<PAGE> 1
File No. 333-16133*
811-4320
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 6 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
Exact name of trust: OHIO NATIONAL VARIABLE ACCOUNT R
Name of depositor: OHIO NATIONAL LIFE ASSURANCE CORPORATION
Complete address of depositor's principal executive offices:
One Financial Way
Cincinnati, Ohio 45242
Name and complete address of agent for service:
Ronald L. Benedict, Esq.
Ohio National Life Assurance Corporation
P.O. Box 237
Cincinnati, Ohio 45201
Notice to: W. Randolph Thompson, Esq.
Of Counsel
Jones & Blouch L.L.P.
Suite 405 West
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b)
--
X on October 16, 2000 pursuant to paragraph (b)
--
60 days after filing pursuant to paragraph (a)(i)
--
on (date) pursuant to paragraph (a)(i)
--
75 days after filing pursuant to paragraph (a)(ii)
--
on (date) pursuant to paragraph (a)(ii) of Rule 485.
--
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
-- previously filed post-effective amendment.
Title and amount of securities being registered: FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE CONTRACTS ("VARI-VEST V"). Registrant has heretofore registered an
indefinite amount of such flexible premium variable life insurance contracts
under the Securities Act of l933 pursuant to Rule 24f-2.
* The prospectus contained in this registration statement also relates to
flexible premium variable life insurance contracts no longer being sold but
for which additional premium payments are accepted and which are covered by
earlier registration statements under File No. 2-98266 and 33-09520.
<PAGE> 2
PART I
PROSPECTUS
<PAGE> 3
PROSPECTUS
VARI-VEST V
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACT
OHIO NATIONAL LIFE ASSURANCE CORPORATION
OHIO NATIONAL VARIABLE ACCOUNT R
One Financial Way
Cincinnati, Ohio 45242
Telephone (800) 366-6654
This prospectus describes a flexible premium variable life insurance contract
(the "contract") offered through Ohio National Variable Account R ("VAR"), a
separate account of ours. We are Ohio National Life Assurance Corporation, a
subsidiary of The Ohio National Life Insurance Company ("Ohio National Life").
The contract has a minimum stated amount of $50,000 and a sales charge which is
deducted from accumulation value upon surrender, lapse, partial surrender or a
decrease in stated amount during the first twenty contract years. Because of the
substantial nature of the surrender charge, the contract is not suitable for
short term investment purposes. The contract generally will not be issued to a
person over age 80.
The contract is "flexible" because, subject to certain restrictions, it permits
you to:
- adjust the timing and amount of your premium payments,
- direct net premiums to one or more of the subaccounts of the variable account
or to the general account,
- choose from two death benefit plans, and
- increase or decrease the level of death benefits under such plans.
The contract is "variable" because the value of the contract will change with
the performance of the investments selected. The flexible and variable features
of the contract give you the opportunity to meet your changing life insurance
needs and to adjust to changing economic conditions within the framework of a
single insurance policy. For this reason, it may not be to your advantage to
purchase a contract as a means of obtaining additional insurance if you already
own another flexible premium variable life insurance policy.
The contract provides life insurance coverage to age 100. You may choose either
a level or variable death benefit plan. The level plan provides a fixed benefit
(the "stated amount") to be paid on the death of the insured. The level plan
contract operates in a manner similar to a whole life insurance policy, except
that its accumulation value varies with investment performance. The variable
plan contract provides a death benefit equal to the sum of the stated amount and
the contract's accumulation value. Accordingly, the variable plan death benefit
generally varies dollar for dollar with the contract's accumulation value. Under
either plan, we insure the death benefit against adverse investment performance
by guaranteeing that the death benefit will never be less than the contract's
stated amount, provided you pay a minimum premium.
When you purchase a contract, you will be required to pay an initial premium.
You must pay the minimum premium described in your contract to keep the death
benefit guarantee in effect.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE. IT SHOULD BE
ACCOMPANIED BY THE CURRENT FUND PROSPECTUSES.
OCTOBER 16, 2000
Form 5560.5
<PAGE> 4
The contract affords you substantial flexibility with your premium payments. You
may adopt a planned premium schedule that indicates the level of your intended
payments. The planned premium will fall somewhere between the minimum and
maximum permitted by the Code. The exact amount of your planned premium will
depend upon your objectives and your estimate of long-term investment
performance. You will find the minimum and planned premiums on the specification
page of your contract. If you do not pay premiums, at least as great as the
minimum premium required to keep the death benefit guarantee in effect, the
contract will remain in force only as long as the cash surrender value (less any
contract indebtedness) will pay the next monthly deduction for contract charges.
You may allocate your contract values among up to 10 of the investment accounts
we offer. Each of the variable subaccounts invests in a corresponding Fund. The
available Funds are listed below. The Fund portfolios are described in the
accompanying Fund prospectuses. Your contract's accumulation value will reflect
the investment performance of the subaccounts you select and is not guaranteed.
Should the need arise, you may obtain access to the cash surrender value of your
contract after the first contract year through loans or, after the second
contract year, partial surrenders, without terminating your insurance coverage.
In addition, you may surrender your contract at any time and receive its cash
surrender value.
AVAILABLE FUNDS
<TABLE>
<S> <C>
OHIO NATIONAL FUND, INC. ADVISER (SUBADVISER)
Equity Portfolio (Legg Mason Funds Management, Inc.)
Money Market Portfolio Ohio National Investments, Inc.
Bond Portfolio Ohio National Investments, Inc.
Omni Portfolio (a flexible portfolio Ohio National Investments, Inc.
fund) (Federated Global Investment Management
International Portfolio Corp.)
International Small Company Portfolio (Federated Global Investment Management
Capital Appreciation Portfolio Corp.)
Small Cap Portfolio (Jennison Associates, LLC)
Aggressive Growth Portfolio (Founders Asset Management LLC)
Core Growth Portfolio (Janus Capital Corporation)
Growth & Income Portfolio (Pilgrim Baxter & Associates, Ltd.)
Capital Growth Portfolio (RS Investment Management, Co. LLC)
S&P 500 Index Portfolio (RS Investment Management, Co. LLC)
Social Awareness Portfolio Ohio National Investments, Inc.
High Income Bond Portfolio Ohio National Investments, Inc.
Equity Income Portfolio (Federated Investment Counseling)
Blue Chip Portfolio (Federated Investment Counseling)
Nasdaq 100 Index Portfolio (Federated Investment Counseling)
Ohio National Investments, Inc.
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Goldman Sachs Growth and Income Fund Goldman Sachs Asset Management
Goldman Sachs CORE U.S. Equity Fund Goldman Sachs Asset Management
Goldman Sachs Capital Growth Fund Goldman Sachs Asset Management
JANUS ASPEN SERIES
Growth Portfolio Janus Capital Corporation
Worldwide Growth Portfolio Janus Capital Corporation
Balanced Portfolio Janus Capital Corporation
LAZARD RETIREMENT SERIES, INC.
Small Cap Portfolio Lazard Asset Management
Emerging Markets Portfolio Lazard Asset Management
</TABLE>
Form 5560.5
2
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<TABLE>
<S> <C>
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Mid Cap Growth Fund II Strong Capital Management, Inc.
Strong Opportunity Fund II
(a mid cap/small cap fund) Strong Capital Management, Inc.
Strong Schafer Value Fund II Strong Capital Management, Inc.
VARIABLE INSURANCE PRODUCTS FUND
CLASS 2 (FIDELITY)
VIP Contrafund(R) Portfolio Fidelity Management & Research Company
VIP MidCap Portfolio Fidelity Management & Research Company
VIP Growth Portfolio Fidelity Management & Research Company
PBHG INSURANCE SERIES FUND, INC.
PBHG Technology & Communications Pilgrim Baxter & Associates, Ltd
Portfolio
</TABLE>
Form 5560.5
3
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Definitions.............................. 5
Introduction............................. 7
Assumptions and Scope of Prospectus...... 7
Summary.................................. 8
Ohio National Financial Services
Group............................... 8
Ohio National Life Assurance
Corporation......................... 8
The Ohio Life Insurance Company........ 8
Ohio National Variable Account R....... 8
The Funds.............................. 8
Death Benefits......................... 8
Accumulation Value..................... 9
Premiums............................... 9
Charges and Deductions................. 10
Federal Tax Matters.................... 11
Ohio National Financial Services Group... 11
Ohio National Life Assurance
Corporation......................... 11
The Ohio National Life Insurance
Company ("Ohio National Life")...... 11
Ohio National Variable Account R
("VAR")............................. 11
The Funds.............................. 12
Mixed and Shared Funding............... 12
Death Benefits........................... 13
Plan A -- Level Benefit................ 13
Plan B -- Variable Benefit............. 14
Change in Death Benefit Plan........... 14
Death Benefit Guarantee................ 15
Changes in Stated Amount............... 15
Accumulation Value....................... 16
Determination of Variable Accumulation
Values.............................. 16
Accumulation Unit Values............... 17
Net Investment Factor.................. 17
Loans.................................. 17
Surrender Privileges................... 18
Maturity............................... 19
Premiums................................. 19
Purchasing a Contract.................. 19
Payment of Premiums.................... 20
Initial Premiums....................... 20
Term Insurance Conversion Credit....... 20
Minimum Premiums....................... 20
Planned Premiums....................... 21
Allocation of Premiums................. 21
Transfers.............................. 21
Dollar Cost Averaging.................. 22
TeleAccess............................. 22
Lapse.................................. 23
Reinstatement.......................... 23
Conversion............................. 23
Free Look.............................. 23
Charges And Deductions................... 23
Premium Expense Charge................. 24
Ohio National Life Employee Discount... 24
Monthly Deduction...................... 24
Risk Charge............................ 25
Surrender Charge....................... 25
Service Charges........................ 27
Other Charges.......................... 27
General Provisions....................... 28
Voting Rights.......................... 28
Additions, Deletions or Substitutions
of Investments...................... 29
Annual Report.......................... 29
Limitation on Right to Contest......... 29
Misstatements.......................... 29
Suicide................................ 30
Beneficiaries.......................... 30
Postponement of Payments............... 30
Assignment............................. 30
Non-Participating Contract............. 30
The General Account...................... 30
General Description.................... 30
Accumulation Value..................... 31
Optional Insurance Benefits............ 31
Settlement Options..................... 31
Distribution of The Contract............. 31
Management of The Company................ 33
Custodian................................ 33
State Regulation of The Company.......... 34
Federal Tax Matters...................... 34
Contract Proceeds...................... 34
Correction of Modified Endowment
Contract............................ 35
Right to Charge for Company Taxes...... 35
Employee Benefit Plans................... 35
Legal Proceedings........................ 35
Legal Matters............................ 35
Experts.................................. 35
Registration Statement................... 36
Financial Statements..................... 36
Prior Contracts.......................... 36
Vari-Vest I............................ 36
Vari-Vest III.......................... 37
Ohio National Life Assurance Corporation
Financial Statements................... 40
Ohio National Variable Account R
Financial Statements................... 58
Appendix A............................... 99
Hypothetical Historical
Illustrations....................... 99
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE COMPANY DOES NOT AUTHORIZE ANY
INFORMATION OR REPRESENTATIONS REGARDING THE VARIABLE ASPECTS OF THE CONTRACT
DESCRIBED IN THIS PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS, THE
FUND PROSPECTUSES OR THE STATEMENTS OF ADDITIONAL INFORMATION OF THE FUNDS.
Form 5560.5
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DEFINITIONS
Accumulation Value -- the sum of the contract's values in the subaccounts, the
general account and the loan collateral account.
Age -- the insured's age at his or her nearest birthday.
Attained Age -- the insured's age at the end of the most recent contract year.
Beneficiary -- the beneficiary designated by the contractowner in the
application or in the latest notification of change of beneficiary filed with
us. If the contractowner is the insured and if no beneficiary survives the
insured, the insured's estate will be the beneficiary. If the contractowner is
not the insured and no beneficiary survives the insured, the contractowner or
his estate will be the beneficiary.
Cash Surrender Value -- the accumulation value less any applicable surrender
charges.
Code -- the Internal Revenue Code of 1986, as amended, and all related
regulations.
Commission -- the Securities and Exchange Commission.
Contract -- the Vari-Vest V flexible premium variable life insurance contract.
Contract Date -- the date as of which insurance coverage and contract charges
begin. The contract date is used to determine contract months and years.
Contract Month -- each contract month starts on the same date in each calendar
month as the contract date.
Contract Year -- each contract year starts on the same date in each calendar
year as the contract date.
Contract Indebtedness -- the total of any unpaid contract loans.
Contractowner -- the person so designated on the specification page of the
contract.
Corridor Percentage Test -- a method of determining the minimum death benefit as
required by the Code to qualify the contract as a "life insurance contract." The
minimum death benefit equals the cash value plus the cash value multiplied by a
percentage which varies with age as specified by the Code.
Death Benefit -- the amount payable upon the death of the insured, before
deductions for contract indebtedness and unpaid monthly deductions.
Death Benefit Guarantee -- our guarantee that the contract will never lapse if
you have met the minimum premium requirement.
General Account -- our assets other than those allocated to our separate
accounts.
Guideline Annual Premium -- the level annual premium that would be payable
through the contract maturity date for a specified stated amount of coverage if
we scheduled premiums as to both timing and amount and such premiums were based
on the 1980 Commissioners Standard Ordinary Mortality Table, net investment
earnings at an annual effective rate of 4%, and fees and charges as set forth in
the contract. This is the maximum premium permitted under the Code.
Home Office -- our principal executive offices located at One Financial Way,
Cincinnati, Ohio 45242.
Initial Premium -- an amount you must pay to begin contract coverage. It must be
at least equal to one monthly minimum premium.
Insured -- the person upon whose life the contract is issued.
Issue Date -- the date we approve your application and issue your contract. The
issue date will be the same as the contract date except for backdated contracts,
for which the contract date will be prior to the issue date.
Loan Collateral Account -- an account to which accumulation value in an amount
equal to a contract loan is transferred pro rata from the subaccounts of VAR and
the general account.
Loan Value -- the maximum amount that may be borrowed under the contract. The
loan value equals the cash surrender value less the cost of insurance charges
for the balance of the contract year. The loan value less contract indebtedness
equals the amount you may borrow at any time.
Form 5560.5
5
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Maturity Date -- unless otherwise specified in the contract, the maturity date
is the end of the contract year nearest the insured's 100th birthday.
Minimum Premium -- the monthly premium set forth on the contract specification
page necessary to maintain the death benefit guarantee. Although the minimum
premium is expressed as a monthly amount, you need not pay it each month.
Rather, you must pay, cumulatively, premiums which equal or exceed the sum of
the minimum premiums required during the applicable time period.
Monthly Deduction -- the monthly charge against cash value which includes the
cost of insurance, an administration charge, a risk charge for the death benefit
guarantee and the cost of any optional insurance benefits added by rider.
Net Premiums -- the premiums you pay less the premium expense charge.
Planned Premium -- a schedule indicating the contractowner's planned premium
payments under the contract. The schedule is a planning device only and need not
be adhered to.
Premium Expense Charge -- an amount deducted from gross premiums consisting of a
federal tax charge and any state premium tax and other state and local taxes
applicable to your contract.
Proceeds -- the amount payable on surrender, maturity or death.
Process Day -- the first day of each contract month. Monthly deductions and any
credits are made on this day.
Pronouns -- "our", "us" or "we" means Ohio National Life Assurance Corporation.
"You", "your" or "yours" means the insured. If the insured is not the
contractowner, "you", "your" or "yours" means the contractowner when referring
to contract rights, payments and notices.
Receipt -- with respect to transactions requiring valuation of variable account
assets, a notice or request is deemed received by us on the date actually
received if received on a valuation date prior to 4:00 p.m. Eastern time. If
received on a day that is not a valuation date or after 4:00 p.m. Eastern time
on a valuation date, it is deemed received on the next valuation date.
Settlement Options -- methods of paying the proceeds other than in a lump sum.
Stated Amount -- the minimum death benefit payable under the contract as long as
the contract remains in force and which is set forth on the contract
specification page.
Subaccount -- a subdivision of VAR which invests exclusively in the shares of a
corresponding portfolio of one of the Funds or of another mutual fund.
Surrender Charge -- a two part charge assessed in connection with contract
surrenders, lapses and decreases in stated amount, consisting of a contingent
deferred sales charge applicable for 20 years, and a contingent deferred
insurance underwriting charge applicable for 8 years, from the contract date
with respect to your initial stated amount and from the date of any increase in
stated amount with respect to such increase.
Valuation Date -- each day on which the net asset value of Fund shares is
determined. See the accompanying Fund prospectuses.
Valuation Period -- the period between two successive valuation dates which
begins at 4:00 p.m. Eastern time on one valuation date and ends at 4:00 p.m.
Eastern time on the next valuation date.
VAR -- Ohio National Variable Account R.
Form 5560.5
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INTRODUCTION
As described on the cover page of this prospectus, the Vari-Vest V contract is a
flexible premium variable universal life insurance contract which enables you
throughout your lifetime to accommodate to your changing insurance needs and to
changing economic conditions within the framework of a single insurance policy.
The contract provides for death benefits, cash values, loans, a variety of
settlement options and other features traditionally associated with life
insurance.
The contract is similar to traditional life insurance in a number of respects.
- You receive insurance coverage to age 100 at least equal to the stated
amount as long as the contract has a positive cash surrender value or the
death benefit guarantee is in effect.
- You may surrender the contract at any time and receive its cash surrender
value. After the first contract year, you may borrow up to the loan value
of the contract.
- To the extent that you elect to allocate net premiums to the general
account, the investment return on the contract is guaranteed.
The contract also has several significant features which differentiate it from
traditional life insurance.
- Within certain limits, you may adjust the timing and amount of your
premium payments to suit your individual circumstances.
- You direct the investment of your net premiums and resulting cash values,
which will vary with the investment performance of the variable
subaccounts you select.
- Values are neither guaranteed nor limited to an assumed rate of interest.
- You may elect a variable death benefit plan as an alternative to a level
plan, the latter being similar in many respects to a traditional whole
life policy.
Under either death benefit plan you may increase the stated amount of insurance
coverage any time after the first contract year and decrease the stated amount
two years after the issue date.
ASSUMPTIONS AND SCOPE OF PROSPECTUS
This prospectus relates principally to VAR and contains only selected
information regarding the general account. For details regarding elements of the
contract involving the general account, see your contract.
Unless otherwise indicated or required by the context, the discussion throughout
this prospectus assumes that:
- "you", the "contractowner" and the "insured" are the same person,
- the death benefit guarantee is in effect,
- the cash surrender value of your contract is sufficient to pay the next
monthly deduction,
- there is no outstanding contract indebtedness,
- the death benefit is not determined by the corridor percentage test,
- the contract is not backdated,
- payments under the contract have not been made in a way that would cause
the contract to be treated as a modified endowment contract under federal
law.
Form 5560.5
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SUMMARY
This summary presents selected information in the same order and uses the same
headings as the body of the prospectus. See the table of contents to find fuller
discussion of each item. See the "Definitions," above, for the meanings of
various terms.
OHIO NATIONAL FINANCIAL SERVICES GROUP:
OHIO NATIONAL LIFE ASSURANCE CORPORATION -- We are a stock life insurance
company established under the laws of Ohio on June 26, 1979. We are owned by
Ohio National Life.
THE OHIO NATIONAL LIFE INSURANCE COMPANY ("Ohio National Life") -- a stock life
insurance company organized in 1909 under the laws of Ohio. It currently has
assets in excess of $7 billion. Ohio National Life is now a subsidiary of Ohio
National Financial Services, Inc., which is a subsidiary of Ohio National Mutual
Holdings, Inc. Ohio National Life continues to control us and the Ohio National
Fund. While Ohio National Life's experienced personnel and facilities are
available to assist in administering our flexible product program, its assets do
not back your contract.
OHIO NATIONAL VARIABLE ACCOUNT R ("VAR") -- established by us on May 6, 1985 as
a means of offering the types of contract described in this prospectus. Net
premiums allocated to VAR are segregated from our other assets and are protected
from claims and liabilities arising from our other lines of business. Our
general account assets, however, are available to support benefits under the
contract.
There is a separate subaccount within VAR corresponding to each of the Funds
listed on pages 2 and 3. The assets of each are invested exclusively in shares
of one of the Funds.
THE FUNDS The operations of each Fund, its investment adviser and its investment
objectives and policies are described in its prospectus. Net premiums under the
contract may be allocated to the subaccounts of the variable account which
invest exclusively in Fund shares. Accordingly, the accumulation values you
allocate to the subaccounts will vary with the investment performance of the
Funds.
The value of each Fund's investments fluctuates daily and is subject to the risk
of changing economic conditions as well as the risk inherent in the ability of
management to anticipate changes necessary in those investments to meet changes
in economic conditions. For additional information concerning each Fund,
including their investment objectives, see the accompanying prospectuses. Read
the prospectuses carefully before investing.
DEATH BENEFITS You may select one of two death benefit plans -- the level plan
(Plan A) or the variable plan (Plan B). With certain limitations, you may also
change death benefit plans during the life of the contract. The death benefit
under the level plan is the stated amount. The death benefit under the variable
plan is the stated amount plus the accumulation value on the date of death.
Under either plan, we may be required to increase the death benefit to satisfy
the corridor percentage test included in the Code's definition of a "life
insurance contract." Generally, favorable investment performance is reflected in
increased accumulation value under the level plan and in increased insurance
coverage under the variable plan. The death benefit will never be less than the
stated amount as long as the contract has a positive cash surrender value or the
death benefit guarantee is in force. The death benefit will be paid according to
your beneficiary's instructions or, at your option, applied in whole or in part
under one or more settlement options.
After the first contract year you may increase your stated amount, and two years
after the issue date you may decrease your stated amount. You cannot decrease
the stated amount below the minimum stated amount shown on the contract
specification page. Any increase or decrease in the stated amount must equal at
least $5,000 and an increase will require additional evidence of insurability.
Form 5560.5
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The contract includes a death benefit guarantee. Under this provision, we
guarantee that the death benefit during the death benefit guarantee period will
not be less than the stated amount, provided you pay the minimum premium.
Accordingly, adverse subaccount investment performance will not cause the
contract to lapse as long as the death benefit guarantee is in effect.
ACCUMULATION VALUE The accumulation value of your contract equals the sum of the
accumulation values in the general account, the subaccounts of VAR and the loan
collateral account. The general account accumulation value will reflect the
amount and timing of net premiums allocated to the general account and interest
thereon. The accumulation value in the variable subaccounts will reflect
deductions for a risk charge, the amount and timing of net premiums allocated to
such subaccounts and their investment experience. Such investment experience is
not guaranteed. In addition, the subaccount and the general account accumulation
values will be charged pro rata in connection with contract loans, partial
surrenders and monthly deductions. The loan collateral account will reflect
amounts borrowed against the loan value of the contract.
Loans -- after the first contract year, you may borrow against the loan value of
your contract. The loan value will never be less than 90% of your cash surrender
value. Loan interest is payable in advance at a rate of 7.4% (an effective
compound annual rate of 8%). Any outstanding contract indebtedness will be
deducted from proceeds payable at the insured's death or upon maturity or
surrender.
Loan amounts and any unpaid interest thereon will be withdrawn pro rata from the
variable subaccounts and the general account. Accumulation value in each
subaccount equal to the contract indebtedness so withdrawn will be transferred
to the loan collateral account. If loan interest is not paid when due, it
becomes loan principal. Accumulation value held in the loan collateral account
earns interest daily at an annual rate guaranteed to be at least 4%. Currently,
we credit interest at an annual rate of 6.75%.
A loan may be repaid in whole or in part at any time while the contract is in
force. When a loan repayment is made, accumulation value securing contract
indebtedness in the loan collateral account equal to the loan repayment will be
allocated first to the general account until the amount borrowed has been
replaced. The balance of the repayment will then be allocated to the general
account and the variable subaccounts using the same percentages as then in
effect to allocate net premiums.
Surrender Privileges -- at any time you may surrender your contract in full and
receive the proceeds. Your contract also gives you a partial surrender right. At
any time after two years from the issue date, you may withdraw part of your cash
surrender value. Such withdrawals will reduce your contract's death benefit and
may be subject to a surrender charge.
Withholding Payment After Premium Payment -- We may withhold payment of any
increased accumulation value or loan value resulting from a recent premium
payment until your premium check has cleared. This could take up to 15 days
after we receive your check.
PREMIUMS An initial premium is required to purchase a contract. In addition, you
must pay a minimum premium to keep the death benefit guarantee in effect. You
must have paid, cumulatively, total premiums that equal or exceed the monthly
minimum premium indicated on the contract specification page multiplied by the
number of contract months the contract has been in effect. If you fail to meet
this requirement, the death benefit guarantee is no longer in effect and may
generally not be reinstated. The monthly minimum premium indicated on the
contract specification page will remain a level amount until you reach the end
of the death benefit guarantee period shown on the contract specification page.
You choose this period from among the available periods. Currently there are 3
different periods available: 5 years; to age 70 (or 10 years, if later); or to
maturity. Not all options are available in all states.
We may, at our discretion, refuse to accept a premium payment of less than $25
or one that would cause the contract, without an increase in death benefit, to
be disqualified as life insurance or to be treated as a modified
Form 5560.5
9
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endowment contract under federal law. Otherwise, the amount and timing of
premium payments is left to your discretion.
To aid you in formulating your insurance plan under the contract, you will adopt
a planned premium schedule at the time of purchase indicating your intended
level of payments. The planned premium will generally be an amount greater than
your minimum premium and less than your guideline annual premium. You do not
have to follow the planned premium, as it is only a planning device.
Allocation of Premiums -- you may allocate your net premiums among up to 10 of
the variable subaccounts and to the general account in any combination of whole
percentages. You indicate your initial allocation in the contract application.
Thereafter, you may transfer accumulation values and reallocate future premiums.
Transfers -- we allow transfers of accumulation values among the subaccounts of
VAR and to the general account at any time. Transfers from the general account
to the subaccounts are subject to certain restrictions.
Lapse -- provided you pay the minimum premiums required to maintain the death
benefit guarantee, your contract will not lapse during the death benefit
guarantee period. If you fail to pay the minimum premiums, the death benefit
guarantee expires. Without the death benefit guarantee, the contract will remain
in force as long as the cash surrender value less any outstanding contract
indebtedness is sufficient to pay the next monthly deduction. When the cash
surrender value will not pay the next monthly deduction, you will have a 61 day
grace period in which to increase your cash surrender value by paying additional
premiums. If you do not pay sufficient additional premiums during the grace
period, the contract will lapse and terminate without value.
Reinstatement -- once a contract has lapsed, you may request reinstatement of
the contract any time within five years of the lapse. Satisfactory proof of
insurability and payment of a reinstatement premium are required for
reinstatement.
Free Look -- following the initial purchase of your contract or any subsequent
increase in the stated amount, you are entitled to a free look period. During
the free look period, you may cancel the contract or increase, as applicable,
and we will refund all the money you have paid. The free look period expires 20
days from your receipt of the contract or increase.
CHARGES AND DEDUCTIONS We make charges against or deductions from premium
payments, accumulation values and contract surrenders as follows:
(a) from premiums we deduct a premium expense charge. The premium expense charge
includes:
- a 1.25% deduction from premium payments for 10 years. This charge
compensates us for federal tax charges,
- a deduction for the state premium tax and any other state and local taxes
applicable to your contract. Currently, state premium taxes vary from 0%
to 4%;
(b) against the accumulation value we make a monthly deduction covering:
- the cost of insurance,
- administrative expenses ($7),
- the risk of providing the death benefit guarantee ($0.00, $0.01, or $0.03
per thousand of stated amount, depending on the death benefit guarantee
period you choose), and the cost of any optional insurance benefit added
by rider;
(c) against the assets of the variable subaccounts we assess a daily charge
equal to an annualized rate of 0.75% of such assets to compensate us for
assuming certain mortality and expense risks; and
(d) from accumulation value we deduct surrender charges in the event of full
surrender, certain partial surrenders and decreases in stated amount. The
surrender charges consist of a contingent deferred sales
Form 5560.5
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charge and a contingent deferred insurance underwriting charge. The
contingent deferred sales charge is 50% of premiums paid, up to a maximum
shown on the contract specification page. The contingent deferred insurance
underwriting charge varies with age at issue or increase from $3 to $6 per
thousand dollars of your first $500,000 of stated amount. These surrender
charges apply during the first 20 contract years following the contract
date and the date of any increase in stated amount.
In addition to the foregoing charges and deductions, we assess the following
three service charges:
- for partial surrenders the lesser of $25 or 2% of the amount surrendered,
- up to $15 (currently the charge is $3 and is waived on the first four
transfers during any contract year) for transfers of accumulation value
among the subaccounts and the general account and,
- up to $100 (currently no charge is being made) for any special
illustration of contract benefits that you may request.
Currently we impose lesser charges for transfers and illustrations, but we only
guarantee that such charges will never exceed the amounts stated above. We also
reserve the right to assess the assets of each subaccount for any taxes payable
by us on account of such assets. Certain expenses and an investment advisory fee
will be assessed against Fund assets, as described in the Fund prospectuses.
FEDERAL TAX MATTERS All death benefits paid under the contract will generally be
excludable from the beneficiary's gross income for federal income tax purposes.
Under current federal tax law, as long as the contract qualifies as a "life
insurance contract", any increases in accumulation value attributable to
favorable investment performance should accumulate on a tax deferred basis in
the same manner as with traditional whole life insurance. Partial withdrawals
and surrenders, however, may result in the taxation of the portion of such
withdrawals or surrenders drawn from the increase in accumulation value
resulting from favorable investment performance. If payments are made in excess
of a rate that would pay up a contract after seven level annual payments, there
may be taxation of, including a penalty tax on, portions of the proceeds of
loans, withdrawals or surrenders.
OHIO NATIONAL FINANCIAL SERVICES GROUP
OHIO NATIONAL LIFE ASSURANCE CORPORATION
We were established on June 26, 1979 under the laws of Ohio to facilitate the
issuance of certain nonparticipating insurance policies. We are a wholly-owned
stock subsidiary of Ohio National Life. We are licensed to sell life insurance
in 47 states, the District of Columbia and Puerto Rico.
THE OHIO NATIONAL LIFE INSURANCE COMPANY ("OHIO NATIONAL LIFE")
Ohio National Life was organized under the laws of Ohio on September 9, 1909 as
a stock life insurance company. Ohio National is now a subsidiary of Ohio
National Financial Services, Inc., which is a subsidiary of Ohio National Mutual
Holdings, Inc. It writes life, accident and health insurance and annuities in 47
states, the District of Columbia and Puerto Rico. Currently it has assets in
excess of $8.9 billion and equity in excess of $710 million. Ohio National Life
provided us with the initial capital to finance our operations. From time to
time, Ohio National Life may make additional capital contributions, although it
is under no legal obligation to do so and its assets do not support the benefits
provided under your contract.
OHIO NATIONAL VARIABLE ACCOUNT R ("VAR")
We established VAR on May 6, 1985 pursuant to the insurance laws of the State of
Ohio. VAR is registered with the Securities and Exchange Commission (the
"Commission") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust. Such registration does not involve supervision by the
Commission of the
Form 5560.5
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management or investment policies of the variable account or of us. Under Ohio
law, VAR's assets are held exclusively for the benefit of contractowners and
persons entitled to payments under the contract. VAR's assets are not chargeable
with liabilities arising out of our other business.
We keep VAR's assets physically segregated from assets of our general account.
We maintain records of all purchases and redemptions of Fund shares by each of
VAR's subaccounts.
VAR has subaccounts corresponding to each of the Funds listed on page 2. VAR may
in the future add or delete investment subaccounts. Each investment subaccount
will invest exclusively in shares representing interests in one of the Funds.
The income and realized and unrealized gains or losses on the assets of each
subaccount are credited to or charged against that subaccount without regard to
income or gains or losses from any other subaccount.
THE FUNDS
The Funds are mutual funds registered under the Investment Company Act of 1940.
Fund shares are sold only to insurance company separate accounts to fund
variable annuity contracts and variable life insurance policies and, in some
cases, to qualified plans. The value of each Fund's investments fluctuates daily
and is subject to the risk that Fund management may not anticipate or make
changes necessary in the investments to meet changes in economic conditions.
The Funds receive investment advice from their investment advisers. The Funds
pay each of the investment advisers a fee as described in the Fund prospectuses.
In some cases, the investment adviser pays part of its fee to a subadviser.
Affiliates of certain Funds may compensate us based upon a percentage of the
Fund's average daily net assets that are allocated to VAR. These percentages
vary by Fund. This is intended to compensate us for administrative and other
services we provide to the Funds and their affiliates.
For additional information concerning the Funds, including their investment
objectives, see the Fund prospectuses. Read them carefully before investing.
They may contain information about other funds that are not available as
investment options for these contracts. You cannot be sure that any Fund will
achieve its stated objectives and policies.
The investment policies, objectives and/or names of some of the Funds may be
similar to those of other investment companies managed by the same investment
adviser or subadviser. However, similar funds often do not have comparable
investment performance. The investment results of the Funds may be higher or
lower than those of the other funds.
MIXED AND SHARED FUNDING
In addition to being offered to VAR, certain Fund shares are offered to Ohio
National Life's separate accounts for variable annuity contracts. Fund shares
may also be offered to other insurance company separate accounts and qualified
plans. It is conceivable that in the future it may become disadvantageous for
one or more of variable life and variable annuity separate accounts, or separate
accounts of other life insurance companies, and qualified plans, to invest in
Fund shares. Although neither we nor any of the Funds currently foresee any such
disadvantage, the Board of Directors or Trustees of each Fund will monitor
events to identify any material conflict among different types of owners and to
determine if any action should be taken. That could possibly include the
withdrawal of VAR's participation in a Fund. Material conflicts could result
from such things as:
- changes in state insurance law;
- changes in federal income tax law;
- changes in the investment management of any portfolio of one of the
Funds, or
- differences between voting instructions given by different types of
contractowners.
Form 5560.5
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DEATH BENEFITS
As long as the contract remains in force we will, upon receipt of due proof of
the insured's death, pay the contract proceeds to the beneficiary. The amount of
the death benefit payable will be determined as of the date of death, or on the
next following valuation date if the date of death is not a valuation date.
Unless a settlement option is elected, the proceeds will be paid according to
your beneficiary's selection from the settlement options listed in the contract.
We offer both beneficiaries and contractowners a wide variety of settlement
options listed in the contract. We offer both beneficiaries and contractowners a
wide variety of settlement options.
The contract provides for two death benefit plans: a level plan ("Plan A") and a
variable plan ("Plan B"). Generally, you designate the death benefit plan in
your contract application. Subject to certain restrictions, you may change the
death benefit plan from time to time. As long as the contract remains in force,
the death benefit under either plan will never be less than the stated amount of
the contract.
PLAN A -- LEVEL BENEFIT
The death benefit is the greater of:
- the contract's stated amount on the date of death or
- the death benefit determined by the corridor percentage test.
The death benefit determined by the corridor percentage test equals the
accumulation value of the contract on the date of death plus such accumulation
value multiplied by the corridor percentage. The corridor percentage varies with
attained age, as indicated in the following table:
<TABLE>
<CAPTION>
CORRIDOR ATTAINED CORRIDOR ATTAINED CORRIDOR CORRIDOR
ATTAINED AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE ATTAINED AGE PERCENTAGE
------------ ---------- -------- ---------- -------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
40 & below 150% 52 71 % 64 22 % 91 4%
41 143 53 64 65 20 92 3%
42 136 54 57 66 19 93 2%
43 129 55 50 67 18 94 1%
44 122 56 46 68 17 95 & above 0%
45 115 57 42 69 16
46 109 58 38 70 15
47 103 59 34 71 13
48 97 60 30 72 11
49 91 61 28 73 9
50 85 62 26 74 7
51 78 63 24 75-90 5
</TABLE>
Illustration of Plan A. Assume that the insured's attained age at time of death
is 40 and that the stated amount of the contract is $100,000.
Under these circumstances, any time the accumulation value of the contract is
less than $40,000, the death benefit will be the stated amount. However, any
time the accumulation value exceeds $40,000, the death benefit will be greater
than the contract's $100,000 stated amount due to the corridor percentage test.
This is because the death benefit for an insured who dies at age 40 must be at
least equal to the accumulation value plus 150% of the accumulation value.
Consequently, each additional dollar added to accumulation value above $40,000
will increase the death benefit by $2.50. Similarly, to the extent accumulation
value exceeds $40,000, each dollar taken out of accumulation value will reduce
the death benefit by $2.50. If, for example, the accumulation value is reduced
from $48,000 to $40,000, the death benefit will be reduced from $120,000 to
$100,000. However, further reductions in the accumulation value below the
$40,000 level will not affect the death benefit so long as the reductions are
due to performance. Reductions due to surrenders, loans and partial surrenders
do affect the death benefit.
Form 5560.5
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In the foregoing example, the breakpoint of $40,000 of accumulation value for
using the corridor percentage test to calculate the death benefit was determined
by dividing the $100,000 stated amount by 100% plus 150% (the corridor
percentage at age 40, as shown in the table above). For your contract, you may
make the corresponding determination by dividing your stated amount by 100% plus
the corridor percentage for your age (see the table above). The calculation will
yield a dollar amount which will be your breakpoint for using the corridor
percentage test. If your accumulation value is greater than such dollar figure,
your death benefit will be determined by the corridor percentage test. If it is
less, your death benefit will be your stated amount.
PLAN B -- VARIABLE BENEFIT
The death benefit is equal to the greater of:
- the stated amount plus the accumulation value on the date of death or
- the death benefit determined by the corridor percentage as described
above and using the foregoing table of corridor percentages.
Illustration of Plan B. Again assume that the insured's attained age at the time
of death is 40 and that the stated amount of the contract is $100,000.
