UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-03015
Ohio National Fund, Inc.
(Exact name of registrant as specified in charter)
One Financial Way, Cincinnati, Ohio | 45242 | |
(Address of principal executive offices) | (Zip code) |
CT Corporation 300 E. Lombard St. Suite 1400 Baltimore, MD 21202
(Name and address of agent for service)
Registrant’s telephone number, including area code: 513-794-6971
Date of fiscal year end: December 31
Date of reporting period: December 31, 2014
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. | Reports To Stockholders. |
OHIO NATIONAL FUND, INC.
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The following pages contain Performance, Management’s Comments, Change in Value of $10,000 Investment, Portfolio Composition, Top Holdings, and Schedule of Investments for each of the Fund’s Portfolios: | ||||
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Message |
Dear Investor:
We’ve all heard that a well-diversified portfolio is a sound investing principle. This concept is worth repeating as we look back on financial market performance in 2014.
Regardless of the events that affect global financial markets, every weeknight the news reports on the performance of the S&P 500® Index, the Dow Jones Industrial Average and the NASDAQ Composite. Although these three indices represent primarily one segment of the equities asset class, they become most viewers’ frame of reference for how the markets are doing overall. However, they do not accurately represent what is happening in the broader global markets. Consider:
¢ | The Dow Jones Industrial Average is comprised of just thirty companies, representing a relatively small number of U.S. large caps. |
¢ | While the S&P 500® Index is broader, it is designed to measure performance of the U.S. economy and is dominated by large cap stocks. |
¢ | Even broader in number with over 2,500 members, the NASDAQ Composite is also dominated by U.S. large caps. In fact, just four large U.S. companies - Apple, Microsoft, Google and Amazon - make up almost 20 percent of the index. |
What else do these three indices have in common? In 2014, they all performed well: the Dow Jones Industrial Average was up 10 percent, the S&P 500® Index was up 13.7 percent and the NASDAQ Composite was up 14.8 percent. While not the astounding 30 percent returns we saw in 2013, all three were strongly positive. In fact, U.S. large cap equities were the best performers in 2014.
Why is this good news for diversified investors? Because well-diversified portfolios tend to have substantial portions invested in U.S. large caps. However, nightly market performance reporting might give investors misguided expectations, because a well-diversified portfolio cannot perform as well as its best performing asset class. Without a fundamental understanding of what these indices represent, investors might conclude that in 2014, diversification did not work so well.
Equities - A Tale of Two Extremes
In the equity markets, it was a tale of two extremes: the US did well, and almost everywhere else did not. On an individual country basis, the only major countries that did better than the US in a local currency basis were India and China. When factoring in the effect of a strengthening U.S. dollar, most major countries had a negative return for 2014. Germany, Japan, France, the United Kingdom, Mexico and Brazil were all down 5-13 percent. Canada just barely managed a positive return after dividends, but only 1.1 percent.
As is often the case, equities diversification is even more complicated than just geographic segmentation. Even in the US, the S&P 500® Index, Dow Jones Industrial Average and NASDAQ Composite do not tell the whole equities story. Domestically, large cap and mid cap indices both did well, returning 10-14 percent. However, small cap indices were not as strong, finishing with a positive 5-6 percent return.
If what we hear on the nightly news is not the best way to gauge the global markets, what is? Fortunately, many global indices try to answer that question. One such index is the MSCI All Country World Index (ACWI), which
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captures large and mid-cap equity securities across 23 developed markets and 23 emerging markets. It has 2,470 members, covering approximately 85 percent of global investment opportunities. The US makes up the majority of this index at 52 percent, so the index’s returns are highly influenced by the domestic market. The index returned 4.7 percent in 2014, a long way from the S&P 500® Index’s 13.7 percent, but a much better indication of global equity market performance.
Fixed Income - Positive but Mixed Performance
Any well-diversified portfolio includes fixed income. How did this market segment perform? At a high level, fixed income performed well, as interest rates fell during the year. However, fixed income suffered from some of the same issues as equities, and performance varied by segment:
¢ | The Bloomberg USD Investment Grade Composite Bond Index, which effectively represents the U.S. large cap fixed income market, returned 6.7 percent. |
¢ | The Bloomberg Global Investment Grade Corporate Bond Index, which suffered from some of the same currency and performance issues as global equities, returned 2.3 percent. |
¢ | The Bloomberg Global High Yield Corporate Bond Index, taking into account the issues in the global, small cap and currencies markets, returned a negative 0.3 percent. |
While it was hard to lose in fixed income, some segments performed stronger than others.
Commodities also add diversification to a portfolio. But how did allocating to commodities work out in 2014? We all know what happened to the price of gas at the pump last year, as the national average fell 30 percent. While good for the consumer, this was not so good for the commodity investor. The S&P GSCI® Commodity Index was down 33 percent in 2014. While adding diversification, commodities did not help performance.
Does this lead us to conclude that diversification did not work well in 2014? Is it time to abandon diversification as
an investment strategy? The answer is absolutely not. Why? The differences in returns, both among asset classes and within the same asset class, that we saw in 2014 reinforce the importance of having a well-diversified portfolio. There is always a best performer, but it is impossible to predict with any certainty which one will come out on top. It is also well documented that an investment strategy of investing in last year’s winners is likely to end poorly because last year’s winners often become this year’s losers. A prudent investment strategy continues to be a well-diversified portfolio, as well as a good understanding and realistic expectation of market performance.
The Ohio National Fund, Inc.
While there are always portfolios that could have performed better, in whole, the Ohio National Fund, Inc. Portfolios performed well. Both index funds tracked their indices very closely. Each of the two fixed income funds either beat its benchmark or was in the top half of its peer group (or did both). In addition, ten of the sixteen equity funds either beat their respective benchmark or placed in the top half of their respective peer group. This is good performance in a year in which many active fund managers struggled to beat their benchmarks.
Looking Ahead
While impossible to forecast where the market is going, it’s important to stay diversified, rebalance periodically and consult with your financial advisor to make sure your assets are positioned appropriately.
Thank you for entrusting your assets to the Ohio National Fund, Inc. We look forward to continuing to serve your investment needs.
Sincerely,
Christopher A. Carlson
President
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Directors and Officers of Ohio National Fund, Inc.
John J. Palmer, Director
Madeleine W. Ludlow, Director
George M. Vredeveld, Director
John I. Von Lehman, Director
Christopher A. Carlson, President
Thomas A. Barefield, Vice President
R. Todd Brockman, Treasurer
Kimberly A. Plante, Secretary
Julie T. Thomas, Chief Compliance Officer
Catherine E. Gehr, Assistant Treasurer
Emily Bae, Assistant Secretary
The Statement of Additional Information of Ohio National Fund, Inc. (the “Fund”) includes additional information about the Fund’s Board of Directors (the “Board”) and is available at http://www.ohionationalfund.com or upon request, without charge, by calling 877-781-6392 (toll-free).
A description of the policies and procedures that the Fund uses in voting proxies relating to Fund securities, as well as information regarding how the Fund voted proxies during the most recent twelve-month period ended June 30, is available without charge, upon request, by calling 877-781-6392 (toll-free) and on the Securities and Exchange Commission (the “Commission”) website at http://www.sec.gov.
The Fund has filed its Schedules of Investments as of March 31 and September 30 with the Commission, as required, on Form N-Q. Form N-Q is required to be filed with the Commission for the first and third quarters of each fiscal year within sixty days after the end of each period and is available on the Commission website upon acceptance of each submission. The Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information about the Public Reference Room is available by calling 1-800-SEC-0330 (toll-free).
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus of Ohio National Fund, Inc. For a prospectus containing more complete information, including charges and expenses, please contact Ohio National Investments, Inc., One Financial Way, Cincinnati, OH 45242, telephone 877-781-6392 (toll-free).
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Ohio National Fund, Inc. | Equity Portfolio |
Objective/Strategy
The Equity Portfolio seeks long-term growth of capital by investing at least 80% of its assets in equity securities.
Performance as of December 31, 2014
Average Annual Returns | ||||
One year | 14.07% | |||
Five years | 13.63% | |||
Ten years | 2.41% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Equity Portfolio returned 14.07% versus 13.69% for the current benchmark, the S&P 500 Index.
Relative portfolio performance was driven by positive security selection effects and sector allocation effects, partially offset by the interaction of sector allocation and security selection. An overweight position in Health Care and an underweight in Telecommunication Services generated the largest contributions to allocation effects, as the former outperformed the index while the latter lagged. Meanwhile, an overweight in Energy detracted from relative performance, as the sector lagged the benchmark. United Continental Holdings, Inc., Apple, Inc., Amgen, Inc., Broadcom Corp., and Microsoft Corp. were the largest contributors to performance, while the largest detractors included Genworth Financial, Inc., Apache Corp., Amazon.com, Inc., Coach, Inc., and Southwestern Energy Co. (1)
Stocks advanced, Treasury yields dropped and commodity prices tumbled during the year in which the market focused on corporate performance, the Federal Reserve’s reaction to improving economic reports, merger and acquisition (“M&A”) activity and escalating geopolitical tensions. Each major equity index posted double-digit returns, with the S&P 500 Index and Nasdaq Composite Index gaining 13.7% and 14.8%, respectively, followed by the Dow Jones Industrial Average, which added 10.0%. Within the S&P 500 Index, the Energy sector lost 7.8% and was the only group in the red, while Health Care, Utilities and Information Technology led the advancing sectors with gains between 20% and 30%.
U.S. Gross Domestic Product (“GDP”) contracted at an annualized rate of 2.9% in the first quarter, largely due to harsh weather conditions; the first economic contraction since 2011 and the worst decline in five years. However, the economy rebounded, with GDP expanding at annualized rates of 4.6% and 5.0% in the second and third quarters, respectively, for the strongest back-to-back quarters since 2003. Meanwhile, U.S. employers added more than 200,000 non-farm jobs in each month other than January, and November’s 321,000 jobs added was the strongest labor report in three years. The unemployment rate also slid from 6.7% to 5.6%.
The Federal Reserve predictably reduced bond purchases by $10 billion each month during the year and closed out the quantitative easing program in October. During the Federal Reserve’s March meeting, Chair Janet Yellen declared that raising target rates will no longer be dependent on an unemployment threshold, but rather on a “wide range of information” predominantly linked to driving inflation above the target of 2%. Throughout the year, the committee maintained a “considerable time” stance in regards to low interest rates despite rampant speculation by investors and strategists.
U.S. corporations, in aggregate, posted impressive earnings reports throughout the year, with the majority topping Street expectations. Additionally, several retailers announced incrementally positive outlooks for the holiday season, indicating that lower gas prices could be providing a tailwind for consumer spending. Meanwhile, the market saw a plethora of M&A activity, as management teams took advantage of low borrowing rates and sought foreign targets to invert tax obligations.
Overseas, violent protests in Ukraine led to the ouster of President Viktor Yanukovych, followed by Crimean voters electing to secede from Ukraine in a snap referendum in hopes of joining the Russian Federation. Russian President Vladimir Putin officially approved this annexation in the face of denunciations from U.S. President Barack Obama and European heads of state. Separatist leaders pushed for similar referendums in Eastern Ukraine while pro-Russian militants began taking control of Ukrainian cities along the Russian border. The situation in Eastern Europe remains volatile despite attempts for a ceasefire between the Ukrainian government and rebel forces. The peak of the violence arrived in mid-July, when a Malaysia Airlines commercial plane was shot down near the Ukraine-Russia border.
Meanwhile, WTI oil prices climbed above $100 per barrel during June, as the Sunni militant group Islamic State in Iraq and Syria (“ISIS”) started an insurgency against the predominantly Shia Iraqi government, capturing several cities in northern Iraq. However, crude futures plummeted on supply concerns throughout the final months of the year, approaching $50 per barrel, the lowest level since 2008. Both the Organization of Petroleum Exporting Countries (“OPEC”) and the International Energy Agency (“IEA”) cut demand forecasts for 2015, while OPEC members refused to cut production to ease the global glut. Saudi Arabia also cut the price to its U.S. oil customers, reinforcing its plan to maintain market share rather than support prices.
Genworth Financial, Inc. detracted during the year due to worse-than-expected results for the second and third quarters. Shares fell sharply after each release indicated disappointing results in its long-term care business. The company also reported a larger-than-expected charge in the long-term care unit, and increased its estimate of capital shortfall in the private mortgage business. While recent results reduce the likelihood of a turnaround at Genworth Financial, Inc., our analysis suggests that the market is overly discounting the erosion of business fundamentals and the possibility of a dilutive capital raise at current levels. Genworth Financial, Inc.’s challenges are real, but we believe the stock offers attractive risk-adjusted return potential for patient investors with a long-term horizon, as management avoids a capital raise and fixes its businesses.(1)
Apache Corp. detracted from returns, as Energy stocks, particularly exploration and production stocks, suffered due to severe declines in commodity prices in the final months of the year. While conditions are certainly volatile, with current oil prices below $50 per barrel, we see upside in certain drilling companies that are redeploying
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Ohio National Fund, Inc. | Equity Portfolio (Continued) |
capital from uneconomic operations towards basins with the highest returns. Apache Corp. has been divesting lower-return assets over the past few years in order to focus on onshore U.S. shale plays, and the recent oil selloff has only furthered this strategy. By focusing on only their highest-return shale plays, we believe they can generate more cash than the pessimistic expectations the market is currently embedding. Additionally, Apache Corp. is an investment grade company with a net debt to capital ratio of 24%, below the peer median of 28%. Thus, the company should weather the downturn better than its lower-quality peers due to its higher level of availability to capital markets. (1)
We entered into a position in Coach, Inc., as the stock came under pressure after reporting several quarters of disappointing same-store sales. We believed the issues to be company-specific and, therefore, fixable. However, Coach, Inc. reported disappointing same-store sales several quarters in a row, and management indicated the trend will continue for some time, as the company will execute a costly and lengthy turnaround plan. It became clear that the issue with Coach, Inc. was more than a product miss and more a problem of changing competitive landscape. Given that the potential for a turnaround is several years away, as well as the risks involved in the execution of the turnaround plan, our updated estimate of the company’s intrinsic business value and the stock’s downside risk yielded an unfavorable return profile. As a result, we sold out of the name and reinvested the proceeds into stocks with the potential for attractive risk-adjusted returns.(1)
United Continental Holdings, Inc. was among the top contributors in the Portfolio over the year, largely due to the sharp decline in crude oil prices. Fuel accounts for anywhere between one third and one half of airlines’ operating costs. The 32% decline in the price of jet fuel during the second half of the year, along with steady ticket prices, helped boost airline stocks during the period. We see greater upside in the stock, as management implements several initiatives to improve margins and the overall industry becomes more disciplined on capacity management.(1)
Apple, Inc. was among the top contributors in the Portfolio during the year thanks to strong quarterly earnings results and continued return of capital to shareholders. Management increased the stock-repurchase authorization by $30 billion, increased the quarterly dividend by 8% and executed a seven-for-one stock split. The company also hosted a major product launch in September, unveiling two larger-screen iPhones, a smart watch, and a new payment system that allows users to make store and online purchases with the new iPhones. Trading above fourteen times fiscal 2015 earnings per share, Apple, Inc. shares trade at a small discount to the market’s calendar year 2014 multiple. At such valuation, the market is increasingly embedding the success of the current new product cycle, as well as sustainability of its high profitability levels. As a result, we see much more balanced upside-downside potential and have used the stock’s strong performance to trim our position.(1)
Broadcom Corp. shares spiked nearly 20% this summer after the company announced plans to exit its unprofitable cellular baseband business. In our initial analysis of the stock, we incorporated this potential outcome in our valuation, and we were pleased to see management improving its approach to capital allocation. The baseband exit removes a significant overhang, and has allowed management to focus on its stronger businesses. The company has already posted higher margins in the quarters following the announcement, and management has committed to returning cash to shareholders. Despite the strong price appreciation, our sum-of-the-parts analysis shows that the company’s remaining wireless
connectivity, infrastructure and broadband businesses are still undervalued.(1)
Our preferred method of equity valuations is to measure the Equity Risk Premium (“ERP”), as calculated by Professor Aswath Damodaran, a valuation expert at NYU. As of January, the ERP was a historically elevated 5.8%, suggesting a potential U.S. equity return of just under 8%, which we calculate by adding the ERP to the 10-Year Treasury yield, or risk-free-rate (“RFR”), of 2%. This suggests a return modestly below the illusive long-term average return, which seems reasonable to us given that U.S. equity valuation levels are ok, but not great. Our biggest concern is that the RFR could reverse and start climbing. This increase in the RFR could easily overwhelm any compression in the ERP to more normal levels.
Gauging the probability of a recession is difficult, but we still think this is an elongated economic cycle, and the probability of a U.S. recession in 2015 is less than 20%. In aggregate, lower energy prices and lower interest rates should actually support a continued U.S. economic expansion, especially coupled with the ongoing recovery in labor markets. Fortunately, we continue to find attractive valuation opportunities at the sector and stock level. In particular, we are finding long-term return asymmetries in Financials, legacy Information Technology, and increasingly in Energy. We are also slowly lowering our Health Care exposure, which we added to meaningfully when valuations were extremely depressed four years ago.
The reality, however, is that as equity valuations have moved up, our jobs have gotten harder, as stock prices reflect cash flows and returns on capital well beyond 2015. One of the biggest challenges for all investors is timing and, as valuation investors, we tend to buy laggards and sell winners too early. This could clearly be the case in Energy and Health Care. One of our colleagues recently published a paper that systematically looks at long-term winner and laggard industries for signs of mean reversion. The paper suggests there are opportunities within the Energy sector, but we will move at a measured pace and allow our investment process to fully vet these opportunities and judiciously provide liquidity as stocks are sold below business value.
Outside of the recent pain in Energy, not much is as out of favor as active management. Our differentiated and disciplined valuation-driven investment process has allowed us to weather the current challenges for active management fairly well, and we are actually encouraged by the rush to passive management. As more money goes passive it should create long-term valuation opportunities for liquidity providers like us, as passive management is always a liquidity taker. We continue to think that there could be big dislocations in liquidity, especially if rates reverse course, and we will carefully value opportunities to provide liquidity to major dislocations between price and value. As Heraclitus realized over 2,500 years ago: “All things change.” Fortunately, change always provides opportunities for disciplined valuation managers.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
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Ohio National Fund, Inc. | Equity Portfolio (Continued) |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The S&P 500 Index is a capitalization-weighted index designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index presented herein includes the effects of reinvested dividends.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 98.7 | |||
Money Market Funds | 1.3 | |||
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100.0 | ||||
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Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Citigroup, Inc. | 4.1 | |||
2. Microsoft Corp. | 4.0 | |||
3. Cisco Systems, Inc. | 3.0 | |||
4. JPMorgan Chase & Co. | 2.9 | |||
5. EMC Corp. | 2.9 | |||
6. UnitedHealth Group, Inc. | 2.9 | |||
7. Medtronic, Inc. | �� | 2.9 | ||
8. Amgen, Inc. | 2.9 | |||
9. Yahoo!, Inc. | 2.8 | |||
10. Wells Fargo & Co. | 2.7 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Financials | 22.2 | |||
Information Technology | 20.4 | |||
Health Care | 14.6 | |||
Consumer Discretionary | 12.0 | |||
Energy | 10.3 | |||
Industrials | 9.3 | |||
Consumer Staples | 4.6 | |||
Utilities | 3.6 | |||
Materials | 1.7 | |||
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98.7 | ||||
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Ohio National Fund, Inc. | Equity Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 98.7% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 12.0% |
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PulteGroup, Inc. (Household Durables) | 571,887 | $ | 12,272,695 | |||||||
Amazon.com, Inc. (Internet & Catalog Retail) | (a) | 36,610 | 11,361,913 | |||||||
Expedia, Inc. (Internet & Catalog Retail) | 95,070 | 8,115,175 | ||||||||
Target Corp. (Multiline Retail) | 149,980 | 11,384,982 | ||||||||
Lowe’s Cos., Inc. (Specialty Retail) | 150,150 | 10,330,320 | ||||||||
Ralph Lauren Corp. (Textiles, Apparel & Luxury Goods) | 46,680 | 8,643,269 | ||||||||
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62,108,354 | ||||||||||
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CONSUMER STAPLES – 4.6% | ||||||||||
Dr Pepper Snapple Group, Inc. (Beverages) | 122,750 | 8,798,720 | ||||||||
Keurig Green Mountain, Inc. (Food Products) | 47,250 | 6,255,664 | ||||||||
Colgate-Palmolive Co. (Household Products) | 129,690 | 8,973,251 | ||||||||
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24,027,635 | ||||||||||
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ENERGY – 10.3% | ||||||||||
Baker Hughes, Inc. (Energy Equip. & Svs.) | 70,760 | 3,967,513 | ||||||||
Apache Corp. (Oil, Gas & Consumable Fuels) | 177,530 | 11,125,805 | ||||||||
Chevron Corp. (Oil, Gas & Consumable Fuels) | 94,750 | 10,629,055 | ||||||||
CONSOL Energy, Inc. (Oil, Gas & Consumable Fuels) | 324,970 | 10,987,236 | ||||||||
EOG Resources, Inc. (Oil, Gas & Consumable Fuels) | 95,790 | 8,819,385 | ||||||||
Phillips 66 (Oil, Gas & Consumable Fuels) | 107,180 | 7,684,806 | ||||||||
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53,213,800 | ||||||||||
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FINANCIALS – 22.2% | ||||||||||
Citigroup, Inc. (Banks) | 396,630 | 21,461,649 | ||||||||
Citizens Financial Group, Inc. (Banks) | 284,560 | 7,074,162 | ||||||||
JPMorgan Chase & Co. (Banks) | 244,190 | 15,281,410 | ||||||||
Wells Fargo & Co. (Banks) | 257,460 | 14,113,957 | ||||||||
E*TRADE Financial Corp. (Capital Markets) | (a) | 374,440 | 9,082,042 | |||||||
KKR & Co. LP (Capital Markets) | 344,830 | 8,003,504 | ||||||||
American International Group, Inc. (Insurance) | 233,720 | 13,090,657 | ||||||||
Genworth Financial, Inc. Class A (Insurance) | (a) | 955,140 | 8,118,690 | |||||||
Hartford Financial Services Group, Inc. / The (Insurance) | 227,080 | 9,466,965 | ||||||||
American Homes 4 Rent (Real Estate Investment Trusts) | 470,460 | 8,011,934 | ||||||||
Realogy Holdings Corp. (Real Estate Mgmt. & Development) | (a) | 29,980 | 1,333,810 | |||||||
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115,038,780 | ||||||||||
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HEALTH CARE – 14.6% | ||||||||||
Amgen, Inc. (Biotechnology) | 93,360 | 14,871,314 | ||||||||
Medtronic, Inc. (Health Care Equip. & Supplies) | 206,880 | 14,936,736 | ||||||||
Express Scripts Holding Co. (Health Care Providers & Svs.) | (a) | 130,650 | 11,062,136 |
Common Stocks (Continued) | Shares | Value | ||||||||
HEALTH CARE (continued) | ||||||||||
UnitedHealth Group, Inc. (Health Care Providers & Svs.) | 148,340 | $ | 14,995,691 | |||||||
Merck & Co., Inc. (Pharmaceuticals) | 215,940 | 12,263,233 | ||||||||
Perrigo Co. PLC (Pharmaceuticals) | 46,600 | 7,789,656 | ||||||||
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75,918,766 | ||||||||||
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INDUSTRIALS – 9.3% | ||||||||||
Boeing Co. / The (Aerospace & Defense) | 60,370 | 7,846,893 | ||||||||
United Continental Holdings, Inc. (Airlines) | (a) | 187,720 | 12,556,591 | |||||||
Rockwell Automation, Inc. (Electrical Equip.) | 77,070 | 8,570,184 | ||||||||
PACCAR, Inc. (Machinery) | 130,695 | 8,888,567 | ||||||||
Norfolk Southern Corp. (Road & Rail) | 94,170 | 10,321,974 | ||||||||
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48,184,209 | ||||||||||
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INFORMATION TECHNOLOGY – 20.4% | ||||||||||
Cisco Systems, Inc. (Communications Equip.) | 550,530 | 15,312,992 | ||||||||
Yahoo!, Inc. (Internet Software & Svs.) | (a) | 283,950 | 14,342,315 | |||||||
Teradata Corp. (IT Svs.) | (a) | 220,178 | 9,617,375 | |||||||
Broadcom Corp. Class A (Semiconductors & Equip.) | 259,180 | 11,230,269 | ||||||||
NXP Semiconductors NV (Semiconductors & Equip.) | (a) | 172,810 | 13,202,684 | |||||||
Microsoft Corp. (Software) | 447,430 | 20,783,124 | ||||||||
Apple, Inc. (Tech. Hardware, Storage & Periph.) | 56,945 | 6,285,589 | ||||||||
EMC Corp. (Tech. Hardware, Storage & Periph.) | 509,530 | 15,153,422 | ||||||||
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105,927,770 | ||||||||||
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MATERIALS – 1.7% | ||||||||||
LyondellBasell Industries NV Class A (Chemicals) | 111,580 | 8,858,336 | ||||||||
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| |||||||||
UTILITIES – 3.6% | ||||||||||
AES Corp. (Ind. Power & Renewable Elec.) | 415,760 | 5,725,015 | ||||||||
Calpine Corp. (Ind. Power & Renewable Elec.) | (a) | 590,610 | 13,070,199 | |||||||
|
| |||||||||
18,795,214 | ||||||||||
|
| |||||||||
Total Common Stocks (Cost $446,474,334) | $ | 512,072,864 | ||||||||
|
| |||||||||
Money Market Funds – 3.0% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds | 15,312,000 | $ | 15,312,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $15,312,000) | $ | 15,312,000 | ||||||||
|
| |||||||||
Total Investments – 101.7% (Cost $461,786,334) | (b) | $ | 527,384,864 | |||||||
Liabilities in Excess of Other Assets – (1.7)% | (8,649,448) | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 518,735,416 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Non-income producing security. |
(b) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
7 |
Ohio National Fund, Inc. | Money Market Portfolio |
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Commercial Paper (2) | 52.0 | |||
U.S. Government Agency Issues | 5.0 | |||
Money Market Funds and | 43.0 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Federated Prime Cash Obligations Fund – Institutional Class | 5.0 | |||
2. Fidelity Institutional Money Market Funds Money Market Portfolio – Class I | 5.0 | |||
3. First American Prime Obligations Fund – Class Z | 5.0 | |||
4. Johnson & Johnson | 5.0 | |||
5. U.S. Bank | 5.0 | |||
6. Prudential Funding LLC | 5.0 | |||
7. Federal Home Loan Bank | 5.0 | |||
8. Microsoft Corp. | 5.0 | |||
9. Toyota Motor Credit Corp. | 5.0 | |||
10. Exxon Mobil Corp. | 5.0 |
(1) | Composition of Portfolio subject to change. |
(2) | Sectors: |
% of Net Assets | ||||
Financials | 24.8 | |||
Energy | 9.9 | |||
Health Care | 5.0 | |||
Information Technology | 4.9 | |||
Consumer Staples | 4.9 | |||
Materials | 2.5 | |||
|
| |||
52.0 | ||||
|
|
8 |
Ohio National Fund, Inc. | Money Market Portfolio |
Schedule of Investments | December 31, 2014 |
Commercial Paper – 52.0% | (b) Rate | Maturity | Face Amount | Amortized Cost | ||||||||||||
CONSUMER STAPLES – 4.9% | ||||||||||||||||
Coca-Cola Co. / The (Beverages) | (a) | 0.090% | 02/06/2015 | $ | 10,000,000 | $ | 9,999,100 | |||||||||
|
| |||||||||||||||
ENERGY – 9.9% | ||||||||||||||||
Chevron Corp. (Oil, Gas & Consumable Fuels) | (a) | 0.090% | 01/08/2015 | 5,000,000 | 4,999,913 | |||||||||||
Chevron Corp. (Oil, Gas & Consumable Fuels) | (a) | 0.080% | 01/27/2015 | 5,000,000 | 4,999,711 | |||||||||||
Exxon Mobil Corp. (Oil, Gas & Consumable Fuels) | 0.120% | 01/06/2015 | 10,000,000 | 9,999,833 | ||||||||||||
|
| |||||||||||||||
19,999,457 | ||||||||||||||||
|
| |||||||||||||||
FINANCIALS – 24.8% | ||||||||||||||||
U.S. Bank (Commercial Banks) | 0.050% | 01/02/2015 | 10,000,000 | 9,999,986 | ||||||||||||
American Honda Finance Corp. (Consumer Finance) | 0.130% | 01/21/2015 | 10,000,000 | 9,999,278 | ||||||||||||
John Deere Capital Corp. (Consumer Finance) | (a) | 0.100% | 01/14/2015 | 10,000,000 | 9,999,639 | |||||||||||
Toyota Motor Credit Corp. (Consumer Finance) | 0.080% | 01/07/2015 | 10,000,000 | 9,999,867 | ||||||||||||
Prudential Funding LLC (Insurance) | 0.100% | 01/02/2015 | 10,000,000 | 9,999,972 | ||||||||||||
|
| |||||||||||||||
49,998,742 | ||||||||||||||||
|
| |||||||||||||||
HEALTH CARE – 5.0% | ||||||||||||||||
Johnson & Johnson (Pharmaceuticals) | (a) | 0.010% | 01/02/2015 | 10,000,000 | 9,999,997 | |||||||||||
|
| |||||||||||||||
INFORMATION TECHNOLOGY – 4.9% | ||||||||||||||||
Microsoft Corp. (Software) | (a) | 0.070% | 01/05/2015 | 10,000,000 | 9,999,922 | |||||||||||
|
| |||||||||||||||
MATERIALS – 2.5% | ||||||||||||||||
Praxair, Inc. (Chemicals) | 0.070% | 01/15/2015 | 5,000,000 | 4,999,864 | ||||||||||||
|
| |||||||||||||||
Total Commercial Paper (Cost $104,997,082) | $ | 104,997,082 | ||||||||||||||
|
| |||||||||||||||
U.S. Government Agency Issues – 5.0% | Rate | Maturity | Face Amount | Amortized Cost | ||||||||||||
Federal Home Loan Bank | 0.050% | 01/05/2015 | $ | 10,000,000 | $ | 9,999,944 | ||||||||||
|
| |||||||||||||||
Total U.S. Government Agency Issues (Cost $9,999,944) | $ | 9,999,944 | ||||||||||||||
|
| |||||||||||||||
Money Market Funds – 14.8% | Shares | Value | ||||||||||||||
Federated Prime Cash Obligations Fund – Institutional Class | 10,000,000 | $ | 10,000,000 | |||||||||||||
Fidelity Institutional Money Market Funds Money Market Portfolio – Class I | 10,000,000 | 10,000,000 | ||||||||||||||
First American Prime Obligations Fund – Class Z | 10,000,000 | 10,000,000 | ||||||||||||||
|
| |||||||||||||||
Total Money Market Funds (Cost $30,000,000) | $ | 30,000,000 | ||||||||||||||
|
| |||||||||||||||
Total Investments – 71.8% (Cost $144,997,026) | (c) | $ | 144,997,026 | |||||||||||||
Other Assets in Excess of Liabilities – 28.2% | 57,015,661 | |||||||||||||||
|
| |||||||||||||||
Net Assets – 100.0% | $ | 202,012,687 | ||||||||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Security exempt from registration under Section 4 (2) of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified buyers under Rule 144A. At December 31, 2014, the value of these securities totaled $49,998,282, or 24.8% of the Portfolio’s net assets. These securities were deemed liquid pursuant to procedures approved by the Board of Directors. |
(b) | Rate presented is the effective yield at the time of purchase. |
(c) | Represents cost for federal income tax and financial reporting purposes. See also Note 2 regarding the use of amortized cost for valuation of instruments in this Portfolio. |
The accompanying notes are an integral part of these financial statements.
9 |
Ohio National Fund, Inc. | Bond Portfolio |
Objective/Strategy
The Bond Portfolio seeks to obtain a high level of income and opportunity for capital appreciation consistent with the preservation of capital by investing primarily in intermediate-term and long-term fixed income securities.
Performance as of December 31, 2014
Average Annual Returns | ||||
One year | 5.89% | |||
Five years | 5.02% | |||
Ten years | 4.05% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Bond Portfolio returned 5.89% versus 7.51% for the current benchmark, the BofA Merrill Lynch U.S. Corporate Master Index (the “Index”).
Both the Portfolio and the Index had positive returns for the year because U.S. Treasury yields declined across much of the maturity spectrum. For the year, the 10-year Treasury yield declined by 86 basis points and the 30-year Treasury declined 122 basis points. Treasury yields declined because of a weak U.S. economy early in the year, and because of demand for U.S. Treasury securities from foreign investors concerned about economic weakness in China and Europe. The positive impact on bond prices from declining Treasury yields was offset to some degree by widening credit spreads. For the year, the credit spread of the Index widened by 16 basis points, with the widening occurring late in the year. Credit spreads widened, primarily because of weakness in energy-related industries as a result of the collapse in oil prices, and, to a lesser extent, shareholder-friendly actions taken by companies which increased leverage marginally.(1)
The Portfolio under-performed the Index by 162 basis points in 2014, primarily because the duration of the Portfolio was shorter than the Index during a year in which longer maturity Treasury yields declined. Having a shorter duration resulted in less bond price appreciation than the Index as Treasury yields declined. The Portfolio started the year with a duration that was approximately 1.2 years shorter than the Index. Later in the year, longer maturity bonds were purchased that lengthened the Portfolio’s duration, and the Portfolio finished the year with a duration that was approximately 0.5 years shorter than the Index. The expense ratio of the Portfolio also negatively impacted relative performance. For the year, the expense ratio of the Portfolio was 66 basis points.(1)
Differences in industry weighting between the Portfolio and the Index had a minor impact on relative performance. The Portfolio was over-weighted in electric utilities by approximately 4% and this benefited relative performance because electric utilities outperformed during the year. The Portfolio was under-weighted in banks by approximately 9% and this hurt relative performance
because the banking sector outperformed slightly. The Portfolio was also under-weighted in the oil and gas sector by approximately 4% and this benefited relative performance because this sector was by far the worst performing sector for the year. During the first eight months of 2014, the Portfolio held an approximate 5% over-weighting in U.S. Treasury securities, which had a minor negative impact on relative performance.(1)
Because the economy of the U.S. continued to grow and there were no significant leveraging events during 2014, the credit quality of the holdings in the Portfolio was maintained. That being said, the five bonds that performed the worst were The Williams Cos., Inc., Marathon Petroleum Corp., Chesapeake Energy Corp., MarkWest Energy Partners LP, and Teck Resources Ltd. Several of these companies are in the energy sector and were hurt late in the year from the collapse in oil prices. The five best performing bonds were Time Warner Cable, Inc., The Allstate Corp., The Walt Disney Co., Public Service Electric & Gas Co., and Westar Energy, Inc. All five of these top performing bonds have long maturity dates and these securities benefited from the decline in U.S. Treasury yields.(1)
We expect the U.S. economy to continue to grow during 2015, aided by lower gas prices and very low interest rates. Lower energy prices will benefit the American consumer and most sectors of the economy except for drillers and oil industry service companies. We can also expect rising interest rates later in 2015 because the Federal Reserve will likely begin to tighten the Federal Funds rate in the second half of the year. For this reason, we intend to maintain the duration of the Portfolio short of the Index duration. Interest rates are so low now that the risk for fixed income investors is a rise in rates. Because the outlook for corporate profits continues to be good, we will plan to purchase what we consider to be solid BBB investment grade bonds. We will also add some BB high yield bonds to the Portfolio if credit spreads for these securities widen. We would rather take credit risk than interest rate risk, given the low level of interest rates.(1)
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The BofA Merrill Lynch U.S. Corporate Master Index tracks the performance of all U.S. dollar-denominated, investment grade corporate public debt issued in the U.S. domestic bond market. Qualifying bonds must have an investment grade rating (based on an average of Moody’s, S&P, and Fitch). In addition, qualifying securities must have at least one year remaining term to maturity, a fixed coupon schedule, and a minimum amount outstanding of $250 million.
10 | (continued) |
Ohio National Fund, Inc. | Bond Portfolio (Continued) |
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Corporate Bonds (3) | 96.2 | |||
Money Market Funds and | 3.8 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Fifth Third Bancorp | 1.2 | |||
2. Union Electric Co. | 1.1 | |||
3. Janus Capital Group, Inc. | 1.0 | |||
4. Prudential Financial, Inc. | 1.0 | |||
5. Kansas City Power & Light Co. | 1.0 | |||
6. CSX Corp. | 1.0 | |||
7. Bunge NA Finance LP | 1.0 | |||
8. Comerica Bank | 1.0 | |||
9. Hartford Financial Services Group, Inc. / The | 1.0 | |||
10. Commonwealth Edison Co. | 1.0 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Financials | 26.6 | |||
Utilities | 13.4 | |||
Energy | 12.5 | |||
Industrials | 11.3 | |||
Consumer Discretionary | 11.2 | |||
Health Care | 5.7 | |||
Consumer Staples | 5.6 | |||
Materials | 5.1 | |||
Information Technology | 3.3 | |||
Telecommunication Services | 1.5 | |||
|
| |||
96.2 | ||||
|
|
11 |
Ohio National Fund, Inc. | Bond Portfolio |
Schedule of Investments | December 31, 2014 |
Corporate Bonds – 96.2% | Rate | Maturity | Face Amount | Value | ||||||||||||
CONSUMER DISCRETIONARY – 11.2% |
| |||||||||||||||
Magna International, Inc. (Auto Components) | 3.625% | 06/15/2024 | $ | 1,000,000 | $ | 1,003,990 | ||||||||||
General Motors Co. (Automobiles) | 5.000% | 04/01/2035 | 900,000 | 940,131 | ||||||||||||
Darden Restaurants, Inc. (Hotels, Restaurants & Leisure) | 3.350% | 11/01/2022 | 206,000 | 191,050 | ||||||||||||
Newell Rubbermaid, Inc. (Household Durables) | 6.250% | 04/15/2018 | 500,000 | 564,252 | ||||||||||||
Mattel, Inc. (Leisure Products) | 3.150% | 03/15/2023 | 625,000 | 616,141 | ||||||||||||
Mattel, Inc. (Leisure Products) | 2.350% | 05/06/2019 | 1,000,000 | 997,485 | ||||||||||||
21st Century Fox America, Inc. (Media) | 4.500% | 02/15/2021 | 1,250,000 | 1,370,072 | ||||||||||||
Comcast Corp. (Media) | 4.250% | 01/15/2033 | 750,000 | 796,722 | ||||||||||||
Discovery Communications, LLC (Media) | 4.375% | 06/15/2021 | 1,000,000 | 1,059,295 | ||||||||||||
Discovery Communications, LLC (Media) | 3.300% | 05/15/2022 | 275,000 | 272,352 | ||||||||||||
Time Warner Cable, Inc. (Media) | 4.500% | 09/15/2042 | 425,000 | 438,620 | ||||||||||||
Time Warner, Inc. (Media) | 2.100% | 06/01/2019 | 1,400,000 | 1,380,728 | ||||||||||||
Viacom, Inc. (Media) | 4.850% | 12/15/2034 | 1,500,000 | 1,539,889 | ||||||||||||
Walt Disney Co. / The (Media) | 3.700% | 12/01/2042 | 925,000 | 913,771 | ||||||||||||
Kohl’s Corp. (Multiline Retail) | 4.000% | 11/01/2021 | 1,250,000 | 1,299,882 | ||||||||||||
Target Corp. (Multiline Retail) | 2.900% | 01/15/2022 | 1,500,000 | 1,520,145 | ||||||||||||
AutoZone, Inc. (Specialty Retail) | 3.125% | 07/15/2023 | 925,000 | 911,437 | ||||||||||||
Bed Bath & Beyond, Inc. (Specialty Retail) | 5.165% | 08/01/2044 | 900,000 | 940,938 | ||||||||||||
Lowe’s Cos., Inc. (Specialty Retail) | 3.800% | 11/15/2021 | 1,000,000 | 1,072,735 | ||||||||||||
|
| |||||||||||||||
17,829,635 | ||||||||||||||||
|
| |||||||||||||||
CONSUMER STAPLES – 5.6% | ||||||||||||||||
Anheuser-Busch Cos., LLC (Beverages) | 5.500% | 01/15/2018 | 750,000 | 834,787 | ||||||||||||
Anheuser-Busch InBev Finance, Inc. (Beverages) | 4.000% | 01/17/2043 | 750,000 | 747,414 | ||||||||||||
CVS Health Corp. (Food & Staples Retailing) | 5.750% | 06/01/2017 | 301,000 | 332,406 | ||||||||||||
CVS Health Corp. (Food & Staples Retailing) | 4.000% | 12/05/2023 | 1,000,000 | 1,060,214 | ||||||||||||
Kroger Co. / The (Food & Staples Retailing) | 2.950% | 11/01/2021 | 900,000 | 893,986 | ||||||||||||
Sysco Corp. (Food & Staples Retailing) | 4.350% | 10/02/2034 | 900,000 | 972,137 | ||||||||||||
Bunge NA Finance LP (Food Products) | 5.900% | 04/01/2017 | 1,500,000 | 1,631,871 | ||||||||||||
Tyson Foods, Inc. (Food Products) | (b) | 6.600% | 04/01/2016 | 1,000,000 | 1,066,527 | |||||||||||
Philip Morris International, Inc. (Tobacco) | 4.125% | 05/17/2021 | 1,250,000 | 1,361,200 | ||||||||||||
|
| |||||||||||||||
8,900,542 | ||||||||||||||||
|
| |||||||||||||||
ENERGY – 12.5% | ||||||||||||||||
Weatherford International Ltd. (Energy Equip. & Svs.) | 6.000% | 03/15/2018 | 1,500,000 | 1,602,429 | ||||||||||||
Anadarko Petroleum Corp. (Oil, Gas & Consumable Fuels) | 5.950% | 09/15/2016 | 1,000,000 | 1,070,089 | ||||||||||||
Buckeye Partners LP (Oil, Gas & Consumable Fuels) | 4.875% | 02/01/2021 | 1,000,000 | 1,049,524 | ||||||||||||
Chesapeake Energy Corp. (Oil, Gas & Consumable Fuels) | 4.875% | 04/15/2022 | 500,000 | 488,750 | ||||||||||||
Devon Energy Corp. (Oil, Gas & Consumable Fuels) | 3.250% | 05/15/2022 | 500,000 | 491,975 | ||||||||||||
Enterprise Products Operating LLC (Oil, Gas & Consumable Fuels) | 3.900% | 02/15/2024 | 1,000,000 | 1,020,387 | ||||||||||||
Kinder Morgan Energy Partners LP (Oil, Gas & Consumable Fuels) | 4.150% | 03/01/2022 | 1,000,000 | 1,009,279 | ||||||||||||
Kinder Morgan, Inc. (Oil, Gas & Consumable Fuels) | 5.300% | 12/01/2034 | 1,000,000 | 1,018,132 | ||||||||||||
Magellan Midstream Partners LP (Oil, Gas & Consumable Fuels) | 4.250% | 02/01/2021 | 1,000,000 | 1,080,469 | ||||||||||||
Marathon Petroleum Corp. (Oil, Gas & Consumable Fuels) | 4.750% | 09/15/2044 | 1,000,000 | 948,057 | ||||||||||||
MarkWest Energy Partners LP / MarkWest Energy Finance Corp. (Oil, Gas & Consumable Fuels) | 4.875% | 12/01/2024 | 1,000,000 | 982,500 | ||||||||||||
Murphy Oil Corp. (Oil, Gas & Consumable Fuels) | 4.000% | 06/01/2022 | 1,250,000 | 1,150,869 | ||||||||||||
Occidental Petroleum Corp. (Oil, Gas & Consumable Fuels) | 3.125% | 02/15/2022 | 1,000,000 | 989,981 | ||||||||||||
ONEOK Partners LP (Oil, Gas & Consumable Fuels) | 3.250% | 02/01/2016 | 1,000,000 | 1,020,461 | ||||||||||||
Phillips 66 (Oil, Gas & Consumable Fuels) | 4.300% | 04/01/2022 | 1,300,000 | 1,374,535 | ||||||||||||
Plains All American Pipeline LP / PAA Finance Corp. (Oil, Gas & Consumable Fuels) | 2.850% | 01/31/2023 | 1,000,000 | 947,285 | ||||||||||||
Shell International Finance BV (Oil, Gas & Consumable Fuels) | 4.375% | 03/25/2020 | 1,250,000 | 1,371,346 | ||||||||||||
TransCanada PipeLines Ltd. (Oil, Gas & Consumable Fuels) | 2.500% | 08/01/2022 | 1,425,000 | 1,344,694 | ||||||||||||
Williams Cos., Inc. / The (Oil, Gas & Consumable Fuels) | 5.750% | 06/24/2044 | 1,000,000 | 872,708 | ||||||||||||
|
| |||||||||||||||
19,833,470 | ||||||||||||||||
|
| |||||||||||||||
FINANCIALS – 26.6% | ||||||||||||||||
Bank of America Corp. (Banks) | 5.650% | 05/01/2018 | 1,000,000 | 1,111,822 | ||||||||||||
Bank of America Corp. (Banks) | 4.200% | 08/26/2024 | 500,000 | 509,966 | ||||||||||||
BB&T Corp. (Banks) | 5.200% | 12/23/2015 | 1,000,000 | 1,040,287 | ||||||||||||
Citigroup, Inc. (Banks) | 6.125% | 05/15/2018 | 1,250,000 | 1,415,799 | ||||||||||||
Comerica Bank (Banks) | 5.750% | 11/21/2016 | 1,500,000 | 1,625,518 | ||||||||||||
Fifth Third Bancorp (Banks) | 4.500% | 06/01/2018 | 1,750,000 | 1,886,643 | ||||||||||||
KeyCorp (Banks) | 5.100% | 03/24/2021 | 500,000 | 565,059 | ||||||||||||
SunTrust Banks, Inc. (Banks) | 2.500% | 05/01/2019 | 1,400,000 | 1,410,606 | ||||||||||||
Wells Fargo & Co. (Banks) | 4.650% | 11/04/2044 | 1,000,000 | 1,036,071 | ||||||||||||
Bank of New York Mellon Corp. / The (Capital Markets) | 2.200% | 05/15/2019 | 500,000 | 501,907 | ||||||||||||
Goldman Sachs Group, Inc. / The (Capital Markets) | 6.150% | 04/01/2018 | 1,250,000 | 1,403,649 | ||||||||||||
Janus Capital Group, Inc. (Capital Markets) | (b) | 6.700% | 06/15/2017 | 1,500,000 | 1,660,686 | |||||||||||
Morgan Stanley (Capital Markets) | 3.750% | 02/25/2023 | 1,250,000 | 1,284,519 | ||||||||||||
Northern Trust Corp. (Capital Markets) | 3.450% | 11/04/2020 | 1,000,000 | 1,058,964 |
12 | (continued) |
Ohio National Fund, Inc. | Bond Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
FINANCIALS (continued) | ||||||||||||||||
State Street Corp. (Capital Markets) | 4.375% | 03/07/2021 | $ | 1,250,000 | $ | 1,369,417 | ||||||||||
Ally Financial, Inc. (Consumer Finance) | 5.125% | 09/30/2024 | 1,000,000 | 1,017,500 | ||||||||||||
Capital One Financial Corp. (Consumer Finance) | 2.450% | 04/24/2019 | 925,000 | 923,818 | ||||||||||||
Discover Financial Services (Consumer Finance) | 6.450% | 06/12/2017 | 750,000 | 829,660 | ||||||||||||
Synchrony Financial (Consumer Finance) | 4.250% | 08/15/2024 | 900,000 | 924,582 | ||||||||||||
General Electric Capital Corp. (Diversified Financial Svs.) | 5.625% | 05/01/2018 | 1,000,000 | 1,125,750 | ||||||||||||
Moody’s Corp. (Diversified Financial Svs.) | 5.250% | 07/15/2044 | 1,000,000 | 1,121,761 | ||||||||||||
Aflac, Inc. (Insurance) | 3.625% | 06/15/2023 | 1,425,000 | 1,462,155 | ||||||||||||
Allstate Corp. / The (Insurance) | 5.200% | 01/15/2042 | 500,000 | 599,630 | ||||||||||||
Hartford Financial Services Group, Inc. / The (Insurance) | 5.375% | 03/15/2017 | 1,500,000 | 1,621,240 | ||||||||||||
Liberty Mutual Group, Inc. (Insurance) | (a) | 4.850% | 08/01/2044 | 1,500,000 | 1,530,727 | |||||||||||
Loews Corp. (Insurance) | 5.250% | 03/15/2016 | 750,000 | 788,448 | ||||||||||||
Marsh & McLennan Cos., Inc. (Insurance) | 3.500% | 06/03/2024 | 1,400,000 | 1,397,871 | ||||||||||||
Metropolitan Life Global Funding I (Insurance) | (a) | 2.300% | 04/10/2019 | 1,500,000 | 1,507,197 | |||||||||||
New York Life Global Funding (Insurance) | (a) | 2.150% | 06/18/2019 | 1,000,000 | 999,102 | |||||||||||
Prudential Financial, Inc. (Insurance) | 6.100% | 06/15/2017 | 1,500,000 | 1,657,337 | ||||||||||||
Boston Properties LP (Real Estate Investment Trusts) | 3.125% | 09/01/2023 | 925,000 | 904,899 | ||||||||||||
Camden Property Trust (Real Estate Investment Trusts) | 4.250% | 01/15/2024 | 500,000 | 527,021 | ||||||||||||
Equity One, Inc. (Real Estate Investment Trusts) | 6.250% | 01/15/2017 | 1,250,000 | 1,353,845 | ||||||||||||
Federal Realty Investment Trust (Real Estate Investment Trusts) | 3.000% | 08/01/2022 | 1,425,000 | 1,423,311 | ||||||||||||
HCP, Inc. (Real Estate Investment Trusts) | 5.375% | 02/01/2021 | 1,000,000 | 1,118,115 | ||||||||||||
Simon Property Group LP (Real Estate Investment Trusts) | 3.750% | 02/01/2024 | 1,475,000 | 1,552,132 | ||||||||||||
|
| |||||||||||||||
42,267,014 | ||||||||||||||||
|
| |||||||||||||||
HEALTH CARE – 5.7% | ||||||||||||||||
Amgen, Inc. (Biotechnology) | 4.100% | 06/15/2021 | 1,000,000 | 1,074,692 | ||||||||||||
Gilead Sciences, Inc. (Biotechnology) | 4.500% | 02/01/2045 | 1,400,000 | 1,502,595 | ||||||||||||
Becton Dickinson and Co. (Health Care Equip. & Supplies) | 5.000% | 05/15/2019 | 500,000 | 553,484 | ||||||||||||
AmerisourceBergen Corp. (Health Care Providers & Svs.) | 4.875% | 11/15/2019 | 500,000 | 553,513 | ||||||||||||
Express Scripts Holding Co. (Health Care Providers & Svs.) | 2.250% | 06/15/2019 | 1,400,000 | 1,386,463 | ||||||||||||
Laboratory Corp. of America Holdings (Health Care Providers & Svs.) | 3.750% | 08/23/2022 | 425,000 | 435,508 | ||||||||||||
Quest Diagnostics, Inc. (Health Care Providers & Svs.) | 2.700% | 04/01/2019 | 1,000,000 | 1,009,538 | ||||||||||||
AbbVie, Inc. (Pharmaceuticals) | 2.900% | 11/06/2022 | 1,425,000 | 1,405,391 | ||||||||||||
Merck Sharp & Dohme Corp. (Pharmaceuticals) | 5.000% | 06/30/2019 | 1,000,000 | 1,130,045 | ||||||||||||
|
| |||||||||||||||
9,051,229 | ||||||||||||||||
|
| |||||||||||||||
INDUSTRIALS – 11.3% | ||||||||||||||||
BAE Systems Holdings, Inc. (Aerospace & Defense) | (a) | 6.375% | 06/01/2019 | 750,000 | 866,736 | |||||||||||
Lockheed Martin Corp. (Aerospace & Defense) | 3.350% | 09/15/2021 | 1,000,000 | 1,037,420 | ||||||||||||
Raytheon Co. (Aerospace & Defense) | 4.400% | 02/15/2020 | 1,250,000 | 1,366,330 | ||||||||||||
FedEx Corp. (Air Freight & Logistics) | 4.900% | 01/15/2034 | 1,425,000 | 1,596,603 | ||||||||||||
Republic Services, Inc. (Commercial Svs. & Supplies) | 3.800% | 05/15/2018 | 1,000,000 | 1,058,841 | ||||||||||||
Waste Management, Inc. (Commercial Svs. & Supplies) | 6.100% | 03/15/2018 | 500,000 | 566,201 | ||||||||||||
Emerson Electric Co. (Electrical Equip.) | 4.250% | 11/15/2020 | 1,250,000 | 1,360,631 | ||||||||||||
Caterpillar, Inc. (Machinery) | 5.700% | 08/15/2016 | 1,000,000 | 1,079,481 | ||||||||||||
Deere & Co. (Machinery) | 4.375% | 10/16/2019 | 1,250,000 | 1,366,089 | ||||||||||||
Illinois Tool Works, Inc. (Machinery) | 3.375% | 09/15/2021 | 500,000 | 528,534 | ||||||||||||
Parker-Hannifin Corp. (Machinery) | 4.200% | 11/21/2034 | 1,400,000 | 1,485,057 | ||||||||||||
Burlington Northern Santa Fe, LLC (Road & Rail) | 4.550% | 09/01/2044 | 900,000 | 969,988 | ||||||||||||
CSX Corp. (Road & Rail) | 5.600% | 05/01/2017 | 1,500,000 | 1,642,415 | ||||||||||||
Norfolk Southern Corp. (Road & Rail) | 3.000% | 04/01/2022 | 600,000 | 603,433 | ||||||||||||
Ryder System, Inc. (Road & Rail) | 3.600% | 03/01/2016 | 1,000,000 | 1,029,750 | ||||||||||||
Union Pacific Corp. (Road & Rail) | 4.000% | 02/01/2021 | 1,250,000 | 1,372,780 | ||||||||||||
|
| |||||||||||||||
17,930,289 | ||||||||||||||||
|
| |||||||||||||||
INFORMATION TECHNOLOGY – 3.3% | ||||||||||||||||
Computer Sciences Corp. (IT Svs.) | 6.500% | 03/15/2018 | 1,000,000 | 1,118,627 | ||||||||||||
Intel Corp. (Semiconductors & Equip.) | 4.000% | 12/15/2032 | 1,500,000 | 1,538,630 | ||||||||||||
KLA-Tencor Corp. (Semiconductors & Equip.) | 3.375% | 11/01/2019 | 900,000 | 917,947 | ||||||||||||
Oracle Corp. (Software) | 4.300% | 07/08/2034 | 1,500,000 | 1,609,179 | ||||||||||||
|
| |||||||||||||||
5,184,383 | ||||||||||||||||
|
| |||||||||||||||
MATERIALS – 5.1% | ||||||||||||||||
Dow Chemical Co. / The (Chemicals) | 4.250% | 10/01/2034 | 1,400,000 | 1,379,552 | ||||||||||||
Eastman Chemical Co. (Chemicals) | 3.600% | 08/15/2022 | 1,000,000 | 1,014,306 | ||||||||||||
FMC Corp. (Chemicals) | 3.950% | 02/01/2022 | 1,000,000 | 1,040,729 | ||||||||||||
Packaging Corp. of America (Containers & Packaging) | 4.500% | 11/01/2023 | 675,000 | 708,327 |
13 | (continued) |
Ohio National Fund, Inc. | Bond Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
MATERIALS (continued) | ||||||||||||||||
Alcoa, Inc. (Metals & Mining) | 5.125% | 10/01/2024 | $ | 500,000 | $ | 530,884 | ||||||||||
Freeport-McMoRan, Inc. (Metals & Mining) | 3.550% | 03/01/2022 | 1,250,000 | 1,182,491 | ||||||||||||
Newmont Mining Corp. (Metals & Mining) | 3.500% | 03/15/2022 | 1,425,000 | 1,340,396 | ||||||||||||
Teck Resources Ltd. (Metals & Mining) | 3.750% | 02/01/2023 | 1,000,000 | 897,813 | ||||||||||||
|
| |||||||||||||||
8,094,498 | ||||||||||||||||
|
| |||||||||||||||
TELECOMMUNICATION SERVICES – 1.5% | ||||||||||||||||
Verizon Communications, Inc. (Diversified Telecom. Svs.) | 4.600% | 04/01/2021 | 1,250,000 | 1,358,566 | ||||||||||||
Verizon Communications, Inc. (Diversified Telecom. Svs.) | 3.850% | 11/01/2042 | 425,000 | 380,425 | ||||||||||||
Rogers Communications, Inc. (Wireless Telecom. Svs.) | 3.000% | 03/15/2023 | 700,000 | 679,186 | ||||||||||||
|
| |||||||||||||||
2,418,177 | ||||||||||||||||
|
| |||||||||||||||
UTILITIES – 13.4% | ||||||||||||||||
Appalachian Power Co. (Electric Utilities) | 4.600% | 03/30/2021 | 1,000,000 | 1,110,790 | ||||||||||||
Commonwealth Edison Co. (Electric Utilities) | 5.950% | 08/15/2016 | 1,500,000 | 1,618,701 | ||||||||||||
DTE Electric Co. (Electric Utilities) | 3.375% | 03/01/2025 | 1,000,000 | 1,028,268 | ||||||||||||
Duke Energy Florida, Inc. (Electric Utilities) | 4.550% | 04/01/2020 | 500,000 | 550,508 | ||||||||||||
ITC Holdings Corp. (Electric Utilities) | 3.650% | 06/15/2024 | 500,000 | 508,039 | ||||||||||||
Kansas City Power & Light Co. (Electric Utilities) | 5.850% | 06/15/2017 | 1,500,000 | 1,652,903 | ||||||||||||
South Carolina Electric & Gas Co. (Electric Utilities) | 4.350% | 02/01/2042 | 1,000,000 | 1,060,855 | ||||||||||||
Tenaska Georgia Partners LP (Electric Utilities) | 9.500% | 02/01/2030 | 447,487 | 562,156 | ||||||||||||
Union Electric Co. (Electric Utilities) | 6.400% | 06/15/2017 | 1,500,000 | 1,671,213 | ||||||||||||
Virginia Electric and Power Co. (Electric Utilities) | 5.400% | 01/15/2016 | 1,500,000 | 1,572,282 | ||||||||||||
Westar Energy, Inc. (Electric Utilities) | 4.125% | 03/01/2042 | 500,000 | 524,696 | ||||||||||||
Xcel Energy, Inc. (Electric Utilities) | 4.700% | 05/15/2020 | 1,000,000 | 1,110,964 | ||||||||||||
AGL Capital Corp. (Gas Utilities) | 5.250% | 08/15/2019 | 1,000,000 | 1,119,214 | ||||||||||||
Southwest Gas Corp. (Gas Utilities) | 3.875% | 04/01/2022 | 1,250,000 | 1,315,335 | ||||||||||||
Spectra Energy Capital LLC (Gas Utilities) | 3.300% | 03/15/2023 | 1,425,000 | 1,355,964 | ||||||||||||
Avista Corp. (Multi-Utilities) | 5.950% | 06/01/2018 | 1,000,000 | 1,133,335 | ||||||||||||
LG&E and KU Energy LLC (Multi-Utilities) | 4.375% | 10/01/2021 | 1,000,000 | 1,065,943 | ||||||||||||
Public Service Electric & Gas Co. (Multi-Utilities) | 3.950% | 05/01/2042 | 750,000 | 779,327 | ||||||||||||
American Water Capital Corp. (Water Utilities) | 4.300% | 12/01/2042 | 1,400,000 | 1,429,385 | ||||||||||||
|
| |||||||||||||||
21,169,878 | ||||||||||||||||
|
| |||||||||||||||
Total Corporate Bonds (Cost $145,516,402) | $ | 152,679,115 | ||||||||||||||
|
| |||||||||||||||
Money Market Funds – 2.5% | Shares | Value | ||||||||||||||
Fidelity Institutional Money Market Funds Money Market Portfolio – Class I | 3,976,000 | $ | 3,976,000 | |||||||||||||
|
| |||||||||||||||
Total Money Market Funds (Cost $3,976,000) | $ | 3,976,000 | ||||||||||||||
|
| |||||||||||||||
Total Investments – 98.7% (Cost $149,492,402) | (c) | $ | 156,655,115 | |||||||||||||
Other Assets in Excess of Liabilities – 1.3% | 2,008,711 | |||||||||||||||
|
| |||||||||||||||
Net Assets – 100.0% | $ | 158,663,826 | ||||||||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Security exempt from registration under Regulation D of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified buyers under Rule 144A. At December 31, 2014, the value of these securities totaled $4,903,762, or 3.1% of the Portfolio’s net assets. These securities were deemed liquid pursuant to procedures approved by the Board of Directors. |
(b) | Represents bonds that are credit sensitive. The coupon rates for these bonds are subject to adjustment based on changes in national credit rating agency ratings. |
(c) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
14 |
Ohio National Fund, Inc. | Omni Portfolio |
Objective/Strategy
The Omni Portfolio seeks a high level of long-term total return consistent with preservation of capital by investing in stocks, bonds, and money market instruments.
Performance as of December 31, 2014
Average Annual returns | ||||
One year | 12.12% | |||
Five years | 12.22% | |||
Ten years | 7.99% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Omni Portfolio returned 12.12% versus 11.87% for the current benchmark, which is comprised of 70% S&P 500 Index and 30% BofA Merrill Lynch U.S. Corporate Master Index (the “Merrill Lynch Index”).
After the large run-up in stocks in 2013, many investors thought the stock market was overbought and, indeed, a correction in the stock market began in early January. The first quarter of 2014 saw the U.S. economy shrink by 2.9%, the most in five years, corporate earnings were flat, and earnings per share for the S&P 500 Index constituents were down. A leading factor among investors may have been the fear of rising interest rates in 2014. When this fear proved to be unfounded, the market shrugged off the reality of a sluggish economy and returned to its upward trend, which continued through to the end of the year. There may have been grounds for speculation that interest rates would rise in 2014 but the new Federal Reserve Chair, Janet Yellen, seemed committed to keeping rates low while inflation remained modest. Her policy was aided by large Treasury purchases by foreign investors who were seeking a safe haven from weak economies in China and Europe. The collapse in oil prices in the latter part of the year will benefit the American consumer in 2015.
The 25 basis points of outperformance for the Portfolio versus the blended benchmark is the result of the outperformance by the equity portion of the Portfolio versus the S&P 500 Index, somewhat offset by the under-performance of the bond portion of the Portfolio versus the Merrill Lynch Index. The asset allocation decision to overweight stocks and underweight bonds versus the blended benchmark benefited relative performance because stocks outperformed bonds for the year.(1)
The equity portion of the Portfolio returned 14.97% versus 13.69% for the S&P 500 Index, for an outperformance of 128 basis points. The Portfolio’s best performing stocks for the year were Pharmacyclics, Inc., Whirlpool Corp., Gilead Sciences, Inc., Hewlett-Packard Co., and Facebook, Inc. The Portfolio’s worst performing stocks were Intercept Pharmaceuticals, Inc., Whiting Petroleum Corp., Clovis Oncology, Inc., PVH Corp., and Amazon.com, Inc. The top contributors to stock performance were Pharmacyclics, Inc., Hewlett-
Packard Co., Valeant Pharmaceuticals International, Inc., Celgene Corp., and Time Warner, Inc. The top detractors from stock performance were Intercept Pharmaceuticals, Inc., Whiting Petroleum Corp., PVH Corp., Las Vegas Sands Corp., and General Motors Co.(1)
During the year, the equity portion of the Portfolio was overweight in Health Care stocks, which added 92 basis points to relative performance, and was underweight in the Energy sector, which contributed 75 basis points to performance. The absence from the Utilities sector detracted 44 basis points from performance. The overweight position in the Consumer Discretionary sector negatively impacted performance by 51 basis points and the modest overweight in the Industrials sector cost the Portfolio 32 basis points of performance. The absence from the Telecommunication Services sector benefited stock performance by 27 basis points.(1)
The bond portion of the Portfolio had a return of 6.74% versus 7.51% for the Merrill Lynch Index. Both the bond portion of the Portfolio and the Merrill Lynch Index had positive returns because longer maturity U.S. Treasury yields declined during 2014, offset to a limited extent by wider credit spreads. U.S. Treasury yields declined primarily because of demand from foreign investors. Credit spreads widened late in the year because of weakness in energy-related industries brought on by the collapse in oil prices. The bond portion of the Portfolio underperformed the Merrill Lynch Index for the year primarily because the duration of the bond portion of the Portfolio was approximately 0.8 to 1.5 years shorter than the Merrill Lynch Index, thus resulting in less bond price appreciation than the index as Treasury yields declined. The only difference in industry weighting between the Merrill Lynch Index and the bond portion of the Portfolio that impacted relative performance was the 7% under-weighting in the oil and gas sector that benefited performance because this sector performed very poorly late in the year. The average credit quality of the Portfolio’s bond portfolio was Baa1 late in the year, and this detracted from relative performance marginally because the average credit quality of the Merrill Lynch Index was A3, and bonds rated Baa did not perform as well as higher-rated bonds late in the year.(1)
Because the U.S. economy continued to grow and there were no significant leveraging events during 2014, the credit quality of the bond holdings in the Portfolio was maintained. That being said, the five bonds that performed the worst were Teck Resources Ltd., Weatherford International Ltd., Murphy Oil Corp., General Electric Capital Corp., and BB&T Corp. The five best performing bonds were Time Warner Cable, Inc., The Walt Disney Co., Westar Energy, Inc., South Carolina Electric & Gas Co., and FedEx Corp. These bonds performed very well because they have long maturity dates and benefited from the decline in U.S. Treasury yields.(1)
The prospects for stocks in 2015 look reasonably good, with lower gas prices expected to be a large windfall for the American consumer. Lower energy prices will also benefit most sectors of the U.S. economy, except for drillers and oil industry service companies. Absent an external shock, the outlook for corporate profits look good. Because of the positive outlook for stocks, we intend to remain approximately 5% over-weight in stocks versus the blended benchmark. The allocation to bonds will, therefore, be less than the weighting in the blended benchmark. Because we expect higher interest rates later in 2015, we plan to maintain the duration of the bond portion of the Portfolio shorter than that of the Merrill Lynch Index. (1)
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
15 | (continued) |
Ohio National Fund, Inc. | Omni Portfolio (Continued) |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The S&P 500 Index is a capitalization-weighted index designed to measure performance of the broad domestic market through changes in the aggregate market value of 500 stocks representing all major industries. The index presented herein includes the effects of reinvested dividends.
The BofA Merrill Lynch U.S. Corporate Master Index tracks the performance of all U.S. dollar-denominated, investment grade corporate public debt issued in the U.S. domestic bond market. Qualifying bonds must have an investment grade rating (based on an average of Moody’s, S&P, and Fitch). In addition, qualifying securities must have at least one year remaining term to maturity, a fixed coupon schedule, and a minimum amount outstanding of $250 million.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 76.1 | |||
Corporate Bonds (3) | 21.2 | |||
U.S. Treasury Obligations | 1.1 | |||
Money Market Funds and | 1.6 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Apple, Inc. | 2.4 | |||
2. Clovis Oncology, Inc. | 1.9 | |||
3. Intel Corp. | 1.9 | |||
4. Hewlett-Packard Co. | 1.8 | |||
5. Actavis PLC | 1.8 | |||
6. Microsoft Corp. | 1.8 | |||
7. Yahoo!, Inc. | 1.8 | |||
8. Adobe Systems, Inc. | 1.8 | |||
9. Celgene Corp. | 1.8 | |||
10. JPMorgan Chase & Co. | 1.8 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors (combined): |
% of Net Assets | ||||
Health Care | 23.5 | |||
Information Technology | 20.0 | |||
Financials | 19.7 | |||
Consumer Discretionary | 11.1 | |||
Industrials | 8.0 | |||
Energy | 4.8 | |||
Materials | 4.0 | |||
Utilities | 2.9 | |||
Consumer Staples | 2.9 | |||
Telecommunication Services | 0.4 | |||
|
| |||
97.3 | ||||
|
|
16 |
Ohio National Fund, Inc. | Omni Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 76.1% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 8.6% |
| |||||||||
Jarden Corp. (Household Durables) | (a) | 12,236 | $ | 585,860 | ||||||
Whirlpool Corp. (Household Durables) | 2,982 | 577,733 | ||||||||
CBS Corp. Class B (Media) | 5,435 | 300,773 | ||||||||
Comcast Corp. Class A (Media) | 9,851 | 571,457 | ||||||||
Time Warner, Inc. (Media) | 6,813 | 581,966 | ||||||||
PVH Corp. (Textiles, Apparel & Luxury Goods) | 4,523 | 579,713 | ||||||||
|
| |||||||||
3,197,502 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 1.0% |
| |||||||||
Molson Coors Brewing Co. Class B (Beverages) | 5,017 | 373,867 | ||||||||
|
| |||||||||
ENERGY – 2.8% |
| |||||||||
Anadarko Petroleum Corp. (Oil, Gas & Consumable Fuels) | 3,112 | 256,740 | ||||||||
Devon Energy Corp. (Oil, Gas & Consumable Fuels) | 7,099 | 434,530 | ||||||||
EOG Resources, Inc. (Oil, Gas & Consumable Fuels) | 3,846 | 354,101 | ||||||||
|
| |||||||||
1,045,371 | ||||||||||
|
| |||||||||
FINANCIALS – 14.3% |
| |||||||||
Bank of America Corp. (Banks) | 31,607 | 565,449 | ||||||||
Citigroup, Inc. (Banks) | 1,546 | 83,654 | ||||||||
JPMorgan Chase & Co. (Banks) | 10,433 | 652,897 | ||||||||
M&T Bank Corp. (Banks) | 4,489 | 563,908 | ||||||||
PNC Financial Services Group, Inc. / The (Banks) | 6,218 | 567,268 | ||||||||
Capital One Financial Corp. (Consumer Finance) | 6,876 | 567,614 | ||||||||
Hartford Financial Services Group, Inc. / The (Insurance) | 13,529 | 564,024 | ||||||||
Lincoln National Corp. (Insurance) | 10,436 | 601,844 | ||||||||
MetLife, Inc. (Insurance) | 10,448 | 565,132 | ||||||||
Prudential Financial, Inc. (Insurance) | 6,585 | 595,679 | ||||||||
|
| |||||||||
5,327,469 | ||||||||||
|
| |||||||||
HEALTH CARE – 21.9% |
| |||||||||
Amgen, Inc. (Biotechnology) | 2,751 | 438,207 | ||||||||
Biogen Idec, Inc. (Biotechnology) | (a) | 1,604 | 544,478 | |||||||
Celgene Corp. (Biotechnology) | (a) | 5,939 | 664,337 | |||||||
Clovis Oncology, Inc. (Biotechnology) | (a) | 12,716 | 712,096 | |||||||
Intercept Pharmaceuticals, Inc. (Biotechnology) | (a) | 2,977 | 464,412 | |||||||
Pharmacyclics, Inc. (Biotechnology) | (a) | 3,993 | 488,184 | |||||||
Medtronic, Inc. (Health Care Equip. & Supplies) | 7,837 | 565,831 | ||||||||
St. Jude Medical, Inc. (Health Care Equip. & Supplies) | 8,445 | 549,178 | ||||||||
HCA Holdings, Inc. (Health Care Providers & Svs.) | (a) | 2,100 | 154,119 | |||||||
Humana, Inc. (Health Care Providers & Svs.) | 3,983 | 572,078 | ||||||||
UnitedHealth Group, Inc. (Health Care | 5,420 | 547,908 | ||||||||
Thermo Fisher Scientific, Inc. (Life Sciences Tools & Svs.) | 4,453 | 557,916 | ||||||||
Actavis PLC (Pharmaceuticals) | (a) | 2,622 | 674,929 | |||||||
Mylan, Inc. (Pharmaceuticals) | (a) | 11,058 | 623,339 | |||||||
Valeant Pharmaceuticals International, Inc. (Pharmaceuticals) | (a) | 4,131 | 591,187 | |||||||
|
| |||||||||
8,148,199 | ||||||||||
|
| |||||||||
INDUSTRIALS – 6.3% |
| |||||||||
Raytheon Co. (Aerospace & Defense) | 5,452 | 589,743 | ||||||||
United Technologies Corp. (Aerospace & Defense) | 4,877 | 560,855 | ||||||||
FedEx Corp. (Air Freight & Logistics) | 3,428 | 595,307 | ||||||||
American Airlines Group, Inc. (Airlines) | 11,270 | 604,410 | ||||||||
|
| |||||||||
2,350,315 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 18.4% |
| |||||||||
Cisco Systems, Inc. (Communications Equip.) | 23,082 | 642,026 | ||||||||
Facebook, Inc. Class A (Internet Software & Svs.) | (a) | 7,530 | 587,491 | |||||||
Google, Inc. Class A (Internet Software & Svs.) | (a) | 569 | 301,946 | |||||||
Google, Inc. Class C (Internet Software & Svs.) | (a) | 798 | 420,067 | |||||||
Yahoo!, Inc. (Internet Software & Svs.) | (a) | 13,323 | 672,945 | |||||||
VeriFone Systems, Inc. (IT Svs.) | (a) | 255 | 9,486 | |||||||
Altera Corp. (Semiconductors & Equip.) | 16,130 | 595,842 | ||||||||
Intel Corp. (Semiconductors & Equip.) | 18,974 | 688,566 | ||||||||
Adobe Systems, Inc. (Software) | (a) | 9,174 | 666,950 | |||||||
Microsoft Corp. (Software) | 14,528 | 674,826 | ||||||||
Apple, Inc. (Tech. Hardware, Storage & Periph.) | 8,117 | 895,954 | ||||||||
Hewlett-Packard Co. (Tech. Hardware, Storage & Periph.) | 16,859 | 676,552 | ||||||||
|
| |||||||||
6,832,651 | ||||||||||
|
| |||||||||
MATERIALS – 2.8% |
| |||||||||
Huntsman Corp. (Chemicals) | 21,330 | 485,897 | ||||||||
Monsanto Co. (Chemicals) | 4,691 | 560,434 | ||||||||
|
| |||||||||
1,046,331 | ||||||||||
|
| |||||||||
Total Common Stocks (Cost $25,695,596) | $ | 28,321,705 | ||||||||
|
|
17 | (continued) |
Ohio National Fund, Inc. | Omni Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds – 21.2% | Rate | Maturity | Face Amount | Value | ||||||||||||
CONSUMER DISCRETIONARY – 2.5% | ||||||||||||||||
General Motors Co. (Automobiles) | 5.000% | 04/01/2035 | $ | 100,000 | $ | 104,459 | ||||||||||
Darden Restaurants, Inc. (Hotels, Restaurants & Leisure) | 3.350% | 11/01/2022 | 11,000 | 10,202 | ||||||||||||
Mattel, Inc. (Leisure Products) | 3.150% | 03/15/2023 | 75,000 | 73,937 | ||||||||||||
Comcast Corp. (Media) | 5.875% | 02/15/2018 | 75,000 | 84,445 | ||||||||||||
Discovery Communications, LLC (Media) | 3.300% | 05/15/2022 | 75,000 | 74,278 | ||||||||||||
Time Warner Cable, Inc. (Media) | 4.500% | 09/15/2042 | 75,000 | 77,404 | ||||||||||||
Time Warner, Inc. (Media) | 2.100% | 06/01/2019 | 100,000 | 98,623 | ||||||||||||
Viacom, Inc. (Media) | 4.250% | 09/01/2023 | 75,000 | 77,469 | ||||||||||||
Walt Disney Co. / The (Media) | 3.700% | 12/01/2042 | 75,000 | 74,090 | ||||||||||||
Kohl’s Corp. (Multiline Retail) | 4.000% | 11/01/2021 | 75,000 | 77,993 | ||||||||||||
AutoZone, Inc. (Specialty Retail) | 3.125% | 07/15/2023 | 75,000 | 73,900 | ||||||||||||
Bed Bath & Beyond, Inc. (Specialty Retail) | 5.165% | 08/01/2044 | 100,000 | 104,549 | ||||||||||||
|
| |||||||||||||||
931,349 | ||||||||||||||||
|
| |||||||||||||||
CONSUMER STAPLES – 1.9% | ||||||||||||||||
Anheuser-Busch Cos., LLC (Beverages) | 5.500% | 01/15/2018 | 150,000 | 166,958 | ||||||||||||
CVS Health Corp. (Food & Staples Retailing) | 5.750% | 06/01/2017 | 45,000 | 49,695 | ||||||||||||
Kroger Co. / The (Food & Staples Retailing) | 2.950% | 11/01/2021 | 100,000 | 99,332 | ||||||||||||
Sysco Corp. (Food & Staples Retailing) | 4.350% | 10/02/2034 | 100,000 | 108,015 | ||||||||||||
Bunge NA Finance LP (Food Products) | 5.900% | 04/01/2017 | 150,000 | 163,187 | ||||||||||||
Procter & Gamble Co. / The (Household Products) | 4.700% | 02/15/2019 | 100,000 | 111,457 | ||||||||||||
|
| |||||||||||||||
698,644 | ||||||||||||||||
|
| |||||||||||||||
ENERGY – 2.0% | ||||||||||||||||
Weatherford International Ltd. (Energy Equip. & Svs.) | 6.000% | 03/15/2018 | 150,000 | 160,243 | ||||||||||||
Anadarko Petroleum Corp. (Oil, Gas & Consumable Fuels) | 5.950% | 09/15/2016 | 100,000 | 107,009 | ||||||||||||
Boardwalk Pipelines LP (Oil, Gas & Consumable Fuels) | 5.500% | 02/01/2017 | 100,000 | 105,549 | ||||||||||||
Kinder Morgan Energy Partners LP (Oil, Gas & Consumable Fuels) | 4.150% | 03/01/2022 | 75,000 | 75,696 | ||||||||||||
Magellan Midstream Partners LP (Oil, Gas & Consumable Fuels) | 6.400% | 07/15/2018 | 150,000 | 170,226 | ||||||||||||
Murphy Oil Corp. (Oil, Gas & Consumable Fuels) | 4.000% | 06/01/2022 | 75,000 | 69,052 | ||||||||||||
TransCanada PipeLines Ltd. (Oil, Gas & Consumable Fuels) | 2.500% | 08/01/2022 | 75,000 | 70,773 | ||||||||||||
|
| |||||||||||||||
758,548 | ||||||||||||||||
|
| |||||||||||||||
FINANCIALS – 5.4% | ||||||||||||||||
Bank of America Corp. (Banks) | 5.750% | 08/15/2016 | 75,000 | 79,895 | ||||||||||||
BB&T Corp. (Banks) | 5.200% | 12/23/2015 | 100,000 | 104,029 | ||||||||||||
Citigroup, Inc. (Banks) | 5.850% | 08/02/2016 | 75,000 | 80,298 | ||||||||||||
Comerica, Inc. (Banks) | 3.800% | 07/22/2026 | 100,000 | 100,942 | ||||||||||||
JPMorgan Chase & Co. (Banks) | 3.250% | 09/23/2022 | 100,000 | 100,753 | ||||||||||||
KeyBank NA (Banks) | 5.700% | 11/01/2017 | 150,000 | 165,340 | ||||||||||||
SunTrust Banks, Inc. (Banks) | 2.500% | 05/01/2019 | 100,000 | 100,758 | ||||||||||||
Wells Fargo & Co. (Banks) | 3.500% | 03/08/2022 | 75,000 | 78,369 | ||||||||||||
Mellon Funding Corp. (Capital Markets) | 5.500% | 11/15/2018 | 100,000 | 112,746 | ||||||||||||
Morgan Stanley (Capital Markets) | 3.750% | 02/25/2023 | 75,000 | 77,071 | ||||||||||||
Northern Trust Corp. (Capital Markets) | 3.950% | 10/30/2025 | 75,000 | 78,229 | ||||||||||||
Capital One Financial Corp. (Consumer Finance) | 2.450% | 04/24/2019 | 75,000 | 74,904 | ||||||||||||
Discover Financial Services (Consumer Finance) | 6.450% | 06/12/2017 | 150,000 | 165,932 | ||||||||||||
Synchrony Financial (Consumer Finance) | 4.250% | 08/15/2024 | 100,000 | 102,731 | ||||||||||||
General Electric Capital Corp. (Diversified Financial Svs.) | 5.000% | 01/08/2016 | 100,000 | 104,230 | ||||||||||||
Aflac, Inc. (Insurance) | 3.625% | 06/15/2023 | 75,000 | 76,956 | ||||||||||||
Allstate Corp. / The (Insurance) | 3.150% | 06/15/2023 | 75,000 | 75,504 | ||||||||||||
Marsh & McLennan Cos., Inc. (Insurance) | 3.500% | 06/03/2024 | 100,000 | 99,848 | ||||||||||||
Boston Properties LP (Real Estate Investment Trusts) | 3.125% | 09/01/2023 | 75,000 | 73,370 | ||||||||||||
Federal Realty Investment Trust (Real Estate Investment Trusts) | 3.000% | 08/01/2022 | 75,000 | 74,911 | ||||||||||||
Simon Property Group LP (Real Estate Investment Trusts) | 3.750% | 02/01/2024 | 75,000 | 78,922 | ||||||||||||
|
| |||||||||||||||
2,005,738 | ||||||||||||||||
|
| |||||||||||||||
HEALTH CARE – 1.6% | ||||||||||||||||
Gilead Sciences, Inc. (Biotechnology) | 4.500% | 02/01/2045 | 100,000 | 107,328 | ||||||||||||
Anthem, Inc. (Health Care Providers & Svs.) | 5.875% | 06/15/2017 | 150,000 | 165,026 | ||||||||||||
Express Scripts Holding Co. (Health Care Providers & Svs.) | 2.250% | 06/15/2019 | 100,000 | 99,033 | ||||||||||||
Laboratory Corp. of America Holdings (Health Care Providers & Svs.) | 3.750% | 08/23/2022 | 75,000 | 76,854 | ||||||||||||
AbbVie, Inc. (Pharmaceuticals) | 2.900% | 11/06/2022 | 75,000 | 73,968 | ||||||||||||
Hospira, Inc. (Pharmaceuticals) | 6.050% | 03/30/2017 | 75,000 | 80,910 | ||||||||||||
|
| |||||||||||||||
603,119 | ||||||||||||||||
|
| |||||||||||||||
INDUSTRIALS – 1.7% | ||||||||||||||||
FedEx Corp. (Air Freight & Logistics) | 4.900% | 01/15/2034 | 75,000 | 84,032 | ||||||||||||
Waste Management, Inc. (Commercial Svs. & Supplies) | 6.100% | 03/15/2018 | 75,000 | 84,930 | ||||||||||||
Parker-Hannifin Corp. (Machinery) | 4.200% | 11/21/2034 | 100,000 | 106,076 |
18 | (continued) |
Ohio National Fund, Inc. | Omni Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
INDUSTRIALS (continued) | ||||||||||||||||
Burlington Northern Santa Fe, LLC (Road & Rail) | 4.550% | 09/01/2044 | $ | 100,000 | $ | 107,776 | ||||||||||
ERAC U.S.A. Finance LLC (Road & Rail) | (b)(c) | 6.375% | 10/15/2017 | 150,000 | 168,541 | |||||||||||
Norfolk Southern Corp. (Road & Rail) | 3.000% | 04/01/2022 | 75,000 | 75,429 | ||||||||||||
|
| |||||||||||||||
626,784 | ||||||||||||||||
|
| |||||||||||||||
INFORMATION TECHNOLOGY – 1.6% | ||||||||||||||||
Amphenol Corp. (Electronic Equip., Instr. & Comp.) | 3.125% | 09/15/2021 | 100,000 | 101,094 | ||||||||||||
Computer Sciences Corp. (IT Svs.) | 6.500% | 03/15/2018 | 150,000 | 167,794 | ||||||||||||
Intel Corp. (Semiconductors & Equip.) | 4.000% | 12/15/2032 | 100,000 | 102,575 | ||||||||||||
KLA-Tencor Corp. (Semiconductors & Equip.) | 3.375% | 11/01/2019 | 100,000 | 101,994 | ||||||||||||
Oracle Corp. (Software) | 4.300% | 07/08/2034 | 100,000 | 107,279 | ||||||||||||
|
| |||||||||||||||
580,736 | ||||||||||||||||
|
| |||||||||||||||
MATERIALS – 1.2% | ||||||||||||||||
CF Industries, Inc. (Chemicals) | 3.450% | 06/01/2023 | 75,000 | 73,448 | ||||||||||||
Dow Chemical Co. / The (Chemicals) | 4.250% | 10/01/2034 | 100,000 | 98,539 | ||||||||||||
Packaging Corp. of America (Containers & Packaging) | 4.500% | 11/01/2023 | 75,000 | 78,703 | ||||||||||||
Freeport-McMoRan, Inc. (Metals & Mining) | 3.550% | 03/01/2022 | 75,000 | 70,950 | ||||||||||||
Newmont Mining Corp. (Metals & Mining) | 3.500% | 03/15/2022 | 75,000 | 70,547 | ||||||||||||
Teck Resources Ltd. (Metals & Mining) | 3.750% | 02/01/2023 | 75,000 | 67,336 | ||||||||||||
|
| |||||||||||||||
459,523 | ||||||||||||||||
|
| |||||||||||||||
TELECOMMUNICATION SERVICES – 0.4% | ||||||||||||||||
Verizon Communications, Inc. (Diversified Telecom. Svs.) | 3.850% | 11/01/2042 | 75,000 | 67,134 | ||||||||||||
Rogers Communications, Inc. (Wireless Telecom. Svs.) | 3.000% | 03/15/2023 | 75,000 | 72,770 | ||||||||||||
|
| |||||||||||||||
139,904 | ||||||||||||||||
|
| |||||||||||||||
UTILITIES – 2.9% | ||||||||||||||||
Commonwealth Edison Co. (Electric Utilities) | 5.950% | 08/15/2016 | 75,000 | 80,935 | ||||||||||||
Kansas City Power & Light Co. (Electric Utilities) | 5.850% | 06/15/2017 | 150,000 | 165,290 | ||||||||||||
Nevada Power Co. (Electric Utilities) | 5.950% | 03/15/2016 | 75,000 | 79,432 | ||||||||||||
Pennsylvania Electric Co. (Electric Utilities) | 6.050% | 09/01/2017 | 150,000 | 166,138 | ||||||||||||
South Carolina Electric & Gas Co. (Electric Utilities) | 4.350% | 02/01/2042 | 75,000 | 79,564 | ||||||||||||
Union Electric Co. (Electric Utilities) | 6.400% | 06/15/2017 | 150,000 | 167,121 | ||||||||||||
Westar Energy, Inc. (Electric Utilities) | 4.125% | 03/01/2042 | 75,000 | 78,704 | ||||||||||||
Southwest Gas Corp. (Gas Utilities) | 3.875% | 04/01/2022 | 75,000 | 78,920 | ||||||||||||
Spectra Energy Capital LLC (Gas Utilities) | 3.300% | 03/15/2023 | 75,000 | 71,367 | ||||||||||||
American Water Capital Corp. (Water Utilities) | 4.300% | 12/01/2042 | 100,000 | 102,099 | ||||||||||||
|
| |||||||||||||||
1,069,570 | ||||||||||||||||
|
| |||||||||||||||
Total Corporate Bonds (Cost $7,526,187) | $ | 7,873,915 | ||||||||||||||
|
| |||||||||||||||
U.S. Treasury Obligations – 1.1% | Rate | Maturity | Face Amount | Value | ||||||||||||
United States Treasury Note | 1.625% | 03/31/2019 | $ | 300,000 | $ | 301,289 | ||||||||||
United States Treasury Note | 2.125% | 06/30/2021 | 100,000 | 101,199 | ||||||||||||
|
| |||||||||||||||
Total U.S. Treasury Obligations (Cost $398,891) | $ | 402,488 | ||||||||||||||
|
| |||||||||||||||
Money Market Funds – 1.4% | Shares | Value | ||||||||||||||
Fidelity Institutional Money Market Funds Money Market Portfolio – Class I | 525,000 | $ | 525,000 | |||||||||||||
|
| |||||||||||||||
Total Money Market Funds (Cost $525,000) | $ | 525,000 | ||||||||||||||
|
| |||||||||||||||
Total Investments – 99.8% (Cost $34,145,674) | (d) | $ | 37,123,108 | |||||||||||||
Other Assets in Excess of Liabilities – 0.2% | 73,474 | |||||||||||||||
|
| |||||||||||||||
Net Assets – 100.0% | $ | 37,196,582 | ||||||||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Non-income producing security. |
(b) | Security exempt from registration under Regulation D of the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified buyers under Rule 144A. At December 31, 2014, the value of this security totaled $168,541, or 0.5% of the Portfolio’s net assets. This security was deemed liquid pursuant to procedures approved by the Board of Directors. |
(c) | Represents bonds that are credit sensitive. The coupon rates for these bonds are subject to adjustment based on changes in national credit rating agency ratings. |
(d) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
19 |
Ohio National Fund, Inc. | International Portfolio |
Objective/Strategy
The International Portfolio seeks long-term growth of capital by investing at least 80% of its assets in securities of foreign companies.
Performance as of December 31, 2014
Average Annual Returns | ||||
One year | -9.39% | |||
Five years | 3.73% | |||
Ten years | 2.48% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the International Portfolio returned -9.39% versus -3.87% for the current benchmark, the MSCI All Country World ex-USA Index (Net-USD).
