIVIDEND-INCOME> 304,389
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<EXPENSES-NET> (37,277)
<NET-INVESTMENT-INCOME> 267,112
<REALIZED-GAINS-CURRENT> 9,585
<APPREC-INCREASE-CURRENT> 9,839
<NET-CHANGE-FROM-OPS> 286,536
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 872,581
<NUMBER-OF-SHARES-REDEEMED> 893,906
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 265,211
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 4
<NAME> OMNI
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
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<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 39,806,649
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<RECEIVABLES> 0
<ASSETS-OTHER> 0
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<TOTAL-ASSETS> 39,806,649
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 358,388
<TOTAL-LIABILITIES> 358,388
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,310,333
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<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 39,448,261
<DIVIDEND-INCOME> 1,160,217
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (366,772)
<NET-INVESTMENT-INCOME> 793,445
<REALIZED-GAINS-CURRENT> 336,734
<APPREC-INCREASE-CURRENT> 2,383,188
<NET-CHANGE-FROM-OPS> 5,403,756
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,295,413
<NUMBER-OF-SHARES-REDEEMED> 3,238,478
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,460,691
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
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<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
<SERIES>
<NUMBER> 5
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<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
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<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
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<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
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<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
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<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
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<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
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<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
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<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
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<NAME> S&P 500 INDEX
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<CIK> 0000073982
<NAME> OHIO NATIONAL VARIABLE ACCOUNT B
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