Under these circumstances, a contract with accumulation value of $20,000 will
have a death benefit of $120,000 ($100,000 + $20,000). An accumulation value of
$60,000 will yield a death benefit of $160,000 ($100,000 + $60,000). The death
benefit under this illustration, however, must be at least equal to the
accumulation value plus 150% of the contract's accumulation value. As a result,
if the accumulation value of the contract exceeds $66,667, the death benefit
will be greater than the stated amount plus accumulation value. Each additional
dollar of accumulation value above $66,667 will increase the death benefit by
$2.50. Under this illustration, a contract with an accumulation value of $80,000
will provide a death benefit of $200,000 ($80,000 + 150% (LOGO) $80,000).
Similarly, to the extent that accumulation value exceeds $66,667, each dollar
taken out of accumulation value reduces the death benefit by $2.50. If, for
example, the accumulation value is reduced from $80,000 to $68,000, the death
benefit will be reduced from $200,000 to $170,000.
In the foregoing example, the breakpoint of $66,667 of accumulation value for
using the corridor percentage test to calculate the death benefit was determined
by dividing the $100,000 stated amount by 150% (the corridor percentage at age
40, as shown in the table above). For your contract, you may make the
corresponding determination by dividing your stated amount by the corridor
percentage for your age (see the table above). The calculation will yield a
dollar amount which will be your breakpoint for using the corridor percentage
test. If your accumulation value is greater than such dollar figure, your death
benefit will be determined by the corridor percentage test. If it is less, your
death benefit will be your stated amount plus your accumulation value.
CHANGE IN DEATH BENEFIT PLAN
Generally, after the first contract year, you may change your death benefit plan
on any process day by sending us a written request. Changing death benefit plans
from Plan B to Plan A will not require evidence of insurability. Changing death
benefit plans from Plan A to Plan B may require evidence of insurability. The
effective date of any such change will be the process day on or following the
date of receipt of your request.
As a general rule, when you wish to have favorable investment performance
reflected in higher accumulation value, you should elect the Plan A death
benefit. Conversely, when you wish to have favorable investment performance
reflected in increased insurance coverage, you should generally elect the Plan B
death benefit.
If you change your death benefit plan from Plan B to Plan A, your stated amount
will be increased by the amount of your accumulation value to equal the death
benefit which would have been payable under Plan B on the effective date of the
change. For example, a Plan B contract with a $100,000 stated amount and $20,000
Form 5560.5
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accumulation value ($120,000 death benefit) would be converted to a Plan A
contract with $120,000 stated amount. Again, the death benefit would remain the
same on the effective date of the change.
A change in the death benefit option will not alter the amount of the
accumulation value or the death benefit payable under the contract on the
effective date of the change. However, switching between the variable and the
level plans will alter your insurance program with consequent effects on the
level of your future death benefits, accumulation values and premiums. For a
given stated amount, the death benefit will be greater under Plan B than under
Plan A, but the monthly deduction will be greater under Plan B than under Plan
A. Furthermore, assuming your accumulation value continues to increase, your
future cost of insurance charges will be higher after a change from Plan A to
Plan B and lower after a change from Plan B to Plan A. If your accumulation
value decreases in the future, the opposite will be true. Changes in the cost of
insurance charges have no effect on your death benefit under Plan A. Under Plan
B, however, increased cost of insurance charges will reduce the future
accumulation value and death benefit to less than they otherwise would be.
DEATH BENEFIT GUARANTEE
We guarantee that the contract will not lapse during the death benefit guarantee
period provided you pay the minimum premium. (See "Premiums -- Minimum
Premiums.") Accordingly, as long as the death benefit guarantee is in effect,
the contract will not lapse even if, because of adverse investment performance,
the cash surrender value falls below the amount needed to pay the next monthly
deduction. A charge per $1,000 of stated amount will be made for each month the
death benefit guarantee is in effect. The charge is $0.00 if you choose a 5 year
guarantee; $0.01 if you choose the guarantee to the later of age 70 or 10 years,
or $0.03 if you choose the guarantee to maturity. (Only the 5 year guarantee is
available in Massachusetts and Texas.)
If on any process day the minimum premium requirement is not met, we will send
you a notice of the required payment. If we do not receive the required payment
within 61 days of the date of the mailing of such notice, the death benefit
guarantee will no longer be in effect. Generally, the death benefit guarantee
may not be reinstated once it has been lost. However, we may at our discretion
permit you to reinstate the death benefit guarantee if you:
- double your stated amount or
- increase your stated amount by $100,000 or more.
A new minimum premium will be required to maintain the reinstated death benefit
guarantee.
CHANGES IN STATED AMOUNT
Subject to certain limitations, you may at any time after the first contract
year increase your contract's stated amount and after two years from the issue
date decrease your stated amount by sending us a written request. We may limit
you to two such changes in each contract year. Any change must be of at least
$5,000. The effective date of the increase or decrease will be the process day
on or following approval of the request. A change in stated amount will affect
the monthly insurance charges and surrender charges.
Increases. An increase is treated in a similar manner to the purchase of a new
contract. To obtain an increase, you must submit a supplemental application to
us with evidence demonstrating insurability. Depending on your accumulation
value, you may or may not have to pay additional premiums to obtain an increase.
If you must pay an additional premium, we must receive it by the effective date
of the increase.
After an increase, a portion of premium payments will be allocated to such
increase. The amount so allocated will bear the same relationship to total
premium payments as the guideline annual premium for such increase bears to the
guideline annual premium for your initial stated amount plus the guideline
annual premiums for all increases.
Only premiums allocated to an increase will be subject to the contingent
deferred sales charge for the increase.
Form 5560.5
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With respect to premiums allocated to an increase, you will have the same free
look and conversion rights with respect to an increase as with the initial
purchase of your contract.
Decreases. You may decrease your stated amount after two years from the issue
date or the date of any increase, subject to the following limitations:
- The stated amount after any requested decrease may not be less than the
minimum stated amount of $50,000.
- We will not permit a decrease in stated amount if the contract's cash
value is such that reducing the stated amount would cause the death
benefit after the decrease to be determined by the corridor percentage
test.
- We will not permit a decrease in stated amount if the decrease would
disqualify the contract as life insurance under the Code.
If you decrease your stated amount, we will deduct any applicable surrender
charge from your accumulation value. For purposes of calculating the amount of
that surrender charge and the cost of insurance charge on your remaining
coverage, a decrease in stated amount will reduce your existing stated amount in
the following order:
- the stated amount provided by your most recent increase,
- your next most recent increases successively, and
- your initial stated amount.
ACCUMULATION VALUE
Your contract provides certain accumulation value benefits. Subject to certain
limitations, you may obtain access to the accumulation value of your contract.
You may borrow against your contract's loan value and you may surrender your
contract in whole or in part.
The accumulation value of your contract is the sum of the accumulation values in
the subaccounts, the general account and the loan collateral account. The
following discussion relates only to the variable subaccounts of VAR. The
general account and the loan collateral account are discussed elsewhere in this
prospectus.
DETERMINATION OF VARIABLE ACCUMULATION VALUES
Your accumulation value in VAR may increase or decrease depending on the
investment performance of the subaccounts you choose. There is no guaranteed
minimum accumulation value in VAR.
The accumulation value of your contract will be calculated initially on the
later of the issue date or when we first receive a premium payment. After that,
it is calculated on each valuation date. On the initial valuation date, your
accumulation value will equal the initial premium paid minus the premium expense
charge and the first monthly deduction. On each subsequent valuation date, your
accumulation value will be (1) plus any transactions referred to in (2), (3) and
(4) and minus any transactions referred to in (5), (6) and (7) which occur
during the current valuation period, where:
(1) is the sum of each subaccount's accumulation value as of the previous
valuation date multiplied by each subaccount's net investment factor
for the current valuation period;
(2) is net premiums allocated to VAR;
(3) is transfers from the loan collateral account as a result of loan
repayments and reallocations of accumulation value from the general
account;
(4) is interest on contract indebtedness credited to the variable
subaccounts;
Form 5560.5
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(5) is transfers to the loan collateral account in connection with contract
loans and reallocations of accumulation value to the general account;
(6) is any partial surrender made (and any surrender charge imposed); and
(7) is the monthly deduction.
ACCUMULATION UNIT VALUES
We use accumulation units as a measure of value for bookkeeping purposes. When
you allocate net premiums to a subaccount, we credit your contract with
accumulation units. In addition, other transactions, including loans, partial
and full surrenders, transfers, surrender and service charges, and monthly
deductions, affect the number of accumulation units credited to your contract.
The number of units credited or debited in connection with any such transaction
is determined by dividing the dollar amount of such transaction by the unit
value of the affected subaccount. We determine the unit value of each subaccount
on each valuation date. The number of units so credited or debited will be based
on the unit value on the valuation date on which the premium payment or
transaction request is received by us at our home office. The number of units
credited will not change because of subsequent changes in unit value. The dollar
value of each subaccount's units will reflect asset charges and the investment
performance of the corresponding portfolio of the Funds.
The accumulation unit value of each subaccount's unit initially was $10. The
unit value of a subaccount on any valuation date is calculated by multiplying
the subaccount unit value on the previous valuation date by its net investment
factor for the current valuation period.
NET INVESTMENT FACTOR
We use a net investment factor to measure investment performance of each
subaccount and to determine changes in unit value from one valuation period to
the next. The net investment factor for a valuation period is (a) divided by (b)
minus (c) where:
(a) is (i) the value of the assets of the subaccount at the end of the
preceding valuation period, plus (ii) the investment income and capital
gains, realized or unrealized, credited to the assets of the subaccount
during the valuation period for which the net investment factor is
being determined, minus, (iii) any amount charged against the
subaccount for taxes or any amount set aside during the valuation
period by us to provide for taxes we determine are attributable to the
operation or maintenance of that subaccount (currently there are no
such taxes);
(b) is the value of the assets of the subaccount at the end of the
preceding valuation period; and
(c) is a charge no greater than 0.0020471% on a daily basis. This
corresponds to 0.75% on an annual basis for mortality and expense
risks.
LOANS
After the first contract year, you may borrow up to the loan value of your
contract. The loan value is the cash surrender value less the cost of insurance
charges on your contract to the end of the current contract year. The loan value
will never be less than 90% of the cash surrender value. We will generally
distribute the loan proceeds to you within seven days from receipt of your
request for the loan at our home office, although payment of the proceeds may be
postponed under certain circumstances. (See "General Provisions -- Postponement
of Payments".) In some circumstances, loans may involve tax liability. (See
"Federal Tax Matters".)
When a loan is made, accumulation value in an amount equal to the loan will be
taken from the general account and each subaccount in proportion to your
accumulation value in the general account and each subaccount. This value is
then held in the loan collateral account and earns interest at an effective rate
guaranteed to be at least 4%
Form 5560.5
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per year. Currently, we credit interest to the loan collateral account at a rate
of 6.75% per year, but we may reduce such rate to 4% at any time. Such interest
is credited to the subaccounts and the general account in accordance with the
premium allocation then in effect.
We charge interest on loans in advance each year at a rate of 7.4% per year,
equivalent to an effective annual rate of 8%. When we make a loan, we add to the
amount of the loan the interest covering the period until the end of the
contract year. At the beginning of each subsequent contract year, if you fail to
pay the interest in cash, we will transfer sufficient accumulation value from
the general account and each subaccount to pay the interest for the following
contract year. The allocation will be in proportion to your accumulation value
in each subaccount.
You may repay a loan at any time, in whole or in part, before we pay the
contract proceeds. When you repay a loan, interest already charged covering any
period after the repayment will reduce the amount necessary to repay the loan.
Premiums paid in excess of any planned premiums when there is a loan outstanding
will be first applied to reduce or repay such loan, unless you request
otherwise. Upon repayment of a loan, the loan collateral account will be reduced
by the amount of the repayment and the repayment will be allocated first to the
general account, until the amount borrowed from the general account has been
repaid. Unless we are instructed otherwise, the balance of the repayment will
then be applied to the subaccounts and the general account according to the
premium allocation then in effect.
Any outstanding contract indebtedness will be subtracted from the proceeds
payable at the insured's death and from cash surrender value upon complete
surrender or maturity.
A loan, whether or not repaid, will have a permanent effect on a contract's cash
surrender value (and the death benefit under Plan B contracts) because the
investment results of the subaccounts will apply only to the amount remaining in
the subaccounts. The longer the loan is outstanding, the greater the effect is
likely to be. The effect could be favorable or unfavorable. If investment
results are greater than the rate being credited upon the amount of the loan
while the loan is outstanding, contract values will not increase as rapidly as
they would have if no loan had been made. If investment results are below that
rate, contract values will be higher than they would have been had no loan been
made.
SURRENDER PRIVILEGES
As an alternative to obtaining access to your accumulation value by using the
loan provisions described above, you may obtain your cash surrender value by
exercising your surrender or partial surrender privileges. Surrenders, however,
may involve tax liability.
You may surrender your contract in full at any time by sending a written request
together with the contract to our home office. The cash surrender value of the
contract equals the accumulation value less any applicable surrender charges.
Upon surrender, the amount of any outstanding loans will be deducted from the
cash surrender value to determine the proceeds. The proceeds will be determined
on the valuation date on which the request for a surrender is received. Proceeds
will generally be paid within seven days of receipt of a request for surrender.
After two years from the issue date, you may obtain a portion of your
accumulation value upon partial surrender of the contract. Partial surrenders
cannot be made more than twice during any contract year. The amount of any
partial surrender may not exceed the cash surrender value, minus:
- any outstanding contract indebtedness,
- an amount sufficient to cover the next two monthly deductions and
- the service charge of $25 or 2% of the amount surrendered, if less.
Form 5560.5
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We will reduce the accumulation value of your contract by the amount of any
partial surrender. In doing so, we will deduct the accumulation value taken by a
partial surrender from each increase and your initial stated amount in
proportion to the amount such increases and initial stated amount bear to the
total stated amount.
Under Plan A, a partial surrender reduces your stated amount. Such a surrender
will result in a dollar for dollar reduction in the death proceeds except when
the death proceeds of your contract are determined by the corridor percentage
test. The stated amount remaining after a partial surrender may be no less than
the minimum stated amount of $50,000. If increases in stated amount have
occurred previously, a partial surrender will first reduce the stated amount of
the most recent increase, then the next most recent increases successively, then
the initial stated amount.
Under Plan B, a partial surrender reduces your accumulation value. Such a
reduction will result in a dollar for dollar reduction in the death proceeds
except when the death proceeds are determined by the corridor percentage test.
Because the Plan B death benefit is the sum of the accumulation value and stated
amount, a partial surrender under Plan B does not reduce your stated amount but
instead reduces accumulation value.
If the proceeds payable under either death benefit option both before and after
the partial surrender are determined by the corridor percentage test, a partial
surrender generally will result in a reduction in proceeds equal to the amount
paid upon such surrender plus such amount multiplied by the applicable corridor
percentage.
During the first 20 contract years and for 20 years after the effective date of
an increase, a partial surrender charge in addition to the service charge of the
lesser of $25 or 2% of the amount surrendered will be made on the amount of
partial surrenders in any contract year that exceeds 10% of the cash surrender
value as of the end of the previous contract year.
MATURITY
We will pay you your accumulation value, reduced by any outstanding contract
indebtedness, on the maturity date. The maturity date is listed on the
specification page and is generally the end of the contract year nearest your
100th birthday. If we consent, you may instead continue your contract as an
extended endowment after the maturity date. In such case, the death benefit
after the maturity date will equal your contract's cash surrender value.
PREMIUMS
PURCHASING A CONTRACT
To purchase a contract, you must complete an application and submit it to us at
our home office through the agent selling the contract. Generally, we will not
issue a contract to a person older than age 80, but we may do so at our sole
discretion. Non-smoker rates are available if you are age 18 or over. We will
only issue contracts with stated amounts of $50,000 or more. All applications
require evidence of insurability. Acceptance of any application is subject to
our insurance underwriting rules. The review period for routine applications
will generally last one week. Approval of applications that require supplemental
medical information, however, may be delayed six weeks or more while such
information is obtained and reviewed.
You must pay an initial premium in order for your contract to take effect. The
contract takes effect as of the contract date. However, if you pay the initial
premium at the time you submit your application, we will, pursuant to the
premium receipt agreement contained in such application, provide you with
insurance coverage equal to your stated amount (up to $1,000,000) for a period
of up to 60 days, starting on the later of the date of your application and the
date you complete any required medical examination and ending on the date we
approve or reject your application. We do not pay interest on initial premiums
during the review period.
Form 5560.5
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<PAGE> 22
The contract date will be the same as the issue date, except in the case of a
backdated contract where the contract date will be earlier than the issue date.
At your request, we will backdate a contract as much as six months where
permitted by state law. This procedure may be to your advantage where backdating
will lower your age at issue and thereby lower your cost of insurance and
surrender charges which are scaled by age. A backdated contract will be treated
as though it had been in force since the contract date. Consequently, the
initial premium required for a backdated contract will be larger than for a
contract which is not backdated because you must pay the minimum premium, pay
monthly deductions and pay all other charges associated with the contract for
the period between the contract date and the issue date.
On the later of the issue date and the date we receive your initial premium, net
premiums are allocated to the Money Market subaccount. On the first process day
following the issue date or, if later, when we receive your initial premium,
such net premiums will be allocated among the subaccounts and the general
account in accordance with your instructions as indicated in your application.
If we reject your application during the review period or you choose to cancel
your contract during the free look period, we will refund to you all amounts you
have paid under the contract.
PAYMENT OF PREMIUMS
We allocate premium payments to the various subaccounts the same day if received
by us at our home office before 4:00 p.m. Eastern time. If a premium payment is
dishonored, you will be liable to us for any changes in the market value between
the date received and the date we are notified that the payment was dishonored.
We will deduct any amount due for this reason from your contract value.
Unlike a traditional insurance policy, the contract does not require a fixed
schedule of premium payments. Within certain limits, you may determine the
amount and timing of your premium payments. As described below, such limits
include an initial premium requirement and a minimum premium requirement. Your
contract specification page will also include a schedule of planned premiums.
INITIAL PREMIUMS
You must pay an initial premium before we will make your contract effective.
This premium may be submitted with your contract application or sent directly to
us at our home office. The amount of the initial premium will be at least one
monthly minimum premium. The initial premium for a backdated contract may be
substantially greater.
TERM INSURANCE CONVERSION CREDIT
We will apply a term insurance conversion credit as premium paid in the first
contract year. The conversion credit is based on (but not necessarily equal to)
the amount of annual premium for the Ohio National Life Assurance Corporation
term life insurance policy being converted to, or exchanged for, the new
contract. Consult your agent for details.
MINIMUM PREMIUMS
You must pay the minimum premium to keep the death benefit guarantee in effect.
Failure to make premium payments sufficient to maintain the death benefit
guarantee will not necessarily cause your contract to lapse. However, once the
death benefit guarantee does not apply to your contract, it may not be
reinstated. The monthly deduction for the death benefit guarantee will not be
imposed on contracts for which the death benefit guarantee is no longer in
effect.
To pay the minimum premium, you must have paid at any time cumulative premiums,
less any partial surrenders and contract indebtedness, equal to the monthly
minimum premium multiplied by the number of contract
Form 5560.5
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months the contract has been in effect. The monthly minimum premium indicated on
the contract specification page will remain a level amount until the end of the
death benefit guarantee period.
PLANNED PREMIUMS
When you purchase a contract, you will be asked to adopt a planned premium
schedule. The schedule is a planning device which indicates the level of
premiums you intend to pay under the contract. You are not required to adhere to
it. You may adopt, in consultation with your agent, any planned premium schedule
that you wish. The amount of scheduled payments, however, should generally be
set between the minimum premium necessary to keep the death benefit guarantee in
effect and the maximum premium permitted for your contract to qualify as life
insurance under the Code. The guideline annual premium is a level amount which
should provide the benefits under the contract through age 100 and is based on
guaranteed assumptions with respect to expenses and cost of insurance charges
and investment performance of 4%.
In choosing your planned premium schedule, you will need to make a judgment as
to the long-term rate of investment return which you expect under the contract.
The higher your assumption as to the long-term rate of investment return, the
lower your planned premium needs to be for a given insurance objective, and vice
versa. There is no assurance that your planned premiums will provide the death
proceeds or other benefits sought under the contract. By definition, the value
of such benefits depends on the investment performance of the subaccounts which
cannot be predicted. In any event, you may need to pay greater or lesser
premiums than are indicated in the planned premium schedule to attain your
insurance objectives.
We will furnish you an annual report which will show personalized hypothetical
illustrations of your contract values under various performance scenarios and
assumed rates of return one year from the date of the report based on planned
premiums, guaranteed cost of insurance and guaranteed interest with respect to
the general account. We may charge for this report.
As previously indicated, at any time you may pay more or less than the amount
indicated in the planned premium schedule. We may at our discretion, however,
refuse to accept any premium payment of less than $25 or so large that it would
cause the contract, without an increase in death benefit, to be disqualified as
life insurance or to be treated as a modified endowment contract under federal
law.
ALLOCATION OF PREMIUMS
In the contract application, you may direct the allocation of your net premium
payments among up to 10 of the subaccounts of VAR and the general account. Your
initial allocation will take effect on the first process day following the issue
date or, if later, when we receive your initial premium payment. Pending such
allocation, net premiums will be held in the Money Market subaccount. If you
fail to indicate an allocation in your contract application, we will leave your
net premiums in the Money Market subaccount until we receive allocation
instructions. The amount allocated to any subaccount or the general account must
equal a whole percentage. You may change the allocation of your future net
premiums at any time upon written notice to us. Premiums allocated to an
increase will be credited to the subaccounts and the general account in
accordance with your premium allocation then in effect on the later of the date
of the increase or the date we receive such a premium.
TRANSFERS
You may transfer the accumulation value of your contract among the subaccounts
of VAR and to the general account at any time. Each amount transferred must be
at least $300 unless a smaller amount constitutes the entire accumulation value
of the subaccount from which the transfer is being made, in which case you may
only transfer the entire amount. There is a service charge of $3 for each
transfer, but we are presently waiving that charge for the first four transfers
during a contract year. Such fee is guaranteed not to exceed $15 in the future.
Form 5560.5
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Transfers from the general account to the subaccounts are subject to additional
restrictions. No more than 25% of the accumulation value in the general account
as of the end of the previous contract year, or $1,000, if greater, may be
transferred to one or more of the subaccounts in any contract year.
To the extent that transfers, surrenders and loans from a subaccount exceed net
purchase payments and transfers into that subaccount, securities of the
corresponding portfolio of the Fund may have to be sold. Excessive sales of a
portfolio's securities on short notice could be detrimental to that portfolio
and to contractowners with values allocated to the corresponding subaccount. To
protect the interests of all contractowners we may limit the number, frequency,
method or amount of transfers. Transfers from any Fund on any one day may be
limited to 1% of the previous day's total net assets of that Fund if we or the
Fund, in our or their discretion, believe that the Fund might otherwise be
damaged.
If and when transfers must be so limited, some transfer requests will not be
made. In determining which requests will be made, scheduled transfers (pursuant
to a preexisting Dollar Cost Averaging program) will be made first, followed by
mailed written requests in the order postmarked and, lastly, telephone and
facsimile requests in the order received. If your transfer requests are not
made, we will notify you. Current rules of the Commission preclude us from
processing at a later date those requests that were not made. Accordingly, a new
transfer request would have to be submitted in order to make a transfer that was
not made because of these limitations.
DOLLAR COST AVERAGING
We administer a Dollar Cost Averaging ("DCA") program enabling you to
preauthorize automatic monthly or quarterly transfers of a specified dollar
amount:
- from any variable subaccount to any of the other subaccounts or the
general account, or
- if established at the time the contract is issued and limited to
accumulation values attributed to your initial premium payment, from the
general account to any other subaccounts.
The DCA program is only available on contracts having a total accumulation value
of at least $10,000. Each transfer under the DCA program must be at least $300,
and at least 12 transfers must be scheduled. No transfer fee will be charged for
DCA transfers. We may discontinue the DCA program at any time.
DCA generally has the effect of reducing the risk of purchasing at the top of a
market cycle by reducing the average cost of indirectly purchasing Fund shares
through the subaccounts to less than the average price of the shares on the same
purchase dates. This is because greater numbers of shares are purchased when the
share prices are lower than when prices are higher. However, DCA does not assure
you of a profit, nor does it protect against losses in a declining market. In
addition, in a rising market, DCA will produce a lower rate of return than will
a single up-front investment. Moreover, for transfers from a subaccount not
having a stabilized net asset value, DCA will have the effect of reducing the
average price of shares being redeemed.
TELEACCESS
If you give us a pre-authorization form contract and unit values and interest
rates can be checked and transfers may be made by telephoning us between 7:00
a.m. and 7:00 p.m. (Eastern time) on days we are open for business, at
1-800-366-6654, #8. You may only make one telephone transfer per day. We will
honor pre-authorized telephone transfer instructions from anyone who provides
the personal identifying information requested via TeleAccess. We will not honor
telephone transfer requests after the contractowner's death. For added security,
we send the contractowner a written confirmation of all telephone transfers on
the next business day. However, if we cannot complete a transfer as requested,
our customer service representative will contact the contractowner in writing
sent within 48 hours of the TeleAccess request. YOU MAY THINK THAT YOU HAVE
LIMITED
Form 5560.5
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THIS ACCESS TO YOURSELF, OR TO YOURSELF AND YOUR REPRESENTATIVE. HOWEVER, ANYONE
GIVING US THE NECESSARY IDENTIFYING INFORMATION CAN USE TELEACCESS ONCE YOU
AUTHORIZE ITS USE.
LAPSE
Provided you pay the minimum premium and thereby keep the death benefit
guarantee in effect, your contract will not lapse during the death benefit
guarantee period. If you fail to pay the minimum premium and, as a result, the
death benefit guarantee is not in effect, the contract will remain in force as
long as the cash surrender value less any contract indebtedness is sufficient to
pay the next monthly deduction. If the cash surrender value less any contract
indebtedness is insufficient to pay the next monthly deduction, you will be
given a 61 day grace period within which to make a premium payment to avoid
lapse. The premium required to avoid lapse will be equal to the amount needed to
allow the cash surrender value less any contract indebtedness to cover the
monthly deduction for two contract months. This required premium will be
indicated in a written notice which we will send to you at the beginning of the
grace period. The grace period begins when we mail the notice. The contract will
continue in force throughout the grace period, but if the required premium is
not received, the contract will terminate without value at the end of the grace
period. If you die during the grace period, the death benefit will be reduced by
the amount of any unpaid monthly deduction. However, the contract will never
lapse due to insufficient cash surrender value as long as the death benefit
guarantee is in effect.
REINSTATEMENT
If the contract lapses, you may apply for reinstatement anytime within five
years. Your contract will be reinstated if you supply proof of insurability and
pay the monthly cost of insurance charges from the grace period plus a
reinstatement premium. The reinstatement premium, after deduction of the premium
expense charge, must be sufficient to cover the monthly deduction for two
contract months following the effective date of reinstatement. If a loan was
outstanding at the time of lapse, we will require reinstatement or repayment of
the loan and accrued interest at 6% per year before permitting reinstatement of
the contract.
CONVERSION
Once during the first two years following the issue date and the date of any
increase in stated amount, you may convert your contract or increase, as
applicable, to a fixed benefit flexible premium policy by transferring all of
your accumulation value to the general account. After such a transfer, values
and death benefits under your contract will be determinable and guaranteed.
Accumulation values will be determined as of the date we receive a conversion
request at our home office. There will be no change in stated amount as a result
of the conversion and no evidence of insurability is required. Outstanding loans
need not be repaid in order to convert your contract. Transfers of accumulation
value to the general account in connection with such a conversion will be made
without charge.
FREE LOOK
You have a limited right to cancel your contract or any increase in stated
amount. We will cancel the contract or increase if you notify us or our agent
before 20 days from the date you receive the contract or increase. Within seven
days after we receive your notice to cancel, we will return all of the money you
paid for the cancelled contract or increase.
CHARGES AND DEDUCTIONS
We make charges against or deductions from premium payments, accumulation values
and contract surrenders in the manner described below.
Form 5560.5
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PREMIUM EXPENSE CHARGE
Each premium payment is subject to a premium expense charge. The premium expense
charge has two components: a federal tax charge and a charge for the state
premium tax and any other state and local taxes applicable to your contract.
Federal Tax Charge. The contract is subject to a charge of 1.25% of premiums
paid in the first 10 years. This charge is intended to help defray the federal
tax cost attributable to this contract.
State Premium Tax. Your premium payments will be subject to the state premium
tax and any other state or local taxes applicable to your contract. Currently,
most state premium taxes range from 0% to 4%.
OHIO NATIONAL LIFE EMPLOYEE DISCOUNT
Ohio National Life and its affiliated companies offer a credit on the purchase
of contracts by any of their employees, directors or retirees, or their spouse
or the surviving spouse of a deceased retiree, covering any of the foregoing or
any of their minor children, or any of their children ages 18 to 21 who is
either (i) living in the purchaser's household or (ii) a full-time college
student being supported by the purchaser, or any of the purchaser's minor
grandchildren under the Uniform Gifts to Minors Act. This credit is treated as
additional premium under the contract.
The amount of the initial credit equals 45% of the first contract year's maximum
commissionable premium or 45% of the maximum commissionable premium of an
increase, which is credited to the general account of the employee's contract
effective one day after the latest of the following three dates:
- the policy approval date,
- the policy effective date, or
- the date the initial payment is received.
The subsequent credit, which is based on 3% of first year premium in excess of
the maximum commissionable premium plus 3% of premiums paid in contract years
two through six, is credited to the general account of the employee's contract
at the beginning of the seventh contract year. For any increase that occurs
during the first six contract years, the 45% initial credit on the increase
described above substitutes for the 3% subsequent credit on that portion of the
premium attributable to the increase.
MONTHLY DEDUCTION
As of the contract date and each subsequent process day, we will deduct from the
accumulation value of your contract a monthly deduction to cover certain charges
and expenses incurred in connection with the contract.
The monthly deduction consists of:
- the cost of insurance,
- an administration charge of $7 for the cost of establishing and
maintaining contract records and processing applications and notices,
- a risk charge for the risk associated with the death benefit guarantee,
and
- the cost of additional insurance benefits provided by rider.
Form 5560.5
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Your cost of insurance is determined on a monthly basis, and is determined
separately for your initial stated amount and each subsequent increase in the
stated amount. The monthly cost of insurance rate is based on your sex, attained
age, and rate class. The cost of insurance is calculated by multiplying (i) by
the result of (ii) minus (iii), where:
(i) is the cost of insurance rate as described in the contract. Such actual cost
will be based on our expectations as to future mortality experience. It will
not, however, be greater than the guaranteed cost of insurance rates set
forth in the contract. Such rates for smokers and non-smokers are based on
the 1980 Commissioner's Standard Ordinary, Male or Female, Smoker or
Nonsmoker, mortality table. The cost of insurance charge is guaranteed not
to exceed such table rates for the insured's risk class;
(ii) is the death benefit at the beginning of the contract month divided by
1.0032737; and
(iii) is accumulation value at the beginning of the contract month.
In connection with certain employer-related plans, cost of insurance rates may
not be based on sex.
The monthly charge for the death benefit guarantee is $0.00, $0.01, or $0.03 per
$1,000 of your stated amount, depending upon which death benefit guarantee
period you choose.
RISK CHARGE
Your accumulation value in VAR, but not your accumulation value in the general
account, will also be subject to a risk charge intended to compensate us for
assuming certain mortality and expense risks in connection with the contract.
Such charge will be assessed at a daily rate of 0.0020471% against each of the
variable subaccounts. This corresponds to an annual rate of 0.75%. The risks we
assume include the risks of greater than anticipated mortality and expenses.
SURRENDER CHARGE
After the free look period and during the early years of your contract and
following any increase in stated amount, a surrender charge is assessed in
connection with all complete surrenders, all lapses, all decreases in stated
amount and certain partial surrenders. Such surrender charge consists of two
components:
- a contingent deferred sales charge, which applies to your initial
contract for 20 years from the contract date and to any increase for 20
years from the effective date of such increase, and
- a contingent deferred insurance underwriting charge, which applies for 8
years from such dates.
If you surrender your contract in full or it lapses when a surrender charge
applies, we will deduct the total charge from your accumulation value. If you
decrease the stated amount of your contract while a surrender charge applies,
your accumulation value will be charged with the portion of the total surrender
charge attributable to the stated amount cancelled by the decrease.
Partial surrenders in any contract year totaling 10% or less of the cash
surrender value of your contract as of the end of the previous contract year are
not subject to any surrender charge. Partial surrenders in any contract year in
excess of 10% of the cash surrender value of your contract as of the end of the
previous contract year will be subject to that percentage of the total surrender
charges that is equal to the percentage of cash surrender value withdrawn minus
10%.
For example, assume a contract which now has, and at the end of the previous
contract year had, an accumulation value of $11,100 and a surrender charge of
$1,100. The cash surrender value of the contract is therefore $10,000. If you
decide to withdraw 25% of such cash surrender value ($2,500), we will impose a
charge
Form 5560.5
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equal to 15% (25% minus 10%) of the total surrender charge (.15 x $1,100 = $165)
and reduce your accumulation value by that amount, as well as by the $2,500 you
withdrew.
Contingent Deferred Sales Charge. The contingent deferred sales charge for your
initial contract is 50% of premiums paid in the first 10 years up to the maximum
shown on the contract specification page. The contingent deferred sales charge
takes effect only if your contract lapses or you surrender your contract, in
whole or in part, or decrease your stated amount, during the first 20 contract
years following the issue date or the date of any increase.
The contingent deferred sales charge for an increase is 50% of premiums
allocated to that increase in the first 10 years.
We grade-off the contingent deferred sales charge over the 20 year period to
which it applies. The table below shows the percentage of the total charge that
we intend to impose on surrenders, lapses, decreases and certain partial
surrenders in each year such charge applies.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL
YEAR CHARGE
---- -------------------
<S> <C>
1 to 10 100%
11 90%
12 80%
13 70%
14 60%
15 50%
16 40%
17 30%
18 20%
19 10%
20 0%
</TABLE>
Contingent Deferred Insurance Underwriting Charge. The contingent deferred
insurance underwriting charge varies with age at issue or increase and is
expressed as an amount per thousand dollars of your stated amount and therefore
varies with the size of your contract as well. The charge only applies to the
first $500,000 of your stated amount. The charges per thousand dollars of stated
amount and the maximum charges by virtue of the $500,000 cap are set forth in
the following table:
<TABLE>
<CAPTION>
AGE AT ISSUE 61 AND
OR INCREASE 0-40 41-50 51-60 OVER
------------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
Charge per $1.000 of Stated Amount $ 3.00 $ 4.00 $ 5.00 $ 6.00
Maximum $1,500 $2,000 $2,500 $3,000
</TABLE>
We grade-off the contingent deferred insurance underwriting charge in accordance
with the following table. The table shows the percentage of the total charge we
intend to impose on surrenders, lapses, decreases and certain partial surrenders
in each year such charge applies.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL
YEAR CHARGE
---- -------------------
<S> <C>
1 to 4 100%
5 80%
6 60%
7 40%
8 20%
9 0%
</TABLE>
Form 5560.5
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The contingent deferred insurance underwriting charge compensates us for certain
insurance underwriting costs, including the selection and classification of
risks and processing medical evidence of insurability.
SERVICE CHARGES
A charge (currently $3 and guaranteed not to exceed $15) will be imposed on each
transfer of accumulation values among the subaccounts of the variable account
and the general account. Currently, the Company is not assessing this charge on
the first four transfers made in any contract year. For partial surrenders, a
service fee will be charged equal to the lesser of $25 or 2% of the amount
surrendered. A fee, not to exceed $100, is charged for any illustration of
benefits and values that you may request after the issue date.
OTHER CHARGES
We may also charge the assets of each subaccount and the general account to
provide for any taxes that may become payable by us in respect of such assets.
Under current law, no such taxes are anticipated. In addition, the Funds pay
certain expenses that affect the value of your contract. The principal expenses
at the Fund level are an investment advisory fee and Fund operating expenses.
The Funds pay their Advisers annual fees on the basis of each portfolio's
average daily net assets during the month for which the fees are paid. The fees
are described in the Fund prospectuses.
The total expenses of each of the Funds in 1999, as a percent of each Fund's net
assets, were:
<TABLE>
<S> <C>
OHIO NATIONAL FUND, INC.:
Money Market Portfolio*................................... 0.36%
Equity Portfolio.......................................... 0.76%
Bond Portfolio............................................ 0.77%
Omni Portfolio............................................ 0.67%
S&P 500 Index Portfolio................................... 0.49%
International Portfolio*.................................. 1.21%
International Small Company Portfolio..................... 2.06%
Capital Appreciation Portfolio............................ 0.95%
Small Cap Portfolio....................................... 0.89%
Aggressive Growth Portfolio............................... 0.95%
Core Growth Portfolio..................................... 1.06%
Growth & Income Portfolio................................. 0.95%
Capital Growth Portfolio.................................. 1.09%
Social Awareness Portfolio................................ 0.93%
High Income Bond Portfolio................................ 1.13%
Equity Income Portfolio................................... 1.28%
Blue Chip Portfolio....................................... 1.35%
Nasdaq 100 Index Portfolio**.............................. 0.95%
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income Fund*..................... 1.00%
Goldman Sachs CORE U.S. Equity Fund....................... 0.90%
Goldman Sachs Capital Growth Fund*........................ 1.00%
JANUS ASPEN SERIES:
Growth Portfolio.......................................... 0.92%
Worldwide Growth Portfolio................................ 0.95%
Balanced Portfolio........................................ 0.92%
LAZARD RETIREMENT SERIES, INC.:
Small Cap Portfolio*...................................... 1.25%
Emerging Markets Portfolio*............................... 1.60%
</TABLE>
Form 5560.5
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<TABLE>
<S> <C>
STRONG VARIABLE INSURANCE FUNDS, INC.:
Strong Mid Cap Growth Fund II*....................................................................... 1.15%
Strong Opportunity Fund II........................................................................... 1.14%
Strong Shafer Value Fund II*......................................................................... 1.20%
VARIABLE INSURANCE PRODUCTS FUND:
CLASS 2 (FIDELITY)
VIP Contrafund(R) Portfolio.......................................................................... 0.95%
VIP Mid Cap Portfolio................................................................................ 1.25%
VIP Growth Portfolio................................................................................. 0.93%
PBHG INSURANCE SERIES FUND, INC.:
PBHG Technology & Communications Portfolio........................................................... 1.09%
</TABLE>
* The investment advisers of these Funds voluntarily waived part or all of
their fee and/or reimbursed the Fund to reduce Fund expenses. Without these
voluntary fee waivers and reimbursements, the total expenses of these Funds
would have been:
<TABLE>
<S> <C>
OHIO NATIONAL FUND, INC.:
Money Market Portfolio.................................... 0.41%
International Portfolio................................... 1.26%
GOLDMAN SACHS VARIABLE INSURANCE TRUST:
Goldman Sachs Growth and Income Fund...................... 1.22%
Goldman Sachs Capital Growth Fund......................... 1.69%
LAZARD RETIREMENT SERIES, INC.:
Small Cap Portfolio....................................... 7.31%
Emerging Markets Portfolio................................ 9.59%
STRONG VARIABLE INSURANCE FUNDS, INC.:
Strong Mid Cap Growth II.................................. 1.17%
Strong Schafer Value II................................... 1.57%
</TABLE>
** The Nasdaq 100 Index Portfolio's inception date is May 1, 2000, therefore,
the expenses have been estimated.