Global equity markets rallied over the last year despite below-trend economic growth. Outside the U.S., central banks in Europe and Japan aggressively loosened monetary policy, as efforts to fight off deflation escalated. As a result, divergent expectations for yields drove the strongest move up in the U.S. Dollar, relative to other major world currencies, in the last ten years. Weaker foreign currencies in Europe and Japan buttressed the outlook for profits and earnings growth. However, while foreign stocks were up 6.05% in local terms, as measured by the MSCI All Country World ex-USA Index, over the reporting period, the returns for U.S. investors were lower, down 3.87%, due to the strong U.S. Dollar. Prospects for this divergent trend continued into the end of the reporting period, as the outlook for economic growth in the U.S. improved, commodity prices dropped, and the projections for reflation and sustained economic improvement in Europe and Japan were pushed out in time.
The European equity market, as measured by MSCI AC Europe Index, returned 4.29% in local terms and -7.22% for U.S. Dollar-based investors. At the beginning of the year, expectations for an improvement in economic activity in Europe were high. Due to the effects of prolonged fiscal austerity across much of the continent, a de facto tightening of monetary policy as the European Central Bank (“ECB”) balance sheet shrunk, and the Russian conflict with Ukraine, economic growth came in worse than forecast and expectations for a recovery moderated. In light of the deteriorating economic outlook and declining inflation expectations, the ECB continued to take an aggressive stance in order to fight off deflation. The ECB said that low interest rates would remain in place for an extended period and took the unprecedented step of lowering deposit rates below zero; to -0.10% in June, and then further to -0.20% in September. As of the end of the reporting period, further quantitative easing was expected by the ECB over the next few months, with full scale quantitative easing on the table; something that was unlikely twelve months ago. Structural reforms across the continent were progressing at a slower than expected pace;
however, the recent poor economic news has re-energized the policymakers and government officials, particularly in France and Italy. The banking union in the European Union progressed positively, as the stress-test and Asset Quality Review was concluded in October, lending support for the view that the European Union financial system is currently sound. The Single Supervisory Mechanism became fully functional as of November 4th, a historical event that allows for a more harmonious financial system across the continent.
The Japanese equity market, as measured by MSCI Japan Index, returned 9.48% in local terms, and -4.02% for U.S. Dollar-based investors. The key events for investors in Japan this year included the consumption tax hike in April and the aggressive action from the Bank of Japan (“BOJ”) late in the period. Prime Minister Abe’s broad plan for economic revitalization, or “Abenomics,” which gained traction in late 2013 into 2014, was dramatically derailed by the deep downturn in economic growth in the second and third quarters. The greater than expected sluggishness prompted quick responses from the BOJ, which increased the scale of quantitative easing, and from the government, which announced that it would postpone the scheduled 2015 tax hike, implement a new fiscal spending package, and called for snap elections in mid-December in order to affirm the government’s mandate for further structural reforms. Despite the contraction in the economy, Japanese corporate sales and earnings rose sharply during the period, accompanied by very strong upward earnings revisions. Corporate profitability is at a seven-year high, return on equity has risen to multi-year highs, the currency is now very competitive, and the labor market, in terms of jobs and wages, has been improving. The prompt and aggressive monetary and fiscal actions led to an improved outlook for Japanese Gross Domestic Product growth, which is now expected to be up 1.2%, in real terms, for 2015.
Emerging Markets (“EM”) equities rallied in the first half then retreated during the last few months of the reporting period. The EM Index returned -2.19% in U.S. Dollar terms, with divergent performance, as Asia markets (EM Asia Index) rose 4.89%, while European markets (MSCI EM Europe Index) fell 29.99%. Similar to other non-U.S. markets, currency played a large role in the performance. The U.S. Dollar strength and weakness in commodities were key drivers in certain emerging markets. In emerging Europe, the downturn in energy prices helped countries like Poland and the Czech Republic; however, it hurt Russia. In addition to the volatility in energy prices, political instability resulting from Russian conflict with Ukraine, and the slump in demand from the euro area, hurt the economic outlook. As with Russia, the slump in oil and metals prices hurt exporters in the Latin America (MSCI EM Latin America Index), where stocks declined 12.30% for the reporting period. A bright spot for EM was South East Asia, where a solid demand recovery took shape in India, Indonesia and Thailand, and was boosted further by positive political change, more responsible monetary policies, and renewed political stability. As measured by the respective MSCI country indices, the markets in the region were up 15-30% despite their weaker currencies.
For the twelve month reporting period ended December 31, 2014, the MSCI USA Index (12.69%) outperformed both the EM Index (-2.19%) and MSCI EAFE Index (-4.90%). There was a strong divergence among country returns. The top performing major developed countries (excluding the U.S.) were Hong Kong (5.07%) and Canada (1.50%), while major underperforming markets included Germany (-10.36%) and France (-9.92%), where euro weakness was a major factor in investment returns.
20 | (continued) |
Ohio National Fund, Inc. | International Portfolio (Continued) |
In emerging markets, despite the strength of the dollar, leading major markets were India (23.87%), Turkey (18.71%) and China (7.96%), while laggards were Russia (-46.27%) and Brazil (-14.04%).
Country allocation remained a key driver of performance for the year, as it consistently has been in the past. The Portfolio maintained exposure to select healthy, high sovereign quality, developed and emerging markets.
In Europe, country allocation decisions detracted from the Portfolio’s performance. Management’s decision to overweight countries in Central Europe, such as Germany, Austria and Poland, detracted from performance. As discussed in the market overview, retaliatory sanctions, energy insecurity, and heightened political risk emanating from the Ukraine/Russian tensions negatively impacted business and consumer confidence and the Pan-European economy. German companies Siemens AG (down 17.9%) and Rheinmetall AG (down 29.3%) declined significantly. In Austria, Erste Group Bank AG (down 32.9%) was hurt by these same factors, but was additionally impacted by its weak stress test results. While a zero allocation to Russia helped absolute and relative performance, the Portfolio was not immune to the sharp decline in crude oil prices. The Portfolio’s overweight position in energy-rich Norway hurt stocks and currencies. Both MSCI Russia and MSCI Norway were down sharply, down 46.27% and 22.04%, respectively. The Portfolio’s positions in Statoil ASA (down 23.3%) and off-shore driller Seadrill Ltd. (down 69.4%) hurt returns. Deflationary concerns in the euro area during the latter half of the year hurt indebted countries, such as Spain, where the Portfolio was overweight. More positively, however, the Portfolio maintained an overweight during the reporting period to Denmark, the best performing developed market in Europe. Insulin maker Novo-Nordisk A/S (up 15.7%) and Danske Bank A/S (up19.6%) rallied during year. A key country decision to underweight France also augmented performance.(1)
In Asia, positive performance was driven by the combination of the Portfolio’s overweight allocation to Japanese equities and underweight currency exposure through a short of the Yen versus the U.S. Dollar. Exporters were the primary beneficiaries of the weaker yen. Fuji Heavy Ltd. Industries (up 27.4%) benefitted from strong demand for its Subaru brand of cars, while Murata Manufacturing Co. Ltd. (up 25.9%), an electronic component producer, saw strong demand from global smart phone and tablet manufacturers. Many domestically-focused Japanese companies did not fare as well. A sluggish recovery in the Japanese housing segment and weakness in consumer spending hurt TOTO Ltd. (down 34.6%), a maker of bathroom fixtures. South Korea’s equity market was also impacted by the weaker yen. Stocks generally declined during the year, as the weakness in the yen (as compared with the Won) hurt investor sentiment for the Portfolio’s holdings in Korean exporters, such as Hyundai Motors Co. (down 27.8%) and Samsung Electronics Co. Ltd. (down 20.3%). Samsung Electronics Co. Ltd. was hurt by falling profitability and market share in the high and low end phone segments. In contrast to the South Korean global exporters, Korea Electric Power Corp. (up 33.4%) benefitted from solid growth in the domestic economy and weaker energy prices. Our decision to underweight India and China negatively impacted returns. In India, recently elected Premier Modi began implementing economic and structural reforms, boosting investor sentiment, while in China, the government continued to support growth via stimulus and rate cuts.(1)
In the Americas, the Portfolio’s holdings in Canada positively impacted performance on the strength of the neighboring U.S. economy and a weaker Canadian Dollar. Consumer- related compa-
nies outperformed, including Metro, Inc. (up 23.8%) and Dollarama, Inc. (up 22.9%). In Brazil, the positioning negatively impacted performance, as the market gyrated wildly due to speculation on the outcome of Presidential elections slated for October. Ultimately, the incumbent President, whose policies have been widely criticized and have led to the worst growth outlook in a decade, won after the closest race since democracy replaced the military dictatorship in the 1980s. Poor timing in stock selection in both Petroleo Brasileiro SA (down 46.0%) and Itau Unibanco Holding SA (down 28.6%) led declines. (1)
The Portfolio used foreign exchange (“FX”) currency forwards to reduce currency risk. In the period, the overall net returns of the FX forward positions contributed positively to performance. Contribution came principally from the Portfolio’s short positions versus the U.S. dollar in the Yen, Euro and the Norwegian Krone and a long position in the British Pound versus the U.S. Dollar. (1)
We are consistently applying our long-term methodology, which seeks to identify countries and stocks with growth and stability in earnings and cash flows. Our country ranking process seeks to identify strong economies trading at reasonable valuation levels with favorable macroeconomic outlooks. We continue to find country and stock holdings attractive for the long-term.
The latest research shows that country effects have become more influential in a well-diversified international portfolio. Portfolio management believes the greater importance of country divergences is likely to persist given the increasing fundamental divergences between countries (even within the euro area), increased macro instability related to sovereign indebtedness and varying trend growth.
The Portfolio maintained exposure to select healthy, high quality developed markets. Our highest conviction overweight investments in major developed markets include Japan and Canada. In Europe, we have high conviction in Spain and Scandinavian countries, such as Norway, Sweden and Denmark. For the other major European markets, we are underweight the United Kingdom, Germany and France. France, in particular, is struggling to gain momentum as high unemployment, last year’s tax increases, public spending cuts and deteriorating corporate fundamentals are all hampering economic activity. Across the Portfolio, we are maintaining currency hedges vs. the U.S. dollar, as we believe the divergence in expectations growth and inflation will drive the dollar higher.(1)
At the end of the period, Asia represented 41.2% of the Portfolio. Our highest conviction overweight is Japanese equities. We continue to believe there are multiple reasons why the Japanese stock market is the most attractive over the medium to long-term. Reasons for maintaining our conviction include: (1) Japanese corporate earnings and sales revisions are among the strongest across all regions we monitor, (2) Japanese corporate profitability, measured by return on equity (“ROE”), is at a 25-year high due to rising margins, (3) the Yen has hit a seven-year low following the BOJ’s stimulus announcement which is a strong support for Japanese equities and (4) the delay of the 2015 consumption tax hike. The Japanese stocks positions are composed mainly of exporting companies, which should benefit from the weaker Yen and the recovery in global economic growth. Elsewhere in Asia, we maintained an overweight position in Taiwan on strong export growth, in Thailand on a stabilizing economic environment and improved outlook for growth, and in Indonesia on prospects for a return to high growth due to structural reforms.(1)
21 | (continued) |
Ohio National Fund, Inc. | International Portfolio (Continued) |
We continue to monitor the Portfolio’s investment universe for signs of countries and companies with poor credit quality (or unmanageable debt levels), preferring to focus on countries and companies with healthy balance sheets and strategic expansion opportunities. As developed economies continue to adjust to new debt levels, and investors continue to fear a reoccurrence of a global financial crisis, markets may see periods of volatility. However, as long-term investors, we feel that fundamentals are supportive of global growth in the mid to long term. The Portfolio managers expect the winners to maintain higher profitability and gain market share, while the weaker players, who continue to struggle to gain footing, may underperform. Despite Federal Reserve tapering, we expect global financial conditions to remain accommodative for some time to come.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The MSCI All Country World Ex-USA Index (Net-USD) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed and emerging markets. The MSCI All Country World Index consists of 24 developed and 21 emerging market country indices.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 88.5 | |||
Money Market Funds and | 11.5 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Banco Santander SA | 2.4 | |||
2. Toronto-Dominion Bank / The | 2.4 | |||
3. Aisin Seiki Co. Ltd. | 2.1 | |||
4. Asahi Kasei Corp. | 1.9 | |||
5. Canadian National Railway Co. | 1.9 | |||
6. Statoil ASA | 1.9 | |||
7. Sekisui House Ltd. | 1.8 | |||
8. Novo Nordisk A/S – ADR | 1.8 | |||
9. Magna International, Inc. | 1.7 | |||
10. Fuji Heavy Industries Ltd. | 1.7 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Top 10 Country Weightings: |
% of Net Assets | ||||
Japan | 23.5 | |||
Canada | 12.9 | |||
Denmark | 7.6 | |||
Spain | 6.9 | |||
Norway | 5.4 | |||
Sweden | 5.0 | |||
Thailand | 4.7 | |||
Taiwan | 4.6 | |||
Austria | 4.0 | |||
Indonesia | 3.2 |
22 |
Ohio National Fund, Inc. | International Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 88.5% | Shares | Value | ||||||||
Japan – 23.5% | ||||||||||
Aisin Seiki Co. Ltd. | (b) | 100,300 | $ | 3,603,621 | ||||||
Asahi Kasei Corp. | (b) | 363,000 | 3,311,440 | |||||||
Chugai Pharmaceutical Co. Ltd. | (b) | 28,200 | 692,404 | |||||||
Disco Corp. | (b) | 26,000 | 2,079,545 | |||||||
Fuji Heavy Industries Ltd. | (b) | 84,000 | 2,972,421 | |||||||
Hitachi Ltd. | (b) | 299,000 | 2,206,848 | |||||||
Honda Motor Co. Ltd. | (b) | 96,000 | 2,816,474 | |||||||
Hoshino Resorts REIT, Inc. | (b) | 116 | 1,224,308 | |||||||
Ikyu Corp. | (b) | 87,100 | 972,573 | |||||||
Japan Hotel REIT Investment Corp. | (b) | 1,850 | 1,186,832 | |||||||
Kubota Corp. | (b) | 190,700 | 2,767,966 | |||||||
Mitsui & Co. Ltd. | (b) | 155,300 | 2,079,953 | |||||||
Murata Manufacturing Co. Ltd. | (b) | 20,800 | 2,269,715 | |||||||
Nippon Express Co. Ltd. | (b) | 307,000 | 1,555,807 | |||||||
Oriental Land Co. Ltd. | (b) | 5,400 | 1,245,315 | |||||||
Osaka Gas Co. Ltd. | (b) | 435,000 | 1,624,703 | |||||||
Resorttrust, Inc. | (b) | 55,400 | 1,212,945 | |||||||
Sekisui House Ltd. | (b) | 242,000 | 3,184,230 | |||||||
Shionogi & Co. Ltd. | (b) | 77,600 | 2,004,860 | |||||||
Sumitomo Mitsui Financial Group, Inc. | (b) | 54,000 | 1,952,246 | |||||||
|
| |||||||||
40,964,206 | ||||||||||
|
| |||||||||
Canada – 12.9% | ||||||||||
Agrium, Inc. | 10,600 | 1,003,615 | ||||||||
Canadian National Railway Co. | 47,600 | 3,278,492 | ||||||||
CI Financial Corp. | 28,000 | 778,206 | ||||||||
Cogeco Cable, Inc. | 21,100 | 1,301,088 | ||||||||
Dollarama, Inc. | 27,000 | 1,380,444 | ||||||||
First Quantum Minerals Ltd. | 38,000 | 540,007 | ||||||||
Magna International, Inc. | 27,725 | 3,004,218 | ||||||||
Metro, Inc. | 20,800 | 1,670,374 | ||||||||
Peyto Exploration & Development Corp. | 39,100 | 1,126,422 | ||||||||
RioCan Real Estate Investment Trust | 76,189 | 1,733,237 | ||||||||
Suncor Energy, Inc. | 80,973 | 2,571,788 | ||||||||
Toronto-Dominion Bank / The | 86,656 | 4,140,364 | ||||||||
|
| |||||||||
22,528,255 | ||||||||||
|
| |||||||||
Denmark – 7.6% | ||||||||||
AP Moeller – Maersk A/S | (b) | 1,012 | 2,012,818 | |||||||
Danske Bank A/S | (b) | 92,600 | 2,503,519 | |||||||
DSV A/S | (b) | 72,900 | 2,219,731 | |||||||
Jyske Bank A/S | (a)(b) | 30,832 | 1,558,445 | |||||||
NKT Holding A/S | (b) | 10,771 | 576,885 | |||||||
Novo Nordisk A/S – ADR | 74,600 | 3,157,072 | ||||||||
Sydbank A/S | (a)(b) | 42,400 | 1,304,383 | |||||||
|
| |||||||||
13,332,853 | ||||||||||
|
| |||||||||
Spain – 6.9% | ||||||||||
ACS Actividades de Construccion y Servicios SA | (b) | 47,247 | 1,646,797 | |||||||
Amadeus IT Holding SA | (b) | 18,600 | 740,788 | |||||||
Banco Bilbao Vizcaya Argentaria SA | (b) | 150,000 | 1,416,660 | |||||||
Banco Santander SA | (b) | 507,829 | 4,262,269 | |||||||
Grifols SA | (b) | 13,100 | 522,736 | |||||||
Iberdrola SA | (b) | 329,854 | 2,223,460 | |||||||
Inditex SA | (b) | 44,100 | 1,257,970 | |||||||
|
| |||||||||
12,070,680 | ||||||||||
|
| |||||||||
Norway – 5.4% | ||||||||||
DNB ASA | (b) | 161,885 | 2,387,905 | |||||||
Statoil ASA | (b) | 185,600 | 3,267,829 | |||||||
TGS Nopec Geophysical Co. ASA | (b) | 66,248 | 1,430,740 | |||||||
Yara International ASA | (b) | 52,198 | 2,324,502 | |||||||
|
| |||||||||
9,410,976 | ||||||||||
|
| |||||||||
Sweden – 5.0% | ||||||||||
Hennes & Mauritz AB | (b) | 26,100 | 1,084,325 | |||||||
Husqvarna AB | (b) | 125,200 | 920,279 | |||||||
Nordea Bank AB | (b) | 125,200 | 1,449,288 | |||||||
Peab AB | (b) | 136,800 | 960,389 | |||||||
Skandinaviska Enskilda Banken AB | (b) | 83,600 | 1,061,599 |
Common Stocks (Continued) | Shares | Value | ||||||||
Sweden (continued) | ||||||||||
Swedbank AB | (b) | 30,200 | $ | 749,290 | ||||||
Telefonaktiebolaget LM Ericsson | (b) | 116,100 | 1,405,751 | |||||||
Volvo AB | (b) | 100,300 | 1,081,584 | |||||||
|
| |||||||||
8,712,505 | ||||||||||
|
| |||||||||
Thailand – 4.7% | ||||||||||
Advanced Info Service PCL | (b) | 53,800 | 407,974 | |||||||
Bangkok Dusit Medical Services PCL | (b) | 1,137,000 | 592,156 | |||||||
Central Pattana PCL | (b) | 334,000 | 458,172 | |||||||
Kasikornbank PCL | (b) | 207,700 | 1,436,503 | |||||||
Minor International PCL | (b) | 1,285,400 | 1,260,938 | |||||||
PTT PCL | (b) | 145,000 | 1,420,444 | |||||||
Siam Cement PCL / The | (b) | 64,500 | 875,496 | |||||||
Siam Commercial Bank PCL / The | (b) | 307,900 | 1,695,815 | |||||||
|
| |||||||||
8,147,498 | ||||||||||
|
| |||||||||
Taiwan – 4.6% | ||||||||||
Asia Cement Corp. | (b) | 572,000 | 704,383 | |||||||
AU Optronics Corp. – ADR | 169,000 | 860,210 | ||||||||
Evergreen Marine Corp. Taiwan Ltd. | (a)(b) | 1,107,000 | 780,563 | |||||||
First Financial Holding Co. Ltd. | (b) | 2,029,000 | 1,189,763 | |||||||
Formosa Chemicals & Fibre Corp. | (b) | 394,000 | 830,525 | |||||||
Fubon Financial Holding Co. Ltd. | (b) | 235,000 | 374,056 | |||||||
Hon Hai Precision Industry Co. Ltd. | (b) | 243,000 | 671,048 | |||||||
Nan Ya Plastics Corp. | (b) | 224,000 | 461,901 | |||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | (b) | 330,000 | 1,453,806 | |||||||
United Microelectronics Corp. | (b) | 1,344,000 | 623,847 | |||||||
|
| |||||||||
7,950,102 | ||||||||||
|
| |||||||||
Austria – 4.0% | ||||||||||
Erste Group Bank AG | (b) | 90,500 | 2,104,910 | |||||||
UNIQA Insurance Group AG | (b) | 120,200 | 1,128,078 | |||||||
Vienna Insurance Group AG Wiener Versicherung Gruppe | (b) | 46,100 | 2,060,391 | |||||||
Voestalpine AG | (b) | 42,000 | 1,659,549 | |||||||
|
| |||||||||
6,952,928 | ||||||||||
|
| |||||||||
Indonesia – 3.2% | ||||||||||
Astra International Tbk PT | (b) | 1,597,000 | 952,426 | |||||||
Bank Mandiri Persero Tbk PT | (b) | 639,000 | 555,699 | |||||||
Bank Rakyat Indonesia Persero Tbk PT | (b) | 1,336,500 | 1,256,284 | |||||||
Indocement Tunggal Prakarsa Tbk PT | (b) | 369,500 | 745,558 | |||||||
Surya Citra Media Tbk PT | (b) | 2,100,000 | 592,625 | |||||||
Telekomunikasi Indonesia Persero Tbk PT | (b) | 2,859,000 | 657,080 | |||||||
Unilever Indonesia Tbk PT | (b) | 315,000 | 817,034 | |||||||
|
| |||||||||
5,576,706 | ||||||||||
|
| |||||||||
Ireland – 2.4% | ||||||||||
Bank of Ireland | (a)(b) | 3,000,000 | 1,125,873 | |||||||
CRH PLC | (b) | 75,000 | 1,803,410 | |||||||
Kerry Group PLC | (b) | 17,500 | 1,209,008 | |||||||
|
| |||||||||
4,138,291 | ||||||||||
|
| |||||||||
Finland – 2.1% | ||||||||||
Elisa OYJ | (b) | 16,000 | 436,720 | |||||||
Fortum OYJ | (b) | 35,400 | 768,589 | |||||||
Nokia OYJ | (b) | 36,700 | 290,253 | |||||||
Sampo Oyj | (b) | 22,600 | 1,058,005 | |||||||
Stora Enso OYJ | (b) | 57,600 | 514,999 | |||||||
UPM-Kymmene OYJ | (b) | 35,500 | 581,780 | |||||||
|
| |||||||||
3,650,346 | ||||||||||
|
| |||||||||
Poland – 2.1% | ||||||||||
Bank Pekao SA | (b) | 14,000 | 703,586 | |||||||
PGE Polska Grupa Energetyczna SA | (b) | 106,000 | 560,446 | |||||||
Polski Koncern Naftowy Orlen SA | (b) | 55,000 | 752,106 | |||||||
Powszechna Kasa Oszczednosci Bank Polski SA | (b) | 100,000 | 1,003,789 | |||||||
Powszechny Zaklad Ubezpieczen SA | (b) | 4,500 | 614,125 | |||||||
|
| |||||||||
3,634,052 | ||||||||||
|
|
23 | (continued) |
Ohio National Fund, Inc. | International Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Common Stocks (Continued) | Shares | Value | ||||||||
Italy – 1.2% | ||||||||||
Azimut Holding SpA | (b) | 15,800 | $ | 343,245 | ||||||
Cerved Information Solutions SpA | (a)(b) | 101,100 | 533,906 | |||||||
Luxottica Group SpA | (b) | 8,300 | 454,996 | |||||||
UniCredit SpA | (b) | 109,800 | 703,336 | |||||||
|
| |||||||||
2,035,483 | ||||||||||
|
| |||||||||
United States – 1.6% | ||||||||||
Royal Caribbean Cruises Ltd. | 33,950 | 2,798,499 | ||||||||
|
| |||||||||
Czech Republic – 0.7% | ||||||||||
Komerèní banka, a.s. | (b) | 6,200 | 1,275,966 | |||||||
|
| |||||||||
Bermuda – 0.3% | ||||||||||
Seadrill Ltd. | (b) | 47,766 | 552,660 | |||||||
|
| |||||||||
United Kingdom – 0.3% | ||||||||||
Fiat Chrysler Automobiles NV | (a)(b) | 47,535 | 552,344 | |||||||
|
| |||||||||
Total Common Stocks (Cost $149,864,933) | $ | 154,284,350 | ||||||||
|
|
Rights – 0.0% | Quantity | Value | ||||||||
Spain – 0.0% | ||||||||||
Banco Bilbao Vizcaya Argentaria SA | (a) | 150,000 | $ | 14,339 | ||||||
|
| |||||||||
Total Rights (Cost $14,673) | $ | 14,339 | ||||||||
|
| |||||||||
Money Market Funds – 8.2% | Shares | Value | ||||||||
State Street Institutional Liquid Reserves Fund Institutional Class | 8,426,765 | $ | 8,426,765 | |||||||
State Street Institutional U.S. Government Money Market Fund Institutional Class | 5,800,486 | 5,800,486 | ||||||||
|
| |||||||||
Total Money Market Funds (Cost $14,227,251) | $ | 14,227,251 | ||||||||
|
| |||||||||
Total Investments – 96.7% (Cost $164,106,857) | (c) | $ | 168,525,940 | |||||||
Other Assets in Excess of Liabilities – 3.3% | (d) | 5,844,452 | ||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 174,370,392 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Abbreviations:
ADR: American Depositary Receipts
Footnotes:
(a) | Non-income producing security. |
(b) | Security traded on a foreign exchange has been valued at an estimate of fair value that is different than the local market close price. These fair value estimates are determined by an independent fair valuation service that has been approved by the Board. These securities represent $124,940,314, or 71.7% of the Portfolio’s net assets. |
Other Portfolio securities are not subjected to fair valuation procedures because they are traded on domestic or foreign exchanges that have close times that are consistent with the U.S. market close, normally 4:00 pm Eastern Time.
(c) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
(d) | Includes $335,371 of cash pledged as collateral for the following futures contracts outstanding at December 31, 2014: |
Type | Description | Expiration | Number of Contracts | Contract at | Initial Contract Amount | Unrealized Appreciation (Depreciation) | Variation Margin Receivable (Payable) | |||||||||||||||
Long | JPX-Nikkei Index 400 Future | March 12, 2015 | 561 | $5,980,940 | $ | 6,128,455 | $ | (147,515 | ) | $ | 321 | |||||||||||
Long | S&P/Toronto Stock Exchange 60 Index Future | March 19, 2015 | 14 | $2,052,401 | $ | 1,950,188 | $ | 102,213 | $ | (5,891 | ) | |||||||||||
|
|
|
|
|
|
| ||||||||||||||||
$8,033,341 | $ | 8,078,643 | $ | (45,302 | ) | $ | (5,570 | ) | ||||||||||||||
|
|
|
|
|
|
|
Details of the foreign currency contracts outstanding in the International Portfolio at December 31, 2014 are as follows: |
Contracts to sell foreign currency:
Date of contract | Exchange date | Counterparty | Currency to receive | Currency to deliver | Contract at value | Unrealized Appreciation | ||||||||||||||
November 6, 2014 | February 6, 2015 | BOA | $ | 5,152,973 | 5,900,000 CAD | $ | 5,074,496 | $ | 78,477 | |||||||||||
December 8, 2014 | March 13, 2015 | HSBC | $ | 8,625,007 | 62,000,000 NOK | $ | 8,302,955 | $ | 322,052 | |||||||||||
December 15, 2014 | March 16, 2015 | HSBC | $ | 20,232,271 | 2,378,000,000 JPY | $ | 19,865,324 | $ | 366,947 | |||||||||||
December 15, 2014 | March 16, 2015 | CITI | $ | 16,651,875 | 13,375,000 EUR | $ | 16,194,853 | $ | 457,022 | |||||||||||
|
|
|
|
|
| |||||||||||||||
$ | 50,662,126 | $ | 49,437,628 | $ | 1,224,498 | |||||||||||||||
|
|
|
|
|
|
Counterparties | Currencies | |
BOA – Bank of America N.A. | CAD – Canadian Dollar | |
HSBC – HSBC Bank USA, N.A. | NOK – Norwegian Krone | |
CITI – Citigroup Global Markets, Inc. | JPY – Japanese Yen | |
EUR – Euro |
24 | (continued) |
Ohio National Fund, Inc. | International Portfolio (Continued) |
Sector Classifications (Common stocks & rights): (Percent of net assets)
Financials | 27.1% | |||
Consumer Discretionary | 18.1% | |||
Industrials | 10.9% | |||
Materials | 8.8% | |||
Information Technology | 7.2% | |||
Energy | 6.4% | |||
Health Care | 4.0% | |||
Utilities | 3.0% | |||
Consumer Staples | 2.1% | |||
Telecommunication Services | 0.9% | |||
|
| |||
88.5% | ||||
|
|
The accompanying notes are an integral part of these financial statements.
25 |
Ohio National Fund, Inc. | Capital Appreciation Portfolio |
Objective/Strategy
The Capital Appreciation Portfolio seeks long-term capital growth by investing primarily in equity and equity related securities of established companies with either current or emerging earnings growth not fully appreciated or recognized by the market.
Performance as of December 31, 2014
Average Annual Returns | ||||
One year | 8.54% | |||
Five years | 14.59% | |||
Ten years | 8.15% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Capital Appreciation Portfolio returned 8.54% versus 13.69% for the current benchmark, the S&P 500 Index.
Looking back, 2014 was a tale of two halves that ended with disappointing results overall. Through the end of the second quarter, the Portfolio continued its strong relative performance from 2013 and materially outperformed broad market indices. Beginning in the third quarter, relative performance faltered, as both macro headwinds and company-specific issues weighed on Portfolio returns.
There are a number of areas where the Portfolio is underweight that hurt relative performance in 2014. This includes higher-yielding large cap companies, real estate investment trusts, utilities and other income-generating securities/companies, mega-caps, and large cap biotech. Superior performance in these areas was in response to the long bond rally, as the U.S. Treasury 30 Year Index returned over 29% for the year. We find market expectations and valuations for many companies in these categories to be lofty, at best, and inconsistent with our investment philosophy.(1)
Nevertheless, there were a number of individual companies that did not perform as we expected. Two were in the Energy sector – Laredo Petroleum, Inc. and Cobalt International Energy, Inc. Both of these companies suffered more than the overall sector due to capital expenditure spending being greater than cash flow. We maintain conviction in the long-term growth of the asset base of both companies and the balance sheet strength to support that growth, even with the recent stress in the crude oil price. Specifically, we continue to believe that Laredo Petroleum, Inc. has tremendous growth potential, with high return Permian acreage and over a ten year drilling inventory. It also trades at a substantive discount to its net asset value, which we expect will be realized as it executes its low cost production growth story.(1)
Cobalt International Energy, Inc., a relatively small position in the Portfolio, has been hurt by a Department of Justice investigation into its dealings with the government of Angola, as well as finding a dry hole in an Angolan prospect. While recognizing that its growth prospects, as measured by exploration success, are somewhat
binary in nature, we think the position size is appropriate to manage the risk. Furthermore, shares are trading at levels not seen since the company’s initial successful exploration well in offshore West Africa. The company has since found close to a billion barrels of commercially viable crude oil, so we view the risk/return potential as very attractive.(1)
The Portfolio’s Energy weighting decreased meaningfully during the year due to sector performance and to the elimination of a few positions that we think will not perform well in a sustained lower-oil price environment. A few holdings from other sectors also hurt performance.(1)
Liquidity Services, Inc. operates online auction marketplaces for seller and buyers of surplus, salvage, and scrap assets. Its shares fell when it withdrew from bidding for two Department of Defense (DOD) contracts that generated a large portion of its existing cash flow. Earnings expectations were reset materially downward and we eliminated the position due to our the lack of visibility into future cash flows.(1)
Terex Corp. manufactures cranes, hoists and other equipment for the construction infrastructure and mining industries. The crane segment, which represents almost 25% of sales, continues to struggle. Arial Work Platforms, which is a bigger portion of total sales, continues to improve, however. Terex Corp. is geared towards internal operational improvement that should result in margin-driven earnings upside, as well as future cyclical recovery in construction markets. However, a recovery in the crane segment is an important part of our thesis and we are closely monitoring our position.(1)
Shares of Newmont Mining Corp. fell in tandem with the price of gold. A possible joint venture with Barrick Gold was the catalyst we were looking for in order for it to capture up to one billion in potential cost savings. The volatility in gold prices caused us to reevaluate the timing of the potential upside in any corporate actions and we decided to sell the position.(1)
Despite disappointing relative performance, the Portfolio’s absolute return benefited from very strong performance in other companies, several from the Information Technology sector. Fortinet, Inc., a provider of network security solutions and appliances, surged toward the end of the year, as high profile security breaches renewed investor focus on the sector. We expect Fortinet, Inc. to continue executing on its plan to accelerate revenue growth and increase marketing spending in order to expand to high end enterprise and data centers from current small/mid-size business focus. It is gaining share in a very high profile security market, and is increasing its competitive differentiation through product refreshes and increasing functionality.(1)
Shares of Apple, Inc. rose on exceptionally strong iPhone 6 and 6 Plus sales. Strong sales of Mac products and iPads are also expected to continue, driven by continued enterprise, education, and emerging market adoption. We expect that product updates will sustain attractive revenue growth in the medium term.? Apple, Inc. could also benefit from the creation of new markets in Apple Pay and Apple Watch.(1)
Cadence Design Systems, Inc. enjoyed solid revenue and earnings, as well as significant margin upside. It also signed the largest single deal in company history in the fourth quarter. Cadence Design Systems, Inc. is the second largest provider of electronic design automation (EDA) software used in designing semiconductor chips and electrical systems. We think industry adoption of new products and increased traction with systems customers will drive sustained
26 | (continued) |
Ohio National Fund, Inc. | Capital Appreciation Portfolio (Continued) |
growth, despite challenges for the semiconductor industry as a whole.(1)
Allergan, Inc. in Health Care and Delta Air Lines, Inc. were also contributors. Allergan, Inc. advanced on a number of takeover bids. We expected a deal to be completed, or that its efforts to manage spending more efficiently and redeploy cash would benefit shareholders. The company, which makes Restasis (chronic dry eye), Botox (medical aesthetics, urinary irregularities, migraine headaches, muscle stiffness), Juvederm (dermal filler), and Lumigan (glaucoma), was eventually acquired by another pharmaceuticals company, Actavis.(1)
Shares of Delta Air Lines, Inc. performed well during the period, as the overall airline industry has been concentrated on cutting capacity and focusing on profitability over the past few years. Given a solid demand environment, pricing controls, strong cost controls, and attractive valuation, we think Delta Air Lines, Inc. should continue to outperform. A decline in oil prices should also be a tailwind.(1)
We remain focused on identifying companies that are likely to experience catalyst-driven growth and that offer the greatest reward versus risk opportunities. They are businesses that we expect to experience a dynamic upward trend in fundamentals and other catalysts over the next twelve to eighteen months, or are demonstrating good growth characteristics but are being mispriced by the market.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The S&P 500 Index is a capitalization-weighted index designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index presented herein includes the effects of reinvested dividends.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 97.6 | |||
Money Market Funds | 2.4 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Carnival Corp. | 2.3 | |||
2. Wells Fargo & Co. | 2.2 | |||
3. Bristol-Myers Squibb Co. | 2.2 | |||
4. JPMorgan Chase & Co. | 2.0 | |||
5. Wendy’s Co. / The | 2.0 | |||
6. Rovi Corp. | 1.9 | |||
7. Brocade Communications Systems, Inc. | 1.9 | |||
8. Hologic, Inc. | 1.9 | |||
9. PNC Financial Services Group, Inc. / The | 1.9 | |||
10. ADT Corp. / The | 1.9 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Information Technology | 21.9 | |||
Consumer Discretionary | 18.5 | |||
Financials | 15.2 | |||
Health Care | 11.0 | |||
Industrials | 10.5 | |||
Energy | 5.4 | |||
Consumer Staples | 5.0 | |||
Utilities | 4.3 | |||
Materials | 3.9 | |||
Telecommunication Services | 1.9 | |||
|
| |||
97.6 | ||||
|
|
27 |
Ohio National Fund, Inc. | Capital Appreciation Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 97.6% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 18.5% |
| |||||||||
Lear Corp. (Auto Components) | 70,522 | $ | 6,916,798 | |||||||
Carnival Corp. (Hotels, Restaurants & Leisure) | 224,490 | 10,176,132 | ||||||||
Hyatt Hotels Corp. Class A (Hotels, Restaurants & Leisure) | (a) | 117,125 | 7,052,096 | |||||||
Pinnacle Entertainment, Inc. (Hotels, Restaurants & Leisure) | (a) | 321,566 | 7,154,844 | |||||||
Wendy’s Co. / The (Hotels, Restaurants & Leisure) | 1,001,362 | 9,042,299 | ||||||||
Comcast Corp. Class A (Media) | 138,788 | 7,989,331 | ||||||||
Live Nation Entertainment, Inc. (Media) | (a) | 242,521 | 6,332,223 | |||||||
Markit Ltd. (Media) | (a) | 141,155 | 3,730,727 | |||||||
Nine Entertainment Co. Holdings Ltd. (Media) | (c) | 351,667 | 546,299 | |||||||
Nine Entertainment Co. Holdings Ltd. (Media) | (b)(c) | 305,683 | 474,865 | |||||||
Thomson Reuters Corp. (Media) | 114,699 | 4,626,958 | ||||||||
Twenty-First Century Fox, Inc. Class A (Media) | 147,009 | 5,645,881 | ||||||||
Target Corp. (Multiline Retail) | 77,931 | 5,915,742 | ||||||||
GameStop Corp. Class A (Specialty Retail) | 113,697 | 3,842,959 | ||||||||
lululemon athletica, Inc. (Textiles, Apparel & Luxury Goods) | (a) | 67,263 | 3,752,603 | |||||||
|
| |||||||||
83,199,757 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 5.0% | ||||||||||
CVS Health Corp. (Food & Staples Retailing) | 73,156 | 7,045,654 | ||||||||
Diamond Foods, Inc. (Food Products) | (a) | 256,710 | 7,246,923 | |||||||
Mondelez International, Inc. Class A (Food Products) | 224,775 | 8,164,952 | ||||||||
|
| |||||||||
22,457,529 | ||||||||||
|
| |||||||||
ENERGY – 5.4% | ||||||||||
Schlumberger Ltd. (Energy Equip. & Svs.) | 43,096 | 3,680,829 | ||||||||
Anadarko Petroleum Corp. (Oil, Gas & Consumable Fuels) | 80,615 | 6,650,738 | ||||||||
Cobalt International Energy, Inc. (Oil, Gas & Consumable Fuels) | (a) | 251,829 | 2,238,760 | |||||||
Laredo Petroleum, Inc. (Oil, Gas & Consumable Fuels) | (a) | 283,938 | 2,938,758 | |||||||
Noble Energy, Inc. (Oil, Gas & Consumable Fuels) | 119,586 | 5,671,964 | ||||||||
Rice Energy, Inc. (Oil, Gas & Consumable Fuels) | (a) | 147,734 | 3,097,982 | |||||||
|
| |||||||||
24,279,031 | ||||||||||
|
| |||||||||
FINANCIALS – 15.2% | ||||||||||
Bank of America Corp. (Banks) | 453,080 | 8,105,601 | ||||||||
JPMorgan Chase & Co. (Banks) | 146,330 | 9,157,331 | ||||||||
PNC Financial Services Group, Inc. / The (Banks) | 93,570 | 8,536,391 | ||||||||
Wells Fargo & Co. (Banks) | 183,801 | 10,075,971 | ||||||||
Zions Bancorporation (Banks) | 227,460 | 6,484,885 | ||||||||
Goldman Sachs Group, Inc. / The (Capital Markets) | 42,238 | 8,186,992 | ||||||||
Voya Financial, Inc. (Diversified Financial Svs.) | 159,872 | 6,775,375 | ||||||||
MetLife, Inc. (Insurance) | 134,302 | 7,264,395 | ||||||||
Symetra Financial Corp. (Insurance) | 159,425 | 3,674,746 | ||||||||
|
| |||||||||
68,261,687 | ||||||||||
|
| |||||||||
HEALTH CARE – 11.0% | ||||||||||
Hologic, Inc. (Health Care Equip. & Supplies) | (a) | 320,650 | 8,574,181 | |||||||
Bristol-Myers Squibb Co. (Pharmaceuticals) | 167,502 | 9,887,643 | ||||||||
Impax Laboratories, Inc. (Pharmaceuticals) | (a) | 163,194 | 5,169,986 | |||||||
Merck & Co., Inc. (Pharmaceuticals) | 111,035 | 6,305,678 | ||||||||
Mylan, Inc. (Pharmaceuticals) | (a) | 117,488 | 6,622,799 | |||||||
Pfizer, Inc. (Pharmaceuticals) | 169,707 | 5,286,373 | ||||||||
Shire PLC - ADR (Pharmaceuticals) | 35,391 | 7,522,003 | ||||||||
|
| |||||||||
49,368,663 | ||||||||||
|
|
Common Stocks (Continued) | Shares | Value | ||||||||
INDUSTRIALS – 10.5% | ||||||||||
Boeing Co. / The (Aerospace & Defense) | 47,079 | $ | 6,119,328 | |||||||
United Technologies Corp. (Aerospace & Defense) | 41,755 | 4,801,825 | ||||||||
FedEx Corp. (Air Freight & Logistics) | 24,904 | 4,324,829 | ||||||||
Delta Air Lines, Inc. (Airlines) | 95,285 | 4,687,069 | ||||||||
ADT Corp. / The (Commercial Svs. & Supplies) | 234,310 | 8,489,051 | ||||||||
Brink’s Co. / The (Commercial Svs. & Supplies) | 179,292 | 4,376,518 | ||||||||
Siemens AG (Industrial Conglomerates) | (c) | 40,312 | 4,523,173 | |||||||
Terex Corp. (Machinery) | 182,947 | 5,100,562 | ||||||||
ManpowerGroup, Inc. (Professional Svs.) | 68,664 | 4,680,825 | ||||||||
|
| |||||||||
47,103,180 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 21.9% | ||||||||||
Brocade Communications Systems, Inc. (Communications Equip.) | 729,224 | 8,634,012 | ||||||||
JDS Uniphase Corp. (Communications Equip.) | (a) | 382,741 | 5,251,207 | |||||||
Juniper Networks, Inc. (Communications Equip.) | 171,614 | 3,830,425 | ||||||||
Polycom, Inc. (Communications Equip.) | (a) | 400,506 | 5,406,831 | |||||||
Benchmark Electronics, Inc. (Electronic Equip., Instr. & Comp.) | (a) | 170,159 | 4,328,845 | |||||||
Alibaba Group Holding Ltd. - ADR (Internet Software & Svs.) | (a) | 13,096 | 1,361,198 | |||||||
Google, Inc. Class C (Internet Software & Svs.) | (a) | 8,496 | 4,472,294 | |||||||
Altera Corp. (Semiconductors & Equip.) | 197,741 | 7,304,553 | ||||||||
Maxim Integrated Products, Inc. (Semiconductors & Equip.) | 151,335 | 4,823,046 | ||||||||
Activision Blizzard, Inc. (Software) | 57,555 | 1,159,733 | ||||||||
Cadence Design Systems, Inc. (Software) | (a) | 344,688 | 6,538,731 | |||||||
Fortinet, Inc. (Software) | (a) | 265,884 | 8,152,003 | |||||||
Guidewire Software, Inc. (Software) | (a) | 121,768 | 6,165,114 | |||||||
Microsoft Corp. (Software) | 141,211 | 6,559,251 | ||||||||
Rovi Corp. (Software) | (a) | 387,102 | 8,744,634 | |||||||
Apple, Inc. (Tech. Hardware, Storage & Periph.) | 71,870 | 7,933,011 | ||||||||
Diebold, Inc. (Tech. Hardware, Storage & Periph.) | 227,888 | 7,894,040 | ||||||||
|
| |||||||||
98,558,928 | ||||||||||
|
| |||||||||
MATERIALS – 3.9% | ||||||||||
Monsanto Co. (Chemicals) | 58,819 | 7,027,106 | ||||||||
Potash Corp. of Saskatchewan, Inc. (Chemicals) | 188,379 | 6,653,546 | ||||||||
Constellium NV Class A (Metals & Mining) | (a) | 241,148 | 3,962,062 | |||||||
|
| |||||||||
17,642,714 | ||||||||||
|
| |||||||||
TELECOMMUNICATION SERVICES – 1.9% | ||||||||||
Vivendi SA (Diversified Telecom. Svs.) | (c) | 335,363 | 8,347,384 | |||||||
|
| |||||||||
UTILITIES - 4.3% | ||||||||||
FirstEnergy Corp. (Electric Utilities) | 126,014 | 4,913,286 | ||||||||
PPL Corp. (Electric Utilities) | 194,859 | 7,079,227 | ||||||||
Calpine Corp. (Ind. Power & Renewable Elec.) | (a) | 205,131 | 4,539,549 | |||||||
NRG Energy, Inc. (Ind. Power & Renewable Elec.) | 111,405 | 3,002,365 | ||||||||
|
| |||||||||
19,534,427 | ||||||||||
|
| |||||||||
Total Common Stocks (Cost $401,840,751) | $ | 438,753,300 | ||||||||
|
| |||||||||
Money Market Funds – 3.4% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds | 15,202,000 | $ | 15,202,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $15,202,000) | $ | 15,202,000 | ||||||||
|
| |||||||||
Total Investments – 101.0% (Cost $417,042,751) | (d) | $ | 453,955,300 | |||||||
Liabilities in Excess of Other Assets – (1.0)% | (4,541,253) | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 449,414,047 | ||||||||
|
|
28 | (continued) |
Ohio National Fund, Inc. | Capital Appreciation Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Percentages are stated as a percent of net assets.
Abbreviations:
ADR: American Depositary Receipts
Footnotes:
(a) | Non-income producing security. |
(b) | Security exempt from registration under Regulation D of the Securities Act of 1933. These securities may be resold in transactions exempt form registration, normally to qualified buyers under Rule 144A. At December 31, 2014, the value of these securities totaled $474,865, or 0.1% of the Portfolio’s net assets. These securities were deemed liquid pursuant to procedures approved by the Board of Directors. |
(c) | Security traded on a foreign exchange has been valued at an estimate of fair value that is different than the local market close price. These fair value estimates are determined by an independent fair valuation service that has been approved by the Board. These securities represent $13,891,721, or 3.1% of the Portfolio’s net assets. |
Other Portfolio securities are not subjected to fair value procedures because they are traded on domestic or foreign exchanges that have close times that are consistent with the U.S. market close, normally 4:00 pm Eastern Time.
(d) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
29 |
Ohio National Fund, Inc. | International Small-Mid Company Portfolio |
Objective/Strategy
The International Small-Mid Company Portfolio seeks long-term growth of capital by investing at least 80% of its assets in equity securities of foreign small and mid-cap companies.
Performance as of December 31, 2014
Average Annual Returns | ||||
One year | -8.79% | |||
Five years | 7.13% | |||
Ten years | 6.75% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the International Small-Mid Company Portfolio returned -8.79% versus -3.35% for the current benchmark, the S&P Developed Small Cap Ex-U.S. Growth Index.
During this reporting period, global markets largely headed higher from 2013 in local currencies. Market performance went through gyrations as investors reacted to the latest headline news. During the first half of the year, emerging markets led, as global economic activity and leading indicators pointed higher, major central banks remained accommodative and volatility fell. Most global equity markets broadly rallied from the depths of 2011 to new highs, again in local currencies. However, a 49% drop in crude oil prices during the second-half of the year and weak economic data out of the Eurozone gave the U.S. dollar strength against all major currencies, wiping out unhedged price gains. Economic growth projections for most European countries fell during the final quarter as the recovery seemed to have stalled. The global economy ended another year still battling to gain any positive growth, with the risk of deflation greater at year end than it was at the beginning.
European equity markets performed strongly through the first half on an improved outlook and diminished risks of a broad European financial crisis. The euro area economic outlook improved, as a nascent recovery in Spain and Italy was accompanied by further above trend growth in Germany. The European Central Bank (“ECB”) was aggressive in fighting off deflation, as it signaled that low interest rates would remain in place for an extended period and it took the unprecedented step of lowering deposit rates below zero, to -0.10% and then to -0.20%. European stock markets and economies began to suffer from the negative sentiment and economic sanctions on Russia created by Russia’s annexation of Crimea and incursion into the Ukraine. German manufacturing data showed signs of slowing, as external factors (Russia, Ukraine, and a potential China slowdown) negatively impacted business and consumer confidence, and hit both investments and industries. European equities began to decline as economic data weakened. The anemic recovery and the inability of the ECB to stimulate inflation compelled the ECB to take more action, as President Draghi introduced a large quantitative easing (“QE”) stimulus proposal in September following
the rate cuts the ECB announced the prior quarter. Further QE is expected over the next few months, as the continuing deterioration in the outlook is forcing the ECB to act.
In Japan, after its strongest returns in more than a decade in 2013, the equity market underperformed for much of the first half of the year. Sentiment turned negative in anticipation of the April 1st consumption tax increase from 5% to 8%. Japan’s economy in the second and third quarters turned down sharply, falling back into recession. In response to the poor economic data, the Bank of Japan announced an aggressive stimulus plan on October 31st aimed at stimulating growth. Subsequent to the announcement, the Yen fell to a seven year low. The unexpected sluggishness prompted quick responses from the Japanese government to include: postponement of the scheduled 2015 tax hike, implementation of a fiscal spending package, and a call for snap elections in mid-December. The ruling coalition parties won a supermajority in these elections, affirming the government’s mandate for further structural reforms. Despite the contracting economy, Japanese corporate sales and earnings jumped during the period, with very strong upward earnings revisions. Corporate profitability is at a seven year high, the currency is very competitive, and the labor market, in terms of jobs and wages, is improving. The prompt and aggressive monetary and fiscal actions led to an improved outlook for Japanese gross domestic product (“GDP”) growth, now expected to be up 1.5% in real terms for the next fiscal year.
While the United Kingdom’s economy has grown for seven straight quarters, through September, and its unemployment has fallen to 6%, the Bank of England has highlighted global risks, principally the weakness in the euro area. With higher staff costs being countered by falling oil prices, the Bank of England has room to hold off from raising interest rates amid the ideal combination of robust economic growth and low inflation. However, it is increasingly concerned with inflation picking up next year due to an expected recovery in fuel prices. United Kingdom inflation slowed to 1.0% year-on-year in November. Markit’s UK manufacturing Purchasing Managers Index (“PMI”) for December slipped to 52.5 from 53.3 in November.
China’s economy continued to slow, with its industrial production, export and import growth losing momentum. China’s third quarter GDP registered at 7.3%, the slowest pace in more than five years. Despite the government pulling some levers, the economy continued to muddle throughout the year, while showing periodic declines in various economic data. The People’s Bank of China injected liquidity via Open Market Operations in October, followed by a surprise interest rate cut on November 21. The policy shift to monetary easing is in response to weak economic growth and higher funding costs. Continued low inflation and weak growth momentum in the economy leaves more room for further monetary easing. The Central Economic Work Conference held in mid-December emphasized stable growth as a priority task. November consumer price index inflation eased to 1.4% from 1.6% in October. HSBC’s China Manufacturing PMI was 49.6 in December, just below the 50 mark that separates growth from contraction.
On a regional basis, the S&P Europe Small Cap Growth Index declined 3.32%, while the S&P Asia Pacific Ex-Japan Small Cap Growth Index declined 3.57%. Japanese small caps lost 2.18%, as measured by the S&P Japan Small Cap Growth Index, with all net returns in U.S. dollars during the reporting period. The best returns were seen in small companies in southeast Asian countries, like Thailand (despite a military coup), and Indonesia and India, each with newly elected presidents that are deemed to be business friendly. These countries are part of the S&P Asia Pacific Emerging Small Cap Growth Index, which gained 5.29% this year.
30 | (continued) |
Ohio National Fund, Inc. | International Small-Mid Company Portfolio (Continued) |
The U.S. dollar appreciated significantly against all major currencies over this reporting period, as the U.S. economy was viewed relatively healthier and growing while international economies struggled and have yet to be successfully stimulated. The following major currencies depreciated against the U.S. dollar: Japanese Yen (down 13.7%), British Sterling (down 5.9%), and Euro (down 12.0%). The West Texas Intermediate (“WTI”) oil price declined 45.9% over this period, finishing at $53.27 per barrel, the low for the year. Oil had spiked as high as $107.26 in June, followed by a free fall into year end.
The Portfolio’s investment strategy focused on: (a) smaller- to mid-sized capitalized companies, (b) growth industries, and (c) a few investment themes. These were the most significant factors affecting the performance relative to the S&P Developed Small Cap Ex-U.S. Growth Index.
The Portfolio’s negative relative performance came from poor performance in Financials and Consumer Discretionary. Poor stock selection in Japan, Italy, and the United Kingdom were largely responsible for the overall poor performance relative to the benchmark, as a number of the Portfolio’s top ten holdings, especially in the two latter countries, declined sharply. Meaningful underperformance also stemmed from not being correctly positioned in Switzerland, which had positive returns while the Portfolio was underweighted.(1)
Stocks that held back relative performance included some of last year’s best performers: Asos PLC and Yoox SpA. Asos PLC is a United Kingdom online fashion retailer that sells branded and own-label products targeting 16-25 year olds in the United Kingdom and internationally. The company issued profit warnings with news that margins had declined much more than its management expected. Asos PLC also had delays in rolling out new pricing schemes. The company further announced that additional infrastructure spending would be required to keep up with its growth plans. Consequently, its earnings growth has been pushed out into the future. There has also been a general de-rating of e-commerce stocks this year. Yoox SpA is an Italian-based global Internet retailing partner for leading fashion and design brands. Yoox SpA successfully manages the online sites for many luxury brands, including Brioni, Balenciaga, Stella McCartney, and Armani. The stock fell in concert with Asos PLC’s stock price decline. However, the two companies are very different in that Yoox SpA clearly deals in luxury brands. Yoox SpA recently said that Black Friday online sales reached record levels, led by the U.S. Rheinmetall AG is a German company with two businesses: automotive parts and defense combat systems and vehicles. The German government had cancelled the company’s export permit for a combat training center in Russia due to developments in the Ukraine. After releasing 9-month results, the company now expects a loss of €10 million, versus a forecasted profit of €65-75 million profit in defense.(1)
Positive relative contribution came from strong stock selection in Materials and Industrials. A large underweight in Energy was the best investment decision in the year, as oil plummeted and took Energy stocks down with it. From a regional perspective, the Portfolio benefited from a mix of strong stock selection and weighting in China, Canada, South Korea, and Israel. The Portfolio’s non-exposure to Australia and the European peripheral countries also had a positive relative impact on the Portfolio’s performance, as Australia had a negative return during this reporting period. In general, stronger positive contributions stemmed from most of our emerging markets investments. (1)
Individual stocks that contributed most significantly to the Portfolio’s performance included: China Everbright International Ltd., Ashtead Group PLC, and Pandora A/S. China Everbright International Ltd., a Chinese environmental, waste management, and energy company benefited from continuing to win contracts with local Chinese governments to ease pollution in waste water and treat solid waste resulting from urbanization and an increase in local consumption. Ashtead Group PLC is a UK-listed equipment and tool rental company that derives 84% of its revenue from the U.S. subsidiary Sunbelt Rentals and its 388 locations. With U.S. non-residential construction activity picking up and the group increasing capital expenditure in its fleets, the company is well poised for growth in the following years. A structural trend which was said to be benefitting Ashtead Group PLC is customers choosing to rent, not buy. Pandora A/S is a Danish-listed global jewelry designer and retailer particularly known for its charm bracelets. The company has benefitted all year, as silver and gold price declines increased its gross margins from 68% to 70.3% through the third quarter. The company has also been buying back its stock throughout the year in line with the announcement made last year.(1)
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolios returns reflect reinvested dividends. The Portfolios holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The S&P Developed Small Cap Ex-U.S. Growth Index is a subset of the S&P Global Broad Market Index (BMI), a broad index including all publicly listed equities with float-adjusted market values of US$ 100 million or more and annual dollar value traded of at least US$ 50 million in all included countries. The Developed Small Cap component of the BMI includes the equities in the bottom 15% of the market capitalization within each “developed” local market. Ex-U.S. denotes the use of all developed markets excluding the United States. The “Growth” subset includes those companies in each local market that exhibit the characteristics of growth. The index presented includes the effects of reinvested dividends.
31 | (continued) |
Ohio National Fund, Inc. | International Small-Mid Company Portfolio (Continued) |
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 93.6 | |||
Money Market Funds | 6.4 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Ashtead Group PLC | 2.8 | |||
2. Caesarstone Sdot-Yam Ltd. | 2.1 | |||
3. Wirecard AG | 2.0 | |||
4. Rightmove PLC | 1.9 | |||
5. Azimut Holding SpA | 1.9 | |||
6. Ingenico | 1.8 | |||
7. Dollarama, Inc. | 1.8 | |||
8. Zodiac Aerospace | 1.8 | |||
9. Hotel Shilla Co. Ltd. | 1.7 | |||
10. Dialog Semiconductor PLC | 1.6 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Top 10 Country Weightings: |
% of Net Assets | ||||
United Kingdom | 21.6 | |||
Japan | 14.8 | |||
France | 12.1 | |||
Germany | 9.6 | |||
Hong Kong | 7.0 | |||
Italy | 5.7 | |||
Canada | 3.9 | |||
Israel | 3.6 | |||
China | 3.1 | |||
South Korea | 2.6 |
32 |
Ohio National Fund, Inc. | International Small-Mid Company Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 93.6% | Shares | Value | ||||||||
United Kingdom – 21.6% | ||||||||||
Aberdeen Asset Management PLC | (c) | 119,486 | $ | 798,400 | ||||||
Ashtead Group PLC | (c) | 108,028 | 1,918,568 | |||||||
ASOS PLC | (a)(c) | 7,930 | 315,279 | |||||||
Babcock International Group PLC | (c) | 59,547 | 975,515 | |||||||
Burberry Group PLC | (c) | 20,355 | 516,441 | |||||||
Croda International PLC | (c) | 25,173 | 1,039,001 | |||||||
Essentra PLC | (c) | 87,470 | 991,568 | |||||||
Howden Joinery Group PLC | (c) | 148,393 | 925,785 | |||||||
InterContinental Hotels Group PLC | (c) | 18,854 | 758,616 | |||||||
John Wood Group PLC | (c) | 34,727 | 321,260 | |||||||
Michael Page International PLC | (c) | 52,800 | 336,698 | |||||||
Rightmove PLC | (c) | 37,447 | 1,305,895 | |||||||
Schroders PLC | (c) | 21,868 | 908,884 | |||||||
Soco International PLC | (c) | 159,087 | 742,683 | |||||||
St. James’s Place PLC | (c) | 81,353 | 1,025,771 | |||||||
Telecity Group PLC | (c) | 55,000 | 686,939 | |||||||
Travis Perkins PLC | (c) | 25,512 | 734,338 | |||||||
Vectura Group PLC | (a)(c) | 153,073 | 304,122 | |||||||
|
| |||||||||
14,605,763 | ||||||||||
|
| |||||||||
Japan – 14.8% | ||||||||||
Aisin Seiki Co. Ltd. | (c) | 12,300 | 441,920 | |||||||
Chugai Pharmaceutical Co. Ltd. | (c) | 26,000 | 638,386 | |||||||
Daifuku Co. Ltd. | (c) | 61,000 | 682,535 | |||||||
Don Quijote Holdings Co. Ltd. | (c) | 14,800 | 1,017,455 | |||||||
Doutor Nichires Holdings Co. Ltd. | (c) | 22,200 | 319,199 | |||||||
Horiba Ltd. | (c) | 13,000 | 430,323 | |||||||
JSR Corp. | (c) | 25,000 | 429,107 | |||||||
Kakaku.com, Inc. | (c) | 57,500 | 822,635 | |||||||
Kanamoto Co. Ltd. | (c) | 26,000 | 703,036 | |||||||
NGK Spark Plug Co. Ltd. | (c) | 23,000 | 698,865 | |||||||
Nihon Kohden Corp. | (c) | 3,200 | 157,685 | |||||||
Nishio Rent All Co. Ltd. | (c) | 18,600 | 612,344 | |||||||
NSK Ltd. | (c) | 59,000 | 696,598 | |||||||
NTN Corp. | (c) | 110,000 | 485,782 | |||||||
Shionogi & Co. Ltd. | (c) | 25,700 | 663,981 | |||||||
Tadano Ltd. | (c) | 26,000 | 321,182 | |||||||
THK Co. Ltd. | (c) | 35,700 | 857,939 | |||||||
|
| |||||||||
9,978,972 | ||||||||||
|
| |||||||||
France – 12.1% | ||||||||||
Accor SA | (c) | 10,953 | 492,348 | |||||||
Criteo SA – ADR | (a) | 22,175 | 896,313 | |||||||
Edenred | (c) | 26,606 | 735,815 | |||||||
Ingenico | (c) | 11,845 | 1,247,733 | |||||||
Ipsen SA | (c) | 12,756 | 660,269 | |||||||
JCDecaux SA | (c) | 19,976 | 687,789 | |||||||
Publicis Groupe SA | (c) | 8,217 | 589,285 | |||||||
Teleperformance | (c) | 12,392 | 843,524 | |||||||
UBISOFT Entertainment | (a)(c) | 45,193 | 823,889 | |||||||
Zodiac Aerospace | (c) | 35,170 | 1,184,095 | |||||||
|
| |||||||||
8,161,060 | ||||||||||
|
| |||||||||
Germany – 9.6% | ||||||||||
Deutz AG | (c) | 140,000 | 670,218 | |||||||
Dialog Semiconductor PLC | (a)(c) | 30,000 | 1,047,471 | |||||||
GEA Group AG | (c) | 17,387 | 764,440 | |||||||
HeidelbergCement AG | (c) | 9,416 | 664,580 | |||||||
MorphoSys AG | (a)(c) | 5,102 | 475,286 | |||||||
OSRAM Licht AG | (a)(c) | 9,000 | 353,339 | |||||||
Rheinmetall AG | (c) | 15,405 | 670,719 | |||||||
SAF-Holland SA | (c) | 34,896 | 466,080 | |||||||
Wirecard AG | (c) | 30,879 | 1,346,451 | |||||||
|
| |||||||||
6,458,584 | ||||||||||
|
| |||||||||
Hong Kong – 7.0% | ||||||||||
Beijing Enterprises Water Group Ltd. | (c) | 1,124,000 | 756,623 | |||||||
Brilliance China Automotive Holdings Ltd. | (c) | 368,000 | 586,372 | |||||||
China Everbright International Ltd. | (c) | 610,000 | 908,408 | |||||||
Haier Electronics Group Co. Ltd. | (c) | 225,000 | 534,587 |
Common Stocks (Continued) | Shares | Value | ||||||||
Hong Kong (continued) | ||||||||||
PAX Global Technology Ltd. | (a)(c) | 440,000 | $ | 450,694 | ||||||
Shun Tak Holdings Ltd. | (c) | 1,786,000 | 823,345 | |||||||
Techtronic Industries Co. Ltd. | (c) | 213,000 | 683,322 | |||||||
|
| |||||||||
4,743,351 | ||||||||||
|
| |||||||||
Italy – 5.7% | ||||||||||
Anima Holding SpA | (a)(b)(c) | 93,664 | 471,202 | |||||||
Azimut Holding SpA | (c) | 59,786 | 1,298,815 | |||||||
Banca Generali SpA | (c) | 31,890 | 886,963 | |||||||
Interpump Group SpA | (c) | 30,979 | 434,678 | |||||||
Sorin SpA | (a)(c) | 91,115 | 212,159 | |||||||
Yoox SpA | (a)(c) | 26,300 | 580,711 | |||||||
|
| |||||||||
3,884,528 | ||||||||||
|
| |||||||||
Canada – 3.9% | ||||||||||
Canadian Western Bank | 18,800 | 529,953 | ||||||||
Dollarama, Inc. | 24,102 | 1,232,276 | ||||||||
lululemon athletica, Inc. | (a) | 15,400 | 859,166 | |||||||
|
| |||||||||
2,621,395 | ||||||||||
|
| |||||||||
Israel – 3.6% | ||||||||||
Caesarstone Sdot-Yam Ltd. | 23,836 | 1,425,869 | ||||||||
NICE-Systems Ltd. – ADR | 19,900 | 1,007,935 | ||||||||
|
| |||||||||
2,433,804 | ||||||||||
|
| |||||||||
China – 3.1% | ||||||||||
China ZhengTong Auto Services Holdings Ltd. | (c) | 911,000 | 399,046 | |||||||
CT Environmental Group Ltd. | (c) | 728,000 | 742,366 | |||||||
SouFun Holdings Ltd. – ADR | 73,000 | 539,470 | ||||||||
Sound Global Ltd. | (a)(c) | 350,000 | 404,554 | |||||||
|
| |||||||||
2,085,436 | ||||||||||
|
| |||||||||
South Korea – 2.6% | ||||||||||
Hotel Shilla Co. Ltd. | (c) | 13,532 | 1,122,430 | |||||||
Samsung Electronics Co. Ltd. | (c) | 554 | 666,043 | |||||||
|
| |||||||||
1,788,473 | ||||||||||
|
| |||||||||
Ireland – 2.1% | ||||||||||
Grafton Group PLC | (c) | 61,229 | 605,764 | |||||||
Smurfit Kappa Group PLC | (c) | 34,800 | 782,597 | |||||||
|
| |||||||||
1,388,361 | ||||||||||
|
| |||||||||
Netherlands – 1.8% | ||||||||||
Koninklijke DSM NV | (c) | 9,311 | 567,906 | |||||||
NN Group NV | (a)(c) | 22,900 | 683,645 | |||||||
|
| |||||||||
1,251,551 | ||||||||||
|
| |||||||||
United States – 1.5% | ||||||||||
Nexteer Automotive Group Ltd. | (c) | 744,000 | 633,567 | |||||||
Samsonite International SA | (c) | 116,300 | 344,649 | |||||||
|
| |||||||||
978,216 | ||||||||||
|
| |||||||||
Denmark – 1.2% | ||||||||||
Pandora A/S | (c) | 10,413 | 844,047 | |||||||
|
| |||||||||
Luxembourg – 0.8% | ||||||||||
B&M European Value Retail SA | (c) | 120,732 | 531,424 | |||||||
|
| |||||||||
Belgium – 0.8% | ||||||||||
UCB SA | (c) | 6,743 | 512,720 | |||||||
|
| |||||||||
Mexico – 0.7% | ||||||||||
Grupo Aeroportuario del Sureste SAB | 3,600 | 474,624 | ||||||||
|
| |||||||||
Switzerland – 0.5% | ||||||||||
OC Oerlikon Corp. AG | (c) | 26,241 | 327,570 | |||||||
|
| |||||||||
Sweden – 0.2% | ||||||||||
Swedish Orphan Biovitrum AB | (a)(c) | 16,036 | 163,028 | |||||||
|
| |||||||||
Total Common Stocks (Cost $51,665,149) | $ | 63,232,907 | ||||||||
|
|
33 | (continued) |
Ohio National Fund, Inc. | International Small-Mid Company Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Money Market Funds - 6.7% | Shares | Value | ||||||||
State Street Institutional Liquid Reserves Fund Institutional Class | 3,380,723 | $ | 3,380,723 | |||||||
State Street Institutional U.S. Government | 1,126,461 | 1,126,461 | ||||||||
|
| |||||||||
Total Money Market Funds (Cost $4,507,184) | $ | 4,507,184 | ||||||||
|
| |||||||||
Total Investments – 100.3% (Cost $56,172,333) | (d) | $ | 67,740,091 | |||||||
Liabilities in Excess of Other Assets – (0.3)% | (185,725) | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 67,554,366 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Abbreviations:
ADR: American Depositary Receipts
Footnotes:
(a) | Non-income producing security. |
(b) | Security exempt from registration under Regulation D of the Securities Act of 1933. These securities may be resold in transactions exempt form registration, normally to qualified buyers under Rule 144A. At December 31, 2014, the value of these securities totaled $471,202, or 0.7% of the Portfolio’s net assets. These securities were deemed liquid pursuant to procedures approved by the Board of Directors. |
(c) | Security traded on a foreign exchange has been valued at an estimate of fair value that is different than the local market close price. These fair value estimates are determined by an independent fair valuation service that has been approved by the Board. These securities represent $56,267,301, or 83.3% of the Portfolio’s net assets. |
Other Portfolio securities are not subjected to fair valuation procedures because they are traded on domestic or foreign exchanges that have close times that are consistent with the U.S. market close, normally 4:00 pm Eastern Time.
(d) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
Sector Classifications (Common stocks): (Percent of net assets)
Industrials | 25.3% | |||
Consumer Discretionary | 25.0% | |||
Information Technology | 14.8% | |||
Financials | 9.8% | |||
Materials | 8.7% | |||
Health Care | 5.6% | |||
Utilities | 2.8% | |||
Energy | 1.6% | |||
|
| |||
93.6% | ||||
|
|
The accompanying notes are an integral part of these financial statements.
34 |
Ohio National Fund, Inc. | Aggressive Growth Portfolio |
Objective/Strategy
The Aggressive Growth Portfolio seeks long-term capital growth by investing primarily in domestic and foreign equity securities selected for growth potential.
Performance as of December 31, 2014
Average Annual Returns | ||||
One year | 9.60% | |||
Five years | 13.02% | |||
Ten years | 8.68% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Aggressive Growth Portfolio returned 9.60% versus 13.69% for the current benchmark, the S&P 500 Index.
Our stock selection in the Information Technology and Consumer Discretionary sectors were the largest detractors from relative performance. Our relative underperformance in both sectors was stock specific, rather than the result of a positive or negative underlying trend to which we were under- or over-exposed.(1)
Our stock selection in the Health Care sector and our underweight to the Energy sector were the largest contributors to relative results. Within the Health Care sector, we owned several biotechnology companies that announced encouraging results about innovative therapies under development, and that was a large driver of performance. We have long maintained an underweight to the Energy sector in our Portfolio due to the sensitivity that many businesses in the sector have to commodity prices. The decision to underweight the sector was important in the fourth quarter, when Energy stocks sold off broadly as oil prices sunk.(1)
The Portfolio’s detractors were Amazon.com, Inc., Precision Castparts Corp., Prada SpA, L Brands, Inc., and MGM Resorts International. Amazon.com, Inc., the online retailer, offers a wide range of products, including books, music, videotapes, computers, electronics, home and garden, and numerous other products. We believe the company’s competitive advantages of a low overhead cost structure, allowing an aggressive pricing structure, and faster shipping will cause consumers to shift an increasing amount of their general merchandise spending toward it. Given that over 90% of retail sales are still sold offline, we believe Amazon.com, Inc. has significant opportunities ahead, particularly as it expands into new business lines and geographies.(1)
Precision Castparts Corp. makes castings, forgings and airframe products for the aerospace and power industries. Precision Castparts Corp. has a strong management team and makes highly specialized and complex products, which we think gives it a competitive advantage. We believe the company has strong growth opportunities as it continues to gain more content share per new aircraft.
We sold our position in Prada SpA, the Italian designer, to pursue other companies we felt had more durable growth profiles. We also sold L Brands, Inc. during the period due to concerns the company was not well positioned, as more shopping moves from malls to mobile and online channels. We sold MGM Resorts International, casino operator, during the period to pursue other opportunities we felt offered greater exposure to the Asian traveler, and that also did not have a highly levered balance sheet.(1)
The Portfolio’s key contributors were Lowe’s Cos., Inc., Medivation, Inc., Canadian Pacific Railway Ltd., Celgene Corp., and Valeant Pharmaceuticals International, Inc. Lowe’s Cos., Inc., the home improvement retailer, distributes building materials and supplies through stores in the U.S. Lowe’s Cos., Inc. offers a complete line of products and services for home decorating, maintenance, repair, remodeling and property maintenance. As one of two major home improvement retailers, we believe the company is well positioned to benefit from increased housing turnover, home price appreciation, an aging housing inventory and greater credit availability. We also believe Lowe’s Cos., Inc. can improve its margins from several operational initiatives. Finally, we appreciate that the company’s interests are aligned with shareholders, as demonstrated by its history of returning significant amounts of capital to shareholders through share buybacks and dividends.(1)
Medivation, Inc., the biopharmaceutical company, is focused on the rapid development of small-molecule drugs to treat serious diseases for which there are limited treatment options. Medivation, Inc. has developed a promising prostate cancer drug with Astellas Pharma called Xtandi, which we think could grow significantly. We sold the position after it reached our price target this year.(1)
Canadian Pacific Railway Ltd.’s railroad network across Canada is a valuable asset that would be nearly impossible for other transportation and logistics companies to replicate. The company also has a significant cost advantage over the trucking industry. In our view, Canadian Pacific Railway Ltd. still has a large opportunity to grow revenues and railroad volumes as it improves execution around its railroad network. A new CEO took over the firm in 2012 and is transforming the company by focusing on three key points: better service and reliability to customers, improved profitability through operating efficiency and new revenue opportunities. As service and reliability improve, it will likely drive more shippers to use Canadian Pacific Railway Ltd. instead of trucking services.
Celgene Corp., a global biotechnology company, seeks to deliver truly innovative and life-changing drugs for the treatment of cancer and other severe immune, inflammatory conditions. We see the potential for continued strong growth ahead for Celgene Corp.’s blood-cancer-fighting Revlimid drug franchise and believe its additional pipeline products could further supplement this growth. Some of the new drugs that could become meaningful contributors include Abraxane for pancreatic cancer, Pomalyst for refractory multiple myeloma, and a recently licensed drug to treat Crohn’s disease. We also appreciate management’s willingness to utilize free cash flow for share repurchases and product acquisitions.
For the past decade, Valeant Pharmaceuticals International, Inc. has run a different playbook than much of the pharmaceutical industry when it comes to new drug development. High research and development costs have been value-destructive for many pharmaceutical companies, but Valeant Pharmaceuticals International, Inc. has largely avoided high research and development spending by making a series of value-accretive acquisitions of pharmaceutical companies with lower product risk. Valeant Pharmaceuticals International, Inc. also takes many of the costs out of those companies and
35 | (continued) |
Ohio National Fund, Inc. | Aggressive Growth Portfolio (Continued) |
essentially acts as a distributor of a number of valuable drugs, rather than a company dependent on new drug discovery for growth.
Heading into 2015, we have a positive outlook for both the U.S. economy and domestic equities. The U.S. is clearly showing economic strength relative to the rest of the world. While declining commodity prices may create some short-term uncertainty, lower oil prices ultimately represent a tax cut for most consumers around the world. In a country such as the U.S., where such a large portion of the economy is driven by consumer spending, the tailwind from a sharp drop in oil prices can be considerable.
Looking at equity markets, we believe valuations are reasonable. However, after considerable multiple expansion in 2013 and the first half of 2014, we expect that further stock price appreciation will need to be accompanied by earnings growth. If earning growth again becomes the primary driver of stock returns next year, we believe such an environment is favorable for our investment process. We continue to be encouraged by the competitive advantages of the companies we invest in, and remain confident they are poised to grow in excess of the market over longer time horizons.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The S&P 500 Index is a capitalization-weighted index designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index presented herein includes the effects of reinvested dividends.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 96.8 | |||
Money Market Funds | 3.2 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Lowe’s Cos., Inc. | 4.6 | |||
2. Precision Castparts Corp. | 4.5 | |||
3. Endo International PLC | 4.0 | |||
4. Google, Inc. Class C | 4.0 | |||
5. Valeant Pharmaceuticals International, Inc. | 3.8 | |||
6. Crown Castle International Corp. | 3.7 | |||
7. Celgene Corp. | 3.6 | |||
8. MasterCard, Inc. Class A | 3.5 | |||
9. Canadian Pacific Railway Ltd. | 3.3 | |||
10. Delphi Automotive PLC | 3.2 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Consumer Discretionary | 23.2 | |||
Information Technology | 22.9 | |||
Health Care | 19.8 | |||
Financials | 15.8 | |||
Industrials | 10.9 | |||
Materials | 2.0 | |||
Telecommunication Services | 1.7 | |||
Energy | 0.5 | |||
|
| |||
96.8 | ||||
|
|
36 |
Ohio National Fund, Inc. | Aggressive Growth Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 96.8% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 23.2% |
| |||||||||
Delphi Automotive PLC (Auto Components) | 17,565 | $ | 1,277,327 | |||||||
Las Vegas Sands Corp. (Hotels, Restaurants & Leisure) | 10,411 | 605,504 | ||||||||
Starbucks Corp. (Hotels, Restaurants & Leisure) | 13,482 | 1,106,198 | ||||||||
Amazon.com, Inc. (Internet & Catalog Retail) | (a) | 3,632 | 1,127,191 | |||||||
Priceline Group, Inc. / The (Internet & Catalog Retail) | (a) | 996 | 1,135,649 | |||||||
Wayfair, Inc. Class A (Internet & Catalog Retail) | (a) | 11,054 | 219,422 | |||||||
Comcast Corp. Class A (Media) | 18,285 | 1,060,713 | ||||||||
Lowe’s Cos., Inc. (Specialty Retail) | 26,601 | 1,830,149 | ||||||||
TJX Cos., Inc. / The (Specialty Retail) | 13,051 | 895,038 | ||||||||
|
| |||||||||
9,257,191 | ||||||||||
|
| |||||||||
ENERGY – 0.5% | ||||||||||
Baker Hughes, Inc. (Energy Equip. & Svs.) | 3,549 | 198,992 | ||||||||
|
| |||||||||
FINANCIALS – 15.8% | ||||||||||
PacWest Bancorp (Banks) | 21,066 | 957,660 | ||||||||
U.S. Bancorp (Banks) | 22,376 | 1,005,801 | ||||||||
E*TRADE Financial Corp. (Capital Markets) | (a) | 28,876 | 700,387 | |||||||
Moelis & Co. Class A (Capital Markets) | 10,357 | 361,770 | ||||||||
Intercontinental Exchange, Inc. (Diversified Financial Svs.) | 3,580 | 785,058 | ||||||||
Aon PLC (Insurance) | 11,052 | 1,048,061 | ||||||||
Crown Castle International Corp. (Real Estate Investment Trusts) | 18,544 | 1,459,413 | ||||||||
|
| |||||||||
6,318,150 | ||||||||||
|
| |||||||||
HEALTH CARE – 19.8% | ||||||||||
Celgene Corp. (Biotechnology) | (a) | 12,891 | 1,441,987 | |||||||
Pharmacyclics, Inc. (Biotechnology) | (a) | 4,108 | 502,244 | |||||||
athenahealth, Inc. (Health Care Technology) | (a) | 5,433 | 791,588 | |||||||
Endo International PLC (Pharmaceuticals) | (a) | 22,032 | 1,588,948 | |||||||
Phibro Animal Health Corp. Class A (Pharmaceuticals) | 14,697 | 463,690 | ||||||||
Salix Pharmaceuticals Ltd. (Pharmaceuticals) | (a) | 2,998 | 344,590 | |||||||
Valeant Pharmaceuticals International, Inc. (Pharmaceuticals) | (a) | 10,633 | 1,521,689 | |||||||
Zoetis, Inc. (Pharmaceuticals) | 28,824 | 1,240,297 | ||||||||
|
| |||||||||
7,895,033 | ||||||||||
|
|
Common Stocks (Continued) | Shares | Value | ||||||||
INDUSTRIALS – 10.9% | ||||||||||
Precision Castparts Corp. (Aerospace & Defense) | 7,511 | $ | 1,809,250 | |||||||
Nielsen NV (Professional Svs.) | 27,068 | 1,210,752 | ||||||||
Canadian Pacific Railway Ltd. (Road & Rail) | 6,927 | 1,334,764 | ||||||||
|
| |||||||||
4,354,766 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 22.9% | ||||||||||
Amphenol Corp. Class A (Electronic Equip., Instr. & Comp.) | 8,377 | 450,766 | ||||||||
Alibaba Group Holding Ltd. – ADR (Internet Software & Svs.) | (a) | 9,411 | 978,179 | |||||||
CoStar Group, Inc. (Internet Software & Svs.) | (a) | 6,086 | 1,117,572 | |||||||
Google, Inc. Class C (Internet Software & Svs.) | (a) | 3,007 | 1,582,885 | |||||||
LinkedIn Corp. (Internet Software & Svs.) | (a) | 2,373 | 545,102 | |||||||
Yahoo!, Inc. (Internet Software & Svs.) | (a) | 11,887 | 600,412 | |||||||
MasterCard, Inc. Class A (IT Svs.) | 16,268 | 1,401,651 | ||||||||
WEX, Inc. (IT Svs.) | (a) | 2,961 | 292,902 | |||||||
ARM Holdings PLC – ADR (Semiconductors & Equip.) | 17,629 | 816,223 | ||||||||
NetSuite, Inc. (Software) | (a) | 3,303 | 360,589 | |||||||
salesforce.com, Inc. (Software) | (a) | 16,845 | 999,077 | |||||||
|
| |||||||||
9,145,358 | ||||||||||
|
| |||||||||
MATERIALS – 2.0% | ||||||||||
Monsanto Co. (Chemicals) | 6,764 | 808,095 | ||||||||
|
| |||||||||
TELECOMMUNICATION SERVICES – 1.7% | ||||||||||
Iliad SA (Diversified Telecom. Svs.) | (b) | 2,875 | 691,258 | |||||||
|
| |||||||||
Total Common Stocks (Cost $31,094,191) | $ | 38,668,843 | ||||||||
|
| |||||||||
Money Market Funds – 4.6% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds | 1,825,000 | $ | 1,825,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $1,825,000) | $ | 1,825,000 | ||||||||
|
| |||||||||
Total Investments – 101.4% (Cost $32,919,191) | (c) | $ | 40,493,843 | |||||||
Liabilities in Excess of Other Assets – (1.4)% | (568,574) | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 39,925,269 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Abbreviations:
ADR: American Depositary Receipts
Footnotes:
(a) | Non-income producing security. |
(b) | As discussed in Note 2 of the Notes to Financial Statements, not all investments that are traded on a foreign exchange are valued at an estimate that is different from the local close price. In some instances, the independent fair valuation service uses a stock’s local close price because the service’s measure of predictability related to their valuation model of a stock is below a chosen threshold. These securities represent $691,258, or 1.7% of the Portfolio’s net assets. |
Other Portfolio securities are not subjected to fair value procedures because they are traded on domestic or foreign exchanges that have close times that are consistent with the U.S. market close, normally 4:00 pm Eastern Time. |
(c) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
37 |
Ohio National Fund, Inc. | Small Cap Growth Portfolio |
Objective/Strategy
The Small Cap Growth Portfolio seeks long-term capital appreciation by investing at least 80% of its net assets in stocks of small companies.
Performance as of December 31, 2014
Average Annual Returns | ||||
One year | 10.68% | |||
Five years | 20.44% | |||
Ten years | 11.85% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Small Cap Growth Portfolio returned 10.68% versus 5.60% for the current benchmark, the Russell 2000 Growth Index.
We have taken a high-quality approach to investing in small caps, and that approach paid off during the year. Many of the companies in the Portfolio have predictable, recurring revenue streams. Our companies also typically generate a high return on invested capital and have demonstrated a proven ability to expand profit margins. We also put a great emphasis on identifying companies with sustainable competitive advantages that should help them gain market share and grow in a variety of market environments. Given our high-quality focus, we expect our Portfolio to produce positive results during market rallies, and to outperform the benchmark in weak or uncertain market environments, creating a smoother path to investing in small caps and a better opportunity to generate higher compounded returns over full market cycles.
This calendar year provided a microcosm of how we expect our Portfolio to perform over a market cycle. Much of our relative outperformance came in the latter half of the year, when volatility increased and high-quality stocks returned to favor. As part of our high-quality focus, we avoided some of the more speculative stocks that had been driven up by momentum in early 2014, and our avoidance of such companies, many of which are yet to generate earnings, also aided performance in the second half of the year.
At the sector level, a meaningful part of our outperformance was driven by strong stock selection in the Energy and Health Care sectors. Sinking oil prices caused Energy stocks to sell off broadly late in the year, and while our Energy holdings were not immune to the cycle, they held up much better as a group than those in the benchmark. We would expect such an outcome in an environment where falling oil prices are a concern, due to our focus on finding Energy companies with less commodity sensitivity and more stable revenue streams. We have avoided many of the highly levered exploration and production companies whose business models face considerable risk if commodity prices do not rise. Instead, we have tended to own pipeline companies whose contracts are less tied to
the price of the underlying commodity, which makes their revenues less susceptible to a drop in oil prices.(1)
Within the Health Care sector, we’ve benefitted by owning some biotech companies that either introduced new innovative products to the market, or announced positive clinical data about highly innovative therapies under development. While our biotech companies fared well during the year, we should highlight that we have also taken a careful approach to investing within the biotech and pharmaceutical industries, as this was one of the momentum-driven pockets of the market where we thought some companies traded at rather high valuations. We navigated that environment by taking smaller positions with companies whose performance is tied to the success or failure of a clinical trial for a single drug, and taking larger positions with biotech companies that have already had innovative therapies approved by the Food and Drug Administration or have multiple products in their pipelines. We have also worked closely with our health care analysts, who come from scientific backgrounds, to gain a better understanding of the science behind new therapies to determine how innovative a therapy is relative to existing products, as well as its likelihood of passing clinical trials. (1)
Key contributors to performance were SS&C Technologies Holdings, Inc., Measurement Specialties, Inc., Diamond Resorts International, Inc., Utragenyx Pharmaceutical, Inc., and Cadence Design Systems, Inc. SS&C Technologies Holdings, Inc. is a global provider of investment and financial software-enabled services and is focused exclusively on the global financial services industry. We like SS&C Technologies Holdings, Inc. because the majority of its revenue comes from recurring sources, such as subscription services or software maintenance, where client retention has remained high. It also has the ability to cross-sell existing clients its entire suite of services. We believe a significant opportunity for the company is in fund administration, where hedge funds are looking for independent providers with a high level of transparency and accountability.(1)
Measurement Specialties, Inc. is a leading global designer and manufacturer of sensors and sensor-based systems. We believe the company will benefit as sensor content grows in a wide range of end products. This long range growth opportunity was recognized by a suitor, as TE Connectivity Ltd. purchased the company at a premium in late 2014.
Diamond Resorts International, Inc. manages vacation ownership resorts across a wide network of more than 300 vacation destinations. We like the low levels of capital intensity in its resort management business, and also like the growth potential for its business related to time share sales.
Ultragenyx Pharmaceutical, Inc. is a clinical-stage biotechnology company committed to bringing to market novel products for the treatment of rare and ultra-rare diseases. We believe the company has an experienced team of drug developers and a promising pipeline of potential treatments.
Cadence Design Systems, Inc., a provider of software technology, design and consulting services and technology, licenses its electronic design automation software to customers who use Cadence Design System, Inc.’s software to design semiconductors and electronic systems. We believe the company’s semiconductor design software is becoming increasingly important as semiconductors grow more complex. As one of only a few companies specializing in this market segment, Cadence Design Systems, Inc. should be able to increase pricing and profits. We also appreciate the company’s intellectual property licensing business, which we believe is a high-margin, high-growth operation.
38 | (continued) |
Ohio National Fund, Inc. | Small Cap Growth Portfolio (Continued) |
While we are generally pleased with our Portfolio’s performance, we did have stocks that declined during the period and detracted from performance. Our stock selection in the Industrials and Consumer Discretionary sectors detracted from relative performance. We believe the underperformance in both sectors was principally due to stock specific factors. Two industrial stocks, GrafTech International Ltd. and Kennametal, Inc., were among the largest detractors within the entire Portfolio.(1)
Kennametal, Inc. makes cutting tools used in end markets serving the Energy sector. We are reviewing the stock as we wait to see the plans of its new CEO. GrafTech International Ltd. produces graphite electrodes that go into electric arc furnaces, which is a more environmentally friendly way to produce steel than using blast furnaces. We trimmed the stock at higher levels due to concerns about the macro environment for steel consumption globally. However we believe the stock is undervalued at its current level after a meaningful selloff late in the year. Capacity in the graphite electrode industry has been reduced since 2012, which should improve pricing for graphite electrodes at some point. We also believe new board members may improve strategy for the company.(1)
Other key detractors from performance were Solera Holdings, Inc., Hibbett Sports, Inc., and SFX Entertainment, Inc.(1)
Solera Holdings, Inc. is a provider of software and services to the automobile insurance claims processing industry, as Solera Holdings, Inc. supplies critical information on auto repairs to insurance companies. Insurers depend on the information from Solera Holdings, Inc.’s databases, as it helps them reduce the cost of processing claims. In addition to its recurring revenue stream from existing insurance clients, we think Solera Holdings, Inc. could experience significant growth through international expansion, including expansion into emerging markets, which will likely favor this technology over current paper-based processes.(1)
Hibbett Sports, Inc. is a sporting goods retailer specializing in footwear, equipment and apparel. We like the company’s competitive positioning. Hibbett Sports, Inc. typically operates in smaller, less-populated areas of the U.S. where competition is limited, and we believe it can bring better selection than a local retailer. We also believe the company can grow square footage, and like that it has consistently been buying back shares.(1)
SFX Entertainment, Inc. is a producer of live events and entertainment connect focused on the electronic dance music (EDM) culture. EDM festivals are drawing hundreds of thousands of concert-goers around the globe with a passionate “millennial” fan base. We believe SFX Entertainment, Inc. can capitalize on sponsorship dollars that advertisers will be willing to pay to reach this very targeted and attractive demographic.(1)
Over the course of the past year, we’ve seen larger-than-normal movements for many stocks in reaction to missing or beating earnings expectations or other news about a company. We think the market has overreacted to both positive and negative news, but we have kept a patient approach with our companies, as demonstrated by our generally low turnover rate. Heading into 2015, we plan to deploy the same approach, using overly negative reactions to increase our position sizes in companies we believe are high-quality businesses, and using large bounces in a stock price to trim positions that are closer to our valuation targets.