GENERAL PROVISIONS
VOTING RIGHTS
We will vote the Fund shares held in the various subaccounts of VAR at Fund
shareholder meetings in accordance with your instructions. If, however, the 1940
Act or any regulation thereunder should change and we determine that it is
permissible to vote the Fund shares in our own right, we may elect to do so. The
number of votes as to which you have the right to instruct will be determined by
dividing your contract's accumulation value in a subaccount by the net asset
value per share of the corresponding Fund portfolio. Fractional shares will be
counted. The number of votes as to which you have the right to instruct will be
determined as of the date coincident with the date established by the Fund for
determining shareholders eligible to vote at the Fund meeting. Voting
instructions will be solicited in writing prior to such meeting in accordance
with procedures established by the Fund. We will vote Fund shares attributable
to contracts as to which no instructions are received, and any Fund shares held
by VAR which are not attributable to contracts, in proportion to the voting
instructions which are received with respect to contracts participating in VAR.
Each person having a voting interest will receive proxy material, reports and
other material relating to the Funds.
We may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that shares be voted so as to
cause a change in subclassification or investment objective of the Fund or
disapprove an investment advisory contract of the Fund. In addition, we may
disregard voting instructions in favor of changes initiated by a contractowner
in the investment policy or the investment adviser of the Fund if we
Form 5560.5
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<PAGE> 31
reasonably disapprove of such changes. A change would be disapproved only if the
proposed change is contrary to state law or prohibited by state regulatory
authorities or we determined that the change would be inconsistent with the
investment objectives of VAR or would result in the purchase of securities for
VAR which vary from the general quality and nature of investments and investment
techniques utilized by other separate accounts created by us or any of our
affiliates which have similar investment objectives. In the event that we
disregard voting instructions, a summary of that action and the reason for such
action will be included in your next semi-annual report.
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
We reserve the right, subject to compliance with applicable law, to make
additions to, deletions from or substitutions for the shares held by any
subaccount or which any subaccount may purchase. If shares of the Funds should
no longer be available for investment or if, in the judgment of management,
further investment in shares of the Funds would be inappropriate in view of the
purposes of the contract, we may substitute shares of any other investment
company for shares already purchased, or to be purchased in the future. No
substitution of securities will take place without notice to and the consent of
contractowners and without prior approval of the Commission, all to the extent
required by the 1940 Act. In addition, the investment policy of VAR will not be
changed without the approval of the Ohio Superintendent of Insurance and such
approval will be on file with the state insurance regulator of the state where
your contract was delivered.
ANNUAL REPORT
Each year we will send you a report which shows the current accumulation value,
the cash surrender value, the stated amount, any contract indebtedness, any
partial withdrawals since the date of the last report, investment experience
credited since the last report, premiums paid and all charges imposed since the
last annual report. We will also send you all reports required by the 1940 Act.
We will also make available an illustration report. This report will be based on
planned premiums, guaranteed cost of insurance and guaranteed interest, if any.
It will show the estimated accumulation value of your contract one year from the
date of the report. Although there is generally no charge, we may charge a fee
of not more than $100 for this report and if you ask for more than one annual
report.
LIMITATION ON RIGHT TO CONTEST
We will not contest the insurance coverage provided under the contract, except
for any subsequent increase in stated amount, after the contract has been in
force during your lifetime for a period of two years from the contract date.
This provision does not apply to any rider which grants disability or accidental
death benefits. Any increase in the stated amount will not be contested after
such increase has been in force during your lifetime for two years following the
effective date of the increase. Any increase will be contestable within the two
year period only with regard to statements concerning the increase.
MISSTATEMENTS
If the age or sex of the insured has been misstated in an application, including
a reinstatement application, the amount payable under the contract by reason of
the death of the insured will be 1.0032737 multiplied by the sum of (i) and (ii)
where:
(i) is the accumulation value on the date of death; and
(ii) is the death benefit, less the accumulation value on the date of
death, multiplied by the ratio of (a) the cost of insurance actually
deducted at the beginning of the contract month in which the death
occurs to (b) the cost of insurance that should have been deducted at
the insured's true age or sex.
Form 5560.5
29
<PAGE> 32
SUICIDE
The contract does not cover the risk of suicide or self-destruction within two
years from the contract date or two years from the date of any increase in
stated amount with respect to that increase, whether the insured is sane or
insane. In the event of suicide within two years of the contract date, we will
refund premiums paid, without interest, less any contract indebtedness and less
any partial surrender. In the event of suicide within two years of an increase
in stated amount, we will refund any premiums allocated to the increase, without
interest, less a deduction for a share of any contract indebtedness outstanding
and any partial surrenders made since the increase. The share of indebtedness
and partial surrenders so deducted will be determined by dividing the total face
amount at the time of death by the face amount of the increase.
BENEFICIARIES
The primary and contingent beneficiaries are designated by the contractowner on
the application. If changed, the primary beneficiary or contingent beneficiary
is as shown in the latest change filed with us. If more than one beneficiary
survives the insured, the proceeds of the contract will be paid in equal shares
to the survivors in the appropriate beneficiary class unless requested otherwise
by the contractowner.
POSTPONEMENT OF PAYMENTS
Payment of any amount upon a complete or partial surrender, a contract loan, or
benefits payable at death or maturity may be postponed whenever:
- the New York Stock Exchange is closed other than customary week-end and
holiday closings, or trading on the Exchange is restricted as determined
by the Commission;
- the Commission by order permits postponement for the protection of
contractowners; or
- an emergency exists, as determined by the Commission, as a result of
which disposal of securities is not reasonably practicable or it is not
reasonably practicable to determine the value of VAR's net assets.
We may also withhold payment of any increased accumulation value or loan value
resulting from a recent premium payment until your premium check has cleared.
This could take up to 15 days after we receive your check.
ASSIGNMENT
The contract may be assigned as collateral security. We must be notified in
writing if the contract has been assigned. Each assignment will be subject to
any payments made or action taken by us prior to our notification of such
assignment. We are not responsible for the validity of an assignment. The
contractowner's rights and the rights of the beneficiary may be affected by an
assignment.
NON-PARTICIPATING CONTRACT
The contract does not share in our surplus distributions. No dividends are
payable with respect to the contract.
THE GENERAL ACCOUNT
By virtue of exclusionary provisions, interests in the general account have not
been registered under the Securities Act of 1933 and the general account has not
been registered as an investment company under the 1940 Act. Accordingly,
neither the general account nor any interests therein are subject to the
provisions of these Acts.
GENERAL DESCRIPTION
The general account consists of all assets owned by us other than those in the
variable account and any other separate accounts we may establish. Subject to
applicable law, we have sole discretion over the investment of the assets of the
general account. You may elect to allocate net premiums to the general account
or to transfer accumulation value to the general account from the subaccounts of
the variable account. The allocation or transfer
Form 5560.5
30
<PAGE> 33
of funds to the general account does not entitle a contractowner to share in the
investment experience of the general account. Instead, we guarantee that your
accumulation value in the general account will accrue interest daily at an
effective annual rate of at least 4%, without regard to the actual investment
experience of the general account. Consequently, if you pay the planned
premiums, allocate all net premiums only to the general account and make no
transfers, partial surrenders, or contract loans, the minimum amount and
duration of your death benefit will be determinable and guaranteed. Transfers
from the general account to VAR are partially restricted and allocation of
substantial sums to the general account reduces the flexibility of the contract.
ACCUMULATION VALUE
The accumulation value in the general account on the later of the issue date or
the day we receive your initial premium is equal to the portion of the net
premium allocated to the general account, minus a pro rata portion of the first
monthly deduction.
Thereafter, until the maturity date, we guarantee that the accumulation value in
the general account will not be less than the amount of the net premiums
allocated or accumulation value transferred to the general account, plus
interest at the rate of 4% per year, plus any excess interest which we credit,
less the sum of all charges and interest thereon allocable to the general
account and any amounts deducted from the general account in connection with
partial surrenders and loans and interest thereon or transfers to VAR or the
loan collateral account.
We guarantee that interest credited to your accumulation value in the general
account will not be less than an effective annual rate of 4% per year. We may,
at our sole discretion, credit a higher rate of interest, although we are not
obligated to do so. The contractowner assumes the risk that interest credited
may not exceed the guaranteed minimum rate of 4% per year. The accumulation
value in the general account will be calculated on each valuation date.
OPTIONAL INSURANCE BENEFITS
Subject to certain requirements, one or more optional insurance benefits may be
added to your contract, including riders providing additional term insurance,
spouse/additional insured term insurance, family plan/children insurance, a
guaranteed purchase option, accidental death, waiver of premium, preferred loan,
continuation of coverage, and accelerated death benefit. More detailed
information concerning such riders may be obtained from your agent. The cost of
any optional insurance benefits will be deducted as part of the monthly
deduction.
SETTLEMENT OPTIONS
In addition to a lump sum payment of benefits under the contract, any proceeds
may be paid in any of the five methods described in your contract. For more
details, contact your agent. A settlement option may be designated by notifying
us in writing at our home office. Any amount left with us for payment under a
settlement option will be transferred to the general account. During the life of
the insured, the contractowner may select a settlement option. If a settlement
option has not been chosen at the insured's death, the beneficiary may choose
one. If a beneficiary is changed, the settlement option selection will no longer
be in effect unless the contractowner requests that it continue. A settlement
option may be elected only if the amount of the proceeds is $5,000 or more. We
can change the interval of payments if necessary to increase the payments to at
least $25 each.
DISTRIBUTION OF THE CONTRACT
The contract is sold by individuals who, in addition to being licensed as life
insurance agents, are also registered representatives (a) of The O.N. Equity
Sales Company ("ONESCO"), a wholly-owned subsidiary of Ohio National Life, or
(b) of other broker-dealers that have entered into distribution agreements with
the principal
Form 5560.5
31
<PAGE> 34
underwriter of the contracts. ONESCO and the other broker-dealers are
responsible for supervising and controlling the conduct of their registered
representatives in connection with the offer and sale of the contract. ONESCO
and the other broker-dealers are registered with the Commission under the
Securities Exchange Act of 1934 and are members of the National Association of
Securities Dealers, Inc.
Ohio National Equities, Inc. ("ONEQ"), another wholly-owned subsidiary of Ohio
National Life, is the principal underwriter of the contracts. Under a
distribution and service agreement with ONEQ, we reimburse it for any expenses
incurred by it in connection with the distribution of the contracts. This
agreement may be terminated at any time by either party on 60 days' written
notice. During 1999, VAR received $33,750,069 in premium payments for variable
life insurance contracts. From this amount, we paid ONEQ $10,322,617 in sales
loads.
The officers and directors of ONEQ are:
<TABLE>
<S> <C>
David B. O'Maley.......................... Director and Chairman
John J. Palmer............................ Director and President
Thomas A. Barefield....................... Senior Vice President
Trudy K. Backus........................... Director and Vice President
James I. Miller II........................ Director and Vice President
Ronald L. Benedict........................ Director and Secretary
Barbara A. Turner......................... Operations Vice President, Treasurer and
Compliance Officer
</TABLE>
Form 5560.5
32
<PAGE> 35
MANAGEMENT OF THE COMPANY
<TABLE>
<CAPTION>
NAME RELATIONSHIP WITH COMPANY*
---- --------------------------
<S> <C>
Trudy K. Backus Vice President, Individual Insurance Services
Thomas A. Barefield Senior Vice President, Institutional Sales
Howard C. Becker Senior Vice President, Individual Insurance &
Corporate Services
Ronald L. Benedict Corporate Vice President, Counsel & Secretary
Robert A. Bowen Senior Vice President, Information Systems
Roylene M. Broadwell Vice President & Treasurer
Michael A. Boedeker Vice President and Senior Investment Officer
Christopher A. Carlson Vice President and Senior Investment Officer
David W. Cook Senior Vice President & Actuary
Dennis C. Twarogowski Vice President, Career Marketing
Ronald J. Dolan Director and Executive Vice President & Chief
Financial Officer
John Houser III Vice President, Claims
Thomas O. Olson Vice President, Underwriting
David B. O'Maley Director and Chairman, President & Chief
Executive Officer
John J. Palmer Director & Executive Vice President, Strategic
Initiatives
George B. Pearson Vice President, PGA Marketing
D. Gates Smith Executive Vice President, Agency and Group
Distribution
Michael D. Stohler Vice President, Mortgages & Real Estate
Stuart G. Summers Director and Executive Vice President &
General Counsel
</TABLE>
---------------
* The principal occupation of each of the above is an officer of Ohio National
Life, with the same title as with us.
The principal business address of each is:
One Financial Way
Cincinnati, Ohio 45242
Our officers, directors and employees who have access to the assets of the
variable account are covered by fidelity bonds issued by United States Fidelity
& Guaranty Company in the aggregate amount of $3,000,000.
CUSTODIAN
Pursuant to a written agreement, Firstar Bank, NA, 425 Walnut Street,
Cincinnati, Ohio, serves as custodian of the assets of VAR. The fee of the
custodian for services rendered to VAR is paid by us. The custodian also
provides valuation and certain recordkeeping services to VAR, which include,
without limitation, maintaining a record of all purchases, redemptions and
distributions relating to Fund shares, the amounts thereof and the number of
shares from time to time standing to the credit of VAR.
Form 5560.5
33
<PAGE> 36
STATE REGULATION OF THE COMPANY
We are organized under the laws of the State of Ohio and are subject to
regulation by the Superintendent of Insurance of Ohio. An annual statement is
filed with the Superintendent on or before March 1 of each year covering the
operations and reporting on our financial condition as of December 31 of the
preceding year. Periodically, the Superintendent examines our assets and
liabilities and those of VAR and verifies their adequacy. A full examination of
our operations is conducted by the National Association of Insurance
Commissioners at least every five years.
In addition, we are subject to the insurance laws and regulations of other
states in which we are licensed to operate. Generally, the insurance department
of any other state applies the laws of the state of domicile in determining
permissible investments.
FEDERAL TAX MATTERS
The following description is a brief summary of some of the Code provisions
which, in our opinion, are currently in effect. This summary does not purport to
be complete or to cover all situations, including the possible tax consequences
of changes in ownership. Counsel and other competent tax advisers should be
consulted for more complete information. Tax laws can change, even with respect
to contracts that have already been issued. Tax law revisions, with unfavorable
consequences to contracts offered by this prospectus, could have retroactive
effect on previously issued contracts or on subsequent voluntary transactions in
previously issued contracts.
CONTRACT PROCEEDS
The contract contains provisions not found in traditional life insurance
contracts providing only for fixed benefits. However, under the Code, as amended
by the Tax Reform Act of 1984, the contract should qualify as a life insurance
contract for federal income tax purposes as long as certain conditions are met.
Consequently, the proceeds of the contract payable to the beneficiary on the
death of the insured will generally be excluded from the beneficiary's income
for purposes of federal income tax.
Current tax rules and penalties on distributions from life insurance contracts
apply to any life insurance contract issued or materially changed on or after
June 21, 1988 that is funded more heavily (faster) than a traditional whole life
plan designed to be paid-up after the payment of level annual premiums over a
seven-year period. Thus, for such a contract (called a "modified endowment
contract" in the Code), any distribution, including surrenders, partial
surrenders, maturity proceeds, and loans secured by the contract, during the
insured's lifetime (but not payments received as an annuity or as a death
benefit) would be included in the contractowner's gross income to the extent
that the contract's cash surrender value exceeds the owner's investment in the
contract. In addition, a ten percent penalty tax applies to any such
distribution from such a contract, to the extent includible in gross income,
except if made:
- after the taxpayer's attaining age 59 1/2,
- as a result of his or her disability or
- in one of several prescribed forms of annuity payments.
Loans received under the contract will be construed as indebtedness of the
contractowner in the same manner as loans under a fixed benefit life insurance
policy and no part of any loan under the contract is expected to constitute
income to the contractowner. Interest payable with respect to such loans is not
tax deductible. If the contract is surrendered or lapsed, any policy loan then
in effect is treated as taxable income to the extent that the contract's
accumulation value (including the loan amount) then exceeds your "basis" in the
contract. (Your "basis" equals the total amount of premiums that were paid into
the contract less any withdrawals from the contract.)
Form 5560.5
34
<PAGE> 37
Federal estate and local estate, inheritance and other tax consequences of
contract ownership or receipt of contract proceeds depend upon the circumstances
of each contractowner and beneficiary.
CORRECTION OF MODIFIED ENDOWMENT CONTRACT
If you have made premium payments in excess of the amount that would be
permitted without your contract being treated as a modified endowment contract
under the Code, you may, upon timely written request, prevent that tax treatment
by receiving a refund, without deduction of any charges, of the excess premium
paid, plus interest thereon at the rate of 6% per year. Under the Code, such a
corrective action must be completed by no later than 60 days after the end of
the year following the date the contract became a modified endowment contract.
RIGHT TO CHARGE FOR COMPANY TAXES
We are presently taxed as a life insurance company under the provisions of the
Code. The Tax Reform Act of 1984 specifically provides for adjustments in
reserves for flexible premium policies, and we will reflect flexible premium
life insurance operations in our tax return in accordance with such Act.
Currently, no charge is assessed against VAR for our federal taxes, or provision
made for such taxes, that may be attributable to VAR. However, we may in the
future charge each subaccount of VAR for its portion of any tax charged to us in
respect of that subaccount or its assets. Under present law, we may incur state
and local taxes (in addition to premium taxes) in several states. At present,
these taxes are not significant. If they increase, however, we may decide to
assess charges for such taxes, or make provision for such taxes, against VAR.
Any such charges against VAR or its subaccounts could have an adverse effect on
the investment performance of the subaccounts.
EMPLOYEE BENEFIT PLANS
Employers and employee organizations should consider, in consultation with
counsel, the impact of Title VII of the Civil Rights Act of 1964 on the purchase
of a contract in connection with an employment-related insurance or benefit
plan. The United States Supreme Court held, in a 1983 decision, that, under
Title VII, optional annuity benefits under a deferred compensation plan could
not vary on the basis of sex.
LEGAL PROCEEDINGS
There are no legal proceedings to which VAR is a party or to which the assets of
any of the subaccounts thereof are subject. We are not involved in any
litigation that is of material importance in relation to its total assets or
that relates to VAR.
LEGAL MATTERS
Jones & Blouch, L.L.P., Washington, D.C., has served as special counsel with
regard to legal matters relating to federal securities laws applicable to the
issuance of the flexible premium variable life insurance contract described in
this prospectus. All matters of Ohio law pertaining to the contract including
the validity of the contract and our right to issue the contract under the
Insurance Law of the State of Ohio have been passed upon by Ronald L. Benedict,
Corporate Vice President, Counsel and Secretary of Ohio National Life.
EXPERTS
The financial statements of VAR as of December 31, 1999 and for each of the
periods indicated herein and the financial statements of the Company as of
December 31, 1999 and 1998 and for the periods indicated herein
Form 5560.5
35
<PAGE> 38
included in this prospectus have been included herein in reliance upon the
reports of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
Actuarial matters included in this prospectus have been examined by David W.
Cook, FSA, MAAA, as stated in the opinion filed as an exhibit to the
registration statement.
REGISTRATION STATEMENT
A registration statement has been filed with the Commission under the Securities
Act of 1933, as amended, with respect to the Vari-Vest V contract. This
prospectus does not contain all the information set forth in the registration
statement. Reference is made to such registration statement for further
information concerning us, VAR, and the contract. Statements contained in this
prospectus as to the contents of the contract and other legal instruments are
summaries. For a complete statement of the terms thereof, reference is made to
such instruments as filed.
FINANCIAL STATEMENTS
Our financial statements which are included in this prospectus should be
considered only as bearing on our ability to meet our obligations under your
contract. They should not be considered as bearing on the investment performance
of the assets held in VAR.
PRIOR CONTRACTS
VARI-VEST I
From 1986 to April 30, 1993, we issued Vari-Vest I flexible premium variable
life insurance contracts. Vari-Vest I is no longer being issued, so there is no
current prospectus for the product. Therefore, Vari-Vest I owners receive this
Vari-Vest V prospectus. The Vari-Vest I contracts that continue in existence are
substantially the same as the contracts described in this prospectus, with the
following exceptions.
You may invest in up to 10 of the following portfolios of Ohio National Fund:
<TABLE>
<S> <C>
Equity Small Cap
Money Market Aggressive Growth
Bond Core Growth
Omni Growth & Income
International S&P 500 Index
International Small Company Social Awareness
Capital Appreciation
</TABLE>
Maturity of Vari-Vest I occurs at age 95.
References to Accumulation Value in this prospectus are equivalent to Vari-Vest
I references to Cash Value.
The surrender charge for Vari-Vest I contracts is composed solely of the
deferred insurance underwriting charge because there is no contingent deferred
sales charge for Vari-Vest I. The charge is made if you: surrender the contract
in full or decrease your stated amount during the first seven years it is in
force or within seven years following an increase in the stated amount, or if
you make partial surrenders of the contract in any contract year aggregating
more than 10% of your cash surrender value as of the end of the previous
contract year. The contract reserves the right to charge 100% of the surrender
charge in each of seven successive years. Currently, we grade off the surrender
charge in accordance with the table shown in this prospectus with the following
changes: percentage of total charge in year 5 is 75%, in year 6 is 50% and in
year 7 is 25%.
Form 5560.5
36
<PAGE> 39
The loan collateral account guaranteed interest rate is 5%. The general account
is also guaranteed to earn interest at an effective annual rate of 5%.
The death benefit guarantee is in effect until age 70 or ten years from the
contract date, if later.
At any time during the first 24 months after we issue any increase in stated
amount, you may convert your increase into a fixed benefit flexible premium life
insurance policy by transferring your cash value to the general account. Your
converted contract will have the same death benefit and the same amount at risk
as did the increase.
The premium expense charge does not contain the federal tax charge described in
this prospectus, but it does contain a sales load on premium payments for
insureds through age 70 of 7.5%; for increases in stated amount, premiums paid
within one year of the date of the increase will be subject to a 30% sales load
for insureds under age 60 or a 20% sales load for insureds aged 60 through 70.
You will not be charged more than $25 for a special illustration of contract
benefits.
The monthly minimum premium will increase substantially after the death benefit
guarantee period (age 70 or ten years from the contract date, if later).
Your contract is subject to a new surrender charge as a result of an increase in
stated amount for only seven years.
You can decrease your stated amount without waiting two years from the date of
increase.
The following sections of this prospectus do not apply to your contract: "Term
Insurance Conversion Credit"; and the second two paragraphs of "Transfers".
The guideline annual premium for your contract is based on maturity at age 95
and, in addition to the other factors described in this prospectus, a guaranteed
assumption of investment performance of 5%.
The monthly deduction for your contract includes a $5 administrative charge and
a set risk charge of $.01 per $1000 of stated amount for the risk associated
with the death benefit guarantee.
The cost of insurance is based on assumed interest at 5% per year and the death
benefit at the beginning of the contract month divided by 1.0040741.
In the event of a misstatement of the age or sex of the insured in an
application, the factor applied will be 1.0040741.
The following riders described in this prospectus are not available to you:
preferred loan, continuation of coverage, accelerated death benefit.
VARI-VEST III
From 1986 to April 30, 1993, we issued Vari-Vest III single premium variable
life insurance contracts. Vari-Vest III is no longer being issued, so there is
no current prospectus for the product. Therefore, Vari-Vest III owners receive
this Vari-Vest V prospectus. The Vari-Vest III contracts that continue in
existence are similar to the contracts described in this prospectus, with the
following exceptions.
You may invest in up to 10 of the following portfolios of Ohio National Fund:
<TABLE>
<S> <C>
Equity Small Cap
Money Market Aggressive Growth
Bond Core Growth
Omni Growth & Income
International S&P 500 Index
International Small Company Social Awareness
Capital Appreciation
</TABLE>
Form 5560.5
37
<PAGE> 40
Maturity of Vari-Vest III occurs at age 95.
References to Accumulation Value in this prospectus are equivalent to Vari-Vest
III references to Cash Value.
Loan value will never be less than 90% of your cash surrender value. Loan
interest is payable in advance at a variable rate of no less than 6%. The rate
in each contract year will be the rate we set on the previous June 30. To the
extent your cash surrender value exceeds your gross premium payments under the
contract and to the extent you have borrowed such excess, we intend to credit
interest to the loan collateral account at a rate that is .50% less than the
effective compound annual loan interest rate charged on the loan. To the extent
your loans exceed any such excess, we intend to credit interest to the loan
collateral account at a rate that is 2% less than the effective compound annual
loan interest rate charged on the loan.
Your contract does not allow for partial surrenders.
The required initial premium for an increase in stated amount is the greater of
$1000 or 75% of the guideline single premium for the stated amount of the
increase. All premium payments after the required initial premium for your
initial stated amount are termed subsequent premiums. If there is contract
indebtedness outstanding, subsequent premiums will be treated as loan repayments
until the indebtedness is eliminated. Otherwise, you may designate subsequent
premiums as additional premiums with respect to your existing stated amount or
as initial premiums for increases in your stated amount. Additional premiums
enhance the investment element of your contract and are not subject to the
contingent deferred sales charge; initial premiums for increases in stated
amount enhance the insurance element of your contract and are subject to the
contingent deferred sales charge.
You may not designate subsequent premiums as additional premiums if those
premiums would cause your contract to violate the Code's definition of life
insurance.
The surrender charge for Vari-Vest III contracts is charged in the event of full
surrender, lapse or decrease in stated amount during the first ten contract
years following the contract date and the date of any increase in stated amount.
The charge consists of a contingent deferred sales charge which, during the
contract year following an increase in stated amount, is 8% of the required
initial premium for the increase. Thereafter, the charge grades down to zero
over the applicable ten year period as follows: Year One: 8%; Year Two: 7.2%;
Year Three: 6.4%; Year Four: 5.6%; Year Five: 4.8%; Year Six: 4.0%; Year Seven:
3.2%; Year Eight: 2.4%; Year Nine: 1.6%; Year Ten: 0.8%. The contingent deferred
sales charge does not apply to premiums required to prevent lapse during the
contract's grace period, nor to reinstatement premiums.
The charge also includes a contingent deferred insurance charge if you:
surrender the contract in full, lapse or decrease your stated amount during the
first seven years it is in force or within seven years following an increase in
the stated amount. The contract reserves the right to charge 100% of the
surrender charge in each of seven successive years. Currently, we grade off the
surrender charge in accordance with the table shown in this prospectus with the
following changes: percentage of total charge in year 5 is 75%, in year 6 is 50%
and in year 7 is 25%.
The loan collateral account guaranteed interest rate is 5%. The general account
is also guaranteed to earn interest at an effective annual rate of 5%.
There is no death benefit guarantee.
At any time during the first 24 months after we issue any increase in stated
amount, you may convert your increase into a fixed benefit flexible premium life
insurance policy by transferring your cash value to the general account. Your
converted contract will have the same death benefit and the same amount at risk
as did the increase.
The premium expense charge contains only the state premium tax.
You will not be charged more than $25 for a special illustration of contract
benefits.
Form 5560.5
38
<PAGE> 41
The monthly minimum premium will increase substantially after the death benefit
guarantee period (age 70 or ten years from the contract date, if later).
Your contract is subject to a new surrender charge as a result of an increase in
stated amount for only seven years.
To increase your stated amount, you must pay at least the required initial
premium for the increase. We will inform you of the amount of the required
initial premium for the increase requested and we must receive it by the
effective date of the increase.
You can decrease your stated amount after one year from the date of increase,
and there is no minimum stated amount.
The following sections of this prospectus do not apply to your contract: "Term
Insurance Conversion Credit"; and the second two paragraphs of "Transfers".
The guideline annual premium for your contract is based on maturity at age 95
and, in addition to the other factors described in this prospectus, a guaranteed
assumption of investment performance of 5%.
The monthly deduction for your contract includes only a $5 administrative charge
and the cost of additional insurance benefits provided by rider.
The cost of insurance is based on assumed interest at 5% per year and the death
benefit at the beginning of the contract month divided by 1.0040741.
In the event of a misstatement of the age or sex of the insured in an
application, the factor applied will be 1.0040741.
The following riders described in this prospectus are not available to you:
additional term, family plan, guaranteed purchase option, waiver of premium,
preferred loan, continuation of coverage, and accelerated death benefit. In
other words, only the accidental death rider is available.
Generally, any Vari-Vest III contract will constitute a modified endowment
contract ("MEC").
Form 5560.5
39
<PAGE> 42
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
Financial Statements
December 31, 1999 and 1998
With Independent Auditors' Report Thereon
and for the period
January 1, 2000 to June 30, 2000
(Unaudited)
Form 5560.5
40
<PAGE> 43
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Ohio National Life Assurance Corporation:
We have audited the accompanying balance sheets of Ohio National Life Assurance
Corporation (the Company) as of December 31, 1999 and 1998, and the related
statements of income, stockholder's equity and cash flows for each of the years
in the three-year period ended December 31, 1999. These financial statements are
the responsibility of the Company's 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. 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 Life Assurance
Corporation as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for each of the years in the three-year period ended December
31, 1999 in conformity with generally accepted accounting principles.
/s/ KPMG LLP
Cincinnati, Ohio
January 28, 2000
Form 5560.5
41
<PAGE> 44
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
BALANCE SHEETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
AND YEAR TO DATE AS OF 6/30/2000
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
6/30/2000
(UNAUDITED) 1999 1998
----------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Investments (notes 4, 7 and 8):
Fixed maturities available-for-sale, at fair value $ 635,857 532,963 606,434
Fixed maturities held-to-maturity, at amortized cost 97,545 98,542 97,576
Mortgage loans on real estate, net 255,884 262,516 229,647
Policy loans 47,333 44,001 40,597
Short-term investments 10,339 68,954 8,997
---------- ---------- ---------
Total investments 1,046,958 1,006,976 983,251
Cash 18,809 4,166 6,203
Accrued investment income 12,159 11,515 11,963
Deferred policy acquisition costs 184,257 177,062 138,582
Reinsurance recoverables 138,741 117,612 105,119
Other assets 2,936 3,177 3,791
Assets held in Separate Accounts 177,978 164,473 103,306
---------- ---------- ---------
Total assets $1,581,838 1,484,981 1,352,215
========== ========== =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Future policy benefits and claims (note 5) $1,145,825 $1,081,024 1,001,501
Other policyholder funds 2,253 2,300 2,357
Accrued Federal income tax (note 6):
Current -- 820 1,796
Deferred 7,094 1,735 11,355
Other liabilities 12,853 12,865 19,705
Liabilities related to Separate Accounts 177,978 164,473 103,306
---------- ---------- ---------
Total liabilities $1,346,003 1,263,217 1,140,020
---------- ---------- ---------
Stockholder's equity (notes 3 and 9):
Class A common stock; authorized 10,000 shares of
$3,000 par value; issued and outstanding 3,200
shares 9,600 9,600 9,600
Additional paid-in capital 27,025 27,025 27,025
Accumulated other comprehensive (loss) income (9,725) (7,382) 12,211
Retained earnings 208,935 192,521 163,359
---------- ---------- ---------
Total stockholder's equity 235,835 221,764 212,195
Commitments and contingencies (notes 11 and 12)
---------- ---------- ---------
Total liabilities and stockholder's equity $1,581,838 1,484,981 1,352,215
========== ========== =========
</TABLE>
See accompanying notes to financial statements.
Form 5560.5
42
<PAGE> 45
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
AND YEAR TO DATE AS OF 6/30/2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
1/1/2000
TO
6/30/2000
(UNAUDITED) 1999 1998 1997
----------- -------- ------- -------
<S> <C> <C> <C> <C>
Revenues (note 11):
Universal life, annuity and investment product
policy charges $35,571 66,550 60,609 51,020
Traditional life and accident and health
insurance premiums 5,637 8,708 10,975 10,512
Net investment income (note 4) 40,134 76,688 69,547 61,348
Other income 38
Net realized (losses) gains on investments (note
4) (1,666) (1,571) 201 1,411
------- -------- ------- -------
79,714 150,375 141,332 124,291
------- -------- ------- -------
Benefits and expenses (notes 10 and 11):
Benefits and claims 42,139 80,794 76,663 67,230
Amortization of deferred policy acquisition
costs 3,145 9,131 12,249 5,487
Other operating costs and expenses 9,177 15,585 12,446 13,156
------- -------- ------- -------
54,461 105,510 101,358 85,873
------- -------- ------- -------
Income before Federal income tax 25,253 44,865 39,974 38,418
------- -------- ------- -------
Federal income tax (note 6):
Current expense 6,434 13,071 16,013 14,361
Deferred tax expense (benefit) 2,405 2,632 (1,771) 315
------- -------- ------- -------
8,839 15,703 14,242 14,676
------- -------- ------- -------
Net income $16,414 29,162 25,732 23,742
======= ======== ======= =======
</TABLE>
See accompanying notes to financial statements.
Form 5560.5
43
<PAGE> 46
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
AND YEAR TO DATE AS OF 6/30/2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER TOTAL
CAPITAL PAID-IN COMPREHENSIVE RETAINED STOCKHOLDER'S
SHARES CAPITAL INCOME (LOSS) EARNINGS EQUITY
------- ---------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C>
1997:
Balance, beginning of year $9,600 27,025 1,293 113,885 151,803
Comprehensive income:
Net income -- -- -- 23,742 23,742
Other comprehensive income (note
13) -- -- 9,034 -- 9,034
-------
Total comprehensive income 32,776
------ ------ ------- ------- -------
Balance, end of year $9,600 27,025 10,327 137,627 184,579
====== ====== ======= ======= =======
1998:
Balance, beginning of year $9,600 27,025 10,327 137,627 184,579
Comprehensive income:
Net income -- -- -- 25,732 25,732
Other comprehensive income (note
13) -- -- 1,884 -- 1,884
-------
Total comprehensive income 27,616
------ ------ ------- ------- -------
Balance, end of year $9,600 27,025 12,211 163,359 212,195
====== ====== ======= ======= =======
1999:
Balance, beginning of year $9,600 27,025 12,211 163,359 212,195
Comprehensive income:
Net income -- -- -- 29,162 29,162
Other comprehensive loss (note
13) -- -- (19,593) -- (19,593)
-------
Total comprehensive income 9,569
------ ------ ------- ------- -------
Balance, end of year $9,600 27,025 (7,382) 192,521 221,764
====== ====== ======= ======= =======
1/1/2000 to 6/30/2000 (unaudited):
Balance, beginning of year $9,600 27,025 (7,382) 192,521 221,764
Comprehensive income:
Net income 16,414 16,414
Other comprehensive income (note
(13) (2,343) (2,343)
Total Comprehensive income 14,071
------ ------ ------- ------- -------
Balance, end of year $9,600 27,025 (9,725) 208,935 235,835
====== ====== ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
Form 5560.5
44
<PAGE> 47
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
AND YEAR TO DATE AS OF 6/30/2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
1/1/2000 TO
6/30/2000
(UNAUDITED) 1999 1998 1997
----------- --------- -------- --------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 16,414 29,162 25,732 23,742
Adjustments to reconcile net income to net cash
provided by operating activities:
Capitalization of deferred policy
acquisition costs (14,200) (26,790) (28,516) (23,855)
Amortization of deferred policy
acquisition costs 3,178 9,131 12,443 5,787
Amortization and depreciation 1,028 184 213 1,297
Realized losses (gains) on invested
assets, net 709 1,571 (201) (1,411)
Increase (decrease) in accrued investment
income (644) 448 (1,780) (1,518)
Increase in reinsurance receivables and
other assets (20,772) (11,995) (24,669) (6,225)
Increase in policyholder account balances 31,736 14,650 19,025 6,672
(Decrease) increase in other policyholder
funds (47) (57) (145) 215
(Decrease) increase in current Federal
income tax payable (820) (976) 921 184
Increase (decrease) in other liabilities (128) (6,724) 4,831 2,539
Deferred income taxes 2,632 (1,771) 315
Other, net 2,406 919 (864) (5,396)
--------- --------- -------- --------
Net cash provided by operating
activities 18,860 12,155 5,219 2,346
--------- --------- -------- --------
Cash flows from investing activities:
Proceeds from maturity of fixed maturities
available-for-sale 101,968 32,314 32,256 84,974
Proceeds from maturity of fixed maturities
held-to-maturity 11,207 7,944 7,964 11,039
Proceeds from repayment of mortgage loans on
real estate 22,184 22,351 38,862 46,468
Cost of fixed maturities available-for-sale
acquired (202,235) (14,965) (123,507) (136,593)
Cost of fixed maturities held-to-maturity
acquired (10,000) (8,079) (48,181) (25,966)
Cost of mortgage loans on real estate acquired (15,689) (55,270) (53,186) (84,114)
Change in policy loans, net (3,332) (3,404) (2,471) (3,191)
--------- --------- -------- --------
Net cash used in investing activities (95,897) (19,109) (148,263) (107,383)
--------- --------- -------- --------
Cash flows from financing activities:
Increase in universal life and investment
product account balances 120,137 227,664 265,733 205,445
Decrease in universal life and investment
product account balances (87,072) (162,790) (133,570) (110,729)
--------- --------- -------- --------
Net cash provided by financing
activities 33,065 64,874 132,163 94,716
--------- --------- -------- --------
Net increase (decrease) in cash and cash
equivalents (43,972) 57,920 (10,881) (10,321)
Cash and cash equivalents, beginning of year 73,120 15,200 26,081 36,402
--------- --------- -------- --------
Cash and cash equivalents, end of year $ 29,148 73,120 15,200 26,081
========= ========= ======== ========
</TABLE>
See accompanying notes to financial statements.