Heading into the new year, valuations for small-cap stocks remain on the higher end of historical averages. Going forward, we would expect a lower aggregate return environment, and we would also expect earnings growth, rather than multiple expansion, to be the primary driver of future returns. We believe this investment backdrop could be beneficial for our relative performance. We have avoided many of the stocks that were driven by momentum in 2014, and believe these pockets of the market are due for multiple consolidations in the coming months or quarters. We also believe our focus on companies that have steadier, recurring earnings streams should be in favor in an environment where earnings growth is the primary driver of further stock price appreciation.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes the Russell 2000 Index companies with higher price-to-value ratios and higher forcasted growth values. The Russell 2000 Index includes the 2000 firms from the Russell 3000 Index with the smallest market capitalizations. The Russell 3000 Index represents 98% of the investable U.S. equity markets. The index presented herein includes the effects of reinvested dividends.
39 | (continued) |
Ohio National Fund, Inc. | Small Cap Growth Portfolio (Continued) |
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 99.0 | |||
Money Market Funds | 1.0 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. SS&C Technologies Holdings, Inc. | 2.5 | |||
2. Rexnord Corp. | 2.2 | |||
3. Solera Holdings, Inc. | 2.1 | |||
4. Sensient Technologies Corp. | 1.9 | |||
5. WESCO International, Inc. | 1.9 | |||
6. Cadence Design Systems, Inc. | 1.8 | |||
7. Sally Beauty Holdings, Inc. | 1.7 | |||
8. Wolverine World Wide, Inc. | 1.7 | |||
9. Belden, Inc. | 1.7 | |||
10. Carter’s, Inc. | 1.7 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Information Technology | 32.2 | |||
Industrials | 19.7 | |||
Health Care | 19.2 | |||
Consumer Discretionary | 14.2 | |||
Financials | 7.4 | |||
Consumer Staples | 2.5 | |||
Materials | 1.9 | |||
Energy | 1.9 | |||
|
| |||
99.0 | ||||
|
|
40 |
Ohio National Fund, Inc. | Small Cap Growth Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 99.0% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 14.2% |
| |||||||||
Ascent Capital Group, Inc. Class A (Diversified Consumer Svs.) | (a) | 11,528 | $ | 610,177 | ||||||
ServiceMaster Global Holdings, Inc. (Diversified Consumer Svs.) | (a) | 57,124 | 1,529,209 | |||||||
Biglari Holdings, Inc. (Hotels, Restaurants & Leisure) | (a) | 8,158 | 3,259,203 | |||||||
Diamond Resorts International, Inc. (Hotels, Restaurants & Leisure) | (a) | 119,008 | 3,320,323 | |||||||
Domino’s Pizza Group PLC (Hotels, Restaurants & Leisure) | (b) | 112,688 | 1,230,373 | |||||||
Popeyes Louisiana Kitchen, Inc. (Hotels, Restaurants & Leisure) | (a) | 16,619 | 935,151 | |||||||
Manchester United PLC Class A (Media) | (a) | 53,358 | 848,392 | |||||||
National CineMedia, Inc. (Media) | 151,863 | 2,182,271 | ||||||||
SFX Entertainment, Inc. (Media) | (a) | 102,318 | 463,500 | |||||||
Hibbett Sports, Inc. (Specialty Retail) | (a) | 63,740 | 3,086,928 | |||||||
Monro Muffler Brake, Inc. (Specialty Retail) | 28,711 | 1,659,496 | ||||||||
Sally Beauty Holdings, Inc. (Specialty Retail) | (a) | 120,695 | 3,710,164 | |||||||
Carter’s, Inc. (Textiles, Apparel & Luxury Goods) | 40,908 | 3,571,677 | ||||||||
Wolverine World Wide, Inc. (Textiles, Apparel & Luxury Goods) | 125,782 | 3,706,796 | ||||||||
|
| |||||||||
30,113,660 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 2.5% | ||||||||||
Casey’s General Stores, Inc. (Food & Staples Retailing) | 23,727 | 2,143,023 | ||||||||
Diamond Foods, Inc. (Food Products) | (a) | 781 | 22,048 | |||||||
IGI Laboratories, Inc. (Personal Products) | (a) | 58,027 | 510,638 | |||||||
Ontex Group NV (Personal Products) | (a)(c) | 90,781 | 2,605,089 | |||||||
|
| |||||||||
5,280,798 | ||||||||||
|
| |||||||||
ENERGY – 1.9% | ||||||||||
Dril-Quip, Inc. (Energy Equip. & Svs.) | (a) | 19,170 | 1,470,914 | |||||||
DCP Midstream Partners LP (Oil, Gas & Consumable Fuels) | 56,032 | 2,545,534 | ||||||||
|
| |||||||||
4,016,448 | ||||||||||
|
| |||||||||
FINANCIALS – 7.4% | ||||||||||
Bank of the Ozarks, Inc. (Banks) | 34,715 | 1,316,393 | ||||||||
Artisan Partners Asset Management, Inc. Class A (Capital Markets) | 32,389 | 1,636,616 | ||||||||
Financial Engines, Inc. (Capital Markets) | 26,543 | 970,147 | ||||||||
FXCM, Inc. Class A (Capital Markets) | 70,725 | 1,171,913 | ||||||||
LPL Financial Holdings, Inc. (Capital Markets) | 74,208 | 3,305,966 | ||||||||
WisdomTree Investments, Inc. (Capital Markets) | 90,065 | 1,411,769 | ||||||||
MSCI, Inc. (Diversified Financial Svs.) | 43,616 | 2,069,143 | ||||||||
Jones Lang LaSalle, Inc. (Real Estate Mgmt. & Development) | 12,443 | 1,865,579 | ||||||||
RE/MAX Holdings Inc. (Real Estate Mgmt. & Development) | 19,241 | 659,004 | ||||||||
St. Joe Co. / The (Real Estate Mgmt. & Development) | (a) | 69,699 | 1,281,765 | |||||||
|
| |||||||||
15,688,295 | ||||||||||
|
| |||||||||
HEALTH CARE – 19.2% | ||||||||||
ACADIA Pharmaceuticals, Inc. (Biotechnology) | (a) | 31,951 | 1,014,444 | |||||||
Achillion Pharmaceuticals, Inc. (Biotechnology) | (a) | 39,325 | 481,731 | |||||||
Chimerix, Inc. (Biotechnology) | (a) | 27,371 | 1,101,956 | |||||||
Dyax Corp. (Biotechnology) | (a) | 119,917 | 1,686,033 | |||||||
Insys Therapeutics, Inc. (Biotechnology) | (a) | 35,611 | 1,501,360 | |||||||
Ironwood Pharmaceuticals, Inc. (Biotechnology) | (a) | 115,923 | 1,775,940 | |||||||
Medivation, Inc. (Biotechnology) | (a) | 8,186 | 815,407 | |||||||
NPS Pharmaceuticals, Inc. (Biotechnology) | (a) | 29,035 | 1,038,582 | |||||||
OvaScience, Inc. (Biotechnology) | (a) | 19,366 | 856,364 | |||||||
Puma Biotechnology, Inc. (Biotechnology) | (a) | 3,824 | 723,768 | |||||||
Synageva BioPharma Corp. (Biotechnology) | (a) | 11,222 | 1,041,289 | |||||||
Endologix, Inc. (Health Care Equip. & Supplies) | (a) | 144,200 | 2,204,818 | |||||||
HeartWare International, Inc. (Health Care Equip. & Supplies) | (a) | 9,841 | 722,625 |
Common Stocks (Continued) | Shares | Value | ||||||||
HEALTH CARE (continued) | ||||||||||
LDR Holding Corp. (Health Care Equip. & Supplies) | (a) | 50,570 | $ | 1,657,685 | ||||||
Masimo Corp. (Health Care Equip. & Supplies) | (a) | 71,888 | 1,893,530 | |||||||
Novadaq Technologies, Inc. (Health Care Equip. & Supplies) | (a) | 138,399 | 2,300,191 | |||||||
Quidel Corp. (Health Care Equip. & Supplies) | (a) | 55,714 | 1,611,249 | |||||||
Capital Senior Living Corp. (Health Care Providers & Svs.) | (a) | 51,017 | 1,270,833 | |||||||
ExamWorks Group, Inc. (Health Care Providers & Svs.) | (a) | 15,512 | 645,144 | |||||||
HealthEquity, Inc. (Health Care Providers & Svs.) | (a) | 23,898 | 608,204 | |||||||
athenahealth, Inc. (Health Care Technology) | (a) | 12,199 | 1,777,394 | |||||||
HMS Holdings Corp. (Health Care Technology) | (a) | 43,390 | 917,265 | |||||||
Bio-Techne Corp. (Life Sciences Tools & Svs.) | 20,398 | 1,884,775 | ||||||||
Catalent, Inc. (Pharmaceuticals) | (a) | 52,728 | 1,470,057 | |||||||
Concordia Healthcare Corp. (Pharmaceuticals) | 24,489 | 985,420 | ||||||||
Mallinckrodt PLC (Pharmaceuticals) | (a) | 22,186 | 2,197,080 | |||||||
Pacira Pharmaceuticals, Inc. (Pharmaceuticals) | (a) | 12,575 | 1,114,899 | |||||||
Pernix Therapeutics Holdings, Inc. (Pharmaceuticals) | (a) | 80,271 | 753,745 | |||||||
Phibro Animal Health Corp. Class A (Pharmaceuticals) | 47,692 | 1,504,683 | ||||||||
Prestige Brands Holdings, Inc. (Pharmaceuticals) | (a) | 47,611 | 1,653,054 | |||||||
Relypsa, Inc. (Pharmaceuticals) | (a) | 46,494 | 1,432,015 | |||||||
|
| |||||||||
40,641,540 | ||||||||||
|
| |||||||||
INDUSTRIALS – 19.7% | ||||||||||
HEICO Corp. Class A (Aerospace & Defense) | 67,656 | 3,204,188 | ||||||||
Sparton Corp. (Aerospace & Defense) | (a) | 23,873 | 676,561 | |||||||
Hub Group, Inc. Class A (Air Freight & Logistics) | (a) | 59,536 | 2,267,131 | |||||||
A.O. Smith Corp. (Building Products) | 44,560 | 2,513,630 | ||||||||
Heritage-Crystal Clean, Inc. (Commercial Svs. & Supplies) | (a) | 35,520 | 437,962 | |||||||
SP Plus Corp. (Commercial Svs. & Supplies) | (a) | 67,070 | 1,692,176 | |||||||
EnerSys (Electrical Equip.) | 53,481 | 3,300,847 | ||||||||
GrafTech International Ltd. (Electrical Equip.) | (a) | 247,179 | 1,250,726 | |||||||
Polypore International, Inc. (Electrical Equip.) | (a) | 17,336 | 815,659 | |||||||
Raven Industries, Inc. (Industrial Conglomerates) | 21,984 | 549,600 | ||||||||
CIRCOR International, Inc. (Machinery) | 10,883 | 656,027 | ||||||||
Kennametal, Inc. (Machinery) | 96,045 | 3,437,451 | ||||||||
Nordson Corp. (Machinery) | 30,822 | 2,402,883 | ||||||||
Rexnord Corp. (Machinery) | (a) | 165,018 | 4,655,158 | |||||||
Wabtec Corp. (Machinery) | 37,085 | 3,222,316 | ||||||||
Corporate Executive Board Co. / The (Professional Svs.) | 23,886 | 1,732,452 | ||||||||
Paylocity Holding Corp. (Professional Svs.) | (a) | 23,447 | 612,201 | |||||||
Landstar System, Inc. (Road & Rail) | 14,028 | 1,017,451 | ||||||||
Old Dominion Freight Line, Inc. (Road & Rail) | (a) | 23,487 | 1,823,531 | |||||||
Saia, Inc. (Road & Rail) | (a) | 28,415 | 1,573,054 | |||||||
WESCO International, Inc. (Trading Companies & Distributors) | (a) | 52,638 | 4,011,542 | |||||||
|
| |||||||||
41,852,546 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 32.2% | ||||||||||
Belden, Inc. (Electronic Equip., Instr. & Comp.) | 45,898 | 3,617,221 | ||||||||
CTS Corp. (Electronic Equip., Instr. & Comp.) | 136,181 | 2,428,107 | ||||||||
National Instruments Corp. (Electronic Equip., Instr. & Comp.) | 43,400 | 1,349,306 | ||||||||
OSI Systems, Inc. (Electronic Equip., Instr. & Comp.) | (a) | 22,780 | 1,612,141 | |||||||
ChannelAdvisor Corp. (Internet Software & Svs.) | (a) | 43,269 | 933,745 | |||||||
Cimpress NV (Internet Software & Svs.) | (a) | 21,076 | 1,577,328 | |||||||
CoStar Group, Inc. (Internet Software & Svs.) | (a) | 6,899 | 1,266,863 | |||||||
Demandware, Inc. (Internet Software & Svs.) | (a) | 12,852 | 739,504 | |||||||
Endurance International Group Holdings, Inc. (Internet Software & Svs.) | (a) | 130,242 | 2,400,360 | |||||||
Envestnet, Inc. (Internet Software & Svs.) | (a) | 28,594 | 1,405,109 | |||||||
HomeAway, Inc. (Internet Software & Svs.) | (a) | 23,260 | 692,683 | |||||||
j2 Global, Inc. (Internet Software & Svs.) | 35,646 | 2,210,052 | ||||||||
Textura Corp. (Internet Software & Svs.) | (a) | 27,083 | 771,053 |
41 | (continued) |
Ohio National Fund, Inc. | Small Cap Growth Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Common Stocks (Continued) | Shares | Value | ||||||||
INFORMATION TECHNOLOGY (continued) | ||||||||||
Zillow, Inc. Class A (Internet Software & Svs.) | (a) | 9,809 | $ | 1,038,675 | ||||||
Blackhawk Network Holdings, Inc. Class B (IT Svs.) | (a) | 38,655 | 1,456,907 | |||||||
Broadridge Financial Solutions, Inc. (IT Svs.) | 72,870 | 3,365,137 | ||||||||
Euronet Worldwide, Inc. (IT Svs.) | (a) | 55,948 | 3,071,545 | |||||||
MAXIMUS, Inc. (IT Svs.) | 40,085 | 2,198,261 | ||||||||
WEX, Inc. (IT Svs.) | (a) | 17,890 | 1,769,679 | |||||||
Atmel Corp. (Semiconductors & Equip.) | (a) | 311,553 | 2,615,487 | |||||||
ON Semiconductor Corp. (Semiconductors & Equip.) | (a) | 296,712 | 3,005,693 | |||||||
ACI Worldwide, Inc. (Software) | (a) | 57,629 | 1,162,377 | |||||||
Advent Software, Inc. (Software) | 56,633 | 1,735,235 | ||||||||
Blackbaud, Inc. (Software) | 59,615 | 2,578,945 | ||||||||
Cadence Design Systems, Inc. (Software) | (a) | 195,796 | 3,714,250 | |||||||
FleetMatics Group PLC (Software) | (a) | 38,949 | 1,382,300 | |||||||
Guidewire Software, Inc. (Software) | (a) | 25,003 | 1,265,902 | |||||||
NICE-Systems Ltd. – ADR (Software) | 58,307 | 2,953,250 | ||||||||
RealPage, Inc. (Software) | (a) | 96,140 | 2,111,234 | |||||||
Solera Holdings, Inc. (Software) | 85,220 | 4,361,560 |
Common Stocks (Continued) | Shares | Value | ||||||||
INFORMATION TECHNOLOGY (continued) | ||||||||||
SS&C Technologies Holdings, Inc. (Software) | 91,101 | $ | 5,328,497 | |||||||
Tyler Technologies, Inc. (Software) | (a) | 10,120 | 1,107,533 | |||||||
Stratasys Ltd. (Tech. Hardware, Storage & Periph.) | (a) | 12,225 | 1,016,020 | |||||||
|
| |||||||||
68,241,959 | ||||||||||
|
| |||||||||
MATERIALS – 1.9% | ||||||||||
Sensient Technologies Corp. (Chemicals) | 67,292 | 4,060,399 | ||||||||
|
| |||||||||
Total Common Stocks (Cost $187,754,342) | $ | 209,895,645 | ||||||||
|
| |||||||||
Money Market Funds – 2.7% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds | 5,772,000 | $ | 5,772,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $5,772,000) | $ | 5,772,000 | ||||||||
|
| |||||||||
Total Investments – 101.7% (Cost $193,526,342) | (d) | $ | 215,667,645 | |||||||
Liabilities in Excess of Other Assets – (1.7)% | (3,523,725) | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 212,143,920 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Abbreviations:
ADR: American Depositary Receipts
Footnotes:
(a) | Non-income producing security. |
(b) | Security traded on a foreign exchange has been valued at an estimate of fair value that is different than the local market close price. These fair value estimates are determined by an independent fair valuation service that has been approved by the Board. These securities represent $1,230,373, or 0.6% of the Portfolio’s net assets. |
(c) | As discussed in Note 2 of the Notes to Financial Statements, not all investments that are traded on a foreign exchange are valued at an estimate that is different from the local close price. In some instances, the independent fair valuation service uses a stock’s local close price because the service’s measure of predictability related to their valuation model of a stock is below a chosen threshold. These securities represent $2,605,089, or 1.2% of the Portfolio’s net assets. |
Other Portfolio securities are not subjected to fair value procedures because they are traded on domestic or foreign exchanges that have close times that are consistent with the U.S. market close, normally 4:00 pm Eastern Time.
(d) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
42 |
Ohio National Fund, Inc. | Mid Cap Opportunity Portfolio |
Objective/Strategy
The Mid Cap Opportunity Portfolio seeks long-term total return by investing at least 80% of its net assets in equity securities of mid-cap companies, primarily those that are strategically positioned for long-term growth.
Performance as of December 31, 2014
Average Annual Returns | ||||
One year | 11.51% | |||
Five years | 15.36% | |||
Ten years | 7.12% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Mid Cap Opportunity Portfolio returned 11.51% versus 11.90% for the current benchmark, the Russell Midcap Growth Index.
Positive stock selection in the Information Technology and Telecommunication Services sectors contributed to relative performance, while weak stock selection in the Industrials and Energy sectors detracted from relative performance.
Keurig Green Mountain, Inc., a leader in specialty coffee and coffeemakers, was a top contributor to relative performance during the period. Its shares rose following the announcement that Coca-Cola purchased a 10% stake in the company and entered into a ten year agreement to develop Coke brand products for the Keurig Cold beverage system. The company has also benefited from recent exposure to the Starbucks, Dunkin, Folgers and Costco brands. Lastly, shareholders approved the company’s official name change to Keurig Green Mountain, Inc., recognizing the value that Keurig has brought to the overall franchise, and creating a powerful corporate identity. Overall, we believe that Keurig Green Mountain, Inc. continues to be well-positioned with a solid long-term growth profile, competitive margins, improving returns on invested capital and a strategically-focused management team.(1)
Tim Hortons, Inc. contributed to relative returns during the period. Its shares surged on the announcement that Burger King intends to acquire Tim Hortons, Inc. at a 30% premium. While surprising, in our view the merger makes strategic sense and validates our investment thesis that Tim Horton, Inc. is an attractive growth story and undervalued company. We decided to take profits and reallocate to higher conviction ideas.(1)
Weatherford International PLC, a multinational oilfield services company, detracted from returns during the period. Its shares declined sharply in connection with the sell-off in oil prices. We believe the company has a solid core business and is well positioned to increase its market share for the foreseeable future. In our view, Weatherford International PLC is well positioned to drive improved profitability and free cash flow generation through its
restructuring process. We believe its shares are attractively valued and that the stock multiple should improve as it begins to execute on its turnaround initiatives.(1)
Offshore drilling and production equipment manufacturer, Dril-Quip, Inc., detracted from returns during the period. While the company reported solid fiscal second quarter results, it announced a lower-than-expected earnings outlook for the third quarter, which caused its shares to fall. We believe the market overreacted to the news and that the company is being characteristically conservative. Management also announced higher revenues and strong margins, which we believe indicate the company is well positioned to continue to produce high quality earnings over the long term.(1)
The top five performers were Keurig Green Mountain, Inc., Shire PLC, Vertex Pharmaceuticals, Inc., Medivation, Inc., and L Brands, Inc. The poorest performers were Weatherford International PLC, Whiting Petroleum Corp., Core Laboratories NV, Pandora Media, Inc., and Kennametal, Inc. The top contributors to returns were Keurig Green Mountain, Inc., Tim Hortons, Inc., CareFusion Corp., Sensata Technologies Holdings NV, and Shire PLC. The top five detractors from returns were Weatherford International PLC, Dril-Quip, Inc., Kennametal, Inc., Whiting Petroleum Corp., and Core Laboratories NV.(1)
As we enter 2015, we continue to believe U.S. equities have further upside potential, as the U.S. economy accelerates and as real earnings growth serves as a fundamental driver of performance. We believe that U.S. corporate fundamentals are strong, evidenced by both healthy balance sheets and earnings resilience, and could provide companies with a number of options to increase shareholder value. While we acknowledge that the potential for headwinds remain, such as geopolitical risks, we ultimately remain constructive on the direction of U.S. equity markets. We believe the U.S. has the best macroeconomic outlook of the developed economies, and we are optimistic about the strengthening U.S. housing and employment markets, as well as the potential for a continued recovery in consumer spending. Consumption, which accounts for approximately 70% of U.S. Gross Domestic Product (“GDP”), could benefit from the combination of low energy prices and a strong dollar. Furthermore, with strong GDP growth momentum from 2014, we believe that an acceleration in earnings growth could continue in the U.S., as the country is less exposed to weaker segments of the global economy due to its lower reliance on exports. Looking forward, we believe that as the U.S. economy improves, companies can reinvest for future growth by increasing capital expenditures, research and development, hiring, and merger and acquisition activity, rather than keeping excess cash on balance sheets. In our view, equity valuations are fair, considering the positive macro environment, and equities are inexpensive relative to fixed income. We believe a forward-looking analysis is critical in this investing environment and we believe stock selection will be increasingly important as companies differentiate themselves on earnings growth and valuation.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
43 | (continued) |
Ohio National Fund, Inc. | Mid Cap Opportunity Portfolio (Continued) |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The Russell Midcap Growth Index is a subset of the Russell Midcap Index, which measures the performance of the 800 smallest companies in the Russell 1000 Index. The Russell Midcap Growth Index measures the performance of those stocks of the Russell Midcap Index with higher price-to-book ratios and higher relative forecasted growth rates. The index presented herein includes the effects of reinvested dividends.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 98.3 | |||
Money Market Funds | ||||
Less Net Liabilities | 1.7 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. W.W. Grainger, Inc. | 2.5 | |||
2. Intercontinental Exchange, Inc. | 2.5 | |||
3. Mylan, Inc. | 2.5 | |||
4. Whole Foods Market, Inc. | 2.4 | |||
5. CBRE Group, Inc. | 2.2 | |||
6. Equinix, Inc. | 2.1 | |||
7. Kate Spade & Co. | 2.1 | |||
8. First Republic Bank | 2.0 | |||
9. PVH Corp. | 2.0 | |||
10. SBA Communications Corp. Class A | 2.0 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Consumer Discretionary | 23.6 | |||
Industrials | 14.4 | |||
Information Technology | 14.4 | |||
Health Care | 14.1 | |||
Financials | 10.3 | |||
Consumer Staples | 9.4 | |||
Energy | 4.7 | |||
Materials | 4.6 | |||
Telecommunication Services | 2.8 | |||
|
| |||
98.3 | ||||
|
|
44 |
Ohio National Fund, Inc. | Mid Cap Opportunity Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 98.3% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 23.6% | ||||||||||
BorgWarner, Inc. (Auto Components) | 22,777 | $ | 1,251,596 | |||||||
Tesla Motors, Inc. (Automobiles) | (a) | 3,260 | 725,057 | |||||||
LKQ Corp. (Distributors) | (a) | 44,474 | 1,250,609 | |||||||
Chipotle Mexican Grill, Inc. (Hotels, Restaurants & Leisure) | (a) | 1,270 | 869,328 | |||||||
Panera Bread Co. Class A (Hotels, Restaurants & Leisure) | (a) | 8,331 | 1,456,259 | |||||||
Toll Brothers, Inc. (Household Durables) | (a) | 21,543 | 738,279 | |||||||
Netflix, Inc. (Internet & Catalog Retail) | (a) | 2,531 | 864,615 | |||||||
TripAdvisor, Inc. (Internet & Catalog Retail) | (a) | 8,904 | 664,773 | |||||||
Discovery Communications, Inc. Class A (Media) | (a) | 19,983 | 688,414 | |||||||
Discovery Communications, Inc. Class C (Media) | (a) | 19,983 | 673,827 | |||||||
Dollar General Corp. (Multiline Retail) | (a) | 7,907 | 559,025 | |||||||
Five Below, Inc. (Specialty Retail) | (a) | 31,330 | 1,279,204 | |||||||
L Brands, Inc. (Specialty Retail) | 12,980 | 1,123,419 | ||||||||
Restoration Hardware Holdings, Inc. (Specialty Retail) | (a) | 8,591 | 824,822 | |||||||
Ulta Salon Cosmetics & Fragrance, Inc. (Specialty Retail) | (a) | 11,598 | 1,482,688 | |||||||
Kate Spade & Co. (Textiles, Apparel & Luxury Goods) | (a) | 56,337 | 1,803,347 | |||||||
PVH Corp. (Textiles, Apparel & Luxury Goods) | 13,285 | 1,702,738 | ||||||||
Under Armour, Inc. Class A (Textiles, Apparel & Luxury Goods) | (a) | 14,779 | 1,003,494 | |||||||
V.F. Corp. (Textiles, Apparel & Luxury Goods) | 19,960 | 1,495,004 | ||||||||
|
| |||||||||
20,456,498 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 9.4% | ||||||||||
Coca-Cola Enterprises, Inc. (Beverages) | 24,221 | 1,071,053 | ||||||||
Whole Foods Market, Inc. (Food & Staples Retailing) | 41,908 | 2,113,001 | ||||||||
Hain Celestial Group, Inc. / The (Food Products) | (a) | 17,404 | 1,014,479 | |||||||
Keurig Green Mountain, Inc. (Food Products) | 10,049 | 1,330,437 | ||||||||
McCormick & Co., Inc. (Food Products) | 20,343 | 1,511,485 | ||||||||
TreeHouse Foods, Inc. (Food Products) | (a) | 13,557 | 1,159,530 | |||||||
|
| |||||||||
8,199,985 | ||||||||||
|
| |||||||||
ENERGY – 4.7% | ||||||||||
Dril-Quip, Inc. (Energy Equip. & Svs.) | (a) | 12,124 | 930,275 | |||||||
Weatherford International PLC (Energy Equip. & Svs.) | (a) | 82,601 | 945,781 | |||||||
Concho Resources, Inc. (Oil, Gas & Consumable Fuels) | (a) | 2,321 | 231,520 | |||||||
Pioneer Natural Resources Co. (Oil, Gas & Consumable Fuels) | 10,630 | 1,582,275 | ||||||||
Whiting Petroleum Corp. (Oil, Gas & Consumable Fuels) | �� | (a) | 10,790 | 356,070 | ||||||
|
| |||||||||
4,045,921 | ||||||||||
|
| |||||||||
FINANCIALS – 10.3% | ||||||||||
First Republic Bank (Banks) | 33,839 | 1,763,689 | ||||||||
Navient Corp. (Consumer Finance) | 66,694 | 1,441,257 | ||||||||
SLM Corp. (Consumer Finance) | 74,073 | 754,804 | ||||||||
Intercontinental Exchange, Inc. (Diversified Financial Svs.) | 9,832 | 2,156,059 | ||||||||
CBRE Group, Inc. (Real Estate Mgmt. & Development) | (a) | 55,101 | 1,887,209 | |||||||
MGIC Investment Corp. (Thrifts & Mortgage Finance) | (a) | 100,291 | 934,712 | |||||||
|
| |||||||||
8,937,730 | ||||||||||
|
| |||||||||
HEALTH CARE – 14.1% | ||||||||||
Alkermes PLC (Biotechnology) | (a) | 9,393 | 550,054 | |||||||
Cepheid (Biotechnology) | (a) | 21,680 | 1,173,755 | |||||||
Medivation, Inc. (Biotechnology) | (a) | 6,016 | 599,254 | |||||||
Vertex Pharmaceuticals, Inc. (Biotechnology) | (a) | 9,317 | 1,106,860 | |||||||
Intuitive Surgical, Inc. (Health Care Equip. & Supplies) | (a) | 2,034 | 1,075,864 | |||||||
Teleflex, Inc. (Health Care Equip. & Supplies) | 5,525 | 634,380 | ||||||||
Henry Schein, Inc. (Health Care Providers & Svs.) | (a) | 8,121 | 1,105,674 | |||||||
Cerner Corp. (Health Care Technology) | (a) | 15,006 | 970,288 | |||||||
HMS Holdings Corp. (Health Care Technology) | (a) | 47,340 | 1,000,768 |
Common Stocks (Continued) | Shares | Value | ||||||||
HEALTH CARE (continued) | ||||||||||
Agilent Technologies, Inc. (Life Sciences Tools & Svs.) | 17,791 | $ | 728,364 | |||||||
Mettler-Toledo International, Inc. (Life Sciences Tools & Svs.) | (a) | 3,820 | 1,155,397 | |||||||
Mylan, Inc. (Pharmaceuticals) | (a) | 37,741 | 2,127,460 | |||||||
|
| |||||||||
12,228,118 | ||||||||||
|
| |||||||||
INDUSTRIALS – 14.4% | ||||||||||
Waste Connections, Inc. (Commercial Svs. & Supplies) | 13,805 | 607,282 | ||||||||
Quanta Services, Inc. (Construction & Engineering) | (a) | 17,985 | 510,594 | |||||||
AMETEK, Inc. (Electrical Equip.) | 24,485 | 1,288,646 | ||||||||
Generac Holdings, Inc. (Electrical Equip.) | (a) | 25,855 | 1,208,980 | |||||||
Hubbell, Inc. Class B (Electrical Equip.) | 10,342 | 1,104,836 | ||||||||
Sensata Technologies Holding NV (Electrical Equip.) | (a) | 27,093 | 1,419,944 | |||||||
Flowserve Corp. (Machinery) | 16,387 | 980,434 | ||||||||
Graco, Inc. (Machinery) | 19,115 | 1,532,641 | ||||||||
Kansas City Southern (Road & Rail) | 13,561 | 1,654,849 | ||||||||
W.W. Grainger, Inc. (Trading Companies & Distributors) | 8,542 | 2,177,270 | ||||||||
|
| |||||||||
12,485,476 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 14.4% | ||||||||||
Amphenol Corp. Class A (Electronic Equip., Instr. & Comp.) | 26,116 | 1,405,302 | ||||||||
Keysight Technologies, Inc. (Electronic Equip., Instr. & Comp.) | (a) | 12,152 | �� | 410,373 | ||||||
Equinix, Inc. (Internet Software & Svs.) | 8,049 | 1,824,950 | ||||||||
LendingClub Corp. (Internet Software & Svs.) | (a) | 8,635 | 218,466 | |||||||
LinkedIn Corp. (Internet Software & Svs.) | (a) | 7,188 | 1,651,155 | |||||||
Pandora Media, Inc. (Internet Software & Svs.) | (a) | 22,658 | 403,992 | |||||||
Twitter, Inc. (Internet Software & Svs.) | (a) | 12,043 | 431,982 | |||||||
Fidelity National Information Services, Inc. (IT Svs.) | 14,138 | 879,384 | ||||||||
FleetCor Technologies, Inc. (IT Svs.) | (a) | 9,971 | 1,482,787 | |||||||
Broadcom Corp. Class A (Semiconductors & Equip.) | 9,894 | 428,707 | ||||||||
Guidewire Software, Inc. (Software) | (a) | 19,639 | 994,323 | |||||||
Red Hat, Inc. (Software) | (a) | 16,704 | 1,154,915 | |||||||
ServiceNow, Inc. (Software) | (a) | 17,227 | 1,168,852 | |||||||
|
| |||||||||
12,455,188 | ||||||||||
|
| |||||||||
MATERIALS – 4.6% | ||||||||||
Airgas, Inc. (Chemicals) | 10,741 | 1,237,148 | ||||||||
International Flavors & Fragrances, Inc. (Chemicals) | 11,887 | 1,204,866 | ||||||||
Sherwin-Williams Co. / The (Chemicals) | 5,915 | 1,555,882 | ||||||||
|
| |||||||||
3,997,896 | ||||||||||
|
| |||||||||
TELECOMMUNICATION SERVICES – 2.8% | ||||||||||
Level 3 Communications, Inc. (Diversified Telecom. Svs.) | (a) | 14,324 | 707,324 | |||||||
SBA Communications Corp. Class A (Wireless Telecom. Svs.) | (a) | 15,342 | 1,699,280 | |||||||
|
| |||||||||
2,406,604 | ||||||||||
|
| |||||||||
Total Common Stocks (Cost $68,831,253) | $ | 85,213,416 | ||||||||
|
| |||||||||
Money Market Funds – 2.3% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds | 1,957,000 | $ | 1,957,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $1,957,000) | $ | 1,957,000 | ||||||||
|
| |||||||||
Total Investments – 100.6% (Cost $70,788,253) | (b) | $ | 87,170,416 | |||||||
Liabilities in Excess of Other Assets – (0.6)% | (498,412) | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 86,672,004 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Non-income producing security. |
(b) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
45 |
Ohio National Fund, Inc. | S&P 500® Index Portfolio |
Objective/Strategy
The S&P 500® Index Portfolio seeks total return that approximates the total return of the Standard & Poor’s 500® Index (S&P 500® Index), at a risk level consistent with that of the Standard & Poor’s 500® Index.
Performance as of December 31, 2014
Average Annual returns | ||||
One year | 13.11% | |||
Five years | 14.90% | |||
Ten years | 7.18% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the S&P 500® Index Portfolio returned 13.11% versus 13.69% for the current benchmark, the S&P 500® Index.
The Portfolio’s correlation with the S&P 500® Index was 99.9%. The high correlation is due to the fact that the Portfolio invests in each of the 500 stocks in the index. The Portfolio also invests in the SPDR S&P 500 ETF Trust, an exchange traded fund that mimics the holdings and returns of the S&P 500® Index.(1)
The largest contributors to the index return were Apple, Inc., Microsoft Corp., Berkshire Hathaway, Inc., Intel Corp., and Wells Fargo & Co. The largest detractors for the index were Exxon Mobil Corp., Amazon.com, Inc., General Electric Co., International Business Machines Corp., and Chevron Corp.(1)
2014 was a very positive year for equities, fueled by a very accommodating Federal Reserve. In 2014, we saw a continued improvement in the economy, an improvement in the housing market, and less public policy uncertainty. Multiples for the S&P 500 expanded in 2014, with the price to earnings ratio starting at 17.22 times at the end of 2013 to 18.25 times at the end of 2014, and net profit margins have continued to expand. Consumer sentiment continued to improve throughout 2014, as the unemployment rate fell from 6.97% at the end of 2013 to 5.70% at the end of 2014.
2015 should be another good year for equities. Low oil prices may continue to provide a tailwind to the economy, and to Gross Domestic Product growth, as the U.S. is a net importer of oil. However, net exporters of oil will be hurt. Quantitative easing is coming to an end in the U.S., with the Federal Reserve on pace to raise its policy rate late in 2015. We would expect equity gains to match earnings growth, which analysts are predicting to be around 6% to 8% for 2015.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting. Investors cannot invest directly in an index, although they can invest in its underlying securities or funds.
The S&P 500® Index is a capitalization-weighted index designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index presented herein includes the effects of reinvested dividends.
“Standard & Poor’s®”, “S&P®”, “S&P 500®” and “Standard & Poor’s 500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Ohio National Investments, Inc. (ONI). The S&P 500® Index Portfolio is not sponsored, endorsed, sold or promoted by Standard & Poor’s (“S&P”) and S&P makes no representation regarding the advisability of investing in the S&P 500® Index Portfolio. S&P makes no representation or warranty, express or implied, to the owners of the Portfolio or any member of the public regarding the advisability of investing in securities generally or in the Portfolio particularly or the ability of the S&P 500® Index to track general stock market performance. S&P’s only relationship to ONI is the licensing of certain trademarks and trade names of S&P® and of the S&P 500® Index which is determined, composed and calculated by S&P® without regard to ONI or the S&P 500® Index Portfolio. S&P® has no obligation to take the needs of ONI or the owners of the Portfolio into consideration in determining, composing or calculating the S&P 500® Index. S&P® is not responsible for and has not participated in the determination of the prices and amount of the Portfolio or the timing of the issuance or sale of the Portfolio or in the determination or calculation of the equation by which the Portfolio is to be converted into cash. S&P® has no obligation or liability in connection with the administration, marketing or trading of the Portfolio.
46 | (continued) |
Ohio National Fund, Inc. | S&P 500® Index Portfolio (Continued) |
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 95.3 | |||
Exchange Traded Funds and | 4.7 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. SPDR S&P 500 ETF Trust | 4.3 | |||
2. Apple, Inc. | 3.4 | |||
3. Exxon Mobil Corp. | 2.0 | |||
4. Microsoft Corp. | 2.0 | |||
5. Johnson & Johnson | 1.5 | |||
6. Berkshire Hathaway, Inc. Class B | 1.4 | |||
7. Wells Fargo & Co. | 1.4 | |||
8. General Electric Co. | 1.3 | |||
9. Procter & Gamble Co. / The | 1.3 | |||
10. JPMorgan Chase & Co. | 1.2 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Information Technology | 18.7 | |||
Financials | 15.9 | |||
Health Care | 13.6 | |||
Consumer Discretionary | 11.6 | |||
Industrials | 9.9 | |||
Consumer Staples | 9.3 | |||
Energy | 8.0 | |||
Utilities | 3.1 | |||
Materials | 3.0 | |||
Telecommunication Services | 2.2 | |||
|
| |||
95.3 | ||||
|
|
47 |
Ohio National Fund, Inc. | S&P 500® Index Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 95.3% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 11.6% | ||||||||||
BorgWarner, Inc. (Auto Components) | 4,600 | $ | 252,770 | |||||||
Delphi Automotive PLC (Auto Components) | 6,000 | 436,320 | ||||||||
Goodyear Tire & Rubber Co. / The (Auto Components) | 5,600 | 159,992 | ||||||||
Johnson Controls, Inc. (Auto Components) | 13,500 | 652,590 | ||||||||
Ford Motor Co. (Automobiles) | 78,087 | 1,210,348 | ||||||||
General Motors Co. (Automobiles) | 27,400 | 956,534 | ||||||||
Harley-Davidson, Inc. (Automobiles) | 4,300 | 283,413 | ||||||||
Genuine Parts Co. (Distributors) | 3,100 | 330,367 | ||||||||
H&R Block, Inc. (Diversified Consumer Svs.) | 5,600 | 188,608 | ||||||||
Carnival Corp. (Hotels, Restaurants & Leisure) | 9,100 | 412,503 | ||||||||
Chipotle Mexican Grill, Inc. (Hotels, Restaurants & Leisure) | (a) | 650 | 444,931 | |||||||
Darden Restaurants, Inc. (Hotels, Restaurants & Leisure) | 2,700 | 158,301 | ||||||||
Marriott International, Inc. Class A (Hotels, Restaurants & Leisure) | 4,346 | 339,118 | ||||||||
McDonald’s Corp. (Hotels, Restaurants & Leisure) | 19,700 | 1,845,890 | ||||||||
Royal Caribbean Cruises Ltd. (Hotels, Restaurants & Leisure) | 3,400 | 280,262 | ||||||||
Starbucks Corp. (Hotels, Restaurants & Leisure) | 15,200 | 1,247,160 | ||||||||
Starwood Hotels & Resorts Worldwide, Inc. (Hotels, Restaurants & Leisure) | 3,600 | 291,852 | ||||||||
Wyndham Worldwide Corp. (Hotels, Restaurants & Leisure) | 2,460 | 210,970 | ||||||||
Wynn Resorts Ltd. (Hotels, Restaurants & Leisure) | 1,600 | 238,016 | ||||||||
Yum! Brands, Inc. (Hotels, Restaurants & Leisure) | 8,900 | 648,365 | ||||||||
D.R. Horton, Inc. (Household Durables) | 6,700 | 169,443 | ||||||||
Garmin Ltd. (Household Durables) | 2,400 | 126,792 | ||||||||
Harman International Industries, Inc. (Household Durables) | 1,400 | 149,394 | ||||||||
Leggett & Platt, Inc. (Household Durables) | 2,800 | 119,308 | ||||||||
Lennar Corp. Class A (Household Durables) | 3,600 | 161,316 | ||||||||
Mohawk Industries, Inc. (Household Durables) | (a) | 1,300 | 201,968 | |||||||
Newell Rubbermaid, Inc. (Household Durables) | 5,500 | 209,495 | ||||||||
PulteGroup, Inc. (Household Durables) | 6,750 | 144,855 | ||||||||
Whirlpool Corp. (Household Durables) | 1,555 | 301,266 | ||||||||
Amazon.com, Inc. (Internet & Catalog Retail) | (a) | 7,700 | 2,389,695 | |||||||
Expedia, Inc. (Internet & Catalog Retail) | 2,000 | 170,720 | ||||||||
Netflix, Inc. (Internet & Catalog Retail) | (a) | 1,200 | 409,932 | |||||||
Priceline Group, Inc. / The (Internet & Catalog Retail) | (a) | 1,050 | 1,197,220 | |||||||
TripAdvisor, Inc. (Internet & Catalog Retail) | (a) | 2,300 | 171,718 | |||||||
Hasbro, Inc. (Leisure Products) | 2,300 | 126,477 | ||||||||
Mattel, Inc. (Leisure Products) | 6,900 | 213,520 | ||||||||
Cablevision Systems Corp. Class A (Media) | 4,400 | 90,816 | ||||||||
CBS Corp. Class B (Media) | 9,650 | 534,031 | ||||||||
Comcast Corp. Class A (Media) | 52,253 | 3,031,197 | ||||||||
DIRECTV (Media) | (a) | 10,200 | 884,340 | |||||||
Discovery Communications, Inc. Class A (Media) | (a) | 3,000 | 103,350 | |||||||
Discovery Communications, Inc. Class C (Media) | (a) | 5,500 | 185,460 | |||||||
Gannett Co., Inc. (Media) | 4,600 | 146,878 | ||||||||
Interpublic Group of Cos., Inc. / The (Media) | 8,523 | 177,023 | ||||||||
News Corp. Class A (Media) | (a) | 10,075 | 158,077 | |||||||
Omnicom Group, Inc. (Media) | 5,000 | 387,350 | ||||||||
Scripps Networks Interactive, Inc. Class A (Media) | 2,100 | 158,067 | ||||||||
Time Warner Cable, Inc. (Media) | 5,732 | 871,608 | ||||||||
Time Warner, Inc. (Media) | 16,966 | 1,449,236 | ||||||||
Twenty-First Century Fox, Inc. Class A (Media) | 37,600 | 1,444,028 | ||||||||
Viacom, Inc. Class B (Media) | 7,450 | 560,612 | ||||||||
Walt Disney Co. / The (Media) | 31,600 | 2,976,404 | ||||||||
Dollar General Corp. (Multiline Retail) | (a) | 6,200 | 438,340 | |||||||
Dollar Tree, Inc. (Multiline Retail) | (a) | 4,200 | 295,596 | |||||||
Family Dollar Stores, Inc. (Multiline Retail) | 1,900 | 150,499 | ||||||||
Kohl’s Corp. (Multiline Retail) | 4,100 | 250,264 | ||||||||
Macy’s, Inc. (Multiline Retail) | 6,976 | 458,672 | ||||||||
Nordstrom, Inc. (Multiline Retail) | 2,900 | 230,231 | ||||||||
Target Corp. (Multiline Retail) | 12,900 | 979,239 | ||||||||
AutoNation, Inc. (Specialty Retail) | (a) | 1,500 | 90,615 | |||||||
AutoZone, Inc. (Specialty Retail) | (a) | 625 | 386,944 |
Common Stocks (Continued) | Shares | Value | ||||||||
CONSUMER DISCRETIONARY (continued) | ||||||||||
Bed Bath & Beyond, Inc. (Specialty Retail) | (a) | 3,800 | $ | 289,446 | ||||||
Best Buy Co., Inc. (Specialty Retail) | 5,875 | 229,007 | ||||||||
CarMax, Inc. (Specialty Retail) | (a) | 4,400 | 292,952 | |||||||
GameStop Corp. Class A (Specialty Retail) | 2,200 | 74,360 | ||||||||
Gap, Inc. / The (Specialty Retail) | 5,450 | 229,499 | ||||||||
Home Depot, Inc. / The (Specialty Retail) | 26,700 | 2,802,699 | ||||||||
L Brands, Inc. (Specialty Retail) | 5,000 | 432,750 | ||||||||
Lowe’s Cos., Inc. (Specialty Retail) | 19,700 | 1,355,360 | ||||||||
O’Reilly Automotive, Inc. (Specialty Retail) | (a) | 2,100 | 404,502 | |||||||
PetSmart, Inc. (Specialty Retail) | 2,000 | 162,590 | ||||||||
Ross Stores, Inc. (Specialty Retail) | 4,300 | 405,318 | ||||||||
Staples, Inc. (Specialty Retail) | 13,000 | 235,560 | ||||||||
Tiffany & Co. (Specialty Retail) | 2,300 | 245,778 | ||||||||
TJX Cos., Inc. / The (Specialty Retail) | 14,000 | 960,120 | ||||||||
Tractor Supply Co. (Specialty Retail) | 2,800 | 220,696 | ||||||||
Urban Outfitters, Inc. (Specialty Retail) | (a) | 2,000 | 70,260 | |||||||
Coach, Inc. (Textiles, Apparel & Luxury Goods) | 5,600 | 210,336 | ||||||||
Fossil Group, Inc. (Textiles, Apparel & Luxury Goods) | (a) | 900 | 99,666 | |||||||
Michael Kors Holdings Ltd. (Textiles, Apparel & Luxury Goods) | (a) | 4,200 | 315,420 | |||||||
NIKE, Inc. Class B (Textiles, Apparel & Luxury Goods) | 14,200 | 1,365,330 | ||||||||
PVH Corp. (Textiles, Apparel & Luxury Goods) | 1,700 | 217,889 | ||||||||
Ralph Lauren Corp. (Textiles, Apparel & Luxury Goods) | 1,200 | 222,192 | ||||||||
Under Armour, Inc. Class A (Textiles, Apparel & Luxury Goods) | (a) | 3,400 | 230,860 | |||||||
V.F. Corp. (Textiles, Apparel & Luxury Goods) | 7,000 | 524,300 | ||||||||
|
| |||||||||
44,887,196 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 9.3% | ||||||||||
Brown-Forman Corp. Class B (Beverages) | 3,175 | 278,892 | ||||||||
Coca-Cola Co. / The (Beverages) | 79,900 | 3,373,378 | ||||||||
Coca-Cola Enterprises, Inc. (Beverages) | 4,500 | 198,990 | ||||||||
Constellation Brands, Inc. Class A (Beverages) | (a) | 3,400 | 333,778 | |||||||
Dr Pepper Snapple Group, Inc. (Beverages) | 3,900 | 279,552 | ||||||||
Molson Coors Brewing Co. Class B (Beverages) | 3,200 | 238,464 | ||||||||
Monster Beverage Corp. (Beverages) | (a) | 2,900 | 314,215 | |||||||
PepsiCo, Inc. (Beverages) | 30,347 | 2,869,612 | ||||||||
Costco Wholesale Corp. (Food & Staples Retailing) | 8,900 | 1,261,575 | ||||||||
CVS Health Corp. (Food & Staples Retailing) | 23,220 | 2,236,318 | ||||||||
Kroger Co. / The (Food & Staples Retailing) | 10,000 | 642,100 | ||||||||
Safeway, Inc. (Food & Staples Retailing) | 4,700 | 165,064 | ||||||||
Sysco Corp. (Food & Staples Retailing) | 11,900 | 472,311 | ||||||||
Walgreens Boots Alliance, Inc. (Food & Staples Retailing) | (a) | 17,600 | 1,341,120 | |||||||
Wal-Mart Stores, Inc. (Food & Staples Retailing) | 32,000 | 2,748,160 | ||||||||
Whole Foods Market, Inc. (Food & Staples Retailing) | 7,300 | 368,066 | ||||||||
Archer-Daniels-Midland Co. (Food Products) | 13,050 | 678,600 | ||||||||
Campbell Soup Co. (Food Products) | 3,600 | 158,400 | ||||||||
ConAgra Foods, Inc. (Food Products) | 8,600 | 312,008 | ||||||||
General Mills, Inc. (Food Products) | 12,200 | 650,626 | ||||||||
Hershey Co. / The (Food Products) | 3,000 | 311,790 | ||||||||
Hormel Foods Corp. (Food Products) | 2,700 | 140,670 | ||||||||
J.M. Smucker Co. / The (Food Products) | 2,100 | 212,058 | ||||||||
Kellogg Co. (Food Products) | 5,100 | 333,744 | ||||||||
Keurig Green Mountain, Inc. (Food Products) | 2,500 | 330,987 | ||||||||
Kraft Foods Group, Inc. (Food Products) | 11,925 | 747,221 | ||||||||
McCormick & Co., Inc. (Food Products) | 2,600 | 193,180 | ||||||||
Mead Johnson Nutrition Co. (Food Products) | 4,051 | 407,288 | ||||||||
Mondelez International, Inc. Class A (Food Products) | 34,076 | 1,237,811 | ||||||||
Tyson Foods, Inc. Class A (Food Products) | 5,900 | 236,531 | ||||||||
Clorox Co. / The (Household Products) | 2,600 | 270,946 | ||||||||
Colgate-Palmolive Co. (Household Products) | 17,400 | 1,203,906 | ||||||||
Kimberly-Clark Corp. (Household Products) | 7,600 | 878,104 | ||||||||
Procter & Gamble Co. / The (Household Products) | 54,822 | 4,993,736 | ||||||||
Avon Products, Inc. (Personal Products) | 8,800 | 82,632 | ||||||||
Estee Lauder Cos., Inc. / The Class A (Personal Products) | 4,500 | 342,900 |
48 | (continued) |
Ohio National Fund, Inc. | S&P 500® Index Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Common Stocks (Continued) | Shares | Value | ||||||||
CONSUMER STAPLES (continued) | ||||||||||
Altria Group, Inc. (Tobacco) | 40,100 | $ | 1,975,727 | |||||||
Lorillard, Inc. (Tobacco) | 7,291 | 458,896 | ||||||||
Philip Morris International, Inc. (Tobacco) | 31,500 | 2,565,675 | ||||||||
Reynolds American, Inc. (Tobacco) | 6,200 | 398,474 | ||||||||
|
| |||||||||
36,243,505 | ||||||||||
|
| |||||||||
ENERGY – 8.0% | ||||||||||
Baker Hughes, Inc. (Energy Equip. & Svs.) | 8,741 | 490,108 | ||||||||
Cameron International Corp. (Energy Equip. & Svs.) | (a) | 4,000 | 199,800 | |||||||
Diamond Offshore Drilling, Inc. (Energy Equip. & Svs.) | 1,400 | 51,394 | ||||||||
Ensco PLC Class A (Energy Equip. & Svs.) | 4,800 | 143,760 | ||||||||
FMC Technologies, Inc. (Energy Equip. & Svs.) | (a) | 4,700 | 220,148 | |||||||
Halliburton Co. (Energy Equip. & Svs.) | 17,200 | 676,476 | ||||||||
Helmerich & Payne, Inc. (Energy Equip. & Svs.) | 2,200 | 148,324 | ||||||||
Nabors Industries Ltd. (Energy Equip. & Svs.) | 5,900 | 76,582 | ||||||||
National Oilwell Varco, Inc. (Energy Equip. & Svs.) | 8,700 | 570,111 | ||||||||
Noble Corp. PLC (Energy Equip. & Svs.) | 5,100 | 84,507 | ||||||||
Schlumberger Ltd. (Energy Equip. & Svs.) | 26,047 | 2,224,674 | ||||||||
Transocean Ltd. (Energy Equip. & Svs.) | 6,900 | 126,477 | ||||||||
Anadarko Petroleum Corp. (Oil, Gas & Consumable Fuels) | 10,300 | 849,750 | ||||||||
Apache Corp. (Oil, Gas & Consumable Fuels) | 7,672 | 480,804 | ||||||||
Cabot Oil & Gas Corp. (Oil, Gas & Consumable Fuels) | 8,400 | 248,724 | ||||||||
Chesapeake Energy Corp. (Oil, Gas & Consumable Fuels) | 10,500 | 205,485 | ||||||||
Chevron Corp. (Oil, Gas & Consumable Fuels) | 38,338 | 4,300,757 | ||||||||
Cimarex Energy Co. (Oil, Gas & Consumable Fuels) | 1,800 | 190,800 | ||||||||
ConocoPhillips (Oil, Gas & Consumable Fuels) | 25,000 | 1,726,500 | ||||||||
CONSOL Energy, Inc. (Oil, Gas & Consumable Fuels) | 4,700 | 158,907 | ||||||||
Denbury Resources, Inc. (Oil, Gas & Consumable Fuels) | 7,100 | 57,723 | ||||||||
Devon Energy Corp. (Oil, Gas & Consumable Fuels) | 7,800 | 477,438 | ||||||||
EOG Resources, Inc. (Oil, Gas & Consumable Fuels) | 11,100 | 1,021,977 | ||||||||
EQT Corp. (Oil, Gas & Consumable Fuels) | 3,100 | 234,670 | ||||||||
Exxon Mobil Corp. (Oil, Gas & Consumable Fuels) | 85,864 | 7,938,127 | ||||||||
Hess Corp. (Oil, Gas & Consumable Fuels) | 5,200 | 383,864 | ||||||||
Kinder Morgan, Inc. (Oil, Gas & Consumable Fuels) | 34,473 | 1,458,553 | ||||||||
Marathon Oil Corp. (Oil, Gas & Consumable Fuels) | 13,720 | 388,139 | ||||||||
Marathon Petroleum Corp. (Oil, Gas & Consumable Fuels) | 5,660 | 510,872 | ||||||||
Murphy Oil Corp. (Oil, Gas & Consumable Fuels) | 3,400 | 171,768 | ||||||||
Newfield Exploration Co. (Oil, Gas & Consumable Fuels) | (a) | 2,800 | 75,936 | |||||||
Noble Energy, Inc. (Oil, Gas & Consumable Fuels) | 7,300 | 346,239 | ||||||||
Occidental Petroleum Corp. (Oil, Gas & Consumable Fuels) | 15,700 | 1,265,577 | ||||||||
ONEOK, Inc. (Oil, Gas & Consumable Fuels) | 4,200 | 209,118 | ||||||||
Phillips 66 (Oil, Gas & Consumable Fuels) | 11,250 | 806,625 | ||||||||
Pioneer Natural Resources Co. (Oil, Gas & Consumable Fuels) | 3,000 | 446,550 | ||||||||
QEP Resources, Inc. (Oil, Gas & Consumable Fuels) | 3,400 | 68,748 | ||||||||
Range Resources Corp. (Oil, Gas & Consumable Fuels) | 3,400 | 181,730 | ||||||||
Southwestern Energy Co. (Oil, Gas & Consumable Fuels) | (a) | 7,200 | 196,488 | |||||||
Spectra Energy Corp. (Oil, Gas & Consumable Fuels) | 13,618 | 494,333 | ||||||||
Tesoro Corp. (Oil, Gas & Consumable Fuels) | 2,600 | 193,310 | ||||||||
Valero Energy Corp. (Oil, Gas & Consumable Fuels) | 10,600 | 524,700 | ||||||||
Williams Cos., Inc. / The (Oil, Gas & Consumable Fuels) | 13,600 | 611,184 | ||||||||
|
| |||||||||
31,237,757 | ||||||||||
|
| |||||||||
FINANCIALS – 15.9% | ||||||||||
Bank of America Corp. (Banks) | 213,227 | 3,814,631 | ||||||||
BB&T Corp. (Banks) | 14,600 | 567,794 | ||||||||
Citigroup, Inc. (Banks) | 61,436 | 3,324,302 | ||||||||
Comerica, Inc. (Banks) | 3,600 | 168,624 | ||||||||
Fifth Third Bancorp (Banks) | 16,750 | 341,281 | ||||||||
Huntington Bancshares, Inc. (Banks) | 16,500 | 173,580 |
Common Stocks (Continued) | Shares | Value | ||||||||
FINANCIALS (continued) | ||||||||||
JPMorgan Chase & Co. (Banks) | 75,843 | $ | 4,746,255 | |||||||
KeyCorp (Banks) | 17,600 | 244,640 | ||||||||
M&T Bank Corp. (Banks) | 2,700 | 339,174 | ||||||||
PNC Financial Services Group, Inc. / The (Banks) | 10,642 | 970,870 | ||||||||
Regions Financial Corp. (Banks) | 27,875 | 294,360 | ||||||||
SunTrust Banks, Inc. (Banks) | 10,600 | 444,140 | ||||||||
U.S. Bancorp (Banks) | 36,290 | 1,631,235 | ||||||||
Wells Fargo & Co. (Banks) | 95,713 | 5,246,987 | ||||||||
Zions Bancorporation (Banks) | 4,100 | 116,891 | ||||||||
Affiliated Managers Group, Inc. (Capital Markets) | (a) | 1,100 | 233,464 | |||||||
Ameriprise Financial, Inc. (Capital Markets) | 3,780 | 499,905 | ||||||||
Bank of New York Mellon Corp. / The (Capital Markets) | 22,811 | 925,442 | ||||||||
BlackRock, Inc. (Capital Markets) | 2,600 | 929,656 | ||||||||
Charles Schwab Corp. / The (Capital Markets) | 23,300 | 703,427 | ||||||||
E*TRADE Financial Corp. (Capital Markets) | (a) | 5,890 | 142,862 | |||||||
Franklin Resources, Inc. (Capital Markets) | 8,000 | 442,960 | ||||||||
Goldman Sachs Group, Inc. / The (Capital Markets) | 8,250 | 1,599,097 | ||||||||
Invesco Ltd. (Capital Markets) | 8,700 | 343,824 | ||||||||
Legg Mason, Inc. (Capital Markets) | 2,000 | 106,740 | ||||||||
Morgan Stanley (Capital Markets) | 31,000 | 1,202,800 | ||||||||
Northern Trust Corp. (Capital Markets) | 4,500 | 303,300 | ||||||||
State Street Corp. (Capital Markets) | 8,500 | 667,250 | ||||||||
T. Rowe Price Group, Inc. (Capital Markets) | 5,300 | 455,058 | ||||||||
American Express Co. (Consumer Finance) | 18,000 | 1,674,720 | ||||||||
Capital One Financial Corp. (Consumer Finance) | 11,273 | 930,586 | ||||||||
Discover Financial Services (Consumer Finance) | 9,150 | 599,233 | ||||||||
Navient Corp. (Consumer Finance) | 8,300 | 179,363 | ||||||||
Berkshire Hathaway, Inc. Class B (Diversified Financial Svs.) | (a) | 36,991 | 5,554,199 | |||||||
CME Group, Inc. (Diversified Financial Svs.) | 6,375 | 565,144 | ||||||||
Intercontinental Exchange, Inc. (Diversified Financial Svs.) | 2,332 | 511,384 | ||||||||
Leucadia National Corp. (Diversified Financial Svs.) | 6,400 | 143,488 | ||||||||
McGraw Hill Financial, Inc. (Diversified Financial Svs.) | 5,500 | 489,390 | ||||||||
Moody’s Corp. (Diversified Financial Svs.) | 3,700 | 354,497 | ||||||||
NASDAQ OMX Group, Inc. / The (Diversified Financial Svs.) | 2,400 | 115,104 | ||||||||
ACE Ltd. (Insurance) | 6,700 | 769,696 | ||||||||
Aflac, Inc. (Insurance) | 9,100 | 555,919 | ||||||||
Allstate Corp. / The (Insurance) | 8,500 | 597,125 | ||||||||
American International Group, Inc. (Insurance) | 28,395 | 1,590,404 | ||||||||
Aon PLC (Insurance) | 5,800 | 550,014 | ||||||||
Assurant, Inc. (Insurance) | 1,400 | 95,802 | ||||||||
Chubb Corp. / The (Insurance) | 4,800 | 496,656 | ||||||||
Cincinnati Financial Corp. (Insurance) | 2,966 | 153,728 | ||||||||
Genworth Financial, Inc. Class A (Insurance) | (a) | 10,100 | 85,850 | |||||||
Hartford Financial Services Group, Inc. / The (Insurance) | 8,700 | 362,703 | ||||||||
Lincoln National Corp. (Insurance) | 5,286 | 304,844 | ||||||||
Loews Corp. (Insurance) | 6,061 | 254,683 | ||||||||
Marsh & McLennan Cos., Inc. (Insurance) | 11,000 | 629,640 | ||||||||
MetLife, Inc. (Insurance) | 23,000 | 1,244,070 | ||||||||
Principal Financial Group, Inc. (Insurance) | 5,500 | 285,670 | ||||||||
Progressive Corp. / The (Insurance) | 10,800 | 291,492 | ||||||||
Prudential Financial, Inc. (Insurance) | 9,300 | 841,278 | ||||||||
Torchmark Corp. (Insurance) | 2,575 | 139,488 | ||||||||
Travelers Cos., Inc. / The (Insurance) | 6,759 | 715,440 | ||||||||
Unum Group (Insurance) | 5,100 | 177,888 | ||||||||
XL Group PLC (Insurance) | 5,200 | 178,724 | ||||||||
American Tower Corp. (Real Estate Investment Trusts) | 8,000 | 790,800 | ||||||||
Apartment Investment & Management Co. Class A (Real Estate Investment Trusts) | 2,973 | 110,447 | ||||||||
AvalonBay Communities, Inc. (Real Estate Investment Trusts) | 2,631 | 429,879 | ||||||||
Boston Properties, Inc. (Real Estate Investment Trusts) | 3,100 | 398,939 |
49 | (continued) |
Ohio National Fund, Inc. | S&P 500® Index Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Common Stocks (Continued) | Shares | Value | ||||||||
FINANCIALS (continued) | ||||||||||
Crown Castle International Corp. (Real Estate Investment Trusts) | 6,800 | $ | 535,160 | |||||||
Equity Residential (Real Estate Investment Trusts) | 7,300 | 524,432 | ||||||||
Essex Property Trust, Inc. (Real Estate Investment Trusts) | 1,300 | 268,580 | ||||||||
General Growth Properties, Inc. (Real Estate Investment Trusts) | 12,700 | 357,251 | ||||||||
HCP, Inc. (Real Estate Investment Trusts) | 9,300 | 409,479 | ||||||||
Health Care REIT, Inc. (Real Estate Investment Trusts) | 6,600 | 499,422 | ||||||||
Host Hotels & Resorts, Inc. (Real Estate Investment Trusts) | 15,402 | 366,106 | ||||||||
Iron Mountain, Inc. (Real Estate Investment Trusts) | 3,828 | 147,990 | ||||||||
Kimco Realty Corp. (Real Estate Investment Trusts) | 8,300 | 208,662 | ||||||||
Macerich Co. / The (Real Estate Investment Trusts) | 2,900 | 241,889 | ||||||||
Plum Creek Timber Co., Inc. (Real Estate Investment Trusts) | 3,600 | 154,044 | ||||||||
Prologis, Inc. (Real Estate Investment Trusts) | 10,139 | 436,281 | ||||||||
Public Storage (Real Estate Investment Trusts) | 2,900 | 536,065 | ||||||||
Simon Property Group, Inc. (Real Estate Investment Trusts) | 6,262 | 1,140,373 | ||||||||
Ventas, Inc. (Real Estate Investment Trusts) | 6,000 | 430,200 | ||||||||
Vornado Realty Trust (Real Estate Investment Trusts) | 3,493 | 411,161 | ||||||||
Weyerhaeuser Co. (Real Estate Investment Trusts) | 10,663 | 382,695 | ||||||||
CBRE Group, Inc. (Real Estate Mgmt. & Development) | (a) | 5,700 | 195,225 | |||||||
Hudson City Bancorp, Inc. (Thrifts & Mortgage Finance) | 9,800 | 99,176 | ||||||||
People’s United Financial, Inc. (Thrifts & Mortgage Finance) | 6,200 | 94,116 | ||||||||
|
| |||||||||
61,587,143 | ||||||||||
|
| |||||||||
HEALTH CARE – 13.6% | ||||||||||
Alexion Pharmaceuticals, Inc. (Biotechnology) | (a) | 4,000 | 740,120 | |||||||
Amgen, Inc. (Biotechnology) | 15,406 | 2,454,022 | ||||||||
Biogen Idec, Inc. (Biotechnology) | (a) | 4,745 | 1,610,690 | |||||||
Celgene Corp. (Biotechnology) | (a) | 16,200 | 1,812,132 | |||||||
Gilead Sciences, Inc. (Biotechnology) | (a) | 30,600 | 2,884,356 | |||||||
Regeneron Pharmaceuticals, Inc. (Biotechnology) | (a) | 1,500 | 615,375 | |||||||
Vertex Pharmaceuticals, Inc. (Biotechnology) | (a) | 4,900 | 582,120 | |||||||
Abbott Laboratories (Health Care Equip. & Supplies) | 30,500 | 1,373,110 | ||||||||
Baxter International, Inc. (Health Care Equip. & Supplies) | 11,000 | 806,190 | ||||||||
Becton Dickinson and Co. (Health Care Equip. & Supplies) | 3,900 | 542,724 | ||||||||
Boston Scientific Corp. (Health Care Equip. & Supplies) | (a) | 26,903 | 356,465 | |||||||
CareFusion Corp. (Health Care Equip. & Supplies) | (a) | 4,150 | 246,261 | |||||||
Covidien PLC (Health Care Equip. & Supplies) | 9,200 | 940,976 | ||||||||
C.R. Bard, Inc. (Health Care Equip. & Supplies) | 1,500 | 249,930 | ||||||||
DENTSPLY International, Inc. (Health Care Equip. & Supplies) | 2,900 | 154,483 | ||||||||
Edwards Lifesciences Corp. (Health Care Equip. & Supplies) | (a) | 2,200 | 280,236 | |||||||
Intuitive Surgical, Inc. (Health Care Equip. & Supplies) | (a) | 725 | 383,481 | |||||||
Medtronic, Inc. (Health Care Equip. & Supplies) | 20,000 | 1,444,000 | ||||||||
St. Jude Medical, Inc. (Health Care Equip. & Supplies) | 5,800 | 377,174 | ||||||||
Stryker Corp. (Health Care Equip. & Supplies) | 6,100 | 575,413 | ||||||||
Varian Medical Systems, Inc. (Health Care Equip. & Supplies) | (a) | 2,000 | 173,020 | |||||||
Zimmer Holdings, Inc. (Health Care Equip. & Supplies) | 3,470 | 393,567 | ||||||||
Aetna, Inc. (Health Care Providers & Svs.) | 7,154 | 635,490 | ||||||||
AmerisourceBergen Corp. (Health Care Providers & Svs.) | 4,200 | 378,672 | ||||||||
Anthem, Inc. (Health Care Providers & Svs.) | 5,500 | 691,185 | ||||||||
Cardinal Health, Inc. (Health Care Providers & Svs.) | 6,700 | 540,891 |
Common Stocks (Continued) | Shares | Value | ||||||||
HEALTH CARE (continued) | ||||||||||
Cigna Corp. (Health Care Providers & Svs.) | 5,300 | $ | 545,423 | |||||||
DaVita HealthCare Partners, Inc. (Health Care Providers & Svs.) | (a) | 3,500 | 265,090 | |||||||
Express Scripts Holding Co. (Health Care Providers & Svs.) | (a) | 14,878 | 1,259,720 | |||||||
Humana, Inc. (Health Care Providers & Svs.) | 3,100 | 445,253 | ||||||||
Laboratory Corp. of America Holdings (Health Care Providers & Svs.) | (a) | 1,700 | 183,430 | |||||||
McKesson Corp. (Health Care Providers & Svs.) | 4,700 | 975,626 | ||||||||
Patterson Cos., Inc. (Health Care Providers & Svs.) | 1,700 | 81,770 | ||||||||
Quest Diagnostics, Inc. (Health Care Providers & Svs.) | 2,900 | 194,474 | ||||||||
Tenet Healthcare Corp. (Health Care Providers & Svs.) | (a) | 2,012 | 101,948 | |||||||
UnitedHealth Group, Inc. (Health Care Providers & Svs.) | 19,500 | 1,971,255 | ||||||||
Universal Health Services, Inc. Class B (Health Care Providers & Svs.) | 1,800 | 200,268 | ||||||||
Cerner Corp. (Health Care Technology) | (a) | 6,200 | 400,892 | |||||||
Agilent Technologies, Inc. (Life Sciences Tools & Svs.) | 6,800 | 278,392 | ||||||||
PerkinElmer, Inc. (Life Sciences Tools & Svs.) | 2,300 | 100,579 | ||||||||
Thermo Fisher Scientific, Inc. (Life Sciences Tools & Svs.) | 8,100 | 1,014,849 | ||||||||
Waters Corp. (Life Sciences Tools & Svs.) | (a) | 1,700 | 191,624 | |||||||
AbbVie, Inc. (Pharmaceuticals) | 32,300 | 2,113,712 | ||||||||
Actavis PLC (Pharmaceuticals) | (a) | 5,420 | 1,395,162 | |||||||
Allergan, Inc. (Pharmaceuticals) | 6,000 | 1,275,540 | ||||||||
Bristol-Myers Squibb Co. (Pharmaceuticals) | 33,669 | 1,987,481 | ||||||||
Eli Lilly & Co. (Pharmaceuticals) | 19,900 | 1,372,901 | ||||||||
Hospira, Inc. (Pharmaceuticals) | (a) | 3,410 | 208,862 | |||||||
Johnson & Johnson (Pharmaceuticals) | 56,800 | 5,939,576 | ||||||||
Mallinckrodt PLC (Pharmaceuticals) | (a) | 2,400 | 237,672 | |||||||
Merck & Co., Inc. (Pharmaceuticals) | 57,794 | 3,282,121 | ||||||||
Mylan, Inc. (Pharmaceuticals) | (a) | 7,600 | 428,412 | |||||||
Perrigo Co. PLC (Pharmaceuticals) | 2,900 | 484,764 | ||||||||
Pfizer, Inc. (Pharmaceuticals) | 127,810 | 3,981,281 | ||||||||
Zoetis, Inc. (Pharmaceuticals) | 10,200 | 438,906 | ||||||||
|
| |||||||||
52,599,066 | ||||||||||
|
| |||||||||
INDUSTRIALS – 9.9% | ||||||||||
Boeing Co. / The (Aerospace & Defense) | 13,400 | 1,741,732 | ||||||||
General Dynamics Corp. (Aerospace & Defense) | 6,400 | 880,768 | ||||||||
Honeywell International, Inc. (Aerospace & Defense) | 15,900 | 1,588,728 | ||||||||
L-3 Communications Holdings, Inc. (Aerospace & Defense) | 1,700 | 214,557 | ||||||||
Lockheed Martin Corp. (Aerospace & Defense) | 5,400 | 1,039,878 | ||||||||
Northrop Grumman Corp. (Aerospace & Defense) | 4,100 | 604,299 | ||||||||
Precision Castparts Corp. (Aerospace & Defense) | 2,900 | 698,552 | ||||||||
Raytheon Co. (Aerospace & Defense) | 6,300 | 681,471 | ||||||||
Rockwell Collins, Inc. (Aerospace & Defense) | 2,700 | 228,096 | ||||||||
Textron, Inc. (Aerospace & Defense) | 5,600 | 235,816 | ||||||||
United Technologies Corp. (Aerospace & Defense) | 17,200 | 1,978,000 | ||||||||
C.H. Robinson Worldwide, Inc. (Air Freight & Logistics) | 3,000 | 224,670 | ||||||||
Expeditors International of Washington, Inc. (Air Freight & Logistics) | 3,900 | 173,979 | ||||||||
FedEx Corp. (Air Freight & Logistics) | 5,300 | 920,398 | ||||||||
United Parcel Service, Inc. Class B (Air Freight & Logistics) | 14,100 | 1,567,497 | ||||||||
Delta Air Lines, Inc. (Airlines) | 17,000 | 836,230 | ||||||||
Southwest Airlines Co. (Airlines) | 13,800 | 584,016 | ||||||||
Allegion PLC (Building Products) | 1,900 | 105,374 | ||||||||
Masco Corp. (Building Products) | 7,200 | 181,440 | ||||||||
ADT Corp. / The (Commercial Svs. & Supplies) | 3,550 | 128,617 | ||||||||
Cintas Corp. (Commercial Svs. & Supplies) | 2,000 | 156,880 | ||||||||
Pitney Bowes, Inc. (Commercial Svs. & Supplies) | 4,100 | 99,917 | ||||||||
Republic Services, Inc. (Commercial Svs. & Supplies) | 5,080 | 204,470 |
50 | (continued) |
Ohio National Fund, Inc. | S&P 500® Index Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Common Stocks (Continued) | Shares | Value | ||||||||
INDUSTRIALS (continued) | ||||||||||
Stericycle, Inc. (Commercial Svs. & Supplies) | (a) | 1,700 | $ | 222,836 | ||||||
Tyco International PLC (Commercial Svs. & Supplies) | 8,500 | 372,810 | ||||||||
Waste Management, Inc. (Commercial Svs. & Supplies) | 8,600 | 441,352 | ||||||||
Fluor Corp. (Construction & Engineering) | 3,200 | 194,016 | ||||||||
Jacobs Engineering Group, Inc. (Construction & Engineering) | (a) | 2,600 | 116,194 | |||||||
Quanta Services, Inc. (Construction & Engineering) | (a) | 4,400 | 124,916 | |||||||
AMETEK, Inc. (Electrical Equip.) | 5,000 | 263,150 | ||||||||
Eaton Corp. PLC (Electrical Equip.) | 9,636 | 654,863 | ||||||||
Emerson Electric Co. (Electrical Equip.) | 14,100 | 870,393 | ||||||||
Rockwell Automation, Inc. (Electrical Equip.) | 2,800 | 311,360 | ||||||||
3M Co. (Industrial Conglomerates) | 13,000 | 2,136,160 | ||||||||
Danaher Corp. (Industrial Conglomerates) | 12,400 | 1,062,804 | ||||||||
General Electric Co. (Industrial Conglomerates) | 203,600 | 5,144,972 | ||||||||
Roper Industries, Inc. (Industrial Conglomerates) | 2,000 | 312,700 | ||||||||
Caterpillar, Inc. (Machinery) | 12,300 | 1,125,819 | ||||||||
Cummins, Inc. (Machinery) | 3,400 | 490,178 | ||||||||
Deere & Co. (Machinery) | 7,300 | 645,831 | ||||||||
Dover Corp. (Machinery) | 3,400 | 243,848 | ||||||||
Flowserve Corp. (Machinery) | 2,800 | 167,524 | ||||||||
Illinois Tool Works, Inc. (Machinery) | 7,300 | 691,310 | ||||||||
Ingersoll-Rand PLC (Machinery) | 5,400 | 342,306 | ||||||||
Joy Global, Inc. (Machinery) | 2,000 | 93,040 | ||||||||
PACCAR, Inc. (Machinery) | 7,212 | 490,488 | ||||||||
Pall Corp. (Machinery) | 2,200 | 222,662 | ||||||||
Parker-Hannifin Corp. (Machinery) | 3,000 | 386,850 | ||||||||
Pentair PLC (Machinery) | 3,803 | 252,595 | ||||||||
Snap-on, Inc. (Machinery) | 1,200 | 164,088 | ||||||||
Stanley Black & Decker, Inc. (Machinery) | 3,147 | 302,364 | ||||||||
Xylem, Inc. (Machinery) | 3,700 | 140,859 | ||||||||
Dun & Bradstreet Corp. / The (Professional Svs.) | 700 | 84,672 | ||||||||
Equifax, Inc. (Professional Svs.) | 2,400 | 194,088 | ||||||||
Nielsen NV (Professional Svs.) | 6,600 | 295,218 | ||||||||
Robert Half International, Inc. (Professional Svs.) | 2,800 | 163,464 | ||||||||
CSX Corp. (Road & Rail) | 20,200 | 731,846 | ||||||||
Kansas City Southern (Road & Rail) | 2,200 | 268,466 | ||||||||
Norfolk Southern Corp. (Road & Rail) | 6,300 | 690,543 | ||||||||
Ryder System, Inc. (Road & Rail) | 1,100 | 102,135 | ||||||||
Union Pacific Corp. (Road & Rail) | 18,000 | 2,144,340 | ||||||||
Fastenal Co. (Trading Companies & Distributors) | 5,500 | 261,580 | ||||||||
United Rentals, Inc. (Trading Companies & Distributors) | (a) | 2,000 | 204,020 | |||||||
W.W. Grainger, Inc. (Trading Companies & Distributors) | 1,200 | 305,868 | ||||||||
|
| |||||||||
38,509,913 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 18.7% | ||||||||||
Cisco Systems, Inc. (Communications Equip.) | 103,700 | 2,884,416 | ||||||||
F5 Networks, Inc. (Communications Equip.) | (a) | 1,500 | 195,698 | |||||||
Harris Corp. (Communications Equip.) | 2,100 | 150,822 | ||||||||
Juniper Networks, Inc. (Communications Equip.) | 7,800 | 174,096 | ||||||||
Motorola Solutions, Inc. (Communications Equip.) | 4,314 | 289,383 | ||||||||
QUALCOMM, Inc. (Communications Equip.) | 33,700 | 2,504,921 | ||||||||
Amphenol Corp. Class A (Electronic Equip., Instr. & Comp.) | 6,300 | 339,003 | ||||||||
Corning, Inc. (Electronic Equip., Instr. & Comp.) | 26,000 | 596,180 | ||||||||
FLIR Systems, Inc. (Electronic Equip., Instr. & Comp.) | 2,900 | 93,699 | ||||||||
TE Connectivity Ltd. (Electronic Equip., Instr. & Comp.) | 8,200 | 518,650 | ||||||||
Akamai Technologies, Inc. (Internet Software & Svs.) | (a) | 3,600 | 226,656 | |||||||
eBay, Inc. (Internet Software & Svs.) | (a) | 22,900 | 1,285,148 | |||||||
Facebook, Inc. Class A (Internet Software & Svs.) | (a) | 42,400 | 3,308,048 | |||||||
Google, Inc. Class A (Internet Software & Svs.) | (a) | 5,775 | 3,064,561 | |||||||
Google, Inc. Class C (Internet Software & Svs.) | (a) | 5,775 | 3,039,960 | |||||||
VeriSign, Inc. (Internet Software & Svs.) | (a) | 2,200 | 125,400 | |||||||
Yahoo!, Inc. (Internet Software & Svs.) | (a) | 17,900 | 904,129 |
Common Stocks (Continued) | Shares | Value | ||||||||
INFORMATION TECHNOLOGY (continued) | ||||||||||
Accenture PLC Class A (IT Svs.) | 12,700 | $ | 1,134,237 | |||||||
Alliance Data Systems Corp. (IT Svs.) | (a) | 1,300 | 371,865 | |||||||
Automatic Data Processing, Inc. (IT Svs.) | 9,800 | 817,026 | ||||||||
Cognizant Technology Solutions Corp. Class A (IT Svs.) | (a) | 12,300 | 647,718 | |||||||
Computer Sciences Corp. (IT Svs.) | 2,800 | 176,540 | ||||||||
Fidelity National Information Services, Inc. (IT Svs.) | 5,800 | 360,760 | ||||||||
Fiserv, Inc. (IT Svs.) | (a) | 4,900 | 347,753 | |||||||
International Business Machines Corp. (IT Svs.) | 18,650 | 2,992,206 | ||||||||
MasterCard, Inc. Class A (IT Svs.) | 19,900 | 1,714,584 | ||||||||
Paychex, Inc. (IT Svs.) | 6,600 | 304,722 | ||||||||
Teradata Corp. (IT Svs.) | (a) | 3,100 | 135,408 | |||||||
Total System Services, Inc. (IT Svs.) | 3,377 | 114,683 | ||||||||
Visa, Inc. (IT Svs.) | 9,900 | 2,595,780 | ||||||||
Western Union Co. / The (IT Svs.) | 10,647 | 190,688 | ||||||||
Xerox Corp. (IT Svs.) | 21,802 | 302,176 | ||||||||
Altera Corp. (Semiconductors & Equip.) | 6,200 | 229,028 | ||||||||
Analog Devices, Inc. (Semiconductors & Equip.) | 6,300 | 349,776 | ||||||||
Applied Materials, Inc. (Semiconductors & Equip.) | 24,700 | 615,524 | ||||||||
Avago Technologies Ltd. (Semiconductors & Equip.) | 5,100 | 513,009 | ||||||||
Broadcom Corp. Class A (Semiconductors & Equip.) | 10,950 | 474,464 | ||||||||
First Solar, Inc. (Semiconductors & Equip.) | (a) | 1,550 | 69,122 | |||||||
Intel Corp. (Semiconductors & Equip.) | 98,000 | 3,556,420 | ||||||||
KLA-Tencor Corp. (Semiconductors & Equip.) | 3,300 | 232,056 | ||||||||
Lam Research Corp. (Semiconductors & Equip.) | 3,225 | 255,872 | ||||||||
Linear Technology Corp. (Semiconductors & Equip.) | 4,800 | 218,880 | ||||||||
Microchip Technology, Inc. (Semiconductors & Equip.) | 4,100 | 184,951 | ||||||||
Micron Technology, Inc. (Semiconductors & Equip.) | (a) | 21,800 | 763,218 | |||||||
NVIDIA Corp. (Semiconductors & Equip.) | 10,500 | 210,525 | ||||||||
Texas Instruments, Inc. (Semiconductors & Equip.) | 21,400 | 1,144,151 | ||||||||
Xilinx, Inc. (Semiconductors & Equip.) | 5,400 | 233,766 | ||||||||
Adobe Systems, Inc. (Software) | (a) | 9,600 | 697,920 | |||||||
Autodesk, Inc. (Software) | (a) | 4,600 | 276,276 | |||||||
CA, Inc. (Software) | 6,500 | 197,925 | ||||||||
Citrix Systems, Inc. (Software) | (a) | 3,300 | 210,540 | |||||||
Electronic Arts, Inc. (Software) | (a) | 6,300 | 296,195 | |||||||
Intuit, Inc. (Software) | 5,800 | 534,702 | ||||||||
Microsoft Corp. (Software) | 167,200 | 7,766,440 | ||||||||
Oracle Corp. (Software) | 65,600 | 2,950,032 | ||||||||
Red Hat, Inc. (Software) | (a) | 3,800 | 262,732 | |||||||
salesforce.com, Inc. (Software) | (a) | 11,900 | 705,789 | |||||||
Symantec Corp. (Software) | 13,994 | 359,016 | ||||||||
Apple, Inc. (Tech. Hardware, Storage & Periph.) | 118,900 | 13,124,182 | ||||||||
EMC Corp. (Tech. Hardware, Storage & Periph.) | 41,300 | 1,228,262 | ||||||||
Hewlett-Packard Co. (Tech. Hardware, Storage & Periph.) | 37,800 | 1,516,914 | ||||||||
NetApp, Inc. (Tech. Hardware, Storage & Periph.) | 6,300 | 261,135 | ||||||||
SanDisk Corp. (Tech. Hardware, Storage & Periph.) | 4,500 | 440,910 | ||||||||
Seagate Technology PLC (Tech. Hardware, Storage & Periph.) | 6,600 | 438,900 | ||||||||
Western Digital Corp. (Tech. Hardware, Storage & Periph.) | 4,400 | 487,080 | ||||||||
|
| |||||||||
72,712,628 | ||||||||||
|
| |||||||||
MATERIALS – 3.0% | ||||||||||
Air Products & Chemicals, Inc. (Chemicals) | 3,900 | 562,497 | ||||||||
Airgas, Inc. (Chemicals) | 1,400 | 161,252 | ||||||||
CF Industries Holdings, Inc. (Chemicals) | 1,000 | 272,540 | ||||||||
Dow Chemical Co. / The (Chemicals) | 22,500 | 1,026,225 | ||||||||
Eastman Chemical Co. (Chemicals) | 3,000 | 227,580 | ||||||||
Ecolab, Inc. (Chemicals) | 5,500 | 574,860 | ||||||||
E.I. du Pont de Nemours & Co. (Chemicals) | 18,400 | 1,360,496 | ||||||||
FMC Corp. (Chemicals) | 2,700 | 153,981 | ||||||||
International Flavors & Fragrances, Inc. (Chemicals) | 1,600 | 162,176 | ||||||||
LyondellBasell Industries NV Class A (Chemicals) | 8,400 | 666,876 | ||||||||
Monsanto Co. (Chemicals) | 9,786 | 1,169,133 | ||||||||
Mosaic Co. / The (Chemicals) | 6,400 | 292,160 | ||||||||
PPG Industries, Inc. (Chemicals) | 2,800 | 647,220 |
51 | (continued) |
Ohio National Fund, Inc. | S&P 500® Index Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Common Stocks (Continued) | Shares | Value | ||||||||
MATERIALS (continued) | ||||||||||
Praxair, Inc. (Chemicals) | 5,900 | $ | 764,404 | |||||||
Sherwin-Williams Co. / The (Chemicals) | 1,700 | 447,168 | ||||||||
Sigma-Aldrich Corp. (Chemicals) | 2,400 | 329,448 | ||||||||
Martin Marietta Materials, Inc. (Construction Materials) | 1,300 | 143,416 | ||||||||
Vulcan Materials Co. (Construction Materials) | 2,700 | 177,471 | ||||||||
Avery Dennison Corp. (Containers & Packaging) | 1,800 | 93,384 | ||||||||
Ball Corp. (Containers & Packaging) | 2,800 | 190,876 | ||||||||
MeadWestvaco Corp. (Containers & Packaging) | 3,400 | 150,926 | ||||||||
Owens-Illinois, Inc. (Containers & Packaging) | (a) | 3,300 | 89,067 | |||||||
Sealed Air Corp. (Containers & Packaging) | 4,300 | 182,449 | ||||||||
Alcoa, Inc. (Metals & Mining) | 23,900 | 377,381 | ||||||||
Allegheny Technologies, Inc. (Metals & Mining) | 2,200 | 76,494 | ||||||||
Freeport-McMoRan, Inc. (Metals & Mining) | 21,052 | 491,775 | ||||||||
Newmont Mining Corp. (Metals & Mining) | 10,100 | 190,890 | ||||||||
Nucor Corp. (Metals & Mining) | 6,500 | 318,825 | ||||||||
International Paper Co. (Paper & Forest Products) | 8,600 | 460,788 | ||||||||
|
| |||||||||
11,761,758 | ||||||||||
|
| |||||||||
TELECOMMUNICATION SERVICES – 2.2% | ||||||||||
AT&T, Inc. (Diversified Telecom. Svs.) | 105,178 | 3,532,929 | ||||||||
CenturyLink, Inc. (Diversified Telecom. Svs.) | 11,572 | 458,020 | ||||||||
Frontier Communications Corp. (Diversified Telecom. Svs.) | 20,341 | 135,674 | ||||||||
Level 3 Communications, Inc. (Diversified Telecom. Svs.) | (a) | 5,700 | 281,466 | |||||||
Verizon Communications, Inc. (Diversified Telecom. Svs.) | 84,200 | 3,938,876 | ||||||||
Windstream Holdings, Inc. (Diversified Telecom. Svs.) | 12,196 | 100,495 | ||||||||
|
| |||||||||
8,447,460 | ||||||||||
|
| |||||||||
UTILITIES – 3.1% | ||||||||||
American Electric Power Co., Inc. (Electric Utilities) | 9,900 | 601,128 | ||||||||
Duke Energy Corp. (Electric Utilities) | 14,343 | 1,198,214 | ||||||||
Edison International (Electric Utilities) | 6,600 | 432,168 | ||||||||
Entergy Corp. (Electric Utilities) | 3,700 | 323,676 | ||||||||
Exelon Corp. (Electric Utilities) | 17,390 | 644,821 | ||||||||
FirstEnergy Corp. (Electric Utilities) | 8,534 | 332,741 |
Common Stocks (Continued) | Shares | Value | ||||||||
UTILITIES (continued) | ||||||||||
NextEra Energy, Inc. (Electric Utilities) | 8,900 | $ | 945,981 | |||||||
Northeast Utilities (Electric Utilities) | 6,400 | 342,528 | ||||||||
Pepco Holdings, Inc. (Electric Utilities) | 5,100 | 137,343 | ||||||||
Pinnacle West Capital Corp. (Electric Utilities) | 2,200 | 150,282 | ||||||||
PPL Corp. (Electric Utilities) | 13,500 | 490,455 | ||||||||
Southern Co. / The (Electric Utilities) | 18,200 | 893,802 | ||||||||
Xcel Energy, Inc. (Electric Utilities) | 10,300 | 369,976 | ||||||||
AGL Resources, Inc. (Gas Utilities) | 2,386 | 130,061 | ||||||||
AES Corp. (Ind. Power & Renewable Elec.) | 13,300 | 183,141 | ||||||||
NRG Energy, Inc. (Ind. Power & Renewable Elec.) | 6,900 | 185,955 | ||||||||
Ameren Corp. (Multi-Utilities) | 4,900 | 226,037 | ||||||||
CenterPoint Energy, Inc. (Multi-Utilities) | 8,700 | 203,841 | ||||||||
CMS Energy Corp. (Multi-Utilities) | 5,600 | 194,600 | ||||||||
Consolidated Edison, Inc. (Multi-Utilities) | 5,900 | 389,459 | ||||||||
Dominion Resources, Inc. (Multi-Utilities) | 11,800 | 907,420 | ||||||||
DTE Energy Co. (Multi-Utilities) | 3,600 | 310,932 | ||||||||
Integrys Energy Group, Inc. (Multi-Utilities) | 1,612 | 125,494 | ||||||||
NiSource, Inc. (Multi-Utilities) | 6,400 | 271,488 | ||||||||
PG&E Corp. (Multi-Utilities) | 9,600 | 511,104 | ||||||||
Public Service Enterprise Group, Inc. (Multi-Utilities) | 10,300 | 426,523 | ||||||||
SCANA Corp. (Multi-Utilities) | 2,900 | 175,160 | ||||||||
Sempra Energy (Multi-Utilities) | 4,700 | 523,392 | ||||||||
TECO Energy, Inc. (Multi-Utilities) | 4,800 | 98,352 | ||||||||
Wisconsin Energy Corp. (Multi-Utilities) | 4,600 | 242,604 | ||||||||
|
| |||||||||
11,968,678 | ||||||||||
|
| |||||||||
Total Common Stocks (Cost $228,966,545) | $ | 369,955,104 | ||||||||
|
| |||||||||
Exchange Traded Funds – 4.3% | Shares | Value | ||||||||
SPDR S&P 500 ETF Trust | 81,775 | $ | 16,804,763 | |||||||
|
| |||||||||
Total Exchange Traded Funds (Cost $16,371,604) | $ | 16,804,763 | ||||||||
|
| |||||||||
Total Investments – 99.6% (Cost $245,338,149) | (b) | $ | 386,759,867 | |||||||
Other Assets in Excess of Liabilities – 0.4% | 1,444,270 | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 388,204,137 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Non-income producing security. |
(b) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
52 |
Ohio National Fund, Inc. | Strategic Value Portfolio |
Objective/Strategy
The Strategic Value Portfolio seeks growth of capital and income by investing primarily in high dividend yielding common stocks, with dividend growth potential.