Form 5560.5
45
<PAGE> 48
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
(1) ORGANIZATION AND BUSINESS DESCRIPTION
Ohio National Life Assurance Corporation (ONLAC or the Company) is a stock life
insurance company, wholly owned by The Ohio National Life Insurance Company
(ONLIC), a stock life insurance company. ONLAC is a life and health insurer
licensed in 47 states, the District of Columbia and Puerto Rico. The Company
offers term life, universal life, disability and annuity products through
independent agents and other distribution channels and competes with other
insurers throughout the United States. The Company is subject to regulation by
the Insurance Departments of states in which it is licensed and undergoes
periodic examinations by those departments.
The following is a description of the most significant risks facing life and
health insurers and how the Company mitigates those risks:
Legal/Regulatory Risk is the risk that changes in the legal or regulatory
environment in which an insurer operates will create additional expenses
not anticipated by the insurer in pricing its products. That is, regulatory
initiatives designed to reduce insurer profits, new legal theories or
insurance company insolvencies through guaranty fund assessments may create
costs for the insurer beyond those recorded in the financial statements.
The Company mitigates this risk by offering a wide range of products and by
operating throughout the United States, thus reducing its exposure to any
single product or jurisdiction, and also by employing underwriting
practices which identify and minimize the adverse impact of this risk.
Credit Risk is the risk that issuers of securities owned by the Company or
mortgagors on mortgage loans on real estate owned by the Company will
default or that other parties, including reinsurers, which owe the Company
money, will not pay. The Company minimizes this risk by adhering to a
conservative investment strategy, by maintaining sound reinsurance and
credit and collection policies and by providing for any amounts deemed
uncollectible.
Interest Rate Risk is the risk that interest rates will change and cause a
decrease in the value of an insurer's investments. This change in rates may
cause certain interest-sensitive products to become uncompetitive or may
cause disintermediation. The Company mitigates this risk by charging fees
for non-conformance with certain policy provisions, by offering products
that transfer this risk to the purchaser, and/or by attempting to match the
maturity schedule of its assets with the expected payouts of its
liabilities. To the extent that liabilities come due more quickly than
assets mature, an insurer would have to borrow funds or sell assets prior
to maturity and potentially recognize a gain or loss.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Company that materially
affect financial reporting are summarized below. The accompanying financial
statements have been prepared in accordance with generally accepted accounting
principles (GAAP) which differ from statutory accounting practices prescribed or
permitted by regulatory authorities (see Note 3).
Form 5560.5
46
<PAGE> 49
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
(a) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES
The Company is required to classify its fixed maturity securities as
either held-to-maturity, available-for-sale or trading. Fixed maturity
securities are classified as held-to-maturity when the Company has the
positive intent and ability to hold the securities to maturity and are
stated at amortized cost. Fixed maturity securities not classified as
held-to-maturity are classified as available-for-sale and are stated at
fair value, with the unrealized gains and losses, net of adjustments to
deferred policy acquisition costs and deferred Federal income tax,
reported as a separate component of shareholder's equity. The adjustment
to deferred policy acquisition costs represents the change in
amortization of deferred policy acquisition costs that would have been
required as a charge or credit to operations had such unrealized amounts
been realized. The Company has no fixed maturity securities classified
as trading.
Mortgage loans on real estate are carried at the unpaid principal
balance less valuation allowances. The Company provides valuation
allowances for impairments of mortgage loans on real estate based on a
review by portfolio managers. The measurement of impaired loans is based
on the present value of expected future cash flows discounted at the
loan's effective interest rate or at the fair value of the collateral,
if the loan is collateral dependent. Loans in foreclosure and loans
considered to be impaired as of the balance sheet date are placed on
non-accrual status and written down to the fair value of the existing
property to derive a new cost basis. Cash receipts on non-accrual status
mortgage loans on real estate are included in interest income in the
period received.
Realized gains and losses on the sale of investments are determined on
the basis of specific security identification, net of associated
deferred acquisition costs and capital gains expenses. Estimates for
valuation allowances and other than temporary declines are included in
realized gains and losses on investments.
(b) REVENUES AND BENEFITS
Traditional life insurance products include those products with fixed
and guaranteed premiums and benefits and consist primarily of graded
premium life and term life policies. Premiums for traditional
non-participating life insurance products are recognized as revenue when
due and collected. Benefits and expenses are associated with earned
premiums so as to result in recognition of profits over the life of the
contract. This association is accomplished by the provision for future
policy benefits and the deferral and amortization of policy acquisition
costs.
Universal life products include universal life, variable universal life
and other interest-sensitive life insurance policies. Investment
products consist primarily of individual immediate and deferred
annuities. Revenues for universal life and investment products consist
of net investment income and cost of insurance, policy administration
and surrender charges that have been earned and assessed against policy
account balances during the period. Policy benefits and claims that are
charged to expense include benefits and claims incurred in the period in
excess of related policy account balances, maintenance costs and
interest credited to policy account balances.
Form 5560.5
47
<PAGE> 50
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
Accident and health insurance premiums are recognized as revenue in
accordance with the terms of the policies. Policy claims are charged to
expense in the period that the claims are incurred.
(c) DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions, certain
expenses of the policy issue and underwriting department and certain
variable agency expenses have been deferred. For traditional non-
participating life insurance products, these deferred acquisition costs
are predominantly being amortized with interest over the premium paying
period of the related policies. Such anticipated premium revenue was
estimated using the same assumptions as were used for computing
liabilities for future policy benefits. For universal life and
investment products, deferred policy acquisition costs are being
amortized with interest over the lives of the policies in relation to
the present value of estimated future gross profits from projected
interest margins, cost of insurance, policy administration and surrender
charges. Deferred policy acquisition costs are adjusted to reflect the
impact of unrealized gains and losses on fixed maturity securities
available-for-sale (see Note 2(a)).
(d) SEPARATE ACCOUNTS
Separate Account assets and liabilities represent contractholders' funds
which have been segregated into accounts with specific investment
objectives. The investment income and gains or losses of these accounts
accrue directly to the contractholders. The activity of the Separate
Accounts is not reflected in the statements of income and cash flows
except for the fees the Company receives for administrative services and
risks assumed.
(e) FUTURE POLICY BENEFITS
Future policy benefits for traditional life policies have been
calculated using a net level premium method based on estimates of
mortality, morbidity, investment yields and withdrawals which were used
or which were being experienced at the time the policies were issued,
rather than the assumptions prescribed by state regulatory authorities
(see Note 5).
Future policy benefits for annuity policies in the accumulation phase,
universal life and variable universal life policies have been calculated
based on participants' aggregate account balances.
(f) FEDERAL INCOME TAX
ONLAC is included as part of the consolidated Federal income tax return
of its ultimate parent, Ohio National Mutual Holdings, Inc. The Company
uses the asset and liability method of accounting for income tax. Under
the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or
settled. Under this method, the effect on deferred tax assets and
liabilities of a change in tax rates is
Form 5560.5
48
<PAGE> 51
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
recognized in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce the
deferred tax assets to the amounts expected to be realized.
(g) REINSURANCE CEDED
Reinsurance premiums ceded and reinsurance recoveries on benefits and
claims incurred are deducted from the respective income and expense
accounts. Assets and liabilities related to reinsurance ceded are
reported on a gross basis.
(h) CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
short-term investments with original maturities of three months or less
to be cash equivalents.
(i) COMPREHENSIVE INCOME
Comprehensive income is the total of net income and all non-owner
changes in equity.
(j) USE OF ESTIMATES
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities as
of the date of the financial statements and revenues and expenses for
the reporting period. Actual results could differ significantly from
those estimates.
The estimates susceptible to significant change are those used in
determining deferred policy acquisition costs, the liability for future
policy benefits and claims, contingencies, and the valuation allowance
for mortgage loans on real estate. Although some variability is inherent
in these estimates, management believes the amounts provided are
adequate.
(3) BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with GAAP
which differs from statutory accounting practices prescribed or permitted by
regulatory authorities. Annual Statements for ONLAC filed with the Department of
Insurance of the State of Ohio, are prepared on a basis of accounting practices
prescribed or permitted by such regulatory authority. Prescribed statutory
accounting practices include a variety of publications of the National
Association of Insurance Commissioners (NAIC), as well as state laws,
regulations and general administrative rules. Permitted statutory accounting
practices encompass all accounting practices not so prescribed. The Company has
no material permitted statutory accounting practices.
The statutory basis capital and surplus of ONLAC as of December 31, 1999 and
1998 was $119,569 and $114,373, respectively. The statutory basis net income of
ONLAC for the years ended December 31, 1999, 1998, and 1997 was $20,567,
$16,524, and $15,540, respectively.
Form 5560.5
49
<PAGE> 52
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
(4) INVESTMENTS
An analysis of investment income and realized gains (losses) by investment type
follows for the years ended December 31:
<TABLE>
<CAPTION>
REALIZED GAINS (LOSSES)
INVESTMENT INCOME ON INVESTMENTS
--------------------------- ------------------------
1999 1998 1997 1999 1998 1997
------- ------ ------ ------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Fixed maturities
available-for-sale $43,620 40,678 34,847 $(2,454) 300 346
Fixed maturities held-to-maturity 7,779 5,036 4,222 830 2 185
Mortgage loans on real estate 21,608 19,636 18,007 98 58 900
Short-term 1,293 1,824 2,121
Other 3,339 2,898 2,749
------- ------ ------ ------- ---- -----
Total 77,639 70,072 61,946 (1,526) 360 1,431
Investment expenses (951) (525) (598)
DAC amortization 11 (194) --
Change in valuation allowance for
mortgage loans on real estate (56) 35 (20)
------- ------ ------ ------- ---- -----
Net investment income $76,688 69,547 61,348
======= ====== ======
Net realized (losses)
gains on investments $(1,571) 201 1,411
======= ==== =====
</TABLE>
The components of unrealized gains on fixed maturities available-for-sale, net,
were as follows as of December 31:
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
Gross unrealized gains (losses) $(19,337) 32,911
Adjustment to deferred policy acquisition costs 8,407 (11,803)
Deferred Federal income tax 3,548 (8,897)
-------- -------
$ (7,382) 12,211
======== =======
</TABLE>
Form 5560.5
50
<PAGE> 53
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
The amortized cost and estimated fair value of fixed maturities
available-for-sale and fixed maturities held-to-maturity were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------------------------------------- -----------------------------------------------
GROSS GROSS ESTIMATED GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE COST GAINS LOSSES VALUE
--------- ---------- ---------- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed maturities
available-for- sale:
U.S. Treasury securities
and obligations of U.S.
government operations and
agencies $ 52,716 1,215 (616) 53,315 52,778 9,530 -- 62,308
Obligations of states and
political subdivisions 4,066 22 (33) 4,055 5,202 265 (36) 5,431
Corporate securities 349,968 3,517 (21,568) 331,917 377,168 21,463 (6,381) 392,250
Mortgage-backed securities 145,550 580 (2,454) 143,676 138,375 8,210 (140) 146,445
-------- ----- ------- ------- ------- ------ ------ -------
$552,300 5,334 (24,671) 532,963 573,523 39,468 (6,557) 606,434
======== ===== ======= ======= ======= ====== ====== =======
Fixed maturities
held-to-maturity:
Corporate securities $ 96,007 1,224 (4,380) 92,851 95,011 8,008 (14) 103,005
Other 2,535 19 -- 2,554 2,565 483 -- 3,048
-------- ----- ------- ------- ------- ------ ------ -------
$ 98,542 1,243 (4,380) 95,405 97,576 8,491 (14) 106,053
======== ===== ======= ======= ======= ====== ====== =======
</TABLE>
The amortized cost and estimated fair value of fixed maturities
available-for-sale and fixed maturities held-to-maturity as of December 31,
1999, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
FIXED MATURITY SECURITIES
---------------------------------------------------
AVAILABLE-FOR-SALE HELD-TO-MATURITY
----------------------- ------------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
--------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Due in one year or less $ 860 866 154 149
Due after one year through five years 63,763 63,580 11,389 11,027
Due after five years through ten years 146,564 141,997 26,179 25,346
Due after ten years 341,113 326,520 60,820 58,883
-------- ------- ------ ------
$552,300 532,963 98,542 95,405
======== ======= ====== ======
</TABLE>
Sales of fixed maturities available-for-sale in 1999 resulted in proceeds of
$29,040, with gross realized gain of $155 and gross realized losses of $1,140,
excluding calls. There were no sales of fixed maturities available-for-sale in
1998 and 1997. Investments with an amortized cost of $4,008 and $3,460 as of
December 31, 1999 and 1998, respectively, were on deposit with various
regulatory agencies as required by law. Realized gains on fixed maturities
held-to-maturity relate to calls.
The Company generally initiates foreclosure proceedings on all mortgage loans on
real estate delinquent sixty days. There were no foreclosures of mortgage loans
on real estate during 1999, and no foreclosures are in process as of December
31, 1999.
Form 5560.5
51
<PAGE> 54
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
(5) FUTURE POLICY BENEFIT AND CLAIMS
The liability for future policy benefits for universal life policies and
investment contracts (approximately 86% of the total liability for future policy
benefits as of December 31, 1999 and 1998) has been established based on the
aggregate account value without reduction for surrender charges. The average
interest rate to be credited on investment product policies was 6.3% and 5.6% as
of December 31, 1999 and 1998, respectively.
The liability for future policy benefits for traditional life products are based
on the following mortality and interest rate assumptions without consideration
for withdrawals. The mortality table and interest assumptions used for the
majority of new policies are the 1980 CSO table with 4% to 5% interest. With
respect to older policies, the mortality table and interest assumptions used are
primarily the 1958 CSO table with 4% interest and the 1980 CSO table with 4%-6%
interest.
The liability for future policy benefits for individual accident and health
policies include liabilities for active lives, disabled lives and unearned
premiums. The liability for active lives are calculated on a two-year
preliminary term basis at 3% to 6% interest, using either the 1964
Commissioner's Disability Table (policies issued prior to 1990) or the 1985
Commissioner's Individual Disability Table A (policies issued after 1989). The
liability for disabled lives are calculated using either the 1985 Commissioner's
Individual Disability Table A at 5% to 5.5% interest (claims incurred after
1989) or the 1971 modification of the 1964 Commissioner's Disability Table, at
3.5% interest (claims incurred prior to 1990).
(6) FEDERAL INCOME TAX
In prior years, under superseded tax acts, the Company deferred income and
accumulated amounts into a Policyholders' Surplus Account (PSA). Management
considers the likelihood of distributions from the PSA to be remote; therefore,
no Federal income tax has been provided for such distributions in the financial
statements. Any distributions from the PSA, however, will continue to be taxable
at the then current tax rate. The balance of the PSA is approximately $5,257 as
of December 31, 1999.
Total income taxes for the year ended December 31, 1999, 1998, and 1997 were
allocated as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Operations $15,703 14,242 14,676
Unrealized gains (losses) on securities
available-for-sale (12,445) 947 5,080
------- ------ ------
$ 3,258 15,189 19,756
======= ====== ======
</TABLE>
Form 5560.5
52
<PAGE> 55
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
Total Federal income tax expense for the years ended December 31, 1999, 1998,
and 1997 differs from the amount computed by applying the U.S. Federal income
tax rate to income before Federal income tax as follows:
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
AMOUNT % AMOUNT % AMOUNT %
------- ---- ------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $15,703 35.0 $13,991 35.0 $13,447 35.0
Differential earnings -- 0.0 (225) (0.6) 611 1.6
Tax exempt interest and dividends
received deduction (87) (0.6) (57) (0.1) (20) (0.1)
Other, net 87 0.6 533 1.3 638 1.7
------- ---- ------- ---- ------- ----
Total expense and
effective rate $15,703 35.0 $14,242 35.6 $14,676 38.2
======= ==== ======= ==== ======= ====
</TABLE>
Total Federal income tax paid during the years ended December 31, 1999, 1998,
and 1997 was $14,540, $15,092, and $14,176 (net of refunds of $493, $1,773, and
$0), respectively.
The tax effects of temporary differences between the financial statement
carrying amounts and tax basis of assets and liabilities that give rise to
significant components of the net deferred tax liability as of December 31, 1999
and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $28,087 32,780
Mortgage loans and real estate 830 811
Other 5,487 76
------- -------
Total gross deferred tax assets 34,404 33,667
------- -------
Deferred tax liabilities:
Deferred policy acquisition costs 35,236 33,201
Fixed maturities available-for-sale 723 11,821
Other 180 --
------- -------
Total gross deferred tax liabilities 36,139 45,022
------- -------
Net deferred tax liability $(1,735) (11,355)
======= =======
</TABLE>
The Company has determined that a deferred tax asset valuation allowance was not
needed as of December 31, 1999 and 1998. In assessing the realization of
deferred tax assets, management considers whether it is more likely than not
that the deferred tax assets will be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become deductible.
Management considers primarily the scheduled reversal of deferred tax
liabilities and tax planning strategies in making this assessment and believes
it is more likely than not the Company will realize the benefits of the
deductible differences remaining at December 31, 1999.
Form 5560.5
53
<PAGE> 56
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
(7) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, Disclosures about Fair
Value of Financial Instruments (SFAS 107) requires disclosure of fair value
information about existing on and off-balance sheet financial instruments. SFAS
107 excludes certain assets and liabilities, including insurance contracts,
other than policies such as annuities that are classified as investment
contracts, from its disclosure requirements. Accordingly, the aggregate fair
value amounts presented do not represent the underlying value of the Company.
The tax ramifications of the related unrealized gains and losses can have a
significant effect on fair value estimates and have not been considered in the
estimates.
The following methods and assumptions were used by the Company in estimating its
fair value disclosures:
Cash, Short-Term Investments, Policy Loans and Other Policyholder
Funds -- The carrying amount reported in the balance sheet for these
instruments approximate their fair value.
Investment Securities -- Fair value for fixed maturity securities is based
on quoted market prices, where available. For fixed maturity securities not
actively traded, fair value is estimated using values obtained from
independent pricing services, or in the case of private placements, is
estimated by discounting expected future cash flows using a current market
rate applicable to the yield, credit quality and duration of the
investments.
Separate Account Assets and Liabilities -- The fair value of assets held in
Separate Accounts is based on quoted market prices. The fair value of
liabilities related to Separate Accounts is the accumulated contract value
in the Separate Account portfolios.
Mortgage Loans on Real Estate -- The fair value for mortgage loans on real
estate is estimated using discounted cash flow analyses, using interest
rates currently being offered for similar loans to borrowers with similar
credit ratings. Loans with similar characteristics are aggregated for
purposes of the calculations.
Deferred and Immediate Annuities and Investment Contracts -- Fair value for
the Company's liabilities under investment type contracts is disclosed
using two methods. For investment contracts without defined maturities,
fair value is the amount payable on demand. For investment contracts with
known or determined maturities, fair value is estimated using discounted
cash flow analysis. Interest rates used are similar to currently offered
contracts with maturities consistent with those remaining for the contracts
being valued.
Form 5560.5
54
<PAGE> 57
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
The carrying amount and estimated fair value of financial instruments subject to
SFAS 107 and policy reserves on insurance contracts were as follows as of
December 31:
<TABLE>
<CAPTION>
1999 1998
---------------------- ----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Fixed maturities
available-for-sale $532,963 532,963 606,434 606,434
Fixed maturities held-to-maturity 98,542 95,405 97,576 106,053
Mortgage loans on real estate 262,516 256,824 229,647 250,380
Policy loans 44,001 44,001 40,597 40,597
Short-term investments 68,954 68,954 8,997 8,997
Cash 4,166 4,166 6,203 6,203
Assets held in Separate Accounts 164,473 164,473 103,306 103,306
LIABILITIES
Deferred and immediate annuity
contracts $107,777 106,111 104,464 105,010
Other policyholder funds 2,300 2,300 2,357 2,357
Liabilities related to Separate
Accounts 164,473 164,473 103,306 103,306
</TABLE>
(8) ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE
SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
Mortgage loans are collateralized by the underlying properties. Collateral must
meet or exceed 125% of the loan at the time the loan is made. The Company grants
mainly commercial mortgage loans to customers throughout the United States. The
Company has a diversified loan portfolio with no exposure greater than 10% in
any state at December 31, 1999. The summary below depicts loan exposure of
remaining principal balances type at December 31:
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
MORTGAGE ASSETS BY TYPE:
Retail $ 85,080 75,553
Office 56,260 50,323
Apartment 62,304 48,017
Industrial 41,588 36,926
Other 19,657 21,145
-------- -------
264,889 231,964
Less valuation allowances 2,373 2,317
-------- -------
Total mortgage loans on real estate, net $262,516 229,647
======== =======
</TABLE>
(9) REGULATORY RISK-BASED CAPITAL AND DIVIDEND RESTRICTIONS ON RETAINED EARNINGS
Based upon the December 31, 1999 and 1998 financial statements, the Company
exceeds all required risk-based capital levels.
Form 5560.5
55
<PAGE> 58
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
The payment of dividends by the Company to its parent, ONLIC, is limited by Ohio
law. As of December 31, 1999, $97,977 of retained earnings, as presented in the
accompanying financial statements, is restricted as to dividend payments in
1999.
(10) RELATED PARTY TRANSACTIONS
The Company shares common facilities and management with ONLIC. A written
agreement, which either party may terminate upon thirty days notice, provides
that ONLIC furnish personnel, space and supplies, accounting, data processing
and related services to ONLAC. This agreement resulted in charges to the Company
of approximately $14,000, $12,800, and $11,400 in 1999, 1998, and 1997,
respectively.
(11) REINSURANCE
In the ordinary course of business, the Company reinsures certain risks with its
parent, ONLIC, and other insurance companies. Amounts in the accompanying
financial statements related to ceded business are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------------------- ---------------------- ----------------------
NON- NON- NON-
AFFILIATE AFFILIATE AFFILIATE AFFILIATE AFFILIATE AFFILIATE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Premiums $25,495 21,669 25,760 24,316 20,473 18,953
Benefits incurred 12,943 12,704 12,797 9,707 12,075 7,140
Commission and expense
allowances 2,889 2,984 2,987 2,514 2,374 3,241
Reinsurance recoverable:
Reserves for future policy
benefits 50,111 57,064 44,773 48,077 36,543 40,455
Policy and contract claims
payable 1,609 1,663 2,356 3,645 1,318 987
</TABLE>
Net traditional life and accident and health premium income in 1999, 1998, and
1997 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Direct premiums earned $53,701 58,686 48,313
Reinsurance assumed 2,172 2,365 2,181
Reinsurance ceded (47,165) (50,076) (39,982)
------- ------- -------
Net premiums earned $ 8,708 10,975 10,512
======= ======= =======
</TABLE>
Reinsurance does not discharge the Company from its primary liability to
policyholders and to the extent that a reinsurer should be unable to meet its
obligations, the Company would be liable to policyholders.
(12) CONTINGENCIES
The Company is a defendant in various legal actions arising in the normal course
of business. While the outcome of such matters cannot be predicted with
certainty, management believes such matters will be resolved without material
adverse impact on the financial condition of the Company.
Form 5560.5
56
<PAGE> 59
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF
THE OHIO NATIONAL LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)
(13) COMPREHENSIVE INCOME
The components of other comprehensive income, including the related Federal tax
amounts, were as follows for the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
-------- ------ ------
<S> <C> <C> <C>
Unrealized (losses) gains on securities
available-for-sale arising during the
period:
Net of adjustment to deferred policy
acquisition costs $(26,481) 3,358 14,126
Related Federal tax benefit (expense) 10,500 (1,131) (4,944)
-------- ------ ------
Net (15,981) 2,227 9,182
-------- ------ ------
Reclassification adjustment for net losses
on securities available-for-sale realized
during the period:
Gross 5,557 527 227
Related federal tax benefit (1,945) (184) (79)
-------- ------ ------
Net 3,612 343 148
-------- ------ ------
Total other comprehensive (loss)
income $(19,593) 1,884 9,034
======== ====== ======
</TABLE>
Form 5560.5
57
<PAGE> 60
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF ASSETS AND CONTRACT OWNERS' EQUITY JUNE 30, 2000 (UNAUDITED)
<TABLE>
MONEY CAPITAL
EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Assets -- Investments at market value
(note 2)............................... $33,798,637 $3,242,747 $2,255,235 $11,440,299 $22,099,706 $6,972,645
=========== ========== ========== =========== =========== ==========
Contract owners' equity
Contracts in accumulation period (note
3).................................. $33,798,637 $3,242,747 $2,255,235 $11,440,299 $22,099,706 $6,972,645
=========== ========== ========== =========== =========== ==========
SMALL CAP
SUBACCOUNT
-----------
<S> <C>
Assets -- Investments at market value
(note 2)............................... $26,993,211
===========
Contract owners' equity
Contracts in accumulation period (note
3).................................. $26,993,211
===========
</TABLE>
<TABLE>
INTERNATIONAL
SMALL AGGRESSIVE CORE GROWTH & S&P 500 SOCIAL
COMPANY GROWTH GROWTH INCOME INDEX AWARENESS
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Assets -- Investments at market value
(note 2)............................... $ 4,863,093 $4,194,541 $5,210,146 $13,475,134 $18,909,364 $ 423,568
=========== ========== ========== =========== =========== ==========
Contract owners' equity
Contracts in accumulation period (note
3).................................. $ 4,863,093 $4,194,541 $5,210,146 $13,475,134 $18,909,364 $ 423,568
=========== ========== ========== =========== =========== ==========
BLUE CHIP
SUBACCOUNT
-----------
<S> <C>
Assets -- Investments at market value
(note 2)............................... $ 178,338
===========
Contract owners' equity
Contracts in accumulation period (note
3).................................. $ 178,338
===========
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
HIGH ------------------------------------------
EQUITY INCOME CAPITAL WORLDWIDE
INCOME BOND GROWTH GROWTH GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- ---------- ---------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets -- Investments at
market value (note 2)... $ 32,625 $ 20,992 $2,592,053 $ 8,821,684 $ 6,715,136 $1,565,826
=========== ========== ========== =========== =========== ==========
Contract owners' equity
Contracts in
accumulation period
(note 3)............. $ 32,625 $ 20,992 $2,592,053 $ 8,821,684 $ 6,715,136 $1,565,826
=========== ========== ========== =========== =========== ==========
</TABLE>
<TABLE>
STRONG VARIABLE FUNDS GOLDMAN SACHS
---------------------------------------- ------------------------------------------
SCHAFER MID-CAP VIT GROWTH VIT CORE VIT CAPITAL
OPPORTUNITY II VALUE II GROWTH & INCOME US EQUITY GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- ---------- ---------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets -- Investments at market value
(note 2)............................... $ 314,610 $ 336,004 $1,273,324 $ 914,796 $ 40,038 $ 154,089
=========== ========== ========== =========== =========== ==========
Contract owners' equity
Contracts in accumulation period (note
3).................................. $ 314,610 $ 336,004 $1,273,324 $ 914,796 $ 40,038 $ 154,089
=========== ========== ========== =========== =========== ==========
</TABLE>
<TABLE>
LAZARD RETIREMENT
MORGAN STANLEY -----------------------
U.S. REAL EMERGING SMALL
ESTATE MARKET CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- ---------- ----------
<S> <C> <C> <C>
Assets -- Investments at market value
(note 2)............................... $ 353,974 $ 623,256 $ 162,586
=========== ========== ==========
Contract owners' equity
Contracts in accumulation period (note
3).................................. $ 353,974 $ 623,256 $ 162,586
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
58
<PAGE> 61
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF OPERATIONS
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
EQUITY SUBACCOUNT
------------------------------------------------------
SIX MONTHS YEARS ENDED
ENDED ---------------------------------------
6/30/2000 1999 1998 1997
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends................. $ 22,176 $ 103,759 $ 374,943 $ 453,946
Risk & administrative expense (note
4)................................. (124,651) (236,084) (222,953) (190,776)
----------- ----------- ---------- ----------
Net investment activity............ (102,475) (132,325) 151,990 263,170
----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains........... 115,765 13,411,033 582,686 1,475,813
Realized gain (loss)............... (158,113) 1,165,160 433,578 431,237
Unrealized gain (loss)............. (1,086,069) (8,842,357) 276,272 1,699,778
----------- ----------- ---------- ----------
Net gain (loss) on investments... (1,128,417) 5,733,836 1,292,536 3,606,828
----------- ----------- ---------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. $(1,230,892) $ 5,601,511 $1,444,526 $3,869,998
=========== =========== ========== ==========
<CAPTION>
MONEY MARKET SUBACCOUNT
---------------------------------------------------
SIX MONTHS YEARS ENDED
ENDED -------------------------------------
6/30/2000 1999 1998 1997
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends................. $104,455 $ 157,294 $ 92,380 $ 55,657
Risk & administrative expense (note
4)................................. (13,288) (23,933) (13,276) (7,949)
-------- ---------- --------- ----------
Net investment activity............ 91,167 133,361 79,104 47,708
-------- ---------- --------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains........... 0 0 0 0
Realized gain (loss)............... 3,788 (31,917) (1,729) 241
Unrealized gain (loss)............. 0 0 0 0
-------- ---------- --------- ----------
Net gain (loss) on investments... 3,788 (31,917) (1,729) 241
-------- ---------- --------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. $ 94,955 $ 101,444 $ 77,375 $ 47,949
======== ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
BOND SUBACCOUNT OMNI SUBACCOUNT
------------------------------------------------------ ------------------------
SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED
ENDED --------------------------------------- ENDED ----------
6/30/2000 1999 1998 1997 6/30/2000 1999
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends................. $ 34,163 $ 120,071 $ 83,140 $ 68,280 $ 41,417 $ 259,003
Risk & administrative expense (note
4)................................. (7,288) (13,410) (9,252) (6,130) (42,857) (89,113)
----------- ----------- ---------- ---------- -------- ----------
Net investment activity............ 26,875 106,661 73,888 62,150 (1,440) 169,890
----------- ----------- ---------- ---------- -------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains........... 0 0 0 0 16,146 411,548
Realized gain (loss)............... (8,622) (6,506) 2,811 1,394 176,653 431,731
Unrealized gain (loss)............. 31,008 (103,003) (21,734) 4,309 105,006 164,688
----------- ----------- ---------- ---------- -------- ----------
Net gain (loss) on investments... 22,386 (109,509) (18,923) 5,703 297,805 1,007,967
----------- ----------- ---------- ---------- -------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. $ 49,261 $ (2,848) $ 54,965 $ 67,853 $296,365 $1,177,857
=========== =========== ========== ========== ======== ==========
<CAPTION>
OMNI SUBACCOUNT
-----------------------
YEARS ENDED
-----------------------
1998 1997
--------- ----------
<S> <C> <C>
Investment activity:
Reinvested dividends................. $ 301,587 $ 285,077
Risk & administrative expense (note
4)................................. (83,337) (65,184)
--------- ----------
Net investment activity............ 218,250 219,893
--------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains........... 1,760 480,048
Realized gain (loss)............... 332,951 73,429
Unrealized gain (loss)............. (101,784) 562,929
--------- ----------
Net gain (loss) on investments... 232,927 1,116,406
--------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. $ 451,177 $1,336,299
========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
59
<PAGE> 62
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF OPERATIONS
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
INTERNATIONAL SUBACCOUNT
------------------------------------------------------
SIX MONTHS YEARS ENDED
ENDED ---------------------------------------
6/30/2000 1999 1998 1997
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends................. $ -- $ 0 $ 630,410 $ 983,741
Risk & administrative expense (note
4)................................. (91,060) (125,913) (124,053) (112,268)
----------- ----------- ---------- ----------
Net investment activity............ (91,060) (125,913) 506,357 871,473
----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains........... 157,840 0 695,117 1,415,674
Realized gain (loss)............... 691,782 (55,726) (45,820) 186,736
Unrealized gain (loss)............. (1,847,025) 10,000,013 (670,437) (2,391,042)
----------- ----------- ---------- ----------
Net gain (loss) on investments... (997,403) 9,944,287 (21,140) (788,632)
----------- ----------- ---------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. $(1,088,463) $ 9,818,374 $ 485,217 $ 82,841
=========== =========== ========== ==========
<CAPTION>
CAPITAL APPRECIATION SUBACCOUNT
---------------------------------------------------
SIX MONTHS YEARS ENDED
ENDED -------------------------------------
6/30/2000 1999 1998 1997
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends................. $ 62,029 $ 181,793 $ 155,395 $ 130,659
Risk & administrative expense (note
4)................................. (26,627) (56,169) (45,565) (28,303)
--------- ---------- --------- ----------
Net investment activity............ 35,402 125,624 109,830 102,356
--------- ---------- --------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains........... 8,097 700,498 539,044 244,214
Realized gain (loss)............... (72,069) 36,655 33,861 34,042
Unrealized gain (loss)............. 222,376 (450,311) (390,779) 129,929
--------- ---------- --------- ----------
Net gain (loss) on investments... 158,404 286,842 182,126 408,185
--------- ---------- --------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. $ 193,806 $ 412,466 $ 291,956 $ 510,541
========= ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP SUBACCOUNT
------------------------------------------------------
SIX MONTHS YEARS ENDED
ENDED ---------------------------------------
6/30/2000 1999 1998 1997
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends................. $ -- $ 0 $ 0 $ 0
Risk & administrative expense (note
4)................................. (94,738) (100,544) (54,057) (38,798)
----------- ----------- ---------- ----------
Net investment activity............ (94,738) (100,544) (54,057) (38,798)
----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains........... 309,255 5,797,375 107 271,143
Realized gain...................... 602,346 307,091 57,223 84,498
Unrealized gain (loss)............. 3,750,340 5,205,819 930,451 130,287
----------- ----------- ---------- ----------
Net gain (loss) on investments... 4,661,941 11,310,285 987,781 485,928
----------- ----------- ---------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. $ 4,567,203 $11,209,741 $ 933,724 $ 447,130
=========== =========== ========== ==========
<CAPTION>
INTERNATIONAL SMALL COMPANY SUBACCOUNT
---------------------------------------------------
SIX MONTHS YEARS ENDED
ENDED -------------------------------------
6/30/2000 1999 1998 1997
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends................. $ 0 $ 0 $ 54,153 $ 52,943
Risk & administrative expense (note
4)................................. (20,780) (20,937) (13,819) (9,551)
--------- ---------- --------- ----------
Net investment activity............ (20,780) (20,937) 40,334 43,392
--------- ---------- --------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains........... 21,621 479,458 180,539 83,769
Realized gain...................... 130,652 202,058 8,238 32,076
Unrealized gain (loss)............. (971,919) 1,832,353 (187,295) (35,010)
--------- ---------- --------- ----------
Net gain (loss) on investments... (819,646) 2,513,869 1,482 80,835
--------- ---------- --------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. $(840,426) $2,492,932 $ 41,816 $ 124,227
========= ========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
60
<PAGE> 63
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF OPERATIONS
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH SUBACCOUNT CORE GROWTH SUBACCOUNT
------------------------------------------------------ ------------------------
SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED
ENDED --------------------------------------- ENDED ----------
6/30/2000 1999 1998 1997 6/30/2000 1999
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends................ $ 0 $ 0 $ 0 $ 24,808 $ 0 $ 0
Risk & administrative expense (note
4)................................ (15,377) (26,551) (23,847) (16,668) (16,431) (14,942)
----------- ----------- ---------- ---------- -------- ----------
Net investment activity........... (15,377) (26,551) (23,847) 8,140 (16,431) (14,942)
----------- ----------- ---------- ---------- -------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains.......... 0 0 258,472 9,068 86,768 763,382
Realized gain (loss).............. 9,024 (41,002) 22,270 (3,358) 91,156 115,808
Unrealized gain (loss)............ (389,462) 248,666 (6,276) 231,511 639,644 875,700
----------- ----------- ---------- ---------- -------- ----------
Net gain (loss) on
investments.................. (380,438) 207,664 274,466 237,221 817,568 1,754,890
----------- ----------- ---------- ---------- -------- ----------
Net increase (decrease) in
contract owners' equity
from operations............ $ (395,815) $ 181,113 $ 250,619 $ 245,361 $801,137 $1,739,948
=========== =========== ========== ========== ======== ==========
<CAPTION>
CORE GROWTH SUBACCOUNT
------------------------
YEARS ENDED
------------------------
1998 1997(a)
---------- ----------
<S> <C> <C>
Investment activity:
Reinvested dividends................ $ 0 $ 161
Risk & administrative expense (note
4)................................ (7,627) (3,844)
---------- ----------
Net investment activity........... (7,627) (3,683)
---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains.......... 0 0
Realized gain (loss).............. 1,725 3,379
Unrealized gain (loss)............ 101,913 (3,039)
---------- ----------
Net gain (loss) on
investments.................. 103,638 340
---------- ----------
Net increase (decrease) in
contract owners' equity
from operations............ $ 96,011 $ (3,343)
========== ==========
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME SUBACCOUNT
------------------------------------------------------
SIX MONTHS YEARS ENDED
ENDED ---------------------------------------
6/30/2000 1999 1998 1997 (a)
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends................ $ 0 $ 17,648 $ 40,476 $ 7,733
Risk & administrative expense (note
4)................................ (51,490) (60,687) (27,216) (4,646)
----------- ----------- ---------- ----------
Net investment activity........... (51,490) (43,039) 13,260 3,087
----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains.......... 219,550 1,905,785 0 90,978
Realized gain..................... 369,457 74,709 10,734 7,768
Unrealized gain (loss)............ (438,897) 2,666,425 252,938 94,008
----------- ----------- ---------- ----------
Net gain (loss) on
investments.................. 150,110 4,646,919 263,672 192,754
----------- ----------- ---------- ----------
Net increase in contract
owners' equity from
operations................. $ 98,620 $ 4,603,880 $ 276,932 $ 195,841
=========== =========== ========== ==========
<CAPTION>
S&P 500 INDEX SUBACCOUNT
----------------------------------------------------
SIX MONTHS YEARS ENDED
ENDED --------------------------------------
6/30/2000 1999 1998 1997 (a)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends................ $132,131 $ 355,574 $ 108,830 $ 33,016
Risk & administrative expense (note
4)................................ (68,007) (103,243) (26,947) (2,986)
-------- ---------- ---------- ----------
Net investment activity........... 64,124 252,331 81,883 30,030
-------- ---------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains.......... 23,095 1,388,105 328,825 94,770
Realized gain..................... 161,005 199,621 20,356 5,779
Unrealized gain (loss)............ (243,207) 1,477,659 619,923 (52,996)
-------- ---------- ---------- ----------
Net gain (loss) on
investments.................. (59,107) 3,065,385 969,104 47,553
-------- ---------- ---------- ----------
Net increase in contract
owners' equity from
operations................. $ 5,017 $3,317,716 $1,050,987 $ 77,583
======== ========== ========== ==========
</TABLE>
---------------
(a) Period from January 3, 1997, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
61
<PAGE> 64
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF OPERATIONS
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
SOCIAL AWARENESS SUBACCOUNT EQUITY INCOME SUBACCOUNT
----------------------------------------------------- -------------------------
SIX MONTHS YEARS ENDED SIX MONTHS
ENDED --------------------------------------- ENDED YEAR ENDED
6/30/2000 1999 1998 1997 (a) 6/30/2000 1999 (c)
----------- ----------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends.................. $ 0 $ 2,088 $ 2,652 $ 983 $ 31 $ 0
Risk & administrative expense (note
4).................................. (1,682) (3,374) (3,609) (394) (51) 0
----------- ----------- ---------- ---------- -------- ----------
Net investment activity............. (1,682) (1,286) (957) 589 (20) 0
----------- ----------- ---------- ---------- -------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............ 0 0 0 29,015 0 0
Realized gain (loss)................ 18,332 (62,411) (31,042) 926 48 0
Unrealized gain (loss).............. 40,686 131,316 (102,278) (31,805) (417) 0
----------- ----------- ---------- ---------- -------- ----------
Net gain (loss) on investments.... 59,018 68,905 (133,320) (1,864) (369) 0
----------- ----------- ---------- ---------- -------- ----------
Net increase (decrease) in
contract owners' equity from
operations................... $ 57,336 $ 67,619 $ (134,277) $ (1,275) $ (389) $ 0
=========== =========== ========== ========== ======== ==========
<CAPTION>
BLUE CHIP SUBACCOUNT
-------------------------
FOR SIX YEAR
MONTHS ENDED ENDED
6/30/2000 1999 (c)
------------ ----------
<S> <C> <C>
Investment activity:
Reinvested dividends.................. $ 14 $ 0
Risk & administrative expense (note
4).................................. (168) 0
--------- ----------
Net investment activity............. (154) 0
--------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............ 36 1
Realized gain (loss)................ 161 0
Unrealized gain (loss).............. (3,228) 10
--------- ----------
Net gain (loss) on investments.... (3,031) 11
--------- ----------
Net increase (decrease) in
contract owners' equity from
operations................... $ (3,185) $ 11
========= ==========
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
-----------------------
HIGH INCOME SUBACCOUNT CAPITAL GROWTH SUBACCOUNT GROWTH SUBACCOUNT
------------------------- ------------------------- -----------------------
SIX MONTHS FOR SIX SIX MONTHS
ENDED YEAR ENDED MONTHS ENDED YEAR ENDED ENDED YEAR ENDED
6/30/2000 1999 (c) 6/30/2000 1999 (c) 6/30/2000 1999 (b)
----------- ----------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends.................. $ 546 $ 526 $ 0 $ 0 $127,075 $ 6,902
Risk & administrative expense (note
4).................................. (121) (17) (6,204) (84) (28,204) (14,713)
----------- ----------- ---------- ---------- -------- ----------
Net investment activity............. 425 509 (6,204) (84) 98,871 (7,811)
----------- ----------- ---------- ---------- -------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............ 0 0 1,346 25,879 212,421 6,806
Realized gain (loss)................ (2,952) 1 (9,962) 776 93,713 9,588
Unrealized gain (loss).............. 337 (347) (57,079) (6,339) (326,356) 1,075,487
----------- ----------- ---------- ---------- -------- ----------
Net gain (loss) on investments.... (2,615) (346) (65,695) 20,316 (20,222) 1,091,881
----------- ----------- ---------- ---------- -------- ----------
Net increase (decrease) in
contract owners' equity from
operations................... $ (2,190) $ 163 $ (71,899) $ 20,232 $ 78,649 $1,084,070
=========== =========== ========== ========== ======== ==========
<CAPTION>
JANUS ASPEN SERIES
-------------------------
WORLDWIDE GROWTH
SUBACCOUNT
-------------------------
FOR SIX
MONTHS ENDED YEAR ENDED
6/30/2000 1999 (b)
------------ ----------
<S> <C> <C>
Investment activity:
Reinvested dividends.................. $ 24,019 $ 1,005
Risk & administrative expense (note
4).................................. (21,028) (6,966)
--------- ----------
Net investment activity............. 2,991 (5,961)
--------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............ 71,624 0
Realized gain (loss)................ 18,847 3,506
Unrealized gain (loss).............. (95,286) 954,815
--------- ----------
Net gain (loss) on investments.... (4,815) 958,321
--------- ----------
Net increase (decrease) in
contract owners' equity from
operations................... $ (1,824) $ 952,360
========= ==========
</TABLE>
---------------
(a) Period from January 3, 1997, date of commencement of operations.