Performance as of December 31, 2014
Average Annual returns | ||||
One year | 12.41% | |||
Five years | 13.24% | |||
Ten years | 5.18% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Strategic Value Portfolio returned 12.41% versus 15.36% for the current benchmark, the Dow Jones U.S. Select Dividend Index (“DJSDI”).
Regardless of market conditions, the Portfolio’s principles remain unchanged, as it continues to focus on providing investors with a high and rising income stream, while also targeting lower downside risk. The Portfolio finished the year with a gross weighted average yield of 4.2%. The Portfolio’s yield not only exceeded the 3.4% yield of the DJSDI, a proxy of the domestic dividend-paying universe, but it was also above that of the S&P 500 Index (2.0%), and greater than the yield of the 10-Year U.S. Treasury bond (2.2%). In addition to its high yield, the Portfolio experienced 43 dividend increases from 37 of its holdings during 2014. Some of the more notable dividend raises during the year came from PepsiCo, Inc., Lorillard, Inc., The Coca-Cola Co., Altria Group, Inc., The Procter & Gamble Co., Chevron Corp., and The Williams Cos., Inc. Of these names, PepsiCo, Inc. and The Coca-Cola Co. have paid consecutive dividends each year for more than 50 years and General Mills, Inc., The Procter & Gamble Co. and Chevron Corp. have paid consecutive dividends for more than 100 years. Additionally, Vodafone Group PLC issued a special dividend, valued at about $17.34 per Vodafone Group PLC ADR share, consisting of Verizon stock and cash. Touted as the largest special dividend in history, this special distribution added about 1.8% to the overall yield of the Portfolio for the period (the impact of such one-time special dividends is excluded from the Portfolio’s weighted average dividend yield of 4.2% stated above).(1)
The Portfolio primarily invests in high yield, low beta, large cap, high quality holdings, which are representative of a dividend-oriented strategy. From an absolute perspective, the strongest contributors to performance were Consumer Staples, Utilities, and Real Estate Investment Trusts (“REITs”), which posted returns of 20.7%, 23.5%, and 36.8% for the period, respectively. Notable performers included Health Care REIT, Inc., American Electric Power Co., Inc., Reynolds American, Inc., Altria Group, Inc. and Realty Income Corp.(1)
The Portfolio’s five best performing securities were Health Care REIT, Inc., up 48.5%, Digital Realty Trust, Inc., up 42.6%, AstraZeneca
PLC, up 36.1%, Reynolds American, Inc., up 34.5%, and Altria Group, Inc., up 34.5%.(1)
To the detriment of the Portfolio, negative total returns were noted in the Energy and Consumer Discretionary sectors, which returned -1.0% and -0.1%, respectively. The Portfolio’s holdings in the Energy sector were the largest negative contributors, driven by the recent drop in oil prices. The sole holding within Consumer Discretionary, McDonald’s Corp., did not participate in the broad market advance due to near-term headwinds related to weakened foreign currencies and pressure on its U.S. segment, as consumers migrated toward healthier eating options. Other laggards included BP PLC, down 16.2%, GlaxoSmithKline PLC, down 14.9%, and Total SA, down 11.7%.(1)
The Portfolio’s five worst performing securities were BP PLC, down 16.2%, GlaxoSmithKline PLC, down 14.9%, Vodafone Group PLC, down 12.3%, Total SA, down 11.7%, and Chevron Corp., down 7.0%.(1)
Of note, the Portfolio achieved its absolute total return target while exposing its investors to a notably lower level of risk as evidenced by its low beta of 0.67 (Wilshire 3-year beta versus the S&P calculated using the monthly return).(1)
During the period, the DJSDI experienced its highest returns from the Utilities (30.8%), Information Technology (29.6%) and Health Care (19.7%) sectors. On a relative basis, the Portfolio’s highest contribution came from the strong performance in REITs within the Financials sector. The Portfolio’s 8.0% REIT exposure posted a return of 36.8%, compared to an average return of 6.6% for the Financials holdings of the benchmark. Notable performers included Health Care REIT, Inc., up 48.5% and Digital Realty Trust, Inc., up 42.6%. As the Portfolio’s largest sector position, Consumer Staples contributed significantly to relative performance, as the Portfolio’s sector holdings posted an average return of 20.7%, versus a 12.0% sector return in the benchmark. The returns in Consumer Staples came from the Portfolio’s tobacco investments, including Reynolds American, Inc., up 34.5%, and Altria Group, Inc., up 34.5%.(1)
Areas of weakness, which led to the Portfolio’s underperformance relative to the DJSDI, were Utilities and Telecommunication Services. The DJSDI benefitted from the strong quarterly performance of Utilities stocks, since the benchmark had a 35.1% weight in that particular sector. This large concentration significantly exceeded the Portfolio’s 16.2% weighting in Utilities. This underweight was the largest sector allocation detractor, costing the portfolio 286 basis points of relative return. The DJSDI’s relative outperformance in Telecommunication Services was driven by CenturyLink, Inc. The company’s stock price recovered after enduring a notable selloff in 2013 that was triggered by a surprise dividend cut. The Portfolio was further hampered within Telecommunication Services by Vodafone Group PLC, down 12.3%, as the company gave back some of the strong gains that occurred following the company’s announcement on September 2, 2013. That particular announcement detailed Vodafone Group PLC’s intent to sell its stake in Verizon Wireless to Verizon and then distribute an important portion of the proceeds to its shareholders.(1)
The Portfolio has not changed its basic positioning, as it continues to invest in companies that exhibit both the ability and the inclination to pay and increase their dividends. That said, the holdings of the Portfolio have changed modestly. Changes to sector exposures included a 9.9% decrease in Health Care, a 4.6% increase in Consumer Staples and a 4.1% increase in Financials. The Health Care weight decreased from 18.5% to 8.6% as positions in AstraZeneca PLC and AbbVie, Inc. were sold due to news of possible merger and acquisition activity. Bristol-Myers Squibb Co. and Eli
53 | (continued) |
Ohio National Fund, Inc. | Strategic Value Portfolio (Continued) |
Lilly & Co. were eliminated as well, because notable advances in their stock prices surpassed the underlying dividend growth trajectories for each company, putting downward pressure on their dividend yields. The Portfolio’s Financials exposure was increased by 4.1%, as existing positions were bolstered for two REITs, Ventas, Inc. and HCP, Inc. There was also one new name, Kinder Morgan, Inc., that was added to the Portfolio in 2014. Kinder Morgan, Inc. possesses a progressive dividend policy, evidenced by its commitment to grow its dividend by 10% per year through 2020.(1)
2014 was a strong year for stocks, as the market repeatedly surpassed new highs despite investor concerns about a slowing U.S. housing market, Ebola, Russian sanctions and, most recently, a confirmed Japanese recession and a weakening Eurozone. Undeterred by the economic environment, the Portfolio seeks to provide an investor with dependable, rising dividend income, the opportunity to achieve superior long-term total returns, and a strategy that largely abstains from the cyclicality of the market. With uncertainty seemingly rising as oil prices have tumbled and international worries have intensified, the Portfolio will strive to provide an unwavering, lower risk investment approach that can address a variety of investor needs, both in the short-term and the long-term.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The Dow Jones U.S. Select Dividend Index is comprised of all dividend-paying companies in the Dow Jones U.S. Index that have a non-negative historical five-year dividend-per-share growth rate, a five-year average dividend to earnings-per-share ratio of less than or equal to 60%, paid dividends in each of the previous five years, and a three-month average daily trading volume of 200,000 shares. Current index components are included in the universe regardless of their dividend payout ratio or trading volume. The Dow Jones U.S. Index aims to consistently represent the top 95% of U.S. companies based on float-adjusted market capitalization, excluding non common issues and illiquid stocks. The index presented includes the effects of reinvested dividends.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 97.4 | |||
Money Market Funds and | 2.6 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||||
1. | Altria Group, Inc. | 4.5 | ||||
2. | Reynolds American, Inc. | 4.3 | ||||
3. | Kraft Foods Group, Inc. | 4.2 | ||||
4. | AT&T, Inc. | 4.0 | ||||
5. | Verizon Communications, Inc. | 4.0 | ||||
6. | Philip Morris International, Inc. | 3.8 | ||||
7. | McDonald’s Corp. | 3.8 | ||||
8. | GlaxoSmithKline PLC | 3.7 | ||||
9. | Duke Energy Corp. | 3.5 | ||||
10. | Royal Dutch Shell PLC | 3.3 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Consumer Staples | 30.5 | |||
Energy | 17.4 | |||
Utilities | 15.2 | |||
Telecommunication Services | 12.9 | |||
Financials | 9.1 | |||
Health Care | 8.5 | |||
Consumer Discretionary | 3.8 | |||
|
| |||
97.4 | ||||
|
|
54 |
Ohio National Fund, Inc. | Strategic Value Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 97.4% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 3.8% | ||||||||||
McDonald’s Corp. (Hotels, Restaurants & Leisure) | 135,145 | $ | 12,663,086 | |||||||
|
| |||||||||
CONSUMER STAPLES – 30.5% | ||||||||||
Coca-Cola Co. / The (Beverages) | 119,450 | 5,043,179 | ||||||||
PepsiCo, Inc. (Beverages) | 36,700 | 3,470,352 | ||||||||
General Mills, Inc. (Food Products) | 97,100 | 5,178,343 | ||||||||
Kellogg Co. (Food Products) | 54,075 | 3,538,668 | ||||||||
Kraft Foods Group, Inc. (Food Products) | 222,730 | 13,956,262 | ||||||||
Unilever PLC (Food Products) | (a) | 215,600 | 8,759,453 | |||||||
Kimberly-Clark Corp. (Household Products) | 78,475 | 9,067,002 | ||||||||
Procter & Gamble Co. / The (Household Products) | 115,350 | 10,507,231 | ||||||||
Altria Group, Inc. (Tobacco) | 304,600 | 15,007,642 | ||||||||
Philip Morris International, Inc. (Tobacco) | 157,045 | 12,791,315 | ||||||||
Reynolds American, Inc. (Tobacco) | 221,720 | 14,249,944 | ||||||||
|
| |||||||||
101,569,391 | ||||||||||
|
| |||||||||
ENERGY – 17.4% | ||||||||||
BP PLC (Oil, Gas & Consumable Fuels) | (a) | 1,220,300 | 7,745,961 | |||||||
Chevron Corp. (Oil, Gas & Consumable Fuels) | 75,680 | 8,489,782 | ||||||||
ConocoPhillips (Oil, Gas & Consumable Fuels) | 121,155 | 8,366,964 | ||||||||
Kinder Morgan, Inc. (Oil, Gas & Consumable Fuels) | 137,390 | 5,812,971 | ||||||||
Royal Dutch Shell PLC (Oil, Gas & Consumable Fuels) | (a) | 321,220 | 11,098,513 | |||||||
Total SA (Oil, Gas & Consumable Fuels) | (a) | 152,420 | 7,808,805 | |||||||
Williams Cos., Inc. / The (Oil, Gas & Consumable Fuels) | 190,150 | 8,545,341 | ||||||||
|
| |||||||||
57,868,337 | ||||||||||
|
| |||||||||
FINANCIALS – 9.1% | ||||||||||
Digital Realty Trust, Inc. (Real Estate Investment Trusts) | 85,700 | 5,681,910 | ||||||||
HCP, Inc. (Real Estate Investment Trusts) | 155,190 | 6,833,016 | ||||||||
Health Care REIT, Inc. (Real Estate Investment Trusts) | 93,500 | 7,075,145 | ||||||||
Realty Income Corp. (Real Estate Investment Trusts) | 80,800 | 3,854,968 | ||||||||
Ventas, Inc. (Real Estate Investment Trusts) | 97,530 | 6,992,901 | ||||||||
|
| |||||||||
30,437,940 | ||||||||||
|
|
Common Stocks (Continued) | Shares | Value | ||||||||
HEALTH CARE – 8.5% | ||||||||||
GlaxoSmithKline PLC (Pharmaceuticals) | (a) | 567,156 | $ | 12,167,559 | ||||||
Johnson & Johnson (Pharmaceuticals) | 51,860 | 5,423,000 | ||||||||
Merck & Co., Inc. (Pharmaceuticals) | 187,900 | 10,670,841 | ||||||||
|
| |||||||||
28,261,400 | ||||||||||
|
| |||||||||
TELECOMMUNICATION SERVICES – 12.9% | ||||||||||
AT&T, Inc. (Diversified Telecom. Svs.) | 400,010 | 13,436,336 | ||||||||
BCE, Inc. (Diversified Telecom. Svs.) | 142,280 | 6,524,943 | ||||||||
Verizon Communications, Inc. (Diversified Telecom. Svs.) | 283,601 | 13,266,855 | ||||||||
Vodafone Group PLC – ADR (Wireless Telecom. Svs.) | 279,893 | 9,563,944 | ||||||||
|
| |||||||||
42,792,078 | ||||||||||
|
| |||||||||
UTILITIES – 15.2% | ||||||||||
American Electric Power Co., Inc. (Electric Utilities) | 74,600 | 4,529,712 | ||||||||
Duke Energy Corp. (Electric Utilities) | 139,906 | 11,687,747 | ||||||||
PPL Corp. (Electric Utilities) | 251,900 | 9,151,527 | ||||||||
Southern Co. / The (Electric Utilities) | 194,860 | 9,569,575 | ||||||||
Dominion Resources, Inc. (Multi-Utilities) | 61,225 | 4,708,203 | ||||||||
National Grid PLC (Multi-Utilities) | (a) | 768,900 | 10,910,164 | |||||||
|
| |||||||||
50,556,928 | ||||||||||
|
| |||||||||
Total Common Stocks (Cost $294,813,183) | $ | 324,149,160 | ||||||||
|
| |||||||||
Money Market Funds – 1.1% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds Money Market Portfolio – Class I | 3,605,000 | $ | 3,605,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $3,605,000) | $ | 3,605,000 | ||||||||
|
| |||||||||
Total Investments – 98.5% (Cost $298,418,183) | (b) | $ | 327,754,160 | |||||||
Other Assets in Excess of Liabilities – 1.5% | 4,856,745 | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 332,610,905 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Abbreviations:
ADR: American Depositary Receipts
Footnotes:
(a) | Security traded on a foreign exchange has been valued at an estimate of fair value that is different than the local market close price. These fair value estimates are determined by an independent fair valuation service that has been approved by the Board. These securities represent $58,490,455, or 17.6% of the Portfolio’s net assets. Other Portfolio securities are not subjected to fair value procedures because they are traded on domestic or foreign exchanges that have close times that are consistent with the U.S. market close, normally 4:00 pm Eastern Time. |
(b) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
55 |
Ohio National Fund, Inc. | High Income Bond Portfolio |
Objective/Strategy
The High Income Bond Portfolio seeks high current income by investing at least 80% of its net assets in lower rated corporate debt obligations commonly referred to as “junk bonds”. The Portfolio’s investments are generally rated Ba or lower by Moody’s, or BB or lower by Standard & Poor’s or Fitch.
Performance as of December 31, 2014
Average Annual returns | ||||
One year | 2.77% | |||
Five years | 8.63% | |||
Ten years | 7.07% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the High Income Bond Portfolio returned 2.77% versus 2.46% for the current benchmark, the Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index (“BCHY2%”).
The total return for the high yield market for the twelve month reporting period was modest on an absolute basis and disappointing on a relative basis. For example, the BCHY2%, returned 2.46%, underperforming the Barclays Capital U.S. Aggregate Bond Index, a measure of high quality bond performance, which returned 5.97% for the period. The main factor that negatively impacted the high yield market during the period was an approximate 42% decline in the price of oil and its impact on the performance of the Energy sector. At the beginning of the period, the Energy component made up 14.27% of the BCHY2%, which can be divided into four subsectors: Independents (7.58%), Oil Field Services (2.36%), Refining (0.42%) and Midstream (3.91%). The two subsectors of the total Energy sector most directly impacted by the fall in the price of oil were Independents and Oil Field Services, which generated total returns of -12.01% and -16.08%, respectively, for the twelve month period. The oil price decline was so dominant that it offset factors that would have normally resulted in very strong performance for high yield securities – strong economic growth, surging stock prices, strong employment growth and rising consumer confidence to name a few. The impact of the Energy sector on the overall market is illustrated by the increase in credit spreads between the Credit Suisse High Yield Bond Index and Treasury securities with comparable maturities, which widened from 436 basis points on December 31, 2013 to 564 basis points on December 31, 2014.
Within the high-yield market, major industry sectors that substantially outperformed the overall BCHY2% included: wireline telecommunications, midstream, electric utilities, cable/satellites and pharmaceuticals. Major industry sectors that substantially underperformed the overall BCHY2% included: energy, gaming, metals & mining, chemicals and consumer products. From a credit quality
perspective, the higher quality BB-rated sector led the way with a return of 5.37%, followed by the B-rated and CCC-rated sectors, which returned 1.48% and 1.11%, respectively.
The Portfolio was positively impacted by its underweight to the poor-performing energy and metals & mining industry sectors. The Portfolio was also positively impacted by its overweight to the outperforming food & beverage, health care, media/entertainment and packaging sectors. The Portfolio was negatively impacted by its underweight in the strong-performing electric utility, pharmaceuticals, home construction, financial institutions and wireline communication sectors. The Portfolio was positively impacted by strong security selection in the gaming, metals & mining, industrial – other and services industry sectors relative to the BCHY2%.
Specific Portfolio holdings that substantially outperformed the BCHY2% included: Nuveen Investments, Inc., Kinder Morgan, Inc., Athlon Holdings, Flextronics International Ltd. and B/E Aerospace, Inc. Specific Portfolio holdings that substantially underperformed the BCHY2% included Gymboree Corp., SandRidge Energy, Inc., Exide Technologies, Energy XXI Gulf Coast, Inc. and W&T Offshore, Inc.(1)
As 2015 begins, the high yield market is really a tale of two markets. First, the independent energy and oil field services industry subsectors will continue to be impacted by the rise and fall of oil prices. While the energy sector substantially underperformed late in 2014, deteriorating financial results will lead to further problems for the weaker players in the sector should oil prices not rebound by late 2015. Of course, if oil prices rise at some point in 2015, these subsectors will most likely far outperform the overall market. The other sectors of the market will benefit from the decline in oil prices in addition to the strong domestic economy, rising employment, improving consumer confidence and rising corporate valuations. Overall, we would expect spreads in energy to move tighter in 2015, with overall market total returns, both relative and absolute, to be heavily influenced by the price of oil and returns in the energy sector. As we begin 2015, we remain underweight the energy sector as a result of both a philosophical belief that commodity based companies should not be highly levered and our near-term expectation that oil prices will not move materially higher anytime soon.(1)
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
56 | (continued) |
Ohio National Fund, Inc. | High Income Bond Portfolio (Continued) |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. All returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of Portfolio management or trading. Neither the Portfolio nor the index is open to direct investment.
The Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index is the 2% Issuer Cap component of the Barclays Capital U.S. Corporate High Yield Bond Index. The Barclays Capital U.S. Corporate High Yield Bond Index is an unmanaged index that includes all fixed income securities having a maximum quality rating of Ba1/BB+/BB+, a minimum amount outstanding of $150 million, and a least 1 year to maturity. The 2% Issuer Cap component limits the exposure of each issuer to 2% of the total market value and distributes any excess market value index–wide on a pro–rata basis. The index is presented on a total return basis.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Corporate Bonds (3) | 96.6 | |||
Common Stocks (3) | 0.1 | |||
Warrants (3) | 0.1 | |||
Money Market Funds and | ||||
Other Net Assets | 3.2 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||||
1. | First Data Corp. 8.750%, 01/15/2022 | 1.3 | ||||
2. | HCA, Inc. 5.000%, 03/15/2024 | 1.0 | ||||
3. | Energy Transfer Equity LP 5.875%, 01/15/2024 | 0.8 | ||||
4. | Syniverse Holdings, Inc. 9.125%, 01/15/2019 | 0.7 | ||||
5. | Infor Software Parent LLC / Infor Software Parent, Inc. 7.125%, 05/01/2021 | 0.7 | ||||
6. | DISH DBS Corp. 5.875%, 07/15/2022 | 0.7 | ||||
7. | Crimson Merger Sub., Inc. 6.625%, 05/15/2022 | 0.7 | ||||
8. | Reynolds Group Issuer, Inc. / Reynolds Group Issuer LLC 5.750%, 10/15/2020 | 0.7 | ||||
9. | Clear Channel Worldwide Holdings, Inc. 6.500%, 11/15/2022 | 0.6 | ||||
10. | Berry Plastics Corp. 5.500%, 05/15/2022 | 0.6 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors (combined): |
% of Net Assets | ||||
Consumer Discretionary | 29.9 | |||
Information Technology | 11.8 | |||
Industrials | 11.1 | |||
Health Care | 10.3 | |||
Energy | 10.0 | |||
Materials | 9.6 | |||
Telecommunication Services | 4.6 | |||
Consumer Staples | 4.0 | |||
Financials | 3.6 | |||
Utilities | 1.9 | |||
|
| |||
96.8 | ||||
�� |
|
57 |
Ohio National Fund, Inc. | High Income Bond Portfolio |
Schedule of Investments | December 31, 2014 |
Corporate Bonds – 96.6% | Rate | Maturity | Face Amount | Value | ||||||||||||
CONSUMER DISCRETIONARY – 29.7% |
| |||||||||||||||
American Axle & Manufacturing, Inc. (Auto Components) | 6.625% | 10/15/2022 | $ | 625,000 | $ | 665,625 | ||||||||||
American Axle & Manufacturing, Inc. (Auto Components) | 6.250% | 03/15/2021 | 400,000 | 422,000 | ||||||||||||
American Axle & Manufacturing, Inc. (Auto Components) | 5.125% | 02/15/2019 | 75,000 | 76,875 | ||||||||||||
Exide Technologies (Acquired 07/20/2011 through 01/05/2012, Cost $228,136)(Auto Components) | (a)(f) | 8.625% | 02/01/2018 | 250,000 | 13,437 | |||||||||||
Gates Global LLC / Gates Global Co. (Auto Components) | (b) | 6.000% | 07/15/2022 | 750,000 | 722,025 | |||||||||||
International Automotive Components Group SL (Auto Components) | (b) | 9.125% | 06/01/2018 | 850,000 | 892,500 | |||||||||||
J.B. Poindexter & Co., Inc. (Auto Components) | (b) | 9.000% | 04/01/2022 | 725,000 | 786,625 | |||||||||||
Lear Corp. (Auto Components) | 5.375% | 03/15/2024 | 225,000 | 231,187 | ||||||||||||
Lear Corp. (Auto Components) | 4.750% | 01/15/2023 | 625,000 | 626,562 | ||||||||||||
Lear Corp. (Auto Components) | 5.250% | 01/15/2025 | 100,000 | 101,750 | ||||||||||||
MPG Holdco I, Inc. (Auto Components) | (b) | 7.375% | 10/15/2022 | 825,000 | 853,875 | |||||||||||
Stackpole International Intermediate / Stackpole International Powder (Auto Components) | (b) | 7.750% | 10/15/2021 | 925,000 | 929,625 | |||||||||||
Tenneco, Inc. (Auto Components) | 5.375% | 12/15/2024 | 225,000 | 231,750 | ||||||||||||
UCI International, Inc. (Auto Components) | 8.625% | 02/15/2019 | 975,000 | 936,000 | ||||||||||||
General Motors Co. (Automobiles) | 4.000% | 04/01/2025 | 500,000 | 502,500 | ||||||||||||
General Motors Financial Co., Inc. (Automobiles) | 4.250% | 05/15/2023 | 325,000 | 332,277 | ||||||||||||
Affinia Group, Inc. (Distributors) | 7.750% | 05/01/2021 | 1,125,000 | 1,164,375 | ||||||||||||
ServiceMaster Co. / The (Diversified Consumer Svs.) | 7.100% | 03/01/2018 | 450,000 | 461,250 | ||||||||||||
ServiceMaster Co. / The (Diversified Consumer Svs.) | 7.450% | 08/15/2027 | 300,000 | 288,000 | ||||||||||||
ServiceMaster Co. / The (Diversified Consumer Svs.) | 8.000% | 02/15/2020 | 488,000 | 516,060 | ||||||||||||
ServiceMaster Co. / The (Diversified Consumer Svs.) | 7.000% | 08/15/2020 | 649,000 | 674,960 | ||||||||||||
1011778 B.C. ULC / New Red Finance, Inc. (Hotels, Restaurants & Leisure) | (b) | 6.000% | 04/01/2022 | 800,000 | 824,000 | |||||||||||
Affinity Gaming LLC / Affinity Gaming Finance Corp. (Acquired 05/04/2012, Cost $600,000)(Hotels, Restaurants & Leisure) | (g) | 9.000% | 05/15/2018 | 600,000 | 579,000 | |||||||||||
Cedar Fair LP / Canada’s Wonderland Co. / Magnum Management Corp. (Hotels, Restaurants & Leisure) | 5.250% | 03/15/2021 | 125,000 | 126,250 | ||||||||||||
Cedar Fair LP / Canada’s Wonderland Co. / Magnum Management Corp. (Hotels, Restaurants & Leisure) | (b) | 5.375% | 06/01/2024 | 375,000 | 373,594 | |||||||||||
Chester Downs & Marina LLC (Hotels, Restaurants & Leisure) | (b) | 9.250% | 02/01/2020 | 450,000 | 337,500 | |||||||||||
Choice Hotels International, Inc. (Hotels, Restaurants & Leisure) | 5.750% | 07/01/2022 | 325,000 | 350,187 | ||||||||||||
Churchill Downs, Inc. (Hotels, Restaurants & Leisure) | 5.375% | 12/15/2021 | 225,000 | 226,125 | ||||||||||||
GLP Capital LP / GLP Financing II, Inc. (Hotels, Restaurants & Leisure) | 5.375% | 11/01/2023 | 375,000 | 390,000 | ||||||||||||
GLP Capital LP / GLP Financing II, Inc. (Hotels, Restaurants & Leisure) | 4.875% | 11/01/2020 | 625,000 | 635,937 | ||||||||||||
Hilton Worldwide Finance LLC / Hilton Worldwide Finance Corp. (Hotels, Restaurants & Leisure) | 5.625% | 10/15/2021 | 300,000 | 315,000 | ||||||||||||
MGM Resorts International (Hotels, Restaurants & Leisure) | 7.750% | 03/15/2022 | 1,125,000 | 1,248,750 | ||||||||||||
MGM Resorts International (Hotels, Restaurants & Leisure) | 6.750% | 10/01/2020 | 425,000 | 447,312 | ||||||||||||
MGM Resorts International (Hotels, Restaurants & Leisure) | 6.000% | 03/15/2023 | 150,000 | 151,500 | ||||||||||||
Mohegan Tribal Gaming Authority (Hotels, Restaurants & Leisure) | 9.750% | 09/01/2021 | 450,000 | 461,250 | ||||||||||||
NCL Corp. Ltd. (Hotels, Restaurants & Leisure) | (b) | 5.250% | 11/15/2019 | 300,000 | 303,750 | |||||||||||
NPC International, Inc. / NPC Operating Co. A, Inc. / NPC Operating Co. B, Inc. (Hotels, Restaurants & Leisure) | 10.500% | 01/15/2020 | 900,000 | 938,250 | ||||||||||||
Penn National Gaming, Inc. (Hotels, Restaurants & Leisure) | 5.875% | 11/01/2021 | 1,075,000 | 1,005,125 | ||||||||||||
Pinnacle Entertainment, Inc. (Hotels, Restaurants & Leisure) | 7.500% | 04/15/2021 | 225,000 | 235,685 | ||||||||||||
Pinnacle Entertainment, Inc. (Hotels, Restaurants & Leisure) | 6.375% | 08/01/2021 | 650,000 | 672,750 | ||||||||||||
Rivers Pittsburgh Borrower LP / Rivers Pittsburgh Finance Corp. (Hotels, Restaurants & Leisure) | (b) | 9.500% | 06/15/2019 | 607,000 | 646,455 | |||||||||||
Seminole Hard Rock Entertainment, Inc. / Seminole Hard Rock International LLC (Hotels, Restaurants & Leisure) | (b) | 5.875% | 05/15/2021 | 1,225,000 | 1,218,875 | |||||||||||
Seminole Indian Tribe of Florida (Hotels, Restaurants & Leisure) | (b) | 7.804% | 10/01/2020 | 745,000 | 793,425 | |||||||||||
Six Flags Entertainment Corp. (Hotels, Restaurants & Leisure) | (b) | 5.250% | 01/15/2021 | 800,000 | 804,000 | |||||||||||
Station Casinos LLC (Hotels, Restaurants & Leisure) | 7.500% | 03/01/2021 | 900,000 | 927,000 | ||||||||||||
B.C. Mountain LLC / B.C. Mountain Finance, Inc. (Household Durables) | (b) | 7.000% | 02/01/2021 | 300,000 | 258,000 | |||||||||||
RSI Home Products, Inc. (Household Durables) | (b) | 6.875% | 03/01/2018 | 350,000 | 367,500 | |||||||||||
Serta Simmons Holdings LLC (Household Durables) | (b) | 8.125% | 10/01/2020 | 1,275,000 | 1,354,687 | |||||||||||
CDW LLC / CDW Finance Corp. (Internet & Catalog Retail) | 8.500% | 04/01/2019 | 489,000 | 517,729 | ||||||||||||
CDW LLC / CDW Finance Corp. (Internet & Catalog Retail) | 6.000% | 08/15/2022 | 100,000 | 103,750 | ||||||||||||
CDW LLC / CDW Finance Corp. (Internet & Catalog Retail) | 5.500% | 12/01/2024 | 525,000 | 526,969 | ||||||||||||
FGI Operating Co. LLC / FGI Finance, Inc. (Leisure Equip. & Products) | 7.875% | 05/01/2020 | 800,000 | 724,000 | ||||||||||||
Altice SA (Media) | (b) | 7.750% | 05/15/2022 | 875,000 | 878,828 | |||||||||||
AMC Networks, Inc. (Media) | 7.750% | 07/15/2021 | 575,000 | 618,125 | ||||||||||||
AMC Networks, Inc. (Media) | 4.750% | 12/15/2022 | 350,000 | 341,250 | ||||||||||||
CBS Outdoor Americas Capital LLC / CBS Outdoor Americas Capital Corp. (Media) | (b) | 5.250% | 02/15/2022 | 100,000 | 101,000 | |||||||||||
CBS Outdoor Americas Capital LLC / CBS Outdoor Americas Capital Corp. (Media) | (b) | 5.625% | 02/15/2024 | 75,000 | 75,563 | |||||||||||
CCO Holdings LLC / CCO Holdings Capital Corp. (Media) | 6.625% | 01/31/2022 | 400,000 | 426,500 | ||||||||||||
CCO Holdings LLC / CCO Holdings Capital Corp. (Media) | 5.125% | 02/15/2023 | 150,000 | 147,187 | ||||||||||||
CCO Holdings LLC / CCO Holdings Capital Corp. (Media) | 5.750% | 01/15/2024 | 1,275,000 | 1,290,937 | ||||||||||||
CCO Holdings LLC / CCO Holdings Capital Corp. (Media) | 5.750% | 09/01/2023 | 325,000 | 330,281 | ||||||||||||
CCOH Safari LLC (Media) | 5.750% | 12/01/2024 | 75,000 | 76,031 | ||||||||||||
CCOH Safari LLC (Media) | 5.500% | 12/01/2022 | 100,000 | 101,750 | ||||||||||||
Cequel Communications Holdings I LLC / Cequel Capital Corp. (Media) | (b) | 6.375% | 09/15/2020 | 350,000 | 364,000 |
58 | (continued) |
Ohio National Fund, Inc. | High Income Bond Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
CONSUMER DISCRETIONARY (continued) |
| |||||||||||||||
Cequel Communications Holdings I LLC / Cequel Capital Corp. (Media) | (b) | 5.125% | 12/15/2021 | $ | 750,000 | $ | 731,250 | |||||||||
Cequel Communications Holdings I LLC / Cequel Capital Corp. (Media) | (b) | 5.125% | 12/15/2021 | 100,000 | 97,500 | |||||||||||
Clear Channel Worldwide Holdings, Inc. (Media) | 7.625% | 03/15/2020 | 175,000 | 182,437 | ||||||||||||
Clear Channel Worldwide Holdings, Inc. (Media) | 6.500% | 11/15/2022 | 275,000 | 281,187 | ||||||||||||
Clear Channel Worldwide Holdings, Inc. (Media) | 6.500% | 11/15/2022 | 1,400,000 | 1,449,000 | ||||||||||||
Crown Media Holdings, Inc. (Media) | 10.500% | 07/15/2019 | 700,000 | 764,750 | ||||||||||||
Cumulus Media Holdings, Inc. (Media) | 7.750% | 05/01/2019 | 1,025,000 | 1,039,094 | ||||||||||||
DISH DBS Corp. (Media) | 5.875% | 07/15/2022 | 1,600,000 | 1,644,000 | ||||||||||||
Entercom Radio LLC (Media) | 10.500% | 12/01/2019 | 575,000 | 626,750 | ||||||||||||
Expo Event Transco, Inc. (Media) | (b) | 9.000% | 06/15/2021 | 800,000 | 820,000 | |||||||||||
Gannett Co., Inc. (Media) | (b) | 5.500% | 09/15/2024 | 75,000 | 75,375 | |||||||||||
Gannett Co., Inc. (Media) | (b) | 4.875% | 09/15/2021 | 75,000 | 74,625 | |||||||||||
Gannett Co., Inc. (Media) | 6.375% | 10/15/2023 | 775,000 | 825,375 | ||||||||||||
Gannett Co., Inc. (Media) | 5.125% | 10/15/2019 | 200,000 | 205,500 | ||||||||||||
Gray Television, Inc. (Media) | 7.500% | 10/01/2020 | 700,000 | 724,500 | ||||||||||||
Igloo Holdings Corp. (Media) | (b)(d) | 8.250% | 12/15/2017 | 875,000 | 884,844 | |||||||||||
iHeartCommunications, Inc. (Media) | 9.000% | 03/01/2021 | 950,000 | 934,562 | ||||||||||||
Intelsat Jackson Holdings SA (Media) | 6.625% | 12/15/2022 | 825,000 | 851,815 | ||||||||||||
Intelsat Jackson Holdings SA (Media) | 5.500% | 08/01/2023 | 550,000 | 548,707 | ||||||||||||
Intelsat Luxembourg SA (Media) | 7.750% | 06/01/2021 | 325,000 | �� | 327,031 | |||||||||||
Intelsat Luxembourg SA (Media) | 8.125% | 06/01/2023 | 750,000 | 768,750 | ||||||||||||
Lamar Media Corp. (Media) | 5.875% | 02/01/2022 | 250,000 | 260,625 | ||||||||||||
Lamar Media Corp. (Media) | 5.000% | 05/01/2023 | 725,000 | 721,375 | ||||||||||||
LIN Television Corp. (Media) | (b) | 5.875% | 11/15/2022 | 150,000 | 148,875 | |||||||||||
Nielsen Co. Luxembourg SARL / The (Media) | (b) | 5.500% | 10/01/2021 | 175,000 | 179,375 | |||||||||||
Nielsen Finance LLC / Nielsen Finance Co. (Media) | 4.500% | 10/01/2020 | 450,000 | 454,500 | ||||||||||||
Nielsen Finance LLC / Nielsen Finance Co. (Media) | (b) | 5.000% | 04/15/2022 | 925,000 | 934,250 | |||||||||||
Numericable Group SA (Media) | (b) | 6.000% | 05/15/2022 | 575,000 | 578,881 | |||||||||||
Numericable Group SA (Media) | (b) | 4.875% | 05/15/2019 | 200,000 | 199,000 | |||||||||||
Numericable Group SA (Media) | (b) | 6.250% | 05/15/2024 | 400,000 | 403,500 | |||||||||||
Radio One, Inc. (Media) | (b) | 9.250% | 02/15/2020 | 725,000 | 634,375 | |||||||||||
Regal Entertainment Group (Media) | 5.750% | 02/01/2025 | 550,000 | 508,750 | ||||||||||||
Regal Entertainment Group (Media) | 5.750% | 03/15/2022 | 100,000 | 96,000 | ||||||||||||
Sinclair Television Group, Inc. (Media) | (b) | 5.625% | 08/01/2024 | 575,000 | 559,187 | |||||||||||
Sirius XM Radio, Inc. (Media) | (b) | 4.250% | 05/15/2020 | 150,000 | 148,125 | |||||||||||
Sirius XM Radio, Inc. (Media) | (b) | 4.625% | 05/15/2023 | 1,400,000 | 1,316,000 | |||||||||||
Sirius XM Radio, Inc. (Media) | (b) | 6.000% | 07/15/2024 | 275,000 | 282,562 | |||||||||||
Time, Inc. (Media) | (b) | 5.750% | 04/15/2022 | 475,000 | 460,750 | |||||||||||
Townsquare Radio LLC / Townsquare Radio, Inc. (Media) | (b) | 9.000% | 04/01/2019 | 450,000 | 481,500 | |||||||||||
Unitymedia Hessen GmbH & Co. KG / Unitymedia NRW GmbH (Media) | (b) | 5.500% | 01/15/2023 | 475,000 | 498,750 | |||||||||||
Unitymedia KabelBW GmbH (Media) | (b) | 6.125% | 01/15/2025 | 425,000 | 439,875 | |||||||||||
Lynx II Corp. (Media) | (b) | 6.375% | 04/15/2023 | 475,000 | 499,937 | |||||||||||
Academy Ltd. / Academy Finance Corp. (Specialty Retail) | (b) | 9.250% | 08/01/2019 | 800,000 | 844,000 | |||||||||||
Jo-Ann Stores Holdings, Inc. (Specialty Retail) | (b)(d) | 9.750% | 10/15/2019 | 675,000 | 577,125 | |||||||||||
Jo-Ann Stores, Inc. (Specialty Retail) | (b) | 8.125% | 03/15/2019 | 500,000 | 467,500 | |||||||||||
L Brands, Inc. (Specialty Retail) | 5.625% | 02/15/2022 | 725,000 | 783,000 | ||||||||||||
Michaels FinCo Holdings LLC / Michaels FinCo, Inc. (Specialty Retail) | (b)(d) | 7.500% | 08/01/2018 | 271,000 | 277,097 | |||||||||||
Michaels Stores, Inc. (Specialty Retail) | (b) | 5.875% | 12/15/2020 | 925,000 | 938,875 | |||||||||||
Neiman Marcus Group LTD, Inc. (Specialty Retail) | (b)(d) | 8.750% | 10/15/2021 | 950,000 | 1,011,750 | |||||||||||
Neiman Marcus Group LTD, Inc. (Specialty Retail) | (b) | 8.000% | 10/15/2021 | 275,000 | 292,187 | |||||||||||
New Academy Finance Co. LLC / New Academy Finance Corp. (Specialty Retail) | (b)(d) | 8.000% | 06/15/2018 | 850,000 | 843,625 | |||||||||||
Party City Holdings, Inc. (Specialty Retail) | 8.875% | 08/01/2020 | 550,000 | 589,875 | ||||||||||||
PC Nextco Holdings LLC / PC Nextco Finance, Inc. (Specialty Retail) | 8.750% | 08/15/2019 | 1,250,000 | 1,262,500 | ||||||||||||
Petco Animal Supplies, Inc. (Specialty Retail) | (b) | 9.250% | 12/01/2018 | 650,000 | 682,500 | |||||||||||
Petco Holdings, Inc. (Specialty Retail) | (b)(d) | 8.500% | 10/15/2017 | 975,000 | 992,062 | |||||||||||
PVH Corp. (Textiles, Apparel & Luxury Goods) | 4.500% | 12/15/2022 | 375,000 | 372,187 | ||||||||||||
Springs Industries, Inc. (Textiles, Apparel & Luxury Goods) | 6.250% | 06/01/2021 | 625,000 | 625,000 | ||||||||||||
|
| |||||||||||||||
68,267,592 | ||||||||||||||||
|
| |||||||||||||||
CONSUMER STAPLES – 4.0% | ||||||||||||||||
B&G Foods, Inc. (Food Products) | 4.625% | 06/01/2021 | 375,000 | 367,444 | ||||||||||||
Big Heart Pet Brands (Food Products) | 7.625% | 02/15/2019 | 1,202,000 | 1,183,970 | ||||||||||||
Hearthside Group Holdings LLC / Hearthside Finance Co. (Food Products) | (b) | 6.500% | 05/01/2022 | 1,100,000 | 1,078,000 | |||||||||||
H.J. Heinz Co. (Food Products) | 4.250% | 10/15/2020 | 1,100,000 | 1,113,750 | ||||||||||||
Pinnacle Foods Finance LLC / Pinnacle Foods Finance Corp. (Food Products) | 4.875% | 05/01/2021 | 1,175,000 | 1,148,562 | ||||||||||||
Shearer’s Foods LLC / Chip Finance Corp. (Food Products) | (b) | 9.000% | 11/01/2019 | 525,000 | 574,875 | |||||||||||
Smithfield Foods, Inc. (Food Products) | 6.625% | 08/15/2022 | 1,050,000 | 1,102,500 | ||||||||||||
Sun Merger Sub., Inc. (Food Products) | (b) | 5.875% | 08/01/2021 | 100,000 | 102,250 | |||||||||||
TreeHouse Foods, Inc. (Food Products) | 4.875% | 03/15/2022 | 75,000 | 76,125 |
59 | (continued) |
Ohio National Fund, Inc. | High Income Bond Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
CONSUMER STAPLES (continued) | ||||||||||||||||
WhiteWave Foods Co. / The (Food Products) | 5.375% | 10/01/2022 | $ | 150,000 | $ | 154,875 | ||||||||||
Spectrum Brands, Inc. (Household Products) | 6.750% | 03/15/2020 | 650,000 | 680,875 | ||||||||||||
Spectrum Brands, Inc. (Household Products) | (b) | 6.125% | 12/15/2024 | 175,000 | 178,500 | |||||||||||
First Quality Finance Co., Inc. (Personal Products) | (b) | 4.625% | 05/15/2021 | 675,000 | 621,000 | |||||||||||
Prestige Brands, Inc. (Personal Products) | 8.125% | 02/01/2020 | 175,000 | 187,250 | ||||||||||||
Prestige Brands, Inc. (Personal Products) | (b) | 5.375% | 12/15/2021 | 625,000 | 617,188 | |||||||||||
|
| |||||||||||||||
9,187,164 | ||||||||||||||||
|
| |||||||||||||||
ENERGY – 10.0% | ||||||||||||||||
CGG SA (Energy Equip. & Svs.) | 6.875% | 01/15/2022 | 675,000 | 519,750 | ||||||||||||
Chaparral Energy, Inc. (Energy Equip. & Svs.) | 9.875% | 10/01/2020 | 600,000 | 411,000 | ||||||||||||
Chaparral Energy, Inc. (Energy Equip. & Svs.) | 7.625% | 11/15/2022 | 425,000 | 282,625 | ||||||||||||
FTS International, Inc. (Energy Equip. & Svs.) | (b) | 6.250% | 05/01/2022 | 775,000 | 577,375 | |||||||||||
Access Midstream Partners LP / ACMP Finance Corp. (Oil, Gas & Consumable Fuels) | 6.125% | 07/15/2022 | 400,000 | 427,000 | ||||||||||||
Antero Resources Corp. (Oil, Gas & Consumable Fuels) | (b) | 5.125% | 12/01/2022 | 375,000 | 355,312 | |||||||||||
Antero Resources Finance Corp. (Oil, Gas & Consumable Fuels) | 6.000% | 12/01/2020 | 875,000 | 877,187 | ||||||||||||
Approach Resources, Inc. (Oil, Gas & Consumable Fuels) | 7.000% | 06/15/2021 | 725,000 | 540,125 | ||||||||||||
Blue Racer Midstream LLC / Blue Racer Finance Corp. (Oil, Gas & Consumable Fuels) | (b) | 6.125% | 11/15/2022 | 325,000 | 314,437 | |||||||||||
BreitBurn Energy Partners LP / BreitBurn Finance Corp. (Oil, Gas & Consumable Fuels) | 7.875% | 04/15/2022 | 800,000 | 622,000 | ||||||||||||
California Resources Corp. (Oil, Gas & Consumable Fuels) | (b) | 6.000% | 11/15/2024 | 600,000 | 510,000 | |||||||||||
California Resources Corp. (Oil, Gas & Consumable Fuels) | (b) | 5.500% | 09/15/2021 | 150,000 | 129,000 | |||||||||||
Carrizo Oil & Gas, Inc. (Oil, Gas & Consumable Fuels) | 7.500% | 09/15/2020 | 575,000 | 554,875 | ||||||||||||
Chesapeake Energy Corp. (Oil, Gas & Consumable Fuels) | 6.875% | 11/15/2020 | 675,000 | 729,000 | ||||||||||||
Chesapeake Energy Corp. (Oil, Gas & Consumable Fuels) | 5.375% | 06/15/2021 | 525,000 | 527,297 | ||||||||||||
Energy Transfer Equity LP (Oil, Gas & Consumable Fuels) | 5.875% | 01/15/2024 | 1,725,000 | 1,759,500 | ||||||||||||
Energy XXI Gulf Coast, Inc. (Oil, Gas & Consumable Fuels) | (b) | 6.875% | 03/15/2024 | 125,000 | 67,812 | |||||||||||
Energy XXI Gulf Coast, Inc. (Oil, Gas & Consumable Fuels) | 7.500% | 12/15/2021 | 900,000 | 490,500 | ||||||||||||
EP Energy LLC / Everest Acquisition Finance, Inc. (Oil, Gas & Consumable Fuels) | 9.375% | 05/01/2020 | 175,000 | 177,625 | ||||||||||||
Gulfport Energy Corp. (Oil, Gas & Consumable Fuels) | (b) | 7.750% | 11/01/2020 | 350,000 | 343,875 | |||||||||||
Hiland Partners LP / Hiland Partners Finance Corp. (Oil, Gas & Consumable Fuels) | (b) | 5.500% | 05/15/2022 | 250,000 | 220,625 | |||||||||||
Holly Energy Partners LP / Holly Energy Finance Corp. (Oil, Gas & Consumable Fuels) | 6.500% | 03/01/2020 | 475,000 | 472,625 | ||||||||||||
Kinder Morgan, Inc. (Oil, Gas & Consumable Fuels) | (b) | 5.625% | 11/15/2023 | 550,000 | 589,743 | |||||||||||
Kodiak Oil & Gas Corp. (Oil, Gas & Consumable Fuels) | 5.500% | 02/01/2022 | 375,000 | 377,812 | ||||||||||||
Kodiak Oil & Gas Corp. (Oil, Gas & Consumable Fuels) | 5.500% | 01/15/2021 | 300,000 | 302,250 | ||||||||||||
Laredo Petroleum, Inc. (Oil, Gas & Consumable Fuels) | 5.625% | 01/15/2022 | 225,000 | 198,000 | ||||||||||||
Legacy Reserves LP / Legacy Reserves Finance Corp. (Oil, Gas & Consumable Fuels) | (b) | 6.625% | 12/01/2021 | 850,000 | 701,250 | |||||||||||
Linn Energy LLC / Linn Energy Finance Corp. (Oil, Gas & Consumable Fuels) | 8.625% | 04/15/2020 | 575,000 | 503,125 | ||||||||||||
Linn Energy LLC / Linn Energy Finance Corp. (Oil, Gas & Consumable Fuels) | 7.750% | 02/01/2021 | 300,000 | 254,250 | ||||||||||||
Linn Energy LLC / Linn Energy Finance Corp. (Oil, Gas & Consumable Fuels) | 6.500% | 09/15/2021 | 125,000 | 101,875 | ||||||||||||
MarkWest Energy Partners LP / MarkWest Energy Finance Corp. (Oil, Gas & Consumable Fuels) | 5.500% | 02/15/2023 | 600,000 | 610,500 | ||||||||||||
MarkWest Energy Partners LP / MarkWest Energy Finance Corp. (Oil, Gas & Consumable Fuels) | 4.500% | 07/15/2023 | 325,000 | 314,437 | ||||||||||||
Northern Oil and Gas, Inc. (Oil, Gas & Consumable Fuels) | 8.000% | 06/01/2020 | 950,000 | 724,375 | ||||||||||||
Oasis Petroleum, Inc. (Oil, Gas & Consumable Fuels) | 6.875% | 03/15/2022 | 625,000 | 571,875 | ||||||||||||
Regency Energy Partners LP / Regency Energy Finance Corp. (Oil, Gas & Consumable Fuels) | 5.500% | 04/15/2023 | 175,000 | 169,750 | ||||||||||||
Regency Energy Partners LP / Regency Energy Finance Corp. (Oil, Gas & Consumable Fuels) | 4.500% | 11/01/2023 | 225,000 | 207,562 | ||||||||||||
Regency Energy Partners LP / Regency Energy Finance Corp. (Oil, Gas & Consumable Fuels) | 5.875% | 03/01/2022 | 150,000 | 150,375 | ||||||||||||
Regency Energy Partners LP / Regency Energy Finance Corp. (Oil, Gas & Consumable Fuels) | 5.000% | 10/01/2022 | 200,000 | 190,000 | ||||||||||||
Rice Energy, Inc. (Oil, Gas & Consumable Fuels) | (b) | 6.250% | 05/01/2022 | 475,000 | 444,125 | |||||||||||
Rose Rock Midstream LP / Rose Rock Finance Corp. (Oil, Gas & Consumable Fuels) | 5.625% | 07/15/2022 | 600,000 | 564,000 | ||||||||||||
RSP Permian, Inc. (Oil, Gas & Consumable Fuels) | (b) | 6.625% | 10/01/2022 | 100,000 | 93,500 | |||||||||||
Sabine Pass Liquefaction LLC (Oil, Gas & Consumable Fuels) | 5.625% | 02/01/2021 | 950,000 | 938,125 | ||||||||||||
Sabine Pass Liquefaction LLC (Oil, Gas & Consumable Fuels) | 5.625% | 04/15/2023 | 225,000 | 221,062 | ||||||||||||
Sabine Pass Liquefaction LLC (Oil, Gas & Consumable Fuels) | 6.250% | 03/15/2022 | 300,000 | 305,625 | ||||||||||||
SandRidge Energy, Inc. (Oil, Gas & Consumable Fuels) | 7.500% | 03/15/2021 | 525,000 | 338,625 | ||||||||||||
SandRidge Energy, Inc. (Oil, Gas & Consumable Fuels) | 8.125% | 10/15/2022 | 500,000 | 317,500 | ||||||||||||
SandRidge Energy, Inc. (Oil, Gas & Consumable Fuels) | 7.500% | 02/15/2023 | 200,000 | 129,000 | ||||||||||||
SM Energy Co. (Oil, Gas & Consumable Fuels) | 5.000% | 01/15/2024 | 275,000 | 239,250 | ||||||||||||
Summit Midstream Holdings LLC / Summit Midstream Finance Corp. (Oil, Gas & Consumable Fuels) | 5.500% | 08/15/2022 | 650,000 | 620,750 | ||||||||||||
Tesoro Corp. (Oil, Gas & Consumable Fuels) | 5.125% | 04/01/2024 | 425,000 | 422,344 | ||||||||||||
Tesoro Logistics LP / Tesoro Logistics Finance Corp. (Oil, Gas & Consumable Fuels) | 6.125% | 10/15/2021 | 325,000 | 325,812 | ||||||||||||
Tesoro Logistics LP / Tesoro Logistics Finance Corp. (Oil, Gas & Consumable Fuels) | 5.875% | 10/01/2020 | 547,000 | 551,102 | ||||||||||||
Tesoro Logistics LP / Tesoro Logistics Finance Corp. (Oil, Gas & Consumable Fuels) | (b) | 6.250% | 10/15/2022 | 75,000 | 75,188 | |||||||||||
Tesoro Logistics LP / Tesoro Logistics Finance Corp. (Oil, Gas & Consumable Fuels) | (b) | 5.500% | 10/15/2019 | 50,000 | 49,750 | |||||||||||
W&T Offshore, Inc. (Oil, Gas & Consumable Fuels) | 8.500% | 06/15/2019 | 775,000 | 511,500 | ||||||||||||
|
| |||||||||||||||
23,023,982 | ||||||||||||||||
|
| |||||||||||||||
FINANCIALS – 3.6% | ||||||||||||||||
CIT Group, Inc. (Banks) | 5.250% | 03/15/2018 | 675,000 | 705,375 | ||||||||||||
CIT Group, Inc. (Banks) | 5.375% | 05/15/2020 | 225,000 | 238,646 | ||||||||||||
CIT Group, Inc. (Banks) | 5.000% | 08/01/2023 | 475,000 | 489,250 |
60 | (continued) |
Ohio National Fund, Inc. | High Income Bond Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
FINANCIALS (continued) | ||||||||||||||||
Neuberger Berman Group LLC / Neuberger Berman Finance Corp. (Capital Markets) | (b) | 5.875% | 03/15/2022 | $ | 500,000 | $ | 528,750 | |||||||||
Ally Financial, Inc. (Consumer Finance) | 8.300% | 02/12/2015 | 500,000 | 503,125 | ||||||||||||
Ally Financial, Inc. (Consumer Finance) | 4.750% | 09/10/2018 | 300,000 | 311,250 | ||||||||||||
Interactive Data Corp. (Diversified Financial Svs.) | (b) | 5.875% | 04/15/2019 | 700,000 | 698,250 | |||||||||||
MSCI, Inc. (Diversified Financial Svs.) | (b) | 5.250% | 11/15/2024 | 150,000 | 155,625 | |||||||||||
TransUnion Holding Co., Inc. (Diversified Financial Svs.) | (d) | 9.625% | 06/15/2018 | 1,125,000 | 1,152,759 | |||||||||||
TransUnion Holding Co., Inc. (Diversified Financial Svs.) | 8.125% | 06/15/2018 | 525,000 | 539,438 | ||||||||||||
Hockey Merger Sub 2, Inc. (Insurance) | (b) | 7.875% | 10/01/2021 | 800,000 | 798,000 | |||||||||||
Reliance Intermediate Holdings LP (Insurance) | (b) | 9.500% | 12/15/2019 | 550,000 | 577,500 | |||||||||||
Onex York Acquisition Corp. (Insurance) | (b) | 8.500% | 10/01/2022 | 450,000 | 451,688 | |||||||||||
Iron Mountain, Inc. (Real Estate Investment Trusts) | 7.750% | 10/01/2019 | 525,000 | 564,375 | ||||||||||||
Hub Holdings, LLC / Hub Holdings Finance, Inc. (Real Estate Mgmt. & Development) | (b)(d) | 8.125% | 07/15/2019 | 600,000 | 597,000 | |||||||||||
|
| |||||||||||||||
8,311,031 | ||||||||||||||||
|
| |||||||||||||||
HEALTH CARE – 10.3% | ||||||||||||||||
Grifols Worldwide Operations Ltd. (Biotechnology) | (b) | 5.250% | 04/01/2022 | 625,000 | 640,750 | |||||||||||
Crimson Merger Sub., Inc. (Health Care Equip. & Supplies) | (b) | 6.625% | 05/15/2022 | 1,775,000 | 1,597,500 | |||||||||||
DJO Finance LLC / DJO Finance Corp. (Health Care Equip. & Supplies) | 7.750% | 04/15/2018 | 1,200,000 | 1,170,000 | ||||||||||||
Hologic, Inc. (Health Care Equip. & Supplies) | 6.250% | 08/01/2020 | 525,000 | 548,625 | ||||||||||||
Teleflex, Inc. (Health Care Equip. & Supplies) | (b) | 5.250% | 06/15/2024 | 150,000 | 150,375 | |||||||||||
VWR Funding, Inc. (Health Care Equip. & Supplies) | 7.250% | 09/15/2017 | 850,000 | 891,438 | ||||||||||||
Amsurg Corp. (Health Care Providers & Svs.) | (b) | 5.625% | 07/15/2022 | 625,000 | 643,750 | |||||||||||
Catamaran Corp. (Health Care Providers & Svs.) | 4.750% | 03/15/2021 | 150,000 | 150,375 | ||||||||||||
CHS / Community Health Systems, Inc. (Health Care Providers & Svs.) | 6.875% | 02/01/2022 | 1,175,000 | 1,250,641 | ||||||||||||
CHS / Community Health Systems, Inc. (Health Care Providers & Svs.) | 5.125% | 08/01/2021 | 300,000 | 312,750 | ||||||||||||
DaVita HealthCare Partners, Inc. (Health Care Providers & Svs.) | 5.750% | 08/15/2022 | 450,000 | 478,688 | ||||||||||||
DaVita HealthCare Partners, Inc. (Health Care Providers & Svs.) | 5.125% | 07/15/2024 | 450,000 | 459,844 | ||||||||||||
Envision Healthcare Corp. (Health Care Providers & Svs.) | (b) | 5.125% | 07/01/2022 | 975,000 | 970,125 | |||||||||||
HCA Holdings, Inc. (Health Care Providers & Svs.) | 7.750% | 05/15/2021 | 1,250,000 | 1,339,063 | ||||||||||||
HCA, Inc. (Health Care Providers & Svs.) | 6.500% | 02/15/2020 | 275,000 | 308,825 | ||||||||||||
HCA, Inc. (Health Care Providers & Svs.) | 5.875% | 05/01/2023 | 275,000 | 290,469 | ||||||||||||
HCA, Inc. (Health Care Providers & Svs.) | 5.000% | 03/15/2024 | 2,175,000 | 2,240,250 | ||||||||||||
HCA, Inc. (Health Care Providers & Svs.) | 5.250% | 04/15/2025 | 450,000 | 470,813 | ||||||||||||
Jaguar Holding Co. I (Health Care Providers & Svs.) | (b)(d) | 9.375% | 10/15/2017 | 725,000 | 742,762 | |||||||||||
Jaguar Holding Co. II / Jaguar Merger Sub, Inc. (Health Care Providers & Svs.) | (b) | 9.500% | 12/01/2019 | 800,000 | 861,000 | |||||||||||
LifePoint Hospitals, Inc. (Health Care Providers & Svs.) | 5.500% | 12/01/2021 | 750,000 | 770,625 | ||||||||||||
MPH Acquisition Holdings LLC (Health Care Providers & Svs.) | (b) | 6.625% | 04/01/2022 | 1,300,000 | 1,332,500 | |||||||||||
Omnicare, Inc. (Health Care Providers & Svs.) | 4.750% | 12/01/2022 | 100,000 | 101,750 | ||||||||||||
Omnicare, Inc. (Health Care Providers & Svs.) | 5.000% | 12/01/2024 | 75,000 | 77,250 | ||||||||||||
Tenet Healthcare Corp. (Health Care Providers & Svs.) | 4.500% | 04/01/2021 | 775,000 | 779,844 | ||||||||||||
Tenet Healthcare Corp. (Health Care Providers & Svs.) | 8.125% | 04/01/2022 | 725,000 | 812,000 | ||||||||||||
Tenet Healthcare Corp. (Health Care Providers & Svs.) | 4.375% | 10/01/2021 | 850,000 | 847,875 | ||||||||||||
United Surgical Partners International, Inc. (Health Care Providers & Svs.) | 9.000% | 04/01/2020 | 850,000 | 916,938 | ||||||||||||
Emdeon, Inc. (Health Care Technology) | 11.000% | 12/31/2019 | 600,000 | 654,750 | ||||||||||||
Truven Health Analytics, Inc. (Health Care Technology) | 10.625% | 06/01/2020 | 700,000 | 686,000 | ||||||||||||
VPII Escrow Corp. (Pharmaceuticals) | (b) | 7.500% | 07/15/2021 | 1,150,000 | 1,246,313 | |||||||||||
|
| |||||||||||||||
23,743,888 | ||||||||||||||||
|
| |||||||||||||||
INDUSTRIALS – 11.1% | ||||||||||||||||
Silver II Borrower / Silver II U.S. Holdings LLC (Aerospace & Defense) | (b) | 7.750% | 12/15/2020 | 925,000 | 878,750 | |||||||||||
KLX, Inc. (Aerospace & Defense) | (b) | 5.875% | 12/01/2022 | 475,000 | 480,938 | |||||||||||
TransDigm, Inc. (Aerospace & Defense) | 5.500% | 10/15/2020 | 275,000 | 270,188 | ||||||||||||
TransDigm, Inc. (Aerospace & Defense) | 7.500% | 07/15/2021 | 300,000 | 321,000 | ||||||||||||
TransDigm, Inc. (Aerospace & Defense) | 6.500% | 07/15/2024 | 475,000 | 479,750 | ||||||||||||
TransDigm, Inc. (Aerospace & Defense) | 6.000% | 07/15/2022 | 550,000 | 551,375 | ||||||||||||
Allegion U.S. Holding Co., Inc. (Building Products) | 5.750% | 10/01/2021 | 325,000 | 345,313 | ||||||||||||
CPG Merger Sub. LLC (Building Products) | (b) | 8.000% | 10/01/2021 | 300,000 | 307,500 | |||||||||||
Hillman Group, Inc. / The (Building Products) | (b) | 6.375% | 07/15/2022 | 800,000 | 772,000 | |||||||||||
Masonite International Corp. (Building Products) | (b) | 8.250% | 04/15/2021 | 800,000 | 858,000 | |||||||||||
Nortek, Inc. (Building Products) | 10.000% | 12/01/2018 | 600,000 | 631,500 | ||||||||||||
Nortek, Inc. (Building Products) | 8.500% | 04/15/2021 | 550,000 | 591,250 | ||||||||||||
Roofing Supply Group LLC / Roofing Supply Finance, Inc. (Building Products) | (b) | 10.000% | 06/01/2020 | 450,000 | 450,855 | |||||||||||
USG Corp. (Building Products) | (b) | 5.875% | 11/01/2021 | 175,000 | 177,625 | |||||||||||
Unifrax I LLC / Unifrax Holding Co. (Building Products) | (b) | 7.500% | 02/15/2019 | 625,000 | 618,750 | |||||||||||
Unifrax I LLC / Unifrax Holding Co. (Building Products) | (b) | 7.500% | 02/15/2019 | 150,000 | 148,500 | |||||||||||
Aramark Services, Inc. (Commercial Svs. & Supplies) | 5.750% | 03/15/2020 | 1,350,000 | 1,400,625 | ||||||||||||
Garda World Security Corp. (Commercial Svs. & Supplies) | (b) | 7.250% | 11/15/2021 | 600,000 | 597,000 | |||||||||||
Garda World Security Corp. (Commercial Svs. & Supplies) | (b) | 7.250% | 11/15/2021 | 650,000 | 646,750 | |||||||||||
Jurassic Holdings III, Inc. (Commercial Svs. & Supplies) | (b) | 6.875% | 02/15/2021 | 775,000 | 724,625 | |||||||||||
Light Tower Rentals, Inc. (Commercial Svs. & Supplies) | (b) | 8.125% | 08/01/2019 | 150,000 | 117,375 |
61 | (continued) |
Ohio National Fund, Inc. | High Income Bond Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
INDUSTRIALS (continued) | ||||||||||||||||
Multi-Color Corp. (Commercial Svs. & Supplies) | (b) | 6.125% | 12/01/2022 | $ | 575,000 | $ | 576,438 | |||||||||
Southern Graphics, Inc. (Commercial Svs. & Supplies) | (b) | 8.375% | 10/15/2020 | 1,200,000 | 1,209,000 | |||||||||||
United Rentals North America, Inc. (Commercial Svs. & Supplies) | 6.125% | 06/15/2023 | 100,000 | 105,500 | ||||||||||||
United Rentals North America, Inc. (Commercial Svs. & Supplies) | 7.375% | 05/15/2020 | 100,000 | 108,500 | ||||||||||||
United Rentals North America, Inc. (Commercial Svs. & Supplies) | 5.750% | 11/15/2024 | 100,000 | 103,250 | ||||||||||||
Sensata Technologies BV (Electrical Equip.) | (b) | 5.625% | 11/01/2024 | 225,000 | 233,859 | |||||||||||
Dematic SA / DH Services Luxembourg Sarl (Machinery) | (b) | 7.750% | 12/15/2020 | 1,100,000 | 1,157,750 | |||||||||||
Gardner Denver, Inc. (Machinery) | (b) | 6.875% | 08/15/2021 | 975,000 | 940,875 | |||||||||||
Mcron Finance Sub. LLC / Mcron Finance Corp. (Machinery) | (b) | 8.375% | 05/15/2019 | 341,000 | 363,165 | |||||||||||
Milacron LLC / Mcron Finance Corp. (Machinery) | (b) | 7.750% | 02/15/2021 | 200,000 | 205,000 | |||||||||||
Schaeffler Finance BV (Machinery) | (b) | 4.750% | 05/15/2021 | 375,000 | 376,875 | |||||||||||
Schaeffler Finance BV (Machinery) | (b) | 4.250% | 05/15/2021 | 250,000 | 245,000 | |||||||||||
Schaeffler Holding Finance BV (Machinery) | �� | (b)(d) | 6.875% | 08/15/2018 | 475,000 | 497,563 | ||||||||||
Schaeffler Holding Finance BV (Machinery) | (b)(d) | 6.750% | 11/15/2022 | 300,000 | 315,000 | |||||||||||
Waterjet Holdings, Inc. (Machinery) | (b) | 7.625% | 02/01/2020 | 175,000 | 180,688 | |||||||||||
Anna Merger Sub., Inc. (Professional Svs.) | (b) | 7.750% | 10/01/2022 | 1,150,000 | 1,167,250 | |||||||||||
IHS, Inc. (Professional Svs.) | (b) | 5.000% | 11/01/2022 | 175,000 | 174,125 | |||||||||||
Hertz Corp. / The (Road & Rail) | 6.750% | 04/15/2019 | 1,025,000 | 1,060,875 | ||||||||||||
Hertz Corp. / The (Road & Rail) | 6.250% | 10/15/2022 | 375,000 | 380,625 | ||||||||||||
American Builders & Contractors Supply Co., Inc. (Trading Companies & Distributors) | (b) | 5.625% | 04/15/2021 | 625,000 | 629,688 | |||||||||||
HD Supply, Inc. (Trading Companies & Distributors) | (b) | 5.250% | 12/15/2021 | 75,000 | 76,500 | |||||||||||
Interline Brands, Inc. (Trading Companies & Distributors) | (d) | 10.000% | 11/15/2018 | 605,000 | 635,250 | |||||||||||
International Lease Finance Corp. (Trading Companies & Distributors) | 5.875% | 08/15/2022 | 1,250,000 | 1,359,375 | ||||||||||||
International Lease Finance Corp. (Trading Companies & Distributors) | 4.625% | 04/15/2021 | 1,150,000 | 1,172,281 | ||||||||||||
Rexel SA (Trading Companies & Distributors) | (b) | 5.250% | 06/15/2020 | 750,000 | 759,375 | |||||||||||
WESCO Distribution, Inc. (Trading Companies & Distributors) | 5.375% | 12/15/2021 | 225,000 | 228,094 | ||||||||||||
|
| |||||||||||||||
25,631,570 | ||||||||||||||||
|
| |||||||||||||||
INFORMATION TECHNOLOGY – 11.8% | ||||||||||||||||
CommScope Holding Co., Inc. (Communications Equip.) | (b)(d) | 6.625% | 06/01/2020 | 1,025,000 | 1,060,875 | |||||||||||
CommScope, Inc. (Communications Equip.) | (b) | 5.500% | 06/15/2024 | 525,000 | 519,750 | |||||||||||
Seagate HDD Cayman (Computers & Peripherals) | 4.750% | 06/01/2023 | 475,000 | 494,211 | ||||||||||||
Anixter, Inc. (Electronic Equip., Instr. & Comp.) | 5.625% | 05/01/2019 | 300,000 | 318,000 | ||||||||||||
Belden, Inc. (Electronic Equip., Instr. & Comp.) | (b) | 5.500% | 09/01/2022 | 725,000 | 723,188 | |||||||||||
Belden, Inc. (Electronic Equip., Instr. & Comp.) | (b) | 5.250% | 07/15/2024 | 375,000 | 361,875 | |||||||||||
Cleaver-Brooks, Inc. (Electronic Equip., Instr. & Comp.) | (b) | 8.750% | 12/15/2019 | 575,000 | 608,063 | |||||||||||
Flextronics International Ltd. (Electronic Equip., Instr. & Comp.) | 5.000% | 02/15/2023 | 325,000 | 333,125 | ||||||||||||
Zebra Technologies Corp. (Electronic Equip., Instr. & Comp.) | (b) | 7.250% | 10/15/2022 | 425,000 | 447,313 | |||||||||||
Blackboard, Inc. (Internet Software & Svs.) | (b) | 7.750% | 11/15/2019 | 600,000 | 604,500 | |||||||||||
IAC / InterActiveCorp (Internet Software & Svs.) | 4.750% | 12/15/2022 | 1,100,000 | 1,075,250 | ||||||||||||
VeriSign, Inc. (Internet Software & Svs.) | 4.625% | 05/01/2023 | 400,000 | 394,000 | ||||||||||||
Compiler Finance Sub, Inc. (IT Svs.) | (b) | 7.000% | 05/01/2021 | 750,000 | 648,750 | |||||||||||
CoreLogic, Inc. (IT Svs.) | 7.250% | 06/01/2021 | 975,000 | 1,028,625 | ||||||||||||
First Data Corp. (IT Svs.) | (b) | 8.750% | 01/15/2022 | 2,825,000 | 3,051,000 | |||||||||||
SunGard Data Systems, Inc. (IT Svs.) | 7.625% | 11/15/2020 | 200,000 | 213,000 | ||||||||||||
SunGard Data Systems, Inc. (IT Svs.) | 6.625% | 11/01/2019 | 725,000 | 735,875 | ||||||||||||
Advanced Micro Devices, Inc. (Semiconductors & Equip.) | 7.500% | 08/15/2022 | 375,000 | 339,375 | ||||||||||||
Advanced Micro Devices, Inc. (Semiconductors & Equip.) | 7.000% | 07/01/2024 | 525,000 | 447,563 | ||||||||||||
Entegris, Inc. (Semiconductors & Equip.) | (b) | 6.000% | 04/01/2022 | 925,000 | 941,188 | |||||||||||
Freescale Semiconductor, Inc. (Semiconductors & Equip.) | (b) | 6.000% | 01/15/2022 | 750,000 | 785,625 | |||||||||||
Magnachip Semiconductor Corp. (Semiconductors & Equip.) | 6.625% | 07/15/2021 | 875,000 | 798,438 | ||||||||||||
NXP BV / NXP Funding LLC (Semiconductors & Equip.) | (b) | 5.750% | 02/15/2021 | 200,000 | 211,000 | |||||||||||
NXP BV / NXP Funding LLC (Semiconductors & Equip.) | (b) | 5.750% | 03/15/2023 | 200,000 | 211,000 | |||||||||||
NXP BV / NXP Funding LLC (Semiconductors & Equip.) | (b) | 3.750% | 06/01/2018 | 375,000 | 376,875 | |||||||||||
ACI Worldwide, Inc. (Software) | (b) | 6.375% | 08/15/2020 | 175,000 | 183,531 | |||||||||||
Audatex North America, Inc. (Software) | (b) | 6.000% | 06/15/2021 | 825,000 | 853,875 | |||||||||||
Audatex North America, Inc. (Software) | (b) | 6.125% | 11/01/2023 | 100,000 | 103,750 | |||||||||||
BMC Software Finance, Inc. (Software) | (b) | 8.125% | 07/15/2021 | 725,000 | 685,125 | |||||||||||
Boxer Parent Co., Inc. (Software) | (b)(d) | 9.000% | 10/15/2019 | 775,000 | 662,625 | |||||||||||
Eagle Midco, Inc. (Software) | (b) | 9.000% | 06/15/2018 | 475,000 | 488,063 | |||||||||||
Epicor Software Corp. (Software) | 8.625% | 05/01/2019 | 1,325,000 | 1,397,875 | ||||||||||||
Infor Software Parent LLC / Infor Software Parent, Inc. (Software) | (b)(d) | 7.125% | 05/01/2021 | 1,700,000 | 1,674,500 | |||||||||||
Infor U.S., Inc. (Software) | 9.375% | 04/01/2019 | 425,000 | 456,344 | ||||||||||||
Nuance Communications, Inc. (Software) | (b) | 5.375% | 08/15/2020 | 1,050,000 | 1,057,875 | |||||||||||
Sophia Holding Finance LP / Sophia Holding Finance, Inc. (Software) | (b)(d) | 9.625% | 12/01/2018 | 375,000 | 378,281 | |||||||||||
Sophia LP / Sophia Finance, Inc. (Software) | (b) | 9.750% | 01/15/2019 | 1,025,000 | 1,098,031 | |||||||||||
NCR Corp. (Tech. Hardware, Storage & Periph.) | 5.000% | 07/15/2022 | 450,000 | 441,000 | ||||||||||||
NCR Corp. (Tech. Hardware, Storage & Periph.) | 4.625% | 02/15/2021 | 475,000 | 463,125 | ||||||||||||
NCR Corp. (Tech. Hardware, Storage & Periph.) | 6.375% | 12/15/2023 | 375,000 | 391,875 | ||||||||||||
|
| |||||||||||||||
27,064,339 | ||||||||||||||||
|
|
62 | (continued) |
Ohio National Fund, Inc. | High Income Bond Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
MATERIALS – 9.6% | ||||||||||||||||
Ashland, Inc. (Chemicals) | 4.750% | 08/15/2022 | $ | 600,000 | $ | 603,000 | ||||||||||
U.S. Coatings Acquisition, Inc. / Flash Dutch 2 BV (Chemicals) | (b) | 7.375% | 05/01/2021 | 975,000 | 1,038,375 | |||||||||||
Axiall Corp. (Chemicals) | 4.875% | 05/15/2023 | 100,000 | 94,750 | ||||||||||||
Celanese U.S. Holdings LLC (Chemicals) | 4.625% | 11/15/2022 | 325,000 | 323,375 | ||||||||||||
Eagle Spinco, Inc. (Chemicals) | 4.625% | 02/15/2021 | 375,000 | 356,719 | ||||||||||||
Eco Services Operations LLC / Eco Finance Corp. (Chemicals) | (b) | 8.500% | 11/01/2022 | 275,000 | 280,500 | |||||||||||
Hexion U.S. Finance Corp / Hexion Nova Scotia Finance ULC (Chemicals) | 8.875% | 02/01/2018 | 800,000 | 714,000 | ||||||||||||
Hexion U.S. Finance Corp. (Chemicals) | 6.625% | 04/15/2020 | 425,000 | 418,625 | ||||||||||||
Huntsman International LLC (Chemicals) | 4.875% | 11/15/2020 | 250,000 | 249,375 | ||||||||||||
Huntsman International LLC (Chemicals) | (b) | 5.125% | 11/15/2022 | 200,000 | 197,500 | |||||||||||
W.R. Grace & Co. (Chemicals) | (b) | 5.625% | 10/01/2024 | 150,000 | 156,938 | |||||||||||
W.R. Grace & Co. (Chemicals) | (b) | 5.125% | 10/01/2021 | 150,000 | 154,125 | |||||||||||
Ardagh Packaging Finance PLC (Containers & Packaging) | (b) | 9.125% | 10/15/2020 | 675,000 | 722,250 | |||||||||||
Ardagh Packaging Finance PLC / Ardagh MP Holdings U.S.A., Inc. (Containers & Packaging) | (b) | 9.125% | 10/15/2020 | 425,000 | 452,625 | |||||||||||
Ardagh Packaging Finance PLC / Ardagh MP Holdings U.S.A., Inc. (Containers & Packaging) | (b) | 7.000% | 11/15/2020 | 48,529 | 49,257 | |||||||||||
Ardagh Packaging Finance PLC / Ardagh Holdings U.S.A., Inc. (Containers & Packaging) | (b) | 6.750% | 01/31/2021 | 200,000 | 199,500 | |||||||||||
Ardagh Packaging Finance PLC / Ardagh Holdings U.S.A., Inc. (Containers & Packaging) | (b)(e) | 3.241% | 12/15/2019 | 200,000 | 193,750 | |||||||||||
Ardagh Packaging Finance PLC / Ardagh Holdings U.S.A., Inc. (Containers & Packaging) | (b) | 6.000% | 06/30/2021 | 200,000 | 191,500 | |||||||||||
Ball Corp. (Containers & Packaging) | 4.000% | 11/15/2023 | 875,000 | 848,750 | ||||||||||||
Berry Plastics Corp. (Containers & Packaging) | 5.500% | 05/15/2022 | 1,425,000 | 1,448,156 | ||||||||||||
Beverage Packaging Holdings Luxembourg II SA / Beverage Packaging Holdings II Issuer (Containers & Packaging) | (b) | 6.000% | 06/15/2017 | 275,000 | 268,813 | |||||||||||
BWAY Holding Co. (Containers & Packaging) | (b) | 9.125% | 08/15/2021 | 1,150,000 | 1,155,750 | |||||||||||
Crown Americas LLC / Crown Americas Capital Corp. IV (Containers & Packaging) | 4.500% | 01/15/2023 | 725,000 | 706,875 | ||||||||||||
Graphic Packaging International, Inc. (Containers & Packaging) | 4.875% | 11/15/2022 | 350,000 | 352,625 | ||||||||||||
Greif, Inc. (Containers & Packaging) | 7.750% | 08/01/2019 | 475,000 | 539,125 | ||||||||||||
Mustang Merger Corp. (Commercial Svs. & Supplies) | (b) | 8.500% | 08/15/2021 | 775,000 | 740,125 | |||||||||||
Owens-Brockway Glass Container, Inc. (Containers & Packaging) | (b) | 5.000% | 01/15/2022 | 100,000 | 102,125 | |||||||||||
Owens-Brockway Glass Container, Inc. (Containers & Packaging) | (b) | 5.375% | 01/15/2025 | 200,000 | 202,250 | |||||||||||
Pactiv LLC (Containers & Packaging) | 7.950% | 12/15/2025 | 225,000 | 227,250 | ||||||||||||
Reynolds Group Issuer, Inc. / Reynolds Group Issuer LLC (Containers & Packaging) | 9.000% | 04/15/2019 | 675,000 | 702,000 | ||||||||||||
Reynolds Group Issuer, Inc. / Reynolds Group Issuer LLC (Containers & Packaging) | 8.250% | 02/15/2021 | 1,325,000 | 1,364,750 | ||||||||||||
Reynolds Group Issuer, Inc. / Reynolds Group Issuer LLC (Containers & Packaging) | 5.750% | 10/15/2020 | 1,475,000 | 1,519,250 | ||||||||||||
Sealed Air Corp. (Containers & Packaging) | (b) | 8.375% | 09/15/2021 | 600,000 | 673,500 | |||||||||||
Sealed Air Corp. (Containers & Packaging) | (b) | 6.500% | 12/01/2020 | 125,000 | 137,500 | |||||||||||
Sealed Air Corp. (Containers & Packaging) | (b) | 4.875% | 12/01/2022 | 300,000 | 298,500 | |||||||||||
Sealed Air Corp. (Containers & Packaging) | (b) | 5.125% | 12/01/2024 | 300,000 | 303,750 | |||||||||||
Signode Industrial Group Lux SA / Signode Industrial Group U.S., Inc. (Containers & Packaging) | (b) | 6.375% | 05/01/2022 | 1,450,000 | 1,421,000 | |||||||||||
Steel Dynamics, Inc. (Metals & Mining) | 5.250% | 04/15/2023 | 125,000 | 127,500 | ||||||||||||
Steel Dynamics, Inc. (Metals & Mining) | (b) | 5.125% | 10/01/2021 | 200,000 | 203,750 | |||||||||||
Steel Dynamics, Inc. (Metals & Mining) | (b) | 5.500% | 10/01/2024 | 350,000 | 359,625 | |||||||||||
Wise Metals Group LLC / Wise Alloys Finance Corp. (Metals & Mining) | (b) | 8.750% | 12/15/2018 | 125,000 | 131,875 | |||||||||||
Wise Metals Intermediate Holdings LLC / Wise Holdings Finance Corp. (Metals & Mining) | (b) | 9.750% | 06/15/2019 | 475,000 | 506,469 | |||||||||||
Clearwater Paper Corp. (Paper & Forest Products) | 4.500% | 02/01/2023 | 800,000 | 784,000 | ||||||||||||
Clearwater Paper Corp. (Paper & Forest Products) | (b) | 5.375% | 02/01/2025 | 500,000 | 493,750 | |||||||||||
|
| |||||||||||||||
22,015,227 | ||||||||||||||||
|
| |||||||||||||||
TELECOMMUNICATION SERVICES – 4.6% | ||||||||||||||||
Inmarsat Finance PLC (Diversified Telecom. Svs.) | (b) | 4.875% | 05/15/2022 | 325,000 | 322,563 | |||||||||||
Level 3 Communications, Inc. (Diversified Telecom. Svs.) | (b) | 5.750% | 12/01/2022 | 375,000 | 379,219 | |||||||||||
Level 3 Financing, Inc. (Diversified Telecom. Svs.) | 8.125% | 07/01/2019 | 725,000 | 773,937 | ||||||||||||
Digicel Group Ltd. (Wireless Telecom. Svs.) | (b) | 8.250% | 09/30/2020 | 1,175,000 | 1,145,625 | |||||||||||
Digicel Ltd. (Wireless Telecom. Svs.) | (b) | 8.250% | 09/01/2017 | 175,000 | 178,062 | |||||||||||
Sprint Capital Corp. (Wireless Telecom. Svs.) | 6.875% | 11/15/2028 | 925,000 | 818,625 | ||||||||||||
Sprint Capital Corp. (Wireless Telecom. Svs.) | 6.900% | 05/01/2019 | 525,000 | 538,125 | ||||||||||||
Sprint Nextel Corp. (Wireless Telecom. Svs.) | (b) | 7.000% | 03/01/2020 | 350,000 | 379,750 | |||||||||||
Sprint Communications, Inc. (Wireless Telecom. Svs.) | 6.000% | 11/15/2022 | 875,000 | 808,281 | ||||||||||||
Sprint Corp. (Wireless Telecom. Svs.) | 7.875% | 09/15/2023 | 675,000 | 669,735 | ||||||||||||
Sprint Corp. (Wireless Telecom. Svs.) | 7.125% | 06/15/2024 | 275,000 | 257,125 | ||||||||||||
Syniverse Holdings, Inc. (Wireless Telecom. Svs.) | 9.125% | 01/15/2019 | 1,600,000 | 1,676,000 | ||||||||||||
MetroPCS Wireless, Inc. (Wireless Telecom. Svs.) | 6.625% | 11/15/2020 | 875,000 | 893,594 | ||||||||||||
T-Mobile U.S.A., Inc. (Wireless Telecom. Svs.) | 6.731% | 04/28/2022 | 75,000 | 77,531 | ||||||||||||
T-Mobile U.S.A., Inc. (Wireless Telecom. Svs.) | 6.500% | 01/15/2024 | 625,000 | 642,188 | ||||||||||||
T-Mobile U.S.A., Inc. (Wireless Telecom. Svs.) | 6.125% | 01/15/2022 | 200,000 | 203,750 | ||||||||||||
T-Mobile U.S.A., Inc. (Wireless Telecom. Svs.) | 6.625% | 04/01/2023 | 450,000 | 463,050 | ||||||||||||
T-Mobile U.S.A., Inc. (Wireless Telecom. Svs.) | 6.375% | 03/01/2025 | 225,000 | 229,163 | ||||||||||||
T-Mobile U.S.A., Inc. (Wireless Telecom. Svs.) | 6.000% | 03/01/2023 | 150,000 | 150,750 | ||||||||||||
|
| |||||||||||||||
10,607,073 | ||||||||||||||||
|
|
63 | (continued) |
Ohio National Fund, Inc. | High Income Bond Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
UTILITIES – 1.9% | ||||||||||||||||
Ferrellgas LP / Ferrellgas Finance Corp. (Gas Utilities) | 6.500% | 05/01/2021 | $ | 450,000 | $ | 441,000 | ||||||||||
Ferrellgas LP / Ferrellgas Finance Corp. (Gas Utilities) | 6.750% | 01/15/2022 | 500,000 | 491,250 | ||||||||||||
Suburban Propane Partners LP / Suburban Energy Finance Corp. (Gas Utilities) | 7.375% | 08/01/2021 | 372,000 | 391,530 | ||||||||||||
Suburban Propane Partners LP / Suburban Energy Finance Corp. (Gas Utilities) | 5.500% | 06/01/2024 | 825,000 | 798,187 | ||||||||||||
Calpine Corp. (Ind. Power Prod. & Energy Traders) | (b) | 6.000% | 01/15/2022 | 175,000 | 187,250 | |||||||||||
Calpine Corp. (Ind. Power & Renewable Elec.) | 5.750% | 01/15/2025 | 1,275,000 | 1,292,531 | ||||||||||||
NRG Energy, Inc. (Ind. Power & Renewable Elec.) | (b) | 6.250% | 05/01/2024 | 725,000 | 741,313 | |||||||||||
FPL Energy National Wind Portfolio LLC (Acquired 05/27/2009, Cost $14,679)(Multi-Utilities) | (b)(g) | 6.125% | 03/25/2019 | 16,245 | 16,407 | |||||||||||
|
| |||||||||||||||
4,359,468 | ||||||||||||||||
|
| |||||||||||||||
Total Corporate Bonds (Cost $223,805,281) | $ | 222,211,334 | ||||||||||||||
|
| |||||||||||||||
Common Stocks – 0.1% | Shares | Value | ||||||||||||||
CONSUMER DISCRETIONARY – 0.1% | ||||||||||||||||
General Motors Co. (Automobiles) | 4,679 | $ | 163,344 | |||||||||||||
|
| |||||||||||||||
ENERGY – 0.0% | ||||||||||||||||
Lone Pine Resources Canada Ltd. (Acquired 07/10/2012, Cost $48,614) (Oil, Gas & Consumable Fuels) | (a)(c)(g) | 6,236 | 5,799 | |||||||||||||
|
| |||||||||||||||
Total Common Stocks (Cost $464,439) | $ | 169,143 | ||||||||||||||
|
| |||||||||||||||
Warrants – 0.1% | Quantity | Value | ||||||||||||||
CONSUMER DISCRETIONARY – 0.1% | ||||||||||||||||
General Motors Co. (Automobiles) Expiration: 07/10/16, Exercise Price: $10.00 | (a) | 4,253 | $ | 107,431 | ||||||||||||
General Motors Co. (Automobiles) Expiration: 07/10/19, Exercise Price: $18.33 | (a) | 4,253 | 72,854 | |||||||||||||
|
| |||||||||||||||
Total Warrants (Cost $476,467) | $ | 180,285 | ||||||||||||||
|
| |||||||||||||||
Money Market Funds – 1.0% | Shares | Value | ||||||||||||||
Fidelity Institutional Money Market Funds Money Market Portfolio – Class I | 2,353,000 | $ | 2,353,000 | |||||||||||||
|
| |||||||||||||||
Total Money Market Funds (Cost 2,353,000) | $ | 2,353,000 | ||||||||||||||
|
| |||||||||||||||
Total Investments – 97.8% (Cost $227,099,187) | (h) | $ | 224,913,762 | |||||||||||||
Other Assets in Excess of Liabilities – 2.2% | 5,186,689 | |||||||||||||||
|
| |||||||||||||||
Net Assets – 100.0% | $ | 230,100,451 | ||||||||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Non-income producing security. |
(b) | Security exempt from registration under Regulation D of the Securities Act of 1933. These securities may be resold in transactions exempt form registration, normally to qualified buyers under Rule 144A. At December 31, 2014, the value of these securities totaled $97,505,545, or 42.4% of the Portfolio’s net assets. Unless also noted with (g), as defined below, these securities were deemed liquid pursuant to procedures approved by the Board of Directors. |
(c) | A market quotation for this investment was not readily available at December 31, 2014. As discussed in Note 2 of the Notes to Financial Statements, the price for this issue was derived from an estimate of fair market value using methods determined in good faith by the Fund’s Pricing Committee under supervision of the Board. This security represents $5,799 or 0.0% of the Portfolio’s net assets. |
(d) | Issuer of the security has the option to make coupon payments in cash or in additional par value of this bond. Rate presented is the coupon rate for the cash option. |
(e) | Security is a variable rate instrument in which the coupon rate is adjusted quarterly in concert with U.S. LIBOR. Interest rates stated are those in effect at December 31, 2014. |
(f) | Represents a security that is in default. Unless noted by (g), as defined below, these securities were deemed liquid pursuant to procedures approved by the Board of Directors. |
(g) | Represents a security deemed to be illiquid. At December 31, 2014, the value of illiquid securities in the Portfolio totaled $601,206, or 0.3% of the Portfolio’s net assets. |
(h) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
64 |
Ohio National Fund, Inc. | Capital Growth Portfolio |
Objective/Strategy
The Capital Growth Portfolio seeks long-term capital appreciation by investing primarily in an actively managed portfolio of equity securities of small cap growth companies.
Performance as of December 31, 2014
Average Annual returns | ||||
One year | 2.45% | |||
Five years | 15.11% | |||
Ten years | 9.08% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Capital Growth Portfolio returned 2.45% versus 5.60% for the current benchmark, the Russell 2000 Growth Index.
Health Care was the most notable detracting sector in 2014, as the Portfolio’s biotech and pharmaceuticals industry holdings failed to keep up with substantial strength exhibited by those of the benchmark. The Portfolio’s performance also encountered difficulty in the Energy sector, as poor results within the energy equipment and services industry weighed on sector-relative returns. Modest outperformance within the Materials sector, as well as a small amount of outperformance within the Information Technology sector, provided some bright spots for the calendar year.(1)
The Portfolio’s key detractors for the year were Geospace Technologies Corp., Natural Grocers by Vitamin Cottage, Inc., Gulfport Energy Corp., Chart Industries, Inc., and Cornerstone OnDemand, Inc. Geospace Technologies Corp. makes seismic instruments used in monitoring oil and natural-gas reserves. Contract-timing issues plagued the stock over the year; however, we believe Geospace Technologies Corp. continues to have strong prospects for its innovative seismic-recording systems. Natural Grocers by Vitamin Cottage, Inc. operates natural and organic grocery stores primarily in the western United States. Despite reporting earnings in line with estimates, concerns arose over a deceleration of same-store sales growth. We believe the deceleration is largely attributable to new-store openings by competitors. We believe Natural Grocers by Vitamin Cottage, Inc.’s management will leverage its well-disciplined approach and effective business model to weather these near-term competitive pressures and ultimately re-accelerate growth. Gulfport Energy Corp. is an oil and gas producer operating primarily within the Utica shale region of Ohio, as well as the Louisiana Gulf Coast region. Production growth appears to be back on track as a result of operational efficiencies achieved since the firm reset expectations earlier this year. Gulfport Energy Corp. has also begun to rotate more resources toward gas-oriented acreage in light of a substantially suppressed oil-pricing environment. Chart Industries, Inc. manufactures equipment used primarily in the production and storage of liquid natural gas (“LNG”). Drastic price
declines in the Energy sector have weighed heavily on firms such as Chart Industries, Inc., whose customers are delaying capital-expenditure projects. When energy markets re-find their footing, the firm is expected to benefit from the build-out of North American LNG export terminals and a progressing shift to natural-gas-powered trucks. Cornerstone OnDemand, Inc., a leader in human- and capital-management software, has made substantial progress with its ongoing sales-force reorganization begun earlier this year. In the meantime, the firm has had some difficulty with sales execution, including the timing of deal closings, thereby affecting its ability to meet lofty revenue- and billings-growth expectations.(1)
The Portfolio’s key contributors for the year were Centene Corp., JetBlue Airways Corp., Universal Electronics, Inc., Cavium, Inc., and WhiteWave Foods Co. Centene Corp. operates Medicaid managed-care programs for several U.S. states using a managed-care model to reduce their expenses in an increasingly cost-conscious health care industry. The firm has benefitted from a close alignment with the Affordable Care Act through its participation in ACA-facilitated healthcare exchanges, as well as from some states shifting previously uninsured populations into Medicaid programs that Centene Corp. administers. JetBlue Airways Corp. continues to benefit from a more disciplined and rational competitive environment, as well as lower fuel prices. Additionally, the company outlined plans to increase revenues and margins by adding additional seats to each plane and introducing a fee for checked luggage. Universal Electronics, Inc., largely a manufacturer of remote controls for television sets, continues to benefit from growing acceptance of its offerings in mobile-phone handsets. Cavium, Inc. makes semiconductor equipment used mainly in communications applications. The stock has been a beneficiary of accelerating Chinese wireless infrastructure build-outs; further, the company possesses growth potential to take market share in datacenter servers. WhiteWave Foods Co. manufactures food products under brands such as Silk and International Delight. The firm continues to execute well in an expanding natural- and organic-foods industry, leveraging strong brand awareness to take market share.(1)
The five top-performing holdings (without regard for position size) were Receptos, Inc., Furiex Pharmaceuticals, Inc., Palo Alto Networks, Inc., Anacor Pharmaceuticals, Inc., and JetBlue Airways Corp. The five worst-performing holdings (without regard for position size) included Geospace Technologies Corp., Chart Industries, Inc., E2open, Inc., Aegerion Pharmaceuticals, Inc., and Angie’s List, Inc.(1)
As we envisioned, the Russell 2000 Growth Index rebounded strongly in the fourth quarter, fueled by continued low interest rates, strong earnings and sharply lower oil prices. We see those same factors aiding a continued advance in the first quarter of 2015. Unlike last year, when most strategists thought interest rates would rise, most forecasts this year are for only a very modest increase in the second half. It appears global growth is slowing and the U.S. Federal Reserve likely will remain accommodative longer than earlier forecast. Most oil forecasts are calling for continued pressure on prices until there are cutbacks in production or an increase in demand, potentially occurring in the second half of the year. The domestic economy looks strong, with gross domestic product (“GDP”) forecast to grow about 3 percent. Given that backdrop, as well as the lack of attractive investment alternatives, we believe equity markets should generally remain strong. If there is weakness, it should be contained to companies with heavy exposure to foreign markets or low oil prices. Small caps have far less foreign exposure and, as such, should lead the market in early 2015.
65 | (continued) |
Ohio National Fund, Inc. | Capital Growth Portfolio (Continued) |
The Energy sector turned in the worst performance of any sector in 2014, as oil prices plummeted into year end. Against a backdrop of continued near-term growth in North American oil production, oil prices may struggle to recover well into 2015. However, the recent correction actually lays the groundwork for a more constructive long-term outlook for the sector given 1) negative investor sentiment; 2) depressed share prices; and 3) commodity prices trading well below long-term “sustainable” levels (i.e., providing enough cash flow to producers for reinvestment). With capital budgets set to plunge in 2015 and signs of improved demand due to lower prices, the sector may see a sharp recovery heading into year end. Despite the volatility in commodity prices, our investment strategy remains unchanged. Namely, we seek to invest in companies generating the highest rates of return. As such, we continue to maintain our investments in companies that hold acreage positions in the core of the Utica shale region as well as the Permian Basin. This strategy also dictates that we avoid the companies that are active in the more marginal basins and lack the balance-sheet flexibility to weather the downturn.
The dramatic fall in oil prices has profound implications – positive and negative – for many companies in the industrial and materials segments. As such, stock selection will likely hold an even greater importance in the current environment. Companies for which energy prices represent a significant cost, such as airlines and other transports, are poised to see a tremendous tailwind in profit margins. Conversely, companies that provide products and services to customers in the energy segment will likely face a severe drop in demand as capital budgets are slashed. We have made adjustments to our positioning and will look for additional opportunities to increase exposure to companies that will benefit from lower oil prices and have significant exposure to the U.S. economy, where growth is outpacing all other developed economies. Secondly, we have reduced our exposure to companies that have direct exposure to the petroleum industry, which will undoubtedly see a dramatic slowdown.
The unpredictable evolution of the health care industry – facilitated by the Obamacare legislation – has shown no signs of abating as 2015 gets under way. Companies are still struggling to understand how the voluminous provisions of the Affordable Care Act (“ACA”) will affect them and how they should prepare for change. The difficulty is in forecasting the intended and unintended consequences of the myriad variables – federal, state and private exchanges; subsidies; the uninsured; patient risk pools; and the Medicare tax – that are integral parts of the ACA. With so many moving parts, the prospects for any material semblance of stability within healthcare currently appear to be few and far between.
Despite these challenges, we continue to identify opportunities in certain trends, such as Medicaid managed-care companies that take over the administration of state Medicaid programs. Usually, that involves transitioning the states from a fee-for-service model to a managed-care model (e.g., one run by Centene Corp.) due to cost savings. As the primary drivers within the biotech industry primarily have been clinical success, beneficial partnerships and acquisitions, we continue to be positioned in select biotech stocks (e.g., Ophthotech Corp., Isis Pharmaceuticals, Inc.) with drugs that possess strong clinical profiles, impressive value propositions and clear value-creating catalysts. Many hospitals are increasingly outsourcing non-core activities to business-process outsourcing companies (e.g., Team Health Holdings, Inc.) in an effort to improve operational efficiencies, providing secular tailwinds for these uniquely positioned companies. Finally, we expect a clear and growing trend toward more consolidation. We are now in an environment
that will force the industry to treat more patients with fewer dollars. The only real way to combat this inevitable trend will be scale. That is why we will continue to evaluate investments in smaller, niche companies as potential acquisition targets. Regulatory uncertainty has become a fact of life as the rules of Obamacare seemingly change on the fly. What is clear, however, is that Obamacare is here to stay and will force health care players to do more with less.(1)
After much speculation, the U.S. Federal Reserve wrapped up its bond-purchasing program at the end of October. With the latest round of quantitative easing “in the books,” focus subsequently has shifted to the long-anticipated rate-increase timetable, which is projected to take shape toward the latter half of 2015, based on current estimates. In this context, we would expect to see an eventual rise in rates temper performance of more yield-oriented investments (e.g., real-estate investment trusts, or REITs, and business-development companies) and ultimately provide a boost to banks and other market-driven firms (e.g., Stifel Financial Corp.) as spreads recover and profitability improves. (1)
Accelerating U.S. macroeconomic data, such as GDP, continue to be positive for technology spending. Improving consumer confidence data due to higher employment figures and lower oil prices – combined with increased capital spending – sets up strong tailwinds for technology fundamentals. We remain focused on what we view as high-quality companies with strong management teams positioned to gain market share. Additionally, we are looking for names that benefit from long-term secular-growth trends with themes that include security software, cloud computing, mobility, e-commerce and alternative energy. We remain underweight in the telecommunications equipment industry due to spending that remains muted; however, we anticipate improvement in late 2015. Meanwhile, we are becoming increasingly cautious on semiconductors, as we are seeing signs that the cycle may be peaking. As we expected, there has been a strong increase in merger-and-acquisition (“M&A”) activity across industries in the technology landscape in 2014, and we expect the trends to continue into 2015. We are investing in the security and mobility themes. For example, we own Imperva, Inc. which helps protect IT assets such as databases and files from hackers. Investors have gained confidence in a new management team with notable sales scaling experience. On the mobility front, Qorvo (formerly RF Micro Devices, Inc.) is a critical player in the smartphone supply chain with chips that provide wireless connectivity. The adoption of the latest cellular technology (e.g., 4G) is a global trend. RF Micro Devices, Inc. recently merged with TriQuint to become a much bigger player (now named Qorvo) in the market to gain revenue and cost synergies.(1)
Consumer stocks rebounded strongly in the fourth quarter, and we expect them to continue the momentum into the new year. A strong domestic economy, continued low interest rates and sharply lower gasoline prices figure to be a perfect storm for consumer stocks in early 2015. We recently purchased restaurant stock Cracker Barrel Old Country Store, Inc. and Brunswick Corp., beneficiaries of a strong domestic economy and lower fuel prices. We have also increased our stake in apparel company Vince Holding Corp. because we believe it should benefit from strong consumer tailwinds.(1)
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
66 | (continued) |
Ohio National Fund, Inc. | Capital Growth Portfolio (Continued) |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 Index companies with higher price-to-value ratios and higher forecasted growth values. The Russell 2000 Index includes the 2000 firms from the Russell 3000 Index with the smallest market capitalizations. The Russell 3000 Index represents 98% of the investable U.S. equity market. The index presented herein includes the effects of reinvested dividends.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 99.6 | |||
Money Market Funds | 0.4 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Genesco, Inc. | 3.2 | |||
2. Universal Electronics, Inc. | 2.4 | |||
3. Vitamin Shoppe, Inc. | 2.3 | |||
4. Quaker Chemical Corp. | 2.3 | |||
5. JetBlue Airways Corp. | 2.2 | |||
6. Centene Corp. | 2.1 | |||
7. Cavium, Inc. | 2.1 | |||
8. Hexcel Corp. | 1.7 | |||
9. Imperva, Inc. | 1.5 | |||
10. Belmond Ltd. Class A | 1.5 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Information Technology | 24.0 | |||
Health Care | 23.3 | |||
Consumer Discretionary | 15.7 | |||
Industrials | 15.0 | |||
Financials | 8.1 | |||
Materials | 6.1 | |||
Consumer Staples | 3.8 | |||
Energy | 3.6 | |||
|
| |||
99.6 | ||||
|
|
67 |
Ohio National Fund, Inc. | Capital Growth Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 99.6% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 15.7% |
| |||||||||
Bright Horizons Family Solutions, Inc. (Diversified Consumer Svs.) | (a) | 8,180 | $ | 384,542 | ||||||
Grand Canyon Education, Inc. (Diversified Consumer Svs.) | (a) | 8,600 | 401,276 | |||||||
Sotheby’s (Diversified Consumer Svs.) | 6,815 | 294,272 | ||||||||
Belmond Ltd. Class A (Hotels, Restaurants & Leisure) | (a) | 89,547 | 1,107,696 | |||||||
Buffalo Wild Wings, Inc. (Hotels, Restaurants & Leisure) | (a) | 3,237 | 583,890 | |||||||
Chuy’s Holdings, Inc. (Hotels, Restaurants & Leisure) | (a) | 15,282 | 300,597 | |||||||
Cracker Barrel Old Country Store, Inc. (Hotels, Restaurants & Leisure) | 1,380 | 194,249 | ||||||||
iRobot Corp. (Household Durables) | (a) | 10,307 | 357,859 | |||||||
KB Home (Household Durables) | 23,155 | 383,215 | ||||||||
Universal Electronics, Inc. (Household Durables) | (a) | 28,268 | 1,838,268 | |||||||
Genesco, Inc. (Specialty Retail) | (a) | 31,755 | 2,433,068 | |||||||
Vitamin Shoppe, Inc. (Specialty Retail) | (a) | 35,156 | 1,707,879 | |||||||
Deckers Outdoor Corp. (Textiles, Apparel & Luxury Goods) | (a) | 8,360 | 761,094 | |||||||
Steven Madden Ltd. (Textiles, Apparel & Luxury Goods) | (a) | 21,133 | 672,663 | |||||||
Vince Holding Corp. (Textiles, Apparel & Luxury Goods) | (a) | 15,662 | 409,405 | |||||||
|
| |||||||||
11,829,973 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 3.8% | ||||||||||
Casey’s General Stores, Inc. (Food & Staples Retailing) | 3,668 | 331,294 | ||||||||
Fresh Market, Inc. / The (Food & Staples Retailing) | (a) | 5,636 | 232,203 | |||||||
Natural Grocers by Vitamin Cottage, Inc. (Food & Staples Retailing) | (a) | 25,982 | 731,913 | |||||||
United Natural Foods, Inc. (Food & Staples Retailing) | (a) | 8,118 | 627,724 | |||||||
WhiteWave Foods Co. / The (Food Products) | (a) | 27,715 | 969,748 | |||||||
|
| |||||||||
2,892,882 | ||||||||||
|
| |||||||||
ENERGY – 3.6% | ||||||||||
Geospace Technologies Corp. (Energy Equip. & Svs.) | (a) | 14,523 | 384,860 | |||||||
Diamondback Energy, Inc. (Oil, Gas & Consumable Fuels) | (a) | 4,696 | 280,727 | |||||||
Gulfport Energy Corp. (Oil, Gas & Consumable Fuels) | (a) | 19,095 | 797,025 | |||||||
Rice Energy, Inc. (Oil, Gas & Consumable Fuels) | (a) | 39,125 | 820,451 | |||||||
RSP Permian, Inc. (Oil, Gas & Consumable Fuels) | (a) | 17,918 | 450,459 | |||||||
|
| |||||||||
2,733,522 | ||||||||||
|
| |||||||||
FINANCIALS – 8.1% | ||||||||||
UMB Financial Corp. (Banks) | 12,547 | 713,799 | ||||||||
Fortress Investment Group LLC Class A (Capital Markets) | 54,561 | 437,579 | ||||||||
FXCM, Inc. Class A (Capital Markets) | 30,291 | 501,922 | ||||||||
Stifel Financial Corp. (Capital Markets) | (a) | 19,441 | 991,880 | |||||||
PRA Group, Inc. (Consumer Finance) | (a) | 5,063 | 293,300 | |||||||
Enstar Group Ltd. (Insurance) | (a) | 3,039 | 464,633 | |||||||
Geo Group, Inc. / The (Real Estate Investment Trusts) | 24,366 | 983,412 | ||||||||
Two Harbors Investment Corp. (Real Estate Investment Trusts) | 33,605 | 336,722 | ||||||||
Home Loan Servicing Solutions Ltd. (Thrifts & Mortgage Finance) | 38,774 | 756,868 | ||||||||
MGIC Investment Corp. (Thrifts & Mortgage Finance) | (a) | 69,885 | 651,328 | |||||||
|
| |||||||||
6,131,443 | ||||||||||
|
| |||||||||
HEALTH CARE – 23.3% | ||||||||||
Acorda Therapeutics, Inc. (Biotechnology) | (a) | 23,891 | 976,425 | |||||||
Akebia Therapeutics, Inc. (Biotechnology) | (a) | 17,912 | 208,496 | |||||||
Anacor Pharmaceuticals, Inc. (Biotechnology) | (a) | 17,309 | 558,215 | |||||||
Celladon Corp. (Biotechnology) | (a) | 11,755 | 229,575 | |||||||
Chimerix, Inc. (Biotechnology) | (a) | 11,815 | 475,672 | |||||||
CTI BioPharma Corp. (Biotechnology) | (a) | 138,095 | 325,904 | |||||||
Enanta Pharmaceuticals, Inc. (Biotechnology) | (a) | 7,127 | 362,408 | |||||||
Isis Pharmaceuticals, Inc. (Biotechnology) | (a) | 10,305 | 636,231 | |||||||
Keryx Biopharmaceuticals, Inc. (Biotechnology) | (a) | 20,865 | 295,240 | |||||||
NPS Pharmaceuticals, Inc. (Biotechnology) | (a) | 13,024 | 465,868 |
Common Stocks (Continued) | Shares | Value | ||||||||
HEALTH CARE (continued) | ||||||||||
Ophthotech Corp. (Biotechnology) | (a) | 16,314 | $ | 732,009 | ||||||
Portola Pharmaceuticals, Inc. (Biotechnology) | (a) | 12,437 | 352,216 | |||||||
Puma Biotechnology, Inc. (Biotechnology) | (a) | 1,307 | 247,376 | |||||||
Receptos, Inc. (Biotechnology) | (a) | 6,810 | 834,293 | |||||||
Seattle Genetics, Inc. (Biotechnology) | (a) | 8,102 | 260,317 | |||||||
Align Technology, Inc. (Health Care Equip. & Supplies) | (a) | 6,087 | 340,324 | |||||||
Cooper Cos., Inc. / The (Health Care Equip. & Supplies) | 3,900 | 632,151 | ||||||||
Cyberonics, Inc. (Health Care Equip. & Supplies) | (a) | 6,098 | 339,537 | |||||||
Endologix, Inc. (Health Care Equip. & Supplies) | (a) | 27,502 | 420,506 | |||||||
Natus Medical, Inc. (Health Care Equip. & Supplies) | (a) | 15,033 | 541,789 | |||||||
Sirona Dental Systems, Inc. (Health Care Equip. & Supplies) | (a) | 8,964 | 783,185 | |||||||
Spectranetics Corp. / The (Health Care Equip. & Supplies) | (a) | 23,904 | 826,600 | |||||||
Thoratec Corp. (Health Care Equip. & Supplies) | (a) | 12,381 | 401,887 | |||||||
Acadia Healthcare Co., Inc. (Health Care Providers & Svs.) | (a) | 5,823 | 356,426 | |||||||
Air Methods Corp. (Health Care Providers & Svs.) | (a) | 14,727 | 648,430 | |||||||
Centene Corp. (Health Care Providers & Svs.) | (a) | 15,297 | 1,588,594 | |||||||
ExamWorks Group, Inc. (Health Care Providers & Svs.) | (a) | 9,810 | 407,998 | |||||||
Team Health Holdings, Inc. (Health Care Providers & Svs.) | (a) | 13,771 | 792,246 | |||||||
HMS Holdings Corp. (Health Care Technology) | (a) | 16,754 | 354,180 | |||||||
MedAssets, Inc. (Health Care Technology) | (a) | 33,946 | 670,773 | |||||||
Medidata Solutions, Inc. (Health Care Technology) | (a) | 9,519 | 454,532 | |||||||
PAREXEL International Corp. (Life Sciences Tools & Svs.) | (a) | 9,311 | 517,319 | |||||||
Pacira Pharmaceuticals, Inc. (Pharmaceuticals) | (a) | 4,364 | 386,912 | |||||||
Theravance Biopharma, Inc. (Pharmaceuticals) | (a) | 8,030 | 119,808 | |||||||
|
| |||||||||
17,543,442 | ||||||||||
|
| |||||||||
INDUSTRIALS – 15.0% | ||||||||||
Hexcel Corp. (Aerospace & Defense) | (a) | 30,202 | 1,253,081 | |||||||
JetBlue Airways Corp. (Airlines) | (a) | 105,980 | 1,680,843 | |||||||
PGT, Inc. (Building Products) | (a) | 25,272 | 243,369 | |||||||
Trex Co., Inc. (Building Products) | (a) | 21,976 | 935,738 | |||||||
Waste Connections, Inc. (Commercial Svs. & Supplies) | 23,677 | 1,041,551 | ||||||||
EMCOR Group, Inc. (Construction & Engineering) | 10,212 | 454,332 | ||||||||
Northwest Pipe Co. (Construction & Engineering) | (a) | 21,235 | 639,598 | |||||||
Thermon Group Holdings, Inc. (Electrical Equip.) | (a) | 23,380 | 565,562 | |||||||
Chart Industries, Inc. (Machinery) | (a) | 6,972 | 238,442 | |||||||
Colfax Corp. (Machinery) | (a) | 15,549 | 801,862 | |||||||
Proto Labs, Inc. (Machinery) | (a) | 5,261 | 353,329 | |||||||
WABCO Holdings, Inc. (Machinery) | (a) | 5,572 | 583,834 | |||||||
Woodward, Inc. (Machinery) | 13,894 | 684,002 | ||||||||
Advisory Board Co. / The (Professional Svs.) | (a) | 6,932 | 339,529 | |||||||
Paylocity Holding Corp. (Professional Svs.) | (a) | 13,640 | 356,140 | |||||||
Landstar System, Inc. (Road & Rail) | 11,820 | 857,305 | ||||||||
Quality Distribution, Inc. (Road & Rail) | (a) | 29,083 | 309,443 | |||||||
|
| |||||||||
11,337,960 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 24.0% | ||||||||||
Aruba Networks, Inc. (Communications Equip.) | (a) | 16,378 | 297,752 | |||||||
Palo Alto Networks, Inc. (Communications Equip.) | (a) | 6,110 | 748,903 | |||||||
Coherent, Inc. (Electronic Equip., Instr. & Comp.) | (a) | 12,368 | 750,985 | |||||||
IPG Photonics Corp. (Electronic Equip., Instr. & Comp.) | (a) | 14,365 | 1,076,226 | |||||||
Cornerstone OnDemand, Inc. (Internet Software & Svs.) | (a) | 22,075 | 777,040 | |||||||
Demandware, Inc. (Internet Software & Svs.) | (a) | 14,258 | 820,405 | |||||||
E2open, Inc. (Internet Software & Svs.) | (a) | 32,435 | 311,700 | |||||||
HomeAway, Inc. (Internet Software & Svs.) | (a) | 22,100 | 658,138 | |||||||
Trulia, Inc. (Internet Software & Svs.) | (a) | 16,397 | 754,754 | |||||||
WebMD Health Corp. (Internet Software & Svs.) | (a) | 11,450 | 452,848 | |||||||
Cavium, Inc. (Semiconductors & Equip.) | (a) | 25,560 | 1,580,119 |
68 | (continued) |
Ohio National Fund, Inc. | Capital Growth Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Common Stocks (Continued) | Shares | Value | ||||||||
INFORMATION TECHNOLOGY (continued) | ||||||||||
Kulicke & Soffa Industries, Inc. (Semiconductors & Equip.) | (a) | 20,006 | $ | 289,287 | ||||||
RF Micro Devices, Inc. (Semiconductors & Equip.) | (a) | 35,502 | 588,978 | |||||||
Teradyne, Inc. (Semiconductors & Equip.) | 21,062 | 416,817 | ||||||||
Veeco Instruments, Inc. (Semiconductors & Equip.) | (a) | 26,546 | 925,924 | |||||||
Aspen Technology, Inc. (Software) | (a) | 17,053 | 597,196 | |||||||
FireEye, Inc. (Software) | (a) | 23,380 | 738,340 | |||||||
Fortinet, Inc. (Software) | (a) | 28,572 | 876,018 | |||||||
Guidewire Software, Inc. (Software) | (a) | 14,048 | 711,250 | |||||||
Imperva, Inc. (Software) | (a) | 23,024 | 1,138,076 | |||||||
Manhattan Associates, Inc. (Software) | (a) | 8,559 | 348,522 | |||||||
PTC, Inc. (Software) | (a) | 14,167 | 519,221 | |||||||
Qualys, Inc. (Software) | (a) | 25,959 | 979,952 | |||||||
Tableau Software, Inc. Class A (Software) | (a) | 6,377 | 540,515 | |||||||
Ultimate Software Group, Inc. / The (Software) | (a) | 5,214 | 765,493 | |||||||
Varonis Systems, Inc. (Software) | (a) | 12,360 | 405,779 | |||||||
|
| |||||||||
18,070,238 | ||||||||||
|
| |||||||||
MATERIALS – 6.1% | ||||||||||
Chemtura Corp. (Chemicals) | (a) | 9,816 | 242,750 | |||||||
Huntsman Corp. (Chemicals) | 45,666 | 1,040,271 |
Common Stocks (Continued) | Shares | Value | ||||||||
MATERIALS (continued) | ||||||||||
Quaker Chemical Corp. (Chemicals) | 18,514 | $ | 1,704,029 | |||||||
Martin Marietta Materials, Inc. (Construction Materials) | 7,395 | 815,816 | ||||||||
RTI International Metals, Inc. (Metals & Mining) | (a) | 32,594 | 823,324 | |||||||
|
| |||||||||
4,626,190 | ||||||||||
|
| |||||||||
Total Common Stocks (Cost $60,389,923) | $ | 75,165,650 | ||||||||
|
| |||||||||
Money Market Funds – 0.5% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds | ||||||||||
Money Market Portfolio – Class I | 369,000 | $ | 369,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $369,000) | $ | 369,000 | ||||||||
|
| |||||||||
Total Investments – 100.1% (Cost $60,758,923) | (b) | $ | 75,534,650 | |||||||
Liabilities in Excess of Other Assets – (0.1)% | (43,505) | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 75,491,145 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Non-income producing security. |
(b) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
69 |
Ohio National Fund, Inc. | Nasdaq-100® Index Portfolio |
Objective/Strategy
The Nasdaq-100® Index Portfolio seeks long-term growth of capital by investing primarily in stocks that are included in the Nasdaq-100® Index. Unlike the other Portfolios of the Fund, the Nasdaq-100® Index Portfolio is a non-diversified portfolio for purposes of Section 5(b) of the Investment Company Act of 1940, as amended.
Performance as of December 31, 2014
Average Annual returns | ||||
One year | 18.77% | |||
Five years | 18.59% | |||
Ten years | 10.37% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Nasdaq-100® Index Portfolio returned 18.77% versus 19.40% for the current benchmark, the Nasdaq-100® Index.
The Portfolio’s correlation to the index for the year was 99.9%. The high correlation is due to the fact that the Portfolio invests in each of the 100 stocks in the index. The Portfolio also invests in Powershares QQQ Trust Series 1, an exchange traded fund that mimics the holdings and returns of the Nasdaq-100® Index.
The largest contributors to the index return were Apple, Inc., Microsoft Corp., Intel Corp., Facebook Inc., and Amgen, Inc. The largest detractors for the index in 2014 were Amazon.com, Inc., Vimpelcom Ltd., Google, Inc., Vodafone Group PLC, and Mattel, Inc.(1)
2014 was a very positive year for equities, fueled by a very accommodating Federal Reserve. In 2014, we saw a continued improvement in the economy, an improvement in the housing market, and less public policy uncertainty. Multiples for the Nasdaq 100 expanded in 2014, with the price to earnings ratio starting at 21.67 times at the end of 2013 to 24.08 times at the end of 2014, and net profit margins have continued to expand. Consumer sentiment continued to improve throughout 2014, as the unemployment rate fell from 6.97% at the end of 2013 to 5.70% at the end of 2014.
2015 should be another good year for equities. Low oil prices may continue to provide a tailwind to the economy, and to Gross Domestic Product growth, as the U.S. is a net importer of oil. However, net exporters of oil will be hurt. Quantitative easing is coming to an end in the U.S., with the Federal Reserve on pace to raise its policy rate late in 2015. We would expect equity gains to match earnings growth, which analysts are predicting to be around 6% to 8% for 2015.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting. Investors cannot invest in an index. Although they can invest in its underlying securities or funds.
The Nasdaq-100® Index is a modified capitalization-weighted index of the 100 largest domestic and international non-financial companies listed on the NASDAQ Stock Market. The index presented herein includes the effects of reinvested dividends.
The Nasdaq-100®, Nasdaq-100 Index®, and Nasdaq® are registered trademarks of The NASDAQ OMX Group, Inc. (which with its affiliates is referred to as “NASDAQ OMX”). Ohio National Investments, Inc. has licensed these marks for the Portfolio’s use. NASDAQ OMX has not passed on the Portfolio’s legality or suitability. NASDAQ OMX does not sponsor, endorse, sell or promote the Portfolio. NASDAQ OMX MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE PORTFOLIO.
70 | (continued) |
Ohio National Fund, Inc. | Nasdaq-100® Index Portfolio |
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 96.7 | |||
Exchange Traded Funds | 3.3 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Apple, Inc. | 13.0 | |||
2. Microsoft Corp. | 7.7 | |||
3. Google, Inc. Class C | 3.6 | |||
4. Intel Corp. | 3.5 | |||
5. Facebook, Inc. Class A | 3.5 | |||
6. PowerShares QQQ Trust Series 1 | 3.4 | |||
7. Google, Inc. Class A | 3.0 | |||
8. Amazon.com, Inc. | 2.9 | |||
9. Cisco Systems, Inc. | 2.9 | |||
10. Gilead Sciences, Inc. | 2.9 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Information Technology | 56.3 | |||
Consumer Discretionary | 18.3 | |||
Health Care | 14.2 | |||
Consumer Staples | 4.4 | |||
Industrials | 2.4 | |||
Telecommunication Services | 0.8 | |||
Materials | 0.3 | |||
|
| |||
96.7 | ||||
|
|
71 |
Ohio National Fund, Inc. | Nasdaq-100® Index Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 96.7% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 18.3% | ||||||||||
Tesla Motors, Inc. (Automobiles) | (a) | 3,050 | $ | 678,350 | ||||||
Marriott International, Inc. Class A (Hotels, Restaurants & Leisure) | 6,925 | 540,358 | ||||||||
Starbucks Corp. (Hotels, Restaurants & Leisure) | 18,250 | 1,497,412 | ||||||||
Wynn Resorts Ltd. (Hotels, Restaurants & Leisure) | 2,475 | 368,181 | ||||||||
Garmin Ltd. (Household Durables) | 4,675 | 246,980 | ||||||||
Amazon.com, Inc. (Internet & Catalog Retail) | (a) | 11,300 | 3,506,955 | |||||||
Liberty Interactive Corp. Class A (Internet & Catalog Retail) | (a) | 10,900 | 320,678 | |||||||
Liberty Ventures (Internet & Catalog Retail) | (a) | 3,288 | 124,023 | |||||||
Netflix, Inc. (Internet & Catalog Retail) | (a) | 1,475 | 503,875 | |||||||
Priceline Group, Inc. / The (Internet & Catalog Retail) | (a) | 1,265 | 1,442,366 | |||||||
TripAdvisor, Inc. (Internet & Catalog Retail) | (a) | 3,175 | 237,045 | |||||||
Mattel, Inc. (Leisure Products) | 8,275 | 256,070 | ||||||||
Charter Communications, Inc. Class A (Media) | (a) | 2,675 | 445,709 | |||||||
Comcast Corp. Class A (Media) | 52,472 | 3,043,901 | ||||||||
Comcast Corp. Special Class A (Media) | 10,150 | 584,285 | ||||||||
DIRECTV (Media) | (a) | 12,250 | 1,062,075 | |||||||
Discovery Communications, Inc. Class A (Media) | (a) | 3,625 | 124,881 | |||||||
Discovery Communications, Inc. Class C (Media) | (a) | 7,000 | 236,040 | |||||||
DISH Network Corp. Class A (Media) | (a) | 5,425 | 395,428 | |||||||
Liberty Global PLC Class A (Media) | (a) | 6,125 | 307,506 | |||||||
Liberty Global PLC Class C (Media) | (a) | 15,700 | 758,467 | |||||||
Liberty Media Corp. Class A (Media) | (a) | 2,550 | 89,939 | |||||||
Liberty Media Corp. Class C (Media) | (a) | 5,575 | 195,292 | |||||||
Sirius XM Holdings, Inc. (Media) | (a) | 134,050 | 469,175 | |||||||
Twenty-First Century Fox, Inc. Class A (Media) | 33,125 | 1,272,166 | ||||||||
Twenty-First Century Fox, Inc. Class B (Media) | 19,475 | 718,433 | ||||||||
Viacom, Inc. Class B (Media) | 8,775 | 660,319 | ||||||||
Dollar Tree, Inc. (Multiline Retail) | (a) | 5,025 | 353,659 | |||||||
Bed Bath & Beyond, Inc. (Specialty Retail) | (a) | 4,525 | 344,669 | |||||||
O’Reilly Automotive, Inc. (Specialty Retail) | (a) | 2,475 | 476,734 | |||||||
Ross Stores, Inc. (Specialty Retail) | 5,125 | 483,082 | ||||||||
Staples, Inc. (Specialty Retail) | 15,600 | 282,672 | ||||||||
Tractor Supply Co. (Specialty Retail) | 3,325 | 262,076 | ||||||||
|
| |||||||||
22,288,801 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 4.4% | ||||||||||
Monster Beverage Corp. (Beverages) | (a) | 4,100 | 444,235 | |||||||
Costco Wholesale Corp. (Food & Staples Retailing) | 10,685 | 1,514,599 | ||||||||
Whole Foods Market, Inc. (Food & Staples Retailing) | 8,775 | 442,435 | ||||||||
Keurig Green Mountain, Inc. (Food Products) | 3,950 | 522,960 | ||||||||
Kraft Foods Group, Inc. (Food Products) | 14,375 | 900,737 | ||||||||
Mondelez International, Inc. Class A (Food Products) | 40,975 | 1,488,417 | ||||||||
|
| |||||||||
5,313,383 | ||||||||||
|
| |||||||||
HEALTH CARE – 14.2% | ||||||||||
Alexion Pharmaceuticals, Inc. (Biotechnology) | (a) | 4,850 | 897,396 | |||||||
Amgen, Inc. (Biotechnology) | 18,547 | 2,954,352 | ||||||||
Biogen Idec, Inc. (Biotechnology) | (a) | 5,750 | 1,951,837 | |||||||
Celgene Corp. (Biotechnology) | (a) | 19,475 | 2,178,473 | |||||||
Gilead Sciences, Inc. (Biotechnology) | (a) | 36,800 | 3,468,768 | |||||||
Regeneron Pharmaceuticals, Inc. (Biotechnology) | (a) | 2,425 | 994,856 | |||||||
Vertex Pharmaceuticals, Inc. (Biotechnology) | (a) | 5,875 | 697,950 | |||||||
Intuitive Surgical, Inc. (Health Care Equip. & Supplies) | (a) | 875 | 462,823 | |||||||
Catamaran Corp. (Health Care Providers & Svs.) | (a) | 5,050 | 261,337 | |||||||
Express Scripts Holding Co. (Health Care Providers & Svs.) | (a) | 17,900 | 1,515,593 | |||||||
Henry Schein, Inc. (Health Care Providers & Svs.) | (a) | 2,050 | 279,108 | |||||||
Cerner Corp. (Health Care Technology) | (a) | 8,325 | 538,295 | |||||||
Illumina, Inc. (Life Sciences Tools & Svs.) | (a) | 3,475 | 641,415 | |||||||
Mylan, Inc. (Pharmaceuticals) | (a) | 9,125 | 514,376 | |||||||
|
| |||||||||
17,356,579 | ||||||||||
|
|
Common Stocks (Continued) | Shares | Value | ||||||||
INDUSTRIALS – 2.4% | ||||||||||
C.H. Robinson Worldwide, Inc. (Air Freight & Logistics) | 3,575 | $ | 267,732 | |||||||
Expeditors International of Washington, Inc. (Air Freight & Logistics) | 4,700 | 209,667 | ||||||||
American Airlines Group, Inc. (Airlines) | 17,500 | 938,525 | ||||||||
Stericycle, Inc. (Commercial Svs. & Supplies) | (a) | 2,075 | 271,991 | |||||||
PACCAR, Inc. (Machinery) | 8,639 | 587,538 | ||||||||
Verisk Analytics, Inc. Class A (Professional Svs.) | (a) | 4,025 | 257,801 | |||||||
Fastenal Co. (Trading Companies & Distributors) | 7,225 | 343,621 | ||||||||
|
| |||||||||
2,876,875 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 56.3% | ||||||||||
Cisco Systems, Inc. (Communications Equip.) | 124,750 | 3,469,921 | ||||||||
QUALCOMM, Inc. (Communications Equip.) | 40,570 | 3,015,568 | ||||||||
Akamai Technologies, Inc. (Internet Software & Svs.) | (a) | 4,350 | 273,876 | |||||||
Baidu, Inc. – ADR (Internet Software & Svs.) | (a) | 6,750 | 1,538,798 | |||||||
eBay, Inc. (Internet Software & Svs.) | (a) | 30,310 | 1,700,997 | |||||||
Equinix, Inc. (Internet Software & Svs.) | 1,343 | 304,498 | ||||||||
Facebook, Inc. Class A (Internet Software & Svs.) | (a) | 54,250 | 4,232,585 | |||||||
Google, Inc. Class A (Internet Software & Svs.) | (a) | 6,950 | 3,688,087 | |||||||
Google, Inc. Class C (Internet Software & Svs.) | (a) | 8,275 | 4,355,960 | |||||||
Yahoo!, Inc. (Internet Software & Svs.) | (a) | 23,110 | 1,167,286 | |||||||
Automatic Data Processing, Inc. (IT Svs.) | 11,750 | 979,598 | ||||||||
Cognizant Technology Solutions Corp. Class A (IT Svs.) | (a) | 14,850 | 782,001 | |||||||
Fiserv, Inc. (IT Svs.) | (a) | 5,949 | 422,201 | |||||||
Paychex, Inc. (IT Svs.) | 8,845 | 408,374 | ||||||||
Altera Corp. (Semiconductors & Equip.) | 7,425 | 274,280 | ||||||||
Analog Devices, Inc. (Semiconductors & Equip.) | 7,675 | 426,116 | ||||||||
Applied Materials, Inc. (Semiconductors & Equip.) | 29,725 | 740,747 | ||||||||
Avago Technologies Ltd. (Semiconductors & Equip.) | 6,175 | 621,143 | ||||||||
Broadcom Corp. Class A (Semiconductors & Equip.) | 13,225 | 573,039 | ||||||||
Intel Corp. (Semiconductors & Equip.) | 117,970 | 4,281,131 | ||||||||
KLA-Tencor Corp. (Semiconductors & Equip.) | 4,025 | 283,038 | ||||||||
Lam Research Corp. (Semiconductors & Equip.) | 3,875 | 307,443 | ||||||||
Linear Technology Corp. (Semiconductors & Equip.) | 5,830 | 265,848 | ||||||||
Micron Technology, Inc. (Semiconductors & Equip.) | (a) | 26,200 | 917,262 | |||||||
NVIDIA Corp. (Semiconductors & Equip.) | 13,262 | 265,903 | ||||||||
NXP Semiconductors NV (Semiconductors & Equip.) | (a) | 5,625 | 429,750 | |||||||
Texas Instruments, Inc. (Semiconductors & Equip.) | 25,775 | 1,378,060 | ||||||||
Xilinx, Inc. (Semiconductors & Equip.) | 6,455 | 279,437 | ||||||||
Activision Blizzard, Inc. (Software) | 17,550 | 353,633 | ||||||||
Adobe Systems, Inc. (Software) | (a) | 12,180 | 885,486 | |||||||
Autodesk, Inc. (Software) | (a) | 5,550 | 333,333 | |||||||
CA, Inc. (Software) | 10,850 | 330,383 | ||||||||
Check Point Software Technologies Ltd. (Software) | (a) | 4,645 | 364,958 | |||||||
Citrix Systems, Inc. (Software) | (a) | 3,925 | 250,415 | |||||||
Electronic Arts, Inc. (Software) | (a) | 7,575 | 356,139 | |||||||
Intuit, Inc. (Software) | 6,955 | 641,181 | ||||||||
Microsoft Corp. (Software) | 201,100 | 9,341,095 | ||||||||
Symantec Corp. (Software) | 16,848 | 432,235 | ||||||||
Apple, Inc. (Tech. Hardware, Storage & Periph.) | 143,085 | 15,793,722 | ||||||||
NetApp, Inc. (Tech. Hardware, Storage & Periph.) | 7,610 | 315,435 | ||||||||
SanDisk Corp. (Tech. Hardware, Storage & Periph.) | 5,375 | 526,643 | ||||||||
Seagate Technology PLC (Tech. Hardware, Storage & Periph.) | 7,975 | 530,338 | ||||||||
Western Digital Corp. (Tech. Hardware, Storage & Periph.) | 5,675 | 628,223 | ||||||||
|
| |||||||||
68,466,166 | ||||||||||
|
| |||||||||
MATERIALS – 0.3% | ||||||||||
Sigma-Aldrich Corp. (Chemicals) | 2,900 | 398,083 | ||||||||
|
|
72 | (continued) |
Ohio National Fund, Inc. | Nasdaq-100® Index Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Common Stocks (Continued) | Shares | Value | ||||||||
TELECOMMUNICATION SERVICES – 0.8% |
| |||||||||
SBA Communications Corp. Class A (Wireless Telecom. Svs.) | (a) | 3,150 | $ | 348,894 | ||||||
VimpelCom Ltd. – ADR (Wireless Telecom. Svs.) | 42,850 | 178,899 | ||||||||
Vodafone Group PLC – ADR (Wireless Telecom. Svs.) | 11,879 | 405,905 | ||||||||
|
| |||||||||
933,698 | ||||||||||
|
| |||||||||
Total Common Stocks (Cost $69,492,544) | $ | 117,633,585 | ||||||||
|
|
Exchange Traded Funds – 3.4% | Shares | Value | ||||||||
PowerShares QQQ Trust Series 1 | 39,840 | $ | 4,113,480 | |||||||
|
| |||||||||
Total Exchange Traded Funds (Cost $4,122,681) | $ | 4,113,480 | ||||||||
|
| |||||||||
Total Investments – 100.1% (Cost $73,615,225) | (b) | $ | 121,747,065 | |||||||
Liabilities in Excess of Other Assets – (0.1)% | (60,996) | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 121,686,069 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Abbreviations:
ADR: American Depositary Receipts
Footnotes:
(a) | Non-income producing security. |
(b) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
73 |
Ohio National Fund, Inc. | Bristol Portfolio |
Objective/Strategy
The Bristol Portfolio seeks long-term growth of capital by investing primarily in common stocks of the 1,000 largest publicly traded U.S. companies in terms of market capitalization.
Performance as of December 31, 2014
Average Annual returns | ||||
One year | 13.88% | |||
Five years | 13.83% | |||
Ten years | 8.05% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Bristol Portfolio returned 13.88% versus 13.69% for the current benchmark, the S&P 500 Index.
After the large run up in the markets in 2013, many investors thought the market was overbought. Sure enough, a correction began in early January, led by biotechnology and small cap stocks. The quarter saw the U.S. economy shrink by 2.9%, the most in five years. Corporate earnings were flat and earnings per share for the S&P 500 Index constituents were down. A leading factor among investors may have been the fear of rising interest rates in 2014. When this proved to be unfounded, the market shrugged off the reality of a sluggish economy and returned to its upward trend. The momentum continued through the second quarter, with the Dow Jones Industrial Average nudging up against the 17,000 level at June’s end and breaching 18,000 in December. There may have been grounds for speculation that rates would rise in 2014, but the new Federal Reserve Chair, Janet Yellen, seemed committed to keeping rates low while inflation remained modest. Her policy was aided by large Treasury purchases in the first two quarters by foreigners who were not voting in favor of the dollar as much as fleeing a weakening Yuan and the prospect of quantitative easing by the European Central Bank. The most positive development in the latter part of the year was the collapse in oil prices, which will benefit the American consumer in 2015.
From a sector allocation perspective, the Portfolio’s overweight in Health Care following the launch of Obamacare, provided 90 basis points of relative return, and an underweight in Energy following the oil price weakness, contributed 75 basis points. The Portfolio’s absence from the Utilities sector – typical for any growth manager – detracted 44 basis points. The Portfolio’s overweight in the Consumer Discretionary sector detracted 51 basis points. From a stock selection perspective, selections in Information Technology led relative outperformance, adding 153 basis points. The key detractor was Financials selections, which detracted 87 basis points when compared to the benchmark’s Financials holdings.(1)
The Portfolio’s best performers for the year were Pharmacyclics, Inc., Whirlpool Corp., Gilead Sciences, Inc., Hewlett-Packard Co.,
and Facebook, Inc. The worst performers were Intercept Pharmaceuticals, Inc., Whiting Petroleum Corp., Clovis Oncolgy, Inc., PVH Corp. and Amazon.com, Inc. The top contributors to performance were Pharmacyclics, Inc., Hewlett-Packard Co., Valeant Pharmaceuticals International, Inc., Celgene Corp., and Time Warner, Inc. The top detractors from performance were Intercept Pharmaceuticals, Inc., Whiting Petroleum, Corp., PVH Corp., Las Vegas Sands Corp., and General Motors Co.(1)
The top contributor to the Portfolio’s performance for the period was Pharmacyclics, Inc., following approval of its blood cancer drug. Hewlett-Packard Co. contributed 85 basis points as a result of the popularity of CEO Meg Whitman, the evidence of a turnaround and the prospect of Hewlett-Packard Co. splitting into two corporations in 2015. Valeant Pharmaceuticals International, Inc. contributed 82 basis points following its successful strategy of acquiring firms rather than developing R&D in house. Celgene Corp. generated 80 basis points as a result of positive sales forecasts for its cancer drugs. Time Warner, Inc. contributed 74 basis points as a result of growth in all segments, led by its HBO unit. (1)
Detractors from performance during the period included Intercept Pharmaceuticals, Inc., which detracted 108 basis points following the release of trial data that raised safety concerns for its treatment for liver disease. Energy sector stock Whiting Petroleum Corp., detracted 71 basis points following the drop in oil prices. PVH Corp. detracted 56 basis points after a weak first quarter and lower guidance for the rest of the year. General Motors Co. detracted 40 basis points with its ongoing massive recall program. Las Vegas Sands Corp. detracted 29 basis points after increased Chinese government regulation significantly reduced revenues for its flagship Macau casino.(1)
For 2015, the prospects for the markets look good, with lower gas prices estimated to put a large windfall into the pocket of the American consumer. Such personal spending is responsible for around 70% of domestic economic activity. This will benefit almost all sectors of the economy except drillers and oil industry service companies, as the Saudi government moves aggressively to discourage the fracking investment that could render its country much less important in the supply of energy to the U.S. Absent an external shock like Russia’s problems – which should not greatly affect domestic firms – the corporate profit picture looks good. Low interest rates permit share buy backs that support the current prices and earnings multiples are not excessive. We can expect rising interest rates later in 2015, but the initial impact will likely be quite small. Equities are not the only alternative to low fixed income returns, but they remain the default setting for many investors, including those who are still sitting on the sidelines in spite of the new record highs for the S&P 500 Index.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
74 | (continued) |
Ohio National Fund, Inc. | Bristol Portfolio (Continued) |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The S&P 500 Index is a capitalization-weighted index designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index presented herein includes the effects of reinvested dividends.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 99.1 | |||
Money Market Funds and | 0.9 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Apple, Inc. | 3.1 | |||
2. Clovis Oncology, Inc. | 2.6 | |||
3. Intel Corp. | 2.5 | |||
4. Microsoft Corp. | 2.4 | |||
5. Yahoo!, Inc. | 2.4 | |||
6. Hewlett-Packard Co. | 2.4 | |||
7. Adobe Systems, Inc. | 2.4 | |||
8. Celgene Corp. | 2.4 | |||
9. JPMorgan Chase & Co. | 2.4 | |||
10. Actavis PLC | 2.3 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Health Care | 26.9 | |||
Information Technology | 24.5 | |||
Financials | 19.2 | |||
Consumer Discretionary | 11.5 | |||
Industrials | 8.4 | |||
Materials | 3.8 | |||
Energy | 3.5 | |||
Consumer Staples | 1.3 | |||
|
| |||
99.1 | ||||
|
|
75 |
Ohio National Fund, Inc. | Bristol Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 99.1% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 11.5% | ||||||||||
Jarden Corp. (Household Durables) | (a) | 102,575 | $ | 4,911,291 | ||||||
Whirlpool Corp. (Household Durables) | 24,966 | 4,836,913 | ||||||||
CBS Corp. Class B (Media) | 45,356 | 2,510,001 | ||||||||
Comcast Corp. Class A (Media) | 82,470 | 4,784,085 | ||||||||
Time Warner, Inc. (Media) | 56,858 | 4,856,810 | ||||||||
PVH Corp. (Textiles, Apparel & Luxury Goods) | 36,526 | 4,681,537 | ||||||||
|
| |||||||||
26,580,637 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 1.3% | ||||||||||
Molson Coors Brewing Co. Class B (Beverages) | 41,681 | 3,106,068 | ||||||||
|
| |||||||||
ENERGY – 3.5% | ||||||||||
Anadarko Petroleum Corp. (Oil, Gas & Consumable Fuels) | 26,062 | 2,150,115 | ||||||||
Devon Energy Corp. (Oil, Gas & Consumable Fuels) | 59,602 | 3,648,238 | ||||||||
EOG Resources, Inc. (Oil, Gas & Consumable Fuels) | 24,451 | 2,251,204 | ||||||||
|
| |||||||||
8,049,557 | ||||||||||
|
| |||||||||
FINANCIALS – 19.2% | ||||||||||
Bank of America Corp. (Banks) | 265,208 | 4,744,571 | ||||||||
Citigroup, Inc. (Banks) | 13,402 | 725,182 | ||||||||
JPMorgan Chase & Co. (Banks) | 87,463 | 5,473,434 | ||||||||
M&T Bank Corp. (Banks) | 37,466 | 4,706,479 | ||||||||
PNC Financial Services Group, Inc. / The (Banks) | 52,185 | 4,760,838 | ||||||||
Capital One Financial Corp. (Consumer Finance) | 57,413 | 4,739,443 | ||||||||
Hartford Financial Services Group, Inc. / The (Insurance) | 113,221 | 4,720,183 | ||||||||
Lincoln National Corp. (Insurance) | 88,098 | 5,080,612 | ||||||||
MetLife, Inc. (Insurance) | 87,366 | 4,725,627 | ||||||||
Prudential Financial, Inc. (Insurance) | 53,806 | 4,867,291 | ||||||||
|
| |||||||||
44,543,660 | ||||||||||
|
| |||||||||
HEALTH CARE – 26.9% | ||||||||||
Biogen Idec, Inc. (Biotechnology) | (a) | 13,450 | 4,565,602 | |||||||
Celgene Corp. (Biotechnology) | (a) | 49,715 | 5,561,120 | |||||||
Clovis Oncology, Inc. (Biotechnology) | (a) | 107,224 | 6,004,544 | |||||||
Intercept Pharmaceuticals, Inc. (Biotechnology) | (a) | 24,847 | 3,876,132 | |||||||
Pharmacyclics, Inc. (Biotechnology) | (a) | 33,420 | 4,085,929 | |||||||
Medtronic, Inc. (Health Care Equip. & Supplies) | 65,594 | 4,735,887 | ||||||||
St. Jude Medical, Inc. (Health Care Equip. & Supplies) | 70,619 | 4,592,354 | ||||||||
Humana, Inc. (Health Care Providers & Svs.) | 33,237 | 4,773,830 | ||||||||
UnitedHealth Group, Inc. (Health Care Providers & Svs.) | 44,783 | 4,527,113 | ||||||||
Thermo Fisher Scientific, Inc. (Life Sciences Tools & Svs.) | 37,236 | 4,665,298 |
Common Stocks (Continued) | Shares | Value | ||||||||
HEALTH CARE (continued) | ||||||||||
Actavis PLC (Pharmaceuticals) | (a) | 21,053 | $ | 5,419,253 | ||||||
Mylan, Inc. (Pharmaceuticals) | (a) | 83,338 | 4,697,763 | |||||||
Valeant Pharmaceuticals International, Inc. (Pharmaceuticals) | (a) | 33,963 | 4,860,445 | |||||||
|
| |||||||||
62,365,270 | ||||||||||
|
| |||||||||
INDUSTRIALS – 8.4% | ||||||||||
Raytheon Co. (Aerospace & Defense) | 44,757 | 4,841,365 | ||||||||
United Technologies Corp. (Aerospace & Defense) | 40,883 | 4,701,545 | ||||||||
FedEx Corp. (Air Freight & Logistics) | 28,653 | 4,975,880 | ||||||||
American Airlines Group, Inc. (Airlines) | 94,055 | 5,044,170 | ||||||||
|
| |||||||||
19,562,960 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 24.5% | ||||||||||
Cisco Systems, Inc. (Communications Equip.) | 192,556 | 5,355,945 | ||||||||
Facebook, Inc. Class A (Internet Software & Svs.) | (a) | 63,072 | 4,920,877 | |||||||
Google, Inc. Class A (Internet Software & Svs.) | (a) | 5,136 | 2,725,470 | |||||||
Google, Inc. Class C (Internet Software & Svs.) | (a) | 6,292 | 3,312,109 | |||||||
Yahoo!, Inc. (Internet Software & Svs.) | (a) | 111,829 | 5,648,483 | |||||||
VeriFone Systems, Inc. (IT Svs.) | (a) | 100 | 3,720 | |||||||
Altera Corp. (Semiconductors & Equip.) | 138,621 | 5,120,660 | ||||||||
Intel Corp. (Semiconductors & Equip.) | 158,940 | 5,767,933 | ||||||||
Adobe Systems, Inc. (Software) | (a) | 76,850 | 5,586,995 | |||||||
Microsoft Corp. (Software) | 121,730 | 5,654,358 | ||||||||
Apple, Inc. (Tech. Hardware, Storage & Periph.) | 64,881 | 7,161,565 | ||||||||
Hewlett-Packard Co. (Tech. Hardware, Storage & Periph.) | 140,435 | 5,635,657 | ||||||||
|
| |||||||||
56,893,772 | ||||||||||
|
| |||||||||
MATERIALS – 3.8% | ||||||||||
Huntsman Corp. (Chemicals) | 178,600 | 4,068,508 | ||||||||
Monsanto Co. (Chemicals) | 39,251 | 4,689,317 | ||||||||
|
| |||||||||
8,757,825 | ||||||||||
|
| |||||||||
Total Common Stocks (Cost $208,440,352) | $ | 229,859,749 | ||||||||
|
| |||||||||
Money Market Funds – 0.5% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds | 1,189,000 | $ | 1,189,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $1,189,000) | $ | 1,189,000 | ||||||||
|
| |||||||||
Total Investments – 99.6% (Cost $209,629,352) | (b) | $ | 231,048,749 | |||||||
Other Assets in Excess of Liabilities – 0.4% | 967,833 | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 232,016,582 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Non-income producing security. |
(b) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
76 |
Ohio National Fund, Inc. | Bryton Growth Portfolio |
Objective/Strategy
The Bryton Growth Portfolio seeks long-term growth of capital by investing primarily in common stocks of growth-oriented U.S. companies smaller than the 500 largest publicly traded U.S. companies in terms of market capitalization.
Performance as of December 31, 2014
Average Annual returns | ||||
One year | 6.17% | |||
Five years | 13.35% | |||
Ten years | 7.47% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more, or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Bryton Growth Portfolio returned 6.17% versus 5.60% for the current benchmark, the Russell 2000 Growth Index.
After the large run up in the markets in 2013, many investors thought the market was overbought. Sure enough, a correction began in early January, led by biotechnology and small cap stocks. The quarter saw the U.S. economy shrink by 2.9%, the most in five years. Corporate earnings were flat and earnings per share for the S&P 500 Index constituents were down. A leading factor among investors may have been the fear of rising interest rates in 2014. When this proved to be unfounded, the market shrugged off the reality of a sluggish economy and returned to its upward trend. The momentum continued through the second quarter, with the Dow Jones Industrial Average nudging up against the 17,000 level at June’s end and breaching 18,000 in December. There may have been grounds for speculation that rates would rise in 2014, but the new Federal Reserve Chair, Janet Yellen, seemed committed to keeping rates low while inflation remained modest. Her policy was aided by large Treasury purchases in the first two quarters by foreigners who were not voting in favor of the dollar as much as fleeing a weakening Yuan and the prospect of quantitative easing by the European Central Bank. The most positive development in the latter part of the year was the collapse in oil prices, which will benefit the American consumer in 2015.
From a sector allocation perspective, the Portfolio was underweight in Health Care following the launch of Obamacare, which detracted 63 basis points from relative performance. The Portfolio’s overweight in Industrials detracted 38 basis points. The Portfolio’s underweight in Materials generated 34 basis points. The overweight in the Energy sector generated 33 basis points. The Portfolio’s modest overweight in the Consumer Discretionary sector generated 26 basis points. From a stock selection perspective, selections in Information Technology and Industrials provided the most contribution relative to the benchmark, adding 223 and 206 basis points of relative performance, respectively. Energy detracted 248 basis
points, as the Portfolio’s Energy selections underperformed the benchmark’s Energy stocks.(1)
The Portfolio’s best performers for the year were Bluebird Bio, Inc., Intercept Pharmaceuticals, Inc., InterMune, Inc., Cavium, Inc., and Taser International, Inc. The worst performers were Quantum Fuel Systems Technologies Worldwide, Inc., Sanchez Energy Corp., Himax Technologies, Halcon Resources Corp. and Boulder Brands, Inc. The top contributors to performance were Intercept Pharmaceuticals, Inc., Bluebird Bio, Inc., Motorcar Parts of America, Inc., XPO Logistics, Inc., and Cavium, Inc. The top detractors from performance were Himax Technologies, Inc., Quantum Fuel Systems Technologies Worldwide, Inc., Sanchez Energy Corp., Stone Energy Corp., and Chart Industries, Inc.(1)
The top contributor to the Portfolio’s performance for the period was Intercept Pharmaceuticals, Inc., which contributed 257 basis points following a huge run up in January when its liver treatment drug had great promise. The stock was sold in the same month, long before the November drug test result that proved disappointing. Bluebird Bio, Inc. generated 128 basis points following good drug test results. Motorcar Parts of America, Inc. contributed 114 basis points as a result of strong after market auto parts demand. XPO Logistics, Inc. generated 100 basis points as a result of a mid-year acquisition that conforms to its strategy of building out a transport network. Cavium, Inc., a server/storage/networking chip maker, contributed 93 basis points, following announcements of a new chip project and a successful build out of China’s 4G wireless network.(1)
Detractors from performance during the period included Himax Technologies, Inc., which detracted 106 basis points following reports that Google, Inc. would not be using its product in Google Glass, as well as inventory issues at Samsung, and was sold in late May. Auto electric drive train Quantum Fuel Systems Technologies Worldwide, Inc. detracted 102 basis points following the announcement that its largest customer is forming a joint venture with a competitor. With the dramatic fall in oil prices, Sanchez Energy Corp. detracted 91 basis points, but is still held in the Portfolio, although on a reduced scale. Stone Energy Corp. detracted 67 basis points for the same reason, but was sold in November. Chart Industries, Inc., a natural gas processing and storage equipment producer, detracted 67 basis points as a result of its business in China suffering a slowdown in demand in 2014. With the slowdown in expected global liquified natural gas demand, Chart Industries, Inc. was sold throughout the year.(1)
For 2015, the prospects for the markets look good, with lower gas prices estimated to put a huge windfall into the pocket of the American consumer. Such personal spending is responsible for around 70% of domestic economic activity. This will benefit almost all sectors of the economy except drillers and oil industry service companies, as the Saudi government moves aggressively to discourage the fracking investment that could render its country much less important in the supply of energy to the U.S. Absent an external shock like Russia’s problems – which should not greatly affect domestic firms – the corporate profit picture looks good. Low interest rates permit share buy backs that support the current prices and earnings multiples are not excessive. We can expect rising interest rates later in 2015, but the initial impact will likely be quite small. Equities are not the only alternative to low fixed income returns, but they remain the default setting for many investors, including those who are still sitting on the sidelines in spite of the new record highs for the S&P 500 Index.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
77 | (continued) |
Ohio National Fund, Inc. | Bryton Growth Portfolio (Continued) |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes the Russell 2000 Index companies with higher price-to-value ratios and higher forecasted growth values. The Russell 2000 Index includes the 2000 firms from the Russell 3000 Index with the smallest market capitalizations. The Russell 3000 Index represents 98% of the investable U.S. equity market. The index presented herein includes the effects of reinvested dividends.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 99.1 | |||
Money Market Funds | 0.9 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Remy International, Inc. | 2.3 | |||
2. Phibro Animal Health Corp. Class A | 2.0 | |||
3. Prestige Brands Holdings, Inc. | 2.0 | |||
4. FARO Technologies, Inc. | 1.9 | |||
5. Healthcare Services Group, Inc. | 1.9 | |||
6. Gentherm, Inc. | 1.8 | |||
7. Neogen Corp. | 1.8 | |||
8. Textainer Group Holdings Ltd. | 1.8 | |||
9. ClubCorp Holdings, Inc. | 1.8 | |||
10. Electronics For Imaging, Inc. | 1.8 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Health Care | 28.6 | |||
Information Technology | 26.9 | |||
Consumer Discretionary | 18.7 | |||
Industrials | 16.6 | |||
Consumer Staples | 3.4 | |||
Energy | 1.8 | |||
Financials | 1.6 | |||
Materials | 1.5 | |||
|
| |||
99.1 | ||||
|
|
78 |
Ohio National Fund, Inc. | Bryton Growth Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 99.1% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 18.7% | ||||||||||
Dana Holding Corp. (Auto Components) | 86,667 | $ | 1,884,141 | |||||||
Gentherm, Inc. (Auto Components) | (a) | 90,112 | 3,299,901 | |||||||
Motorcar Parts of America, Inc. (Auto Components) | (a) | 86,612 | 2,692,767 | |||||||
Remy International, Inc. (Auto Components) | 193,583 | 4,049,756 | ||||||||
Tenneco, Inc. (Auto Components) | (a) | 33,092 | 1,873,338 | |||||||
Buffalo Wild Wings, Inc. (Hotels, Restaurants & Leisure) | (a) | 16,300 | 2,940,194 | |||||||
ClubCorp Holdings, Inc. (Hotels, Restaurants & Leisure) | 178,031 | 3,192,096 | ||||||||
Jack in the Box, Inc. (Hotels, Restaurants & Leisure) | 28,900 | 2,310,844 | ||||||||
Kona Grill, Inc. (Hotels, Restaurants & Leisure) | (a) | 123,297 | 2,846,928 | |||||||
Lands’ End, Inc. (Internet & Catalog Retail) | (a) | 44,600 | 2,406,616 | |||||||
Five Below, Inc. (Specialty Retail) | (a) | 42,889 | 1,751,158 | |||||||
Steven Madden Ltd. (Textiles, Apparel & Luxury Goods) | (a) | 69,739 | 2,219,792 | |||||||
Vince Holding Corp. (Textiles, Apparel & Luxury Goods) | (a) | 76,946 | 2,011,368 | |||||||
|
| |||||||||
33,478,899 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 3.4% | ||||||||||
Diamond Foods, Inc. (Food Products) | (a) | 3,518 | 99,313 | |||||||
J&J Snack Foods Corp. (Food Products) | 27,734 | 3,016,627 | ||||||||
TreeHouse Foods, Inc. (Food Products) | (a) | 35,200 | 3,010,656 | |||||||
|
| |||||||||
6,126,596 | ||||||||||
|
| |||||||||
ENERGY – 1.8% | ||||||||||
Diamondback Energy, Inc. (Oil, Gas & Consumable Fuels) | (a) | 34,300 | 2,050,454 | |||||||
Sanchez Energy Corp. (Oil, Gas & Consumable Fuels) | (a) | 129,250 | 1,200,733 | |||||||
|
| |||||||||
3,251,187 | ||||||||||
|
| |||||||||
FINANCIALS – 1.6% | ||||||||||
Bank of the Ozarks, Inc. (Banks) | 77,547 | 2,940,582 | ||||||||
|
| |||||||||
HEALTH CARE – 28.6% | ||||||||||
Bluebird Bio, Inc. (Biotechnology) | (a) | 30,478 | 2,795,442 | |||||||
Celldex Therapeutics, Inc. (Biotechnology) | (a) | 168,560 | 3,076,220 | |||||||
Clovis Oncology, Inc. (Biotechnology) | (a) | 53,243 | 2,981,608 | |||||||
Intercept Pharmaceuticals, Inc. (Biotechnology) | (a) | 12,727 | 1,985,412 | |||||||
Ligand Pharmaceuticals, Inc. (Biotechnology) | (a) | 53,661 | 2,855,302 | |||||||
MacroGenics, Inc. (Biotechnology) | (a) | 55,000 | 1,928,850 | |||||||
Puma Biotechnology, Inc. (Biotechnology) | (a) | 8,234 | 1,558,449 | |||||||
TESARO, Inc. (Biotechnology) | (a) | 78,300 | 2,911,977 | |||||||
Alliqua, Inc. (Health Care Equip. & Supplies) | (a) | 418,427 | 2,217,663 | |||||||
AngioDynamics, Inc. (Health Care Equip. & Supplies) | (a) | 142,000 | 2,699,420 | |||||||
Neogen Corp. (Health Care Equip. & Supplies) | (a) | 64,948 | 3,220,771 | |||||||
Wright Medical Group, Inc. (Health Care Equip. & Supplies) | (a) | 101,500 | 2,727,305 | |||||||
Acadia Healthcare Co., Inc. (Health Care Providers & Svs.) | (a) | 43,796 | 2,680,753 | |||||||
Team Health Holdings, Inc. (Health Care Providers & Svs.) | (a) | 52,400 | 3,014,572 | |||||||
WellCare Health Plans, Inc. (Health Care Providers & Svs.) | (a) | 35,002 | 2,872,264 | |||||||
Alimera Sciences, Inc. (Pharmaceuticals) | (a) | 366,354 | 2,029,601 | |||||||
BioDelivery Sciences International, Inc. (Pharmaceuticals) | (a) | 216,000 | 2,596,320 |
Common Stocks (Continued) | Shares | Value | ||||||||
HEALTH CARE (continued) | ||||||||||
Phibro Animal Health Corp. Class A (Pharmaceuticals) | 112,828 | $ | 3,559,723 | |||||||
Prestige Brands Holdings, Inc. (Pharmaceuticals) | (a) | 101,609 | 3,527,864 | |||||||
|
| |||||||||
51,239,516 | ||||||||||
|
| |||||||||
INDUSTRIALS – 16.6% | ||||||||||
GenCorp, Inc. (Aerospace & Defense) | (a) | 148,792 | 2,722,894 | |||||||
XPO Logistics, Inc. (Air Freight & Logistics) | (a) | 74,386 | 3,040,900 | |||||||
PGT, Inc. (Building Products) | (a) | 289,784 | 2,790,620 | |||||||
Healthcare Services Group, Inc. (Commercial Svs. & Supplies) | 112,269 | 3,472,480 | ||||||||
Power Solutions International, Inc. (Electrical Equip.) | (a) | 48,955 | 2,526,568 | |||||||
Mueller Water Products, Inc. Class A (Machinery) | 305,307 | 3,126,344 | ||||||||
Rexnord Corp. (Machinery) | (a) | 112,886 | 3,184,514 | |||||||
Wabash National Corp. (Machinery) | (a) | 251,210 | 3,104,956 | |||||||
DXP Enterprises, Inc. (Trading Companies & Distributors) | (a) | 49,128 | 2,482,438 | |||||||
Textainer Group Holdings Ltd. (Trading Companies & Distributors) | 93,289 | 3,201,678 | ||||||||
|
| |||||||||
29,653,392 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 26.9% | ||||||||||
Belden, Inc. (Electronic Equip., Instr. & Comp.) | 36,853 | 2,904,385 | ||||||||
Cognex Corp. (Electronic Equip., Instr. & Comp.) | (a) | 71,785 | 2,966,874 | |||||||
FARO Technologies, Inc. (Electronic Equip., Instr. & Comp.) | (a) | 55,600 | 3,485,008 | |||||||
Cvent, Inc. (Internet Software & Svs.) | (a) | 71,833 | 1,999,831 | |||||||
Demandware, Inc. (Internet Software & Svs.) | (a) | 47,402 | 2,727,511 | |||||||
Textura Corp. (Internet Software & Svs.) | (a) | 83,400 | 2,374,398 | |||||||
Euronet Worldwide, Inc. (IT Svs.) | (a) | 50,953 | 2,797,320 | |||||||
Cavium, Inc. (Semiconductors & Equip.) | (a) | 28,590 | 1,767,434 | |||||||
Cypress Semiconductor Corp. (Semiconductors & Equip.) | 201,813 | 2,881,890 | ||||||||
Microsemi Corp. (Semiconductors & Equip.) | (a) | 109,388 | 3,104,431 | |||||||
Power Integrations, Inc. (Semiconductors & Equip.) | 58,700 | 3,037,138 | ||||||||
RF Micro Devices, Inc. (Semiconductors & Equip.) | (a) | 172,569 | 2,862,920 | |||||||
Guidewire Software, Inc. (Software) | (a) | 55,747 | 2,822,471 | |||||||
Imperva, Inc. (Software) | (a) | 62,811 | 3,104,748 | |||||||
Qlik Technologies, Inc. (Software) | (a) | 102,048 | 3,152,263 | |||||||
Telenav, Inc. (Software) | (a) | 443,302 | 2,956,824 | |||||||
Electronics For Imaging, Inc. (Tech. Hardware, Storage & Periph.) | (a) | 74,525 | 3,191,906 | |||||||
|
| |||||||||
48,137,352 | ||||||||||
|
| |||||||||
MATERIALS – 1.5% | ||||||||||
PolyOne Corp. (Chemicals) | 71,034 | 2,692,899 | ||||||||
|
| |||||||||
Total Common Stocks (Cost $166,508,534) | $ | 177,520,423 | ||||||||
|
| |||||||||
Money Market Funds – 3.2% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds | ||||||||||
Money Market Portfolio – Class I | 5,753,000 | $ | 5,753,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $5,753,000) | $ | 5,753,000 | ||||||||
|
| |||||||||
Total Investments – 102.3% (Cost $172,261,534) | (b) | $ | 183,273,423 | |||||||
Liabilities in Excess of Other Assets – (2.3)% | (4,187,487) | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 179,085,936 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Non-income producing security. |
(b) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
79 |
Ohio National Fund, Inc. | Balanced Portfolio |
Objective/Strategy
The Balanced Portfolio seeks capital appreciation and income by investing normally up to 75% of its assets in equity securities of domestic and foreign companies of any market capitalization while maintaining a minimum of 25% of its assets in fixed income securities.
Performance as of December 31, 2014
Average Annual returns | ||||
One year | 5.99% | |||
Five years | 8.82% | |||
Ten years | 6.23% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Balanced Portfolio returned 5.99% versus 10.09% for the current benchmark, which is comprised of 60% S&P Composite 1500 Index and 40% Barclays Capital U.S. Universal Index.
As we entered 2014, our equity valuation model saw the domestic market as fair valued, which was significant because we had been bullish on the equity market as a whole since early 2009. With the market at about fair value, according to our methodology, the Portfolio was initially positioned relatively conservatively, with a 55% equity/45% fixed income allocation. Additionally, the Portfolio had a tight hedge on the equity holdings, using both S&P 500 Index out-of-the-money put options and S&P 500 Index out-of-the-money written call options in an attempt to reduce overall volatility. This strategy turned out to be advantageous during the first month of the year, as the equity market fell by about 3.5% due to a combination of macro-economic concerns and stretched valuations. At the same time, the fixed income market experienced a rally, as yields on the U.S.10-year Treasury fell from about 3% to about 2.6%. Due to our allocation and increased hedge, the Portfolio was able to hold up much better during this time frame, only capturing approximately a quarter of the downside equity move. This initial bout of equity volatility reduced some valuation froth within the market, and we began to see opportunities in certain sectors. Further, the combination of falling bond yields and historically tight credit spreads reduced the overall attractiveness of the bond market.
In response to the reduction in equity downside risk and relative fixed income attractiveness, we progressively adjusted the allocation of the Portfolio towards a more aggressive 70% equity / 30% fixed income split, which the Portfolio maintained the remainder of the year. Additionally, the hedge on the equity portion of the Portfolio was loosened to make way for a better opportunity to participate in the anticipated upside move. The market rallied rather aggressively with a relatively low amount of volatility through both the second and third quarters of the year. Finally, in the fourth quarter, the market experienced increased volatility, and we made
corresponding Portfolio hedge adjustments in an attempt to dampen the volatility. Specifically, from mid-September to mid-October, both the equity market and high yield corporate bond space experienced a relatively steep sell-off, as fears regarding European economic growth and the precipitous drop in oil prices drove investors away from risky assets. While we remained overweight in equities going into this time period, we increased our hedge on the Portfolio in late-September, which helped to mitigate a portion of the downside move in the markets. Additionally, as the sell-off gained steam, we took profits in our hedging position as equity valuations became more attractive. This again allowed us to capture a higher percentage of the upside move going into year end.
Overall, the Portfolio produced positive returns over the course of 2014 and was able to reduce some of the market based volatility. However, while both allocation and hedging- based decisions provided value during certain time periods, our selection effect in both the equity and fixed income segments of the Portfolio was negative in aggregate.
In the equity portion of the Portfolio, the largest sector contributor to relative performance over the course of the year was the Health Care sector. While the Portfolio was underweight the sector as a whole, we saw industry-specific opportunities that performed well, producing a large positive benchmark-relative selection effect. The Industrials sector was another key contributor to Portfolio performance, as holdings in the overweight airline industry performed well, resulting in positive total effect. All other sectors were positive contributors to Portfolio performance with the exception of the Energy sector, which fell precipitously during the second half of the year. The Energy sector as a whole also produced the largest negative total effect for the Portfolio during 2014, due to both an overweight position and underperforming holdings. Other large negative sectors included Financials, Information Technology, and Materials.(1)
Moving to individual stock performance within the Portfolio, the five best benchmark- relative contributors were Delta Air Lines, Inc., Biogen Idec, Inc., Actavis PLC, Union Pacific Corp., and Gilead Sciences, Inc. The five stocks that had the most negative benchmark-relative contribution were Oceaneering International, Inc., Whiting Petroleum Corp., Waddell & Reed Financial, Inc., Methanex Corp., and Range Resources Corp.(1)
Focusing on the fixed income portion of the Portfolio, 2014 caught virtually all investors off guard. A highly anticipated bond sell-off turned into a strong rally, as yields fell across the board. The yield on the U.S. 10-year Treasury began the year at 3.00%, but fell over the course of the year for numerous reasons, finishing at 2.17% on the last day of the year. While the downward interest rate move was relatively steady over the course of the year, corporate credit spreads saw significant volatility, especially during the second half of the year, as investors preferred the safety of U.S. Treasuries to corporate credit. This volatility was most apparent in high yield energy bonds, as investors aggressively sold out of this segment of the market due to fears about company viability. The fixed income portion of the Portfolio underperformed the broad based fixed income benchmark over the course of the year mainly due to three specific factors: lower overall duration, an under-exposure to the U.S. Treasury space, and an overweight position in high yield corporate credit, primarily high yield energy holdings. More specifically, Shelf Drilling Holdings Ltd., Drill Rigs Holdings, Inc., and Forbes Energy Services Ltd. all experienced significant sell-offs, as questions arose regarding balance sheet quality in the face of the precipitous decline in oil prices. In the corporate bond space, some of the Portfolio’s longer duration holdings in the Financials sector pro-
80 | (continued) |
Ohio National Fund, Inc. | Balanced Portfolio (Continued) |
duced strong relative returns due to both curve effect and credit spread tightening. Additionally, the Portfolio’s holdings in shorter-term, yield-to-call, high yield Telecommunication Services bonds held up well during the volatility in the second half of the year. Moreover, positions within the preferred stock segment of the Portfolio produced relatively strong returns. For example, within the real estate segment of the market, one specific holding produced a large gain due to a company issued call. Lastly, holdings within the closed-end fund segment of the market produced market-beating returns in aggregate, as either NAV-based movement or discount arbitrage opportunities were realized.(1)
Looking ahead to 2015, based on our equity valuation model, we see approximately 10% of upside in the equity market over the next nine to twelve months. While we see opportunity in all the sectors that we follow, there seems to be a distinct tilt towards the more cyclical segments of the market. This clear sector and industry value-based differentiation creates opportunities that we are looking to exploit, and the Portfolio is currently overweight in the Consumer Discretionary, Materials, and Financials sectors. The Portfolio continues to maintain a relatively neutral balanced allocation with approximately 60% in equities and 40% in fixed income (including preferred shares and closed-end funds). The equity hedge is currently targeting a beta of approximately 0.85, which is at the middle of our historical range, and will be adjusted based on our equity valuation readings. Further, we believe the volatility in the fixed income market during the latter half of 2014 has opened up numerous opportunities. We are beginning to look for specific prospects within the high yield energy segment of the market, as investors sold out of companies in this segment regardless of balance sheet strength or long-term viability. However, we will be selective in our individual bond purchases as we believe numerous risks still remain. Finally, we continue to see opportunity in uniquely structured bonds, specific preferred securities, which we believe have attractive upside profiles, and closed-end fund discount arbitrage opportunities. Regardless of how the market behaves, we will continue to manage the Portfolio with both returns and lower overall volatility in mind.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The S&P Composite 1500 Index is a broad-based capitalization-weighted index of 1500 U.S. companies and is comprised of the S&P MidCap 400, S&P 500, and the S&P SmallCap 600. It is designed for investors seeking to replicate to the performance of the U.S. equity market or benchmark against a representative universe of tradable stocks. The index presented herein includes the effects of reinvested dividends.
The Barclays Capital U.S. Universal Index represents the union of the U.S. Aggregate Index, U.S. Corporate High Yield Index. Investment Grade 144A Index, Eurodollar Index, U.S. Emerging Markets Index, and the non-ERISA portion of the Commercial Mortgage-Backed Securities (CMBS) Index. The index covers USD-denominated, taxable bonds that are rated either investment grade or high-yield.