(b) Period from May 3, 1999, date of commencement of operations.
(c) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
62
<PAGE> 65
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF OPERATIONS
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
JANUS ASPEN SERIES STRONG VARIABLE ANNUITY FUNDS
------------------------- ------------------------------------------------------
BALANCE SUBACCOUNT OPPORTUNITY II SUBACCOUNT SCHAFER VALUE SUBACCOUNT
------------------------- ------------------------- -------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
6/30/2000 1999 (c) 6/30/2000 1999 (c) 6/30/2000 1999 (c)
----------- ----------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends.................. $ 26,047 $ 583 $ 0 $ 0 $ 0 $ 20
Risk & administrative expense (note
4).................................. (2,515) (18) (360) (3) (491) (3)
----------- ----------- ---------- ---------- -------- ----------
Net investment activity............. 23,532 565 0 (3) (491) 17
----------- ----------- ---------- ---------- -------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............ 72,937 0 0 0 0 91
Realized gain (loss)................ 1,730 191 1,641 0 6,039 36
Unrealized gain (loss).............. (79,710) 1,157 (7,099) 246 (19,508) (122)
----------- ----------- ---------- ---------- -------- ----------
Net gain (loss) on investments.... (5,043) 1,348 (5,458) 246 (13,469) 5
----------- ----------- ---------- ---------- -------- ----------
Net increase (decrease) in
contract owners' equity from
operations................... $ 18,489 $ 1,913 $ (5,458) $ 243 $(13,960) $ 22
=========== =========== ========== ========== ======== ==========
<CAPTION>
STRONG VARIABLE ANNUITY FUNDS
-------------------------
MID-CAP GROWTH SUBACCOUNT
-------------------------
SIX MONTHS
ENDED YEAR ENDED
6/30/2000 1999 (c)
------------ ----------
<S> <C> <C>
Investment activity:
Reinvested dividends.................. $ 0 $ 0
Risk & administrative expense (note
4).................................. (3,218) (107)
--------- ----------
Net investment activity............. (3,218) (107)
--------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............ 0 0
Realized gain (loss)................ (24,263) 453
Unrealized gain (loss).............. (7,284) 25,711
--------- ----------
Net gain (loss) on investments.... (31,547) 26,164
--------- ----------
Net increase (decrease) in
contract owners' equity from
operations................... $ (34,765) $ 26,057
========= ==========
</TABLE>
<TABLE>
<CAPTION>
GOLDMAN SACHS
--------------------------------------------------------------------------------
VIT GROWTH & INCOME VIT CORE US EQUITY VIT CAPITAL GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ------------------------- -----------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
6/30/2000 1999 (b) 6/30/2000 1999 (c) 6/30/2000 1999 (c)
----------- ----------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends.................. $ 0 $ 7,699 $ 0 $ 25 $ 0 $ 18
Risk & administrative expense (note
4).................................. (3,131) (1,357) (76) (4) (361) (12)
----------- ----------- ---------- ---------- -------- ----------
Net investment activity............. (3,131) 6,342 (76) 21 (361) 6
----------- ----------- ---------- ---------- -------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............ 0 0 0 88 0 521
Realized gain (loss)................ (336) (1,291) 121 (15) (44) 415
Unrealized gain..................... 11,825 5,904 101 283 7,073 472
----------- ----------- ---------- ---------- -------- ----------
Net gain on investments........... 11,489 4,613 222 356 7,029 1,408
----------- ----------- ---------- ---------- -------- ----------
Net increase in contract
owners' equity from
operations................... $ 8,358 $ 10,955 $ 146 $ 377 $ 6,668 $ 1,414
=========== =========== ========== ========== ======== ==========
<CAPTION>
MORGAN STANLEY
-------------------------
US REAL ESTATE
SUBACCOUNT
-------------------------
SIX MONTHS
ENDED YEAR ENDED
6/30/2000 1999 (c)
------------ ----------
<S> <C> <C>
Investment activity:
Reinvested dividends.................. $ 649 $ 0
Risk & administrative expense (note
4).................................. (391) 0
--------- ----------
Net investment activity............. 0 0
--------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............ 0 0
Realized gain (loss)................ (422) 0
Unrealized gain..................... 13,917 0
--------- ----------
Net gain on investments........... 13,495 0
--------- ----------
Net increase in contract
owners' equity from
operations................... $ 13,495 $ 0
========= ==========
</TABLE>
---------------
(b) Period from May 3, 1999, date of commencement of operations.
(c) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
63
<PAGE> 66
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF OPERATIONS
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
LAZARD RETIREMENT
------------------------------------------------------
EMERGING MARKET SMALL CAP
SUBACCOUNT SUBACCOUNT
-------------------------- ------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
6/30/2000 1999 (c) 6/30/2000 1999 (c)
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends............ $ 0 $ 1,046 $ 0 $ 3
Risk & administrative expense
(note 4)..................... (2,224) (606) (384) (5)
----------- ----------- -------- ----------
Net investment activity...... (2,224) 440 (384) (2)
----------- ----------- -------- ----------
Realized & unrealized gain
(loss) on Investments:
Reinvested capital gains..... 0 0 0 37
Realized gain (loss)......... 8,463 5,449 1,740 0
Unrealized gain (loss)....... (53,694) 107,388 6,550 536
----------- ----------- -------- ----------
Net gain (loss) on
investments............. (45,231) 112,837 8,290 573
----------- ----------- -------- ----------
Net increase (decrease)
in contract owners'
equity from
operations............ $ (47,455) $ 113,277 $ 7,906 $ 571
=========== =========== ======== ==========
</TABLE>
---------------
(c) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
64
<PAGE> 67
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
EQUITY MONEY MARKET
SUBACCOUNT SUBACCOUNT
----------------------------------------------------- -------------------------
SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED
ENDED --------------------------------------- ENDED -----------
6/30/2000 1999 1998 1997 6/30/2000 1999
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity........... $ (102,475) $ (132,325) $ 151,990 $ 263,170 $ 91,167 $ 133,361
Reinvested capital gains.......... 115,765 13,411,033 582,686 1,475,813 0 0
Realized gain (loss).............. (158,113) 1,165,160 433,578 431,237 3,788 (31,917)
Unrealized gain (loss)............ (1,086,069) (8,842,357) 276,272 1,699,778 0 0
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
contract owners' equity
from operations............ (1,230,892) 5,601,511 1,444,526 3,869,998 94,955 101,444
----------- ----------- ----------- ----------- ----------- -----------
Equity transactions:
Sales:
Contract purchase payments........ 2,427,210 5,012,273 5,167,419 4,850,686 6,078,794 6,289,867
Transfers from fixed & other
subaccounts.................... 2,546,072 2,442,831 1,599,312 2,585,503 1,886,010 5,592,228
----------- ----------- ----------- ----------- ----------- -----------
4,973,282 7,455,104 6,766,731 7,436,189 7,964,804 11,882,095
----------- ----------- ----------- ----------- ----------- -----------
Redemptions:
Withdrawals & surrenders (note
5)............................. 736,269 1,283,863 975,495 930,275 434,586 22,532
Transfers to fixed & other
subaccounts.................... 3,157,558 6,010,815 2,231,174 2,061,907 8,563,769 11,367,686
Cost of insurance & administrative
fee (note 5)................... 917,372 2,060,563 2,044,300 1,775,339 196,652 283,708
----------- ----------- ----------- ----------- ----------- -----------
4,811,199 9,355,241 5,250,969 4,767,521 9,195,007 11,673,926
----------- ----------- ----------- ----------- ----------- -----------
Net equity transactions...... 162,083 (1,900,137) 1,515,762 2,668,668 (1,230,203) 208,169
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity.......... (1,068,809) 3,701,374 2,960,288 6,538,666 (1,135,248) 309,613
Contract owners' equity:
Beginning of period................. 34,867,446 31,166,072 28,205,784 21,667,118 4,377,995 4,068,382
----------- ----------- ----------- ----------- ----------- -----------
End of period....................... $33,798,637 $34,867,446 $31,166,072 $28,205,784 $ 3,242,747 $ 4,377,995
=========== =========== =========== =========== =========== ===========
MONEY MARKET
SUBACCOUNT
-------------------------
YEARS ENDED
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity........... $ 79,104 $ 47,708
Reinvested capital gains.......... 0 0
Realized gain (loss).............. (1,729) 241
Unrealized gain (loss)............ 0 0
----------- -----------
Net increase (decrease) in
contract owners' equity
from operations............ 77,375 47,949
----------- -----------
Equity transactions:
Sales:
Contract purchase payments........ 9,924,762 6,067,434
Transfers from fixed & other
subaccounts.................... 2,863,761 1,593,336
----------- -----------
12,788,523 7,660,770
----------- -----------
Redemptions:
Withdrawals & surrenders (note
5)............................. 48,825 8,519
Transfers to fixed & other
subaccounts.................... 9,721,391 7,321,910
Cost of insurance & administrative
fee (note 5)................... 257,277 225,524
----------- -----------
10,027,493 7,555,953
----------- -----------
Net equity transactions...... 2,761,030 104,817
----------- -----------
Net change in contract
owners' equity.......... 2,838,405 152,766
Contract owners' equity:
Beginning of period................. 1,229,977 1,077,211
----------- -----------
End of period....................... $ 4,068,382 $ 1,229,977
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
65
<PAGE> 68
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
BOND OMNI
SUBACCOUNT SUBACCOUNT
----------------------------------------------------- -------------------------
SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED
ENDED --------------------------------------- ENDED -----------
6/30/2000 1999 1998 1997 6/30/2000 1999
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity........... $ 26,875 $ 106,661 $ 73,888 $ 62,150 $ (1,440) $ 169,890
Reinvested capital gains.......... 0 0 0 0 16,146 411,548
Realized gain (loss).............. (8,622) (6,506) 2,811 1,394 176,653 431,731
Unrealized gain (loss)............ 31,008 (103,003) (21,734) 4,309 105,006 164,688
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
contract owners' equity
from operations............ 49,261 (2,848) 54,965 67,853 296,365 1,177,857
----------- ----------- ----------- ----------- ----------- -----------
Equity transactions:
Sales:
Contract purchase payments........ 226,123 419,790 345,106 244,107 841,396 2,179,009
Transfers from fixed & other
subaccounts.................... 862,964 256,378 567,357 131,403 227,552 934,257
----------- ----------- ----------- ----------- ----------- -----------
1,089,087 676,168 912,463 375,510 1,068,948 3,113,266
----------- ----------- ----------- ----------- ----------- -----------
Redemptions:
Withdrawals & surrenders (note
5)............................. 36,350 103,237 13,218 21,828 308,321 600,731
Transfers to fixed & other
subaccounts.................... 673,115 243,107 129,183 131,854 1,091,892 2,971,645
Cost of insurance & administrative
fee (note 5)................... 52,461 122,471 100,579 70,289 333,641 841,801
----------- ----------- ----------- ----------- ----------- -----------
761,926 468,815 242,980 223,971 1,733,854 4,414,177
----------- ----------- ----------- ----------- ----------- -----------
Net equity transactions...... 327,161 207,353 669,483 151,539 (664,906) (1,300,911)
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity.......... 376,422 204,505 724,448 219,392 (368,541) (123,054)
Contract owners' equity:
Beginning of period................. 1,878,813 1,674,308 949,860 730,468 11,808,840 11,931,894
----------- ----------- ----------- ----------- ----------- -----------
End of period....................... $ 2,255,235 $ 1,878,813 $ 1,674,308 $ 949,860 $11,440,299 $11,808,840
=========== =========== =========== =========== =========== ===========
OMNI
SUBACCOUNT
-------------------------
YEARS ENDED
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity........... $ 218,250 $ 219,893
Reinvested capital gains.......... 1,760 480,048
Realized gain (loss).............. 332,951 73,429
Unrealized gain (loss)............ (101,784) 562,929
----------- -----------
Net increase (decrease) in
contract owners' equity
from operations............ 451,177 1,336,299
----------- -----------
Equity transactions:
Sales:
Contract purchase payments........ 2,470,020 1,966,189
Transfers from fixed & other
subaccounts.................... 2,614,095 907,850
----------- -----------
5,084,115 2,874,039
----------- -----------
Redemptions:
Withdrawals & surrenders (note
5)............................. 705,842 187,562
Transfers to fixed & other
subaccounts.................... 2,318,267 312,223
Cost of insurance & administrative
fee (note 5)................... 802,634 648,661
----------- -----------
3,826,743 1,148,446
----------- -----------
Net equity transactions...... 1,257,372 1,725,593
----------- -----------
Net change in contract
owners' equity.......... 1,708,549 3,061,892
Contract owners' equity:
Beginning of period................. 10,223,345 7,161,453
----------- -----------
End of period....................... $11,931,894 $10,223,345
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
66
<PAGE> 69
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
INTERNATIONAL CAPITAL APPRECIATION
SUBACCOUNT SUBACCOUNT
----------------------------------------------------- -------------------------
SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED
ENDED --------------------------------------- ENDED -----------
6/30/2000 1999 1998 1997 6/30/2000 1999
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity........... $ (91,060) $ (125,913) $ 506,357 $ 871,473 $ 35,402 $ 125,624
Reinvested capital gains.......... 157,840 0 695,117 1,415,674 8,097 700,498
Realized gain (loss).............. 691,782 (55,726) (45,820) 186,736 (72,069) 36,655
Unrealized gain (loss)............ (1,847,025) 10,000,013 (670,437) (2,391,042) 222,376 (450,311)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
contract owners' equity
from operations............ (1,088,463) 9,818,374 485,217 82,841 193,806 412,466
----------- ----------- ----------- ----------- ----------- -----------
Equity transactions:
Sales:
Contract purchase payments........ 1,516,634 3,266,962 4,027,966 4,352,514 763,021 1,870,385
Transfers from fixed & other
subaccounts.................... 1,061,068 954,384 965,930 2,121,595 1,026,998 851,618
----------- ----------- ----------- ----------- ----------- -----------
2,577,702 4,221,346 4,993,896 6,474,109 1,790,019 2,722,003
----------- ----------- ----------- ----------- ----------- -----------
Redemptions:
Withdrawals & surrenders (note
5)............................. 529,570 881,527 618,889 469,189 170,130 262,934
Transfers to fixed & other
subaccounts.................... 2,365,939 4,697,047 2,112,568 2,136,043 2,215,343 1,789,041
Cost of insurance & administrative
fee (note 5)................... 614,287 1,206,179 1,348,113 1,269,503 213,651 574,371
----------- ----------- ----------- ----------- ----------- -----------
3,509,796 6,784,753 4,079,570 3,874,735 2,599,124 2,626,346
----------- ----------- ----------- ----------- ----------- -----------
Net equity transactions...... (932,094) (2,563,407) 914,326 2,599,374 (809,105) 95,657
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity.......... (2,020,557) 7,254,967 1,399,543 2,682,215 (615,299) 508,123
Contract owners' equity:
Beginning of period................. 24,120,263 16,865,296 15,465,753 12,783,538 7,587,944 7,079,821
----------- ----------- ----------- ----------- ----------- -----------
End of period....................... $22,099,706 $24,120,263 $16,865,296 $15,465,753 $ 6,972,645 $ 7,587,944
=========== =========== =========== =========== =========== ===========
CAPITAL APPRECIATION
SUBACCOUNT
-------------------------
YEARS ENDED
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity........... $ 109,830 $ 102,356
Reinvested capital gains.......... 539,044 244,214
Realized gain (loss).............. 33,861 34,042
Unrealized gain (loss)............ (390,779) 129,929
----------- -----------
Net increase (decrease) in
contract owners' equity
from operations............ 291,956 510,541
----------- -----------
Equity transactions:
Sales:
Contract purchase payments........ 2,206,184 1,458,697
Transfers from fixed & other
subaccounts.................... 951,520 1,299,231
----------- -----------
3,157,704 2,757,928
----------- -----------
Redemptions:
Withdrawals & surrenders (note
5)............................. 170,616 54,331
Transfers to fixed & other
subaccounts.................... 518,403 775,912
Cost of insurance & administrative
fee (note 5)................... 548,283 377,999
----------- -----------
1,237,302 1,208,242
----------- -----------
Net equity transactions...... 1,920,402 1,549,686
----------- -----------
Net change in contract
owners' equity.......... 2,212,358 2,060,227
Contract owners' equity:
Beginning of period................. 4,867,463 2,807,236
----------- -----------
End of period....................... $ 7,079,821 $ 4,867,463
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
67
<PAGE> 70
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
INTERNATIONAL SMALL
SMALL CAP COMPANY
SUBACCOUNT SUBACCOUNT
----------------------------------------------------- -------------------------
SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED
ENDED --------------------------------------- ENDED -----------
6/30/2000 1999 1998 1997 6/30/2000 1999
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract
Owners' equity from operations:
Net investment activity........... $ (94,738) $ (100,544) $ (54,057) $ (38,798) $ (20,780) $ (20,937)
Reinvested capital gains.......... 309,255 5,797,375 107 271,143 21,621 479,458
Realized gain..................... 602,346 307,091 57,223 84,498 130,652 202,058
Unrealized gain (loss)............ 3,750,340 5,205,819 930,451 130,287 (971,919) 1,832,353
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
contract owners' equity
from operations............ 4,567,203 11,209,741 933,724 447,130 (840,426) 2,492,932
----------- ----------- ----------- ----------- ----------- -----------
Equity transactions:
Sales:
Contract purchase payments........ 1,627,205 2,645,343 2,614,149 2,181,009 381,004 603,036
Transfers from fixed & other
subaccounts.................... 3,052,529 3,174,822 1,096,254 1,438,960 1,098,858 1,743,233
----------- ----------- ----------- ----------- ----------- -----------
4,679,734 5,820,165 3,710,403 3,619,969 1,479,862 2,346,269
----------- ----------- ----------- ----------- ----------- -----------
Redemptions:
Withdrawals & surrenders (note
5)............................. 456,570 515,999 258,338 141,409 48,198 109,397
Transfers to fixed & other
subaccounts.................... 3,865,077 2,004,103 795,000 1,146,251 649,911 1,506,122
Cost of insurance & administrative
fee (note 5)................... 673,209 1,018,712 705,650 579,612 139,000 207,469
----------- ----------- ----------- ----------- ----------- -----------
4,994,856 3,538,814 1,758,988 1,867,272 837,109 1,822,988
----------- ----------- ----------- ----------- ----------- -----------
Net equity transactions...... (315,122) 2,281,351 1,951,415 1,752,697 642,753 523,281
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity.......... 4,252,081 13,491,092 2,885,139 2,199,827 (197,673) 3,016,213
Contract owners' equity:
Beginning of period................. 22,741,130 9,250,038 6,364,899 4,165,072 5,060,766 2,044,553
----------- ----------- ----------- ----------- ----------- -----------
End of period....................... $26,993,211 $22,741,130 $ 9,250,038 $ 6,364,899 $ 4,863,093 $ 5,060,766
=========== =========== =========== =========== =========== ===========
INTERNATIONAL SMALL
COMPANY
SUBACCOUNT
-------------------------
YEARS ENDED
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Increase (decrease) in contract
Owners' equity from operations:
Net investment activity........... $ 40,334 $ 43,392
Reinvested capital gains.......... 180,539 83,769
Realized gain..................... 8,238 32,076
Unrealized gain (loss)............ (187,295) (35,010)
----------- -----------
Net increase (decrease) in
contract owners' equity
from operations............ 41,816 124,227
----------- -----------
Equity transactions:
Sales:
Contract purchase payments........ 666,312 537,053
Transfers from fixed & other
subaccounts.................... 218,614 450,868
----------- -----------
884,926 987,921
----------- -----------
Redemptions:
Withdrawals & surrenders (note
5)............................. 56,018 221,380
Transfers to fixed & other
subaccounts.................... 219,547 218,387
Cost of insurance & administrative
fee (note 5)................... 178,599 140,673
----------- -----------
454,164 580,440
----------- -----------
Net equity transactions...... 430,762 407,481
----------- -----------
Net change in contract
owners' equity.......... 472,578 531,708
Contract owners' equity:
Beginning of period................. 1,571,975 1,040,267
----------- -----------
End of period....................... $ 2,044,553 $ 1,571,975
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
68
<PAGE> 71
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
AGGRESSIVE GROWTH CORE GROWTH
SUBACCOUNT SUBACCOUNT
----------------------------------------------------- -------------------------
SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED
ENDED --------------------------------------- ENDED -----------
6/30/2000 1999 1998 1997 6/30/2000 1999
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity........... $ (15,377) $ (26,551) $ (23,847) $ 8,140 $ (16,431) $ (14,942)
Reinvested capital gains.......... 0 0 258,472 9,068 86,768 763,382
Realized gain (loss).............. 9,024 (41,002) 22,270 (3,358) 91,156 115,808
Unrealized gain (loss)............ (389,462) 248,666 (6,276) 231,511 639,644 875,700
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
contract owners' equity
from operations............ (395,815) 181,113 250,619 245,361 801,137 1,739,948
----------- ----------- ----------- ----------- ----------- -----------
Equity transactions:
Sales:
Contract purchase payments........ 553,299 1,136,033 1,348,654 969,362 380,830 438,214
Transfers from fixed & other
subaccounts.................... 593,087 499,516 423,659 544,712 1,118,396 1,317,575
----------- ----------- ----------- ----------- ----------- -----------
1,146,386 1,635,549 1,772,313 1,514,074 1,499,226 1,755,789
----------- ----------- ----------- ----------- ----------- -----------
Redemptions:
Withdrawals & surrenders (note
5)............................. 57,111 182,042 86,262 84,536 99,010 82,138
Transfers to fixed & other
subaccounts.................... 350,517 1,139,574 460,387 418,423 558,547 853,515
Cost of insurance & administrative
fee (note 5)................... 139,036 338,621 347,236 278,191 122,829 166,365
----------- ----------- ----------- ----------- ----------- -----------
546,664 1,660,237 893,885 781,150 780,386 1,102,018
----------- ----------- ----------- ----------- ----------- -----------
Net equity transactions...... 599,722 (24,688) 878,428 732,924 718,840 653,771
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity.......... 203,907 156,425 1,129,047 978,285 1,519,977 2,393,719
Contract owners' equity:
Beginning of period................. 3,990,634 3,834,209 2,705,162 1,726,877 3,690,169 1,296,450
----------- ----------- ----------- ----------- ----------- -----------
End of period....................... $ 4,194,541 $ 3,990,634 $ 3,834,209 $ 2,705,162 $ 5,210,146 $ 3,690,169
=========== =========== =========== =========== =========== ===========
CORE GROWTH
SUBACCOUNT
-------------------------
YEARS ENDED
-------------------------
1998 1997 (a)
----------- -----------
<S> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity........... $ (7,627) $ (3,683)
Reinvested capital gains.......... 0 0
Realized gain (loss).............. 1,725 3,379
Unrealized gain (loss)............ 101,913 (3,039)
----------- -----------
Net increase (decrease) in
contract owners' equity
from operations............ 96,011 (3,343)
----------- -----------
Equity transactions:
Sales:
Contract purchase payments........ 459,093 377,379
Transfers from fixed & other
subaccounts.................... 378,819 631,937
----------- -----------
837,912 1,009,316
----------- -----------
Redemptions:
Withdrawals & surrenders (note
5)............................. 16,609 1,885
Transfers to fixed & other
subaccounts.................... 327,440 116,828
Cost of insurance & administrative
fee (note 5)................... 117,857 62,827
----------- -----------
461,906 181,540
----------- -----------
Net equity transactions...... 376,006 827,776
----------- -----------
Net change in contract
owners' equity.......... 472,017 824,433
Contract owners' equity:
Beginning of period................. 824,433 0
----------- -----------
End of period....................... $ 1,296,450 $ 824,433
=========== ===========
</TABLE>
---------------
(a) Period from January 3, 1997, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
69
<PAGE> 72
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
GROWTH & INCOME SUBACCOUNT
----------------------------------------------------
SIX MONTHS YEARS ENDED
ENDED --------------------------------------
6/30/2000 1999 1998 1997 (a)
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Increase in contract owners' equity
from operations:
Net investment activity.......... $ (51,490) $ (43,039) $ 13,260 $ 3,087
Reinvested capital gains......... 219,550 1,905,785 0 90,978
Realized gain.................... 369,457 74,709 10,734 7,768
Unrealized gain (loss)........... (438,897) 2,666,425 252,938 94,008
----------- ----------- ---------- ----------
Net increase in contract
owners' equity from
operations................ 98,620 4,603,880 276,932 195,841
----------- ----------- ---------- ----------
Equity transactions:
Sales:
Contract purchase payments..... 1,504,672 2,601,488 2,034,257 536,293
Transfers from fixed & other
subaccounts................. 1,101,639 2,589,201 2,464,502 1,270,995
----------- ----------- ---------- ----------
2,606,311 5,190,689 4,498,759 1,807,288
----------- ----------- ---------- ----------
Redemptions:
Withdrawals & surrenders (note
5).......................... 152,777 263,243 37,971 436
Transfers to fixed & other
subaccounts................. 1,939,323 1,254,948 582,153 95,943
Cost of insurance &
administrative fee (note
5).......................... 390,854 645,343 376,090 64,105
----------- ----------- ---------- ----------
2,482,954 2,163,534 996,214 160,484
----------- ----------- ---------- ----------
Net equity transactions..... 123,357 3,027,155 3,502,545 1,646,804
----------- ----------- ---------- ----------
Net change in contract
owners' equity.......... 221,977 7,631,035 3,779,477 1,842,645
Contract owners' equity:
Beginning of period.............. 13,253,157 5,622,122 1,842,645 0
----------- ----------- ---------- ----------
End of period.................... $13,475,134 $13,253,157 $5,622,122 $1,842,645
=========== =========== ========== ==========
<CAPTION>
S&P 500 INDEX SUBACCOUNT
----------------------------------------------------
SIX MONTHS YEARS ENDED
ENDED --------------------------------------
6/30/2000 1999 1998 1997 (a)
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Increase in contract owners' equity
from operations:
Net investment activity.......... $ 64,124 $ 252,331 $ 81,883 $ 30,030
Reinvested capital gains......... 23,095 1,388,105 328,825 94,770
Realized gain.................... 161,005 199,621 20,356 5,779
Unrealized gain (loss)........... (243,207) 1,477,659 619,923 (52,996)
----------- ----------- ---------- ----------
Net increase in contract
owners' equity from
operations................ 5,017 3,317,716 1,050,987 77,583
----------- ----------- ---------- ----------
Equity transactions:
Sales:
Contract purchase payments..... 2,423,900 5,028,217 2,194,159 560,773
Transfers from fixed & other
subaccounts................. 2,023,869 7,673,684 4,432,311 775,750
----------- ----------- ---------- ----------
4,447,769 12,701,901 6,626,470 1,336,523
----------- ----------- ---------- ----------
Redemptions:
Withdrawals & surrenders (note
5).......................... 397,234 491,958 110,446 727
Transfers to fixed & other
subaccounts................. 3,199,016 3,445,258 714,255 83,751
Cost of insurance &
administrative fee (note
5).......................... 620,935 1,121,691 407,189 62,142
----------- ----------- ---------- ----------
4,217,185 5,058,907 1,231,890 146,620
----------- ----------- ---------- ----------
Net equity transactions..... 230,584 7,642,994 5,394,580 1,189,903
----------- ----------- ---------- ----------
Net change in contract
owners' equity.......... 235,601 10,960,710 6,445,567 1,267,486
Contract owners' equity:
Beginning of period.............. 18,673,763 7,713,053 1,267,486 0
----------- ----------- ---------- ----------
End of period.................... $18,909,364 $18,673,763 $7,713,053 $1,267,486
=========== =========== ========== ==========
</TABLE>
---------------
(a) Period from January 3, 1997, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
70
<PAGE> 73
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
SOCIAL AWARENESS SUBACCOUNT EQUITY INCOME SUBACCOUNT
---------------------------------------------------- -------------------------
SIX MONTHS YEARS ENDED SIX MONTHS
ENDED -------------------------------------- ENDED YEAR ENDED
6/30/2000 1999 1998 1997 (a) 6/30/2000 1999 (c)
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity.......... $ (1,682) $ (1,286) $ (957) $ 589 $ (20) $ 0
Reinvested capital gains......... 0 0 0 29,015 0 0
Realized gain (loss)............. 18,332 (62,411) (31,042) 926 48 0
Unrealized gain (loss)........... 40,686 131,316 (102,278) (31,805) (417) 0
----------- ----------- ---------- ---------- ----------- -----------
Net increase (decrease) in
contract owners' equity from
operations.................. 57,336 67,619 (134,277) (1,275) (389) 0
----------- ----------- ---------- ---------- ----------- -----------
Equity transactions:
Sales:
Contract purchase payments..... 62,768 158,628 292,044 35,077 1,312 0
Transfers from fixed & other
subaccounts................. 25,611 116,135 229,481 319,587 36,379 0
----------- ----------- ---------- ---------- ----------- -----------
88,379 274,763 521,525 354,664 37,691 0
----------- ----------- ---------- ---------- ----------- -----------
Redemptions:
Withdrawals & surrenders (note
5).......................... 5,191 6,911 7,059 50 0 0
Transfers to fixed & other
subaccounts................. 168,354 363,431 148,460 13,740 4,074 0
Cost of insurance &
administrative fee (note
5).......................... 13,927 36,077 37,586 4,380 603 0
----------- ----------- ---------- ---------- ----------- -----------
187,472 406,419 193,105 18,170 4,677 0
----------- ----------- ---------- ---------- ----------- -----------
Net equity transactions..... (99,093) (131,656) 328,420 336,494 33,014 0
----------- ----------- ---------- ---------- ----------- -----------
Net change in contract
owners' equity.......... (41,757) (64,037) 194,143 335,219 32,625 0
Contract owners' equity:
Beginning of period.............. 465,325 529,362 335,219 0 0 0
----------- ----------- ---------- ---------- ----------- -----------
End of period.................... $ 423,568 $ 465,325 $ 529,362 $ 335,219 $ 32,625 $ 0
=========== =========== ========== ========== =========== ===========
<CAPTION>
BLUE CHIP SUBACCOUNT
------------------------
SIX MONTHS
ENDED YEAR ENDED
6/30/2000 1999 (c)
----------- ----------
<S> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity.......... $ (154) $ 0
Reinvested capital gains......... 36 1
Realized gain (loss)............. 161 0
Unrealized gain (loss)........... (3,228) 10
---------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. (3,185) 11
---------- ----------
Equity transactions:
Sales:
Contract purchase payments..... 16,551 0
Transfers from fixed & other
subaccounts................. 392,824 462
---------- ----------
409,375 462
---------- ----------
Redemptions:
Withdrawals & surrenders (note
5).......................... 3 0
Transfers to fixed & other
subaccounts................. 226,309 0
Cost of insurance &
administrative fee (note
5).......................... 2,008 5
---------- ----------
228,320 5
---------- ----------
Net equity transactions..... 181,055 457
---------- ----------
Net change in contract
owners' equity.......... 177,870 468
Contract owners' equity:
Beginning of period.............. 468 0
---------- ----------
End of period.................... $ 178,338 $ 468
========== ==========
</TABLE>
---------------
(a) Period from January 3, 1997, date of commencement of operations.