81 | (continued) |
Ohio National Fund, Inc. | Balanced Portfolio (Continued) |
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 63.0 | |||
Corporate Bonds (3) | 22.3 | |||
Preferred Stocks (3) | 2.2 | |||
Asset-Backed / Commercial Mortgage-Backed Securities (3) | 0.5 | |||
U.S. Treasury Obligations | 6.6 | |||
Closed-End Mutual Funds | 2.4 | |||
Purchased Options | 0.3 | |||
Written Options | (0.1 | ) | ||
Money Market Funds | 2.8 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. U.S. Treasury Note 1.000%, 09/15/2017 | 2.4 | |||
2. U.S. Treasury Note 0.500%, 09/30/2016 | 2.4 | |||
3. Delta Air Lines, Inc. | 2.3 | |||
4. Comcast Corp. Class A | 2.0 | |||
5. Union Pacific Corp. | 2.0 | |||
6. McKesson Corp. | 1.9 | |||
7. Google, Inc. Class C | 1.8 | |||
8. Ashland, Inc. | 1.7 | |||
9. Signature Bank | 1.7 | |||
10. Jones Lang LaSalle, Inc. | 1.7 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors (combined): |
% of Net Assets | ||||
Financials | 20.5 | |||
Consumer Discretionary | 14.2 | |||
Information Technology | 13.3 | |||
Industrials | 10.6 | |||
Health Care | 7.0 | |||
Energy | 5.8 | |||
Materials | 5.7 | |||
Consumer Staples | 4.8 | |||
Utilities | 4.2 | |||
Telecommunication Services | 2.1 | |||
|
| |||
88.2 | ||||
|
|
82 |
Ohio National Fund, Inc. | Balanced Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 63.0% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 12.6% | ||||||||||
Starbucks Corp. (Hotels, Restaurants & Leisure) | (e) | 100,000 | $ | 8,205,000 | ||||||
Jarden Corp. (Household Durables) | (a) | 167,197 | 8,005,392 | |||||||
CBS Corp. Class B (Media) | 220,100 | 12,180,334 | ||||||||
Comcast Corp. Class A (Media) | (e) | 293,895 | 17,048,849 | |||||||
Walt Disney Co. / The (Media) | 135,280 | 12,742,023 | ||||||||
Macy’s, Inc. (Multiline Retail) | 174,600 | 11,479,950 | ||||||||
Foot Locker, Inc. (Specialty Retail) | 150,000 | 8,427,000 | ||||||||
Home Depot, Inc. / The (Specialty Retail) | 75,000 | 7,872,750 | ||||||||
Lumber Liquidators Holdings, Inc. (Specialty Retail) | (a) | 70,000 | 4,641,700 | |||||||
Tractor Supply Co. (Specialty Retail) | (e) | 53,700 | 4,232,634 | |||||||
Gildan Activewear, Inc. (Textiles, Apparel & Luxury Goods) | 177,500 | 10,037,625 | ||||||||
|
| |||||||||
104,873,257 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 3.0% | ||||||||||
Costco Wholesale Corp. (Food & Staples Retailing) | 33,930 | 4,809,577 | ||||||||
CVS Health Corp. (Food & Staples Retailing) | 100,000 | 9,631,000 | ||||||||
Tyson Foods, Inc. Class A (Food Products) | 200,000 | 8,018,000 | ||||||||
Reynolds American, Inc. (Tobacco) | 41,120 | 2,642,782 | ||||||||
|
| |||||||||
25,101,359 | ||||||||||
|
| |||||||||
ENERGY – 4.2% | ||||||||||
Bristow Group, Inc. (Energy Equip. & Svs.) | 77,110 | 5,073,067 | ||||||||
FMC Technologies, Inc. (Energy Equip. & Svs.) | (a)(e) | 38,130 | 1,786,009 | |||||||
Oceaneering International, Inc. (Energy Equip. & Svs.) | (e) | 59,520 | 3,500,371 | |||||||
Schlumberger Ltd. (Energy Equip. & Svs.) | 80,000 | 6,832,800 | ||||||||
EQT Corp. (Oil, Gas & Consumable Fuels) | 45,010 | 3,407,257 | ||||||||
Range Resources Corp. (Oil, Gas & Consumable Fuels) | 50,000 | 2,672,500 | ||||||||
Valero Energy Corp. (Oil, Gas & Consumable Fuels) | 170,370 | 8,433,315 | ||||||||
Whiting Petroleum Corp. (Oil, Gas & Consumable Fuels) | (a) | 100,000 | 3,300,000 | |||||||
|
| |||||||||
35,005,319 | ||||||||||
|
| |||||||||
FINANCIALS – 11.3% | ||||||||||
Signature Bank (Banks) | (a) | 113,270 | 14,267,489 | |||||||
SVB Financial Group (Banks) | (a) | 110,000 | 12,767,700 | |||||||
Wells Fargo & Co. (Banks) | 150,000 | 8,223,000 | ||||||||
Invesco Ltd. (Capital Markets) | 202,900 | 8,018,608 | ||||||||
Waddell & Reed Financial, Inc. Class A (Capital Markets) | 152,000 | 7,572,640 | ||||||||
Discover Financial Services (Consumer Finance) | 162,080 | 10,614,619 | ||||||||
Encore Capital Group, Inc. (Consumer Finance) | (a) | 235,370 | 10,450,428 | |||||||
Arthur J. Gallagher & Co. (Insurance) | 175,670 | 8,270,544 | ||||||||
Jones Lang LaSalle, Inc. (Real Estate Mgmt. & Development) | (e) | 95,000 | 14,243,350 | |||||||
|
| |||||||||
94,428,378 | ||||||||||
|
| |||||||||
HEALTH CARE – 5.6% | ||||||||||
Biogen Idec, Inc. (Biotechnology) | (a) | 23,000 | 7,807,350 | |||||||
Gilead Sciences, Inc. (Biotechnology) | (a) | 60,530 | 5,705,558 | |||||||
St. Jude Medical, Inc. (Health Care Equip. & Supplies) | 100,000 | 6,503,000 | ||||||||
McKesson Corp. (Health Care Providers & Svs.) | 75,000 | 15,568,500 | ||||||||
Actavis PLC (Pharmaceuticals) | (a) | 43,700 | 11,248,817 | |||||||
|
| |||||||||
46,833,225 | ||||||||||
|
| |||||||||
INDUSTRIALS – 7.0% | ||||||||||
Curtiss-Wright Corp. (Aerospace & Defense) | 89,563 | 6,322,252 | ||||||||
Precision Castparts Corp. (Aerospace & Defense) | 35,083 | 8,450,793 | ||||||||
Delta Air Lines, Inc. (Airlines) | (e) | 385,000 | 18,938,150 | |||||||
Tyco International PLC (Commercial Svs. & Supplies) | 69,300 | 3,039,498 | ||||||||
Genesee & Wyoming, Inc. Class A (Road & Rail) | (a) | 40,200 | 3,614,784 | |||||||
Norfolk Southern Corp. (Road & Rail) | 10,700 | 1,172,827 | ||||||||
Union Pacific Corp. (Road & Rail) | (e) | 138,160 | 16,459,001 | |||||||
|
| |||||||||
57,997,305 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 11.4% | ||||||||||
SYNNEX Corp. (Electronic Equip., Instr. & Comp.) | 70,000 | 5,471,200 | ||||||||
Facebook, Inc. Class A (Internet Software & Svs.) | (a) | 150,000 | 11,703,000 | |||||||
Google, Inc. Class A (Internet Software & Svs.) | (a) | 700 | 371,462 | |||||||
Google, Inc. Class C (Internet Software & Svs.) | (a) | 27,700 | 14,581,280 | |||||||
Accenture PLC Class A (IT Svs.) | 145,786 | 13,020,148 | ||||||||
Alliance Data Systems Corp. (IT Svs.) | (a) | 46,800 | 13,387,140 | |||||||
DST Systems, Inc. (IT Svs.) | 65,000 | 6,119,750 | ||||||||
MasterCard, Inc. Class A (IT Svs.) | (e) | 96,600 | 8,323,056 | |||||||
Visa, Inc. (IT Svs.) | 32,850 | 8,613,270 | ||||||||
Synaptics, Inc. (Semiconductors & Equip.) | (a) | 65,000 | 4,474,600 | |||||||
Apple, Inc. (Tech. Hardware, Storage & Periph.) | 78,910 | 8,710,086 | ||||||||
|
| |||||||||
�� | 94,774,992 | |||||||||
|
|
83 | (continued) |
Ohio National Fund, Inc. | Balanced Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Common Stocks (Continued) | Shares | Value | ||||||||
MATERIALS – 4.9% | ||||||||||
Ashland, Inc. (Chemicals) | 120,000 | $ | 14,371,200 | |||||||
LyondellBasell Industries NV Class A (Chemicals) | (e) | 125,340 | 9,950,743 | |||||||
Methanex Corp. (Chemicals) | (e) | 180,050 | 8,251,692 | |||||||
Monsanto Co. (Chemicals) | 70,000 | 8,362,900 | ||||||||
|
| |||||||||
40,936,535 | ||||||||||
|
| |||||||||
TELECOMMUNICATION SERVICES – 0.8% | ||||||||||
Verizon Communications, Inc. (Diversified Telecom. Svs.) | 150,000 | 7,017,000 | ||||||||
|
| |||||||||
UTILITIES – 2.2% | ||||||||||
OGE Energy Corp. (Electric Utilities) | 125,190 | 4,441,741 | ||||||||
Atmos Energy Corp. (Gas Utilities) | 41,900 | 2,335,506 | ||||||||
Laclede Group, Inc. / The (Gas Utilities) | 94,300 | 5,016,760 | ||||||||
CMS Energy Corp. (Multi-Utilities) | 186,300 | 6,473,925 | ||||||||
|
| |||||||||
18,267,932 | ||||||||||
|
| |||||||||
Total Common Stocks (Cost $493,756,693) | $ | 525,235,302 | ||||||||
|
|
Corporate Bonds – 22.3% | Rate | Maturity | Face Amount | Value | ||||||||||||
CONSUMER DISCRETIONARY – 1.6% | ||||||||||||||||
MDC Holdings, Inc. (Household Durables) | 5.500% | 01/15/2024 | $ | 3,630,000 | $ | 3,530,175 | ||||||||||
CCO Holdings LLC / CCO Holdings Capital Corp. (Media) | 7.250% | 10/30/2017 | 1,000,000 | 1,041,750 | ||||||||||||
Comcast Cable Holdings, LLC (Media) | 10.125% | 04/15/2022 | 1,500,000 | 2,105,070 | ||||||||||||
Intelsat Jackson Holdings SA (Media) | 7.250% | 04/01/2019 | 2,982,000 | 3,123,645 | ||||||||||||
GRD Holdings III Corp. (Specialty Retail) | (b) | 10.750% | 06/01/2019 | 3,475,000 | 3,813,812 | |||||||||||
|
| |||||||||||||||
13,614,452 | ||||||||||||||||
|
| |||||||||||||||
CONSUMER STAPLES – 1.8% | ||||||||||||||||
Kroger Co. / The (Food & Staples Retailing) | 7.500% | 04/01/2031 | 3,240,000 | 4,386,954 | ||||||||||||
Altria Group, Inc. (Tobacco) | 9.250% | 08/06/2019 | 7,967,000 | 10,249,482 | ||||||||||||
|
| |||||||||||||||
14,636,436 | ||||||||||||||||
|
| |||||||||||||||
ENERGY – 1.6% | ||||||||||||||||
Drill Rigs Holdings, Inc. (Energy Equip. & Svs.) | (b) | 6.500% | 10/01/2017 | 1,000,000 | 835,000 | |||||||||||
Forbes Energy Services Ltd. (Energy Equip. & Svs.) | 9.000% | 06/15/2019 | 1,980,000 | 1,197,900 | ||||||||||||
Permian Holdings, Inc. (Energy Equip. & Svs.) | (b) | 10.500% | 01/15/2018 | 2,187,000 | 1,651,185 | |||||||||||
SESI LLC (Energy Equip. & Svs.) | 7.125% | 12/15/2021 | 1,800,000 | 1,737,000 | ||||||||||||
Shelf Drilling Holdings Ltd. (Energy Equip. & Svs.) | (b) | 8.625% | 11/01/2018 | 3,186,000 | 2,644,380 | |||||||||||
Alliance Pipeline LP / United States (Oil, Gas & Consumable Fuels) | (b) | 7.877% | 12/31/2025 | 2,000,000 | 2,598,950 | |||||||||||
Bill Barrett Corp. (Oil, Gas & Consumable Fuels) | 7.000% | 10/15/2022 | 1,000,000 | 810,000 | ||||||||||||
Kodiak Oil & Gas Corp. (Oil, Gas & Consumable Fuels) | 5.500% | 01/15/2021 | 900,000 | 906,750 | ||||||||||||
United Refining Co. (Oil, Gas & Consumable Fuels) | 10.500% | 02/28/2018 | 832,000 | 861,120 | ||||||||||||
|
| |||||||||||||||
13,242,285 | ||||||||||||||||
|
| |||||||||||||||
FINANCIALS – 6.3% | ||||||||||||||||
Fulton Capital Trust I (Acquired 03/11/2014, Cost $948,465) (Banks) | (i) | 6.290% | 02/01/2036 | 1,000,000 | 997,500 | |||||||||||
PNC Preferred Funding Trust II (Banks) | (b)(c) | 1.463% | 03/29/2049 | 4,000,000 | 3,780,000 | |||||||||||
Enova International, Inc. (Consumer Finance) | (b) | 9.750% | 06/01/2021 | 1,985,000 | 1,960,187 | |||||||||||
GE Capital Franchise Finance Corp. (Diversified Financial Svs.) | 7.100% | 11/30/2026 | 1,000,000 | 1,311,544 | ||||||||||||
General Electric Capital Corp. / LJ VP Holdings LLC (Diversified Financial Svs.) | (b) | 3.800% | 06/18/2019 | 2,750,000 | 2,924,578 | |||||||||||
Alleghany Corp. (Insurance) | 5.625% | 09/15/2020 | 1,000,000 | 1,124,098 | ||||||||||||
Everest Reinsurance Holdings, Inc. (Insurance) | (f) | 6.600% | 05/01/2067 | 5,200,000 | 5,343,000 | |||||||||||
Glen Meadow Pass-Through Trust (Insurance) | (b)(f) | 6.505% | 02/12/2067 | 395,000 | 388,087 | |||||||||||
Liberty Mutual Group, Inc. (Insurance) | (b)(f) | 7.000% | 03/07/2067 | 750,000 | 772,500 | |||||||||||
MBIA, Inc. (Insurance) | 6.625% | 10/01/2028 | 2,810,000 | 2,866,200 | ||||||||||||
Old Republic International Corp. (Insurance) | 4.875% | 10/01/2024 | 5,000,000 | 5,239,505 | ||||||||||||
ProAssurance Corp. (Insurance) | 5.300% | 11/15/2023 | 5,063,000 | 5,550,648 | ||||||||||||
Prudential Financial, Inc. (Insurance) | (f) | 8.875% | 06/15/2068 | 10,485,000 | 12,293,662 | |||||||||||
Prudential Insurance Co. of America / The (Insurance) | (b) | 8.300% | 07/01/2025 | 2,500,000 | 3,382,818 | |||||||||||
Reinsurance Group of America, Inc. (Insurance) | 6.450% | 11/15/2019 | 1,000,000 | 1,159,061 | ||||||||||||
SAFG Retirement Services, Inc. (Insurance) | 8.125% | 04/28/2023 | 500,000 | 640,536 | ||||||||||||
Torchmark Corp. (Insurance) | 7.875% | 05/15/2023 | 2,000,000 | 2,536,272 | ||||||||||||
|
| |||||||||||||||
52,270,196 | ||||||||||||||||
|
| |||||||||||||||
HEALTH CARE – 1.4% | ||||||||||||||||
DaVita HealthCare Partners, Inc. (Health Care Providers & Svs.) | 6.625% | 11/01/2020 | 500,000 | 526,563 | ||||||||||||
Highmark, Inc. (Health Care Providers & Svs.) | (b) | 4.750% | 05/15/2021 | 3,500,000 | 3,624,758 | |||||||||||
Highmark, Inc. (Health Care Providers & Svs.) | (b) | 6.125% | 05/15/2041 | 1,000,000 | 1,058,862 | |||||||||||
inVentiv Health, Inc. (Health Care Providers & Svs.) | (b) | 9.000% | 01/15/2018 | 3,405,000 | 3,490,125 | |||||||||||
Prospect Medical Holdings, Inc. (Health Care Providers & Svs.) | (b) | 8.375% | 05/01/2019 | 2,985,000 | 3,201,413 | |||||||||||
|
| |||||||||||||||
11,901,721 | ||||||||||||||||
|
|
84 | (continued) |
Ohio National Fund, Inc. | Balanced Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
INDUSTRIALS – 3.6% | ||||||||||||||||
CHC Helicopter SA (Air Freight & Logistics) | 9.375% | 06/01/2021 | $ | 1,625,000 | $ | 1,535,624 | ||||||||||
Goodman Networks, Inc. (Building Products) | 12.125% | 07/01/2018 | 2,570,000 | 2,666,375 | ||||||||||||
Masco Corp. (Building Products) | (h) | 6.125% | 10/03/2016 | 5,000,000 | 5,327,500 | |||||||||||
Masco Corp. (Building Products) | 5.950% | 03/15/2022 | 4,934,000 | 5,501,410 | ||||||||||||
USG Corp. (Building Products) | (b) | 5.875% | 11/01/2021 | 2,090,000 | 2,121,350 | |||||||||||
USG Corp. (Building Products) | (b) | 7.875% | 03/30/2020 | 4,000,000 | 4,295,000 | |||||||||||
Michael Baker International LLC / CDL Acquisition Co., Inc. (Construction & Engineering) | (b) | 8.250% | 10/15/2018 | 1,485,000 | 1,485,000 | |||||||||||
Case New Holland Industrial, Inc. (Machinery) | 7.875% | 12/01/2017 | 980,000 | 1,082,900 | ||||||||||||
Ingersoll-Rand Co. (Machinery) | 6.391% | 11/15/2027 | 2,000,000 | 2,403,296 | ||||||||||||
Brightstar Corp. (Trading Companies & Distributors) | (b) | 7.250% | 08/01/2018 | 1,832,000 | 1,964,820 | |||||||||||
Brightstar Corp. (Trading Companies & Distributors) | (b) | 9.500% | 12/01/2016 | 1,900,000 | 1,997,375 | |||||||||||
|
| |||||||||||||||
30,380,650 | ||||||||||||||||
|
| |||||||||||||||
INFORMATION TECHNOLOGY – 1.9% | ||||||||||||||||
Harris Corp. (Communications Equip.) | 6.375% | 06/15/2019 | 1,000,000 | 1,142,028 | ||||||||||||
Corning, Inc. (Electronic Equip., Instr. & Comp.) | 7.250% | 08/15/2036 | 2,180,000 | 2,838,031 | ||||||||||||
First Data Corp. (IT Svs.) | 12.625% | 01/15/2021 | 3,584,000 | 4,264,960 | ||||||||||||
Lender Processing Services, Inc. / Black Knight Lending Solutions, Inc. (IT Svs.) | 5.750% | 04/15/2023 | 7,242,000 | 7,640,310 | ||||||||||||
|
| |||||||||||||||
15,885,329 | ||||||||||||||||
|
| |||||||||||||||
MATERIALS – 0.8% | ||||||||||||||||
LSB Industries, Inc. (Chemicals) | 7.750% | 08/01/2019 | 948,000 | 990,660 | ||||||||||||
PaperWorks Industries, Inc. (Containers & Packaging) | (b) | 9.500% | 08/15/2019 | 2,485,000 | 2,494,319 | |||||||||||
Alcoa, Inc. (Metals & Mining) | 5.125% | 10/01/2024 | 2,900,000 | 3,079,127 | ||||||||||||
|
| |||||||||||||||
6,564,106 | ||||||||||||||||
|
| |||||||||||||||
TELECOMMUNICATION SERVICES – 1.3% | ||||||||||||||||
Windstream Corp. (Diversified Telecom. Svs.) | 8.125% | 09/01/2018 | 1,000,000 | 1,038,500 | ||||||||||||
Clearwire Communications LLC / Clearwire Finance, Inc. (Wireless Telecom. Svs.) | (b) | 14.750% | 12/01/2016 | 5,406,000 | 6,514,230 | |||||||||||
Sprint Communications, Inc. (Wireless Telecom. Svs.) | 6.000% | 11/15/2022 | 3,425,000 | 3,163,844 | ||||||||||||
|
| |||||||||||||||
10,716,574 | ||||||||||||||||
|
| |||||||||||||||
UTILITIES – 2.0% | ||||||||||||||||
Kiowa Power Partners, LLC (Electric Utilities) | (b) | 5.737% | 03/30/2021 | 1,483,074 | 1,599,791 | |||||||||||
PECO Energy Capital Trust IV (Electric Utilities) | 5.750% | 06/15/2033 | 5,000,000 | 4,999,480 | ||||||||||||
Tenaska Georgia Partners LP (Electric Utilities) | 9.500% | 02/01/2030 | 1,342,462 | 1,686,468 | ||||||||||||
Hydro-Quebec (Ind. Power & Renewable Elec.) | 9.375% | 04/15/2030 | 5,000,000 | 8,204,510 | ||||||||||||
|
| |||||||||||||||
16,490,249 | ||||||||||||||||
|
| |||||||||||||||
Total Corporate Bonds (Cost $188,928,455) | $ | 185,701,998 | ||||||||||||||
|
| |||||||||||||||
Preferred Stocks – 2.2% | Rate | Shares | Value | |||||||||||||
FINANCIALS – 2.2% | ||||||||||||||||
RBS Capital Funding Trust V (Banks) | 5.900% | 159,126 | $ | 3,866,762 | ||||||||||||
Charles Schwab Corp. Series A / The (Capital Markets) | (g) | 7.000% | 4,000,000 | 4,642,520 | ||||||||||||
General Electric Capital Corp. (Diversified Financial Svs.) | (g) | 7.125% | 2,500,000 | 2,918,750 | ||||||||||||
American Homes 4 Rent (Real Estate Investment Trusts) | 5.000% | 38,651 | 953,134 | |||||||||||||
Equity Commonwealth (Real Estate Investment Trusts) | 7.250% | 156,040 | 3,979,020 | |||||||||||||
Gramercy Property Trust, Inc. (Acquired 08/26/2014 through 12/11/2014, Cost $2,102,796) (Real Estate Investment Trusts) | (i) | 7.125% | 83,924 | 2,161,043 | ||||||||||||
|
| |||||||||||||||
Total Preferred Stocks (Cost $18,485,264) | $ | 18,521,229 | ||||||||||||||
|
| |||||||||||||||
Asset-Backed / Commercial Mortgage-Backed Securities – 0.5% | Rate | Maturity | Face Amount | Value | ||||||||||||
FINANCIALS – 0.5% | ||||||||||||||||
Citigroup Mortgage Loan Trust, Inc. 2004-NCM2 Class 2CB1 | 5.500% | 08/25/2034 | $ | 1,508,609 | $ | 1,640,700 | ||||||||||
MASTR Seasoned Securitization Trust 2005-1 Class 1A1 | 6.633% | 09/25/2032 | 2,439,872 | 2,695,311 | ||||||||||||
|
| |||||||||||||||
Total Asset-Backed / Commercial Mortgage-Backed Securities (Cost $4,299,121) | $ | 4,336,011 | ||||||||||||||
|
| |||||||||||||||
U.S. Treasury Obligations – 6.6% | Rate | Maturity | Face Amount | Value | ||||||||||||
U.S. Treasury Note | 0.500% | 09/30/2016 | $ | 20,000,000 | $ | 19,972,660 | ||||||||||
U.S. Treasury Note | 1.000% | 09/15/2017 | 20,000,000 | 20,006,240 | ||||||||||||
U.S. Treasury Note | 2.125% | 09/30/2021 | 5,000,000 | 5,055,080 | ||||||||||||
U.S. Treasury Note | 2.250% | 11/15/2024 | 10,000,000 | 10,068,750 | ||||||||||||
|
| |||||||||||||||
Total U.S. Treasury Obligations (Cost $54,842,969) | $ | 55,102,730 | ||||||||||||||
|
| |||||||||||||||
Closed-End Mutual Funds – 2.4% | Shares | Value | ||||||||||||||
Diversified Real Asset Income Fund | 523,387 | $ | 9,080,764 | |||||||||||||
Firsthand Technology Value Fund, Inc. | 85,541 | 1,595,340 | ||||||||||||||
Montgomery Street Income Securities, Inc. | 28,042 | 460,450 |
85 | (continued) |
Ohio National Fund, Inc. | Balanced Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Closed-End Mutual Funds (Continued) | Shares | Value | ||||||||
Nuveen Dividend Advantage Municipal Fund 3 | 172,492 | $ | 2,376,940 | |||||||
Nuveen Dividend Advantage Municipal Income Fund | 69,252 | 977,146 | ||||||||
Nuveen Global High Income Fund | (a) | 292,994 | 5,054,146 | |||||||
Western Asset / Claymore Inflation-Linked Securities & Income Fund | 18,150 | 210,540 | ||||||||
|
| |||||||||
Total Closed-End Mutual Funds (Cost $20,643,930) | $ | 19,755,326 | ||||||||
|
| |||||||||
Purchased Options – 0.3% | Contracts (d) | Value | ||||||||
S&P 500 Index Put Option | 500 | $ | 1,565,000 | |||||||
S&P 500 Index Put Option | 400 | 774,000 | ||||||||
|
| |||||||||
Total Purchased Options (Cost $2,388,051) | $ | 2,339,000 | ||||||||
|
| |||||||||
Money Market Funds – 3.6% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds Money Market Portfolio – Class I | 29,630,000 | $ | 29,630,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $29,630,000) | $ | 29,630,000 | ||||||||
|
| |||||||||
Total Investments – 100.9% (Cost $812,974,483) | (j) | $ | 840,621,596 | |||||||
Total Written Options Outstanding – (0.1)% (see schedule below) | (1,023,500) | |||||||||
Liabilities in Excess of Other Assets – (0.8)% | (6,464,457) | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 833,133,639 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Non-income producing security. |
(b) | Security exempt from registration under Regulation D of the Securities Act of 1933. These securities may be resold in transactions exempt form registration, normally to qualified buyers under Rule 144A. At December 31, 2014, the value of these securities totaled $58,598,540, or 7.0% of the Portfolio’s net assets. These securities were deemed liquid pursuant to procedures approved by the Board of Directors. |
(c) | Security is a variable rate instrument in which the coupon rate is adjusted quarterly in concert with U.S. LIBOR. Interest rates stated are those in effect at December 31, 2014. |
(d) | 100 shares per contract. |
(e) | Security is fully or partially pledged as collateral for written call options outstanding. Outstanding written call options are presented in the following schedule. |
(f) | Security is a variable rate instrument in which the coupon rate is fixed until a later specified date, then is adjusted quarterly in concert with U.S. LIBOR. Interest rates stated are those in effect at December 31, 2014. |
(g) | Security is a variable rate preferred stock in which the dividend rate is fixed until a later specified date, then is adjusted quarterly in concert with U.S. LIBOR. Dividend rates stated are those in effect at December 31, 2014. |
(h) | Represents bonds that are credit sensitive. The coupon rates for these bonds are subject to adjustment based on changes in national credit rating agency ratings. |
(i) | Represents a security deemed to be illiquid. At December 31, 2014, the value of illiquid securities in the Portfolio totaled $3,158,543, or 0.4% of the Portfolio’s net assets. |
(j) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
Schedule of Written Options Outstanding | December 31, 2014 |
Contracts* | Value | |||||
S&P 500 Index Call Option | ||||||
Expiration: February 2015, Exercise Price: $2,150.00 | 500 | $ | 350,000 | |||
S&P 500 Index Call Option | ||||||
Expiration: February 2015, Exercise Price: $2,100.00 | 300 | 673,500 | ||||
|
|
| ||||
Total Written Options Outstanding (Premiums received $1,432,788) | 800 | $ | 1,023,500 | |||
|
|
|
* | 100 shares per contract. |
The accompanying notes are an integral part of these financial statements.
86 |
Ohio National Fund, Inc. | Target VIP Portfolio |
Objective/Strategy
The Target VIP Portfolio seeks an above average total return by investing in the common stocks of companies which are identified by a model that applies separate uniquely specialized strategies.
Performance as of December 31, 2014
Average Annual returns | ||||
One year | 7.44% | |||
Five years | 14.80% | |||
Since inception (11/2/05) | 5.25% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Target VIP Portfolio returned 7.44% versus 12.56% for the current benchmark, the Russell 3000 Index.
U.S. equities climbed steadily throughout 2014, with the exception of the brief dip in October. Stocks quickly recovered from the brief decline and ended the year near all-time highs. Among the major events impacting the markets over the course of the year were extremely cold weather in the first quarter, the plunge in oil prices in the second half of the year, and the Federal Reserve ending its bond purchases in the fourth quarter. Despite these headwinds, it was a solid year for U.S. equities. Large caps led small caps, as they offered more attractive valuations and perceived safety amid the uncertainty in the markets. Within sectors, more defensive sectors such as Utilities and Health Care led the market, while more cyclical sectors, such as Energy, lagged.
The Portfolio had its annual rebalance in early January 2014. Though the selection process for the underlying strategies did not change, there were changes in the sector exposures as a result of the rebalance. The rebalance resulted in additional exposure to the Energy, Financials and Telecommunications Services sectors. As a result, both Energy and Telecommunications Services were overweight the benchmarks, while the Financials underweight was reduced. Both Consumer Discretionary and Health Care saw large reductions in weight, though they remained slightly overweight. (1)
Stock selection in the Information Technology sector was the biggest contributor to the Portfolio’s relative performance for the year. Semiconductor holdings Intel Corp., Avago Technologies Ltd. and Skyworks Solutions, Inc. were among the top performers in the sector. A sizeable position in Apple, Inc. also boosted returns. Stock selection in Industrials was also a positive contributor to performance. Southwest Airlines Co. and 3M Co. were the biggest contributors in the sector. Both Information Technology and Industrials also had positive allocation effects.(1)
The Energy sector was the biggest detractor from relative return due to both stock selection and allocation. The Portfolio was overweight the sector, which was the worst performing sector for the year, as oil prices dropped dramatically in the latter half of the year.
The Portfolio’s holdings in smaller oilfield servicers and exploration and production stocks were responsible for the negative selection effect. Stock selection in Health Care, Financials and Utilities also detracted from relative performance. Within Health Care, the Portfolio’s holdings were concentrated in large cap names (Pfizer, Inc., Biogen Idec, Inc., AstraZeneca PLC) which trailed the overall sector. Financials sector performance was hurt by a concentration of holdings in the small/mid cap space, which significantly underperformed large caps for the year. In Utilities, all holdings were non-U.S. based and picked up by the European 20 strategy within the Portfolio. Foreign stocks, as a whole, trailed their U.S. counterparts for the year.(1)
The Portfolio’s best performers were Skyworks Solutions, Inc., Southwest Airlines Co., Avago Technologies Ltd., JetBlue Airways Corp. and Core-Mark Holding Co. The worst performers were Seventy Seven Energy, Inc., Rex Energy Corp., Sturm, Ruger & Company, Inc., eHealth, Inc., and TETA Technologies, Inc. The Portfolio’s top contributors to performance were Intel Corp., Apple, Inc., Home Depot, Inc., Gilead Sciences, Inc. and Travelers Companies, Inc. The top detractors from performance were BP plc, Rex Energy Corp., Sturm, Ruger & Company, Inc., eHealth, Inc., and Eni SpA.(1)
As we look to 2015, U.S. equities continue to look attractive, in our opinion, given the outlook for growth. The new year is expected to bring a divergence in monetary policy around the world. Growth is expected to pick up in the U.S. and the Federal Reserve is likely to start raising rates, while most of the rest of the world (developed markets in particular) is struggling for growth and is likely to undertake measures to boost economic activity. With stock valuations hovering around fair value, gains in the new year are likely to closely follow earnings growth, which the consensus estimates to be at about 10% for the S&P 500 Index. We remain consistent in the application of the six strategies underlying the Portfolio. The result is a Portfolio with broad exposures across the size and sector spectrum, which provides diversification along with upside potential.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The index presented includes the effects of reinvested dividends.
87 | (continued) |
Ohio National Fund, Inc. | Target VIP Portfolio (Continued) |
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 98.4 | |||
Money Market Funds and | 1.6 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Intel Corp. | 5.4 | |||
2. Apple, Inc. | 5.4 | |||
3. Pfizer, Inc. | 5.0 | |||
4. Home Depot, Inc. / The | 4.0 | |||
5. BP PLC – ADR | 3.7 | |||
6. Travelers Cos., Inc. / The | 3.6 | |||
7. Schlumberger Ltd. | 3.4 | |||
8. Goldman Sachs Group, Inc. / The | 3.4 | |||
9. Gilead Sciences, Inc. | 3.2 | |||
10. AT&T, Inc. | 2.9 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Information Technology | 23.8 | |||
Health Care | 13.9 | |||
Consumer Discretionary | 13.8 | |||
Financials | 13.2 | |||
Energy | 11.8 | |||
Industrials | 7.3 | |||
Telecommunication Services | 6.8 | |||
Utilities | 3.7 | |||
Consumer Staples | 2.8 | |||
Materials | 1.3 | |||
|
| |||
98.4 | ||||
|
|
88 |
Ohio National Fund, Inc. | Target VIP Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 98.4% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 13.8% | ||||||||||
China Automotive Systems, Inc. (Auto Components) | 10,935 | $ | 77,529 | |||||||
Drew Industries, Inc. (Auto Components) | (a) | 4,801 | 245,187 | |||||||
Federal-Mogul Holdings Corp. (Auto Components) | (a) | 4,390 | 70,635 | |||||||
Goodyear Tire & Rubber Co. / The (Auto Components) | 4,085 | 116,708 | ||||||||
Standard Motor Products, Inc. (Auto Components) | 4,746 | 180,918 | ||||||||
Visteon Corp. (Auto Components) | (a) | 1,050 | 112,203 | |||||||
Winnebago Industries, Inc. (Automobiles) | 5,913 | 128,667 | ||||||||
Core-Mark Holding Co., Inc. (Distributors) | 4,803 | 297,450 | ||||||||
Bridgepoint Education, Inc. (Diversified Consumer Svs.) | (a) | 11,511 | 130,305 | |||||||
Chuy’s Holdings, Inc. (Hotels, Restaurants & Leisure) | (a) | 3,447 | 67,802 | |||||||
Ryland Group, Inc. / The (Household Durables) | 1,983 | 76,464 | ||||||||
Netflix, Inc. (Internet & Catalog Retail) | (a) | 741 | 253,133 | |||||||
Priceline Group, Inc. / The (Internet & Catalog Retail) | (a) | 652 | 743,417 | |||||||
Arctic Cat, Inc. (Leisure Products) | 2,803 | 99,506 | ||||||||
Smith & Wesson Holding Corp. (Leisure Products) | (a) | 11,450 | 108,431 | |||||||
Sturm Ruger & Co., Inc. (Leisure Products) | 4,066 | 140,806 | ||||||||
DIRECTV (Media) | (a) | 9,955 | 863,098 | |||||||
Regal Entertainment Group Class A (Media) | 4,371 | 93,365 | ||||||||
Viacom, Inc. Class B (Media) | 4,868 | 366,317 | ||||||||
AutoZone, Inc. (Specialty Retail) | (a) | 640 | 396,230 | |||||||
Brown Shoe Co., Inc. (Specialty Retail) | 8,858 | 284,785 | ||||||||
Home Depot, Inc. / The (Specialty Retail) | 20,764 | 2,179,597 | ||||||||
Tractor Supply Co. (Specialty Retail) | 1,727 | 136,122 | ||||||||
Fossil Group, Inc. (Textiles, Apparel & Luxury Goods) | (a) | 1,053 | 116,609 | |||||||
Movado Group, Inc. (Textiles, Apparel & Luxury Goods) | 3,920 | 111,210 | ||||||||
Oxford Industries, Inc. (Textiles, Apparel & Luxury Goods) | 3,394 | 187,383 | ||||||||
|
| |||||||||
7,583,877 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 2.8% | ||||||||||
Diamond Foods, Inc. (Food Products) | (a) | 255 | 7,199 | |||||||
Tyson Foods, Inc. Class A (Food Products) | 2,353 | 94,332 | ||||||||
Colgate-Palmolive Co. (Household Products) | 7,971 | 551,513 | ||||||||
Kimberly-Clark Corp. (Household Products) | 3,265 | 377,238 | ||||||||
Imperial Tobacco Group PLC – ADR (Tobacco) | 5,774 | 505,225 | ||||||||
|
| |||||||||
1,535,507 | ||||||||||
|
| |||||||||
ENERGY – 11.8% | ||||||||||
Newpark Resources, Inc. (Energy Equip. & Svs.) | (a) | 18,113 | 172,798 | |||||||
Schlumberger Ltd. (Energy Equip. & Svs.) | 22,072 | 1,885,170 | ||||||||
Seventy Seven Energy, Inc. (Energy Equip. & Svs.) | (a) | 657 | 3,554 | |||||||
TETRA Technologies, Inc. (Energy Equip. & Svs.) | (a) | 16,626 | 111,062 | |||||||
BP PLC – ADR (Oil, Gas & Consumable Fuels) | 53,396 | 2,035,456 | ||||||||
Chesapeake Energy Corp. (Oil, Gas & Consumable Fuels) | 11,236 | 219,889 | ||||||||
Chevron Corp. (Oil, Gas & Consumable Fuels) | 5,641 | 632,807 | ||||||||
Eni SpA – ADR (Oil, Gas & Consumable Fuels) | 9,303 | 324,768 | ||||||||
Marathon Petroleum Corp. (Oil, Gas & Consumable Fuels) | 882 | 79,609 | ||||||||
Phillips 66 (Oil, Gas & Consumable Fuels) | 1,746 | 125,188 | ||||||||
Rex Energy Corp. (Oil, Gas & Consumable Fuels) | (a) | 11,479 | 58,543 | |||||||
Royal Dutch Shell PLC Class B – ADR (Oil, Gas & Consumable Fuels) | 6,003 | 417,569 | ||||||||
Total SA – ADR (Oil, Gas & Consumable Fuels) | 7,325 | 375,040 | ||||||||
Triangle Petroleum Corp. (Oil, Gas & Consumable Fuels) | (a) | 19,199 | 91,771 | |||||||
|
| |||||||||
6,533,224 | ||||||||||
|
| |||||||||
FINANCIALS – 13.2% | ||||||||||
Columbia Banking System, Inc. (Banks) | 10,818 | 298,685 | ||||||||
HSBC Holdings PLC – ADR (Banks) | 8,178 | 386,247 | ||||||||
Swedbank AB – ADR (Banks) | 15,804 | 393,632 | ||||||||
Goldman Sachs Group, Inc. / The (Capital Markets) | 9,682 | 1,876,662 | ||||||||
Encore Capital Group, Inc. (Consumer Finance) | (a) | 5,284 | 234,610 | |||||||
Aon PLC (Insurance) | 11,647 | 1,104,485 | ||||||||
Assurant, Inc. (Insurance) | 2,802 | 191,741 | ||||||||
eHealth, Inc. (Insurance) | (a) | 3,894 | 97,038 | |||||||
Employers Holdings, Inc. (Insurance) | 6,467 | 152,039 |
Common Stocks (Continued) | Shares | Value | ||||||||
FINANCIALS (continued) | ||||||||||
Horace Mann Educators Corp. (Insurance) | 8,402 | $ | 278,778 | |||||||
Torchmark Corp. (Insurance) | 5,235 | 283,580 | ||||||||
Travelers Cos., Inc. / The (Insurance) | 18,846 | 1,994,849 | ||||||||
|
| |||||||||
7,292,346 | ||||||||||
|
| |||||||||
HEALTH CARE – 13.9% | ||||||||||
Biogen Idec, Inc. (Biotechnology) | (a) | 2,924 | 992,552 | |||||||
Gilead Sciences, Inc. (Biotechnology) | (a) | 18,984 | 1,789,432 | |||||||
PDL BioPharma, Inc. (Biotechnology) | 10,044 | 77,439 | ||||||||
Regeneron Pharmaceuticals, Inc. (Biotechnology) | (a) | 1,212 | 497,223 | |||||||
Alere, Inc. (Health Care Equip. & Supplies) | (a) | 2,352 | 89,376 | |||||||
Halyard Health, Inc. (Health Care Equip. & Supplies) | (a) | 407 | 18,506 | |||||||
St. Jude Medical, Inc. (Health Care Equip. & Supplies) | 1,487 | 96,700 | ||||||||
Laboratory Corp. of America Holdings (Health Care Providers & Svs.) | (a) | 442 | 47,692 | |||||||
Omnicell, Inc. (Health Care Technology) | (a) | 7,385 | 244,591 | |||||||
AstraZeneca PLC – ADR (Pharmaceuticals) | 7,525 | 529,609 | ||||||||
GlaxoSmithKline PLC – ADR (Pharmaceuticals) | 8,429 | 360,255 | ||||||||
Pfizer, Inc. (Pharmaceuticals) | 88,252 | 2,749,050 | ||||||||
Sagent Pharmaceuticals, Inc. (Pharmaceuticals) | (a) | 6,709 | 168,463 | |||||||
|
| |||||||||
7,660,888 | ||||||||||
|
| |||||||||
INDUSTRIALS – 7.3% | ||||||||||
AAR Corp. (Aerospace & Defense) | 8,323 | 231,213 | ||||||||
Elbit Systems Ltd. (Aerospace & Defense) | 1,432 | 86,973 | ||||||||
Northrop Grumman Corp. (Aerospace & Defense) | 1,700 | 250,563 | ||||||||
Orbital Sciences Corp. (Aerospace & Defense) | (a) | 12,686 | 341,127 | |||||||
JetBlue Airways Corp. (Airlines) | (a) | 10,044 | 159,298 | |||||||
Southwest Airlines Co. (Airlines) | 11,526 | 487,780 | ||||||||
Apogee Enterprises, Inc. (Building Products) | 6,062 | 256,847 | ||||||||
Kimball International, Inc. Class B (Commercial Svs. & Supplies) | 5,737 | 52,321 | ||||||||
3M Co. (Industrial Conglomerates) | 5,056 | 830,802 | ||||||||
Altra Industrial Motion Corp. (Machinery) | 5,557 | 157,763 | ||||||||
Flowserve Corp. (Machinery) | 1,049 | 62,762 | ||||||||
Tennant Co. (Machinery) | 3,780 | 272,803 | ||||||||
Korn/Ferry International (Professional Svs.) | (a) | 10,268 | 295,308 | |||||||
Navigant Consulting, Inc. (Professional Svs.) | (a) | 4,424 | 67,997 | |||||||
TrueBlue, Inc. (Professional Svs.) | (a) | 8,513 | 189,414 | |||||||
ArcBest Corp. (Road & Rail) | 2,515 | 116,621 | ||||||||
Roadrunner Transportation Systems, Inc. (Road & Rail) | (a) | 7,852 | 183,344 | |||||||
|
| |||||||||
4,042,936 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 23.8% | ||||||||||
Brocade Communications Systems, Inc. (Communications Equip.) | 9,701 | 114,860 | ||||||||
Finisar Corp. (Communications Equip.) | (a) | 3,591 | 69,701 | |||||||
FARO Technologies, Inc. (Electronic Equip., Instr. & Comp.) | (a) | 3,505 | 219,693 | |||||||
Kimball Electronics, Inc. (Electronic Equip., Instr. & Comp.) | (a) | 4,274 | 51,373 | |||||||
Plexus Corp. (Electronic Equip., Instr. & Comp.) | (a) | 7,082 | 291,849 | |||||||
Sanmina Corp. (Electronic Equip., Instr. & Comp.) | (a) | 5,134 | 120,803 | |||||||
Baidu, Inc. – ADR (Internet Software & Svs.) | (a) | 3,407 | 776,694 | |||||||
Stamps.com, Inc. (Internet Software & Svs.) | (a) | 3,377 | 162,062 | |||||||
VeriSign, Inc. (Internet Software & Svs.) | (a) | 1,892 | 107,844 | |||||||
Yahoo!, Inc. (Internet Software & Svs.) | (a) | 12,758 | 644,407 | |||||||
Computer Sciences Corp. (IT Svs.) | 2,439 | 153,779 | ||||||||
CSG Systems International, Inc. (IT Svs.) | 7,099 | 177,972 | ||||||||
MasterCard, Inc. Class A (IT Svs.) | 15,800 | 1,361,328 | ||||||||
Advanced Energy Industries, Inc. (Semiconductors & Equip.) | (a) | 8,230 | 195,051 | |||||||
Amkor Technology, Inc. (Semiconductors & Equip.) | (a) | 13,946 | 99,017 | |||||||
Avago Technologies Ltd. (Semiconductors & Equip.) | 3,095 | 311,326 | ||||||||
Intel Corp. (Semiconductors & Equip.) | 82,241 | 2,984,526 | ||||||||
Micron Technology, Inc. (Semiconductors & Equip.) | (a) | 13,340 | 467,033 | |||||||
Monolithic Power Systems, Inc. (Semiconductors & Equip.) | 7,896 | 392,747 |
89 | (continued) |
Ohio National Fund, Inc. | Target VIP Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Common Stocks (Continued) | Shares | Value | ||||||||
INFORMATION TECHNOLOGY (continued) | ||||||||||
Skyworks Solutions, Inc. (Semiconductors & Equip.) | 3,080 | $ | 223,947 | |||||||
Apple, Inc. (Tech. Hardware, Storage & Periph.) | 26,837 | 2,962,268 | ||||||||
Immersion Corp. (Tech. Hardware, Storage & Periph.) | (a) | 5,986 | 56,687 | |||||||
SanDisk Corp. (Tech. Hardware, Storage & Periph.) | 2,827 | 276,989 | ||||||||
Seagate Technology PLC (Tech. Hardware, Storage & Periph.) | 8,420 | 559,930 | ||||||||
Western Digital Corp. (Tech. Hardware, Storage & Periph.) | 2,926 | 323,908 | ||||||||
|
| |||||||||
13,105,794 | ||||||||||
|
| |||||||||
MATERIALS – 1.3% | ||||||||||
Flotek Industries, Inc. (Chemicals) | (a) | 10,709 | 200,580 | |||||||
FMC Corp. (Chemicals) | 450 | 25,664 | ||||||||
LyondellBasell Industries NV Class A (Chemicals) | 1,862 | 147,824 | ||||||||
Praxair, Inc. (Chemicals) | 992 | 128,524 | ||||||||
P.H. Glatfelter Co. (Paper & Forest Products) | 9,094 | 232,534 | ||||||||
|
| |||||||||
735,126 | ||||||||||
|
| |||||||||
TELECOMMUNICATION SERVICES – 6.8% | ||||||||||
AT&T, Inc. (Diversified Telecom. Svs.) | 48,336 | 1,623,606 | ||||||||
Deutsche Telekom AG – ADR (Diversified Telecom. Svs.) | 26,001 | 413,156 | ||||||||
General Communication, Inc. Class A (Diversified Telecom. Svs.) | (a) | 7,762 | 106,727 | |||||||
Orange SA – ADR (Diversified Telecom. Svs.) | 36,491 | 617,428 | ||||||||
TeliaSonera AB – ADR (Diversified Telecom. Svs.) | 26,843 | 345,738 | ||||||||
Vivendi SA – ADR (Diversified Telecom. Svs.) | 17,051 | 423,206 | ||||||||
Vodafone Group PLC – ADR (Wireless Telecom. Svs.) | 6,260 | 213,904 | ||||||||
|
| |||||||||
3,743,765 | ||||||||||
|
|
Common Stocks (Continued) | Shares | Value | ||||||||
UTILITIES – 3.7% | ||||||||||
Electricite de France SA – ADR (Electric Utilities) | 63,600 | $ | 345,348 | |||||||
Centrica PLC – ADR (Multi-Utilities) | 19,408 | 334,982 | ||||||||
E.ON SE – ADR (Multi-Utilities) | 24,203 | 411,330 | ||||||||
GDF Suez – ADR (Multi-Utilities) | 18,956 | 441,637 | ||||||||
National Grid PLC – ADR (Multi-Utilities) | 6,910 | 488,261 | ||||||||
|
| |||||||||
2,021,558 | ||||||||||
|
| |||||||||
Total Common Stocks (Cost $49,497,689) | $ | 54,255,021 | ||||||||
|
| |||||||||
Money Market Funds – 1.6% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds | 881,000 | $ | 881,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $881,000) | $ | 881,000 | ||||||||
|
| |||||||||
Total Investments – 100.0% (Cost $50,378,689) | (b) | $ | 55,136,021 | |||||||
Other Assets in Excess of Liabilities – 0.0% | 5,888 | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 55,141,909 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Abbreviations:
ADR: American Depositary Receipts
Footnotes:
(a) | Non-income producing security. |
(b) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
90 |
Ohio National Fund, Inc. | Bristol Growth Portfolio |
Objective/Strategy
The Bristol Growth Portfolio seeks long-term growth of capital by investing primarily in common stocks of the 1,000 largest publicly traded U.S. companies in terms of market capitalization.
Performance as of December 31, 2014
Average Annual returns | ||||
One year | 12.01% | |||
Five years | 13.85% | |||
Since inception (5/1/07) | 6.93% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price and reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. To obtain performance information up to the most recent month end, call toll-free 1-877-781-6392.
The Portfolio is not open to direct retail investment. Beneficial interest in shares is obtained solely by purchase of variable life insurance policies and variable annuity contracts. Actual performance results for variable annuity and variable universal life contracts will be lower due to contract charges. Consult your contract for applicable charges.
Comments
For the year ended December 31, 2014, the Bristol Growth Portfolio returned 12.01% versus 13.05% for the current benchmark, the Russell 1000 Growth Index.
After the large run up in the markets in 2013 many investors thought the market was overbought. Sure enough, a correction began in early January, led by biotechnology and small cap stocks. The quarter saw the U.S. economy shrink by 2.9%, the most in five years. Corporate earnings were flat and earnings per share for the S&P 500 Index constituents were down. A leading factor among investors may have been the fear of rising interest rates in 2014. When this proved to be unfounded, the market shrugged off the reality of a sluggish economy and returned to its upward trend. The momentum continued through the second quarter, with the Dow Jones Industrial Average nudging up against the 17,000 level at June’s end and breaching 18,000 in December. There may have been grounds for speculation that rates would rise in 2014, but the new Federal Reserve Chair, Janet Yellen, seemed committed to keeping rates low while inflation remained modest. Her policy was aided by large Treasury purchases in the first two quarters by foreigners who were not voting in favor of the dollar as much as fleeing a weakening Yuan and the prospect of quantitative easing by the European Central Bank. The most positive development in the latter part of the year was the collapse in oil prices, which will benefit the American consumer in 2015.
From a sector allocation perspective, the Portfolio’s overweight in Health Care following the launch of Obamacare, contributed 116 basis points to relative performance. The Portfolio’s very modest underweight in the Consumer Discretionary sector detracted 34 basis points and the overweight in Industrials detracted 35 basis points. From a stock selection perspective, selections in Information Technology contributed 237 basis points to relative performance. Selections in several sectors detracted from relative performance, led by the Portfolio’s Consumer Discretionary sector, which detracted 137 basis points relative to the sector stocks in the benchmark.(1)
The Portfolio’s best performers for the year were Pharmacyclics, Inc., Whirlpool Corp., Facebook, Inc., Apple, Inc., and Gilead Sciences, Inc. The worst performers were Intercept Pharmaceuticals, Inc., Whiting Petroleum Corp., Clovis Oncolgy,, Inc., PVH Corp., and Ascena Retail Group, Inc. The top contributors to performance were Apple, Inc., Pharmacyclics,, Inc., Microsoft Corp., Celgene Corp., and Vertex Pharmaceuticals, Inc. The top detractors from performance were Intercept Pharmaceuticals, Inc., Whiting Petroleum Corp., PVH Corp., Ascena Retail Group, Inc., and Lululemon Athletica, Inc.(1)
The top contributor to the Portfolio’s performance was Apple, Inc., which contributed 183 basis points following the successful launch of iPhone 6. Pharmacyclics, Inc. generated 103 basis points following a positive leukemia drug trial. Microsoft Corp. contributed 86 basis points as a result of strong sales for its Xbox versus its Sony competitor. Celgene Corp. generated 75 basis points as a result of its continued success in the cancer treatment drug arena. Vertex Pharmaceuticals, Inc. contributed 75 basis points following positive test reports on its cystic fibrosis drug.(1)
Detractors from performance included Intercept Pharmaceuticals, Inc., which detracted 96 basis points following the release of the trial data that raised questions of safety for its drug test for liver disease. Energy sector Whiting Petroleum Corp. detracted 70 basis points following the drop in oil prices. PVH Corp. detracted 63 basis points after the firm reported poor first quarter results and reduced its guidance for the rest of the year. Ascena Retail Group, Inc. detracted 37 basis points as a result of disappointing results across its brand portfolio, which includes Dressbarn, Lane Bryant and department store Maurices. Lululemon Athletica, Inc. detracted 35 basis points as a hangover from the quality concerns dating back to 2013, in spite of its legions of loyal consumers.(1)
For 2015, the prospects for the markets look good, with lower gas prices estimated to put a large windfall into the pocket of the American consumer. Such personal spending is responsible for around 70% of domestic economic activity. This will benefit almost all sectors of the economy except drillers and oil industry service companies, as the Saudi government moves aggressively to discourage the fracking investment that could render its country much less important in the supply of energy to the U.S. Absent an external shock like Russia’s problems – which should not greatly affect domestic firms – the corporate profit picture looks good. Low interest rates permit share buy backs that support the current prices and earnings multiples are not excessive. We can expect rising interest rates later in 2015, but the initial impact will likely be quite small. Equities are not the only alternative to low fixed income returns, but they remain the default setting for many investors, including those who are still sitting on the sidelines in spite of the new record highs for the S&P 500 Index.
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
91 | (continued) |
Ohio National Fund, Inc. | Bristol Growth Portfolio (Continued) |
Change in Value of $10,000 Investment
Hypothetical illustration based on past performance. Future performance will vary. The Portfolio’s returns reflect reinvested dividends. The Portfolio’s holdings may differ significantly from the securities in the index. The index is unmanaged and therefore does not reflect the cost of portfolio management and accounting.
The Russell 1000 Growth Index is a market-capitalization weighted index of those firms in the Russell 1000 Index with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. The index presented herein includes the effects of requested dividends.
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 98.7 | �� | ||
Money Market Funds | 1.3 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. Apple, Inc. | 4.6 | |||
2. Microsoft Corp. | 3.4 | |||
3. Clovis Oncology, Inc. | 2.5 | |||
4. Intel Corp. | 2.5 | |||
5. Yahoo!, Inc. | 2.5 | |||
6. Visa, Inc. | 2.4 | |||
7. Adobe Systems, Inc. | 2.4 | |||
8. Celgene Corp. | 2.4 | |||
9. Google, Inc. Class C | 2.3 | |||
10. Mylan, Inc. | 2.2 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors: |
% of Net Assets | ||||
Information Technology | 29.0 | |||
Health Care | 24.7 | |||
Consumer Discretionary | 13.1 | |||
Industrials | 11.4 | |||
Consumer Staples | 6.7 | |||
Financials | 4.9 | |||
Energy | 3.8 | |||
Materials | 3.8 | |||
Telecommunication Services | 1.3 | |||
|
| |||
98.7 | ||||
|
|
92 |
Ohio National Fund, Inc. | Bristol Growth Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 98.7% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 13.1% | ||||||||||
Chipotle Mexican Grill, Inc. (Hotels, Restaurants & Leisure) | (a) | 2,327 | $ | 1,592,855 | ||||||
Jarden Corp. (Household Durables) | (a) | 54,696 | 2,618,845 | |||||||
Whirlpool Corp. (Household Durables) | 13,360 | 2,588,366 | ||||||||
Amazon.com, Inc. (Internet & Catalog Retail) | (a) | 3,768 | 1,169,399 | |||||||
CBS Corp. Class B (Media) | 24,188 | 1,338,564 | ||||||||
Comcast Corp. Class A (Media) | 43,778 | 2,539,562 | ||||||||
Walt Disney Co. / The (Media) | 19,197 | 1,808,165 | ||||||||
PVH Corp. (Textiles, Apparel & Luxury Goods) | 20,170 | 2,585,189 | ||||||||
|
| |||||||||
16,240,945 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 6.7% | ||||||||||
Coca-Cola Co. / The (Beverages) | 58,581 | 2,473,290 | ||||||||
Molson Coors Brewing Co. Class B (Beverages) | 15,009 | 1,118,471 | ||||||||
Colgate-Palmolive Co. (Household Products) | 38,275 | 2,648,247 | ||||||||
Procter & Gamble Co. / The (Household Products) | 22,213 | 2,023,382 | ||||||||
|
| |||||||||
8,263,390 | ||||||||||
|
| |||||||||
ENERGY – 3.8% | ||||||||||
Anadarko Petroleum Corp. (Oil, Gas & Consumable Fuels) | 13,964 | 1,152,030 | ||||||||
Devon Energy Corp. (Oil, Gas & Consumable Fuels) | 32,087 | 1,964,045 | ||||||||
EOG Resources, Inc. (Oil, Gas & Consumable Fuels) | 17,241 | 1,587,379 | ||||||||
|
| |||||||||
4,703,454 | ||||||||||
|
| |||||||||
FINANCIALS – 4.9% | ||||||||||
Bank of America Corp. (Banks) | 71,300 | 1,275,557 | ||||||||
Hartford Financial Services Group, Inc. / The (Insurance) | 60,476 | 2,521,244 | ||||||||
Prudential Financial, Inc. (Insurance) | 25,545 | 2,310,801 | ||||||||
|
| |||||||||
6,107,602 | ||||||||||
|
| |||||||||
HEALTH CARE – 24.7% | ||||||||||
Amgen, Inc. (Biotechnology) | 1,164 | 185,414 | ||||||||
Biogen Idec, Inc. (Biotechnology) | (a) | 7,172 | 2,434,535 | |||||||
Celgene Corp. (Biotechnology) | (a) | 26,399 | 2,952,992 | |||||||
Clovis Oncology, Inc. (Biotechnology) | (a) | 56,113 | 3,142,328 | |||||||
Intercept Pharmaceuticals, Inc. (Biotechnology) | (a) | 11,457 | 1,787,292 | |||||||
Pharmacyclics, Inc. (Biotechnology) | (a) | 17,884 | 2,186,498 | |||||||
Medtronic, Inc. (Health Care Equip. & Supplies) | 35,094 | 2,533,787 | ||||||||
St. Jude Medical, Inc. (Health Care Equip. & Supplies) | 37,657 | 2,448,835 | ||||||||
HCA Holdings, Inc. (Health Care Providers & Svs.) | (a) | 3,979 | 292,019 | |||||||
Humana, Inc. (Health Care Providers & Svs.) | 15,453 | 2,219,514 | ||||||||
UnitedHealth Group, Inc. (Health Care Providers & Svs.) | 24,527 | 2,479,434 | ||||||||
Thermo Fisher Scientific, Inc. (Life Sciences Tools & Svs.) | 19,856 | 2,487,758 | ||||||||
Actavis PLC (Pharmaceuticals) | (a) | 10,480 | 2,697,657 | |||||||
Mylan, Inc. (Pharmaceuticals) | (a) | 49,322 | 2,780,281 | |||||||
|
| |||||||||
30,628,344 | ||||||||||
|
|
Common Stocks (Continued) | Shares | Value | ||||||||
INDUSTRIALS – 11.4% | ||||||||||
Honeywell International, Inc. (Aerospace & Defense) | 12,700 | $ | 1,268,984 | |||||||
Lockheed Martin Corp. (Aerospace & Defense) | 13,854 | 2,667,865 | ||||||||
United Technologies Corp. (Aerospace & Defense) | 21,800 | 2,507,000 | ||||||||
FedEx Corp. (Air Freight & Logistics) | 15,372 | 2,669,502 | ||||||||
American Airlines Group, Inc. (Airlines) | 42,929 | 2,302,282 | ||||||||
Danaher Corp. (Industrial Conglomerates) | 32,093 | 2,750,691 | ||||||||
|
| |||||||||
14,166,324 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 29.0% | ||||||||||
Cisco Systems, Inc. (Communications Equip.) | 68,503 | 1,905,411 | ||||||||
Facebook, Inc. Class A (Internet Software & Svs.) | (a) | 33,861 | 2,641,835 | |||||||
Google, Inc. Class A (Internet Software & Svs.) | (a) | 4,335 | 2,300,411 | |||||||
Google, Inc. Class C (Internet Software & Svs.) | (a) | 5,441 | 2,864,142 | |||||||
Yahoo!, Inc. (Internet Software & Svs.) | (a) | 60,177 | 3,039,540 | |||||||
VeriFone Systems, Inc. (IT Svs.) | (a) | 1,137 | 42,296 | |||||||
Visa, Inc. (IT Svs.) | 11,504 | 3,016,349 | ||||||||
Altera Corp. (Semiconductors & Equip.) | 74,458 | 2,750,479 | ||||||||
Intel Corp. (Semiconductors & Equip.) | 85,040 | 3,086,102 | ||||||||
Adobe Systems, Inc. (Software) | (a) | 41,118 | 2,989,279 | |||||||
Microsoft Corp. (Software) | 91,485 | 4,249,478 | ||||||||
Oracle Corp. (Software) | 31,018 | 1,394,879 | ||||||||
Apple, Inc. (Tech. Hardware, Storage & Periph.) | 51,528 | 5,687,661 | ||||||||
|
| |||||||||
35,967,862 | ||||||||||
|
| |||||||||
MATERIALS – 3.8% | ||||||||||
Huntsman Corp. (Chemicals) | 95,640 | 2,178,679 | ||||||||
Monsanto Co. (Chemicals) | 21,068 | 2,516,994 | ||||||||
|
| |||||||||
4,695,673 | ||||||||||
|
| |||||||||
TELECOMMUNICATION SERVICES – 1.3% | ||||||||||
Verizon Communications, Inc. (Diversified Telecom. Svs.) | 35,773 | 1,673,461 | ||||||||
|
| |||||||||
Total Common Stocks (Cost $109,256,484) | $ | 122,447,055 | ||||||||
|
| |||||||||
Money Market Funds – 1.8% | Shares | Value | ||||||||
Fidelity Institutional Money Market Funds | ||||||||||
Money Market Portfolio – Class I | 2,288,000 | $ | 2,288,000 | |||||||
|
| |||||||||
Total Money Market Funds (Cost $2,288,000) | $ | 2,288,000 | ||||||||
|
| |||||||||
Total Investments – 100.5% (Cost $111,544,484) | (b) | $ | 124,735,055 | |||||||
Liabilities in Excess of Other Assets – (0.5)% | (681,748) | |||||||||
|
| |||||||||
Net Assets – 100.0% | $ | 124,053,307 | ||||||||
|
|
Percentages are stated as a percent of net assets.
Footnotes:
(a) | Non-income producing security. |
(b) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
93 |
Ohio National Fund, Inc. | Risk Managed Balanced Portfolio |
Objective/Strategy
The Risk Managed Balanced Portfolio seeks long-term capital growth, consistent with preservation of capital and balanced by current income. The Portfolio invests in a balanced portfolio of equity and fixed-income securities (the “Balanced Component”) and a risk management portfolio intended to enhance the risk adjusted return of the Portfolio (the “Risk Managed Component”).
Performance as of December 31, 2014
Return Since Inception (5/1/14) | 8.30% |
Comments
For the eight-month period from the Portfolio’s inception, May 1, 2014, to December 31, 2014, the Risk Managed Balanced Portfolio returned 8.30% versus 7.25% for the current benchmark, which is comprised of 55% S&P 500 Index and 45% Barclays Capital U.S. Aggregate Bond Index.
The U.S. economic recovery gathered momentum as the year progressed, while inflation remained tame. The Federal Reserve (“Fed”) acknowledged improved economic conditions and ended its quantitative easing (“QE”) program. However, the Fed’s policymakers seem to be looking for improving trends in economic data before hiking rates, and they signaled that a rate hike would not happen until 2015. Major equity indices rallied to records. Meanwhile, an economic slowdown abroad sent crude oil prices plunging. The difference in growth and monetary policy trajectories between the U.S. and its major trading partners sparked a rally in the U.S. dollar.
The fixed income market in 2014 can be characterized by a heavy rotation into the long end of the Treasury curve and a rotation out of risk assets, specifically the Energy sector within high yield. Long-end yields fell amid low inflation and concerns that an economic slowdown abroad could threaten U.S. growth. The flattening yield curve reflected this concern. The short-end of the curve rose, reflecting expectations for a Fed rate hike in 2015.
The Portfolio seeks to provide consistent returns over time by allocating across the spectrum of fixed income and equity securities. At period end, the equity allocation of the Balanced Component was about 60%, with the remainder in fixed income. At May 31, the Balanced Component had roughly 55% in equities, with the remainder in fixed income. The increase in the equity allocation stems from our primary focus on capital preservation and risk-adjusted returns. Global economic growth and inflation trends lead us to believe that equities offer better risk-adjusted returns at this juncture. Through a bottom up, fundamental process, we seek to identify companies with higher-quality business models, which are managed by solid capital stewards.
The equity sleeve of the Balanced Component outperformed its benchmark, the S&P 500 Index. The top contributing stock sectors on a relative basis were Energy, Industrials, and Health Care. During the period, we were materially underweight the Energy sector, and this helped drive returns, especially amid the plunge in crude oil prices during the fourth quarter. Likewise, lower oil prices helped our relative returns in Industrials, as lower fuel and input costs helped our stocks within that sector. Lastly, while a number of our holdings within Health Care have promising pipelines, heavy merger and acquisition activity was beneficial for several of our holdings during the period.(1)
On an individual stock basis, athletic apparel maker, Nike, Inc., was the top contributor due to solid earnings reports. The company’s
growth was fairly balanced throughout the world, though its growth in China was particularly strong despite the country’s slowing growth. While fashion trends can be unpredictable and comparable sales can be challenging, especially given unusual events like the World Cup, we believe that Nike, Inc. continues to have solid growth prospects.(1)
United Continental Holdings, Inc. was also a leading contributor. The airline company’s stock was helped by the market’s expectations that its bottom line will be boosted by lower fuel costs. United Continental Holdings, Inc. hedges only about 20% of its fuel cost by our estimates. We also expect that the company has a material amount of cost savings yet to be realized by the merger that formed the company several years ago.(1)
Apple, Inc. was another contributor. The company saw the successful launch of a number of new and next generation products during the period, especially the iPhone 6. The mobile device and computer maker continues to be the beneficiary of incremental sales opportunities and increased penetration in new geographies, mobile service providers and product categories.(1)
Stock sectors which detracted the most from returns on a relative basis were led by Consumer Discretionary, Consumer Staples and Materials. Our overweight within Consumer Discretionary helped returns on a relative basis, but that was not enough to offset lower returns by stock selection within the sector. We continue to be optimistic on several Consumer Discretionary firms amid an improving U.S. labor market and lower gasoline prices, which provide consumers with extra cash. We were underweight Consumer Staples, though here too, stock selection detracted versus the index. In Materials, both our overweight and our stock selection detracted from relative performance.(1)
On an individual stock basis, detractors were led by Las Vegas Sands Corp. The casino operator was hurt by softness in the company’s VIP business, but we believe the company’s mass market business remains solid. We expect the company to continue to expand its already large market share in Macau, and we believe its presence in other parts of Asia will provide opportunities.(1)
Toy maker Mattel, Inc.’s stock suffered due to an inventory overhang, which hurt profits. We continue to believe that its profitability will improve as it executes on its efficiency programs and refines its business mix.(1)
Chemicals maker LyondellBasell Industries NV’s stock declined amid investor concern that declining oil prices will pressure its ethylene prices. We view this development as a near-term headwind and continue to have conviction in the firm’s long-term growth potential.(1)
The fixed income sleeve of the Balanced Component underperformed its benchmark, the Barclays Capital U.S. Aggregate Bond Index, during the period. Underperformance was driven by our yield curve positioning, as well as by our overweight within corporate credit. Moreover, our overweight in several energy-related sectors also hurt performance. In the fourth quarter, the sharp decline in crude oil prices sparked indiscriminate selling in energy-related corporate credit, primarily within the high-yield market.(1)
Our yield-curve positioning was the largest detractor within the fixed income sleeve. For much of the period, we favored shorter duration securities amid our belief that there was a greater risk that rates would rise, in which case, longer duration securities presented more downside risk, in our view. However, the market favored longer-dated fixed income securities during the period.(1)
94 | (continued) |
Ohio National Fund, Inc. | Risk Managed Balanced Portfolio (Continued) |
Within corporate credit, our energy exposure included companies that generate solid cash flows and are strengthening their balance sheets, in our view. Many have ratings in the high-yield market’s “crossover” section, which is just beneath investment grade. We believe this section of the high yield market, in general, offers attractive risk-adjusted returns due to the potential ratings upgrades for these companies. We also believe many of our energy holdings can efficiently produce oil at lower prices.
Wholesale selling of energy credits during the period meant individual company fundamentals were ignored, in our view. We would add that a significant portion of crude oil’s decline occurred during the fourth quarter holiday season. That is a low volume period in the high yield market, and we believe the lower trading volume exacerbated price declines.
One Energy industry in particular, independent exploration and production, significantly detracted from relative performance. The Portfolio’s other top industry detractors were also energy-related, such as the midstream sector. The automotive and technology segments within corporate credit were additive on a relative basis. Moreover, our out-of-index high-yield exposure in corporate credit helped make spread carry, or the excess yield generated by individual securities versus the index, a relative contributor.(1)
Our Treasury allocation was also a relative detractor. We increased our Treasury weighting during the period as a defensive measure in light of market conditions, though we still remained underweight the benchmark during much of the period. Given the significant decline in long-end Treasury yields during the period, our underweight made the Treasury allocation a relative detractor.(1)
The Risk Managed Component of the Portfolio, a sleeve of derivatives and cash equivalents, seeks to limit the downside risk of the Portfolio. The Portfolio returns are enhanced on a risk-adjusted basis when the aggregate Portfolio achieves lower volatility with similar returns, or higher returns at similar volatility compared to a benchmark. For the May 1, 2014 through December 31, 2014 period, the Risk Managed Component reduced the annualized volatility of the aggregate Portfolio by 0.70% and increased the cumulative return by 2.80% when compared to the Balanced Component alone. Under normal circumstances, the Risk Managed Component will represent approximately 20% of the Portfolio. The allocation from this target over this period ranged between 19.9% and 22.5%, and ended the 2014 year representing approximately 21.9% of the Portfolio.(1)
Heading into 2015, we have a sanguine outlook for both the U.S. economy and domestic stock markets. The economy continues to grow at a modest, but steady clip, with the Fed in no rush to raise rates. An improving economy and a benign interest rate environment historically has been an ideal backdrop for equities.
U.S. equities are trading at higher valuations than they were a year ago, but we believe those higher valuations remain reasonable given our belief that earnings growth by U.S. companies will continue to push many stocks higher. The U.S. consumer remains strong, and the steep drop in oil prices is acting as a tax cut that should only bolster consumer spending power and increase revenues for many companies.
Even though we are generally bullish on U.S. stocks, there are risks we continue to monitor. Falling oil prices could continue to hurt a number of energy companies and other industries tied to the Energy sector. A stronger dollar and slow economic growth outside the U.S. are still headwinds for large U.S.-based companies that derive a considerable portion of revenues overseas.
The fixed income market is more focused on the downside effect that global economic challenges could have on the U.S. economy. Uncertainty created by the diverging growth and monetary policy trajectories of the U.S. and its major trading partners could drive volatility in the fixed income markets, in our view.
First and foremost, we invest according to our two core tenets of seeking capital preservation and risk-adjusted returns. Given the potential for greater volatility ahead, we have de-risked our fixed income sleeve by reducing our exposure to corporate credit, though we remain overweight the benchmark.(1)
While the Fed has signaled that it is preparing to exit loose monetary policy, we believe near-term global growth concerns and tame inflation trends may contain long-end Treasury rates for now. We are also mindful of stepped up Treasury purchases by foreign investors hungry for yield. As part of our defensive positioning, we have increased our Treasury exposure. We also believe it is prudent at this juncture for the Portfolio’s overall duration to be more in line with the benchmark and allowed to adjust upward or downward as conditions warrant.(1)
Solid U.S. economic growth bodes well for corporate prospects. Moreover, with yields low, corporate credit will continue to be in demand. Nevertheless, at this stage in the credit cycle, companies are re-leveraging their balance sheets through share repurchases and expensive acquisitions. Selectivity is key, and that plays to our bottom-up, fundamental process of focusing on strong balance sheets and managements. We believe that equities offer better opportunities to take advantage of corporate prospects on a risk-adjusted return basis than do fixed income securities at this juncture, and we intend to maintain our equities overweight in the Portfolio.(1)
(1) | The Portfolio’s composition is subject to change. Holdings and weightings are as of December 31, 2014. |
Change in Value of $10,000 Investment
The S&P 500 index is a capitalization-weighted index designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index includes the effects of reinvested dividends.
The Barclays Capital U.S. Aggregate Bond Index measures returns of U.S. investment grade bonds market, which includes investment grade U.S. Government bonds, high quality corporate bonds, mortgage pass-through securities, and asset-backed securities publicly offered for sale in the U.S. The index’s securities must have at least one year remaining to maturity; they must also be denominated in U.S. dollars and must be fixed rate, nonconvertible, and taxable.
95 | (continued) |
Ohio National Fund, Inc. | Risk Managed Balanced Portfolio (Continued) |
Portfolio Composition as of December 31, 2014 (1)
% of Net Assets | ||||
Common Stocks (3) | 45.6 | |||
Corporate Bonds (3) | 11.7 | |||
Preferred Stocks (3) | 0.6 | |||
Asset-Backed / Commercial Mortgage-Backed Securities (3) | 1.3 | |||
U.S. Treasury Obligations | 12.7 | |||
U.S. Government Agency Mortgage-Backed Securities | 4.5 | |||
Purchased Options | 7.2 | |||
Other | 0.3 | |||
Money Market Funds and | 16.1 | |||
|
| |||
100.0 | ||||
|
|
Top 10 Portfolio Holdings as of December 31, 2014 (1) (2)
% of Net Assets | ||||
1. U.S. Treasury Note | 1.8 | |||
2. U.S. Treasury Note | 1.7 | |||
3. EI du Pont de Nemours & Co. | 1.6 | |||
4. MasterCard, Inc. Class A | 1.6 | |||
5. U.S. Treasury Note | 1.5 | |||
6. U.S. Treasury Note | 1.5 | |||
7. Union Pacific Corp. | 1.5 | |||
8. Blackstone Group LP / The | 1.5 | |||
9. LyondellBasell Industries NV Class A | 1.4 | |||
10. NIKE, Inc. Class B | 1.4 |
(1) | Composition of Portfolio subject to change. |
(2) | Short-term investments have been excluded from the list of Top 10 Portfolio Holdings. |
(3) | Sectors (combined): |
% of Net Assets | ||||
Financials | 11.2 | |||
Consumer Discretionary | 10.1 | |||
Information Technology | 8.9 | |||
Industrials | 8.8 | |||
Health Care | 8.5 | |||
Energy | 5.3 | |||
Materials | 3.7 | |||
Consumer Staples | 2.7 | |||
Telecommunication Services | 0.2 | |||
Utilities | 0.1 | |||
|
| |||
59.5 | ||||
|
|
96 |
Ohio National Fund, Inc. | Risk Managed Balanced Portfolio |
Schedule of Investments | December 31, 2014 |
Common Stocks – 45.6% | Shares | Value | ||||||||
CONSUMER DISCRETIONARY – 8.3% | ||||||||||
General Motors Co. (Automobiles) | 9,648 | $ | 336,812 | |||||||
Las Vegas Sands Corp. (Hotels, Restaurants & Leisure) | 6,043 | 351,461 | ||||||||
Six Flags Entertainment Corp. (Hotels, Restaurants & Leisure) | 2,009 | 86,688 | ||||||||
Starwood Hotels & Resorts Worldwide, Inc. (Hotels, Restaurants & Leisure) | 2,612 | 211,755 | ||||||||
Priceline Group, Inc. / The (Internet & Catalog Retail) | (a) | 199 | 226,902 | |||||||
Mattel, Inc. (Leisure Products) | 8,490 | 262,723 | ||||||||
CBS Corp. Class B (Media) | 6,706 | 371,110 | ||||||||
Time Warner Cable, Inc. (Media) | 1,165 | 177,150 | ||||||||
Viacom, Inc. Class B (Media) | 705 | 53,051 | ||||||||
AutoZone, Inc. (Specialty Retail) | (a) | 172 | 106,487 | |||||||
Home Depot, Inc. / The (Specialty Retail) | 1,578 | 165,643 | ||||||||
NIKE, Inc. Class B (Textiles, Apparel & Luxury Goods) | 4,779 | 459,501 | ||||||||
|
| |||||||||
2,809,283 | ||||||||||
|
| |||||||||
CONSUMER STAPLES – 2.4% | ||||||||||
Diageo PLC (Beverages) | (c) | 4,120 | 118,026 | |||||||
Hershey Co. / The (Food Products) | 1,257 | 130,640 | ||||||||
Altria Group, Inc. (Tobacco) | 5,036 | 248,124 | ||||||||
Philip Morris International, Inc. (Tobacco) | 3,892 | 317,003 | ||||||||
|
| |||||||||
813,793 | ||||||||||
|
| |||||||||
ENERGY – 2.7% | ||||||||||
Chevron Corp. (Oil, Gas & Consumable Fuels) | 3,217 | 360,883 | ||||||||
Enterprise Products Partners LP (Oil, Gas & Consumable Fuels) | 11,218 | 405,194 | ||||||||
Marathon Oil Corp. (Oil, Gas & Consumable Fuels) | 5,003 | 141,535 | ||||||||
|
| |||||||||
907,612 | ||||||||||
|
| |||||||||
FINANCIALS – 5.4% | ||||||||||
JPMorgan Chase & Co. (Banks) | 3,939 | 246,503 | ||||||||
U.S. Bancorp (Banks) | 8,981 | 403,696 | ||||||||
Blackstone Group LP / The (Capital Markets) | 14,694 | 497,098 | ||||||||
American Express Co. (Consumer Finance) | 2,336 | 217,342 | ||||||||
CME Group, Inc. (Diversified Financial Svs.) | 1,430 | 126,770 | ||||||||
Prudential PLC (Insurance) | (c) | 9,858 | 227,912 | |||||||
Outfront Media, Inc. (Real Estate Investment Trusts) | 1,286 | 34,503 | ||||||||
Ventas, Inc. (Real Estate Investment Trusts) | 1,165 | 83,531 | ||||||||
|
| |||||||||
1,837,355 | ||||||||||
|
| |||||||||
HEALTH CARE – 8.0% | ||||||||||
Amgen, Inc. (Biotechnology) | 1,196 | 190,511 | ||||||||
Abbott Laboratories (Health Care Equip. & Supplies) | 4,965 | 223,524 | ||||||||
Aetna, Inc. (Health Care Providers & Svs.) | 4,256 | 378,061 | ||||||||
Express Scripts Holding Co. (Health Care Providers & Svs.) | (a) | 2,693 | 228,016 | |||||||
AbbVie, Inc. (Pharmaceuticals) | 6,791 | 444,403 | ||||||||
Bristol-Myers Squibb Co. (Pharmaceuticals) | 5,080 | 299,872 | ||||||||
Eli Lilly & Co. (Pharmaceuticals) | 2,207 | 152,261 | ||||||||
Endo International PLC (Pharmaceuticals) | (a) | 3,004 | 216,648 | |||||||
Johnson & Johnson (Pharmaceuticals) | 3,001 | 313,815 | ||||||||
Mylan, Inc. (Pharmaceuticals) | (a) | 4,387 | 247,295 | |||||||
|
| |||||||||
2,694,406 | ||||||||||
|
| |||||||||
INDUSTRIALS – 7.7% | ||||||||||
Boeing Co. / The (Aerospace & Defense) | 3,479 | 452,200 | ||||||||
Honeywell International, Inc. (Aerospace & Defense) | 3,209 | 320,643 | ||||||||
Precision Castparts Corp. (Aerospace & Defense) | 1,664 | 400,824 | ||||||||
United Continental Holdings, Inc. (Airlines) | (a) | 5,272 | 352,644 | |||||||
3M Co. (Industrial Conglomerates) | 1,229 | 201,949 | ||||||||
Dover Corp. (Machinery) | 1,011 | 72,509 | ||||||||
Towers Watson & Co. Class A (Professional Svs.) | 751 | 84,991 | ||||||||
Canadian Pacific Railway Ltd. (Road & Rail) | 1,047 | 201,746 | ||||||||
Union Pacific Corp. (Road & Rail) | 4,226 | 503,443 | ||||||||
|
| |||||||||
2,590,949 | ||||||||||
|
| |||||||||
INFORMATION TECHNOLOGY – 8.0% | ||||||||||
TE Connectivity Ltd. (Electronic Equip., Instr. & Comp.) | 5,247 | 331,873 | ||||||||
Alibaba Group Holding Ltd. – ADR (Internet Software & Svs.) | (a) | 1,616 | 167,967 | |||||||
Google, Inc. Class C (Internet Software & Svs.) | (a) | 689 | 362,690 | |||||||
Automatic Data Processing, Inc. (IT Svs.) | 1,426 | 118,886 | ||||||||
MasterCard, Inc. Class A (IT Svs.) | 6,185 | 532,900 |
97 | (continued) |
Ohio National Fund, Inc. | Risk Managed Balanced Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Common Stocks (Continued) | Shares | Value | ||||||||
INFORMATION TECHNOLOGY (continued) | ||||||||||
CDK Global, Inc. (Software) | 323 | $ | 13,165 | |||||||
Microsoft Corp. (Software) | 9,037 | 419,769 | ||||||||
Apple, Inc. (Tech. Hardware, Storage & Periph.) | 3,496 | 385,888 | ||||||||
EMC Corp. (Tech. Hardware, Storage & Periph.) | 6,347 | 188,760 | ||||||||
Seagate Technology PLC (Tech. Hardware, Storage & Periph.) | 2,960 | 196,840 | ||||||||
|
| |||||||||
2,718,738 | ||||||||||
|
| |||||||||
MATERIALS – 3.0% | ||||||||||
E.I. du Pont de Nemours & Co. (Chemicals) | 7,233 | 534,808 | ||||||||
LyondellBasell Industries NV Class A (Chemicals) | 6,011 | 477,213 | ||||||||
|
| |||||||||
1,012,021 | ||||||||||
|
| |||||||||
TELECOMMUNICATION SERVICES – 0.1% | ||||||||||
Verizon Communications, Inc. (Diversified Telecom. Svs.) | 1,011 | 47,295 | ||||||||
|
| |||||||||
Total Common Stocks (Cost $14,838,617) | $ | 15,431,452 | ||||||||
|
|
Corporate Bonds – 11.7% | Rate | Maturity | Face Amount | Value | ||||||||||||
CONSUMER DISCRETIONARY – 1.2% | ||||||||||||||||
General Motors Co. (Automobiles) | 6.250% | 10/02/2043 | $ | 17,000 | $ | 20,393 | ||||||||||
General Motors Co. (Automobiles) | 4.875% | 10/02/2023 | 96,000 | 103,200 | ||||||||||||
General Motors Co. (Automobiles) | 3.500% | 10/02/2018 | 62,000 | 63,550 | ||||||||||||
General Motors Co. (Automobiles) | 5.200% | 04/01/2045 | 18,000 | 19,035 | ||||||||||||
Brinker International, Inc. (Hotels, Restaurants & Leisure) | 3.875% | 05/15/2023 | 39,000 | 38,960 | ||||||||||||
MGM Resorts International (Hotels, Restaurants & Leisure) | 8.625% | 02/01/2019 | 32,000 | 36,440 | ||||||||||||
Wynn Las Vegas LLC / Wynn Las Vegas Capital Corp. (Hotels, Restaurants & Leisure) | (b) | 4.250% | 05/30/2023 | 11,000 | 10,505 | |||||||||||
D.R. Horton, Inc. (Household Durables) | 4.750% | 05/15/2017 | 14,000 | 14,700 | ||||||||||||
MDC Holdings, Inc. (Household Durables) | 5.500% | 01/15/2024 | 32,000 | 31,120 | ||||||||||||
Toll Brothers Finance Corp. (Household Durables) | 5.875% | 02/15/2022 | 16,000 | 17,160 | ||||||||||||
Nielsen Finance LLC / Nielsen Finance Co. (Media) | (b) | 5.000% | 04/15/2022 | 10,000 | 10,100 | |||||||||||
UBM PLC (Media) | (b) | 5.750% | 11/03/2020 | 31,000 | 33,859 | |||||||||||
Macy’s Retail Holdings, Inc. (Multiline Retail) | 5.900% | 12/01/2016 | 16,000 | 17,373 | ||||||||||||
|
| |||||||||||||||
416,395 | ||||||||||||||||
|
| |||||||||||||||
CONSUMER STAPLES – 0.3% | ||||||||||||||||
Safeway, Inc. (Food & Staples Retailing) | 4.750% | 12/01/2021 | 16,000 | 16,224 | ||||||||||||
Wm. Wrigley Jr. Co. (Food Products) | (b) | 3.375% | 10/21/2020 | 32,000 | 32,751 | |||||||||||
Wm. Wrigley Jr. Co. (Food Products) | (b) | 2.400% | 10/21/2018 | 62,000 | 62,492 | |||||||||||
|
| |||||||||||||||
111,467 | ||||||||||||||||
|
| |||||||||||||||
ENERGY – 2.6% | ||||||||||||||||
Ensco PLC (Energy Equip. & Svs.) | 4.500% | 10/01/2024 | 10,000 | 9,656 | ||||||||||||
Nabors Industries, Inc. (Energy Equip. & Svs.) | 5.000% | 09/15/2020 | 30,000 | 29,501 | ||||||||||||
Oceaneering International, Inc. (Energy Equip. & Svs.) | 4.650% | 11/15/2024 | 42,000 | 41,205 | ||||||||||||
Chesapeake Energy Corp. (Oil, Gas & Consumable Fuels) | 5.375% | 06/15/2021 | 31,000 | 31,136 | ||||||||||||
Chesapeake Energy Corp. (Oil, Gas & Consumable Fuels) | 4.875% | 04/15/2022 | 44,000 | 43,010 | ||||||||||||
Chevron Corp. (Oil, Gas & Consumable Fuels) | 1.345% | 11/15/2017 | 48,000 | 48,076 | ||||||||||||
Cimarex Energy Co. (Oil, Gas & Consumable Fuels) | 5.875% | 05/01/2022 | 70,000 | 73,150 | ||||||||||||
Cimarex Energy Co. (Oil, Gas & Consumable Fuels) | 4.375% | 06/01/2024 | 41,000 | 39,258 | ||||||||||||
Continental Resources, Inc. (Oil, Gas & Consumable Fuels) | 5.000% | 09/15/2022 | 27,000 | 26,156 | ||||||||||||
DCP Midstream Operating LP (Oil, Gas & Consumable Fuels) | 5.600% | 04/01/2044 | 19,000 | 19,496 | ||||||||||||
DCP Midstream Operating LP (Oil, Gas & Consumable Fuels) | 3.875% | 03/15/2023 | 24,000 | 23,006 | ||||||||||||
DCP Midstream Operating LP (Oil, Gas & Consumable Fuels) | 4.950% | 04/01/2022 | 35,000 | 37,207 | ||||||||||||
Devon Energy Corp. (Oil, Gas & Consumable Fuels) | 2.250% | 12/15/2018 | 24,000 | 23,936 | ||||||||||||
El Paso Pipeline Partners Operating Co., LLC (Oil, Gas & Consumable Fuels) | 5.000% | 10/01/2021 | 31,000 | 32,649 | ||||||||||||
El Paso Pipeline Partners Operating Co., LLC (Oil, Gas & Consumable Fuels) | 4.300% | 05/01/2024 | 16,000 | 16,061 | ||||||||||||
Energy Transfer Partners LP (Oil, Gas & Consumable Fuels) | 4.150% | 10/01/2020 | 16,000 | 16,423 | ||||||||||||
EnLink Midstream Partners LP (Oil, Gas & Consumable Fuels) | 4.400% | 04/01/2024 | 31,000 | 31,462 | ||||||||||||
EnLink Midstream Partners LP (Oil, Gas & Consumable Fuels) | 5.600% | 04/01/2044 | 19,000 | 19,920 | ||||||||||||
Kinder Morgan, Inc. (Oil, Gas & Consumable Fuels) | 7.750% | 01/15/2032 | 17,000 | 20,995 | ||||||||||||
Motiva Enterprises LLC (Oil, Gas & Consumable Fuels) | (b) | 5.750% | 01/15/2020 | 22,000 | 24,574 | |||||||||||
NGL Energy Partners LP / NGL Energy Finance Corp. (Oil, Gas & Consumable Fuels) | (b) | 5.125% | 07/15/2019 | 30,000 | 28,838 | |||||||||||
Plains All American Pipeline LP / PAA Finance Corp. (Oil, Gas & Consumable Fuels) | 3.950% | 09/15/2015 | 45,000 | 45,933 | ||||||||||||
Spectra Energy Partners LP (Oil, Gas & Consumable Fuels) | 4.750% | 03/15/2024 | 31,000 | 33,290 | ||||||||||||
Targa Resources Partners LP / Targa Resources Partners Finance Corp. (Oil, Gas & Consumable Fuels) | (b) | 4.125% | 11/15/2019 | 40,000 | 38,700 | |||||||||||
Western Gas Partners LP (Oil, Gas & Consumable Fuels) | 5.375% | 06/01/2021 | 47,000 | 51,633 | ||||||||||||
Whiting Petroleum Corp. (Oil, Gas & Consumable Fuels) | 5.000% | 03/15/2019 | 65,000 | 61,100 | ||||||||||||
|
| |||||||||||||||
866,371 | ||||||||||||||||
|
|
98 | (continued) |
Ohio National Fund, Inc. | Risk Managed Balanced Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
FINANCIALS – 4.2% | ||||||||||||||||
Goldman Sachs Capital I | 6.345% | 02/15/2034 | $ | 39,000 | $ | 46,531 | ||||||||||
CIT Group, Inc. (Banks) | (b) | 6.625% | 04/01/2018 | 2,000 | 2,177 | |||||||||||
CIT Group, Inc. (Banks) | (b) | 5.500% | 02/15/2019 | 40,000 | 42,325 | |||||||||||
CIT Group, Inc. (Banks) | 4.250% | 08/15/2017 | 55,000 | 56,237 | ||||||||||||
CIT Group, Inc. (Banks) | 3.875% | 02/19/2019 | 22,000 | 22,000 | ||||||||||||
Royal Bank of Scotland Group PLC (Banks) | 2.550% | 09/18/2015 | 39,000 | 39,397 | ||||||||||||
Royal Bank of Scotland Group PLC (Banks) | 6.000% | 12/19/2023 | 87,000 | 94,333 | ||||||||||||
Royal Bank of Scotland Group PLC (Banks) | 6.100% | 06/10/2023 | 50,000 | 54,320 | ||||||||||||
SVB Financial Group (Banks) | 5.375% | 09/15/2020 | 25,000 | 28,181 | ||||||||||||
Ameriprise Financial, Inc. (Capital Markets) | (d) | 7.518% | 06/01/2066 | 62,000 | 66,650 | |||||||||||
E*TRADE Financial Corp. (Capital Markets) | 6.375% | 11/15/2019 | 102,000 | 108,630 | ||||||||||||
E*TRADE Financial Corp. (Capital Markets) | 5.375% | 11/15/2022 | 19,000 | 19,475 | ||||||||||||
Lazard Group LLC (Capital Markets) | 4.250% | 11/14/2020 | 39,000 | 41,157 | ||||||||||||
Morgan Stanley (Capital Markets) | 5.000% | 11/24/2025 | 16,000 | 17,095 | ||||||||||||
Morgan Stanley (Capital Markets) | 1.875% | 01/05/2018 | 35,000 | 34,940 | ||||||||||||
Neuberger Berman Group LLC / Neuberger Berman Finance Corp. (Capital Markets) | (b) | 5.875% | 03/15/2022 | 89,000 | 94,117 | |||||||||||
Neuberger Berman Group LLC / Neuberger Berman Finance Corp. (Capital Markets) | (b) | 5.625% | 03/15/2020 | 8,000 | 8,400 | |||||||||||
Raymond James Financial, Inc. (Capital Markets) | 5.625% | 04/01/2024 | 80,000 | 91,286 | ||||||||||||
Raymond James Financial, Inc. (Capital Markets) | 4.250% | 04/15/2016 | 17,000 | 17,635 | ||||||||||||
Stifel Financial Corp. (Capital Markets) | 4.250% | 07/18/2024 | 26,000 | 26,205 | ||||||||||||
TD Ameritrade Holding Corp. (Capital Markets) | 3.625% | 04/01/2025 | 50,000 | 50,781 | ||||||||||||
Ally Financial, Inc. (Consumer Finance) | 8.000% | 03/15/2020 | 12,000 | 14,190 | ||||||||||||
Ally Financial, Inc. (Consumer Finance) | 7.500% | 09/15/2020 | 10,000 | 11,750 | ||||||||||||
American Express Co. (Consumer Finance) | (d) | 6.800% | 09/01/2066 | 35,000 | 36,750 | |||||||||||
Discover Financial Services (Consumer Finance) | 3.950% | 11/06/2024 | 22,000 | 22,159 | ||||||||||||
Synchrony Financial (Consumer Finance) | 4.250% | 08/15/2024 | 38,000 | 39,038 | ||||||||||||
Synchrony Financial (Consumer Finance) | 3.000% | 08/15/2019 | 32,000 | 32,371 | ||||||||||||
GE Capital Trust I (Diversified Financial Svs.) | (d) | 6.375% | 11/15/2067 | 13,000 | 14,034 | |||||||||||
MSCI, Inc. (Diversified Financial Svs.) | (b) | 5.250% | 11/15/2024 | 11,000 | 11,413 | |||||||||||
Voya Financial, Inc. (Diversified Financial Svs.) | (d) | 5.650% | 05/15/2053 | 17,000 | 16,915 | |||||||||||
Primerica, Inc. (Insurance) | 4.750% | 07/15/2022 | 46,000 | 50,256 | ||||||||||||
Alexandria Real Estate Equities, Inc. (Real Estate Investment Trusts) | 4.600% | 04/01/2022 | 39,000 | 41,545 | ||||||||||||
Alexandria Real Estate Equities, Inc. (Real Estate Investment Trusts) | 2.750% | 01/15/2020 | 25,000 | 24,790 | ||||||||||||
Alexandria Real Estate Equities, Inc. (Real Estate Investment Trusts) | 4.500% | 07/30/2029 | 7,000 | 7,187 | ||||||||||||
Retail Opportunity Investments Partnership LP (Real Estate Investment Trusts) | 4.000% | 12/15/2024 | 9,000 | 9,037 | ||||||||||||
SL Green Realty Corp. (Real Estate Investment Trusts) | 7.750% | 03/15/2020 | 30,000 | 35,878 | ||||||||||||
SL Green Realty Corp. (Real Estate Investment Trusts) | 5.000% | 08/15/2018 | 32,000 | 34,350 | ||||||||||||
Jones Lang LaSalle, Inc. (Real Estate Mgmt. & Development) | 4.400% | 11/15/2022 | 26,000 | 27,027 | ||||||||||||
Kennedy-Wilson, Inc. (Real Estate Mgmt. & Development) | 5.875% | 04/01/2024 | 30,000 | 30,150 | ||||||||||||
|
| |||||||||||||||
1,420,712 | ||||||||||||||||
|
| |||||||||||||||
HEALTH CARE – 0.5% | ||||||||||||||||
Becton Dickinson and Co. (Health Care Equip. & Supplies) | 1.800% | 12/15/2017 | 20,000 | 20,090 | ||||||||||||
Fresenius Medical Care U.S. Finance II, Inc. (Health Care Providers & Svs.) | (b) | 5.875% | 01/31/2022 | 32,000 | 34,880 | |||||||||||
HCA, Inc. (Health Care Providers & Svs.) | 3.750% | 03/15/2019 | 16,000 | 16,060 | ||||||||||||
Omnicare, Inc. (Health Care Providers & Svs.) | 4.750% | 12/01/2022 | 11,000 | 11,193 | ||||||||||||
Omnicare, Inc. (Health Care Providers & Svs.) | 5.000% | 12/01/2024 | 15,000 | 15,450 | ||||||||||||
Life Technologies Corp. (Life Sciences Tools & Svs.) | 6.000% | 03/01/2020 | 34,000 | 38,887 | ||||||||||||
Thermo Fisher Scientific, Inc. (Life Sciences Tools & Svs.) | 3.300% | 02/15/2022 | 13,000 | 13,042 | ||||||||||||
Actavis Funding SCS (Pharmaceuticals) | 4.850% | 06/15/2044 | 6,000 | 6,112 | ||||||||||||
Actavis Funding SCS (Pharmaceuticals) | 3.850% | 06/15/2024 | 7,000 | 7,049 | ||||||||||||
|
| |||||||||||||||
162,763 | ||||||||||||||||
|
| |||||||||||||||
INDUSTRIALS – 1.1% | ||||||||||||||||
Exelis, Inc. (Aerospace & Defense) | 5.550% | 10/01/2021 | 9,000 | 9,727 | ||||||||||||
Exelis, Inc. (Aerospace & Defense) | 4.250% | 10/01/2016 | 15,000 | 15,524 | ||||||||||||
KLX, Inc. (Aerospace & Defense) | (b) | 5.875% | 12/01/2022 | 14,000 | 14,175 | |||||||||||
Southwest Airlines Co. (Airlines) | 5.125% | 03/01/2017 | 23,000 | 24,652 | ||||||||||||
Owens Corning (Building Products) | 4.200% | 12/01/2024 | 10,000 | 9,896 | ||||||||||||
CNH Industrial Capital LLC (Machinery) | 3.625% | 04/15/2018 | 15,000 | 14,850 | ||||||||||||
Verisk Analytics, Inc. (Professional Svs.) | 5.800% | 05/01/2021 | 104,000 | 117,332 | ||||||||||||
Verisk Analytics, Inc. (Professional Svs.) | 4.125% | 09/12/2022 | 26,000 | 26,839 | ||||||||||||
Verisk Analytics, Inc. (Professional Svs.) | 4.875% | 01/15/2019 | 14,000 | 15,043 | ||||||||||||
JB Hunt Transport Services, Inc. (Road & Rail) | 3.375% | 09/15/2015 | 33,000 | 33,576 | ||||||||||||
Penske Truck Leasing Co. LP / PTL Finance Corp. (Road & Rail) | (b) | 3.375% | 03/15/2018 | 25,000 | 25,829 | |||||||||||
Penske Truck Leasing Co. LP / PTL Finance Corp. (Road & Rail) | (b) | 4.250% | 01/17/2023 | 45,000 | 46,788 | |||||||||||
Penske Truck Leasing Co. LP / PTL Finance Corp. (Road & Rail) | (b) | 2.500% | 06/15/2019 | 17,000 | 16,914 | |||||||||||
|
| |||||||||||||||
371,145 | ||||||||||||||||
|
|
99 | (continued) |
Ohio National Fund, Inc. | Risk Managed Balanced Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Corporate Bonds (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
INFORMATION TECHNOLOGY – 0.9% | ||||||||||||||||
Motorola Solutions, Inc. (Communications Equip.) | 4.000% | 09/01/2024 | $ | 9,000 | $ | 9,072 | ||||||||||
Seagate HDD Cayman (Computers & Peripherals) | (b) | 4.750% | 01/01/2025 | 95,000 | 98,216 | |||||||||||
Seagate HDD Cayman (Computers & Peripherals) | 4.750% | 06/01/2023 | 15,000 | 15,607 | ||||||||||||
Seagate HDD Cayman (Computers & Peripherals) | (b) | 5.750% | 12/01/2034 | 5,000 | 5,289 | |||||||||||
FLIR Systems, Inc. (Electronic Equip., Instr. & Comp.) | 3.750% | 09/01/2016 | 23,000 | 23,856 | ||||||||||||
Trimble Navigation Ltd. (Electronic Equip., Instr. & Comp.) | 4.750% | 12/01/2024 | 39,000 | 40,036 | ||||||||||||
Fidelity National Information Services, Inc. (IT Svs.) | 5.000% | 03/15/2022 | 5,000 | 5,308 | ||||||||||||
Fidelity National Information Services, Inc. (IT Svs.) | 3.875% | 06/05/2024 | 13,000 | 13,157 | ||||||||||||
Fiserv, Inc. (IT Svs.) | 3.125% | 10/01/2015 | 21,000 | 21,368 | ||||||||||||
Autodesk, Inc. (Software) | 3.600% | 12/15/2022 | 26,000 | 25,753 | ||||||||||||
Cadence Design Systems, Inc. (Software) | 4.375% | 10/15/2024 | 57,000 | 58,027 | ||||||||||||
|
| |||||||||||||||
315,689 | ||||||||||||||||
|
| |||||||||||||||
MATERIALS – 0.7% | ||||||||||||||||
Albemarle Corp. (Chemicals) | 5.450% | 12/01/2044 | 28,000 | 30,243 | ||||||||||||
Albemarle Corp. (Chemicals) | 4.150% | 12/01/2024 | 33,000 | 33,595 | ||||||||||||
Ashland, Inc. (Chemicals) | 3.875% | 04/15/2018 | 15,000 | 15,206 | ||||||||||||
Ashland, Inc. (Chemicals) | 6.875% | 05/15/2043 | 16,000 | 17,120 | ||||||||||||
Hanson Ltd. (Construction Materials) | 6.125% | 08/15/2016 | 26,000 | 27,690 | ||||||||||||
Martin Marietta Materials, Inc. (Construction Materials) | 4.250% | 07/02/2024 | 15,000 | 15,406 | ||||||||||||
Reliance Steel & Aluminum Co. (Metals & Mining) | 4.500% | 04/15/2023 | 11,000 | 10,799 | ||||||||||||
Georgia-Pacific LLC (Paper & Forest Products) | (b) | 3.163% | 11/15/2021 | 39,000 | 39,292 | |||||||||||
Georgia-Pacific LLC (Paper & Forest Products) | (b) | 3.600% | 03/01/2025 | 40,000 | 40,254 | |||||||||||
|
| |||||||||||||||
229,605 | ||||||||||||||||
|
| |||||||||||||||
TELECOMMUNICATION SERVICES – 0.1% | ||||||||||||||||
Sprint Corp. (Wireless Telecom. Svs.) | 7.250% | 09/15/2021 | 32,000 | 31,880 | ||||||||||||
|
| |||||||||||||||
UTILITIES – 0.1% | ||||||||||||||||
IPALCO Enterprises, Inc. (Electric Utilities) | 5.000% | 05/01/2018 | 18,000 | 19,080 | ||||||||||||
|
| |||||||||||||||
Total Corporate Bonds (Cost $3,976,987) | $ | 3,945,107 | ||||||||||||||
|
| |||||||||||||||
Preferred Stocks – 0.6% | Rate | Shares | Value | |||||||||||||
FINANCIALS – 0.6% |
| |||||||||||||||
Citigroup Capital XIII (Banks) | 7.875% | 250 | $ | 6,645 | ||||||||||||
Citigroup, Inc. Series B (Banks) | (e) | 5.900% | 23,000 | 22,540 | ||||||||||||
Wells Fargo & Co. (Banks) | 6.625% | 475 | 13,176 | |||||||||||||
Zions Bancorporation (Banks) | (e) | 5.800% | 30,000 | 28,395 | ||||||||||||
Charles Schwab Corp. Series A / The (Capital Markets) | (e) | 7.000% | 32,000 | 37,140 | ||||||||||||
Morgan Stanley (Capital Markets) | 7.125% | 1,600 | 44,048 | |||||||||||||
Ally Financial, Inc. (Consumer Finance) | (b) | 7.000% | 35 | 35,161 | ||||||||||||
Discover Financial Services (Consumer Finance) | 6.500% | 1,200 | 30,408 | |||||||||||||
|
| |||||||||||||||
Total Preferred Stocks (Cost $218,773) | $ | 217,513 | ||||||||||||||
|
| |||||||||||||||
Asset-Backed / Commercial Mortgage-Backed Securities – 1.3% | Rate | Maturity | Face Amount | Value | ||||||||||||
CONSUMER DISCRETIONARY – 0.6% |
| |||||||||||||||
Applebee’s / IHOP Funding, LLC | (b) | 4.277% | 09/05/2044 | $ | 7,000 | $ | 7,035 | |||||||||
CKE Restaurant Holdings, Inc. | (b) | 4.474% | 03/20/2043 | 48,688 | 49,440 | |||||||||||
Hilton U.S.A. Trust 2013-HLT | (b) | 5.222% | 11/05/2030 | 150,000 | 154,210 | |||||||||||
|
| |||||||||||||||
210,685 | ||||||||||||||||
|
| |||||||||||||||
FINANCIALS – 0.7% |
| |||||||||||||||
AmeriCredit Automobile Receivables Trust 2012-4 | 2.680% | 10/09/2018 | 100,000 | 100,838 | ||||||||||||
COMM 2007-C9 Mortgage Trust | 5.650% | 12/10/2049 | 10,000 | 10,638 | ||||||||||||
Commercial Mortgage Trust 2007-GG11 | 5.867% | 12/10/2049 | 75,000 | 81,420 | ||||||||||||
LB-UBS Commercial Mortgage Trust 2007-C2 | 5.493% | 02/15/2040 | 10,000 | 10,559 | ||||||||||||
Wachovia Bank Commercial Mortgage Trust Series 2007-C31 | 5.660% | 04/15/2047 | 20,000 | 20,761 | ||||||||||||
Wachovia Bank Commercial Mortgage Trust Series 2007-C33 | 5.941% | 02/15/2051 | 25,621 | 26,908 | ||||||||||||
|
| |||||||||||||||
251,124 | ||||||||||||||||
|
| |||||||||||||||
Total Asset-Backed / Commercial Mortgage-Backed Securities (Cost $465,398) | $ | 461,809 | ||||||||||||||
|
| |||||||||||||||
U.S. Treasury Obligations – 12.7% | Rate | Maturity | Face Amount | Value | ||||||||||||
U.S. Treasury Note | 0.375% | 10/31/2016 | $ | 50,000 | $ | 49,785 | ||||||||||
U.S. Treasury Note | 0.500% | 11/30/2016 | 617,000 | 615,554 | ||||||||||||
U.S. Treasury Note | 0.625% | 12/31/2016 | 509,000 | 508,503 | ||||||||||||
U.S. Treasury Note | 0.875% | 01/31/2017 | 15,000 | 15,045 | ||||||||||||
U.S. Treasury Note | 0.875% | 02/28/2017 | 4,000 | 4,010 |
100 | (continued) |
Ohio National Fund, Inc. | Risk Managed Balanced Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
U.S. Treasury Obligations (Continued) | Rate | Maturity | Face Amount | Value | ||||||||||||
U.S. Treasury Note | 0.875% | 07/15/2017 | $ | 8,000 | $ | 7,989 | ||||||||||
U.S. Treasury Note | 1.000% | 09/15/2017 | 1,000 | 1,000 | ||||||||||||
U.S. Treasury Note | 0.875% | 10/15/2017 | 2,000 | 1,992 | ||||||||||||
U.S. Treasury Note | 0.750% | 10/31/2017 | 11,000 | 10,909 | ||||||||||||
U.S. Treasury Note | 1.000% | 12/15/2017 | 107,000 | 106,762 | ||||||||||||
U.S. Treasury Note | 0.750% | 12/31/2017 | 16,000 | 15,828 | ||||||||||||
U.S. Treasury Note | 0.875% | 01/31/2018 | 6,000 | 5,951 | ||||||||||||
U.S. Treasury Note | 0.750% | 03/31/2018 | 26,000 | 25,598 | ||||||||||||
U.S. Treasury Note | 1.375% | 07/31/2018 | 148,000 | 148,150 | ||||||||||||
U.S. Treasury Note | 1.500% | 08/31/2018 | 169,000 | 169,805 | ||||||||||||
U.S. Treasury Note | 1.375% | 09/30/2018 | 565,000 | 564,382 | ||||||||||||
U.S. Treasury Note | 1.250% | 10/31/2018 | 111,000 | 110,289 | ||||||||||||
U.S. Treasury Note | 1.625% | 07/31/2019 | 96,000 | 96,150 | ||||||||||||
U.S. Treasury Note | 1.750% | 09/30/2019 | 86,000 | 86,497 | ||||||||||||
U.S. Treasury Note | 1.500% | 10/31/2019 | 128,000 | 127,185 | ||||||||||||
U.S. Treasury Note | 1.500% | 11/30/2019 | 218,000 | 216,586 | ||||||||||||
U.S. Treasury Note | 2.125% | 09/30/2021 | 69,000 | 69,760 | ||||||||||||
U.S. Treasury Note | 1.750% | 05/15/2023 | 30,000 | 29,194 | ||||||||||||
U.S. Treasury Note | 2.500% | 08/15/2023 | 109,000 | 112,453 | ||||||||||||
U.S. Treasury Note | 2.750% | 11/15/2023 | 152,000 | 159,944 | ||||||||||||
U.S. Treasury Note | 2.500% | 05/15/2024 | 79,000 | 81,333 | ||||||||||||
U.S. Treasury Note | 2.375% | 08/15/2024 | 20,000 | 20,360 | ||||||||||||
U.S. Treasury Note | 2.250% | 11/15/2024 | 502,000 | 505,451 | ||||||||||||
U.S. Treasury Note | 3.750% | 11/15/2043 | 119,000 | 143,190 | ||||||||||||
U.S. Treasury Note | 3.625% | 02/15/2044 | 23,000 | 27,095 | ||||||||||||
U.S. Treasury Note | 3.375% | 05/15/2044 | 26,000 | 29,299 | ||||||||||||
U.S. Treasury Note | 3.125% | 08/15/2044 | 52,000 | 55,994 | ||||||||||||
U.S. Treasury Note | 3.000% | 11/15/2044 | 154,000 | 161,893 | ||||||||||||
|
| |||||||||||||||
Total U.S. Treasury Obligations (Cost $4,260,493) | $ | 4,283,936 | ||||||||||||||
|
| |||||||||||||||
U.S. Government Agency Mortgage-Backed Securities – 4.5% | Rate | Maturity | Face Amount | Value | ||||||||||||
Fannie Mae Pool | 3.500% | 10/01/2029 | $ | 30,551 | $ | 32,324 | ||||||||||
Fannie Mae Pool | 5.500% | 04/01/2040 | 372,669 | 418,504 | ||||||||||||
Fannie Mae Pool | 5.500% | 05/01/2041 | 9,626 | 10,761 | ||||||||||||
Fannie Mae Pool | 5.500% | 07/01/2041 | 51,382 | 57,547 | ||||||||||||
Fannie Mae Pool | 4.000% | 06/01/2042 | 17,518 | 18,896 | ||||||||||||
Fannie Mae Pool | 4.000% | 07/01/2042 | 134,426 | 144,981 | ||||||||||||
Fannie Mae Pool | 3.500% | 07/01/2042 | 41,381 | 43,339 | ||||||||||||
Fannie Mae Pool | 4.000% | 08/01/2042 | 7,977 | 8,604 | ||||||||||||
Fannie Mae Pool | 4.000% | 09/01/2042 | 9,647 | 10,401 | ||||||||||||
Fannie Mae Pool | 4.000% | 08/01/2043 | 24,109 | 26,010 | ||||||||||||
Fannie Mae Pool | 3.500% | 04/01/2044 | 7,614 | 7,975 | ||||||||||||
Fannie Mae Pool | 3.500% | 05/01/2044 | 54,980 | 57,653 | ||||||||||||
Fannie Mae Pool | 4.000% | 06/01/2044 | 185,653 | 200,253 | ||||||||||||
Fannie Mae Pool | 4.000% | 07/01/2044 | 55,324 | 59,792 | ||||||||||||
Fannie Mae Pool | 4.000% | 08/01/2044 | 34,999 | 37,826 | ||||||||||||
Freddie Mac Gold Pool | 3.500% | 07/01/2029 | 92,736 | 97,882 | ||||||||||||
Freddie Mac Gold Pool | 4.500% | 09/01/2044 | 90,176 | 99,866 | ||||||||||||
Ginnie Mae I Pool | 5.000% | 05/15/2040 | 138,541 | 154,436 | ||||||||||||
Ginnie Mae II Pool | 5.500% | 11/20/2037 | 7,181 | 8,008 | ||||||||||||
Ginnie Mae II Pool | 5.500% | 05/20/2042 | 10,468 | 11,811 | ||||||||||||
|
| |||||||||||||||
Total U.S. Government Agency Mortgage-Backed Securities (Cost $1,482,888) | $ | 1,506,869 | ||||||||||||||
|
| |||||||||||||||
Purchased Options – 7.2% | Contracts (h) | Value | ||||||||||||||
SPDR S&P 500 ETF Trust Put Option | 148 | $ | 243,386 | |||||||||||||
SPDR S&P 500 ETF Trust Put Option | 109 | 200,233 | ||||||||||||||
SPDR S&P 500 ETF Trust Put Option | 152 | 304,152 | ||||||||||||||
SPDR S&P 500 ETF Trust Put Option | 66 | 147,840 | ||||||||||||||
SPDR S&P 500 ETF Trust Put Option | 55 | 136,840 | ||||||||||||||
SPDR S&P 500 ETF Trust Put Option | 30 | 81,870 | ||||||||||||||
SPDR S&P 500 ETF Trust Call Option | 148 | 432,160 | ||||||||||||||
SPDR S&P 500 ETF Trust Call Option | 104 | 266,916 | ||||||||||||||
SPDR S&P 500 ETF Trust Call Option | 152 | 357,200 |
101 | (continued) |
Ohio National Fund, Inc. | Risk Managed Balanced Portfolio (Continued) |
Schedule of Investments | December 31, 2014 |
Purchased Options (Continued) | Contracts (h) | Value | ||||||||||||
SPDR S&P 500 ETF Trust Call Option | 66 | $ | 133,650 | |||||||||||
SPDR S&P 500 ETF Trust Call Option | 55 | 95,013 | ||||||||||||
SPDR S&P 500 ETF Trust Call Option | 30 | 44,535 | ||||||||||||
|
| |||||||||||||
Total Purchased Options (Cost $2,249,819) | $ | 2,443,795 | ||||||||||||
|
| |||||||||||||
Other – 0.3% | Rate | Shares | Value | |||||||||||
FINANCIALS – 0.3% |
| |||||||||||||
Bank of America Corp. (Banks) (Preferred Stock Depository Receipts) | (f) | 8.000% | 32,000 | $ | 34,520 | |||||||||
Citigroup, Inc. (Banks) (Preferred Stock Depository Receipts) | (f) | 5.800% | 43,000 | 43,108 | ||||||||||
Goldman Sachs Group, Inc. / The (Capital Markets) (Preferred Stock Depository Receipts) | (f) | 5.700% | 8,000 | 8,122 | ||||||||||
American Express Co. (Consumer Finance) (Preferred Stock Depository Receipts) | (g) | 5.200% | 9,000 | 9,188 | ||||||||||
|
| |||||||||||||
Total Other (Cost $95,805) | $ | 94,938 | ||||||||||||
|
| |||||||||||||
Money Market Funds – 13.9% | Shares | Value | ||||||||||||
Fidelity Institutional Money Market Funds Money Market Portfolio – Class I | 2,000,000 | $ | 2,000,000 | |||||||||||
First American Prime Obligations Fund – Class Z | 692,000 | 692,000 | ||||||||||||
Short-Term Investments Trust – STIC Prime Portfolio | 2,000,000 | 2,000,000 | ||||||||||||
|
| |||||||||||||
Total Money Market Funds (Cost $4,692,000) | $ | 4,692,000 | ||||||||||||
|
| |||||||||||||
Total Investments – 97.8% (Cost $32,280,780) | (i) | $ | 33,077,419 | |||||||||||
Other Assets in Excess of Liabilities – 2.2% | (j) | 729,274 | ||||||||||||
|
| |||||||||||||
Net Assets – 100.0% | $ | 33,806,693 | ||||||||||||
|
|
Percentages are stated as a percent of net assets.
Abbreviations:
ADR: American Depositary Receipts
Footnotes:
(a) | Non-income producing security. |
(b) | Security exempt from registration under Regulation D of the Securities Act of 1933. These securities may be resold in transactions exempt form registration, normally to qualified buyers under Rule 144A. At December 31, 2014, the value of these securities totaled $967,734, or 2.9% of the Portfolio’s net assets. These securities were deemed liquid pursuant to procedures approved by the Board of Directors. |
(c) | Security traded on a foreign exchange has been valued at an estimate of fair value that is different than the local market close price. These fair value estimates are determined by an independent fair valuation service that has been approved by the Board. These securities represent $345,938, or 1.0% of the Portfolio’s net assets. Other Portfolio securities are not subjected to fair value procedures because they are traded on domestic or foreign exchanges that have close times that are consistent with the U.S. market close, normally 4:00 pm Eastern Time. |
(d) | Security is a variable rate instrument in which the coupon rate is fixed until a later specified date, then is adjusted quarterly in concert with U.S. LIBOR. Interest rates stated are those in effect at December 31, 2014. |
(e) | Security is a variable rate preferred stock in which the dividend rate is fixed until a later specified date, then is adjusted quarterly in concert with U.S. LIBOR. Dividend rates stated are those in effect at December 31, 2014. |
(f) | Security is a depository receipt in which each share represents a 1/25th interest in a share of the corresponding perpetual non-cumulative variable rate preferred stock. The dividend rate is fixed until a later specified date, then is adjusted quarterly in concert with U.S. LIBOR. Dividend rates stated are those in effect at December 31, 2014. |
(g) | Security is a depository receipt in which each share represents a 1/1,000th interest in a share of the corresponding perpetual non-cumulative variable rate preferred stock. The dividend rate is fixed until a later specified date, then is adjusted quarterly in concert with U.S. LIBOR. Dividend rates stated are those in effect at December 31, 2014. |
(h) | 100 shares per contract. |
(i) | Represents cost for financial reporting purposes, which may differ from cost basis for federal income tax purposes. See also Note 7 of the Notes to Financial Statements. |
(j) | Includes $654,908 of cash pledged as collateral for the following futures contracts outstanding at December 31, 2014: |
Type | Description | Expiration | Number of contracts | Contract at | Initial contract amount | Unrealized Appreciation | Variation Margin Receivable | |||||||||||||
Long | S&P 500 E-mini | March 23, 2015 | 35 | $ 3,591,700 | $ | 3,542,326 | $ | 49,374 | $ | – | ||||||||||
Long | 10-Year U.S. Treasury Note | April 1, 2015 | 152 | $19,273,125 | $ | 19,179,514 | $ | 93,611 | $ | – | ||||||||||
|
|
|
|
|
|
| ||||||||||||||
$22,864,825 | $ | 22,721,840 | $ | 142,985 | $ | – | ||||||||||||||
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
102 |
Ohio National Fund, Inc. |
December 31, 2014 |
Equity Portfolio | Money Market Portfolio | Bond Portfolio | Omni Portfolio | International Portfolio | Capital Appreciation Portfolio | International Small-Mid Company Portfolio | Aggressive Growth Portfolio | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Investments in securities, at value* | $ | 527,384,864 | $ | 144,997,026 | $ | 156,655,115 | $ | 37,123,108 | $ | 168,525,940 | $ | 453,955,300 | $ | 67,740,091 | $ | 40,493,843 | ||||||||||||||||
Cash | 713 | 57,245,597 | 681 | 417 | 349,179 | 42 | — | 16,028 | ||||||||||||||||||||||||
Foreign currencies, at value** | — | — | — | — | 31 | — | 33,487 | — | ||||||||||||||||||||||||
Receivable for securities sold | — | — | — | 132,769 | — | — | — | 33,841 | ||||||||||||||||||||||||
Due from adviser | — | 36,014 | — | — | — | — | — | — | ||||||||||||||||||||||||
Receivable for fund shares sold | 636,876 | 1,148,275 | 640,978 | 44,878 | 6,903,794 | 231,895 | 66,659 | 180,385 | ||||||||||||||||||||||||
Dividends and accrued interest receivable | 497,057 | 968 | 1,534,592 | 102,895 | 114,064 | 271,642 | 45,629 | 8,423 | ||||||||||||||||||||||||
Foreign tax reclaim receivable | — | — | — | — | 140,990 | 9,688 | 22,442 | 3,907 | ||||||||||||||||||||||||
Prepaid expenses and other assets | 2,418 | 1,185 | 754 | 401 | 2,586 | 1,527 | 794 | 408 | ||||||||||||||||||||||||
Unrealized appreciation on foreign currency contracts | — | — | — | — | 1,224,498 | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total assets | 528,521,928 | 203,429,065 | 158,832,120 | 37,404,468 | 177,261,082 | 454,470,094 | 67,909,102 | 40,736,835 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Payable for securities purchased | — | — | — | 117,575 | 2,467,387 | — | 238,656 | 580,311 | ||||||||||||||||||||||||
Payable for fund shares redeemed | 9,414,771 | 1,354,173 | 76,070 | 59,841 | 230,486 | 4,738,747 | 36,762 | 193,539 | ||||||||||||||||||||||||
Payable for investment management services | 339,678 | 44,041 | 75,386 | 18,985 | 119,492 | 287,755 | 58,216 | 26,884 | ||||||||||||||||||||||||
Variation margin payable on futures contracts | — | — | — | — | 5,570 | — | — | — | ||||||||||||||||||||||||
Accrued custody expense | 1,540 | 864 | 496 | 488 | 14,338 | 1,925 | 6,304 | 312 | ||||||||||||||||||||||||
Accrued professional fees | 7,988 | 7,988 | 7,988 | 7,988 | 7,988 | 7,988 | 7,988 | 7,988 | ||||||||||||||||||||||||
Accrued accounting fees | 7,995 | 3,578 | 4,034 | 1,978 | 5,030 | 7,128 | 3,185 | 1,123 | ||||||||||||||||||||||||
Accrued printing and filing fees | 14,540 | 5,734 | 4,320 | 1,031 | 4,660 | 12,504 | 1,891 | 1,096 | ||||||||||||||||||||||||
Withholding tax payable | — | — | — | — | 35,739 | — | 1,734 | 313 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total liabilities | 9,786,512 | 1,416,378 | 168,294 | 207,886 | 2,890,690 | 5,056,047 | 354,736 | 811,566 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net assets | $ | 518,735,416 | $ | 202,012,687 | $ | 158,663,826 | $ | 37,196,582 | $ | 174,370,392 | $ | 449,414,047 | $ | 67,554,366 | $ | 39,925,269 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net assets consist of: | ||||||||||||||||||||||||||||||||
Par value, $1 per share | $ | 15,513,944 | $ | 20,201,281 | $ | 10,139,773 | $ | 1,539,923 | $ | 13,889,904 | $ | 13,289,773 | $ | 2,465,953 | $ | 2,913,739 | ||||||||||||||||
Paid-in capital in excess of par value | 485,382,812 | 181,811,406 | 146,361,863 | 26,582,085 | 216,919,802 | 379,308,896 | 52,669,892 | 21,334,115 | ||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (48,145,903 | ) | — | (10,057,664 | ) | 6,042,977 | (66,244,422 | ) | 19,866,501 | 657,893 | 8,102,996 | |||||||||||||||||||||
Net unrealized appreciation (depreciation) on: | ||||||||||||||||||||||||||||||||
Investments | 65,598,530 | — | 7,162,713 | 2,977,434 | 4,419,083 | 36,912,549 | 11,567,758 | 7,574,651 | ||||||||||||||||||||||||
Foreign currency contracts | — | — | — | — | 1,224,498 | — | 145 | — | ||||||||||||||||||||||||
Futures contracts | — | — | — | — | (45,302 | ) | — | — | — | |||||||||||||||||||||||
Other foreign currency related transactions | — | — | — | — | (47,187 | ) | (1,137 | ) | (3,772 | ) | (232 | ) | ||||||||||||||||||||
Undistributed net investment income (loss) | 386,033 | — | 5,057,141 | 54,163 | 4,254,016 | 37,465 | 196,497 | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net assets | $ | 518,735,416 | $ | 202,012,687 | $ | 158,663,826 | $ | 37,196,582 | $ | 174,370,392 | $ | 449,414,047 | $ | 67,554,366 | $ | 39,925,269 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
* Investments in securities, at cost | $ | 461,786,334 | $ | 144,997,026 | $ | 149,492,402 | $ | 34,145,674 | $ | 164,106,857 | $ | 417,042,751 | $ | 56,172,333 | $ | 32,919,192 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
** Foreign currencies, at cost | $ | — | $ | — | $ | — | $ | — | $ | 31 | $ | — | $ | 33,342 | $ | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Shares outstanding | 15,513,944 | 20,201,281 | 10,139,773 | 1,539,923 | 13,889,904 | 13,289,773 | 2,465,953 | 2,913,739 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Authorized Fund shares allocated to Portfolio | 25,000,000 | 55,000,000 | 30,000,000 | 10,000,000 | 30,000,000 | 25,000,000 | 7,000,000 | 7,000,000 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net asset value per share | $ | 33.44 | $ | 10.00 | $ | 15.65 | $ | 24.15 | $ | 12.55 | $ | 33.82 | $ | 27.39 | $ | 13.70 | ||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
103 |
Ohio National Fund, Inc. |
Statements of Assets and Liabilities | December 31, 2014 |
Small Cap Growth Portfolio | Mid Cap Opportunity Portfolio | S&P 500® Index Portfolio | Strategic Value Portfolio | High Income Bond Portfolio | Capital Growth Portfolio | Nasdaq-100® Index Portfolio | Bristol Portfolio | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Investments in securities, at value* | $ | 215,667,645 | $ | 87,170,416 | $ | 386,759,867 | $ | 327,754,160 | $ | 224,913,762 | $ | 75,534,650 | $ | 121,747,065 | $ | 231,048,749 | ||||||||||||||||
Cash | 702 | 497 | 2,409,609 | 506 | 632 | 684 | 928,148 | 946 | ||||||||||||||||||||||||
Receivable for securities sold | 7,398,719 | 8,363 | — | 5,185,374 | 3,656 | 15,873 | 167,548 | 7,843,120 | ||||||||||||||||||||||||
Receivable for fund shares sold | 910,051 | 146,925 | 983,176 | 240,488 | 1,916,464 | 124,501 | 321,189 | 142,314 | ||||||||||||||||||||||||
Dividends and accrued interest receivable | 57,749 | 23,494 | 593,663 | 1,555,009 | 3,893,275 | 18,691 | 42,374 | 124,100 | ||||||||||||||||||||||||
Foreign tax reclaim receivable | — | — | 1,533 | 56,833 | — | — | — | — | ||||||||||||||||||||||||
Prepaid expenses and other assets | 1,090 | 899 | 3,680 | 4,499 | 1,575 | 830 | 1,131 | 2,552 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total assets | 224,035,956 | 87,350,594 | 390,751,528 | 334,796,869 | 230,729,364 | 75,695,229 | 123,207,455 | 239,161,781 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Payable for securities purchased | 162,376 | 178,897 | 1,435,080 | 3,513 | — | — | 794,352 | 212,556 | ||||||||||||||||||||||||
Payable for fund shares redeemed | 11,564,834 | 424,580 | 966,443 | 1,887,245 | 468,121 | 134,389 | 671,816 | 6,762,577 | ||||||||||||||||||||||||
Payable for investment management services | 145,209 | 62,323 | 116,285 | 203,359 | 135,479 | 57,146 | 40,297 | 150,503 | ||||||||||||||||||||||||
Accrued custody expense | 1,676 | 528 | 2,349 | 2,176 | 838 | 602 | 405 | 1,035 | ||||||||||||||||||||||||
Accrued professional fees | 7,988 | 7,988 | 8,106 | 9,184 | 7,988 | 7,988 | 7,988 | 7,988 | ||||||||||||||||||||||||
Accrued accounting fees | 3,888 | 1,883 | 7,803 | 5,412 | 10,216 | 1,874 | 2,486 | 3,897 | ||||||||||||||||||||||||
Accrued printing and filing fees | 6,065 | 2,391 | 10,672 | 9,276 | 6,271 | 2,085 | 3,364 | 6,643 | ||||||||||||||||||||||||
Withholding tax payable | — | — | 653 | 65,799 | — | — | 678 | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total liabilities | 11,892,036 | 678,590 | 2,547,391 | 2,185,964 | 628,913 | 204,084 | 1,521,386 | 7,145,199 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net assets | $ | 212,143,920 | $ | 86,672,004 | $ | 388,204,137 | $ | 332,610,905 | $ | 230,100,451 | $ | 75,491,145 | $ | 121,686,069 | $ | 232,016,582 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net assets consist of: | ||||||||||||||||||||||||||||||||
Par value, $1 per share | $ | 8,461,771 | $ | 2,752,722 | $ | 17,699,997 | $ | 23,894,019 | $ | 14,096,143 | $ | 1,840,751 | $ | 11,188,752 | $ | 11,180,436 | ||||||||||||||||
Paid-in capital in excess of par value | 166,717,132 | 68,539,217 | 226,586,668 | 239,307,838 | 193,205,993 | 50,383,763 | 58,528,240 | 155,722,129 | ||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 14,859,534 | (1,002,098 | ) | 1,610,075 | 37,250,502 | 8,225,039 | 8,485,514 | 3,681,424 | 43,595,027 | |||||||||||||||||||||||
Net unrealized appreciation (depreciation) on: | ||||||||||||||||||||||||||||||||
Investments | 22,141,303 | 16,382,163 | 141,421,718 | 29,335,977 | (2,185,425 | ) | 14,775,727 | 48,131,840 | 21,419,397 | |||||||||||||||||||||||
Foreign currency related transactions | — | — | — | (14,352 | ) | — | — | — | — | |||||||||||||||||||||||
Undistributed net investment income (loss) | (35,820 | ) | — | 885,679 | 2,836,921 | 16,758,701 | 5,390 | 155,813 | 99,593 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net assets | $ | 212,143,920 | $ | 86,672,004 | $ | 388,204,137 | $ | 332,610,905 | $ | 230,100,451 | $ | 75,491,145 | $ | 121,686,069 | $ | 232,016,582 | ||||||||||||||||
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|
|
|
|
|
|
|
| |||||||||||||||||
* Investments in securities, at cost | $ | 193,526,342 | $ | 70,788,253 | $ | 245,338,149 | $ | 298,418,183 | $ | 227,099,187 | $ | 60,758,923 | $ | 73,615,225 | $ | 209,629,352 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Shares outstanding | 8,461,771 | 2,752,722 | 17,699,997 | 23,894,019 | 14,096,143 | 1,840,751 | 11,188,752 | 11,180,436 | ||||||||||||||||||||||||
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|
|
|
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| |||||||||||||||||
Authorized Fund shares allocated to Portfolio | 15,000,000 | 6,000,000 | 35,000,000 | 65,000,000 | 35,000,000 | 5,000,000 | 25,000,000 | 40,000,000 | ||||||||||||||||||||||||
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| |||||||||||||||||
Net asset value per share | $ | 25.07 | $ | 31.49 | $ | 21.93 | $ | 13.92 | $ | 16.32 | $ | 41.01 | $ | 10.88 | $ | 20.75 | ||||||||||||||||
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|
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|
|
The accompanying notes are an integral part of these financial statements.
104 |
Ohio National Fund, Inc. |
Statements of Assets and Liabilities | December 31, 2014 |
Bryton Growth Portfolio | Balanced Portfolio | Target VIP Portfolio | Bristol Growth Portfolio | Risk Managed Balanced Portfolio | ||||||||||||||||||
Assets: | ||||||||||||||||||||||
Investments in securities, at value* | $ | 183,273,423 | $ | 840,621,596 | $ | 55,136,021 | $ | 124,735,055 | $ | 33,077,419 | ||||||||||||
Cash | 340 | 154,456 | 898 | 765 | 659,994 | |||||||||||||||||
Receivable for securities sold | 6,092,772 | 70,072 | — | 3,296,577 | 52,722 | |||||||||||||||||
Receivable for fund shares sold | 79,490 | 356,365 | 4,706 | 57,136 | 350,470 | |||||||||||||||||
Dividends and accrued interest receivable | 70,077 | 3,560,979 | 49,939 | 73,596 | 86,413 | |||||||||||||||||
Foreign tax reclaim receivable | — | 2,308 | 7,671 | — | 31 | |||||||||||||||||
Prepaid expenses and other assets | 1,941 | 3,285 | 586 | 1,360 | 268 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total assets | 189,518,043 | 844,769,061 | 55,199,821 | 128,164,489 | 34,227,317 | |||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||
Liabilities: | ||||||||||||||||||||||
Options written, at value** | — | 1,023,500 | — | — | — | |||||||||||||||||
Payable for securities purchased | 409,257 | 1,433,990 | — | 426,725 | 377,660 | |||||||||||||||||
Payable for fund shares redeemed | 9,878,576 | 8,707,102 | 14,035 | 3,585,500 | 3,492 | |||||||||||||||||
Payable for investment management services | 126,618 | 420,230 | 28,170 | 84,388 | 23,698 | |||||||||||||||||
Accrued custody expense | 1,309 | 2,709 | 578 | 684 | 1,507 | |||||||||||||||||
Accrued professional fees | 7,988 | 7,988 | 8,070 | 7,988 | 7,988 | |||||||||||||||||
Accrued accounting fees | 3,192 | 13,317 | 1,694 | 2,350 | 5,374 | |||||||||||||||||
Accrued printing and filing fees | 5,167 | 23,125 | 1,529 | 3,547 | 859 | |||||||||||||||||
Withholding tax payable | — | 3,461 | 3,836 | — | 46 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total liabilities | 10,432,107 | 11,635,422 | 57,912 | 4,111,182 | 420,624 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net assets | $ | 179,085,936 | $ | 833,133,639 | $ | 55,141,909 | $ | 124,053,307 | $ | 33,806,693 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net assets consist of: | ||||||||||||||||||||||
Par value, $1 per share | $ | 8,748,089 | $ | 43,935,677 | $ | 3,806,409 | $ | 7,545,926 | $ | 3,120,733 | ||||||||||||
Paid-in capital in excess of par value | 139,219,097 | 746,962,074 | 52,928,966 | 83,527,942 | 28,497,596 | |||||||||||||||||
Accumulated net realized gain (loss) on investments | 20,106,861 | 12,769,132 | (6,450,926 | ) | 19,733,834 | 1,167,319 | ||||||||||||||||
Net unrealized appreciation (depreciation) on: | ||||||||||||||||||||||
Investments | 11,011,889 | 27,647,113 | 4,757,332 | 13,190,571 | 796,639 | |||||||||||||||||
Futures contracts | — | — | — | — | 142,986 | |||||||||||||||||
Written options | — | 409,288 | — | — | — | |||||||||||||||||
Undistributed net investment income (loss) | — | 1,410,355 | 100,128 | 55,034 | 81,420 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net assets | $ | 179,085,936 | $ | 833,133,639 | $ | 55,141,909 | $ | 124,053,307 | $ | 33,806,693 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
* Investments in securities, at cost | $ | 172,261,534 | $ | 812,974,483 | $ | 50,378,689 | $ | 111,544,484 | $ | 32,280,780 | ||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||
** Premiums received on options written | $ | — | $ | 1,432,788 | $ | — | $ | — | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Shares outstanding | 8,748,089 | 43,935,677 | 3,806,409 | 7,545,926 | 3,120,733 | |||||||||||||||||
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|
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|
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|
| |||||||||||||
Authorized Fund shares allocated to Portfolio | 30,000,000 | 55,000,000 | 10,000,000 | 25,000,000 | 15,000,000 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net asset value per share | $ | 20.47 | $ | 18.96 | $ | 14.49 | $ | 16.44 | $ | 10.83 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
105 |
Ohio National Fund, Inc. |
For the Year Ended December 31, 2014 |
Equity Portfolio | Money Market Portfolio | Bond Portfolio | Omni Portfolio | International Portfolio | Capital Appreciation Portfolio | International Small-Mid Company Portfolio | Aggressive Growth Portfolio | |||||||||||||||||||||||||
Investment income: | ||||||||||||||||||||||||||||||||
Interest | $ | — | $ | 93,200 | $ | 6,031,092 | $ | 321,936 | $ | 364 | $ | — | $ | — | $ | 129 | ||||||||||||||||
Dividends, net of taxes withheld* | 4,525,858 | 8,573 | 1,313 | 361,901 | 4,090,690 | 3,018,419 | 1,143,674 | 271,670 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total investment income | 4,525,858 | 101,773 | 6,032,405 | 683,837 | 4,091,054 | 3,018,419 | 1,143,674 | 271,799 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||
Management fees | 2,302,400 | 640,365 | 857,428 | 223,888 | 1,490,002 | 1,661,792 | 732,168 | 306,592 | ||||||||||||||||||||||||
Custodian fees | 12,974 | 11,068 | 5,906 | 7,464 | 183,722 | 14,173 | 61,505 | 6,466 | ||||||||||||||||||||||||
Directors’ fees | 29,701 | 24,731 | 15,763 | 3,898 | 18,786 | 21,093 | 7,661 | 3,997 | ||||||||||||||||||||||||
Professional fees | 21,868 | 20,584 | 17,840 | 14,198 | 18,784 | 19,227 | 15,369 | 14,229 | ||||||||||||||||||||||||
Accounting fees | 65,919 | 55,766 | 55,044 | 25,294 | 63,935 | 51,605 | 31,543 | 14,778 | ||||||||||||||||||||||||
Printing and filing fees | 31,928 | 19,293 | 12,310 | 3,680 | 14,821 | 24,536 | 6,667 | 3,848 | ||||||||||||||||||||||||
Compliance expense | 8,906 | 8,906 | 8,906 | 8,906 | 8,906 | 8,906 | 8,906 | 8,906 | ||||||||||||||||||||||||
Other | 5,805 | 3,280 | 2,067 | 975 | 8,338 | 3,646 | 2,676 | 970 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total expenses | 2,479,501 | 783,993 | 975,264 | 288,303 | 1,807,294 | 1,804,978 | 866,495 | 359,786 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Less expenses reduced or reimbursed by adviser | — | (682,220 | ) | — | — | (288,997 | ) | — | — | — | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net expenses | 2,479,501 | 101,773 | 975,264 | 288,303 | 1,518,297 | 1,804,978 | 866,495 | 359,786 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net investment income (loss) | 2,046,357 | — | 5,057,141 | 395,534 | 2,572,757 | 1,213,441 | 277,179 | (87,987 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Realized/unrealized gain (loss) on investments, futures contracts, foreign currency contracts, and other foreign currency related transactions: | ||||||||||||||||||||||||||||||||
Net realized gain (loss) on: | ||||||||||||||||||||||||||||||||
Investments | 33,346,801 | — | 1,319,586 | 6,306,647 | 15,460,890 | 20,183,375 | 5,678,757 | 8,194,825 | ||||||||||||||||||||||||
Futures contracts | — | — | — | — | 1,176,714 | — | — | — | ||||||||||||||||||||||||
Foreign currency contracts | — | — | — | — | 3,255,092 | — | — | — | ||||||||||||||||||||||||
Other foreign currency related transactions | — | — | — | — | (309,728 | ) | (10,132 | ) | (80,682 | ) | (149 | ) | ||||||||||||||||||||
Change in unrealized appreciation/depreciation on: | ||||||||||||||||||||||||||||||||
Investments | 6,063,115 | — | 2,254,423 | (2,442,237 | ) | (39,752,926 | ) | (1,238,512 | ) | (12,561,502 | ) | (4,578,975 | ) | |||||||||||||||||||
Futures contracts | — | — | — | — | (215,832 | ) | — | — | — | |||||||||||||||||||||||
Foreign currency contracts | — | — | — | — | 444,099 | — | — | — | ||||||||||||||||||||||||
Other foreign currency related transactions | — | — | — | — | (52,791 | ) | (1,137 | ) | (3,786 | ) | (397 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net realized/unrealized gain (loss) on investments, futures contracts, foreign currency contracts, and other foreign currency related transactions | 39,409,916 | — | 3,574,009 | 3,864,410 | (19,994,482 | ) | 18,933,594 | (6,967,213 | ) | 3,615,304 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Change in net assets from operations | $ | 41,456,273 | $ | — | $ | 8,631,150 | $ | 4,259,944 | $ | (17,421,725 | ) | $ | 20,147,035 | $ | (6,690,034 | ) | $ | 3,527,317 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
* Taxes withheld | $ | — | $ | — | $ | — | $ | — | $ | 617,692 | $ | 42,548 | $ | 77,247 | $ | 2,563 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
106 |
Ohio National Fund, Inc. |
Statements of Operations | For the Year Ended December 31, 2014 |
Small Cap Growth Portfolio | Mid Cap Opportunity Portfolio | S&P 500® Index Portfolio | Strategic Value Portfolio | High Income Bond Portfolio | Capital Growth Portfolio | Nasdaq-100® Index Portfolio | Bristol Portfolio | |||||||||||||||||||||||||
Investment income: | ||||||||||||||||||||||||||||||||
Interest | $ | 514 | $ | — | $ | — | $ | — | $ | 18,979,209 | $ | — | $ | — | $ | — | ||||||||||||||||
Dividends, net of taxes withheld* | 750,775 | 637,357 | 7,101,586 | 23,999,397 | 20,769 | 418,373 | 1,819,765 | 2,886,821 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total investment income | 751,289 | 637,357 | 7,101,586 | 23,999,397 | 18,999,978 | 418,373 | 1,819,765 | 2,886,821 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||
Management fees | 1,025,615 | 710,781 | 1,232,307 | 2,782,218 | 1,979,512 | 693,475 | 422,369 | 1,740,115 | ||||||||||||||||||||||||
Custodian fees | 23,073 | 9,139 | 24,353 | 35,493 | 14,358 | 6,963 | 9,481 | 14,710 | ||||||||||||||||||||||||
Directors’ fees | 12,849 | 8,729 | 35,673 | 41,316 | 30,928 | 8,041 | 11,094 | 24,454 | ||||||||||||||||||||||||
Professional fees | 18,548 | 15,679 | 24,433 | 30,622 | 22,503 | 15,475 | 16,411 | 20,542 | ||||||||||||||||||||||||
Accounting fees | 36,394 | 25,274 | 100,727 | 91,240 | 164,385 | 25,842 | 31,444 | 55,544 | ||||||||||||||||||||||||
Printing and filing fees | 18,152 | 7,785 | 30,048 | 36,323 | 23,791 | 7,143 | 10,311 | 21,665 | ||||||||||||||||||||||||
Compliance expense | 8,906 | 8,906 | 8,906 | 8,906 | 8,906 | 8,906 | 8,906 | 8,906 | ||||||||||||||||||||||||
Other | 2,113 | 2,285 | 8,080 | 9,757 | 4,253 | 1,885 | 2,442 | 6,210 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total expenses | 1,145,650 | 788,578 | 1,464,527 | 3,035,875 | 2,248,636 | 767,730 | 512,458 | 1,892,146 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net investment income (loss) | (394,361 | ) | (151,221 | ) | 5,637,059 | 20,963,522 | 16,751,342 | (349,357 | ) | 1,307,307 | 994,675 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Realized/unrealized gain (loss) on investments and foreign currency related transactions: | ||||||||||||||||||||||||||||||||
Net realized gain (loss) on: | ||||||||||||||||||||||||||||||||
Investments | 15,524,461 | 15,149,617 | 3,675,264 | 37,091,251 | 8,225,039 | 8,907,401 | 4,311,375 | 45,974,586 | ||||||||||||||||||||||||
Foreign currency related transactions | (1,029 | ) | 21 | — | (169,864 | ) | — | — | — | — | ||||||||||||||||||||||
Change in unrealized appreciation/depreciation on: | ||||||||||||||||||||||||||||||||
Investments | 7,515,663 | (5,886,389 | ) | 33,949,693 | (11,414,969 | ) | (16,353,341 | ) | (6,915,894 | ) | 12,616,165 | (16,492,459 | ) | |||||||||||||||||||
Foreign currency related transactions | 5,462 | — | — | (23,131 | ) | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net realized/unrealized gain (loss) on investments and foreign currency related transactions | 23,044,557 | 9,263,249 | 37,624,957 | 25,483,287 | (8,128,302 | ) | 1,991,507 | 16,927,540 | 29,482,127 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Change in net assets from operations | $ | 22,650,196 | $ | 9,112,028 | $ | 43,262,016 | $ | 46,446,809 | $ | 8,623,040 | $ | 1,642,150 | $ | 18,234,847 | $ | 30,476,802 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
* Taxes withheld | $ | 7,213 | $ | 3,490 | $ | 1,228 | $ | 570,013 | $ | — | $ | 963 | $ | 885 | $ | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
107 |
Ohio National Fund, Inc. |
Statements of Operations | For the Year Ended December 31, 2014 |
Bryton Growth Portfolio | Balanced Portfolio | Target VIP Portfolio | Bristol Growth Portfolio | Risk Managed Balanced Portfolio** | ||||||||||||||||
Investment income: | ||||||||||||||||||||
Interest | $ | — | $ | 5,354,736 | $ | 363 | $ | — | $ | 179,424 | ||||||||||
Dividends, net of taxes withheld* | 782,348 | 4,939,257 | 1,366,396 | 1,496,204 | 170,844 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total investment income | 782,348 | 10,293,993 | 1,366,759 | 1,496,204 | 350,268 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Expenses: | ||||||||||||||||||||
Management fees | 1,468,402 | 2,588,717 | 322,888 | 973,456 | 169,797 | |||||||||||||||
Custodian fees | 17,996 | 22,409 | 18,304 | 9,490 | 16,116 | |||||||||||||||
Directors’ fees | 19,068 | 41,413 | 5,631 | 13,020 | 1,453 | |||||||||||||||
Professional fees | 18,854 | 26,952 | 25,036 | 17,017 | 30,565 | |||||||||||||||
Accounting fees | 45,179 | 100,776 | 21,674 | 32,570 | 40,140 | |||||||||||||||
Printing and filing fees | 17,429 | 51,116 | 8,809 | 12,818 | 4,518 | |||||||||||||||
Compliance expense | 8,906 | 8,906 | 8,906 | 8,906 | 5,880 | |||||||||||||||
Other | 4,760 | 6,150 | 1,234 | 3,290 | 372 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total expenses | 1,600,594 | 2,846,439 | 412,482 | 1,070,567 | 268,841 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less expenses reduced or reimbursed by adviser | — | (137,000 | ) | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net expenses | 1,600,594 | 2,709,439 | 412,482 | 1,070,567 | 268,841 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net investment income (loss) | (818,246 | ) | 7,584,554 | 954,277 | 425,637 | 81,427 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Realized/unrealized gain (loss) on investments, foreign currency related transactions, and written options: | ||||||||||||||||||||
Net realized gain (loss) on: | ||||||||||||||||||||
Investments | 22,063,567 | 18,776,897 | 6,802,148 | 20,039,564 | 430,439 | |||||||||||||||
Futures contracts | — | — | — | — | 736,921 | |||||||||||||||
Foreign currency related transactions | — | (655 | ) | — | — | (48 | ) | |||||||||||||
Written options | — | (3,299,551 | ) | — | — | — | ||||||||||||||
Change in unrealized appreciation/depreciation on: | ||||||||||||||||||||
Investments | (9,867,313 | ) | 7,864,270 | (3,839,788 | ) | (6,250,848 | ) | 796,639 | ||||||||||||
Futures contracts | — | — | — | — | 142,986 | |||||||||||||||
Foreign currency related transactions | — | 96 | — | — | — | |||||||||||||||
Written options | — | 1,129,500 | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net realized/unrealized gain (loss) on investments, foreign currency related transactions, and written options | 12,196,254 | 24,470,557 | 2,962,360 | 13,788,716 | 2,106,937 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Change in net assets from operations | $ | 11,378,008 | $ | 32,055,111 | $ | 3,916,637 | $ | 14,214,353 | $ | 2,188,364 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
* Taxes withheld | $ | — | $ | 28,793 | $ | 35,874 | $ | — | $ | 581 | ||||||||||
|
|
|
|
|
|
|
|
|
|
** | Period from May 1, 2014 (date of inception and commencement of operations) to December 31, 2014. |
The accompanying notes are an integral part of these financial statements.
108 |
Ohio National Fund, Inc. |
Equity Portfolio | Money Market Portfolio | Bond Portfolio | Omni Portfolio | |||||||||||||||||||||||||||||
Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | |||||||||||||||||||||||||
Increase (Decrease) in net assets: | ||||||||||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||
Net investment income | $ | 2,046,357 | $ | 2,021,985 | $ | — | $ | — | $ | 5,057,141 | $ | 5,136,321 | $ | 395,534 | $ | 412,102 | ||||||||||||||||
Net realized gain on investments and foreign currency related transactions | 33,346,801 | 28,393,403 | — | — | 1,319,586 | 1,717,938 | 6,306,647 | 5,570,305 | ||||||||||||||||||||||||
Change in unrealized appreciation/depreciation on investments | 6,063,115 | 35,131,231 | — | — | 2,254,423 | (9,876,691 | ) | (2,442,237 | ) | 3,438,117 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Change in net assets from operations | 41,456,273 | 65,546,619 | — | — | 8,631,150 | (3,022,432 | ) | 4,259,944 | 9,420,524 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||||||||||
Distributions from net investment income | (1,660,324 | ) | (1,826,670 | ) | — | — | — | — | (341,371 | ) | (362,024 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Capital transactions: | ||||||||||||||||||||||||||||||||
Received from shares sold | 315,246,386 | 13,409,441 | 192,184,015 | 235,857,734 | 46,735,844 | 41,763,271 | 2,915,916 | 3,461,743 | ||||||||||||||||||||||||
Received from dividends reinvested | 1,660,324 | 1,826,670 | — | — | — | — | 341,371 | 362,024 | ||||||||||||||||||||||||
Paid for shares redeemed | (59,401,285 | ) | (44,049,301 | ) | (251,269,999 | ) | (233,365,275 | ) | (48,280,931 | ) | (59,347,526 | ) | (7,867,809 | ) | (8,198,425 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Change in net assets from capital transactions | 257,505,425 | (28,813,190 | ) | (59,085,984 | ) | 2,492,459 | (1,545,087 | ) | (17,584,255 | ) | (4,610,522 | ) | (4,374,658 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Change in net assets | 297,301,374 | 34,906,759 | (59,085,984 | ) | 2,492,459 | 7,086,063 | (20,606,687 | ) | (691,949 | ) | 4,683,842 | |||||||||||||||||||||
Net assets: | ||||||||||||||||||||||||||||||||
Beginning of year | 221,434,042 | 186,527,283 | 261,098,671 | 258,606,212 | 151,577,763 | 172,184,450 | 37,888,531 | 33,204,689 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
End of year | $ | 518,735,416 | $ | 221,434,042 | $ | 202,012,687 | $ | 261,098,671 | $ | 158,663,826 | $ | 151,577,763 | $ | 37,196,582 | $ | 37,888,531 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Undistributed net investment income | $ | 386,033 | $ | 195,315 | $ | — | $ | — | $ | 5,057,141 | $ | 5,136,321 | $ | 54,163 | $ | 47,856 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
109 |
Ohio National Fund, Inc. |
Statements of Changes in Net Assets |
International Portfolio | Capital Appreciation Portfolio | International Small-Mid Company Portfolio | Aggressive Growth Portfolio | |||||||||||||||||||||||||||||
Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | |||||||||||||||||||||||||
Increase (Decrease) in net assets: | ||||||||||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | $ | 2,572,757 | $ | 2,794,976 | $ | 1,213,441 | $ | 584,457 | $ | 277,179 | $ | 276,948 | $ | (87,987 | ) | $ | (87,527 | ) | ||||||||||||||
Net realized gain on investments, futures contracts, foreign currency contracts, and other foreign currency related transactions | 19,582,968 | 10,205,588 | 20,173,243 | 12,161,877 | 5,598,075 | 7,333,003 | 8,194,676 | 5,281,441 | ||||||||||||||||||||||||
Change in unrealized appreciation/depreciation on investments, futures contracts, foreign currency contracts, and other foreign currency related transactions | (39,577,450 | ) | 7,678,305 | (1,239,649 | ) | 25,016,691 | (12,565,288 | ) | 9,429,824 | (4,579,372 | ) | 4,447,717 | ||||||||||||||||||||
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|
| |||||||||||||||||
Change in net assets from operations | (17,421,725 | ) | 20,678,869 | 20,147,035 | 37,763,025 | (6,690,034 | ) | 17,039,775 | 3,527,317 | 9,641,631 | ||||||||||||||||||||||
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| |||||||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||||||||||
Distributions from net investment income | — | — | (1,165,844 | ) | (545,051 | ) | — | — | — | — | ||||||||||||||||||||||
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Capital transactions: | ||||||||||||||||||||||||||||||||
Received from shares sold | 30,187,407 | 24,664,519 | 331,391,049 | 16,336,182 | 13,115,148 | 10,691,131 | 7,560,703 | 8,319,694 | ||||||||||||||||||||||||
Received from dividends reinvested | — | — | 1,165,844 | 545,051 | — | — | — | — | ||||||||||||||||||||||||
Paid for shares redeemed | (27,822,330 | ) | (36,260,480 | ) | (40,131,679 | ) | (31,759,424 | ) | (15,853,656 | ) | (15,230,589 | ) | (10,565,748 | ) | (11,703,009 | ) | ||||||||||||||||
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| |||||||||||||||||
Change in net assets from capital transactions | 2,365,077 | (11,595,961 | ) | 292,425,214 | (14,878,191 | ) | (2,738,508 | ) | (4,539,458 | ) | (3,005,045 | ) | (3,383,315 | ) | ||||||||||||||||||
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Change in net assets | (15,056,648 | ) | 9,082,908 | 311,406,405 | 22,339,783 | (9,428,542 | ) | 12,500,317 | 522,272 | 6,258,316 | ||||||||||||||||||||||
Net assets: | ||||||||||||||||||||||||||||||||
Beginning of year | 189,427,040 | 180,344,132 | 138,007,642 | 115,667,859 | 76,982,908 | 64,482,591 | 39,402,997 | 33,144,681 | ||||||||||||||||||||||||
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End of year | $ | 174,370,392 | $ | 189,427,040 | $ | 449,414,047 | $ | 138,007,642 | $ | 67,554,366 | $ | 76,982,908 | $ | 39,925,269 | $ | 39,402,997 | ||||||||||||||||
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Undistributed net investment income | $ | 4,254,016 | $ | 3,063,222 | $ | 37,465 | $ | 38,483 | $ | 196,497 | $ | 196,447 | $ | — | $ | — | ||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
110 |
Ohio National Fund, Inc. |
Statements of Changes in Net Assets |
Small Cap Growth Portfolio | Mid Cap Opportunity Portfolio | S&P 500® Index Portfolio | Strategic Value Portfolio | |||||||||||||||||||||||||||||
Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | |||||||||||||||||||||||||
Increase (Decrease) in net assets: | ||||||||||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | $ | (394,361 | ) | $ | (145,662 | ) | $ | (151,221 | ) | $ | (209,597 | ) | $ | 5,637,059 | $ | 4,258,395 | $ | 20,963,522 | $ | 11,138,381 | ||||||||||||
Net realized gain on investments and foreign currency related transactions | 15,523,432 | 15,028,435 | 15,149,638 | 8,674,199 | 3,675,264 | 3,688,356 | 36,921,387 | 9,876,449 | ||||||||||||||||||||||||
Change in unrealized appreciation/depreciation on investments and foreign currency related transactions | 7,521,125 | 4,058,946 | (5,886,389 | ) | 12,646,891 | 33,949,693 | 61,348,239 | (11,438,100 | ) | 39,073,192 | ||||||||||||||||||||||
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Change in net assets from operations | 22,650,196 | 18,941,719 | 9,112,028 | 21,111,493 | 43,262,016 | 69,294,990 | 46,446,809 | 60,088,022 | ||||||||||||||||||||||||
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Distributions to shareholders: | ||||||||||||||||||||||||||||||||
Distributions from net investment income | — | — | — | — | (4,671,250 | ) | (3,617,496 | ) | (17,815,244 | ) | (9,524,108 | ) | ||||||||||||||||||||
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Capital transactions: | ||||||||||||||||||||||||||||||||
Received from shares sold | 130,344,816 | 31,291,065 | 14,483,197 | 15,330,951 | 111,526,771 | 97,436,649 | 42,389,840 | 131,585,498 | ||||||||||||||||||||||||
Received from shares issued in merger | — | 40,746,730 | — | — | — | — | — | — | ||||||||||||||||||||||||
Received from dividends reinvested | — | — | — | — | 4,671,250 | 3,617,496 | 17,815,244 | 9,524,108 | ||||||||||||||||||||||||
Paid for shares redeemed | (50,387,901 | ) | (16,426,684 | ) | (19,935,180 | ) | (20,492,091 | ) | (81,517,679 | ) | (59,579,130 | ) | (153,890,559 | ) | (62,172,415 | ) | ||||||||||||||||
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Change in net assets from capital transactions | 79,956,915 | 55,611,111 | (5,451,983 | ) | (5,161,140 | ) | 34,680,342 | 41,475,015 | (93,685,475 | ) | 78,937,191 | |||||||||||||||||||||
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Change in net assets | 102,607,111 | 74,552,830 | 3,660,045 | 15,950,353 | 73,271,108 | 107,152,509 | (65,053,910 | ) | 129,501,105 | |||||||||||||||||||||||
Net assets: | ||||||||||||||||||||||||||||||||
Beginning of year | 109,536,809 | 34,983,979 | 83,011,959 | 67,061,606 | 314,933,029 | 207,780,520 | 397,664,815 | 268,163,710 | ||||||||||||||||||||||||
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End of year | $ | 212,143,920 | $ | 109,536,809 | $ | 86,672,004 | $ | 83,011,959 | $ | 388,204,137 | $ | 314,933,029 | $ | 332,610,905 | $ | 397,664,815 | ||||||||||||||||
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Undistributed net investment income (loss) | $ | (35,820 | ) | $ | (17,130 | ) | $ | — | $ | — | $ | 885,679 | $ | 597,879 | $ | 2,836,921 | $ | 1,568,491 | ||||||||||||||
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The accompanying notes are an integral part of these financial statements.
111 |
Ohio National Fund, Inc. |
Statements of Changes in Net Assets |
High Income Bond Portfolio | Capital Growth Portfolio | Nasdaq-100® Index Portfolio | Bristol Portfolio | |||||||||||||||||||||||||||||
Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | |||||||||||||||||||||||||
Increase (Decrease) in net assets: | ||||||||||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | $ | 16,751,342 | $ | 19,562,894 | $ | (349,357 | ) | $ | (298,131 | ) | $ | 1,307,307 | $ | 724,509 | $ | 994,675 | $ | 1,141,144 | ||||||||||||||
Net realized gain on investments and foreign currency related transactions | 8,225,039 | 3,478,257 | 8,907,401 | 5,469,110 | 4,311,375 | 5,521,100 | 45,974,586 | 48,232,798 | ||||||||||||||||||||||||
Change in unrealized appreciation/depreciation on investments and foreign currency related transactions | (16,353,341 | ) | (1,974,076 | ) | (6,915,894 | ) | 12,232,870 | 12,616,165 | 18,052,218 | (16,492,459 | ) | 27,351,718 | ||||||||||||||||||||
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Change in net assets from operations | 8,623,040 | 21,067,075 | 1,642,150 | 17,403,849 | 18,234,847 | 24,297,827 | 30,476,802 | 76,725,660 | ||||||||||||||||||||||||
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Distributions to shareholders: | ||||||||||||||||||||||||||||||||
Distributions from net investment income | — | — | — | — | (1,151,494 | ) | (631,494 | ) | (895,082 | ) | (1,050,451 | ) | ||||||||||||||||||||
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Capital transactions: | ||||||||||||||||||||||||||||||||
Received from shares sold | 45,515,603 | 54,569,050 | 16,459,619 | 24,739,894 | 43,549,332 | 35,003,296 | 17,018,019 | 14,986,415 | ||||||||||||||||||||||||
Received from dividends reinvested | — | — | — | — | 1,151,494 | 631,494 | 895,082 | 1,050,451 | ||||||||||||||||||||||||
Paid for shares redeemed | (131,923,035 | ) | (79,666,219 | ) | (23,042,984 | ) | (16,826,118 | ) | (35,945,696 | ) | (31,995,740 | ) | (47,019,709 | ) | (65,074,351 | ) | ||||||||||||||||
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Change in net assets from capital transactions | (86,407,432 | ) | (25,097,169 | ) | (6,583,365 | ) | 7,913,776 | 8,755,130 | 3,639,050 | (29,106,608 | ) | (49,037,485 | ) | |||||||||||||||||||
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Change in net assets | (77,784,392 | ) | (4,030,094 | ) | (4,941,215 | ) | 25,317,625 | 25,838,483 | 27,305,383 | 475,112 | 26,637,724 | |||||||||||||||||||||
Net assets: | ||||||||||||||||||||||||||||||||
Beginning of year | 307,884,843 | 311,914,937 | 80,432,360 | 55,114,735 | 95,847,586 | 68,542,203 | 231,541,470 | 204,903,746 | ||||||||||||||||||||||||
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End of year | $ | 230,100,451 | $ | 307,884,843 | $ | 75,491,145 | $ | 80,432,360 | $ | 121,686,069 | $ | 95,847,586 | $ | 232,016,582 | $ | 231,541,470 | ||||||||||||||||
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Undistributed net investment income (loss) | $ | 16,758,701 | $ | 19,562,894 | $ | 5,390 | $ | — | $ | 155,813 | $ | 93,015 | $ | 99,593 | $ | 89,796 | ||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
112 |
Ohio National Fund, Inc. |
Statements of Changes in Net Assets |
Bryton Growth Portfolio | Balanced Portfolio | Target VIP Portfolio | Bristol Growth Portfolio | |||||||||||||||||||||||||||||
Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | |||||||||||||||||||||||||
Increase (Decrease) in net assets: | ||||||||||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | $ | (818,246 | ) | $ | (1,016,119 | ) | $ | 7,584,554 | $ | 1,977,473 | $ | 954,277 | $ | 227,047 | $ | 425,637 | $ | 497,544 | ||||||||||||||
Net realized gain on investments, foreign currency related transactions, and written options | 22,063,567 | 38,865,947 | 15,476,691 | 6,575,219 | 6,802,148 | 6,638,289 | 20,039,564 | 23,724,595 | ||||||||||||||||||||||||
Change in unrealized appreciation/depreciation on investments, foreign currency related transactions, and written options | (9,867,313 | ) | 20,607,365 | 8,993,866 | 8,941,600 | (3,839,788 | ) | 1,076,715 | (6,250,848 | ) | 14,073,672 | |||||||||||||||||||||
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Change in net assets from operations | 11,378,008 | 58,457,193 | 32,055,111 | 17,494,292 | 3,916,637 | 7,942,051 | 14,214,353 | 38,295,811 | ||||||||||||||||||||||||
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Distributions to shareholders: | ||||||||||||||||||||||||||||||||
Distributions from net investment income | — | — | (6,075,617 | ) | (1,674,034 | ) | (854,149 | ) | (201,405 | ) | (370,603 | ) | (476,090 | ) | ||||||||||||||||||
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Capital transactions: | ||||||||||||||||||||||||||||||||
Received from shares sold | 30,786,203 | 14,529,378 | 624,661,369 | 149,308,124 | 6,144,750 | 2,641,232 | 10,802,580 | 9,727,458 | ||||||||||||||||||||||||
Received from shares issued in mergers | — | — | — | 30,903,821 | — | 26,663,158 | — | — | ||||||||||||||||||||||||
Received from dividends reinvested | — | — | 6,075,617 | 1,674,034 | 854,149 | 201,405 | 370,603 | 476,090 | ||||||||||||||||||||||||
Paid for shares redeemed | (43,857,130 | ) | (49,864,240 | ) | (72,643,183 | ) | (25,782,822 | ) | (8,637,548 | ) | (4,710,713 | ) | (23,225,588 | ) | (33,794,446 | ) | ||||||||||||||||
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Change in net assets from capital transactions | (13,070,927 | ) | (35,334,862 | ) | 558,093,803 | 156,103,157 | (1,638,649 | ) | 24,795,082 | (12,052,405 | ) | (23,590,898 | ) | |||||||||||||||||||
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Change in net assets | (1,692,919 | ) | 23,122,331 | 584,073,297 | 171,923,415 | 1,423,839 | 32,535,728 | 1,791,345 | 14,228,823 | |||||||||||||||||||||||
Net assets: | ||||||||||||||||||||||||||||||||
Beginning of year | 180,778,855 | 157,656,524 | 249,060,342 | 77,136,927 | 53,718,070 | 21,182,342 | 122,261,962 | 108,033,139 | ||||||||||||||||||||||||
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End of year | $ | 179,085,936 | $ | 180,778,855 | $ | 833,133,639 | $ | 249,060,342 | $ | 55,141,909 | $ | 53,718,070 | $ | 124,053,307 | $ | 122,261,962 | ||||||||||||||||
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Undistributed net investment income (loss) | $ | — | $ | — | $ | 1,410,355 | $ | 285,060 | $ | 100,128 | $ | 25,680 | $ | 55,034 | $ | 21,733 | ||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
113 |
Ohio National Fund, Inc. |
Statements of Changes in Net Assets |
Risk Managed Balanced Portfolio | ||||
Period from May 1, 2014* to December 31, 2014 | ||||
Increase (Decrease) in net assets: | ||||
Operations: | ||||
Net investment income | $ | 81,427 | ||
Net realized gain on investments, futures contracts, and foreign currency related transactions | 1,167,312 | |||
Change in unrealized appreciation/depreciation on investments, futures contracts, and foreign currency related transactions | 939,625 | |||
|
| |||
Change in net assets from operations | 2,188,364 | |||
|
| |||
Capital transactions: | ||||
Received from shares sold | 54,419,880 | |||
Paid for shares redeemed | (22,801,551 | ) | ||
|
| |||
Change in net assets from capital transactions | 31,618,329 | |||
|
| |||
Change in net assets | 33,806,693 | |||
Net assets: | ||||
Beginning of year | — | |||
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| |||
End of year | $ | 33,806,693 | ||
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Undistributed net investment income | $ | 81,420 | ||
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|
* | Represents date of inception and commencement of operations. |
The accompanying notes are an integral part of these financial statements.
114 |
Ohio National Fund, Inc. |
Equity Portfolio | Money Market Portfolio | |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||||||||||||||
Selected per-share data: | ||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of year | $ | 29.41 | $ | 21.54 | $ | 18.88 | $ | 19.72 | $ | 18.31 | $ | 10.00 | $ | 10.00 | $ | 10.00 | $ | 10.00 | $ | 10.00 | ||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.12 | 0.27 | 0.35 | 0.21 | 0.04 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency related transactions | 4.02 | 7.84 | 2.61 | (0.88 | ) | 1.41 | — | — | — | — | — | |||||||||||||||||||||||||||||
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Total from operations | 4.14 | 8.11 | 2.96 | (0.67 | ) | 1.45 | — | — | — | — | — | |||||||||||||||||||||||||||||
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Distributions: | ||||||||||||||||||||||||||||||||||||||||
Distributions from net investment income | (0.11 | ) | (0.24 | ) | (0.30 | ) | (0.17 | ) | (0.04 | ) | — | — | — | — | — | |||||||||||||||||||||||||
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Net asset value, end of year | $ | 33.44 | $ | 29.41 | $ | 21.54 | $ | 18.88 | $ | 19.72 | $ | 10.00 | $ | 10.00 | $ | 10.00 | $ | 10.00 | $ | 10.00 | ||||||||||||||||||||
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Total return | 14.07 | % | 37.69 | % | 15.69 | % | –3.38 | % | 7.91 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||
Net assets at end of year (in millions) | $ | 518.7 | $ | 221.4 | $ | 186.5 | $ | 187.9 | $ | 219.4 | $ | 202.0 | $ | 261.1 | $ | 258.6 | $ | 286.2 | $ | 293.4 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||
Ratios net of expenses reduced or reimbursed by adviser: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 0.83 | % | 0.87 | % | 0.89 | % | 0.87 | % | 0.87 | % | 0.04 | % | 0.06 | % | 0.09 | % | 0.11 | % | 0.17 | % | ||||||||||||||||||||
Net investment income | 0.69 | % | 0.98 | % | 1.55 | % | 1.00 | % | 0.21 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||||||||||||||
Ratios assuming no expenses reduced or reimbursed by adviser: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 0.83 | % | 0.87 | % | 0.89 | % | 0.87 | % | 0.87 | % | 0.33 | % | 0.34 | % | 0.35 | % | 0.34 | % | 0.35 | % | ||||||||||||||||||||
Net investment income (loss) | 0.69 | % | 0.98 | % | 1.55 | % | 1.00 | % | 0.21 | % | –0.29 | % | –0.28 | % | –0.26 | % | –0.23 | % | –0.18 | % | ||||||||||||||||||||
Portfolio turnover rate | 46 | % | 43 | % | 48 | % | 54 | % | 50 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % |
The accompanying notes are an integral part of these financial statements.
115 |
Ohio National Fund, Inc. |
Financial Highlights |
Bond Portfolio | Omni Portfolio | |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||||||||||||||
Selected per-share data: | ||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of year | $ | 14.78 | $ | 15.07 | $ | 14.05 | $ | 13.21 | $ | 12.25 | $ | 21.74 | $ | 16.82 | $ | 15.21 | $ | 16.08 | $ | 14.42 | ||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.50 | 0.56 | 0.51 | 0.48 | 0.52 | 0.26 | 0.24 | 0.26 | 0.25 | 0.28 | ||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency related transactions | 0.37 | (0.85 | ) | 0.51 | 0.36 | 0.44 | 2.37 | 4.89 | 1.57 | (0.91 | ) | 1.62 | ||||||||||||||||||||||||||||
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Total from operations | 0.87 | (0.29 | ) | 1.02 | 0.84 | 0.96 | 2.63 | 5.13 | 1.83 | (0.66 | ) | 1.90 | ||||||||||||||||||||||||||||
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Distributions: | ||||||||||||||||||||||||||||||||||||||||
Distributions from net investment income | — | — | — | — | — | (0.22 | ) | (0.21 | ) | (0.22 | ) | (0.21 | ) | (0.24 | ) | |||||||||||||||||||||||||
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Net asset value, end of year | $ | 15.65 | $ | 14.78 | $ | 15.07 | $ | 14.05 | $ | 13.21 | $ | 24.15 | $ | 21.74 | $ | 16.82 | $ | 15.21 | $ | 16.08 | ||||||||||||||||||||
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Total return | 5.89 | % | –1.92 | % | 7.26 | % | 6.36 | % | 7.84 | % | 12.12 | % | 30.53 | % | 12.04 | % | –4.12 | % | 13.19 | % | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||
Net assets at end of year (in millions) | $ | 158.7 | $ | 151.6 | $ | 172.2 | $ | 162.0 | $ | 148.2 | $ | 37.2 | $ | 37.9 | $ | 33.2 | $ | 34.7 | $ | 41.2 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 0.64 | % | 0.66 | % | 0.66 | % | 0.66 | % | 0.67 | % | 0.77 | % | 0.79 | % | 0.81 | % | 0.77 | % | 0.78 | % | ||||||||||||||||||||
Net investment income | 3.34 | % | 3.34 | % | 3.41 | % | 3.70 | % | 3.91 | % | 1.06 | % | 1.17 | % | 1.49 | % | 1.40 | % | 1.71 | % | ||||||||||||||||||||
Portfolio turnover rate | 35 | % | 15 | % | 18 | % | 15 | % | 22 | % | 198 | % | 210 | % | 179 | % | 147 | % | 182 | % |
The accompanying notes are an integral part of these financial statements.
116 |
Ohio National Fund, Inc. |
Financial Highlights |
International Portfolio | Capital Appreciation Portfolio | |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||||||||||||||
Selected per-share data: | ||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of year | $ | 13.85 | $ | 12.41 | $ | 10.32 | $ | 12.20 | $ | 10.45 | $ | 31.24 | $ | 23.32 | $ | 19.95 | $ | 20.37 | $ | 17.45 | ||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.18 | 0.23 | 0.20 | 0.17 | 0.14 | 0.08 | 0.13 | 0.15 | 0.09 | 0.06 | ||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments, futures contracts, foreign currency contracts, and other foreign currency related transactions | (1.48 | ) | 1.21 | 1.89 | (2.05 | ) | 1.61 | 2.59 | 7.91 | 3.36 | (0.43 | ) | 2.90 | |||||||||||||||||||||||||||
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Total from operations | (1.30 | ) | 1.44 | 2.09 | (1.88 | ) | 1.75 | 2.67 | 8.04 | 3.51 | (0.34 | ) | 2.96 | |||||||||||||||||||||||||||
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Distributions: | ||||||||||||||||||||||||||||||||||||||||
Distributions from net investment income | — | — | — | — | — | (0.09 | ) | (0.12 | ) | (0.14 | ) | (0.08 | ) | (0.04 | ) | |||||||||||||||||||||||||
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Net asset value, end of year | $ | 12.55 | $ | 13.85 | $ | 12.41 | $ | 10.32 | $ | 12.20 | $ | 33.82 | $ | 31.24 | $ | 23.32 | $ | 19.95 | $ | 20.37 | ||||||||||||||||||||
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Total return | –9.39 | % | 11.60 | % | 20.25 | % | –15.41 | % | 16.75 | % | 8.54 | % | 34.51 | % | 17.59 | % | –1.65 | % | 16.99 | % | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||
Net assets at end of year (in millions) | $ | 174.4 | $ | 189.4 | $ | 180.3 | $ | 172.8 | $ | 213.1 | $ | 449.4 | $ | 138.0 | $ | 115.7 | $ | 114.7 | $ | 129.8 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||
Ratios net of expenses reduced or reimbursed by adviser: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 0.84 | % | 0.75 | % | 1.02 | % | 1.02 | % | 1.03 | % | 0.83 | % | 0.88 | % | 0.90 | % | 0.88 | % | 0.89 | % | ||||||||||||||||||||
Net investment income | 1.43 | % | 1.52 | % | 1.65 | % | 1.41 | % | 1.15 | % | 0.56 | % | 0.45 | % | 0.66 | % | 0.41 | % | 0.31 | % | ||||||||||||||||||||
Ratios assuming no expenses reduced or reimbursed by adviser: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 1.00 | % | 1.01 | % | 1.02 | % | 1.02 | % | 1.03 | % | 0.83 | % | 0.88 | % | 0.90 | % | 0.88 | % | 0.89 | % | ||||||||||||||||||||
Net investment income | 1.27 | % | 1.26 | % | 1.65 | % | 1.41 | % | 1.15 | % | 0.56 | % | 0.45 | % | 0.66 | % | 0.41 | % | 0.31 | % | ||||||||||||||||||||
Portfolio turnover rate | 95 | % | 53 | % | 61 | % | 58 | % | 67 | % | 67 | % | 49 | % | 39 | % | 61 | % | 58 | % |
The accompanying notes are an integral part of these financial statements.
117 |
Ohio National Fund, Inc. |
Financial Highlights |
International Small-Mid Company Portfolio | Aggressive Growth Portfolio | |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||||||||||||||
Selected per-share data: | ||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of year | $ | 30.03 | $ | 23.52 | $ | 19.17 | $ | 23.24 | $ | 19.41 | $ | 12.50 | $ | 9.51 | $ | 7.74 | $ | 8.17 | $ | 7.43 | ||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.12 | 0.12 | 0.17 | 0.26 | 0.07 | (0.03 | ) | (0.02 | ) | 0.03 | — | 0.01 | ||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency related transactions | (2.76 | ) | 6.39 | 4.18 | (4.33 | ) | 3.76 | 1.23 | 3.01 | 1.74 | (0.43 | ) | 0.73 | |||||||||||||||||||||||||||
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Total from operations | (2.64 | ) | 6.51 | 4.35 | (4.07 | ) | 3.83 | 1.20 | 2.99 | 1.77 | (0.43 | ) | 0.74 | |||||||||||||||||||||||||||
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Net asset value, end of year | $ | 27.39 | $ | 30.03 | $ | 23.52 | $ | 19.17 | $ | 23.24 | $ | 13.70 | $ | 12.50 | $ | 9.51 | $ | 7.74 | $ | 8.17 | ||||||||||||||||||||
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Total return | –8.79 | % | 27.68 | % | 22.69 | % | –17.51 | % | 19.73 | % | 9.60 | % | 31.44 | % | 22.87 | % | –5.26 | % | 9.96 | % | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||
Net assets at end of year (in millions) | $ | 67.6 | $ | 77.0 | $ | 64.5 | $ | 57.5 | $ | 78.6 | $ | 39.9 | $ | 39.4 | $ | 33.1 | $ | 25.8 | $ | 29.8 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 1.18 | % | 1.19 | % | 1.21 | % | 1.20 | % | 1.25 | % | 0.94 | % | 0.97 | % | 0.99 | % | 1.04 | % | 1.05 | % | ||||||||||||||||||||
Net investment income (loss) | 0.38 | % | 0.40 | % | 0.64 | % | 1.07 | % | 0.32 | % | –0.23 | % | –0.25 | % | 0.34 | % | 0.02 | % | 0.17 | % | ||||||||||||||||||||
Portfolio turnover rate | 65 | % | 51 | % | 55 | % | 67 | % | 81 | % | 55 | % | 60 | % | 17 | % | 47 | % | 37 | % |
The accompanying notes are an integral part of these financial statements.
118 |
Ohio National Fund, Inc. |
Financial Highlights |
Small Cap Growth Portfolio | Mid Cap Opportunity Portfolio | |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||||||||||||||
Selected per-share data: | ||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of year | $ | 22.65 | $ | 15.59 | $ | 13.21 | $ | 12.86 | $ | 9.89 | $ | 28.24 | $ | 21.32 | $ | 17.81 | $ | 18.43 | $ | 15.41 | ||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.05 | ) | (0.03 | ) | (0.03 | ) | (0.08 | ) | (0.07 | ) | (0.05 | ) | (0.07 | ) | (0.02 | ) | (0.06 | ) | (0.06 | ) | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency related transactions | 2.47 | 7.09 | 2.41 | 0.43 | 3.04 | 3.30 | 6.99 | 3.53 | (0.56 | ) | 3.08 | |||||||||||||||||||||||||||||
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Total from operations | 2.42 | 7.06 | 2.38 | 0.35 | 2.97 | 3.25 | 6.92 | 3.51 | (0.62 | ) | 3.02 | |||||||||||||||||||||||||||||
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Distributions: | ||||||||||||||||||||||||||||||||||||||||
Distributions from net investment income | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
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Net asset value, end of year | $ | 25.07 | $ | 22.65 | $ | 15.59 | $ | 13.21 | $ | 12.86 | $ | 31.49 | $ | 28.24 | $ | 21.32 | $ | 17.81 | $ | 18.43 | ||||||||||||||||||||
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Total return | 10.68 | % | 45.29 | % | 18.02 | % | 2.72 | % | 30.03 | % | 11.51 | % | 32.46 | % | 19.71 | % | –3.36 | % | 19.60 | % | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||
Net assets at end of year (in millions) | $ | 212.1 | $ | 109.5 | $ | 35.0 | $ | 31.5 | $ | 32.1 | $ | 86.7 | $ | 83.0 | $ | 67.1 | $ | 61.1 | $ | 70.4 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 0.89 | % | 1.04 | % | 1.10 | % | 1.08 | % | 1.13 | % | 0.94 | % | 0.96 | % | 0.98 | % | 0.96 | % | 0.98 | % | ||||||||||||||||||||
Net investment income (loss) | –0.31 | % | –0.29 | % | –0.20 | % | –0.60 | % | –0.70 | % | –0.18 | % | –0.28 | % | –0.09 | % | –0.29 | % | –0.35 | % | ||||||||||||||||||||
Portfolio turnover rate | 58 | % | 69 | % (a) | 65 | % | 58 | % | 94 | % | 61 | % | 44 | % | 45 | % | 51 | % | 56 | % |
(a) | The cost of purchases and proceeds from sales of securities that were incurred to realign the Portfolio’s holdings subsequent to the December 20, 2013 reorganization are excluded from the 2013 portfolio turnover rate calculation. If such amounts had not been excluded, the portfolio turnover rate would have been 146%. |
The accompanying notes are an integral part of these financial statements.
119 |
Ohio National Fund, Inc. |
Financial Highlights |
S&P 500® Index Portfolio | Strategic Value Portfolio | |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||||||||||||||
Selected per-share data: | ||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of year | $ | 19.63 | $ | 15.08 | $ | 13.25 | $ | 13.21 | $ | 11.69 | $ | 13.09 | $ | 11.09 | $ | 10.50 | $ | 9.36 | $ | 8.64 | ||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.32 | 0.26 | 0.26 | 0.22 | 0.19 | 0.93 | 0.35 | 0.13 | 0.33 | 0.35 | ||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments and foreign currency related transactions | 2.25 | 4.52 | 1.78 | 0.01 | 1.50 | 0.68 | 1.97 | 0.63 | 0.98 | 0.68 | ||||||||||||||||||||||||||||||
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Total from operations | 2.57 | 4.78 | 2.04 | 0.23 | 1.69 | 1.61 | 2.32 | 0.76 | 1.31 | 1.03 | ||||||||||||||||||||||||||||||
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Distributions: | ||||||||||||||||||||||||||||||||||||||||
Distributions from net investment income | (0.27 | ) | (0.23 | ) | (0.21 | ) | (0.19 | ) | (0.17 | ) | (0.78 | ) | (0.32 | ) | (0.17 | ) | (0.17 | ) | (0.24 | ) | ||||||||||||||||||||
Return of capital distributions | — | — | — | — | — | — | — | — | — | (0.07 | ) | |||||||||||||||||||||||||||||
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Total distributions | (0.27 | ) | (0.23 | ) | (0.21 | ) | (0.19 | ) | (0.17 | ) | (0.78 | ) | (0.32 | ) | (0.17 | ) | (0.17 | ) | (0.31 | ) | ||||||||||||||||||||
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Net asset value, end of year | $ | 21.93 | $ | 19.63 | $ | 15.08 | $ | 13.25 | $ | 13.21 | $ | 13.92 | $ | 13.09 | $ | 11.09 | $ | 10.50 | $ | 9.36 | ||||||||||||||||||||
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Total return | 13.11 | % | 31.74 | % | 15.40 | % | 1.77 | % | 14.45 | % | 12.41 | % | 21.00 | % | 7.21 | % | 14.03 | % | 11.98 | % | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||
Net assets at end of year (in millions) | $ | 388.2 | $ | 314.9 | $ | 207.8 | $ | 170.7 | $ | 176.2 | $ | 332.6 | $ | 397.7 | $ | 268.2 | $ | 42.0 | $ | 24.3 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 0.43 | % | 0.45 | % | 0.48 | % | 0.47 | % | 0.49 | % | 0.78 | % | 0.79 | % | 0.82 | % | 0.96 | % | 0.96 | % | ||||||||||||||||||||
Net investment income | 1.64 | % | 1.68 | % | 1.87 | % | 1.62 | % | 1.59 | % | 5.37 | % | 3.58 | % | 3.84 | % | 4.07 | % | 4.11 | % | ||||||||||||||||||||
Portfolio turnover rate | 11 | % | 15 | % | 7 | % | 9 | % | 8 | % | 22 | % | 22 | % | 30 | % | 19 | % | 31 | % |
The accompanying notes are an integral part of these financial statements.
120 |
Ohio National Fund, Inc. |
Financial Highlights |
High Income Bond Portfolio | Capital Growth Portfolio | |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||||||||||||||
Selected per-share data: | ||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of year | $ | 15.88 | $ | 14.83 | $ | 12.97 | $ | 12.31 | $ | 10.79 | $ | 40.03 | $ | 30.73 | $ | 27.00 | $ | 27.68 | $ | 20.29 | ||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 1.57 | 1.10 | 0.99 | 1.08 | 0.58 | (0.19 | ) | (0.15 | ) | (0.03 | ) | (0.19 | ) | (0.11 | ) | |||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency related transactions | (1.13 | ) | (0.05 | ) | 0.87 | (0.42 | ) | 0.94 | 1.17 | 9.45 | 3.76 | (0.49 | ) | 7.50 | ||||||||||||||||||||||||||
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Total from operations | 0.44 | 1.05 | 1.86 | 0.66 | 1.52 | 0.98 | 9.30 | 3.73 | (0.68 | ) | 7.39 | |||||||||||||||||||||||||||||
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Net asset value, end of year | $ | 16.32 | $ | 15.88 | $ | 14.83 | $ | 12.97 | $ | 12.31 | $ | 41.01 | $ | 40.03 | $ | 30.73 | $ | 27.00 | $ | 27.68 | ||||||||||||||||||||
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Total return | 2.77 | % | 7.08 | % | 14.34 | % | 5.36 | % | 14.09 | % | 2.45 | % | 30.26 | % | 13.81 | % | –2.46 | % | 36.42 | % | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||
Net assets at end of year (in millions) | $ | 230.1 | $ | 307.9 | $ | 311.9 | $ | 267.5 | $ | 269.8 | $ | 75.5 | $ | 80.4 | $ | 55.1 | $ | 51.1 | $ | 52.4 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 0.77 | % | 0.77 | % | 0.79 | % | 0.78 | % | 0.81 | % | 1.00 | % | 1.01 | % | 1.04 | % | 1.02 | % | 1.04 | % | ||||||||||||||||||||
Net investment income (loss) | 5.73 | % | 6.36 | % | 7.17 | % | 7.69 | % | 8.03 | % | –0.45 | % | –0.44 | % | –0.10 | % | –0.64 | % | –0.50 | % | ||||||||||||||||||||
Portfolio turnover rate | 33 | % | 29 | % | 35 | % | 35 | % | 33 | % | 44 | % | 42 | % | 42 | % | 44 | % | 56 | % |
The accompanying notes are an integral part of these financial statements.
121 |
Ohio National Fund, Inc. |
Financial Highlights |
Nasdaq-100® Index Portfolio | Bristol Portfolio | |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||||||||||||||
Selected per-share data: | ||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of year | $ | 9.25 | $ | 6.85 | $ | 5.85 | $ | 5.69 | $ | 4.78 | $ | 18.29 | $ | 13.01 | $ | 11.56 | $ | 12.51 | $ | 11.12 | ||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.12 | 0.07 | 0.06 | 0.02 | 0.02 | 0.09 | 0.09 | 0.09 | 0.06 | 0.07 | ||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.62 | 2.39 | 0.99 | 0.16 | 0.91 | 2.45 | 5.27 | 1.43 | (0.95 | ) | 1.39 | |||||||||||||||||||||||||||||
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Total from operations | 1.74 | 2.46 | 1.05 | 0.18 | 0.93 | 2.54 | 5.36 | 1.52 | (0.89 | ) | 1.46 | |||||||||||||||||||||||||||||
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Distributions: | ||||||||||||||||||||||||||||||||||||||||
Distributions from net investment income | (0.11 | ) | (0.06 | ) | (0.05 | ) | (0.02 | ) | (0.02 | ) | (0.08 | ) | (0.08 | ) | (0.07 | ) | (0.06 | ) | (0.07 | ) | ||||||||||||||||||||
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Net asset value, end of year | $ | 10.88 | $ | 9.25 | $ | 6.85 | $ | 5.85 | $ | 5.69 | $ | 20.75 | $ | 18.29 | $ | 13.01 | $ | 11.56 | $ | 12.51 | ||||||||||||||||||||
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Total return | 18.77 | % | 35.98 | % | 17.88 | % | 3.19 | % | 19.38 | % | 13.88 | % | 41.21 | % | 13.19 | % | –7.16 | % | 13.10 | % | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||
Net assets at end of year (in millions) | $ | 121.7 | $ | 95.8 | $ | 68.5 | $ | 55.5 | $ | 54.9 | $ | 232.0 | $ | 231.5 | $ | 204.9 | $ | 192.7 | $ | 182.6 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 0.48 | % | 0.51 | % | 0.53 | % | 0.52 | % | 0.54 | % | 0.81 | % | 0.82 | % | 0.85 | % | 0.84 | % | 0.86 | % | ||||||||||||||||||||
Net investment income | 1.23 | % | 0.94 | % | 0.98 | % | 0.41 | % | 0.39 | % | 0.42 | % | 0.51 | % | 0.68 | % | 0.52 | % | 0.70 | % | ||||||||||||||||||||
Portfolio turnover rate | 23 | % | 43 | % | 25 | % | 44 | % | 30 | % | 239 | % | 269 | % | 244 | % | 198 | % | 253 | % |
The accompanying notes are an integral part of these financial statements.