(c) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
71
<PAGE> 74
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
-------------------------
HIGH INCOME SUBACCOUNT CAPITAL GROWTH SUBACCOUNT GROWTH SUBACCOUNT
------------------------- ------------------------- -------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
6/30/2000 1999 (c) 6/30/2000 1999 (c) 6/30/2000 1999 (b)
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity.......... $ 425 $ 509 $ (6,204) $ (84) $ 98,871 $ (7,811)
Reinvested capital gains......... 0 0 1,346 25,879 212,421 6,806
Realized gain (loss)............. (2,952) 1 (9,962) 776 93,713 9,588
Unrealized gain (loss)........... 337 (347) (57,079) (6,339) (326,356) 1,075,487
----------- ----------- ---------- ---------- ----------- -----------
Net increase (decrease) in
contract owners' equity from
operations.................. (2,190) 163 (71,899) 20,232 78,649 1,084,070
----------- ----------- ---------- ---------- ----------- -----------
Equity transactions:
Sales:
Contract purchase payments..... 4,619 0 391,425 16,540 1,308,199 1,227,956
Transfers from fixed & other
subaccounts................. 23,671 58,507 2,329,260 284,457 2,520,801 4,493,684
----------- ----------- ---------- ---------- ----------- -----------
28,290 58,507 2,720,685 300,997 3,829,000 5,721,640
----------- ----------- ---------- ---------- ----------- -----------
Redemptions:
Withdrawals & surrenders (note
5).......................... 559 171 18,454 261 98,975 69,942
Transfers to fixed & other
subaccounts................. 61,982 0 298,765 22,030 938,251 388,605
Cost of insurance &
administrative fee (note
5).......................... 1,004 62 37,832 620 248,117 147,785
----------- ----------- ---------- ---------- ----------- -----------
63,545 233 355,051 22,911 1,285,343 606,332
----------- ----------- ---------- ---------- ----------- -----------
Net equity transactions..... (35,255) 58,274 2,365,634 278,086 2,543,657 5,115,308
----------- ----------- ---------- ---------- ----------- -----------
Net change in contract
owners' equity.......... (37,445) 58,437 2,293,735 298,318 2,622,306 6,199,378
Contract owners' equity:
Beginning of period.............. 58,437 0 298,318 0 6,199,378 0
----------- ----------- ---------- ---------- ----------- -----------
End of period.................... $ 20,992 $ 58,437 $2,592,053 $ 298,318 $ 8,821,684 $ 6,199,378
=========== =========== ========== ========== =========== ===========
<CAPTION>
JANUS ASPEN SERIES
-----------------------
WORLDWIDE GROWTH
SUBACCOUNT
-----------------------
SIX MONTHS
ENDED YEAR ENDED
6/30/2000 1999 (b)
---------- ----------
<S> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity.......... $ 2,991 $ (5,961)
Reinvested capital gains......... 71,624 0
Realized gain (loss)............. 18,847 3,506
Unrealized gain (loss)........... (95,286) 954,815
---------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. (1,824) 952,360
---------- ----------
Equity transactions:
Sales:
Contract purchase payments..... 938,873 447,177
Transfers from fixed & other
subaccounts................. 2,635,357 2,495,368
---------- ----------
3,574,230 2,942,545
---------- ----------
Redemptions:
Withdrawals & surrenders (note
5).......................... 41,097 18,171
Transfers to fixed & other
subaccounts................. 333,048 119,927
Cost of insurance &
administrative fee (note
5).......................... 169,752 70,180
---------- ----------
543,897 208,278
---------- ----------
Net equity transactions..... 3,030,333 2,734,267
---------- ----------
Net change in contract
owners' equity.......... 3,028,509 3,686,627
Contract owners' equity:
Beginning of period.............. 3,686,627 0
---------- ----------
End of period.................... $6,715,136 $3,686,627
========== ==========
</TABLE>
---------------
(b) Period from May 3, 1999, date of commencement of operations.
(c) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
72
<PAGE> 75
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
STRONG VARIABLE ANNUITY FUNDS
JANUS ASPEN SERIES --------------------------------------------------------
-------------------------
BALANCE SUBACCOUNT OPPORTUNITY II SUBACCOUNT SCHAFER VALUE II SUBACCOUNT
------------------------- -------------------------- ---------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
6/30/2000 1999 (c) 6/30/2000 1999 (c) 6/30/2000 1999 (c)
----------- ----------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity.......... $ 23,532 $ 565 $ (360) $ (3) $ (491) $ 17
Reinvested capital gains......... 72,937 0 0 0 0 91
Realized gain (loss)............. 1,730 191 1,641 0 6,039 36
Unrealized gain (loss)........... (79,710) 1,157 (7,099) 246 (19,508) (122)
----------- ----------- ---------- ---------- ----------- -----------
Net increase (decrease) in
contract owners' equity from
operations.................. 18,489 1,913 (5,818) 243 (13,960) 22
----------- ----------- ---------- ---------- ----------- -----------
Equity transactions:
Sales:
Contract purchase payments..... 132,985 950 6,009 27 4,929 69
Transfers from fixed & other
subaccount.................. 2,316,441 69,482 778,245 3,529 427,441 8,647
----------- ----------- ---------- ---------- ----------- -----------
2,449,426 70,432 784,254 3,556 432,370 8,716
----------- ----------- ---------- ---------- ----------- -----------
Redemptions:
Withdrawals & surrenders (note
5).......................... 98 0 (55) 0 15 0
Transfers to fixed & other
subaccounts................. 947,658 0 464,535 795 88,715 0
Cost of insurance &
administrative fee (note
5).......................... 26,518 160 2,316 34 2,401 13
----------- ----------- ---------- ---------- ----------- -----------
974,274 160 466,796 829 91,131 13
----------- ----------- ---------- ---------- ----------- -----------
Net equity transactions..... 1,475,152 70,272 317,458 2,727 341,239 8,703
----------- ----------- ---------- ---------- ----------- -----------
Net change in contract
owners' equity.......... 1,493,641 72,185 311,640 2,970 327,279 8,725
Contract owners' equity:
Beginning of period.............. 72,185 0 2,970 0 8,725 0
----------- ----------- ---------- ---------- ----------- -----------
End of period.................... $ 1,565,826 $ 72,185 $ 314,610 $ 2,970 $ 336,004 $ 8,725
=========== =========== ========== ========== =========== ===========
<CAPTION>
STRONG VARIABLE ANNUITY FUNDS
------------------------
MID-CAP GROWTH II
SUBACCOUNT
------------------------
SIX MONTHS
ENDED YEAR ENDED
6/30/2000 1999 (c)
----------- ----------
<S> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity.......... $ (3,218) $ (107)
Reinvested capital gains......... 0 0
Realized gain (loss)............. (24,263) 453
Unrealized gain (loss)........... (7,284) 25,711
---------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. (34,765) 26,057
---------- ----------
Equity transactions:
Sales:
Contract purchase payments..... 155,226 4,910
Transfers from fixed & other
subaccount.................. 1,047,989 277,711
---------- ----------
1,203,215 282,621
---------- ----------
Redemptions:
Withdrawals & surrenders (note
5).......................... 11,870 0
Transfers to fixed & other
subaccounts................. 150,826 15,869
Cost of insurance &
administrative fee (note
5).......................... 24,504 735
---------- ----------
187,200 16,604
---------- ----------
Net equity transactions..... 1,016,015 266,017
---------- ----------
Net change in contract
owners' equity.......... 981,250 292,074
Contract owners' equity:
Beginning of period.............. 292,074 0
---------- ----------
End of period.................... $1,273,324 $ 292,074
========== ==========
</TABLE>
---------------
(c) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
73
<PAGE> 76
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
GOLDMAN SACHS
-------------------------------------------------------------------------------
VIT GROWTH & INCOME VIT CORE US EQUITY VIT CAPITAL GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ----------------------- -------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
6/30/2000 1999 (b) 6/30/2000 1999 (c) 6/30/2000 1999 (c)
----------- ----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase in contract owners' equity
from operations:
Net investment activity.......... $ (3,131) $ 6,342 $ (76) $ 21 $ (361) $ 6
Reinvested capital gains......... 0 0 0 88 0 521
Realized gain (loss)............. (336) (1,291) 121 (15) (44) 415
Unrealized gain.................. 11,825 5,904 101 283 7,073 472
----------- ----------- ---------- ---------- ----------- -----------
Net increase in contract
owners' equity from
operations.................. 8,358 10,955 146 377 6,668 1,414
----------- ----------- ---------- ---------- ----------- -----------
Equity transactions:
Sales:
Contract purchase payments..... 158,582 224,791 5,216 27 35,992 506
Transfers from fixed & other
subaccounts................. 190,162 587,752 29,278 11,931 105,395 27,948
----------- ----------- ---------- ---------- ----------- -----------
348,744 812,543 34,494 11,958 141,387 28,454
----------- ----------- ---------- ---------- ----------- -----------
Redemptions:
Withdrawals & surrenders (note
5).......................... 20,615 (148) 6 0 0 0
Transfers to fixed & other
subaccounts................. 82,456 121,177 1,214 4,541 3,581 15,776
Cost of insurance &
administrative fee (note
5).......................... 26,835 14,869 1,154 22 4,391 86
----------- ----------- ---------- ---------- ----------- -----------
129,906 135,898 2,374 4,563 7,972 15,862
----------- ----------- ---------- ---------- ----------- -----------
Net equity transactions..... 218,838 676,645 32,120 7,395 133,415 12,592
----------- ----------- ---------- ---------- ----------- -----------
Net change in contract
owners' equity.......... 227,196 687,600 32,266 7,772 140,083 14,006
Contract owners' equity:
Beginning of period.............. 687,600 0 7,772 0 14,006 0
----------- ----------- ---------- ---------- ----------- -----------
End of period.................... $ 914,796 $ 687,600 $ 40,038 $ 7,772 $ 154,089 $ 14,006
=========== =========== ========== ========== =========== ===========
<CAPTION>
MORGAN STANLEY
-----------------------
US REAL ESTATE
SUBACCOUNT
-----------------------
SIX MONTHS
ENDED YEAR ENDED
6/30/2000 1999 (c)
---------- ----------
<S> <C> <C>
Increase in contract owners' equity
from operations:
Net investment activity.......... $ 258 $ 0
Reinvested capital gains......... 0 0
Realized gain (loss)............. (422) 0
Unrealized gain.................. 13,917 0
---------- ----------
Net increase in contract
owners' equity from
operations.................. 13,753 0
---------- ----------
Equity transactions:
Sales:
Contract purchase payments..... 22,674 0
Transfers from fixed & other
subaccounts................. 414,881 0
---------- ----------
437,555 0
---------- ----------
Redemptions:
Withdrawals & surrenders (note
5).......................... 3 0
Transfers to fixed & other
subaccounts................. 95,048 0
Cost of insurance &
administrative fee (note
5).......................... 2,283 0
---------- ----------
97,334 0
---------- ----------
Net equity transactions..... 340,221 0
---------- ----------
Net change in contract
owners' equity.......... 353,974 0
Contract owners' equity:
Beginning of period.............. 0 0
---------- ----------
End of period.................... $ 353,974 $ 0
========== ==========
</TABLE>
---------------
(b) Period from May 3, 1999, date of commencement of operations.
(c) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
74
<PAGE> 77
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
LAZARD RETIREMENT
---------------------------------------------------
EMERGING MARKET SMALL CAP
SUBACCOUNT SUBACCOUNT
------------------------- -----------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
6/30/2000 1999 (c) 6/30/2000 1999 (c)
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Increase (decrease) in contract
owners' equity from operations:
Net investment activity.......... $ (2,224) $ 440 $ (384) $ (2)
Reinvested capital gains......... 0 0 0 37
Realized gain.................... 8,463 5,449 1,740 0
Unrealized gain (loss)........... (53,694) 107,388 6,550 536
----------- ----------- ---------- ----------
Net increase (decrease) in
contract owners' equity from
operations.................. (47,455) 113,277 7,906 571
----------- ----------- ---------- ----------
Equity transactions:
Sales:
Contract purchase payments..... 91,007 22,776 14,267 106
Transfers from fixed & other
subaccounts................. 79,499 563,737 146,432 42,908
----------- ----------- ---------- ----------
170,506 586,513 160,699 43,014
----------- ----------- ---------- ----------
Redemptions:
Withdrawals & surrenders (note
5).......................... 7,098 536 312 0
Transfers to fixed & other
subaccounts................. 56,338 108,799 46,899 0
Cost of insurance &
administrative fee (note
5).......................... 20,200 6,614 2,330 63
----------- ----------- ---------- ----------
83,636 115,949 49,541 63
----------- ----------- ---------- ----------
Net equity transactions..... 86,870 470,564 111,158 42,951
----------- ----------- ---------- ----------
Net change in contract
owners' equity.......... 39,415 583,841 119,064 43,522
Contract owners' equity:
Beginning of period.............. 583,841 0 43,522 0
----------- ----------- ---------- ----------
End of period.................... $ 623,256 $ 583,841 $ 162,586 $ 43,522
=========== =========== ========== ==========
</TABLE>
---------------
(c) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
75
<PAGE> 78
OHIO NATIONAL VARIABLE ACCOUNT R
NOTES TO FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ohio National Variable Account R (the Account) is a separate account of The
Ohio National Life Assurance Corporation (ONLAC). All obligations arising
under variable life insurance contracts are general corporate obligations of
ONLAC. ONLAC is a wholly-owned subsidiary of The Ohio National Life Insurance
Company. The account has been registered as a unit investment trust under the
Investment Company Act of 1940.
Assets of the Account are invested in portfolio shares of Ohio National Fund,
Inc., Janus Aspen Series, Strong Variable Insurance Funds, Inc., Goldman
Sachs Variable Insurance Trust, and Lazard Retirement Funds (collectively the
Funds). The Funds are diversified open-end management investment companies.
The Funds' 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.
Investments are valued at the net asset value of fund shares held at June 30,
2000. Share transactions are recorded on the trade date. Income and capital
gain distributions are recorded on the ex-dividend date. Net realized capital
gains and losses are determined on the basis of average cost.
ONLAC 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 June 30, 2000 the aggregate cost and number of shares of the underlying
funds owned by the respective subaccounts were:
<TABLE>
<CAPTION>
MONEY CAPITAL
EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ----------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Cost................ $35,968,084 $3,242,747 $2,333,093 $ 9,261,495 $15,539,034 $7,196,070
Number of Shares.............. 1,323,465 324,275 225,028 495,037 1,084,701 560,007
<CAPTION>
SMALL CAP
SUBACCOUNT
-----------
<S> <C>
Aggregate Cost................ $16,350,718
Number of Shares.............. 714,352
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL AGGRESSIVE CORE GROWTH & S&P 500 SOCIAL
COMPANY GROWTH GROWTH INCOME INDEX AWARENESS
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ---------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Cost................ $ 4,175,992 $4,208,867 $3,595,927 $10,900,660 $17,107,985 $ 385,648
Number of Shares.............. 280,957 387,630 256,430 723,148 1,173,256 36,854
<CAPTION>
EQUITY
INCOME
SUBACCOUNT
-----------
<S> <C>
Aggregate Cost................ $ 33,043
Number of Shares.............. 2,618
</TABLE>
<TABLE>
<CAPTION>
HIGH JANUS ASPEN
INCOME CAPITAL JANUS ASPEN WORLDWIDE JANUS ASPEN
BLUE CHIP BOND GROWTH GROWTH GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Cost................ $ 181,555 $ 21,001 $2,655,471 $ 8,072,554 $ 5,855,607 $1,644,380
Number of Shares.............. 17,855 2,364 84,283 268,218 139,811 59,492
<CAPTION>
STRONG
OPPORTUNITY
II
SUBACCOUNT
-----------
<S> <C>
Aggregate Cost................ $ 321,462
Number of Shares.............. 11,631
</TABLE>
(continued)
Form 5560.5
76
<PAGE> 79
OHIO NATIONAL VARIABLE ACCOUNT R
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
GOLDMAN GOLDMAN GOLDMAN LAZARD
STRONG STRONG SACHS VIT SACHS VIT SACHS VIT MORGAN RETIREMENT
SCHAFER MID-CAP GROWTH & CORE US CAPITAL STANLEY US EMERGING
VALUE II GROWTH II INCOME EQUITY GROWTH REAL ESTATE MARKET
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Cost................ $355,632 $1,254,897 $897,066 $39,653 $146,545 $340,056 $569,563
Number of Shares.............. 36,843 40,004 83,391 2,895 10,775 33,616 61,224
<CAPTION>
LAZARD
RETIREMENT
SMALL CAP
SUBACCOUNT
----------
<S> <C>
Aggregate Cost................ $155,500
Number of Shares.............. 15,082
</TABLE>
(3) CONTRACTS IN ACCUMULATION PERIOD
At June 30, 2000 the accumulation units and value per unit of the respective
subaccounts and products were:
<TABLE>
<CAPTION>
ACCUMULATION UNITS VALUE PER UNIT VALUE
------------------ ---------------- -----------
<S> <C> <C> <C>
EQUITY SUBACCOUNT................................... 960,971.1235 35.171335 $33,798,637
MONEY MARKET SUBACCOUNT............................. 174,610.7502 18.571292 $ 3,242,747
BOND SUBACCOUNT..................................... 105,863.7319 21.303190 $ 2,255,235
OMNI SUBACCOUNT..................................... 359,527.9592 31.820332 $11,440,299
INTERNATIONAL SUBACCOUNT............................ 795,555.9750 27.778944 $22,099,705
CAPITAL APPRECIATION SUBACCOUNT..................... 383,712.8345 18.171521 $ 6,972,646
SMALL CAP SUBACCOUNT................................ 583,356.1527 46.272266 $26,993,211
INTERNATIONAL SMALL COMPANY SUBACCOUNT.............. 200,401.8025 24.266716 $ 4,863,094
AGGRESSIVE GROWTH SUBACCOUNT........................ 289,555.5962 14.486132 $ 4,194,541
CORE GROWTH SUBACCOUNT.............................. 203,205.5367 25.639783 $ 5,210,146
GROWTH & INCOME SUBACCOUNT.......................... 578,955.6783 23.274897 $13,475,134
S&P 500 INDEX SUBACCOUNT............................ 897,418.9980 21.070830 $18,909,363
SOCIAL AWARENESS SUBACCOUNT......................... 33,989.9499 12.461574 $ 423,568
EQUITY INCOME SUBACCOUNT............................ 2,972.2058 10.976534 $ 32,625
BLUE CHIP SUBACCOUNT................................ 18,323.8438 9.732589 $ 178,338
HIGH INCOME BOND SUBACCOUNT......................... 2,087.0946 10.058216 $ 20,992
CAPITAL GROWTH SUBACCOUNT........................... 166,750.6549 15.544484 $ 2,592,053
JANUS ASPEN GROWTH SUBACCOUNT....................... 677,495.1257 13.021029 $ 8,821,684
JANUS ASPEN WORLDWIDE GROWTH SUBACCOUNT............. 438,672.5631 15.307853 $ 6,715,135
JANUS ASPEN BALANCED SUBACCOUNT..................... 141,455.3235 11.069405 $ 1,565,826
STRONG OPPORTUNITY II SUBACCOUNT.................... 27,175.5106 11.576961 $ 314,610
STRONG SCHAFER VALUE II SUBACCOUNT.................. 32,774.5709 10.251972 $ 336,004
STRONG MID-CAP GROWTH II SUBACCOUNT................. 94,355.1807 13.495015 $ 1,273,325
GOLDMAN SACHS GROWTH & INCOME SUBACCOUNT............ 95,134.6493 9.615800 $ 914,795
GOLDMAN SACHS CORE US EQUITY SUBACCOUNT............. 710.9680 10.931168 $ 7,772
GOLDMAN SACHS CAPITAL GROWTH SUBACCOUNT............. 13,547.6801 11.373841 $ 154,089
MORGAN STANLEY US REAL ESTATE....................... 30,276.7055 11.691306 $ 353,974
LAZARD RETIREMENT EMERGING MARKET SUBACCOUNT........ 54,043.9995 11.532384 $ 623,256
LAZARD RETIREMENT SMALL CAP SUBACCOUNT.............. 14,098.9323 11.531771 $ 162,586
</TABLE>
(4) RISK AND ADMINISTRATIVE EXPENSE
Although variable life payments differ according to the investment
performance of the Accounts, they are not affected by mortality or expense
experience because ONLAC assumes the expense risk and the mortality risk
under the contracts. ONLAC charges the Accounts' assets for assuming those
risks. Such charge will be assessed at a daily rate of 0.0020471% which
corresponds to an annual rate of .75% of the contract value.
(continued)
Form 5560.5
77
<PAGE> 80
OHIO NATIONAL VARIABLE ACCOUNT R
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(5) CONTRACT CHARGES
Each premium payment is subject to a premium expense charge. The premium
expense charge has two components: (a) Sales Load. Each contract is subject
to a level sales load of all premiums paid of 4%. (b) State Premium Tax.
Premium payments will be subject to the state premium tax and any other state
or local taxes that currently range from 2% to 4%.
Total premium expense charges in the Account amounted to approximately
$000,000 during 2000.
A surrender charge is assessed in connection with all complete surrenders,
all decreases in stated amount and certain partial surrenders consisting of
two components: (1) a contingent deferred sales charge, and (2) a contingent
deferred insurance underwriting charge.
The contingent deferred sales charge is a percentage of premiums paid in the
first two contract years. The contingent deferred sales charge percentages
are scaled by age at issue or increase. The contingent deferred insurance
underwriting charge varies with age at issue or increase.
A service charge is imposed on each transfer of cash values among the
subaccounts. Currently, ONLAC is not assessing this charge on the first four
transfers made in any contract year. For partial surrenders, a service fee is
charged.
ONLAC charges a monthly deduction from the contract value for the cost of
insurance, a $5.00 or $7.00 record keeping and processing charge, a risk
charge of $.01 per $1,000 of the stated amount for the risk associated with
the death benefit guarantee, and the cost of additional insurance benefits
provided by rider.
(6) FEDERAL INCOME TAXES
Operations of the Account form a part of, and are taxed with, operations of
ONLAC 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.
Form 5560.5
78
<PAGE> 81
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF ASSETS AND CONTRACT OWNERS' EQUITY DECEMBER 31, 1999
<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)... $34,867,446 $4,377,995 $1,878,813 $11,808,840 $24,120,263 $7,587,944 $22,741,130
=========== ========== ========== =========== =========== ========== ===========
Contract owners' equity
Contracts in
accumulation period
(note 3).............. $34,867,446 $4,377,995 $1,878,813 $11,808,840 $24,120,263 $7,587,944 $22,741,130
=========== ========== ========== =========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL AGGRESSIVE CORE GROWTH & S&P 500 SOCIAL
COMPANY GROWTH GROWTH INCOME INDEX AWARENESS BLUE CHIP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- ---------- ---------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets -- Investments at
market value (note 2)... $ 5,060,766 $3,990,634 $3,690,169 $13,253,157 $18,673,763 $ 465,325 $ 468
=========== ========== ========== =========== =========== ========== ===========
Contract owners' equity
Contracts in
accumulation period
(note 3).............. $ 5,060,766 $3,990,634 $3,690,169 $13,253,157 $18,673,763 $ 465,325 $ 468
=========== ========== ========== =========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
HIGH ----------------------------------------
INCOME CAPITAL WORLDWIDE
BOND GROWTH GROWTH GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Assets -- Investments at market value (note 2)........... $ 58,437 $ 298,318 $6,199,378 $ 3,686,627 $ 72,185
=========== ========== ========== =========== ===========
Contract owners' equity
Contracts in accumulation period (note 3).............. $ 58,437 $ 298,318 $6,199,378 $ 3,686,627 $ 72,185
=========== ========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
STRONG VARIABLE FUNDS GOLDMAN SACHS
---------------------------------------- ------------------------------------------
SCHAFER MID-CAP VIT GROWTH VIT CORE VIT CAPITAL
OPPORTUNITY II VALUE II GROWTH & INCOME US EQUITY GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- ---------- ---------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets -- Investments at market value
(note 2)................................ $ 2,970 $ 8,725 $ 292,074 $ 687,600 $ 7,772 $ 14,006
=========== ========== ========== =========== =========== ==========
Contract owners' equity
Contracts in accumulation period (note
3).................................... $ 2,970 $ 8,725 $ 292,074 $ 687,600 $ 7,772 $ 14,006
=========== ========== ========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
LAZARD RETIREMENT
---------------------------
EMERGING SMALL
MARKET CAP
SUBACCOUNT SUBACCOUNT
-------------- ----------
<S> <C> <C>
Assets -- Investments at market value (note 2).............. $ 583,841 $ 43,522
=========== ==========
Contract owners' equity
Contracts in accumulation period (note 3)................. $ 583,841 $ 43,522
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
79
<PAGE> 82
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF OPERATIONS
For the Three Years Ended December 31
<TABLE>
<CAPTION>
EQUITY MONEY MARKET
SUBACCOUNT SUBACCOUNT
----------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends..................... $ 103,759 $ 374,943 $ 453,946 $ 157,294 $ 92,380 $ 55,657
Risk & administrative expense (note 4)... (236,084) (222,953) (190,776) (23,933) (13,276) (7,949)
----------- ----------- ----------- ----------- ---------- ----------
Net investment activity.............. (132,325) 151,990 263,170 133,361 79,104 47,708
----------- ----------- ----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............... 13,411,033 582,686 1,475,813 0 0 0
Realized gain (loss)................... 1,165,160 433,578 431,237 (31,917) (1,729) 241
Unrealized gain (loss)................. (8,842,357) 276,272 1,699,778 0 0 0
----------- ----------- ----------- ----------- ---------- ----------
Net gain (loss) on investments....... 5,733,836 1,292,536 3,606,828 (31,917) (1,729) 241
----------- ----------- ----------- ----------- ---------- ----------
Net increase in contract owners'
equity from operations.......... $ 5,601,511 $ 1,444,526 $ 3,869,998 $ 101,444 $ 77,375 $ 47,949
=========== =========== =========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
BOND OMNI
SUBACCOUNT SUBACCOUNT
----------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends..................... $ 120,071 $ 83,140 $ 68,280 $ 259,003 $ 301,587 $ 285,077
Risk & administrative expense (note 4)... (13,410) (9,252) (6,130) (89,113) (83,337) (65,184)
----------- ----------- ----------- ----------- ---------- ----------
Net investment activity.............. 106,661 73,888 62,150 169,890 218,250 219,893
----------- ----------- ----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............... 0 0 0 411,548 1,760 480,048
Realized gain (loss)................... (6,506) 2,811 1,394 431,731 332,951 73,429
Unrealized gain (loss)................. (103,003) (21,734) 4,309 164,688 (101,784) 562,929
----------- ----------- ----------- ----------- ---------- ----------
Net gain (loss) on investments....... (109,509) (18,923) 5,703 1,007,967 232,927 1,116,406
----------- ----------- ----------- ----------- ---------- ----------
Net increase (decrease) in
contract owners' equity from
operations...................... $ (2,848) $ 54,965 $ 67,853 $ 1,177,857 $ 451,177 $1,336,299
=========== =========== =========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
80
<PAGE> 83
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF OPERATIONS
For the Three Years Ended December 31
<TABLE>
<CAPTION>
INTERNATIONAL CAPITAL APPRECIATION
SUBACCOUNT SUBACCOUNT
----------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends..................... $ 0 $ 630,410 $ 983,741 $ 181,793 $ 155,395 $ 130,659
Risk & administrative expense (note 4)... (125,913) (124,053) (112,268) (56,169) (45,565) (28,303)
----------- ----------- ----------- ----------- ---------- ----------
Net investment activity.............. (125,913) 506,357 871,473 125,624 109,830 102,356
----------- ----------- ----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............... 0 695,117 1,415,674 700,498 539,044 244,214
Realized gain (loss)................... (55,726) (45,820) 186,736 36,655 33,861 34,042
Unrealized gain (loss)................. 10,000,013 (670,437) (2,391,042) (450,311) (390,779) 129,929
----------- ----------- ----------- ----------- ---------- ----------
Net gain (loss) on investments....... 9,944,287 (21,140) (788,632) 286,842 182,126 408,185
----------- ----------- ----------- ----------- ---------- ----------
Net increase in contract owners'
equity from operations.......... $ 9,818,374 $ 485,217 $ 82,841 $ 412,466 $ 291,956 $ 510,541
=========== =========== =========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL SMALL COMPANY
SUBACCOUNT SUBACCOUNT
----------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends..................... $ 0 $ 0 $ 0 $ 0 $ 54,153 $ 52,943
Risk & administrative expense (note 4)... (100,544) (54,057) (38,798) (20,937) (13,819) (9,551)
----------- ----------- ----------- ----------- ---------- ----------
Net investment activity.............. (100,544) (54,057) (38,798) (20,937) 40,334 43,392
----------- ----------- ----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............... 5,797,375 107 271,143 479,458 180,539 83,769
Realized gain.......................... 307,091 57,223 84,498 202,058 8,238 32,076
Unrealized gain (loss)................. 5,205,819 930,451 130,287 1,832,353 (187,295) (35,010)
----------- ----------- ----------- ----------- ---------- ----------
Net gain on investments.............. 11,310,285 987,781 485,928 2,513,869 1,482 80,835
----------- ----------- ----------- ----------- ---------- ----------
Net increase in contract owners'
equity from operations.......... $11,209,741 $ 933,724 $ 447,130 $ 2,492,932 $ 41,816 $ 124,227
=========== =========== =========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
81
<PAGE> 84
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF OPERATIONS
For the Three Years Ended December 31
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH CORE GROWTH
SUBACCOUNT SUBACCOUNT
----------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997(A)
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends..................... $ 0 $ 0 $ 24,808 $ 0 $ 0 $ 161
Risk & administrative expense (note 4)... (26,551) (23,847) (16,668) (14,942) (7,627) (3,844)
----------- ----------- ----------- ----------- ---------- ----------
Net investment activity.............. (26,551) (23,847) 8,140 (14,942) (7,627) (3,683)
----------- ----------- ----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............... 0 258,472 9,068 763,382 0 0
Realized gain (loss)................... (41,002) 22,270 (3,358) 115,808 1,725 3,379
Unrealized gain (loss)................. 248,666 (6,276) 231,511 875,700 101,913 (3,039)
----------- ----------- ----------- ----------- ---------- ----------
Net gain on investments.............. 207,664 274,466 237,221 1,754,890 103,638 340
----------- ----------- ----------- ----------- ---------- ----------
Net increase in contract owners'
equity from operations.......... $ 181,113 $ 250,619 $ 245,361 $ 1,739,948 $ 96,011 $ (3,343)
=========== =========== =========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME S&P 500 INDEX
SUBACCOUNT SUBACCOUNT
----------------------------------------- ---------------------------------------
1999 1998 1997(A) 1999 1998 1997(A)
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends..................... $ 17,648 $ 40,476 $ 7,733 $ 355,574 $ 108,830 $ 33,016
Risk & administrative expense (note 4)... (60,687) (27,216) (4,646) (103,243) (26,947) (2,986)
----------- ----------- ----------- ----------- ---------- ----------
Net investment activity.............. (43,039) 13,260 3,087 252,331 81,883 30,030
----------- ----------- ----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............... 1,905,785 0 90,978 1,388,105 328,825 94,770
Realized gain.......................... 74,709 10,734 7,768 199,621 20,356 5,779
Unrealized gain (loss)................. 2,666,425 252,938 94,008 1,477,659 619,923 (52,996)
----------- ----------- ----------- ----------- ---------- ----------
Net gain on investments.............. 4,646,919 263,672 192,754 3,065,385 969,104 47,553
----------- ----------- ----------- ----------- ---------- ----------
Net increase in contract owners'
equity from operations.......... $ 4,603,880 $ 276,932 $ 195,841 $ 3,317,716 $1,050,987 $ 77,583
=========== =========== =========== =========== ========== ==========
</TABLE>
---------------
(a) Period from January 3, 1997, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
82
<PAGE> 85
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF OPERATIONS
For the Three Years Ended December 31
<TABLE>
<CAPTION>
MONTGOMERY ASSET
SOCIAL AWARENESS EMERGING MARKET
SUBACCOUNT SUBACCOUNT
--------------------------------------- -------------------------------------
1999 1998 1997(A) 1999 1998 1997(B)
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends.......................... $ 2,088 $ 2,652 $ 983 $ 0 $ 438 $ 131
Risk & administrative expense (note 4)........ (3,374) (3,609) (394) (2,118) (1,165) (188)
----------- ----------- ----------- ----------- ---------- ----------
Net investment activity................... (1,286) (957) 589 (2,118) (727) (57)
----------- ----------- ----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains.................... 0 0 29,015 0 0 0
Realized gain (loss)........................ (62,411) (31,042) 926 8,194 (3,512) (554)
Unrealized gain (loss)...................... 131,316 (102,278) (31,805) 68,642 (58,655) (9,987)
----------- ----------- ----------- ----------- ---------- ----------
Net gain (loss) on investments............ 68,905 (133,320) (1,864) 76,836 (62,167) (10,541)
----------- ----------- ----------- ----------- ---------- ----------
Net increase (decrease) in contract
owners' equity From operations....... $ 67,619 $ (134,277) $ (1,275) $ 74,718 $ (62,894) $ (10,598)
=========== =========== =========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
-------------------------------------
BLUE HIGH CAPITAL WORLDWIDE
CHIP INCOME GROWTH GROWTH GROWTH BALANCE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
1999(D) 1999(D) 1999(D) 1999(C) 1999(C) 1999(D)
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends.......................... $ 0 $ 526 $ 0 $ 6,902 $ 1,005 $ 583
Risk & administrative expense (note 4)........ 0 (17) (84) (14,713) (6,966) (18)
----------- ----------- ----------- ----------- ---------- ----------
Net investment activity................... 0 509 (84) (7,811) (5,961) 565
----------- ----------- ----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains.................... 1 0 25,879 6,806 0 0
Realized gain............................... 0 1 776 9,588 3,506 191
Unrealized gain (loss)...................... 10 (347) (6,339) 1,075,487 954,815 1,157
----------- ----------- ----------- ----------- ---------- ----------
Net gain (loss) on investments............ 11 (346) 20,316 1,091,881 958,321 1,348
----------- ----------- ----------- ----------- ---------- ----------
Net increase in contract owners' equity
from operations...................... $ 11 $ 163 $ 20,232 $ 1,084,070 $ 952,360 $ 1,913
=========== =========== =========== =========== ========== ==========
</TABLE>
---------------
(a) Period from January 3, 1997, date of commencement of operations.
(b) Period from April 1, 1997, date of commencement of operations.
(c) Period from May 3, 1999, date of commencement of operations.
(d) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
83
<PAGE> 86
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF OPERATIONS
For the Three Years Ended December 31
<TABLE>
<CAPTION>
STRONG VARIABLE ANNUITY FUNDS GOLDMAN SACHS
------------------------------------------ ---------------------------------------
SCHAFER MID-CAP VIT GROWTH & VIT CORE VIT CAPITAL
OPPORTUNITY II VALUE GROWTH INCOME US EQUITY GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
1999(D) 1999(D) 1999(D) 1999(C) 1999(D) 1999(D)
-------------- ----------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends..................... $ 0 $ 20 $ 0 $ 7,699 $ 25 $ 18
Risk & administrative expense (note 4)... (3) (3) (107) (1,357) (4) (12)
----------- ----------- ----------- ----------- ---------- ----------
Net investment activity............. (3) 17 (107) 6,342 21 6
----------- ----------- ----------- ----------- ---------- ----------
Realized & unrealized gain (loss) on
Investments:
Reinvested capital gains............... 0 91 0 0 88 521
Realized gain.......................... 0 36 453 (1,291) (15) 415
Unrealized gain (loss)................. 246 (122) 25,711 5,904 283 472
----------- ----------- ----------- ----------- ---------- ----------
Net gain (loss) on investments...... 246 5 26,164 4,613 356 1,408
----------- ----------- ----------- ----------- ---------- ----------
Net increase in contract owners'
equity from operations......... $ 243 $ 22 $ 26,057 $ 10,955 $ 377 $ 1,414
=========== =========== =========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
LAZARD RETIREMENT
----------------------------
EMERGING SMALL
MARKET CAP
SUBACCOUNT SUBACCOUNT
1999(D) 1999(D)
-------------- -----------
<S> <C> <C>
Investment activity:
Reinvested dividends...................................... $ 1,046 $ 3
Risk & administrative expense (note 4).................... (606) (5)
----------- -----------
Net investment activity.............................. 440 (2)
----------- -----------
Realized & unrealized gain (loss) on Investments:
Reinvested capital gains................................ 0 37
Realized gain (loss).................................... 5,449 0
Unrealized gain......................................... 107,388 536
----------- -----------
Net gain on investments.............................. 112,837 573
----------- -----------
Net increase in contract owners' equity from
operations.......................................... $ 113,277 $ 571
=========== ===========
</TABLE>
---------------
(c) Period from May 3, 1999, date of commencement of operations.
(d) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
84
<PAGE> 87
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Three Years Ended December 31
<TABLE>
EQUITY MONEY MARKET
SUBACCOUNT SUBACCOUNT
--------------------------------------- ------------------------
1999 1998 1997 1999 1998
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Increase in contract owners' equity from operations:
Net investment activity............................... $ (132,325) $ 151,990 $ 263,170 $ 133,361 $ 79,104
Reinvested capital gains.............................. 13,411,033 582,686 1,475,813 0 0
Realized gain (loss).................................. 1,165,160 433,578 431,237 (31,917) (1,729)
Unrealized gain (loss)................................ (8,842,357) 276,272 1,699,778 0 0
----------- ----------- ----------- ----------- ----------
Net increase in contract owners' equity from
operations..................................... 5,601,511 1,444,526 3,869,998 101,444 77,375
----------- ----------- ----------- ----------- ----------
Equity transactions:
Sales:
Contract purchase payments............................ 5,012,273 5,167,419 4,850,686 6,289,867 9,924,762
Transfers from fixed & other subaccounts.............. 2,442,831 1,599,312 2,585,503 5,592,228 2,863,761
----------- ----------- ----------- ----------- ----------
7,455,104 6,766,731 7,436,189 11,882,095 12,788,523
----------- ----------- ----------- ----------- ----------
Redemptions:
Withdrawals & surrenders (note 5)..................... 1,283,863 975,495 930,275 22,532 48,825
Transfers to fixed & other subaccounts................ 6,010,815 2,231,174 2,061,907 11,367,686 9,721,391
Cost of insurance & administrative fee (note 5)....... 2,060,563 2,044,300 1,775,339 283,708 257,277
----------- ----------- ----------- ----------- ----------
9,355,241 5,250,969 4,767,521 11,673,926 10,027,493
----------- ----------- ----------- ----------- ----------
Net equity transactions.......................... (1,900,137) 1,515,762 2,668,668 208,169 2,761,030
----------- ----------- ----------- ----------- ----------
Net change in contract owners' equity.......... 3,701,374 2,960,288 6,538,666 309,613 2,838,405
Contract owners' equity:
Beginning of period..................................... 31,166,072 28,205,784 21,667,118 4,068,382 1,229,977
----------- ----------- ----------- ----------- ----------
End of period........................................... $34,867,446 $31,166,072 $28,205,784 $ 4,377,995 $4,068,382
=========== =========== =========== =========== ==========
----------
1997
----------
<S> <C>
Increase in contract owners' equity from operations:
Net investment activity............................... $ 47,708
Reinvested capital gains.............................. 0
Realized gain (loss).................................. 241
Unrealized gain (loss)................................ 0
----------
Net increase in contract owners' equity from
operations..................................... 47,949
----------
Equity transactions:
Sales:
Contract purchase payments............................ 6,067,434
Transfers from fixed & other subaccounts.............. 1,593,336
----------
7,660,770
----------
Redemptions:
Withdrawals & surrenders (note 5)..................... 8,519
Transfers to fixed & other subaccounts................ 7,321,910
Cost of insurance & administrative fee (note 5)....... 225,524
----------
7,555,953
----------
Net equity transactions.......................... 104,817
----------
Net change in contract owners' equity.......... 152,766
Contract owners' equity:
Beginning of period..................................... 1,077,211
----------
End of period........................................... $1,229,977
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
85
<PAGE> 88
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Three Years Ended December 31
<TABLE>
BOND OMNI
SUBACCOUNT SUBACCOUNT
--------------------------------------- -------------------------
1999 1998 1997 1999 1998
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in contract owners' equity from
operations:
Net investment activity.............................. $ 106,661 $ 73,888 $ 62,150 $ 169,890 $ 218,250
Reinvested capital gains............................. 0 0 0 411,548 1,760
Realized gain (loss)................................. (6,506) 2,811 1,394 431,731 332,951
Unrealized gain (loss)............................... (103,003) (21,734) 4,309 164,688 (101,784)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity from operations........................ (2,848) 54,965 67,853 1,177,857 451,177
----------- ----------- ----------- ----------- -----------
Equity transactions:
Sales:
Contract purchase payments........................... 419,790 345,106 244,107 2,179,009 2,470,020
Transfers from fixed & other subaccounts............. 256,378 567,357 131,403 934,257 2,614,095
----------- ----------- ----------- ----------- -----------
676,168 912,463 375,510 3,113,266 5,084,115
----------- ----------- ----------- ----------- -----------
Redemptions:
Withdrawals & surrenders (note 5).................... 103,237 13,218 21,828 600,731 705,842
Transfers to fixed & other subaccounts............... 243,107 129,183 131,854 2,971,645 2,318,267
Cost of insurance & administrative fee (note 5)...... 122,471 100,579 70,289 841,801 802,634
----------- ----------- ----------- ----------- -----------
468,815 242,980 223,971 4,414,177 3,826,743
----------- ----------- ----------- ----------- -----------
Net equity transactions......................... 207,353 669,483 151,539 (1,300,911) 1,257,372
----------- ----------- ----------- ----------- -----------
Net change in contract owners' equity......... 204,505 724,448 219,392 (123,054) 1,708,549
Contract owners' equity:
Beginning of period.................................... 1,674,308 949,860 730,468 11,931,894 10,223,345
----------- ----------- ----------- ----------- -----------
End of period.......................................... $ 1,878,813 $ 1,674,308 $ 949,860 $11,808,840 $11,931,894
=========== =========== =========== =========== ===========
-----------
1997
-----------
<S> <C>
Increase (decrease) in contract owners' equity from
operations:
Net investment activity.............................. $ 219,893
Reinvested capital gains............................. 480,048
Realized gain (loss)................................. 73,429
Unrealized gain (loss)............................... 562,929
-----------
Net increase (decrease) in contract owners'
equity from operations........................ 1,336,299
-----------
Equity transactions:
Sales:
Contract purchase payments........................... 1,966,189
Transfers from fixed & other subaccounts............. 907,850
-----------
2,874,039
-----------
Redemptions:
Withdrawals & surrenders (note 5).................... 187,562
Transfers to fixed & other subaccounts............... 312,223
Cost of insurance & administrative fee (note 5)...... 648,661
-----------
1,148,446
-----------
Net equity transactions......................... 1,725,593
-----------
Net change in contract owners' equity......... 3,061,892
Contract owners' equity:
Beginning of period.................................... 7,161,453
-----------
End of period.......................................... $10,223,345
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
86
<PAGE> 89
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Three Years Ended December 31
<TABLE>
INTERNATIONAL CAPITAL APPRECIATION
SUBACCOUNT SUBACCOUNT
--------------------------------------- ------------------------
1999 1998 1997 1999 1998
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Increase in contract owners' equity from operations:
Net investment activity............................... $ (125,913) $ 506,357 $ 871,473 $ 125,624 $ 109,830
Reinvested capital gains.............................. 0 695,117 1,415,674 700,498 539,044
Realized gain (loss).................................. (55,726) (45,820) 186,736 36,655 33,861
Unrealized gain (loss)................................ 10,000,013 (670,437) (2,391,042) (450,311) (390,779)
----------- ----------- ----------- ----------- ----------
Net increase in contract owners' equity from
operations..................................... 9,818,374 485,217 82,841 412,466 291,956
----------- ----------- ----------- ----------- ----------
Equity transactions:
Sales:
Contract purchase payments............................ 3,266,962 4,027,966 4,352,514 1,870,385 2,206,184
Transfers from fixed & other subaccounts.............. 954,384 965,930 2,121,595 851,618 951,520
----------- ----------- ----------- ----------- ----------
4,221,346 4,993,896 6,474,109 2,722,003 3,157,704
----------- ----------- ----------- ----------- ----------
Redemptions:
Withdrawals & surrenders (note 5)..................... 881,527 618,889 469,189 262,934 170,616
Transfers to fixed & other subaccounts................ 4,697,047 2,112,568 2,136,043 1,789,041 518,403
Cost of insurance & administrative fee (note 5)....... 1,206,179 1,348,113 1,269,503 574,371 548,283
----------- ----------- ----------- ----------- ----------
6,784,753 4,079,570 3,874,735 2,626,346 1,237,302
----------- ----------- ----------- ----------- ----------
Net equity transactions.......................... (2,563,407) 914,326 2,599,374 95,657 1,920,402
----------- ----------- ----------- ----------- ----------
Net change in contract owners' equity.......... 7,254,967 1,399,543 2,682,215 508,123 2,212,358
Contract owners' equity:
Beginning of period..................................... 16,865,296 15,465,753 12,783,538 7,079,821 4,867,463
----------- ----------- ----------- ----------- ----------
End of period........................................... $24,120,263 $16,865,296 $15,465,753 $ 7,587,944 $7,079,821
=========== =========== =========== =========== ==========
----------
1997
----------
<S> <C>
Increase in contract owners' equity from operations:
Net investment activity............................... $ 102,356
Reinvested capital gains.............................. 244,214
Realized gain (loss).................................. 34,042
Unrealized gain (loss)................................ 129,929
----------
Net increase in contract owners' equity from
operations..................................... 510,541
----------
Equity transactions:
Sales:
Contract purchase payments............................ 1,458,697
Transfers from fixed & other subaccounts.............. 1,299,231
----------
2,757,928
----------
Redemptions:
Withdrawals & surrenders (note 5)..................... 54,331
Transfers to fixed & other subaccounts................ 775,912
Cost of insurance & administrative fee (note 5)....... 377,999
----------
1,208,242
----------
Net equity transactions.......................... 1,549,686
----------
Net change in contract owners' equity.......... 2,060,227
Contract owners' equity:
Beginning of period..................................... 2,807,236
----------
End of period........................................... $4,867,463
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
87
<PAGE> 90
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Three Years Ended December 31
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL SMALL COMPANY
SUBACCOUNT SUBACCOUNT
--------------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase in contract owners' equity from
operations:
Net investment activity.................... $ (100,544) $ (54,057) $ (38,798) $ (20,937) $ 40,334 $ 43,392
Reinvested capital gains................... 5,797,375 107 271,143 479,458 180,539 83,769
Realized gain.............................. 307,091 57,223 84,498 202,058 8,238 32,076
Unrealized gain (loss)..................... 5,205,819 930,451 130,287 1,832,353 (187,295) (35,010)
----------- ----------- ----------- ----------- ---------- ----------
Net increase in contract owners'
equity from operations.............. 11,209,741 933,724 447,130 2,492,932 41,816 124,227
----------- ----------- ----------- ----------- ---------- ----------
Equity transactions:
Sales:
Contract purchase payments................. 2,645,343 2,614,149 2,181,009 603,036 666,312 537,053
Transfers from fixed & other subaccounts... 3,174,822 1,096,254 1,438,960 1,743,233 218,614 450,868
----------- ----------- ----------- ----------- ---------- ----------
5,820,165 3,710,403 3,619,969 2,346,269 884,926 987,921
----------- ----------- ----------- ----------- ---------- ----------
Redemptions:
Withdrawals & surrenders (note 5).......... 515,999 258,338 141,409 109,397 56,018 221,380
Transfers to fixed & other subaccounts..... 2,004,103 795,000 1,146,251 1,506,122 219,547 218,387
Cost of insurance & administrative fee
(note 5)................................ 1,018,712 705,650 579,612 207,469 178,599 140,673
----------- ----------- ----------- ----------- ---------- ----------
3,538,814 1,758,988 1,867,272 1,822,988 454,164 580,440
----------- ----------- ----------- ----------- ---------- ----------
Net equity transactions............... 2,281,351 1,951,415 1,752,697 523,281 430,762 407,481
----------- ----------- ----------- ----------- ---------- ----------
Net change in contract owners'
equity........................... 13,491,092 2,885,139 2,199,827 3,016,213 472,578 531,708
Contract owners' equity:
Beginning of period.......................... 9,250,038 6,364,899 4,165,072 2,044,553 1,571,975 1,040,267
----------- ----------- ----------- ----------- ---------- ----------
End of period................................ $22,741,130 $ 9,250,038 $ 6,364,899 $ 5,060,766 $2,044,553 $1,571,975
=========== =========== =========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Form 5560.5
88
<PAGE> 91
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Three Years Ended December 31
<TABLE>
AGGRESSIVE GROWTH CORE GROWTH
SUBACCOUNT SUBACCOUNT
--------------------------------------- ------------------------
1999 1998 1997 1999 1998
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in contract owners' equity from
operations:
Net investment activity............................... $ (26,551) $ (23,847) $ 8,140 $ (14,942) $ (7,627)
Reinvested capital gains.............................. 0 258,472 9,068 763,382 0
Realized gain (loss).................................. (41,002) 22,270 (3,358) 115,808 1,725
Unrealized gain (loss)................................ 248,666 (6,276) 231,511 875,700 101,913
----------- ----------- ----------- ----------- ----------
Net increase in contract owners' equity from
operations..................................... 181,113 250,619 245,361 1,739,948 96,011
----------- ----------- ----------- ----------- ----------
Equity transactions:
Sales:
Contract purchase payments............................ 1,136,033 1,348,654 969,362 438,214 459,093
Transfers from fixed & other subaccounts.............. 499,516 423,659 544,712 1,317,575 378,819
----------- ----------- ----------- ----------- ----------
1,635,549 1,772,313 1,514,074 1,755,789 837,912
----------- ----------- ----------- ----------- ----------
Redemptions:
Withdrawals & surrenders (note 5)..................... 182,042 86,262 84,536 82,138 16,609
Transfers to fixed & other subaccounts................ 1,139,574 460,387 418,423 853,515 327,440
Cost of insurance & administrative fee (note 5)....... 338,621 347,236 278,191 166,365 117,857
----------- ----------- ----------- ----------- ----------
1,660,237 893,885 781,150 1,102,018 461,906
----------- ----------- ----------- ----------- ----------
Net equity transactions.......................... (24,688) 878,428 732,924 653,771 376,006
----------- ----------- ----------- ----------- ----------
Net change in contract owners' equity.......... 156,425 1,129,047 978,285 2,393,719 472,017
Contract owners' equity:
Beginning of period..................................... 3,834,209 2,705,162 1,726,877 1,296,450 824,433
----------- ----------- ----------- ----------- ----------
End of period........................................... $ 3,990,634 $ 3,834,209 $ 2,705,162 $ 3,690,169 $1,296,450
=========== =========== =========== =========== ==========
----------
1997(A)
----------
<S> <C>
Increase (decrease) in contract owners' equity from
operations:
Net investment activity............................... $ (3,683)
Reinvested capital gains.............................. 0
Realized gain (loss).................................. 3,379
Unrealized gain (loss)................................ (3,039)
----------
Net increase in contract owners' equity from
operations..................................... (3,343)
----------
Equity transactions:
Sales:
Contract purchase payments............................ 377,379
Transfers from fixed & other subaccounts.............. 631,937
----------
1,009,316
----------
Redemptions:
Withdrawals & surrenders (note 5)..................... 1,885
Transfers to fixed & other subaccounts................ 116,828
Cost of insurance & administrative fee (note 5)....... 62,827
----------
181,540
----------
Net equity transactions.......................... 827,776
----------
Net change in contract owners' equity.......... 824,433
Contract owners' equity:
Beginning of period..................................... 0
----------
End of period........................................... $ 824,433
==========
</TABLE>
---------------
(a) Period from January 3, 1997, date of commencement of operations
The accompanying notes are an integral part of these financial statements.
Form 5560.5
89
<PAGE> 92
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Three Years Ended December 31
<TABLE>
<CAPTION>
GROWTH & INCOME SUBACCOUNT S&P 500 INDEX SUBACCOUNT
--------------------------------------- -------------------------------------
1999 1998 1997(A) 1999 1998 1997(A)
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase in contract owners' equity from
operations:
Net investment activity....................... $ (43,039) $ 13,260 $ 3,087 $ 252,331 $ 81,883 $ 30,030
Reinvested capital gains...................... 1,905,785 0 90,978 1,388,105 328,825 94,770
Realized gain................................. 74,709 10,734 7,768 199,621 20,356 5,779
Unrealized gain (loss)........................ 2,666,425 252,938 94,008 1,477,659 619,923 (52,996)
----------- ----------- ----------- ----------- ---------- ----------
Net increase in contract owners' equity
from operations........................ 4,603,880 276,932 195,841 3,317,716 1,050,987 77,583
----------- ----------- ----------- ----------- ---------- ----------
Equity transactions:
Sales:
Contract purchase payments.................. 2,601,488 2,034,257 536,293 5,028,217 2,194,159 560,773
Transfers from fixed & other subaccounts.... 2,589,201 2,464,502 1,270,995 7,673,684 4,432,311 775,750
----------- ----------- ----------- ----------- ---------- ----------
5,190,689 4,498,759 1,807,288 12,701,901 6,626,470 1,336,523
----------- ----------- ----------- ----------- ---------- ----------
Redemptions:
Withdrawals & surrenders (note 5)........... 263,243 37,971 436 491,958 110,446 727
Transfers to fixed & other subaccounts...... 1,254,948 582,153 95,943 3,445,258 714,255 83,751
Cost of insurance & administrative fee
(note 5)................................. 645,343 376,090 64,105 1,121,691 407,189 62,142
----------- ----------- ----------- ----------- ---------- ----------
2,163,534 996,214 160,484 5,058,907 1,231,890 146,620
----------- ----------- ----------- ----------- ---------- ----------
Net equity transactions.................. 3,027,155 3,502,545 1,646,804 7,642,994 5,394,580 1,189,903
----------- ----------- ----------- ----------- ---------- ----------
Net change in contract owners'
equity............................... 7,631,035 3,779,477 1,842,645 10,960,710 6,445,567 1,267,486
Contract owners' equity:
Beginning of period........................... 5,622,122 1,842,645 0 7,713,053 1,267,486 0
----------- ----------- ----------- ----------- ---------- ----------
End of period................................. $13,253,157 $ 5,622,122 $ 1,842,645 $18,673,763 $7,713,053 $1,267,486
=========== =========== =========== =========== ========== ==========
</TABLE>
---------------
(a) Period from January 3, 1997, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
90
<PAGE> 93
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Three Years Ended December 31
<TABLE>
<CAPTION>
MONTGOMERY ASSET EMERGING
SOCIAL AWARENESS SUBACCOUNT MARKET SUBACCOUNT
--------------------------------------- -------------------------------------
1999 1998 1997(A) 1999 1998 1997(B)
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in contract owners' equity
from operations:
Net investment activity....................... $ (1,286) $ (957) $ 589 $ (2,118) $ (727) $ (57)
Reinvested capital gains...................... 0 0 29,015 0 0 0
Realized gain (loss).......................... (62,411) (31,042) 926 8,194 (3,512) (554)
Unrealized gain (loss)........................ 131,316 (102,278) (31,805) 68,642 (58,655) (9,987)
----------- ----------- ----------- ----------- ---------- ----------
Net increase (decrease) in contract
owners' equity from operations......... 67,619 (134,277) (1,275) 74,718 (62,894) (10,598)
----------- ----------- ----------- ----------- ---------- ----------
Equity transactions:
Sales:
Contract purchase payments.................. 158,628 292,044 35,077 154,989 190,059 44,409
Transfers from fixed & other subaccounts.... 116,135 229,481 319,587 155,921 69,940 58,741
----------- ----------- ----------- ----------- ---------- ----------
274,763 521,525 354,664 310,910 259,999 103,150
----------- ----------- ----------- ----------- ---------- ----------
Redemptions:
Withdrawals & surrenders (note 5)........... 6,911 7,059 50 2,952 1,469 0
Transfers to fixed & other subaccounts...... 363,431 148,460 13,740 581,568 18,913 6,244
Cost of insurance & administrative fee (note
5)....................................... 36,077 37,586 4,380 31,888 26,219 6,032
----------- ----------- ----------- ----------- ---------- ----------
406,419 193,105 18,170 616,408 46,601 12,276
----------- ----------- ----------- ----------- ---------- ----------
Net equity transactions.................. (131,656) 328,420 336,494 (305,498) 213,398 90,874
----------- ----------- ----------- ----------- ---------- ----------
Net change in contract owners'
equity............................... (64,037) 194,143 335,219 (230,780) 150,504 80,276
Contract owners' equity:
Beginning of period........................... 529,362 335,219 0 230,780 80,276 0
----------- ----------- ----------- ----------- ---------- ----------
End of period................................. $ 465,325 $ 529,362 $ 335,219 $ 0 $ 230,780 $ 80,276
=========== =========== =========== =========== ========== ==========
</TABLE>
---------------
(a) Period from January 3, 1997, date of commencement of operations.
(b) Period from April 1, 1997, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
91
<PAGE> 94
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Three Years Ended December 31
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
------------------------------------
BLUE HIGH CAPITAL WORLDWIDE
CHIP INCOME GROWTH GROWTH GROWTH BALANCE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
1999(D) 1999(D) 1999(D) 1999(C) 1999(C) 1999(D)
----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase in contract owners' equity from
operations:
Net investment activity........................ $ 0 $ 509 $ (84) $ (7,811) $ (5,961) $ 565
Reinvested capital gains....................... 1 0 25,879 6,806 0 0
Realized gain.................................. 0 1 776 9,588 3,506 191
Unrealized gain (loss)......................... 10 (347) (6,339) 1,075,487 954,815 1,157
----------- ----------- ----------- ---------- ---------- ----------
Net increase in contract owners' equity
from operations......................... 11 163 20,232 1,084,070 952,360 1,913
----------- ----------- ----------- ---------- ---------- ----------
Equity transactions:
Sales:
Contract purchase payments................... 0 0 16,540 1,227,956 447,177 950
Transfers from fixed & other subaccounts..... 462 58,507 284,457 4,493,684 2,495,368 69,482
----------- ----------- ----------- ---------- ---------- ----------
462 58,507 300,997 5,721,640 2,942,545 70,432
----------- ----------- ----------- ---------- ---------- ----------
Redemptions:
Withdrawals & surrenders (note 5)............ 0 171 261 69,942 18,171 0
Transfers to fixed & other subaccounts....... 0 0 22,030 388,605 119,927 0
Cost of insurance & administrative fee
(note 5).................................. 5 62 620 147,785 70,180 160
----------- ----------- ----------- ---------- ---------- ----------
5 233 22,911 606,332 208,278 160
----------- ----------- ----------- ---------- ---------- ----------
Net equity transactions................... 457 58,274 278,086 5,115,308 2,734,267 70,272
----------- ----------- ----------- ---------- ---------- ----------
Net change in contract owners' equity... 468 58,437 298,318 6,199,378 3,686,627 72,185
Contract owners' equity:
Beginning of period............................ 0 0 0 0 0 0
----------- ----------- ----------- ---------- ---------- ----------
End of period.................................. $ 468 $ 58,437 $ 298,318 $6,199,378 $3,686,627 $ 72,185
=========== =========== =========== ========== ========== ==========
</TABLE>
---------------
(c) Period from May 3, 1999, date of commencement of operations.
(d) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
92
<PAGE> 95
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Three Years Ended December 31
<TABLE>
<CAPTION>
STRONG VARIABLE ANNUITY FUNDS GOLDMAN SACHS
------------------------------------------ ---------------------------------------
SCHAFER MID-CAP VIT GROWTH & VIT CORE VIT CAPITAL
OPPORTUNITY II VALUE GROWTH INCOME US EQUITY GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
1999(D) 1999(D) 1999(D) 1999(C) 1999(D) 1999(D)
-------------- ----------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase in contract owners' equity from
operations:
Net investment activity.................. $ (3) $ 17 $ (107) $ 6,342 $ 21 $ 6
Reinvested capital gains................. 0 91 0 0 88 521
Realized gain............................ 0 36 453 (1,291) (15) 415
Unrealized gain (loss)................... 246 (122) 25,711 5,904 283 472
----------- ----------- ----------- ---------- ---------- ----------
Net increase in contract owners'
equity from operations............ 243 22 26,057 10,955 377 1,414
----------- ----------- ----------- ---------- ---------- ----------
Equity transactions:
Sales:
Contract purchase payments............. 27 69 4,910 224,791 27 506
Transfers from fixed & other
subaccounts......................... 3,529 8,647 277,711 587,752 11,931 27,948
----------- ----------- ----------- ---------- ---------- ----------
3,556 8,716 282,621 812,543 11,958 28,454
----------- ----------- ----------- ---------- ---------- ----------
Redemptions:
Withdrawals & surrenders (note 5)...... 0 0 0 (148) 0 0
Transfers to fixed & other
subaccounts......................... 795 0 15,869 121,177 4,541 15,776
Cost of insurance & administrative fee
(note 5)............................ 34 13 735 14,869 22 86
----------- ----------- ----------- ---------- ---------- ----------
829 13 16,604 135,898 4,563 15,862
----------- ----------- ----------- ---------- ---------- ----------
Net equity transactions............. 2,727 8,703 266,017 676,645 7,395 12,592
----------- ----------- ----------- ---------- ---------- ----------
Net change in contract owners'
equity.......................... 2,970 8,725 292,074 687,600 7,772 14,006
Contract owners' equity:
Beginning of period...................... 0 0 0 0 0 0
----------- ----------- ----------- ---------- ---------- ----------
End of period............................ $ 2,970 $ 8,725 $ 292,074 $ 687,600 $ 7,772 $ 14,006
=========== =========== =========== ========== ========== ==========
</TABLE>
---------------
(c) Period from May 3, 1999, date of commencement of operations.
(d) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
93
<PAGE> 96
OHIO NATIONAL VARIABLE ACCOUNT R
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Three Years Ended December 31
<TABLE>
<CAPTION>
LAZARD RETIREMENT
-----------------------
EMERGING SMALL
MARKET CAP
SUBACCOUNT SUBACCOUNT
1999(D) 1999(D)
---------- ----------
<S> <C> <C>
Increase in contract owners' equity from operations:
Net investment activity................................... $ 440 $ (2)
Reinvested capital gains.................................. 0 37
Realized gain (loss)...................................... 5,449 0
Unrealized gain........................................... 107,388 536
-------- -------
Net increase in contract owners' equity from
operations........................................... 113,277 571
-------- -------
Equity transactions:
Sales:
Contract purchase payments.............................. 22,776 106
Transfers from fixed & other subaccounts................ 563,737 42,908
-------- -------
586,513 43,014
-------- -------
Redemptions:
Withdrawals & surrenders (note 5)....................... 536 0
Transfers to fixed & other subaccounts.................. 108,799 0
Cost of insurance & administrative fee
(note 5)............................................. 6,614 63
-------- -------
115,949 63
-------- -------
Net equity transactions.............................. 470,564 42,951
-------- -------
Net change in contract owners' equity.............. 583,841 43,522
Contract owners' equity:
Beginning of period....................................... 0 0
-------- -------
End of period............................................. $583,841 $43,522
======== =======
</TABLE>
---------------
(d) Period from November 1, 1999, date of commencement of operations.
The accompanying notes are an integral part of these financial statements.
Form 5560.5
94
<PAGE> 97
OHIO NATIONAL VARIABLE ACCOUNT R
NOTES TO FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ohio National Variable Account R (the Account) is a separate account of The
Ohio National Life Assurance Corporation (ONLAC). All obligations arising
under variable life insurance contracts are general corporate obligations of
ONLAC. ONLAC is a wholly-owned subsidiary of The Ohio National Life Insurance
Company. The account has been registered as a unit investment trust under the
Investment Company Act of 1940.
Assets of the Account are invested in portfolio shares of Ohio National Fund,
Inc., Janus Aspen Series, Strong Variable Insurance Funds, Inc., Goldman
Sachs Variable Insurance Trust, and Lazard Retirement Funds (collectively the
Funds). The Funds are diversified open-end management investment companies.
The Funds' 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.
Investments are valued at the net asset value of fund shares held at December
31, 1999. Share transactions are recorded on the trade date. Income and
capital gain distributions are recorded on the ex-dividend date. Net realized
capital gains and losses are determined on the basis of average cost.
ONLAC 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, 1999 the aggregate cost and number of shares of the
underlying funds owned by the respective subaccounts were:
<TABLE>
<CAPTION>
MONEY CAPITAL
EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ----------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Cost................ $35,950,824 $4,377,995 $1,987,682 $ 9,735,042 $15,712,565 $8,033,744
Number of Shares.............. 1,316,896 437,799 189,072 523,767 1,120,986 626,740
<CAPTION>
SMALL CAP
SUBACCOUNT
-----------
<S> <C>
Aggregate Cost................ $15,848,978
Number of Shares.............. 719,292
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL AGGRESSIVE CORE GROWTH & S&P 500 SOCIAL
COMPANY GROWTH GROWTH INCOME INDEX AWARENESS
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ---------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Cost................ $ 3,401,745 $3,615,498 $2,715,595 $10,239,786 $16,629,176 $ 468,092
Number of Shares.............. 249,964 338,447 217,337 705,819 1,155,126 45,142
<CAPTION>
BLUE CHIP
SUBACCOUNT
-----------
<S> <C>
Aggregate Cost................ $ 458
Number of Shares.............. 44
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN
HIGH INCOME CAPITAL JANUS ASPEN WORLDWIDE JANUS ASPEN STRONG
BOND GROWTH GROWTH GROWTH BALANCED OPPORTUNITY II
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Cost................ $ 58,784 $ 304,657 $5,123,891 $ 2,731,811 $ 71,028 $ 2,724
Number of Shares.............. 6,339 10,649 184,231 77,207 2,585 114
<CAPTION>
STRONG
SCHAFER
VALUE II
SUBACCOUNT
-----------
<S> <C>
Aggregate Cost................ $ 8,846
Number of Shares.............. 957
</TABLE>
(continued)
Form 5560.5
95
<PAGE> 98
OHIO NATIONAL VARIABLE ACCOUNT R
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
GOLDMAN GOLDMAN GOLDMAN LAZARD
STRONG SACHS VIT SACHS VIT SACHS VIT RETIREMENT LAZARD
MID-CAP GROWTH & CORE US CAPITAL EMERGING RETIREMENT
GROWTH II INCOME EQUITY GROWTH MARKET SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ----------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Cost................ $ 266,363 $ 681,696 $ 7,489 $ 13,535 $ 476,453 $ 42,986
Number of Shares.............. 9,617 63,141 556 1,000 53,028 4,432
</TABLE>
(3) CONTRACTS IN ACCUMULATION PERIOD
At December 31, 1999 the accumulation units and value per unit of the
respective subaccounts and products were:
<TABLE>
<CAPTION>
ACCUMULATION UNITS VALUE PER UNIT VALUE
------------------ -------------- -----------
<S> <C> <C> <C>
EQUITY SUBACCOUNT.................................... 956,501.9114 36.453086 $34,867,446
MONEY MARKET SUBACCOUNT.............................. 241,831.3196 18.103505 $ 4,377,995
BOND SUBACCOUNT...................................... 90,239.7040 20.820247 $ 1,878,813
OMNI SUBACCOUNT...................................... 380,821.9971 31.008817 $11,808,840
INTERNATIONAL SUBACCOUNT............................. 823,798.9415 29.279308 $24,120,263
CAPITAL APPRECIATION SUBACCOUNT...................... 429,436.9536 17.669517 $ 7,587,944
SMALL CAP SUBACCOUNT................................. 591,731.8723 38.431477 $22,741,130
INTERNATIONAL SMALL COMPANY SUBACCOUNT............... 178,215.6181 28.396871 $ 5,060,766
AGGRESSIVE GROWTH SUBACCOUNT......................... 251,874.7415 15.843725 $ 3,990,634
CORE GROWTH SUBACCOUNT............................... 174,597.4169 21.135299 $ 3,690,169
GROWTH & INCOME SUBACCOUNT........................... 571,171.3135 23.203471 $13,253,157
S&P 500 INDEX SUBACCOUNT............................. 887,540.5166 21.039899 $18,673,763
SOCIAL AWARENESS SUBACCOUNT.......................... 41,478.8627 11.218364 $ 465,325
BLUE CHIP SUBACCOUNT................................. 45.1620 10.364605 $ 468
HIGH INCOME BOND SUBACCOUNT.......................... 5,678.1831 10.291509 $ 58,437
CAPITAL GROWTH SUBACCOUNT............................ 21,002.7969 14.203709 $ 298,318
JANUS ASPEN GROWTH SUBACCOUNT........................ 482,511.0310 12.848159 $ 6,199,378
JANUS ASPEN WORLDWIDE GROWTH SUBACCOUNT.............. 244,886.3836 15.054438 $ 3,686,627
JANUS ASPEN BALANCED SUBACCOUNT...................... 6,543.3186 11.031897 $ 72,185
STRONG OPPORTUNITY II SUBACCOUNT..................... 266.0292 11.164799 $ 2,970
STRONG SCHAFER VALUE II SUBACCOUNT................... 847.8621 10.290266 $ 8,725
STRONG MID-CAP GROWTH II SUBACCOUNT.................. 22,599.1256 12.924122 $ 292,074
GOLDMAN SACHS GROWTH & INCOME SUBACCOUNT............. 71,764.9366 9.581286 $ 687,600
GOLDMAN SACHS CORE US EQUITY SUBACCOUNT.............. 710.9680 10.931168 $ 7,772
GOLDMAN SACHS CAPITAL GROWTH SUBACCOUNT.............. 1,252.2793 11.184743 $ 14,006
LAZARD RETIREMENT EMERGING MARKET SUBACCOUNT......... 46,635.2870 12.519300 $ 583,841
LAZARD RETIREMENT SMALL CAP SUBACCOUNT............... 4,127.5970 10.544030 $ 43,522
</TABLE>
(4) RISK AND ADMINISTRATIVE EXPENSE
Although variable life payments differ according to the investment
performance of the Accounts, they are not affected by mortality or expense
experience because ONLAC assumes the expense risk and the mortality risk
under the contracts. ONLAC charges the Accounts' assets for assuming those
risks. Such charge will be assessed at a daily rate of 0.0020471% which
corresponds to an annual rate of .75% of the contract value.
(continued)
Form 5560.5
96
<PAGE> 99
OHIO NATIONAL VARIABLE ACCOUNT R
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(5) CONTRACT CHARGES
Each premium payment is subject to a premium expense charge. The premium
expense charge has two components: (a) Sales Load. Each contract is subject
to a level sales load of all premiums paid of 4%. (b) State Premium Tax.
Premium payments will be subject to the state premium tax and any other state
or local taxes that currently range from 2% to 4%.
Total premium expense charges in the Account amounted to approximately
$1,630,880.00 during 1999.
A surrender charge is assessed in connection with all complete surrenders,
all decreases in stated amount and certain partial surrenders consisting of
two components: (1) a contingent deferred sales charge, and (2) a contingent
deferred insurance underwriting charge.
The contingent deferred sales charge is a percentage of premiums paid in the
first two contract years. The contingent deferred sales charge percentages
are scaled by age at issue or increase. The contingent deferred insurance
underwriting charge varies with age at issue or increase.
A service charge is imposed on each transfer of cash values among the
subaccounts. Currently, ONLAC is not assessing this charge on the first four
transfers made in any contract year. For partial surrenders, a service fee is
charged.
ONLAC charges a monthly deduction from the contract value for the cost of
insurance, a $5.00 or $7.00 record keeping and processing charge, a risk
charge of $.01 per $1,000 of the stated amount for the risk associated with
the death benefit guarantee, and the cost of additional insurance benefits
provided by rider.
(6) FEDERAL INCOME TAXES
Operations of the Account form a part of, and are taxed with, operations of
ONLAC 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.
Form 5560.5
97
<PAGE> 100
OHIO NATIONAL VARIABLE ACCOUNT R
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
The Ohio National Life Assurance Corporation
and Contract Owners of Ohio National
Variable Account R:
We have audited the accompanying statements of assets and contract owners'
equity of Ohio National Variable Account R (comprised of the Equity, Money
Market, Bond, Omni, International, Capital Appreciation (formerly Small Cap
Growth), Small Cap, International Small Company (formerly Global Contrarian),
Aggressive Growth, Core Growth, Growth & Income, S&P 500 Index, Social
Awareness, Blue Chip, High Income Bond, Capital Growth, Janus Aspen
Series -- Growth, Janus Aspen Series -- Worldwide Growth, Janus Aspen
Series -- Balanced, Strong Variable Funds -- Opportunity II, Strong Variable
Funds -- Schafer Value II, Strong Variable Funds -- Mid-Cap Growth, Goldman
Sachs VIT Growth & Income, Goldman Sachs VIT Core US Equity, Goldman Sachs VIT
Capital Growth, Lazard Retirement Emerging Market, and Lazard Retirement Small
Cap subaccounts) (collectively, the Account) as of December 31, 1999 and the
related statements of operations and changes in contract owners' equity for each
of the periods indicated herein. These financial statements are the
responsibility of the Account's 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, 1999, by correspondence with
the transfer agents of the underlying mutual funds. 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
R as of December 31, 1999, and the results of its operations and its changes in
contract owners' equity for each of the periods indicated herein in conformity
with generally accepted accounting principles.
KPMG LLP
Cincinnati, Ohio
February 18, 2000
Form 5560.5
98
<PAGE> 101
APPENDIX A
ILLUSTRATIONS OF CASH SURRENDER VALUES,
DEATH BENEFITS AND ACCUMULATED PREMIUMS.
The following tables help to show how contract values change with investment
performance. The tables illustrate how the death benefit of a contract of an
insured of a given age and the cash surrender value (reflecting the deduction of
sales load) would vary over time if the return on the assets held in the Funds
was a constant, gross, after-tax, annual rate of 0%, 6% or 12%. Because of
compounding, the death benefits and cash surrender values would be different
from those shown if the returns averaged 0%, 6%, or 12%, but fluctuated over and
under those averages throughout the years.
The amounts shown for the death benefit and cash surrender value as of each
contract year show that the net investment return on the assets held in the
subaccounts is lower than the gross, after-tax returns on Fund assets. This is
because certain fees and charges are deducted from the gross return. They are
the daily investment management fees incurred by the Funds. These are currently
equivalent to an average annual rate of 1.79% of the value of the average daily
net assets of the Funds to which contract values may be allocated. The daily
charge to VAR for assuming mortality and expense risks is equivalent to an
annual charge of 0.75%. Certain other fees and miscellaneous expenses borne by
the Funds are currently equivalent to an annual rate of 1.04% of average daily
net assets. Gross annual rates of return of 0%, 6%, and 12% produce average net
annual rates of return for all Funds of approximately -1.79%, 4.21%, and 10.21%.
Each page of illustrations includes two tables. The top table shows the death
benefits and cash surrender values assuming we assess current contract charges
("current tables"). Current charges are not guaranteed and may be changed. The
lower table shows the death benefits and cash surrender values assuming we
assess the maximum contract charges allowable.
The tables assume a premium tax deduction of 2.5% (the charge deducted from your
contract will reflect premium taxes in your jurisdiction), that no portion of
your net premiums have been allocated to the general account and that planned
premiums are paid on the first day of each contract year. The tables also assume
that you have made no transfers, partial surrenders, loans, changes in death
benefit option or changes in stated amount. Additionally, the tables assume that
there are no optional insurance benefits and the current tables assume that our
current cost of insurance charges will not be changed. Finally, the tables
reflect the fact that no charges for federal, state or local taxes are made now
against VAR. If such a charge is made in the future, it will take a higher gross
rate of return to produce after-tax returns of 0%, 6% and 12% than it does now.
Below is a list of the sample illustrations presented on the following pages of
this prospectus. Upon request, we will furnish a comparable illustration based
on your age, sex, risk class, death benefit plan, stated amount and planned
premium.
VARI-VEST V
<TABLE>
<CAPTION>
AGE DEATH BENEFIT PLAN PLANNED PREMIUM STATED AMOUNT RISK CLASS PAGE
--- ------------------ --------------- ------------- ---------- ----
<S> <C> <C> <C> <C> <C> <C>
25 Plan A 1,002 (Minimum) $ 150,000 Nonsmoker 100
25 Plan A 1,230 150,000 Nonsmoker 101
25 Plan B 1,002 (Minimum) 150,000 Nonsmoker 102
25 Plan B 3,020 150,000 Nonsmoker 103
40 Plan A 2,484 (Minimum) 250,000 Select Nonsmoker 104
40 Plan A 3,750 250,000 Select Nonsmoker 105
40 Plan B 2,484 (Minimum) 250,000 Select Nonsmoker 106
40 Plan B 9,000 250,000 Select Nonsmoker 107
</TABLE>
HYPOTHETICAL HISTORICAL ILLUSTRATIONS
We may produce hypothetical illustrations of the contract (such as those listed
above) based upon the actual historical investment performance (total return) of
the Funds from the inception of each Fund or one-, five- and ten-year periods.
Such illustrations reflect all contract and subsequent charges, including the
cost of insurance (specific to the age, sex, stated amount, risk classification
and type of death benefit), planned premium, premium tax, risk charge, sales
load, administration charge and surrender charge for the contract being
illustrated. We will also provide individualized illustrations upon request.
Being based upon past performance, neither hypothetical illustrations nor other
performance data indicate future performance.
Form 5560.5
99
<PAGE> 102
MALE ISSUE AGE 25 INITIAL STATED AMOUNT: $150,000
CLASSIFICATION: NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100)
INITIAL PREMIUM: $1,002.00 STATED AMOUNT INCLUDES CASH VALUE
SUMMARY OF VALUES AND BENEFITS
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28 NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,002 1,052 0 150,000 0 150,000 0 150,000
2 1,002 2,157 172 150,000 25 150,000 0 150,000
3 1,002 3,317 611 150,000 311 150,000 35 150,000
4 1,002 4,535 1,477 150,000 961 150,000 504 150,000
5 1,002 5,814 2,712 150,000 1,908 150,000 1,224 150,000
6 1,002 7,156 4,066 150,000 2,892 150,000 1,934 150,000
7 1,002 8,566 5,547 150,000 3,912 150,000 2,630 150,000
8 1,002 10,047 7,168 150,000 4,968 150,000 3,312 150,000
9 1,002 11,601 8,942 150,000 6,060 150,000 3,979 150,000
10 1,002 13,233 10,791 150,000 7,098 150,000 4,537 150,000
15 1,002 22,703 24,067 150,000 13,721 150,000 7,914 150,000
20 1,002 34,789 44,821 150,000 21,254 150,000 10,653 150,000
Age 60 1,002 95,026 213,496 286,085 47,572 150,000 10,836 150,000
Age 65 1,002 127,093 348,778 425,509 58,210 150,000 7,416 150,000
Age 70 1,002 168,021 565,449 655,921 69,290 150,000 144 150,000
</TABLE>
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28 NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,002 1,052 0 150,000 0 150,000 0 150,000
2 1,002 2,157 112 150,000 0 150,000 0 150,000
3 1,002 3,317 523 150,000 231 150,000 0 150,000
4 1,002 4,535 1,362 150,000 860 150,000 416 150,000
5 1,002 5,814 2,567 150,000 1,785 150,000 1,120 150,000
6 1,002 7,156 3,887 150,000 2,745 150,000 1,814 150,000
7 1,002 8,566 5,330 150,000 3,740 150,000 2,494 150,000
8 1,002 10,047 6,910 150,000 4,770 150,000 3,159 150,000
9 1,002 11,601 8,636 150,000 5,833 150,000 3,809 150,000
10 1,002 13,233 10,433 150,000 6,840 150,000 4,350 150,000
15 1,002 22,703 23,340 150,000 13,275 150,000 7,628 150,000
20 1,002 34,789 43,418 150,000 20,493 150,000 10,197 150,000
Age 60 1,002 95,026 204,489 274,016 42,471 150,000 7,273 150,000
Age 65 1,002 127,093 332,009 405,051 48,377 150,000
Age 70 1,002 168,021 533,683 619,072 50,262 150,000
</TABLE>
The hypothetical gross annual investment results shown above are illustrative
only and should not be deemed a representation of past or future investment
results. Actual investment results may be more or less than those shown and will
depend on a number of factors, including allocations made by the owner among the
investment options and the actual investment results of those options. The cash
surrender value and death benefit for a policy would be different from those
shown even if the actual rates of investment averaged 0%, 6% and 12% over a
period of years but fluctuated above or below those averages for individual
contract years. No representations can be made that these hypothetical
investment rates of return can be achieved for any one year or sustained over
any period of time. This illustration assumes current cost of insurance and
expense charges remain unchanged.
Form 5560.5
100
<PAGE> 103
MALE ISSUE AGE 25 INITIAL STATED AMOUNT: $150,000
CLASSIFICATION: NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100)
INITIAL PREMIUM: $1,230.00 STATED AMOUNT INCLUDES CASH VALUE
SUMMARY OF VALUES AND BENEFITS
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28 NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,230 1,292 0 150,000 0 150,000 0 150,000
2 1,230 2,648 455 150,000 267 150,000 86 150,000
3 1,230 4,071 1,248 150,000 860 150,000 503 150,000
4 1,230 5,567 2,612 150,000 1,943 150,000 1,350 150,000
5 1,230 7,136 4,208 150,000 3,162 150,000 2,272 150,000
6 1,230 8,785 5,959 150,000 4,431 150,000 3,181 150,000
7 1,230 10,515 7,880 150,000 5,748 150,000 4,074 150,000
8 1,230 12,333 9,986 150,000 7,113 150,000 4,949 150,000
9 1,230 14,241 12,295 150,000 8,529 150,000 5,805 150,000
10 1,230 16,244 14,735 150,000 9,904 150,000 6,550 150,000
15 1,230 27,869 32,052 150,000 18,472 150,000 10,832 150,000
20 1,230 42,705 59,480 150,000 28,439 150,000 14,416 150,000
Age 60 1,230 116,649 282,804 378,957 66,884 150,000 16,961 150,000
Age 65 1,230 156,013 461,538 563,077 84,474 150,000 14,392 150,000
Age 70 1,230 206,253 747,805 867,454 105,526 150,000 8,147 150,000
</TABLE>
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28 NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,230 1,292 0 150,000 0 150,000 0 150,000
2 1,230 2,648 396 150,000 211 150,000 34 150,000
3 1,230 4,071 1,160 150,000 781 150,000 431 150,000
4 1,230 5,567 2,497 150,000 1,842 150,000 1,262 150,000
5 1,230 7,136 4,063 150,000 3,039 150,000 2,169 150,000
6 1,230 8,785 5,782 150,000 4,285 150,000 3,062 150,000
7 1,230 10,515 7,664 150,000 5,577 150,000 3,938 150,000
8 1,230 12,333 9,729 150,000 6,916 150,000 4,797 150,000
9 1,230 14,241 11,991 150,000 8,304 150,000 5,636 150,000
10 1,230 16,244 14,380 150,000 9,649 150,000 6,364 150,000
15 1,230 27,869 31,337 150,000 18,033 150,000 10,550 150,000
20 1,230 42,705 58,117 150,000 27,695 150,000 13,969 150,000
Age 60 1,230 116,649 273,501 366,491 62,263 150,000 13,531 150,000
Age 65 1,230 156,013 443,517 541,091 76,011 150,000 7,295 150,000
Age 70 1,230 206,253 712,398 826,381 90,334 150,000
</TABLE>
The hypothetical gross annual investment results shown above are illustrative
only and should not be deemed a representation of past or future investment
results. Actual investment results may be more or less than those shown and will
depend on a number of factors, including allocations made by the owner among the
investment options and the actual investment results of those options. The cash
surrender value and death benefit for a policy would be different from those
shown even if the actual rates of investment averaged 0%, 6% and 12% over a
period of years but fluctuated above or below those averages for individual
contract years. No representations can be made that these hypothetical
investment rates of return can be achieved for any one year or sustained over
any period of time. This illustration assumes current cost of insurance and
expense charges remain unchanged.
Form 5560.5
101
<PAGE> 104
MALE ISSUE AGE 25 INITIAL STATED AMOUNT: $150,000
CLASSIFICATION: NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100)
INITIAL PREMIUM: $1,002.00 STATED AMOUNT PLUS CASH VALUE
SUMMARY OF VALUES AND BENEFITS
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28 NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,002 1,052 0 150,771 0 150,722 0 150,673
2 1,002 2,157 168 151,620 22 151,474 0 151,333
3 1,002 3,317 603 152,556 304 152,257 29 151,982
4 1,002 4,535 1,464 153,588 950 153,074 495 152,619
5 1,002 5,814 2,691 154,725 1,891 153,925 1,211 153,245
6 1,002 7,156 4,034 155,978 2,868 154,812 1,915 153,859
7 1,002 8,566 5,502 157,356 3,879 155,733 2,606 154,460
8 1,002 10,047 7,106 158,870 4,924 156,688 3,281 155,045
9 1,002 11,601 8,858 160,532 6,003 157,677 3,940 155,614
10 1,002 13,233 10,681 162,355 7,025 158,699 4,490 156,164
15 1,002 22,703 23,684 174,521 13,516 164,353 7,803 158,640
20 1,002 34,789 43,680 193,680 20,761 170,761 10,434 160,434
Age 60 1,002 95,026 198,134 348,134 43,314 193,314 9,877 159,877
Age 65 1,002 127,093 318,702 468,702 50,018 200,018 6,072 156,072
Age 70 1,002 168,021 509,575 659,575 53,675 203,675
</TABLE>
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28 NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,002 1,052 0 150,739 0 150,691 0 150,643
2 1,002 2,157 108 151,560 0 151,417 0 151,280
3 1,002 3,317 515 152,468 224 152,177 0 151,909
4 1,002 4,535 1,348 153,472 848 152,972 406 152,530
5 1,002 5,814 2,544 154,578 1,766 153,800 1,105 153,139
6 1,002 7,156 3,853 155,797 2,719 154,663 1,794 153,738
7 1,002 8,566 5,282 157,136 3,704 155,558 2,467 154,321
8 1,002 10,047 6,843 158,607 4,722 156,486 3,126 154,890
9 1,002 11,601 8,547 160,221 5,772 157,446 3,767 155,441
10 1,002 13,233 10,315 161,989 6,763 158,437 4,299 155,973
15 1,002 22,703 22,932 173,769 13,056 163,893 7,510 158,347
20 1,002 34,789 42,191 192,191 19,963 169,963 9,962 159,962
Age 60 1,002 95,026 185,419 335,419 37,326 187,326 6,193 156,193
Age 65 1,002 127,093 292,818 442,818 38,075 188,075
Age 70 1,002 168,021 457,632 607,632 30,364 180,364
</TABLE>
The hypothetical gross annual investment results shown above are illustrative
only and should not be deemed a representation of past or future investment
results. Actual investment results may be more or less than those shown and will
depend on a number of factors, including allocations made by the owner among the
investment options and the actual investment results of those options. The cash
surrender value and death benefit for a policy would be different from those
shown even if the actual rates of investment averaged 0%, 6% and 12% over a
period of years but fluctuated above or below those averages for individual
contract years. No representations can be made that these hypothetical
investment rates of return can be achieved for any one year or sustained over
any period of time. This illustration assumes current cost of insurance and
expense charges remain unchanged.
Form 5560.5
102
<PAGE> 105
MALE ISSUE AGE 25 INITIAL STATED AMOUNT: $150,000
CLASSIFICATION: NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100)
INITIAL PREMIUM: $3,020.00 STATED AMOUNT PLUS CASH VALUE
SUMMARY OF VALUES AND BENEFITS
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28% NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
--------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,020 3,171 960 152,920 794 152,754 628 152,588
2 3,020 6,501 4,015 156,139 3,501 155,625 3,006 155,130
3 3,020 9,997 7,563 159,687 6,492 158,616 5,503 157,627
4 3,020 13,667 11,472 163,596 9,609 161,733 7,954 160,078
5 3,020 17,522 15,871 167,905 12,947 164,981 10,452 162,486
6 3,020 21,569 20,709 172,653 16,422 168,366 12,907 164,851
7 3,020 25,818 26,030 177,884 20,037 171,891 15,317 167,171
8 3,020 30,280 31,879 183,643 23,795 175,559 17,680 169,444
9 3,020 34,965 38,311 189,985 27,702 179,376 19,997 171,671
10 3,020 39,884 45,290 196,964 31,670 183,344 22,175 173,849
15 3,020 68,426 93,309 244,146 55,004 205,841 33,323 184,160
20 3,020 104,852 169,876 377,125 82,951 232,951 43,113 193,113
Age 60 3,020 286,406 796,714 1,067,597 200,667 350,667 60,538 210,538
Age 65 3,020 383,056 1,298,304 1,583,931 254,635 404,635 61,728 211,728
Age 70 3,020 506,409 2,101,663 2,437,929 316,411 466,411 58,807 208,807
</TABLE>
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28% NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
--------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,020 3,171 929 152,889 764 152,724 599 152,559
2 3,020 6,501 3,955 156,079 3,444 155,568 2,953 155,077
3 3,020 9,997 7,474 159,598 6,412 158,536 5,430 157,554
4 3,020 13,667 11,356 163,480 9,507 161,631 7,865 159,989
5 3,020 17,522 15,724 167,758 12,823 164,857 10,347 162,381
6 3,020 21,569 20,529 172,473 16,274 168,218 12,786 164,730
7 3,020 25,818 25,810 177,664 19,862 171,716 15,178 167,032
8 3,020 30,280 31,617 183,381 23,594 175,358 17,525 169,289
9 3,020 34,965 37,999 189,673 27,470 179,144 19,824 171,498
10 3,020 39,884 44,925 196,599 31,407 183,081 21,985 173,659
15 3,020 68,426 92,557 243,394 54,545 205,382 33,030 183,867
20 3,020 104,852 168,364 373,768 82,153 232,153 42,641 192,641
Age 60 3,020 286,406 780,194 1,045,460 194,692 344,692 56,858 206,858
Age 65 3,020 383,056 1,262,991 1,540,849 242,725 392,725 54,353 204,353
Age 70 3,020 506,409 2,026,519 2,350,762 293,186 443,186 44,572 194,572
</TABLE>
The hypothetical gross annual investment results shown above are illustrative
only and should not be deemed a representation of past or future investment
results. Actual investment results may be more or less than those shown and will
depend on a number of factors, including allocations made by the owner among the
investment options and the actual investment results of those options. The cash
surrender value and death benefit for a policy would be different from those
shown even if the actual rates of investment averaged 0%, 6% and 12% over a
period of years but fluctuated above or below those averages for individual
contract years. No representations can be made that these hypothetical
investment rates of return can be achieved for any one year or sustained over
any period of time. This illustration assumes current cost of insurance and
expense charges remain unchanged.
Form 5560.5
103
<PAGE> 106
MALE ISSUE AGE 40 INITIAL STATED AMOUNT: $250,000
CLASSIFICATION: SELECT NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100)
INITIAL PREMIUM: $2,484.00 STATED AMOUNT INCLUDES CASH VALUE
SUMMARY OF VALUES AND BENEFITS
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28% NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
------ ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,484 2,608 219 250,000 88 250,000 0 250,000
2 2,484 5,347 1,394 250,000 995 250,000 611 250,000
3 2,484 8,222 2,800 250,000 1,975 250,000 1,214 250,000
4 2,484 11,242 4,459 250,000 3,032 250,000 1,767 250,000
5 2,484 14,412 7,058 250,000 4,828 250,000 2,930 250,000
6 2,484 17,741 10,675 250,000 7,417 250,000 4,753 250,000
7 2,484 21,236 14,616 250,000 10,077 250,000 6,515 250,000
8 2,484 24,906 18,908 250,000 12,803 250,000 8,207 250,000
9 2,484 28,759 23,618 250,000 15,630 250,000 9,861 250,000
10 2,484 32,806 28,610 250,000 18,379 250,000 11,295 250,000
15 2,484 56,281 65,065 250,000 36,514 250,000 20,571 250,000
20 2,484 86,243 121,985 250,000 56,859 250,000 27,851 250,000
Age 60 2,484 86,243 121,985 250,000 56,859 250,000 27,851 250,000
Age 65 2,484 124,482 210,451 256,750 76,339 250,000 29,381 250,000
Age 70 2,484 173,286 354,775 411,539 97,581 250,000 26,608 250,000
</TABLE>
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28% NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,484 2,608 0 250,000 0 250,000 0 250,000
2 2,484 5,347 847 250,000 478 250,000 124 250,000
3 2,484 8,222 1,901 250,000 1,149 250,000 457 250,000
4 2,484 11,242 3,142 250,000 1,854 250,000 715 250,000
5 2,484 14,412 5,255 250,000 3,257 250,000 1,563 250,000
6 2,484 17,741 8,319 250,000 5,419 250,000 3,060 250,000
7 2,484 21,236 11,625 250,000 7,608 250,000 4,473 250,000
8 2,484 24,906 15,196 250,000 9,821 250,000 5,800 250,000
9 2,484 28,759 19,057 250,000 12,056 250,000 7,038 250,000
10 2,484 32,806 23,082 250,000 14,155 250,000 8,030 250,000
15 2,484 56,281 52,030 250,000 27,580 250,000 14,216 250,000
20 2,484 86,243 94,490 250,000 39,484 250,000 16,117 250,000
Age 60 2,484 86,243 94,490 250,000 39,484 250,000 16,117 250,000
Age 65 2,484 124,482 157,125 250,000 44,114 250,000 8,194 250,000
Age 70 2,484 173,286 262,387 304,369 37,901 250,000
</TABLE>
The hypothetical gross annual investment results shown above are illustrative
only and should not be deemed a representation of past or future investment
results. Actual investment results may be more or less than those shown and will
depend on a number of factors, including allocations made by the owner among the
investment options and the actual investment results of those options. The cash
surrender value and death benefit for a policy would be different from those
shown even if the actual rates of investment averaged 0%, 6% and 12% over a
period of years but fluctuated above or below those averages for individual
contract years. No representations can be made that these hypothetical
investment rates of return can be achieved for any one year or sustained over
any period of time. This illustration assumes current cost of insurance and
expense charges remain unchanged.
Form 5560.5
104
<PAGE> 107
MALE ISSUE AGE 40 INITIAL STATED AMOUNT: $250,000
CLASSIFICATION: SELECT NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100)
INITIAL PREMIUM: $3,750.00 STATED AMOUNT INCLUDES CASH VALUE
SUMMARY OF VALUES AND BENEFITS
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28% NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,750 3,938 937 250,000 732 250,000 528 250,000
2 3,750 8,072 2,969 250,000 2,338 250,000 1,732 250,000
3 3,750 12,413 5,387 250,000 4,076 250,000 2,866 250,000
4 3,750 16,971 10,033 250,000 7,755 250,000 5,735 250,000
5 3,750 21,757 15,367 250,000 11,797 250,000 8,754 250,000
6 3,750 26,783 21,201 250,000 15,971 250,000 11,688 250,000
7 3,750 32,059 27,591 250,000 20,287 250,000 14,544 250,000
8 3,750 37,600 34,591 250,000 24,744 250,000 17,314 250,000
9 3,750 43,417 42,293 250,000 29,380 250,000 20,029 250,000
10 3,750 49,525 50,594 250,000 34,022 250,000 22,511 250,000
15 3,750 84,966 109,801 250,000 63,117 250,000 36,898 250,000
20 3,750 130,197 204,779 274,403 97,408 250,000 49,054 250,000
Age 60 3,750 130,197 204,779 274,403 97,408 250,000 49,054 250,000
Age 65 3,750 187,925 354,222 432,150 135,092 250,000 55,428 250,000
Age 70 3,750 261,603 594,677 689,826 181,070 250,000 57,803 250,000
</TABLE>
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28% NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,750 3,938 688 250,000 491 250,000 294 250,000
2 3,750 8,072 2,426 250,000 1,825 250,000 1,249 250,000
3 3,750 12,413 4,498 250,000 3,259 250,000 2,117 250,000
4 3,750 16,971 8,735 250,000 6,593 250,000 4,696 250,000
5 3,750 21,757 13,597 250,000 10,253 250,000 7,409 250,000
6 3,750 26,783 18,897 250,000 14,014 250,000 10,026 250,000
7 3,750 32,059 24,678 250,000 17,876 250,000 12,546 250,000
8 3,750 37,600 30,992 250,000 21,843 250,000 14,966 250,000
9 3,750 43,417 37,893 250,000 25,917 250,000 17,284 250,000
10 3,750 49,525 45,290 250,000 29,947 250,000 19,345 250,000
15 3,750 84,966 97,770 250,000 54,735 250,000 30,849 250,000
20 3,750 130,197 181,156 250,000 81,743 250,000 38,112 250,000
Age 60 3,750 130,197 181,156 250,000 81,743 250,000 38,112 250,000
Age 65 3,750 187,925 312,709 381,505 107,671 250,000 36,097 250,000
Age 70 3,750 261,603 520,918 604,265 134,549 250,000 22,796 250,000
</TABLE>
The hypothetical gross annual investment results shown above are illustrative
only and should not be deemed a representation of past or future investment
results. Actual investment results may be more or less than those shown and will
depend on a number of factors, including allocations made by the owner among the
investment options and the actual investment results of those options. The cash
surrender value and death benefit for a policy would be different from those
shown even if the actual rates of investment averaged 0%, 6% and 12% over a
period of years but fluctuated above or below those averages for individual
contract years. No representations can be made that these hypothetical
investment rates of return can be achieved for any one year or sustained over
any period of time. This illustration assumes current cost of insurance and
expense charges remain unchanged.
Form 5560.5
105
<PAGE> 108
MALE ISSUE AGE 40 INITIAL STATED AMOUNT: $250,000
CLASSIFICATION: SELECT NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100)
INITIAL PREMIUM: $2,484.00 STATED AMOUNT PLUS CASH VALUE
SUMMARY OF VALUES AND BENEFITS
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28% NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,484 2,608 216 252,208 85 252,077 0 251,947
2 2,484 5,347 1,384 254,618 985 254,219 602 253,836
3 2,484 8,222 2,777 257,253 1,955 256,431 1,196 255,672
4 2,484 11,242 4,418 260,136 2,997 258,715 1,738 257,456
5 2,484 14,412 6,989 263,287 4,772 261,070 2,885 259,183
6 2,484 17,741 10,568 266,715 7,333 263,481 4,689 260,837
7 2,484 21,236 14,456 270,454 9,957 265,955 6,426 262,424
8 2,484 24,906 18,677 274,524 12,637 268,485 8,089 263,936
9 2,484 28,759 23,297 278,995 15,408 271,106 9,709 265,406
10 2,484 32,806 28,172 283,869 18,089 273,786 11,103 266,801
15 2,484 56,281 63,402 316,252 35,619 288,469 20,087 272,937
20 2,484 86,243 116,682 366,682 54,564 304,564 26,836 276,836
Age 60 2,484 86,243 116,682 366,682 54,564 304,564 26,836 276,836
Age 65 2,484 124,482 194,776 444,776 70,956 320,956 27,464 277,464
Age 70 2,484 173,286 315,614 565,614 85,713 335,713 23,325 273,325
</TABLE>
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28% NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,484 2,608 0 251,956 0 251,833 0 251,710
2 2,484 5,347 830 254,064 462 253,696 110 253,344
3 2,484 8,222 1,864 256,340 1,117 255,593 429 254,905
4 2,484 11,242 3,075 258,793 1,798 257,516 669 256,387
5 2,484 14,412 5,145 261,442 3,168 259,466 1,492 257,789
6 2,484 17,741 8,148 264,295 5,287 261,434 2,958 259,106
7 2,484 21,236 11,372 267,369 7,419 263,417 4,334 260,331
8 2,484 24,906 14,833 270,681 9,562 265,409 5,616 261,464
9 2,484 28,759 18,551 274,249 11,709 267,406 6,802 262,499
10 2,484 32,806 22,392 278,089 13,701 269,398 7,732 263,430
15 2,484 56,281 49,331 302,181 26,152 279,002 13,460 266,310
20 2,484 86,243 85,608 335,608 35,802 285,802 14,589 264,589
Age 60 2,484 86,243 85,608 335,608 35,802 285,802 14,589 264,589
Age 65 2,484 124,482 130,409 380,409 35,823 285,823 5,759 255,759
Age 70 2,484 173,286 186,750 436,750 21,460 271,460
</TABLE>
The hypothetical gross annual investment results shown above are illustrative
only and should not be deemed a representation of past or future investment
results. Actual investment results may be more or less than those shown and will
depend on a number of factors, including allocations made by the owner among the
investment options and the actual investment results of those options. The cash
surrender value and death benefit for a policy would be different from those
shown even if the actual rates of investment averaged 0%, 6% and 12% over a
period of years but fluctuated above or below those averages for individual
contract years. No representations can be made that these hypothetical
investment rates of return can be achieved for any one year or sustained over
any period of time. This illustration assumes current cost of insurance and
expense charges remain unchanged.
Form 5560.5
106
<PAGE> 109
MALE ISSUE AGE 40 INITIAL STATED AMOUNT: $250,000
CLASSIFICATION: SELECT NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100)
INITIAL PREMIUM: $9,000.00 STATED AMOUNT PLUS CASH VALUE
SUMMARY OF VALUES AND BENEFITS
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28% NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 9,000 9,450 3,900 259,150 3,391 258,641 2,882 258,132
2 9,000 19,373 12,762 269,210 11,175 267,622 9,649 266,097
3 9,000 29,791 23,828 280,276 20,514 276,962 17,452 273,899
4 9,000 40,731 36,004 292,451 30,227 286,674 25,095 281,542
5 9,000 52,217 49,546 305,843 40,473 296,770 32,726 289,024
6 9,000 64,278 64,411 320,558 51,100 307,248 40,182 296,329
7 9,000 76,942 80,739 336,736 62,131 318,128 47,470 303,467
8 9,000 90,239 98,669 354,516 73,571 329,419 54,583 310,431
9 9,000 104,201 118,399 374,096 85,472 341,169 61,557 317,255
10 9,000 118,861 139,925 395,623 97,666 353,363 68,210 323,907
15 9,000 203,917 288,224 541,074 169,586 422,436 102,492 355,342
20 9,000 312,473 525,363 775,363 255,382 505,382 132,359 382,359
Age 60 9,000 312,473 525,363 775,363 255,382 505,382 132,359 382,359
Age 65 9,000 451,021 902,453 1,152,453 353,950 603,950 154,114 404,114
Age 70 9,000 627,847 1,509,574 1,759,574 469,735 719,735 169,289 419,289
</TABLE>
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN
12.00%(10.28% NET) 6.00%(4.28% NET) 0.00%(-1.72% NET)
ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
<TABLE>
<CAPTION>
PLANNED PREMIUMS CURRENT CURRENT CURRENT
-------------------- ---------------------------- ---------------------------- ----------------------------
TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR
END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 9,000 9,450 3,647 258,897 3,146 258,396 2,645 257,895
2 9,000 19,373 12,208 268,656 10,652 267,100 9,158 265,605
3 9,000 29,791 22,916 279,363 19,677 276,124 16,685 273,132
4 9,000 40,731 34,662 291,109 29,028 285,475 24,026 280,473
5 9,000 52,217 47,702 303,999 38,869 295,166 31,333 287,631
6 9,000 64,278 61,992 318,140 49,055 305,202 38,451 294,599
7 9,000 76,942 77,656 333,653 59,594 315,591 45,378 301,375
8 9,000 90,239 94,827 350,675 70,497 326,344 52,112 307,959
9 9,000 104,201 113,655 369,353 81,774 337,471 58,652 314,349
10 9,000 118,861 134,149 389,846 93,280 348,978 64,841 320,538
15 9,000 203,917 274,169 527,019 160,128 412,978 95,870 348,720
20 9,000 312,473 494,349 744,349 236,646 486,646 120,125 370,125
Age 60 9,000 312,473 494,349 744,349 236,646 486,646 120,125 370,125
Age 65 9,000 451,021 838,283 1,088,283 318,889 568,889 132,437 382,437
Age 70 9,000 627,847 1,381,324 1,631,324 405,663 655,663 131,211 381,211
</TABLE>
The hypothetical gross annual investment results shown above are illustrative
only and should not be deemed a representation of past or future investment
results. Actual investment results may be more or less than those shown and will
depend on a number of factors, including allocations made by the owner among the
investment options and the actual investment results of those options. The cash
surrender value and death benefit for a policy would be different from those
shown even if the actual rates of investment averaged 0%, 6% and 12% over a
period of years but fluctuated above or below those averages for individual
contract years. No representations can be made that these hypothetical
investment rates of return can be achieved for any one year or sustained over
any period of time. This illustration assumes current cost of insurance and
expense charges remain unchanged.
Form 5560.5
107
<PAGE> 110
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE> 111
PART II
OTHER INFORMATION
<PAGE> 112
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet
The prospectus consisting of ___ pages
Representations pursuant to Section 26(e)(2)(A) of the Investment Company
Act of 1940, were furnished in Pre-effective Amendment no. 1 to the
Registrant's Form S-6.
The signatures
Written consents of the following persons:
KPMG LLP
Jones & Blouch L.L.P.
Ronald L. Benedict, Esq.
David W. Cook, FSA, MAAA
Exhibits:
All relevant exhibits, which have previously been filed with the Commission and
are incorporated herein by reference, are as follows:
(1) Resolution of the Board of Directors of the Depositor
authorizing establishment of Ohio National Variable Account R
was filed as Exhibit 1.(1) of the Registrant's registration
statement on Form S-6 on June 7, 1985 (File no. 2-98265).
(3)(a) Principal Underwriting Agreement for Variable Life Insurance,
with compensation schedule, between the Depositor and Ohio
National Equities, Inc was filed as Exhibit (3)(a) of the
Registrant's registration statement on Form S-6 on April 27,
1998 (File no. 333-16133).
<PAGE> 113
(3)(b) Registered Representative's Sales Contract with Variable Life
Supplement was filed as Exhibit (3)(b) of the Registrant's
Form S-6, Post-effective Amendment no. 5, on April 18, 1991
(File no. 2-98265).
(3)(c) Schedule of Sales Commissions was filed as Exhibit 1.(3)(c) of
the Registrant's Form S-6 on October 15, 1986 (File no.
2-98265).
(3)(d) Variable Contract Distribution Agreements (with compensation
schedules) between the Depositor and Ohio National Equities,
Inc. were filed as Exhibit (3)(d) of Post-effective Amendment
no. 23 of Ohio National Variable Account A registration
statement on Form N-4 (File no. 2-91213).
(5) Flexible Premium Variable Life Insurance Policy, Form
96-VL-1, was filed as Exhibit (5) of the Registrant's
Form S-6 on November 14, 1996.
(6)(a) Articles of Incorporation of the Depositor were filed as
Exhibit 1.(6)(a) of the Registrant's Form S-6 on June 7, 1985
(File no. 2-98265).
(6)(b) Code of Regulations (by-laws) of the Depositor were filed as
Exhibit 1.(6)(b) of the Registrant's Form S-6 on June 7, 1985
(File no. 2-98265).
(8) Service Agreement between the Depositor and The Ohio National
Life Insurance Company was filed as Exhibit 1.(8) of the
Registrant's Form S-6 on June 7, 1985 (File no. 2-98265).
(10) Variable Life Insurance Application Supplement: Suitability
Information, was filed as Exhibit (10) of the Registrant's
Form S-6 on November 14, 1996.
(11) Memorandum describing the Depositor's purchase, transfer,
redemption and conversion procedures for the contracts was
filed as Exhibit 1.(11) of the Registrant's Form S-6 on
October 15, 1986 (File no. 2-98265).
<PAGE> 114
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant, Ohio National Variable Account R certifies that it meets
the requirements of Securities Act Rule 485(b) for effectiveness of this
registration statement and has caused this post-effective amendment to the
registration statement to be signed on its behalf in the City of Montgomery and
State of Ohio on the 25th day of September, 2000.
OHIO NATIONAL VARIABLE ACCOUNT R
(Registrant)
By OHIO NATIONAL LIFE ASSURANCE CORPORATION
(Depositor)
By /s/ John J. Palmer
------------------------------------
John J. Palmer
Executive Vice President,
Strategic Initiatives
Attest:
/s/ Ronald L. Benedict
----------------------
Ronald L. Benedict
Corporate Vice President,
Counsel and Secretary
<PAGE> 115
Pursuant to the requirements of the Securities Act of 1933, the depositor has
duly caused this post-effective amendment to its registration statement to be
signed on its behalf by the undersigned thereunto duly authorized in the City of
Montgomery and the State of Ohio on the 25th day of September, 2000.
OHIO NATIONAL LIFE ASSURANCE CORPORATION
(Depositor)
By /s/ John J. Palmer
------------------------------------
John J. Palmer
Senior Vice President, Strategic Initiatives
Attest:
/s/ Ronald L. Benedict
----------------------
Ronald L. Benedict
Corporate Vice President,
Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this post-effective
amendment to the registration statement has been signed below by the following
persons in the capacities with the depositor and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ David B. O'Maley Chairman, President
----------------------------- and Chief Executive
David B. O'Maley Officer and Director September 25, 2000
/s/ Ronald J. Dolan Executive Vice President
---------------------------- and Chief Financial Officer
Ronald J. Dolan and Director September 25, 2000
/s/ John J. Palmer Executive Vice President,
----------------------------- Strategic Initiatives
John J. Palmer and Director September 25, 2000
/s/ Stuart G. Summers Executive Vice President and
----------------------------- General Counsel and
Stuart G. Summers Director September 25, 2000
/s/ Roylene M. Broadwell Vice President & Treasurer
-----------------------------
Roylene M. Broadwell September 25, 2000
</TABLE>
<PAGE> 116
INDEX OF CONSENTS AND EXHIBITS
Page Number
Exhibit in Sequential
Number Description Numbering System
Consent of KPMG LLP
Consent of Jones & Blouch L.L.P.
Consent of Ronald L. Benedict, Esq.
Consent of David W. Cook, FSA, MAAA
<PAGE> 117
CONSENTS
<PAGE> 118
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of
Ohio National Life Assurance Corporation and
Contract Owners of
Ohio National Variable Account R:
We consent to use of our reports dated February 18, 2000 for the Ohio National
Variable Account R and January 28, 2000 for Ohio National Life Assurance
Corporation as included herein and to the reference to our firm under the
heading "Experts" herein.
Cincinnati, Ohio
September 27, 2000
KPMG, LLP
<PAGE> 119
[OHIO NATIONAL FINANCIAL SERVICES LETTERHEAD]
September 25, 2000
The Board of Directors
Ohio National Life Assurance Corporation
One Financial Way
Cincinnati, OH 45242
Re: Ohio National Variable Account R (1940 Act File No. 811-4320)
Post-Effective Amendment No. 20 to File No. 2-98265
Post-Effective Amendment No. 14 to File No. 33-53350
Post-Effective Amendment No. 6 to File No. 333-16133
Ladies and Gentlemen:
The undersigned hereby consents to the use of my name under the caption of
"Legal Opinions" in the registration statements on Form S-6 of the above
captioned registrant.
As required by paragraph (b)(4) of Rule 485 under the Securities Act of 1933,
the registrant has certified that the above captioned post-effective amendments
to the registrant's Forms S-6 meet all the requirements for effectiveness
pursuant to paragraph (b) of that Rule. Having reviewed these amendments, the
undersigned legal counsel to the registrant hereby confirms that the amendments
do not contain any material that would render any of them ineligible to become
effective pursuant to paragraph (b).
Sincerely,
/s/Ronald L. Benedict
------------------------------------
Ronald L. Benedict
Corporate Vice President, Counsel
and Secretary
RLB/nh
VARS6II
<PAGE> 120
[OHIO NATIONAL FINANCIAL SERVICES LETTERHEAD]
September 25, 2000
Ohio National Life Assurance Corporation
One Financial Way
Cincinnati, Ohio 45242
Re: Ohio National Variable Account R (1940 Act File No. 811-4320)
Post-Effective Amendment No. 20 to File No. 2-98265
Post-Effective Amendment No. 14 to File No. 33-53350
Post-Effective Amendment No. 6 to File No. 333-16133
Gentlemen:
I hereby consent to the use of my name under the heading "Experts" in the
prospectuses included in the post-effective amendments to the above-captioned
registration statements on Form S-6.
Sincerely,
/s/ David W. Cook
------------------------------
David W. Cook, FSA, MAAA
Senior Vice President and
Actuary
DWC/nh
VARS6II
<PAGE> 121
Jones & Blouch L.L.P.
Suite 405-West
1025 Thomas Jefferson St., N.W.
Washington, DC 20007
(202) 223-3500
September 25, 2000
VIA EDGAR TRANSMISSION
Board of Directors
Ohio National Life Assurance Corporation
One Financial Way
Cincinnati, OH 45201
Re: Ohio National Variable Account R
Registration Statement on Form S-6
File No. 333-16133
----------------------------------
Dear Sirs:
We hereby consent to the reference to this firm under the caption
"Legal Matters" in the prospectus contained in post-effective Amendment No. 6
to the above-referenced registration statement to be filed with the Securities
and Exchange Commission pursuant to the Securities Act of 1933.
Very truly yours,
/s/ JONES & BLOUCH L.L.P.
-------------------------
Jones & Blouch L.L.P.