122 |
Ohio National Fund, Inc. |
Financial Highlights |
Bryton Growth Portfolio | Balanced Portfolio | |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||||||||||||||
Selected per-share data: | ||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of year | $ | 19.28 | $ | 13.70 | $ | 12.31 | $ | 13.57 | $ | 10.94 | $ | 18.02 | $ | 15.76 | $ | 13.91 | $ | 13.87 | $ | 13.13 | ||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.09 | ) | (0.11 | ) | (0.07 | ) | (0.08 | ) | (0.06 | ) | 0.16 | 0.08 | 0.10 | 0.31 | 0.32 | |||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments, foreign currency related transactions, and written options | 1.28 | 5.69 | 1.46 | (1.18 | ) | 2.69 | 0.92 | 2.32 | 1.75 | (0.00 | ) | 0.70 | ||||||||||||||||||||||||||||
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Total from operations | 1.19 | 5.58 | 1.39 | (1.26 | ) | 2.63 | 1.08 | 2.40 | 1.85 | 0.31 | 1.02 | |||||||||||||||||||||||||||||
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Distributions: | ||||||||||||||||||||||||||||||||||||||||
Distributions from net investment income | — | — | — | — | — | (0.14 | ) | (0.14 | ) | — | (0.27 | ) | (0.28 | ) | ||||||||||||||||||||||||||
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Net asset value, end of year | $ | 20.47 | $ | 19.28 | $ | 13.70 | $ | 12.31 | $ | 13.57 | $ | 18.96 | $ | 18.02 | $ | 15.76 | $ | 13.91 | $ | 13.87 | ||||||||||||||||||||
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Total return | 6.17 | % | 40.73 | % | 11.29 | % | –9.29 | % | 24.04 | % | 5.99 | % | 15.26 | % | 13.30 | % | 2.29 | % | 7.78 | % | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||
Net assets at end of year (in millions) | $ | 179.1 | $ | 180.8 | $ | 157.7 | $ | 155.4 | $ | 137.4 | $ | 833.1 | $ | 249.1 | $ | 77.1 | $ | 17.1 | $ | 14.5 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||
Ratios net of expenses reduced or reimbursed by adviser: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 0.88 | % | 0.89 | % | 0.93 | % | 0.91 | % | 0.93 | % | 0.64 | % | 0.75 | % | 0.86 | % | 0.94 | % | 0.99 | % | ||||||||||||||||||||
Net investment income | –0.45 | % | –0.59 | % | –0.57 | % | –0.67 | % | –0.49 | % | 1.80 | % | 1.45 | % | 1.90 | % | 2.33 | % | 2.48 | % | ||||||||||||||||||||
Ratios assuming no expenses reduced or reimbursed by adviser: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 0.88 | % | 0.89 | % | 0.93 | % | 0.91 | % | 0.93 | % | 0.68 | % | 0.75 | % | 0.86 | % | 0.94 | % | 0.99 | % | ||||||||||||||||||||
Net investment income | –0.45 | % | –0.59 | % | –0.57 | % | –0.67 | % | –0.49 | % | 1.76 | % | 1.45 | % | 1.90 | % | 2.33 | % | 2.48 | % | ||||||||||||||||||||
Portfolio turnover rate | 178 | % | 185 | % | 152 | % | 156 | % | 118 | % | 94 | % | 82 | % (a) | 60 | % | 47 | % | 56 | % |
(a) | The cost of purchases and proceeds from sales of securities that were incurred to realign the Portfolio’s holdings subsequent to the December 20, 2013 reorganization are excluded from the 2013 portfolio turnover rate calculation. If such amounts had not been excluded, the portfolio turnover rate would have been 89%. |
The accompanying notes are an integral part of these financial statements.
123 |
Ohio National Fund, Inc. |
Financial Highlights |
Target VIP Portfolio | Bristol Growth Portfolio | |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||||||||||||||
Selected per-share data: | ||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of year | $ | 13.70 | $ | 10.10 | $ | 8.89 | $ | 9.11 | $ | 7.72 | $ | 14.72 | $ | 10.66 | $ | 9.63 | $ | 9.84 | $ | 8.75 | ||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.25 | 0.09 | 0.18 | 0.10 | 0.13 | 0.06 | 0.06 | 0.06 | 0.04 | 0.02 | ||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency related transactions | 0.77 | 3.61 | 1.17 | (0.23 | ) | 1.37 | 1.71 | 4.05 | 1.02 | (0.21 | ) | 1.10 | ||||||||||||||||||||||||||||
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Total from operations | 1.02 | 3.70 | 1.35 | (0.13 | ) | 1.50 | 1.77 | 4.11 | 1.08 | (0.17 | ) | 1.12 | ||||||||||||||||||||||||||||
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Distributions: | ||||||||||||||||||||||||||||||||||||||||
Distributions from net investment income | (0.23 | ) | (0.10 | ) | (0.14 | ) | (0.09 | ) | (0.11 | ) | (0.05 | ) | (0.05 | ) | (0.05 | ) | (0.04 | ) | (0.03 | ) | ||||||||||||||||||||
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Net asset value, end of year | $ | 14.49 | $ | 13.70 | $ | 10.10 | $ | 8.89 | $ | 9.11 | $ | 16.44 | $ | 14.72 | $ | 10.66 | $ | 9.63 | $ | 9.84 | ||||||||||||||||||||
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Total return | 7.44 | % | 36.71 | % | 15.24 | % | –1.41 | % | 19.47 | % | 12.01 | % | 38.62 | % | 11.20 | % | –1.77 | % | 12.79 | % | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||
Net assets at end of year (in millions) | $ | 55.1 | $ | 53.7 | $ | 21.2 | $ | 20.5 | $ | 21.9 | $ | 124.1 | $ | 122.3 | $ | 108.0 | $ | 99.9 | $ | 85.3 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||
Expenses | 0.77 | % | 0.82 | % | 0.87 | % | 0.84 | % | 0.82 | % | 0.86 | % | 0.88 | % | 0.92 | % | 0.90 | % | 0.93 | % | ||||||||||||||||||||
Net investment income | 1.77 | % | 0.92 | % | 1.73 | % | 1.07 | % | 1.50 | % | 0.34 | % | 0.42 | % | 0.57 | % | 0.41 | % | 0.63 | % | ||||||||||||||||||||
Portfolio turnover rate | 79 | % | 57 | % (a) | 70 | % | 79 | % | 92 | % | 192 | % | 237 | % | 229 | % | 187 | % | 268 | % |
(a) | The cost of purchases and proceeds from sales of securities that were incurred to realign the Portfolio’s holdings subsequent to the December 20, 2013 reorganization are excluded from the 2013 portfolio turnover rate calculation. If such amounts had not been excluded, the portfolio turnover rate would have been 138%. |
The accompanying notes are an integral part of these financial statements.
124 |
Ohio National Fund, Inc. |
Financial Highlights |
Risk Managed Balanced Portfolio
Period from May 1, 2014* to December 31, 2014 | ||||
Selected per-share data: | ||||
Net asset value, beginning of year | $ | 10.00 | ||
Operations: | ||||
Net investment income | 0.03 | |||
Net realized and unrealized gain (loss) on investments, futures contracts, and foreign currency related transactions | 0.80 | |||
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Total from operations | 0.83 | |||
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Net asset value, end of year | $ | 10.83 | ||
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Total return | 8.30 | %** | ||
Ratios and supplemental data: | ||||
Net assets at end of year (in millions) | $ | 33.8 | ||
Ratios to average net assets: | ||||
Expenses | 1.43 | %*** | ||
Net investment income | 0.43 | %*** | ||
Portfolio turnover rate | 94 | %** |
* | Represents date of inception and commencement of operations. |
** | Not annualized. |
*** | Annualized. |
The accompanying notes are an integral part of these financial statements.
125 |
Ohio National Fund, Inc. |
December 31, 2014 |
(1) | Organization |
Ohio National Fund, Inc. (the “Fund”) is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the “40 Act”). The Fund is an open-end investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services-Investment Companies”. The Fund consists of twenty-one separate investment portfolios (the “Portfolios”) that seek the following objectives and strategies:
¢ | Equity Portfolio — Long-term growth of capital by investing at least 80% of its assets in equity securities. |
¢ | Money Market Portfolio — Maximum current income consistent with preservation of principal and liquidity by investing in high quality money market instruments. |
¢ | Bond Portfolio — High level of income and opportunity for capital appreciation consistent with preservation of capital by investing primarily in intermediate-term and long-term fixed income securities. |
¢ | Omni Portfolio — High level of long-term total return consistent with preservation of capital by investing in stocks, bonds, and money market instruments. |
¢ | International Portfolio — Long term growth of capital by investing at least 80% of its assets in securities of foreign companies. |
¢ | Capital Appreciation Portfolio — Long-term capital growth by investing primarily in equity and equity related securities of established companies with either current or emerging earnings growth not fully appreciated or recognized by the market. |
¢ | International Small-Mid Company Portfolio — Long-term growth of capital by investing at least 80% of its assets in equity securities of foreign small and mid-cap companies. |
¢ | Aggressive Growth Portfolio — Long-term capital growth by investing primarily in domestic and foreign equity securities selected for growth potential. |
¢ | Small Cap Growth Portfolio — Long-term capital appreciation by investing at least 80% of its net assets in stocks of small companies. |
¢ | Mid Cap Opportunity Portfolio — Long-term total return by investing at least 80% of its net assets in equity securities of mid-cap companies, primarily those that are strategically positioned for long-term growth. |
¢ | S&P 500® Index Portfolio — Total return that approximates the total return of the Standard & Poor’s 500® Index, at a risk level consistent with that of the Standard & Poor’s 500® Index. |
¢ | Strategic Value Portfolio — Growth of capital and income by investing primarily in high dividend yielding common stocks with dividend growth potential. |
¢ | High Income Bond Portfolio — High current income by investing at least 80% of its net assets in lower rated corporate debt obligations commonly referred to as “junk bonds”. The Portfolio’s investments are generally rated Ba or lower by Moody’s, or BB or lower by Standard & Poor’s or Fitch. |
¢ | Capital Growth Portfolio — Long-term capital appreciation by investing primarily in an actively managed portfolio of equity securities of small cap growth companies. |
¢ | Nasdaq-100® Index Portfolio — Long-term growth of capital by investing primarily in stocks that are included in the Nasdaq-100® Index. Unlike the other Portfolios of the Fund, the Nasdaq-100® Index Portfolio is a non-diversified portfolio for purposes of Section 5(b) of the 40 Act. |
¢ | Bristol Portfolio — Long-term growth of capital by investing primarily in common stocks of the 1,000 largest publicly traded U.S. companies in terms of market capitalization. |
¢ | Bryton Growth Portfolio — Long-term growth of capital by investing primarily in common stocks of growth-oriented U.S. companies smaller than the 500 largest publicly traded U.S. companies in terms of market capitalization. |
¢ | Balanced Portfolio — Capital appreciation and income by investing normally up to 75% of its assets in equity securities of domestic and foreign securities of any market capitalization while maintaining a minimum of 25% of its assets in fixed income securities. |
126 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
¢ | Target VIP Portfolio — Above average total return by investing in the common stocks of companies which are identified by a model that applies separate uniquely specialized strategies. |
¢ | Bristol Growth Portfolio — Long-term growth of capital by investing primarily in common stocks of the 1,000 largest publicly traded U.S. companies in terms of market capitalization. |
¢ | Risk Managed Balanced Portfolio (Date of inception and commencement of operations: May 1, 2014) — Long-term capital growth, consistent with preservation of capital and balanced by current income. The Portfolio invests in a balanced portfolio of equity and fixed-income securities and a risk management portfolio intended to enhance the risk adjusted return of the Portfolio. |
Additional detail regarding portfolio-specific objectives, policies, and investment strategies is provided in the prospectus and Statement of Additional Information of Ohio National Fund, Inc. There are no assurances that these objectives will be met. Each Portfolio, except the Nasdaq-100® Index Portfolio, is classified as diversified for purposes of Section 5(b) of the 40 Act.
At present, the Fund sells its shares only to separate accounts of The Ohio National Life Insurance Company (“ONLIC”), Ohio National Life Assurance Corporation (“ONLAC”), and National Security Life and Annuity Company (“NSLA”) to support certain benefits under variable contracts issued by those entities. In the future, Fund shares may be used for other purposes but, unless there is a change in applicable law, they will not be sold directly to the public.
Interest in each Portfolio is represented by a separate class of the Fund’s capital stock, par value $1. Each share of a Portfolio participates equally in the Portfolio’s dividends, distributions, net assets, and voting matters.
The Fund is authorized to issue 550 million of its capital shares. These authorized shares have been allocated to specific Portfolios of the Fund as follows:
Portfolio | Authorized Shares | |||
Equity | 25,000,000 | |||
Money Market | 55,000,000 | |||
Bond | 30,000,000 | |||
Omni | 10,000,000 | |||
International | 30,000,000 | |||
Capital Appreciation | 25,000,000 | |||
International Small-Mid Company | 7,000,000 | |||
Aggressive Growth | 7,000,000 | |||
Small Cap Growth | 15,000,000 | |||
Mid Cap Opportunity | 6,000,000 | |||
S&P 500® Index | 35,000,000 |
Portfolio | Authorized Shares | |||
Strategic Value | 65,000,000 | |||
High Income Bond | 35,000,000 | |||
Capital Growth | 5,000,000 | |||
Nasdaq-100® Index | 25,000,000 | |||
Bristol | 40,000,000 | |||
Bryton Growth | 30,000,000 | |||
Balanced | 55,000,000 | |||
Target VIP | 10,000,000 | |||
Bristol Growth | 25,000,000 | |||
Risk Managed Balanced | 15,000,000 |
The Fund’s Board of Directors (the “Board”) periodically reallocates authorized shares among the Portfolios of the Fund and may authorize additional shares as deemed necessary.
Under the Fund’s organizational documents, its Officers and Directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund. However, based on experience, the risk of loss to the Fund is expected to be remote.
(2) | Significant Accounting Policies |
The following is a summary of significant accounting policies followed by the Fund in preparation of its Schedules of Investments:
Use of Estimates
The preparation of Schedules of Investments in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
127 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
Security Valuation
Investments are valued using pricing procedures approved by the Board.
Various investments in the Money Market Portfolio are valued at amortized cost in accordance with Rule 2a-7 of the 40 Act. In all Portfolios of the Fund, fixed income instruments that mature in sixty days or less, and of sufficient credit quality, are valued at amortized cost. Amortized cost valuation involves valuing a security at its cost initially and thereafter amortizing to maturity any discounts or premiums on the level-yield method, regardless of the impact of fluctuating market interest rates on the value of the security. In these instances, amortized cost approximates fair value.
Investments, other than those securities aforementioned, are valued as follows:
Domestic equity securities that are traded on U.S. exchanges are valued at the last trade price reported by the primary exchange of each security (4:00 pm Eastern Time for normal trading sessions). Over-the-counter domestic equity securities are valued at the last trade price reported daily as of 4:00 pm Eastern Time (normal trading sessions). Over-the-counter traded ADRs may also be valued at an evaluated price based on the value of the underlying securities. If a domestic equity security is not traded on a particular day, the mean between the bid and ask prices reported at 4:00 pm Eastern Time (normal trading sessions) by the primary exchange will generally be used for valuation purposes. The principal sources for market quotations are independent pricing services that have been approved by the Board.
Fixed income securities that have a remaining maturity exceeding sixty days are generally valued at the mean between the daily close bid and ask prices reported at 4:00 pm Eastern Time (normal trading sessions), as provided by independent pricing services approved by the Board.
Shares of open-end mutual funds are valued at each fund’s last calculated net asset value per share.
Restricted securities, illiquid securities, or other investments for which market quotations or other observable market inputs are not readily available are valued at an estimate of value using methods determined in good faith by the Fund’s Pricing Committee under the supervision of the Board.
Foreign equity securities are initially priced at the reported close price of the exchange on which a security is primarily traded. Securities not traded on a particular day are valued at the mean between the last reported bid and ask quotes at daily close, or the last sale price when appropriate. The principal sources for market quotations are independent pricing services that have been approved by the Board.
Equity securities that are primarily traded on foreign exchanges, other than those with close times that are consistent with the normal 4:00 pm Eastern Time close of U.S. equity markets, are further subjected to fair valuation pricing procedures provided by an independent fair valuation service. The service provides data that can be used to estimate the price of a foreign issue that would prevail in a liquid market given market information available daily at 4:00 pm Eastern Time (normal trading sessions). Multiple factors may be considered in performing this valuation, including an issue’s local close price, relevant general and sector indices, currency fluctuations, and pricing of related depository receipts, exchange traded funds, and futures. The pricing procedures are performed for each individual security for which there is a fairly large degree of certainty that the local close price is not the liquid market price at the time of U.S. market close. The procedures are performed each day there is a change in a consistently used market index from the time of local close to the U.S. market close. Backtesting analysis is performed on a quarterly basis to monitor the effectiveness of these procedures. The testing is reviewed by management of the Fund as well as the Fund’s Board. Prior results have indicated that these procedures have been effective in reaching valuation objectives.
The differences between the aggregate cost and values of investments are reflected as unrealized appreciation or unrealized depreciation.
Pricing inputs used in the Fund’s determination of its investment values are categorized according to a three-tier hierarchy framework. The hierarchy is summarized in three broad levels:
Level 1: | Quoted prices in active markets for identical securities. |
Level 2: | Other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc. |
Level 3: | Significant unobservable inputs, including the Fund’s own assumptions used to determine the value of securities. |
128 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
The following is a summary of the inputs used in valuing each of the Portfolio’s assets (liabilities) at value as of December 31, 2014:
Portfolio | Financial Instrument Type | Level 1 | Level 2 | Level 3 | ||||||||||
Equity | Common Stocks** | $ | 512,072,864 | $ | — | $ | — | |||||||
Money Market Funds | 15,312,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 527,384,864 | $ | — | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Money Market* | Commercial Paper** | $ | — | $ | 104,997,082 | $ | — | |||||||
U.S. Government Agency Issues | — | 9,999,944 | — | |||||||||||
Money Market Funds | 30,000,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 30,000,000 | $ | 114,997,026 | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Bond | Corporate Bonds** | $ | — | $ | 152,679,115 | $ | — | |||||||
Money Market Funds | 3,976,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 3,976,000 | $ | 152,679,115 | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Omni | Common Stocks** | $ | 28,321,705 | $ | — | $ | — | |||||||
Corporate Bonds** | — | 7,873,915 | — | |||||||||||
U.S. Treasury Obligations | — | 402,488 | — | |||||||||||
Money Market Funds | 525,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 28,846,705 | $ | 8,276,403 | $ | — | |||||||||
|
|
|
|
|
| |||||||||
International | Common Stocks** | $ | 29,344,036 | $ | 124,940,314 | $ | — | |||||||
Rights** | 14,339 | — | — | |||||||||||
Money Market Funds | 14,227,251 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 43,585,626 | $ | 124,940,314 | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Foreign currency contracts | $ | 1,224,498 | $ | — | $ | — | ||||||||
|
|
|
|
|
| |||||||||
Futures contracts | $ | (45,302 | ) | $ | — | $ | — | |||||||
|
|
|
|
|
| |||||||||
Capital Appreciation | Common Stocks** | $ | 424,861,579 | $ | 13,891,721 | $ | — | |||||||
Money Market Funds | 15,202,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 440,063,579 | $ | 13,891,721 | $ | — | |||||||||
|
|
|
|
|
| |||||||||
International Small-Mid Company | Common Stocks** | $ | 6,965,606 | $ | 56,267,301 | $ | — | |||||||
Money Market Funds | 4,507,184 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 11,472,790 | $ | 56,267,301 | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Aggressive Growth | Common Stocks** | $ | 38,668,843 | $ | — | $ | — | |||||||
Money Market Funds | 1,825,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 40,493,843 | $ | — | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Small Cap Growth | Common Stocks** | $ | 208,665,272 | $ | 1,230,373 | $ | — | |||||||
Money Market Funds | 5,772,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 214,437,272 | $ | 1,230,373 | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Mid Cap Opportunity | Common Stocks** | $ | 85,213,416 | $ | — | $ | — | |||||||
Money Market Funds | 1,957,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 87,170,416 | $ | — | $ | — | |||||||||
|
|
|
|
|
| |||||||||
S&P 500® Index | Common Stocks** | $ | 369,955,104 | $ | — | $ | — | |||||||
Exchange Traded Funds | 16,804,763 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 386,759,867 | $ | — | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Strategic Value ... | Common Stocks** | $ | 265,658,705 | $ | 58,490,455 | $ | — | |||||||
Money Market Funds | 3,605,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 269,263,705 | $ | 58,490,455 | $ | — | |||||||||
|
|
|
|
|
|
129 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
Portfolio | Financial Instrument Type | Level 1 | Level 2 | Level 3 | ||||||||||
High Income Bond | Corporate Bonds** | $ | — | $ | 222,211,334 | $ | — | |||||||
Common Stocks** | 163,344 | — | 5,799 | |||||||||||
Warrants** | 180,285 | — | — | |||||||||||
Money Market Funds | 2,353,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 2,696,629 | $ | 222,211,334 | $ | 5,799 | |||||||||
|
|
|
|
|
| |||||||||
Capital Growth | Common Stocks** | $ | 75,165,650 | $ | — | $ | — | |||||||
Money Market Funds | 369,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 75,534,650 | $ | — | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Nasdaq-100® Index | Common Stocks** | $ | 117,633,585 | $ | — | $ | — | |||||||
Exchange Traded Funds | 4,113,480 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 121,747,065 | $ | — | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Bristol | Common Stocks** | $ | 229,859,749 | $ | — | $ | — | |||||||
Money Market Funds | 1,189,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 231,048,749 | $ | — | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Bryton Growth | Common Stocks** | $ | 177,520,423 | $ | — | $ | — | |||||||
Money Market Funds | 5,753,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 183,273,423 | $ | — | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Balanced | Common Stocks** | $ | 525,235,302 | $ | — | $ | — | |||||||
Corporate Bonds** | — | 185,701,998 | — | |||||||||||
Preferred Stocks** | 8,798,916 | 9,722,313 | — | |||||||||||
Asset-Backed / Commercial Mortgage-Backed Securities** | — | 4,336,011 | — | |||||||||||
U.S. Treasury Obligations | — | 55,102,730 | — | |||||||||||
Closed-End Mutual Funds | 19,755,326 | — | — | |||||||||||
Purchased Options | 2,339,000 | — | — | |||||||||||
Money Market Funds | 29,630,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 585,758,544 | $ | 254,863,052 | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Written Options | $ | 1,023,500 | $ | — | $ | — | ||||||||
|
|
|
|
|
| |||||||||
Target VIP | Common Stocks** | $ | 54,255,021 | $ | — | $ | — | |||||||
Money Market Funds | 881,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 55,136,021 | $ | — | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Bristol Growth | Common Stocks** | $ | 122,447,055 | $ | — | $ | — | |||||||
Money Market Funds | 2,288,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 124,735,055 | $ | — | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Risk Managed Balanced | Common Stocks** | $ | 15,085,514 | $ | 345,938 | $ | — | |||||||
Corporate Bonds** | — | 3,945,107 | — | |||||||||||
Preferred Stocks** | 94,277 | 123,236 | — | |||||||||||
Asset-Backed / Commercial Mortgage-Backed Securities** | — | 461,809 | — | |||||||||||
U.S. Treasury Obligations | — | 4,283,936 | — | |||||||||||
U.S. Government Agency Mortgage-Backed Securities | — | 1,506,869 | — | |||||||||||
Purchased Options | 1,564,235 | 879,560 | — | |||||||||||
Other** | — | 94,938 | — | |||||||||||
Money Market Funds | 4,692,000 | — | — | |||||||||||
|
|
|
|
|
| |||||||||
$ | 21,436,026 | $ | 11,641,393 | $ | — | |||||||||
|
|
|
|
|
| |||||||||
Futures contracts | $ | 142,985 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
* | At December 31, 2014, the Money Market Portfolio’s investments, with the exception of money market funds, were valued using amortized cost, in accordance with rules under the 40 Act. Amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are considered to be valued using Level 2 inputs. |
** | For detailed industry descriptions, see the accompanying Schedules of Investments. |
130 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
As stated above, the value assigned to the Fund’s foreign securities will, in most cases, not be the quoted or published prices of the investments on their respective primary markets or exchanges. Securities that are priced using fair value estimates are categorized as Level 2 in the fair value hierarchy, whereas securities that do not meet the established criteria are categorized as Level 1. The valuation of a foreign security from one valuation period to the next may result in a transfer between Levels 1 and 2 if the degree of certainty that the local close price is not the liquid market price at the time of U.S. market close is not similar for both periods. The Fund’s policy is to recognize transfers between fair value hierarchy levels at the reporting period end.
In the International Small-Mid Company Portfolio, there were two transfers of securities from Level 1 pricing at December 31, 2013, to Level 2 at December 31, 2014. These securities were that Portfolio’s holdings of Vectura Group PLC and Nexteer Automotive Group Ltd. common stocks. The fair valuation service provider reported that those securities did not meet the minimum predictability threshold to be fair valued at December 31, 2013, and were not fair valued in the prior period, whereas in the current period, the securities met the threshold to be fair valued. The aggregate value of these holdings were $937,689 and $669,335 at December 31, 2014 and December 31, 2013, respectively.
Below is a reconciliation that details the activity of securities in Level 3 for the year ended December 31, 2014:
High Income Bond | ||||
Beginning Balance – January 1, 2014 | $ | — | ||
Total gains or losses (realized/unrealized): | ||||
Included in earnings (or changes in net assets) | (9,448 | ) | ||
Issuances | 15,247 | |||
Settlements | — | |||
Transfers out of Level 3 (due to availability of active market quotations or significant observable market inputs) | — | |||
Transfers into Level 3 (due to lack of active market quotations or significant observable market inputs) | — | |||
|
| |||
Ending Balance – December 31, 2014 | $ | 5,799 | ||
|
| |||
The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date | $ | (9,448 | ) | |
|
|
The following table present additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 at December 31, 2014:
High Income Bond | Ending Balance at December 31, 2014 | Valuation Technique Used | Unobservable inputs | |||||
Common Stock | $ | 5,799 | Value of claim on the | Net enterprise value | ||||
enterprise value of | Share class claim on value | |||||||
underlying company | Number of share class total shares |
Foreign Securities and Currency
The books and records of all the Portfolios are maintained in U.S. dollars. All investments and cash quoted in foreign currencies are valued daily in U.S. dollars on the basis of the foreign currency exchange rates provided by an independent source. These exchange rates are currently determined daily, at 4:00 pm Eastern Time for normal trading sessions. Purchases and sales of foreign-denominated investments are recorded at rates of exchange prevailing on the respective dates of such transactions.
The Fund may not fully isolate that portion of the results of operations resulting from changes in foreign exchange rates from fluctuations arising from changes in market prices on foreign currency-denominated investments. For the portion that is isolated, amounts are reflected in the Statements of Operations as other foreign currency related transactions. However, for tax purposes, the Fund does fully isolate the effect of fluctuations in foreign exchange rates when determining the gain or loss upon sale or maturity of such investments to the extent required by federal income tax regulations.
All Portfolios of the Fund may invest in securities of foreign issuers. Securities of foreign issuers that are purchased by the Money Market Portfolio are limited to 50% of that Portfolio’s assets and must be denominated in U.S. dollars and held in custody in the United States of America. The International and International Small-Mid Company Portfolios may be invested entirely in foreign securities. Investments in securities of foreign issuers, including investments in foreign companies through the use of depositary receipts, carry certain risks not ordinarily associated with investments in securities of domestic issuers. Such risks include future
131 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments that could adversely affect capital investment within those countries.
Restricted and Illiquid Securities
Restricted securities are those securities purchased through a private offering and cannot be resold to the general public without prior registration under the Securities Act of 1933 (“the 1933 Act”) or pursuant to the resale limitations provided by Rule 144A under the 1933 Act, or an exemption from the registration requirements of the 1933 Act. 144A securities are issued by corporations without registration in reliance on 1933 Act provisions allowing for the private resale of unregistered securities to qualified institutional buyers. Section 4(a)(2) commercial paper is issued pursuant to Section 4(a)(2) of the 1933 Act which exempts an issue from registration. This paper may be used to finance non-current transactions, such as acquisitions, stock repurchase programs, and other long-term assets. Investments by a portfolio in Rule 144A and Section 4(a)(2) securities could have the effect of decreasing the liquidity of a Portfolio during any period in which qualified institutional investors were no longer interested in purchasing these securities.
Typically, the restricted securities noted above are not considered illiquid. The criteria used to determine if a restricted security is illiquid includes frequency of trades and quotes, available dealers willing to make transactions, availability of market makers in the security, and the nature of the security and its trades. The Money Market, Bond, and Omni Portfolios may invest up to 10% of their respective assets in illiquid securities. Each of the other Portfolios of the Fund may invest up to 15% of its net assets in illiquid securities.
Investment Transactions and Related Income
For financial reporting purposes, investment transactions are accounted for on a trade date basis. For purposes of executing separate account shareholder transactions in the normal course of business, however, the Fund’s investment transactions are recorded no later than the first calculation on the first business day following the trade date in accordance with Rule 2a-4 of the 40 Act. Accordingly, differences between the net asset values for financial reporting and for executing separate account shareholder transactions may arise.
Dividend income is recognized on the ex-dividend date, except in the case of those Portfolios holding foreign securities, in which dividends are recorded as soon after the ex-dividend date as the Fund’s information agents become aware of such dividends. Interest income is accrued daily as earned and includes the amortization of premium and accretion of discount. Net realized gain or loss on investments and foreign exchange transactions are determined using the specific identification method.
Distributions to Shareholders and Federal Taxes
Net investment income of the Money Market Portfolio is declared and paid daily as a dividend to shareholders immediately before the computation of the net asset value of Money Market Portfolio shares. Dividends are automatically reinvested in additional Money Market Portfolio shares at the net asset value immediately following such computation. Distributions arising from net investment income and net capital gains from the remaining Portfolios are declared and paid to shareholders periodically as required for each of the Portfolios to continue to qualify as a regulated investment company pursuant to Subchapter M of the Internal Revenue Code. The Fund, excluding the Money Market Portfolio, may also fully or partially satisfy its distribution requirements by using consent dividends rather than cash dividends. If consent dividends are authorized, these amounts will become taxable to the shareholders as if they were paid in cash. The Fund has the intent to continue to comply with tax provisions pertaining to regulated investment companies and make distributions of taxable income, whether by cash or consent dividends, sufficient to relieve it from substantially all federal income and excise taxes. As such, no provisions for federal income or excise taxes have been recorded.
The character of income and realized capital gains distributions are determined in accordance with federal income tax regulations and may differ from net investment income and realized gains for financial reporting purposes. These “book/tax” differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature they are reclassified within the composition of net assets; temporary differences do not require such reclassification. Distributions to shareholders that exceed taxable income and net taxable realized gains are reported as return of capital distributions.
132 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
The Fund’s management and its tax agent, U.S. Bancorp Fund Services, LLC, perform an affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether it is more-likely-than-not (i.e. greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the Schedules of Investments. Differences between tax positions taken in a tax return and amounts recognized in the Schedules of Investments will generally result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable), including the recognition of any related interest and penalties as an operating expense. Implementation of the evaluation included a review of tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal tax and the state of Maryland (i.e., the last four tax year ends and the interim tax period since then). The determination has been made that there are no uncertain tax positions that would require the Portfolios to record a tax liability and, therefore, there is no impact to the Portfolios’ Schedules of Investments.
Expense Allocation
Expenses directly attributable to a Portfolio are charged to that Portfolio. Expenses that cannot be directly attributed to a Portfolio are allocated among all the benefited Portfolios on a basis of relative net assets or other appropriate method.
Foreign Withholding Taxes
Certain Portfolios in the Fund may be subject to taxes imposed by countries in which they invest with respect to their investments in issuers existing or operating in such countries. Such taxes are generally withheld based on income earned. These Portfolios accrue such taxes as the related income is earned.
Subsequent Events
Management has evaluated events and transactions through the date the financial statements were issued, for purposes of recognition or disclosure in these financial statements, and there are no other subsequent events to report.
(3) | Related Party and Other Transactions |
The Fund has an Investment Advisory Agreement with Ohio National Investments, Inc. (“ONI”), a wholly-owned subsidiary of ONLIC. Under the terms of this agreement, ONI provides portfolio management and investment advice to the Fund and administers its operations, subject to the supervision of the Fund’s Board. This agreement is renewed annually upon the approval by the Board. As compensation for its services, ONI receives advisory fees from the Fund calculated on the basis of each Portfolio’s average daily net assets and the following current schedule of Board-approved annualized fee breakpoints.
Equity |
0.79% of first $200 million |
0.74% of next $800 million |
0.70% over $1 billion |
Bond |
0.60% of first $100 million |
0.50% of next $150 million |
0.45% of next $250 million |
0.40% of next $500 million |
0.30% of next $1 billion |
0.25% over $2 billion |
International 1 |
0.85% of first $100 million |
0.80% of next $100 million |
0.70% over $200 million |
International Small-Mid Company |
1.00% of first $100 million |
0.90% of next $100 million |
0.85% over $200 million |
Money Market |
0.30% of first $100 million |
0.25% of next $150 million |
0.23% of next $250 million |
0.20% of next $500 million |
0.15% over $1 billion |
Omni |
0.60% of first $100 million |
0.50% of next $150 million |
0.45% of next $250 million |
0.40% of next $500 million |
0.30% of next $1 billion |
0.25% over $2 billion |
Capital Appreciation |
0.80% of first $100 million |
0.75% of next $300 million |
0.65% of next $600 million |
0.60% over $1 billion |
133 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
Small Cap Growth |
0.80% of first $150 million |
0.75% of next $150 million 0.70% of next $300 million |
0.65% over $600 million |
S&P 500® Index |
0.40% of first $100 million |
0.35% of next $150 million |
0.33% over $250 million |
High Income Bond |
0.75% of first $75 million |
0.70% of next $75 million |
0.65% of next $75 million |
0.60% over $225 million |
Nasdaq-100® Index |
0.40% of first $100 million |
0.35% of next $150 million |
0.33% over $250 million |
Bryton Growth |
0.85% of first $100 million |
0.75% of next $400 million |
0.70% over $500 million |
Target VIP |
0.60% of first $100 million |
0.55% of next $400 million |
0.50% over $500 million |
Risk Managed Balanced |
0.90% of first $500 million |
0.75% over $500 million |
Aggressive Growth |
0.80% of first $100 million |
0.75% of next $400 million |
0.70% over $500 million |
Mid Cap Opportunity |
0.85% of first $100 million |
0.80% of next $100 million |
0.75% of next $300 million |
0.70% over $500 million |
Strategic Value |
0.75% of first $100 million |
0.70% of next $400 million |
0.65% over $500 million |
Capital Growth |
0.90% of first $100 million |
0.85% of next $100 million |
0.80% of next $300 million |
0.75% over $500 million |
Bristol |
0.80% of first $100 million |
0.70% of next $400 million |
0.65% over $500 million |
Balanced 2 |
0.65% of first $200 million |
0.60% of next $300 million |
0.55% over $500 million |
Bristol Growth |
0.80% of first $100 million |
0.70% of next $400 million |
0.65% over $500 million |
1 | Effective June 1, 2013, ONI agreed to waive advisory fees equal to an annualized rate of 0.44% of the first $200 million of average daily net assets, and 0.39% of the average daily net assets, thereafter. Waivers related to the International Portfolio are voluntary and are not subject to recoupment in subsequent periods. This waiver was discontinued on May 15, 2014. The amount of the waiver for the year ended December 31, 2014 was $288,997. If ONI did not agree to waive these fees, the total expenses incurred by the International Portfolio for the year ended December 31, 2014 would have been higher than the net expenses reflected in the Statements of Operations. |
2 | Effective November 1, 2014, ONI agreed to temporarily waive all advisory fees with respect to the Balanced Portfolio. Waivers related to the Balanced Portfolio are voluntary and are not subject to recoupment in subsequent periods. This waiver was discontinued on November 11, 2014. The amount of the waiver for the year ended December 31, 2014 was $137,000. If ONI did not agree to waive these fees, the total expenses incurred by the Balanced Portfolio for the year ended December 31, 2014 would have been higher than the net expenses reflected in the Statements of Operations. |
Under the Investment Advisory Agreement, the Fund authorizes ONI to retain sub-advisers (“the Sub-Advisers”) for the Equity, Omni, International, Capital Appreciation, International Small-Mid Company, Aggressive Growth, Small Cap Growth, Mid Cap Opportunity, Strategic Value, High Income Bond, Capital Growth, Bristol, Bryton Growth, Balanced, Target VIP, Bristol Growth, and Risk Managed Balanced Portfolios subject to the approval of the Board. ONI has entered into sub-advisory agreements with ClearBridge, LLC (formerly Legg Mason Capital Management, Inc.) (“ClearBridge”), Suffolk Capital Management, LLC (“Suffolk”), Federated Global Investment Management Corp. (“Federated Global”), Jennison Associates LLC (“Jennison”), Janus Capital Management LLC (“Janus”), Goldman Sachs Asset Management, L.P. (“Goldman Sachs”), Federated Equity Management Company of Pennsylvania (“Federated Equity”), Federated Investment Management Company (“Federated Investment”), Eagle Asset Management, Inc. (“Eagle”), ICON Advisers, Inc. (“ICON”), First Trust Advisors L.P. (“First Trust”), and AnchorPath Financial, LLC (“AnchorPath”), to manage the investment of those Portfolios’ assets, subject to the supervision of ONI. As
134 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
compensation for their services, the Sub-Advisers receive from ONI a sub-advisory fee calculated on the basis of each of the aforementioned Portfolio’s average daily net assets and the following current Board-approved schedule of annualized fee breakpoints.
Equity (ClearBridge) |
0.40% of first $200 million |
0.38% over $200 million |
International (Federated Global) 3 |
0.40% of first $200 million |
0.35% over $200 million |
Capital Appreciation (Jennison) |
0.75% of first $10 million |
0.50% of next $30 million |
0.35% of next $25 million |
0.25% of next $335 million |
0.22% of next $600 million |
0.20% over $1 billion |
Small Cap Growth (Janus) |
0.55% of first $150 million |
0.45% over $150 million |
Strategic Value (Federated Equity) |
0.50% of first $35 million |
0.35% of next $65 million |
0.25% over $100 million |
Capital Growth (Eagle) |
0.59% of first $100 million |
0.55% of next $100 million |
0.50% over $200 million |
Bristol (Suffolk) |
0.45% of first $100 million |
0.40% of next $400 million |
0.35% over $500 million |
Balanced (ICON) 4 |
0.40% of first $200 million |
0.35% of next $300 million |
0.30% over $500 million |
Bristol Growth (Suffolk) |
0.45% of first $100 million |
0.40% of next $400 million |
0.35% over $500 million |
Omni (Suffolk) |
0.30% of first $100 million |
0.25% of next $150 million |
0.225% of next $250 million |
0.20% of next $500 million |
0.15% of next $1 billion |
0.125% over $2 billion |
International Small-Mid Company (Federated Global) |
0.75% of first $100 million |
0.65% over $100 million |
Aggressive Growth (Janus) |
0.55% of first $100 million |
0.50% of next $400 million |
0.45% over $500 million |
Mid Cap Opportunity (Goldman Sachs) |
0.60% of first $100 million |
0.55% of next $100 million |
0.50% over $200 million |
High Income Bond (Federated Investment) |
0.50% of first $30 million |
0.40% of next $20 million |
0.30% of next $25 million |
0.25% over $75 million |
Bryton Growth (Suffolk) |
0.50% of first $100 million |
0.45% of next $400 million |
0.40% over $500 million |
Target VIP (First Trust) |
0.35% of first $500 million |
0.25% over $500 million |
Risk Managed Balanced (Janus) |
0.35% of first $500 million |
0.25% over $500 million |
Risk Managed Balanced (AnchorPath) |
0.20% of first $500 million |
0.15% over $500 million |
3 | Effective June 1, 2013, Federated Global agreed to waive sub-advisory fees, with respect to the International Portfolio, at an annualized rate of 0.40% of the Portfolio’s first $200 million of average daily net assets, and 0.35% of the Portfolio’s average daily net assets, thereafter. Waivers related to the International Portfolio are voluntary and are not subject to recoupment in subsequent periods. This waiver was discontinued on May 15, 2014. The amount of the waiver for the year ended December 31, 2014 was $255,705. As sub-advisory fees represent an expense of ONI rather than the Fund, the expenses of the International Portfolio were not directly affected by the sub-advisory fee waiver. |
4 | Effective November 1, 2014, ICON agreed to temporarily waive all sub-advisory fees, with respect to the Balanced Portfolio. The waivers related to the Balanced Portfolio are voluntary and are not subject to recoupment in subsequent periods. This waiver was discontinued on November 18, 2014. The amount of the waiver for the year ended December 31, 2014 was $137,000. As sub-advisory fees represent an expense of ONI rather than the Fund, the expenses of the Balanced Portfolio were not directly affected by the sub-advisory fee waiver. |
135 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
Suffolk, the sub-adviser for the Omni, Bristol, Bryton Growth, and Bristol Growth Portfolios has an affiliation with ONI. Ohio National Financial Services, Inc. (ONFS) owns 100% of ONLIC, the parent company of ONI, and also owns 100% of the voting securities of Suffolk. There were no Fund liabilities payable to Suffolk at December 31, 2014 and fees paid to Suffolk are an expense of ONI, not of the Fund.
Pursuant to a service agreement among ONI, ONLIC, and the Fund, ONLIC has agreed to provide personnel and facilities to ONI on a cost-reimbursement basis. These personnel members include officers of the Fund. ONLIC also provides clerical and administrative services and such supplies and equipment as may be reasonably required in order for ONI to properly perform its advisory function pursuant to the Investment Advisory Agreement. ONLIC further performs duties to fulfill the transfer agent function on behalf of the Fund. Performance of these duties by ONLIC and availability of facilities, personnel, supplies, and equipment does not represent an expense to the Fund in excess of the advisory fees paid to ONI.
Pursuant to the Investment Advisory Agreement between ONI and the Fund, if the total expenses applicable to any Portfolio during any calendar quarter (excluding taxes, brokerage commissions, interest expense and management fees) exceed 1%, on an annualized basis, evaluated quarterly, of such Portfolio’s average daily net asset value, ONI will reimburse the Portfolio for such excess expenses. There were no expense reimbursements associated with this agreement during the year ended December 31, 2014.
During the year ended December 31, 2014, ONI voluntarily reimbursed the amount of daily gross expenses of the Money Market Portfolio in excess of daily income earned by the Portfolio. The amount reimbursed to the Portfolio for the year ended December 31, 2014 was $632,220 of which $36,014 was receivable from ONI at December 31, 2014. This reimbursement is not subject to recoupment in subsequent periods. The total amount noted as “Less expenses reduced or reimbursed by adviser” for this Portfolio on the Statements of Operations also includes a waiver of advisory fees. For the year ended December 31, 2014, ONI waived advisory fees in excess of an annualized rate of 0.25% of the first $100 million of average daily net assets in the Money Market Portfolio. Waivers related to the Money Market Portfolio are voluntary and are not subject to recoupment in subsequent periods. The amount of the waiver for the year ended December 31, 2014 was $50,000. If ONI did not agree to waive these fees, the total expenses incurred by the Money Market Portfolio for the year ended December 31, 2014 would have been higher than the net expenses reflected in the Statements of Operations.
The Investment Advisory Agreement allows for a portion of the expenses related to the Fund’s Chief Compliance Officer and staff to be incurred by the Fund and paid from the Fund to the Fund’s adviser, ONI. Pursuant to the service agreement among ONI, ONLIC, and the Fund, ONLIC has provided the personnel, services, and equipment necessary for the execution of the Fund’s regulation-mandated compliance function and ONI has reimbursed ONLIC for costs allocated to the Fund. For the year ended December 31, 2014, the Fund incurred compliance expenses totaling $184,000, which is generally allocated to the Portfolios by equal dollar amounts. The Risk Managed Balanced Portfolio, however, incurred a lesser expense than the other Portfolios of the Fund for the year ended December 31, 2014 due to its shorter period of operation. Expenses incurred by the Portfolios are reflected on the Statements of Operations as “Compliance expense”.
Each director of the Board is compensated based on an annual retainer fee of $85,000, paid quarterly. The Board chair receives an additional quarterly retainer fee of $3,750, the lead independent director of the Board receives an additional quarterly retainer fee of $3,125, and the Audit Committee chair receives an additional quarterly retainer fee of $1,250; each paid quarterly. For the year ended December 31, 2014, directors’ compensation and reimbursement of director expenses by the Portfolios of the Fund totaled $379,299.
U.S. Bancorp Fund Services, LLC, 615 East Michigan Street, Milwaukee, Wisconsin, serves as the accounting agent for all but the International and International Small-Mid Company Portfolios. U.S. Bank Institutional Trust & Custody, 425 Walnut Street, Cincinnati, Ohio serves as the custodian for all but the International and International Small-Mid Company Portfolios. The accounting agent and custodian for the International and International Small-Mid Company Portfolios is State Street Bank-Kansas City, 801 Pennsylvania Ave., Kansas City, Missouri. For assets held outside the United States, U.S. Bank and State Street Bank-Kansas City enter into sub-custodial agreements, subject to approval by the Board.
136 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
(4) | Capital Share Transactions |
Capital share transactions for the years ended December 31, 2014 and 2013, respectively, were as follows:
Equity | Money Market | Bond | ||||||||||||||||||||||
Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | |||||||||||||||||||
Capital shares issued on sales | 9,807,995 | 515,918 | 19,218,401 | 23,585,774 | 3,030,585 | 2,809,937 | ||||||||||||||||||
Capital shares issued in mergers | — | — | — | — | — | — | ||||||||||||||||||
Capital shares issued on reinvested dividends | 50,620 | 64,139 | — | — | — | — | ||||||||||||||||||
Capital shares redeemed | (1,872,987 | ) | (1,711,261 | ) | (25,127,000 | ) | (23,336,528 | ) | (3,149,736 | ) | (3,976,364 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase/(decrease) | 7,985,628 | (1,131,204 | ) | (5,908,599 | ) | 249,246 | (119,151 | ) | (1,166,427 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Omni | International | Capital Appreciation | ||||||||||||||||||||||
Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | |||||||||||||||||||
Capital shares issued on sales | 127,023 | 176,693 | 2,302,342 | 1,926,632 | 10,054,175 | 593,769 | ||||||||||||||||||
Capital shares issued in mergers | — | — | — | — | — | — | ||||||||||||||||||
Capital shares issued on reinvested dividends | 14,307 | 17,206 | — | — | 35,371 | 18,126 | ||||||||||||||||||
Capital shares redeemed | (344,229 | ) | (425,132 | ) | (2,089,021 | ) | (2,786,945 | ) | (1,217,063 | ) | (1,153,773 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase/(decrease) | (202,899 | ) | (231,233 | ) | 213,321 | (860,313 | ) | 8,872,483 | (541,878 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
International Small-Mid Company | Aggressive Growth | Small Cap Growth | ||||||||||||||||||||||
Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | |||||||||||||||||||
Capital shares issued on sales | 451,579 | 402,135 | 596,695 | 782,997 | 5,798,430 | 1,619,206 | ||||||||||||||||||
Capital shares issued in mergers | — | — | — | — | — | 1,827,307 | ||||||||||||||||||
Capital shares issued on reinvested dividends | — | — | — | — | — | — | ||||||||||||||||||
Capital shares redeemed | (549,074 | ) | (579,882 | ) | (835,040 | ) | (1,116,885 | ) | (2,173,789 | ) | (853,578 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase/(decrease) | (97,495 | ) | (177,747 | ) | (238,345 | ) | (333,888 | ) | 3,624,641 | 2,592,935 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Mid Cap Opportunity | S&P 500® Index | Strategic Value | ||||||||||||||||||||||
Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | |||||||||||||||||||
Capital shares issued on sales | 492,242 | 627,288 | 5,393,429 | 5,465,467 | 2,994,850 | 10,435,476 | ||||||||||||||||||
Capital shares issued in mergers | — | — | — | — | — | — | ||||||||||||||||||
Capital shares issued on reinvested dividends | — | — | 216,562 | 190,796 | 1,295,654 | 748,162 | ||||||||||||||||||
Capital shares redeemed | (679,451 | ) | (832,398 | ) | (3,957,420 | ) | (3,383,311 | ) | (10,775,289 | ) | (4,995,971 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase/(decrease) | (187,209 | ) | (205,110 | ) | 1,652,571 | 2,272,952 | (6,484,785 | ) | 6,187,667 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
High Income Bond | Capital Growth | Nasdaq-100® Index | ||||||||||||||||||||||
Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | |||||||||||||||||||
Capital shares issued on sales | 2,776,857 | 3,549,427 | 416,020 | 691,020 | 4,349,282 | 4,349,341 | ||||||||||||||||||
Capital shares issued in mergers | — | — | — | — | — | — | ||||||||||||||||||
Capital shares issued on reinvested dividends | — | — | — | — | 106,128 | 70,558 | ||||||||||||||||||
Capital shares redeemed | (8,064,822 | ) | (5,196,081 | ) | (584,328 | ) | (475,222 | ) | (3,627,481 | ) | (4,066,393 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase/(decrease) | (5,287,965 | ) | (1,646,654 | ) | (168,308 | ) | 215,798 | 827,929 | 353,506 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
137 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
Bristol | Bryton Growth | Balanced | ||||||||||||||||||||||
Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | |||||||||||||||||||
Capital shares issued on sales | 885,795 | 969,452 | 1,556,041 | 885,169 | 33,697,189 | 8,612,004 | ||||||||||||||||||
Capital shares issued in mergers | — | — | — | — | — | 1,724,803 | ||||||||||||||||||
Capital shares issued on reinvested dividends | 43,834 | 59,821 | — | — | 325,770 | 93,889 | ||||||||||||||||||
Capital shares redeemed | (2,406,623 | ) | (4,117,944 | ) | (2,185,467 | ) | (3,016,683 | ) | (3,910,873 | ) | (1,500,790 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net increase/(decrease) | (1,476,994 | ) | (3,088,671 | ) | (629,426 | ) | (2,131,514 | ) | 30,112,086 | 8,929,906 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Target VIP | Bristol Growth | Risk Managed Balanced | ||||||||||||||||||
Year Ended 12/31/2014 | Year Ended 12/31/2013 | Year Ended 12/31/2014 | Year Ended 12/31/2013 | Period from May 1, 2014* to 12/31/14 | ||||||||||||||||
Capital shares issued on sales | 435,011 | 212,729 | 703,568 | 781,980 | 5,294,469 | |||||||||||||||
Capital shares issued in mergers | — | 1,982,908 | — | — | — | |||||||||||||||
Capital shares issued on reinvested dividends | 59,398 | 15,316 | 22,849 | 33,717 | — | |||||||||||||||
Capital shares redeemed | (609,589 | ) | (385,906 | ) | (1,488,214 | ) | (2,642,261 | ) | (2,173,736 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net increase/(decrease) | (115,180 | ) | 1,825,047 | (761,797 | ) | (1,826,564 | ) | 3,120,733 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
* | Commencement of operations. |
(5) | Investment Transactions |
Cost of purchases and proceeds from sales of investments (excluding short-term and government securities) for the year ended December 31, 2014 were as follows:
Equity | Bond | Omni | International | Capital Appreciation | ||||||||||||||||
Cost of purchases | $ | 385,233,389 | $ | 48,698,121 | $ | 71,309,539 | $ | 159,997,085 | $ | 420,916,259 | ||||||||||
Proceeds from sales | $ | 132,333,292 | $ | 30,242,543 | $ | 75,794,895 | $ | 162,535,432 | $ | 138,197,269 | ||||||||||
International Small-Mid Company | Aggressive Growth | Small Cap Growth | Mid Cap Opportunity | S&P 500® Index | ||||||||||||||||
Cost of purchases | $ | 44,240,626 | $ | 20,455,333 | $ | 156,468,163 | $ | 50,789,899 | $ | 73,561,363 | ||||||||||
Proceeds from sales | $ | 45,727,976 | $ | 24,387,474 | $ | 73,111,758 | $ | 56,377,233 | $ | 39,104,628 | ||||||||||
Strategic Value | High Income Bond | Capital Growth | Nasdaq-100® Index | Bristol | ||||||||||||||||
Cost of purchases | $ | 85,183,605 | $ | 92,178,021 | $ | 34,056,396 | $ | 33,309,527 | $ | 554,172,007 | ||||||||||
Proceeds from sales | $ | 180,865,189 | $ | 156,071,568 | $ | 41,055,208 | $ | 24,843,955 | $ | 583,828,937 | ||||||||||
Bryton Growth | Balanced | Target VIP | Bristol Growth | Risk Managed Balanced | ||||||||||||||||
Cost of purchases | $ | 313,691,139 | $ | 820,639,375 | $ | 41,691,932 | $ | 235,644,664 | $ | 35,730,222 | ||||||||||
Proceeds from sales | $ | 327,533,097 | $ | 315,857,297 | $ | 42,490,939 | $ | 248,505,186 | $ | 13,291,336 |
Cost of purchases and proceeds from sales of government securities for the year ended December 31, 2014 were as follows:
Bond | Omni | Balanced | Risk Managed Balanced | |||||||||||||
Cost of purchases | $ | 11,378,379 | $ | 1,698,238 | $ | 95,499,668 | $ | 13,318,213 | ||||||||
Proceeds from sales | $ | 21,177,090 | $ | 1,621,414 | $ | 56,936,445 | $ | 8,891,483 |
(6) | Financial Instruments |
The Fund’s Portfolios, other than the Money Market Portfolio, may trade in financial instruments with off-balance sheet risk for hedging purposes or, otherwise, in accordance with stated investing objectives. These financial instruments may include options, futures, and foreign currency contracts that may involve, to a varying degree, elements of risk in excess of the amounts recognized on financial statements.
138 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
Options
A Portfolio may buy and write (i.e., sell) call and put options. In writing call options, the Portfolio gives the purchaser of the call option the right to purchase the underlying securities from the Portfolio at a specified “exercise” price at any time prior to the expiration of the option, normally within nine months. A Portfolio writes a covered call option when it owns the underlying securities and an uncovered call option when it does not. In purchasing put options, a Portfolio pays the seller of the put option a premium for the right of the Portfolio to sell the underlying securities to the seller at a specified exercise price prior to the expiration of the option. When a Portfolio sells a put option, it has the obligation to buy, and the purchaser of the put the right to sell, the underlying security at the exercise price during the option period. Whenever a Portfolio has a written covered call option outstanding, the underlying securities will be segregated by the Custodian and held in an escrow account to assure that such securities will be delivered to the option holder if the option is exercised. While the underlying securities are subject to the option, the Portfolio remains the record owner of the securities, entitling it to receive dividends and to exercise any voting rights. Whenever a Portfolio has a written uncovered call option outstanding, it will segregate with the Custodian cash or liquid assets that, when added to the amounts deposited with the broker as margin, equal to the market value of the securities underlying the call option (but not less than the exercise price of the call option). To cover a written put option, the Portfolio writing the option deposits cash or liquid securities in a segregated account at the Custodian. In order to terminate its position as the writer or the purchaser of an option, the Portfolio may enter into a “closing” transaction, which is the purchase (if the Portfolio has written the option) or sale (if the Portfolio is the purchaser of the option) of an option on the same underlying securities and having the same exercise price and expiration date as the option previously written or purchased by the Portfolio.
When a Portfolio writes a put or call option, an amount equal to the premium received is included on the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. Such liability is subject to off balance sheet risks to the extent of any future increases in market value of the written options. If an option expires on its stipulated expiration date or if the Portfolio enters into a closing purchase transaction, a gain or loss is realized. If a written call option on an individual security is exercised, a gain or loss is realized for the sale of the underlying security, and the proceeds from the sale are increased by the premium originally received. If a written call option on a securities index is exercised, a gain or loss is realized as determined by the premium originally received, the exercise price and the market value of the index. If a written put option on an individual security is exercised, the cost of the security acquired is decreased by the premium originally received. When a Portfolio purchases a put or call option, an amount equal to the premium paid is included on the Portfolio’s Statement of Assets and Liabilities as an investment, and is subsequently marked-to-market to reflect the current market value of the option. If an option expires on the stipulated expiration date or if the Portfolio enters into a closing sale transaction, a gain or loss is realized. If a Portfolio exercises a call option on an individual security, the cost of the security acquired is increased by the premium paid for the call. If the Portfolio exercises a put option on an individual security, a gain or loss is realized from the sale of the underlying security, and the proceeds from such a sale are decreased by the premium originally paid. If the Portfolio exercises a put option on a security index, a gain or loss is realized as determined by the premium originally paid, the exercise price and the market value of the index.
The Balanced Portfolio wrote call options and purchased put options associated with the S&P 500 Index during the year ended December 31, 2014 . These instruments were used by the Portfolio to provide a hedge against equity price risk. During a period in which the prices of the Portfolio’s common stocks may decline, these instruments are designed to increase in value, thus providing price accumulation gains that partially offset the price accumulation losses of the common stocks in the Portfolio.
The Balanced Portfolio’s written call options are collateralized by cash and/or securities held with the Portfolio’s prime broker and in segregated accounts at the Portfolio’s custodian. Such collateral holdings are restricted from use. The cash collateral or borrowings from the prime broker, if necessary, are included on the Statement of Assets and Liabilities. The securities pledged as collateral are noted as such on the Portfolio’s Schedules of Investments. Written and purchased options are non-income producing securities.
139 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
The number of option contracts written and the premiums received by the Balanced Portfolio for the year ended December 31, 2014 as follows:
Number of Contracts | Premiums Received | |||||||
Options outstanding, beginning of period | 345 | $ | 1,073,788 | |||||
Options written | 4,590 | 7,635,795 | ||||||
Options exercised | — | — | ||||||
Options expired | — | — | ||||||
Options closed | (4,135 | ) | (7,276,795 | ) | ||||
|
|
|
| |||||
Options outstanding, end of period | 800 | $ | 1,432,788 | |||||
|
|
|
|
Transactions involving purchased options by the Balanced Portfolio for the year ended December 31, 2014 were: Cost of purchases: $10,096,509, Proceeds from sales: $5,748,851, Expirations: $166,017.
The Risk Managed Balanced Portfolio also purchased call and put options associated with the S&P 500 Index during the year ended December 31, 2014 These instruments were used by the Portfolio to provide for the Portfolio’s stated risk management strategy. Transactions involving purchased options by the Risk Managed Balanced Portfolio for the period from May 1, 2014 to December 31, 2014 were: Cost of purchases: $2,657,820 Proceeds from sales: $470,084, Expirations: $0.
Futures Contracts
A Portfolio may buy or sell two kinds of financial futures contracts: stock index futures contracts and interest rate futures contracts. Stock index futures contracts are contracts developed by and traded on national commodity exchanges whereby the buyer will, on a specified future date, pay or receive a final cash payment equal to the difference between the actual value of the stock index on the last day of the contract and the value of the stock index established by the contract multiplied by the specific dollar amount set by the exchange. Futures contracts may be based on broad-based stock indexes such as the S&P 500 Index or on narrow-based stock indexes. A particular index will be selected according to the Adviser’s investment strategy for the particular Portfolio. An interest rate futures contract is an agreement whereby one party agrees to sell and another party agrees to purchase a specified amount of a specified financial instrument (debt security) at a specified price at a specified date, time and place. Although interest rate futures contracts typically require actual future delivery of and payment for financial instruments, the contracts are usually closed out before the delivery date. A public market exists in interest rate futures contracts covering primarily the following financial instruments: U.S. Treasury bonds; U.S. Treasury notes; Government National Mortgage Association (GNMA) modified pass-through mortgage-backed securities; three-month U.S. Treasury bills; 90-day commercial paper; bank certificates of deposit; and Eurodollar certificates of deposit. U.S. futures contracts are traded on exchanges which have been designated “contract markets” by the Commodities Futures Trading Commission (“CFTC”) and must be executed through a futures commission merchant (“FCM”), or brokerage firm, which is a member of the relevant contract market. It is expected that futures contracts trading in additional financial instruments will be authorized.
The Fund, on behalf of each Portfolio, has filed with the National Futures Association, a notice claiming an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act, as amended, and the rules of the CFTC promulgated thereunder, with respect to each Portfolio’s operation. Accordingly, the Portfolios are not subject to registration or regulation as a commodity pool operator.
The buyer or seller of a futures contract is not required to deliver or pay for the underlying instrument unless the contract is held until the delivery date. However, both the buyer and seller are required to deposit “initial margin” for the benefit of the broker when the contract is entered into. Initial margin deposits are equal to a percentage of the contract’s value, as set by the exchange on which the contract is traded, and are similar to good faith deposits or performance bonds.
Unlike margin extended by a securities broker, initial margin payments do not constitute purchasing securities on margin for purposes of a Portfolio’s investment limitations. A Portfolio, its futures commission merchant and the Custodian retain control of the initial margin until the contract is liquidated. If the value of either party’s position declines, that party will be required to make additional “variation margin” payments to settle the change in value on a daily basis. The party that has a gain may be entitled to receive all or a portion of this amount. In the event of the bankruptcy of the FCM that holds margin on behalf of a Portfolio, the Portfolio may be entitled to return of margin owed to the Portfolio only in proportion to the amount received by the FCM’s other
140 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
customers. ONI and the Sub-Advisers will attempt to minimize this risk by carefully monitoring the creditworthiness of the FCMs with which the Portfolios do business. In addition to the margin restrictions discussed above, transactions in futures contracts and options on futures contracts may involve the segregation of funds pursuant to requirements imposed by the SEC. Under those requirements, where a Portfolio has a long position in a futures contract or sells a put option, it will be required to establish a segregated account (not with an FCM or broker) containing cash or certain liquid assets equal to the purchase price of the contract or the exercise price of the option (less any margin on deposit). For a short position in futures contacts held by a Portfolio or call options sold by a Portfolio, those requirements mandate the establishment of a segregated account (not with a futures commission merchant or broker) containing cash or certain liquid assets that, when added to the amounts deposited as margin, equal the market value of the instruments underlying the futures contracts or call options. However, segregation of assets is not required if a Portfolio “covers” its position.
At December 31, 2014, there were outstanding futures contracts in the International Portfolio. Details of these contracts are as follows:
Type | Description | Expiration | Number of Contracts | Contract at Value | Initial Contract Amount | Unrealized Appreciation (Depreciation) | Variation Margin Receivable (Payable) | |||||||||||||||
Long | JPX Nikkei Index 400 Future | March 12, 2015 | 561 | $5,980,940 | $ | 6,128,455 | $ | (147,515 | ) | $ | 321 | |||||||||||
Long | S&P/Toronto Stock Exchange 60 Index Future | March 19, 2015 | 14 | $2,052,401 | $ | 1,950,188 | $ | 102,213 | $ | (5,891 | ) | |||||||||||
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$8,033,341 | $ | 8,078,643 | $ | (45,302 | ) | $ | (5,570 | ) | ||||||||||||||
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A portion of the International Portfolio’s cash holdings, as noted on the Portfolio’s Schedule of Investments, were pledged at December 31, 2014 as collateral for these contracts.
These futures contracts were executed for the purpose of increasing exposure to an attractive equities market, beyond that evidenced by the Portfolio’s investment in common stocks, while maintaining a significant cash balance that could be used for potentially higher-than-average shareholder transactions. There were other index futures contracts that were executed and closed in the International Portfolio during the year ended December 31, 2014. Those contracts were executed for similar purposes as the contracts outstanding at December 31, 2014. For the year ended December 31, 2014, the notional values of futures contracts opened and closed prior to contract settlement date by the International Portfolio were $77.0 million and $72.6 million, respectively.
At December 31, 2014, there were also outstanding futures contracts in the Risk Managed Balanced Portfolio. Details of these contracts are as follows:
Type | Description | Expiration | Number of Contracts | Contract at | Initial Contract Amount | Unrealized Appreciation | Variation Margin Receivable | |||||||||||||||
Long | S&P 500 E-mini Future | March 23, 2015 | 35 | $3,591,700 | $ | 3,542,326 | $ | 49,374 | $ | — | ||||||||||||
Long | 10-Year U.S. Treasury Note Future | April 1, 2015 | 152 | $19,273,125 | $ | 19,179,514 | $ | 93,612 | $ | — | ||||||||||||
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$22,864,825 | $ | 22,721,840 | $ | 142,986 | $ | — | ||||||||||||||||
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A portion of Risk Managed Balanced Portfolio’s cash holdings, as noted on the Portfolio’s Schedule of Investments, was pledged at December 31, 2014 as collateral for these contracts. These futures contracts were used by the Portfolio to provide for the Portfolio’s stated risk management strategy. There were other index futures contracts that were executed and closed in the Risk Managed Balanced Portfolio during the period from May 1, 2014 to December 31, 2014. Those contracts were executed for similar purposes as the contracts outstanding at December 31, 2014. For the period from May 1, 2014 to December 31, 2014, the notional
141 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
values of futures contracts opened and closed prior to contract settlement date by the Risk Managed Balanced Portfolio were $87.6 million and $64.8 million, respectively.
Foreign Currency Contracts
In order to hedge against changes in the exchange rates of foreign currencies in relation to the U.S. dollar, each Portfolio, other than the Money Market Portfolio, may engage in forward foreign currency contracts, foreign currency options and foreign currency futures contracts in connection with the purchase, sale or ownership of a specific security. The International Portfolio, International Small-Mid Company Portfolio, Strategic Value Portfolio and High Income Bond Portfolio may engage in non-hedging related transactions to implement their investment strategies.
The Portfolios generally conduct their foreign currency exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange currency market. When a Portfolio purchases or sells a security denominated in or exposed to a foreign currency, it may enter into a forward foreign currency contract (“forward contract”) for the purchase or sale, for a fixed amount of dollars, of the amount of currency involved in the underlying security transaction. A forward contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. In this manner, a Portfolio may obtain protection against a possible loss resulting from an adverse change in the relationship between the U.S. dollar and the foreign currency during the period between the date the security is purchased or sold and the date upon which payment is made or received. Although such contracts tend to minimize the risk of loss due to the decline in the value of the hedged currency, at the same time they tend to limit any potential gain which might result should the value of such currency increase.
Forward contracts are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. Generally a forward contract has no deposit requirement, and no commissions are charged. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference between the prices at which they buy and sell various currencies. When the Portfolio manager believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, a Portfolio may enter into a forward contract to sell, for a fixed amount of dollars, the amount of foreign currency approximating the value of some or all of that Portfolio’s securities denominated in or exposed to such foreign currency. No Portfolio will enter into such forward contracts or maintain a net exposure to such contracts where the consummation of the contracts would obligate the Portfolio to deliver an amount of foreign currency in excess of the value of its assets denominated in or exposed to that currency. At the consummation of a forward contract for delivery by a Portfolio of a foreign currency, the Portfolio may either make delivery of the foreign currency or terminate its contractual obligation to deliver the foreign currency by purchasing an offsetting contract obligating it to purchase, at the same maturity date, the same amount of the foreign currency. If the Portfolio chooses to make delivery of the foreign currency, it may be required to obtain such currency through the sale of its securities denominated in such currency or through conversion of other Portfolio assets into such currency. It is impossible to forecast the market value of Portfolio securities at the expiration of the forward contract. Accordingly, it may be necessary for the Portfolio to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the Portfolio is obligated to deliver, and if a decision is made to sell the security and make delivery of the foreign currency. Conversely, it may be necessary for the Portfolio to sell on the spot market some of the foreign currency received on the sale of its hedged security if the security’s market value exceeds the amount of foreign currency the Portfolio is obligated to deliver.
If the Portfolio retains the hedged security and engages in an offsetting transaction, it will incur a gain or loss to the extent that there has been movement in spot or forward contract prices. If a Portfolio engages in an offsetting transaction, it may subsequently enter into a new forward contract to sell the foreign currency. Should forward prices decline during the period between the Portfolio’s entering into a forward contract for the sale of a foreign currency and the date it enters into an offsetting contract for the purchase of the foreign currency, the Portfolio will realize a gain to the extent the price of the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward prices increase, the Portfolio will suffer a loss to the extent the price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell.
Buyers and sellers of foreign currency options and futures contracts are subject to the same risks previously described with respect to options and futures generally. In addition, settlement of currency options and futures contracts with respect to most currencies must occur at a bank located in the issuing nation. The ability to establish and close out positions on such options is
142 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
subject to the maintenance of a liquid market that may not always be available. Currency rates may fluctuate based on political considerations and governmental actions as opposed to purely economic factors.
Predicting the movements of foreign currency in relation to the U.S. dollar is difficult and requires different skills than those necessary to predict movements in the securities market. There is no assurance that the use of foreign currency hedging transactions can successfully protect a Portfolio against loss resulting from the movements of foreign currency in relation to the U.S. dollar. In addition, it must be remembered that these methods of protecting the value of a Portfolio’s securities against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange which can be achieved at some future point in time. Additionally, although such contracts tend to minimize the risk of loss due to the decline in the value of the hedged currency, at the same time they tend to limit any potential gain which might result should the value of such currency increase.
Foreign currency contracts were executed in the International Portfolio in order to mitigate the effect that exchange rate volatility had on the valuation of the Portfolio’s investments that were either under-weighted or over-weighted in relation to the Portfolio’s benchmark index. The Portfolio was over-weighted in equity investments within Canada, Norway, Japan, and member states of the European Union and, therefore, executed contracts to sell the Canadian Dollar, Norwegian Krone, Japanese Yen and the Euro in order to mitigate the effect that volatility in those exchanges rates might otherwise have on relative performance.
The Portfolio entered into other foreign currency contracts during the period for similar benchmark performance hedging purposes. The Portfolio also entered into contracts that were the inverse of previously executed contracts to effectively exit prior contracts earlier than stated contract delivery dates, as investment over-weights or under-weights were reduced, or as previously executed contracts resulted in an attractive return to the Portfolio. For the year ended December 31, 2014, the notional value of foreign currency contracts executed by the International Portfolio were approximately $199.3 million for currencies bought and approximately $233.0 million for currencies sold.
The values and financial statement effects of derivative instruments that were not accounted for as hedging instruments as of, and for the year ended December 31, 2014, were as follows:
Portfolio | Instrument | Primary Risk Type | Value - Asset Derivatives | Value - Liability Derivatives | Location on Statements of Assets and Liabilities | |||||||||||
International | Contracts to sell foreign currencies | Currency exchange rate | $ | 50,662,126 | $ | (49,437,628 | ) | (1 | ) | |||||||
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Futures contracts | Equity price | $ | 8,033,341 | $ | (8,078,643 | ) | (2 | ) | ||||||||
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Balanced | Purchased options | Equity price | $ | 2,339,000 | $ | — | (3 | ) | ||||||||
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Written options | Equity price | $ | — | $ | (1,023,500 | ) | (4 | ) | ||||||||
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Risk Managed Balanced | Purchased options | Equity price | $ | 2,443,795 | $ | — | (3 | ) | ||||||||
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Futures contracts | Equity price | $ | 22,864,825 | $ | (22,721,840 | ) | (2 | ) | ||||||||
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(1) | Net unrealized appreciation (depreciation) on foreign currency contacts |
(2) | Net unrealized appreciation (depreciation) on futures contracts |
(3) | Investments in securities, at value |
(4) | Options written, at value |
143 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
Portfolio | Instrument | Risk Type | Realized Gain (Loss) on Derivatives Recognized in Income | Change in Unrealized Appreciation/ Depreciation on Derivatives Recognized in Income | Location on Statements of Operations | |||||||||||
International | Foreign currency contracts | Currency exchange rate | $ | 3,255,092 | $ | 444,099 | (1 | ),(2) | ||||||||
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Futures contracts | Equity price | $ | 1,176,714 | $ | (215,832 | ) | (3 | ),(4) | ||||||||
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Balanced | Purchased options | Equity price | $ | (2,994,913 | ) | $ | 470,355 | (5 | ),(6) | |||||||
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Written options | Equity price | $ | (3,299,551 | ) | $ | 1,129,500 | (7 | ),(8) | ||||||||
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Risk Managed Balanced | Futures contracts | Equity price | $ | 736,921 | $ | 142,986 | (3 | ),(4) | ||||||||
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Purchased options | Equity price | $ | 62,083 | $ | 193,976 | (5 | ),(6) | |||||||||
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(1) | Net realized gain (loss) on foreign currency contracts |
(2) | Change in unrealized appreciation/depreciation on foreign currency contracts |
(3) | Net realized gain (loss) on futures contracts |
(4) | Change in unrealized appreciation/depreciation on futures contracts |
(5) | Net realized gain (loss) on investments |
(6) | Change in unrealized appreciation/depreciation on investments |
(7) | Net realized gain (loss) on written options |
(8) | Change in unrealized appreciation/depreciation on written options |
The Portfolios may enter into International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreement”) or similar agreements with their derivative contract counterparties whereby the Portfolios may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables and create one single net payment. Under certain of the ISDA Master Agreements in place at December 31, 2014, the Portfolios are subject to master netting agreements (“MNA”) that allows for amounts owed between each Portfolio and the counterparty to their transactions to be netted. The party that has the larger payable pays the excess of the larger amount over the smaller amount to the other party. The MNAs do not apply to amounts owed to or from different counterparties; further, certain of the MNAs limit offsetting for forward foreign currency contracts to amounts owed in the same currency and on the same exchange date.
For financial reporting purposes, the Portfolios offset derivative assets and liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities. At December 31, 2014, there were no outstanding derivative transactions that were subject to netting arrangements.
144 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
(7) | Federal Income Tax Information |
At December 31, 2014, the components of accumulated earnings (deficit) on a tax basis were as follows:
Portfolio | Undistributed Ordinary Income | Undistributed Long-Term Capital Gains (Losses) | Accumulated Earnings | Accumulated Capital and Other Losses | Unrealized Appreciation (Depreciation)(1) | Total Accumulated Earnings (Deficit) | ||||||||||||||||||
Equity | $ | 386,033 | $ | — | $ | 386,033 | $ | (47,738,305 | ) | $ | 65,190,932 | $ | 17,838,660 | |||||||||||
Money Market | — | — | — | — | — | — | ||||||||||||||||||
Bond | 5,057,141 | — | 5,057,141 | (10,057,664 | ) | 7,162,713 | 2,162,190 | |||||||||||||||||
Omni | 3,414,759 | 2,836,013 | 6,250,772 | — | 2,823,802 | 9,074,574 | ||||||||||||||||||
International | 5,661,713 | — | 5,661,713 | (66,063,445 | ) | 3,962,418 | (56,439,314 | ) | ||||||||||||||||
Capital Appreciation | 37,465 | 21,377,238 | 21,414,703 | — | 35,400,675 | 56,815,378 | ||||||||||||||||||
International Small-Mid Company | 196,497 | 663,392 | 859,889 | — | 11,558,632 | 12,418,521 | ||||||||||||||||||
Aggressive Growth | 757,233 | 7,625,484 | 8,382,717 | — | 7,294,698 | 15,677,415 | ||||||||||||||||||
Small Cap Growth | 6,796,985 | 8,271,301 | 15,068,286 | — | 21,896,731 | 36,965,017 | ||||||||||||||||||
Mid Cap Opportunity | — | — | — | (908,099 | ) | 16,288,164 | 15,380,065 | |||||||||||||||||
S&P 500® Index | 2,502,607 | 2,916,947 | 5,419,554 | — | 138,497,918 | 143,917,472 | ||||||||||||||||||
Strategic Value | 9,115,067 | 31,089,467 | 40,204,534 | — | 29,204,514 | 69,409,048 | ||||||||||||||||||
High Income Bond | 16,913,403 | 8,062,933 | 24,976,336 | — | (2,178,021 | ) | 22,798,315 | |||||||||||||||||
Capital Growth | 64,168 | 8,492,117 | 8,556,285 | — | 14,710,346 | 23,266,631 | ||||||||||||||||||
Nasdaq-100® Index | 642,404 | 3,719,174 | 4,361,578 | — | 47,607,499 | 51,969,077 | ||||||||||||||||||
Bristol | 25,104,654 | 19,779,477 | 44,884,131 | — | 20,229,886 | 65,114,017 | ||||||||||||||||||
Bryton Growth | 13,803,912 | 7,047,022 | 20,850,934 | — | 10,267,816 | 31,118,750 | ||||||||||||||||||
Balanced | 7,409,393 | 7,100,698 | 14,510,091 | — | 27,725,797 | 42,235,888 | ||||||||||||||||||
Target VIP | 100,128 | — | 100,128 | (6,201,457 | ) | 4,507,863 | (1,593,466 | ) | ||||||||||||||||
Bristol Growth | 9,673,590 | 10,640,279 | 20,313,869 | — | 12,665,570 | 32,979,439 | ||||||||||||||||||
Risk Managed Balanced | 1,039,871 | 527,944 | 1,567,815 | — | 620,549 | 2,188,364 |
(1) | The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributed primarliy to tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains/(losses) on certain instruments. |
For Federal income tax purposes, the following Portfolios had capital loss carryforwards as of December 31, 2014 that are available to offset future realized gains, if any:
Total Loss Carryforward | Expiration | |||||||||||||||||||||||
Portfolio | 2016 | 2017 | 2018 | No Expiration Short Term | No Expiration Long Term | |||||||||||||||||||
Equity | $ | 47,738,305 | $ | — | $ | 44,720,565 | $ | 3,017,740 | $ | — | $ | — | ||||||||||||
Bond | 10,057,664 | 534,910 | 9,522,754 | — | — | — | ||||||||||||||||||
International | 66,063,445 | 271,315 | 65,792,130 | — | — | — | ||||||||||||||||||
Mid Cap Opportunity | 908,099 | — | 908,099 | — | — | — | ||||||||||||||||||
Target VIP | 6,201,457 | 6,201,457 | — | — | — | — |
145 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
The tax characteristics of distributions paid to shareholders for the year ended December 31, 2014 were as follows:
Portfolio | Ordinary Income | Net Long-Term Capital Gains | Total Distribution Paid | |||||||||
Equity | $ | 1,660,324 | $ | — | | $ | 1,660,324 | |||||
Omni | 341,371 | | — | | 341,371 | |||||||
Capital Appreciation | 1,165,844 | | — | | 1,165,844 | |||||||
S&P 500® Index | 4,671,250 | — | 4,671,250 | |||||||||
Strategic Value | 17,815,244 | | — | | 17,815,244 | |||||||
Nasdaq-100® Index | 1,151,494 | | — | | 1,151,494 | |||||||
Bristol | 895,082 | | — | | 895,082 | |||||||
Balanced | 6,075,617 | — | 6,075,617 | |||||||||
Target VIP | 854,149 | | — | | 854,149 | |||||||
Bristol Growth | 370,603 | | — | | 370,603 |
The tax characteristics of distributions paid to shareholders for the year ended December 31, 2013 were as follows:
Portfolio | Ordinary Income | Net Long-Term Capital Gains | Total Distribution Paid | |||||||||
Equity | $ | 1,826,670 | $ | — | $ | 1,826,670 | ||||||
Omni | 362,024 | — | 362,024 | |||||||||
Capital Appreciation | 545,051 | — | 545,051 | |||||||||
S&P 500® Index | 3,617,496 | — | 3,617,496 | |||||||||
Strategic Value | 9,524,108 | — | 9,524,108 | |||||||||
Nasdaq-100® Index | 631,494 | — | 631,494 | |||||||||
Bristol | 1,050,451 | — | 1,050,451 | |||||||||
Balanced | 1,674,034 | — | 1,674,034 | |||||||||
Target VIP | 201,405 | — | 201,405 | |||||||||
Bristol Growth | 476,090 | — | 476,090 |
146 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
During the year ended December 31, 2014, the Fund recorded classifications within the composition of net assets for permanent book/tax differences. These classifications were as follows:
Equity | Money Market | Bond | Omni | International | Capital Appreciation | International Small-Mid Company | Aggressive Growth | Small Cap Growth | Mid Cap Opportunity | |||||||||||||||||||||||||||||||
Consent distributions | ||||||||||||||||||||||||||||||||||||||||
Paid in capital in excess of par value | $ | 195,315 | $ | — | $ | 5,136,321 | $ | 1,439,909 | $ | 4,327,327 | $ | 2,511,660 | $ | 196,447 | $ | 4,354,957 | $ | 14,770,686 | $ | — | ||||||||||||||||||||
Undistributed net investment income | (195,315 | ) | — | (5,136,321 | ) | (47,856 | ) | (4,327,327 | ) | (38,483 | ) | (196,447 | ) | — | — | — | ||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | — | — | — | (1,392,053 | ) | — | (2,473,177 | ) | — | (4,354,957 | ) | (14,770,686 | ) | — | ||||||||||||||||||||||||||
Undistributed net investment losses | ||||||||||||||||||||||||||||||||||||||||
Paid in capital in excess of par value | — | — | — | — | — | — | — | — | — | (151,406 | ) | |||||||||||||||||||||||||||||
Undistributed net investment income | — | — | — | — | — | — | — | 88,136 | 408,849 | 151,200 | ||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | — | — | — | — | — | — | — | (88,136 | ) | (408,849 | ) | 206 | ||||||||||||||||||||||||||||
Foreign currency related reclassifications | ||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | — | — | — | — | 2,945,364 | (10,132 | ) | (80,682 | ) | (149 | ) | (1,029 | ) | 21 | ||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | — | — | — | — | (2,945,364 | ) | 10,132 | 80,682 | 149 | 1,029 | (21 | ) | ||||||||||||||||||||||||||||
Reclassifications for partnership sales/basis | ||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | — | — | — | — | — | — | — | — | (32,200 | ) | — | |||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | — | — | — | — | — | — | — | — | 32,200 | — | ||||||||||||||||||||||||||||||
Other permanent differences | ||||||||||||||||||||||||||||||||||||||||
Paid in capital in excess of par value | — | — | — | — | — | — | — | — | (52 | ) | — | |||||||||||||||||||||||||||||
Undistributed net investment income | — | — | — | — | — | — | — | — | 51 | — | ||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | — | — | — | — | — | — | — | — | 1 | — |
147 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
S&P 500® Index | Strategic Value | High Income Bond | Capital Growth | Nasdaq-100® Index | Bristol | Bryton Growth | Balanced | Target VIP | Bristol Growth | Risk Managed Balanced | ||||||||||||||||||||||||||||||||||
Consent distributions | ||||||||||||||||||||||||||||||||||||||||||||
Paid in capital in excess of par value | $ | 3,436,824 | $ | 5,416,348 | $ | 23,033,792 | $ | 5,342,907 | $ | 5,443,659 | $ | 49,458,063 | $ | 38,069,479 | $ | 5,188,610 | $ | 67,221 | $ | 23,554,720 | $ | — | ||||||||||||||||||||||
Undistributed net investment income | (584,268 | ) | (1,480,210 | ) | (19,555,535 | ) | — | (93,015 | ) | (89,796 | ) | — | (320,182 | ) | (25,680 | ) | (21,733 | ) | — | |||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | (2,852,556 | ) | (3,936,138 | ) | (3,478,257 | ) | (5,342,907 | ) | (5,350,644 | ) | (49,368,267 | ) | (38,069,479 | ) | (4,868,428 | ) | (41,541 | ) | (23,532,987 | ) | — | |||||||||||||||||||||||
Undistributed net investment losses | ||||||||||||||||||||||||||||||||||||||||||||
Paid in capital in excess of par value | — | — | — | 51,425 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Undistributed net investment income | — | — | — | 286,348 | — | — | 818,246 | — | — | — | — | |||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | — | — | — | (337,773 | ) | — | — | (818,246 | ) | — | — | — | — | |||||||||||||||||||||||||||||||
Foreign currency related reclassifications | ||||||||||||||||||||||||||||||||||||||||||||
Paid in capital in excess of par value | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Undistributed net investment income | — | (169,864 | ) | — | — | — | — | — | (655 | ) | — | — | (48 | ) | ||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | — | 169,864 | — | — | — | — | — | 655 | — | — | 48 | |||||||||||||||||||||||||||||||||
Real estate investment trust (REIT) reclassifications | ||||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | (93,694 | ) | (229,774 | ) | — | (3,826 | ) | — | — | — | (97,927 | ) | — | — | 41 | |||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 93,694 | 229,774 | — | 3,826 | — | — | — | 97,927 | — | — | (41 | ) | ||||||||||||||||||||||||||||||||
Passive Foreign Investment Company (PFIC) reclassifications | ||||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | — | — | — | 22,081 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | — | — | — | (22,081 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Reclassifications for partnership sales/basis | ||||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | — | — | — | 50,144 | — | — | — | 35,123 | — | — | — | |||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | — | — | — | (50,144 | ) | — | — | — | (35,123 | ) | — | — | — | |||||||||||||||||||||||||||||||
Other permanent differences | ||||||||||||||||||||||||||||||||||||||||||||
Paid in capital in excess of par value | — | — | — | — | — | — | — | (14 | ) | — | — | — | ||||||||||||||||||||||||||||||||
Undistributed net investment income | (47 | ) | — | — | — | — | — | — | (1 | ) | — | — | — | |||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 47 | — | — | — | — | — | — | 15 | — | — | — |
148 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
The cost basis for Federal income tax purposes may differ from the cost basis for financial reporting purposes. The table below details the unrealized appreciation (depreciation) and aggregate cost of securities at December 31, 2014 for Federal income tax purposes.
Equity | Bond | Omni | International | Capital Appreciation | International Small-Mid Company | |||||||||||||||||||
Gross unrealized: | ||||||||||||||||||||||||
Appreciation | $ | 78,778,515 | $ | 8,120,994 | $ | 3,588,848 | $ | 14,217,368 | $ | 48,133,335 | $ | 13,997,906 | ||||||||||||
Depreciation | (13,587,583 | ) | (958,281 | ) | (765,046 | ) | (10,162,461 | ) | (12,731,523 | ) | (2,435,647 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net unrealized appreciation (depreciation) | $ | 65,190,932 | $ | 7,162,713 | $ | 2,823,802 | $ | 4,054,907 | $ | 35,401,812 | $ | 11,562,259 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Aggregate cost of securities: | $ | 462,193,932 | $ | 149,492,402 | $ | 34,299,306 | $ | 164,471,033 | $ | 418,553,488 | $ | 56,177,832 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Aggressive Growth | Small Cap Growth | Mid Cap Opportunity | S&P 500® Index | Strategic Value | High Income Bond | |||||||||||||||||||
Gross unrealized: | ||||||||||||||||||||||||
Appreciation | $ | 7,892,370 | $ | 28,349,754 | $ | 18,521,529 | $ | 153,811,215 | $ | 39,598,692 | $ | 4,883,051 | ||||||||||||
Depreciation | (597,440 | ) | (6,453,023 | ) | (2,233,365 | ) | (15,313,297 | ) | (10,379,826 | ) | (7,061,072 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net unrealized appreciation (depreciation) | $ | 7,294,930 | $ | 21,896,731 | $ | 16,288,164 | $ | 138,497,918 | $ | 29,218,866 | $ | (2,178,021 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Aggregate cost of securities: | $ | 33,198,913 | $ | 193,770,914 | $ | 70,882,252 | $ | 248,261,949 | $ | 298,535,294 | $ | 227,091,783 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Capital Growth | Nasdaq-100® Index | Bristol | Bryton Growth | Balanced | Target VIP | |||||||||||||||||||
Gross unrealized: | ||||||||||||||||||||||||
Appreciation | $ | 18,384,172 | $ | 49,309,234 | $ | 25,948,760 | $ | 21,847,548 | $ | 53,808,702 | $ | 7,821,814 | ||||||||||||
Depreciation | (3,673,826 | ) | (1,701,735 | ) | (5,718,874 | ) | (11,579,732 | ) | (26,082,905 | ) | (3,313,951 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net unrealized appreciation (depreciation) | $ | 14,710,346 | $ | 47,607,499 | $ | 20,229,886 | $ | 10,267,816 | $ | 27,725,797 | $ | 4,507,863 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Aggregate cost of securities: | $ | 60,824,304 | $ | 74,139,566 | $ | 210,818,863 | $ | 173,005,607 | $ | 812,895,799 | $ | 50,628,158 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Bristol Growth | Risk Managed Balanced | |||||||||||||||||||||||
Gross unrealized: | ||||||||||||||||||||||||
Appreciation | $ | 15,561,388 | $ | 1,443,601 | ||||||||||||||||||||
Depreciation | (2,895,818 | ) | (823,052 | ) | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Net unrealized appreciation (depreciation) | $ | 12,665,570 | $ | 620,549 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Aggregate cost of securities: | $ | 112,069,485 | $ | 32,456,870 | ||||||||||||||||||||
|
|
|
|
(8) | Legal Matters |
Effective December 20, 2013, the assets and liabilities of the Target Equity/Income Portfolio were acquired and assumed by the Target VIP Portfolio in exchange for shares of the Target VIP Portfolio (“the reorganization”).
In December 2007, prior to the reorganization, the Target Equity/Income Portfolio, as a shareholder of Lyondell Chemical Company (“Lyondell”), participated in a cash out merger of Lyondell in which it received $48 per share of consideration (the “Merger”). The value of the proceeds received by the Target Equity/Income Portfolio as a result of the Merger was $1,772,400. Lyondell later filed for bankruptcy and two entities created by the Lyondell bankruptcy plan of reorganization have initiated lawsuits seeking to recover, or clawback, proceeds received by shareholders in the December 2007 merger based on fraudulent transfer claims.
149 | (continued) |
Ohio National Fund, Inc. |
Notes to Financial Statements (Continued) | December 31, 2014 |
The first action, Edward S. Weisfelner, as Trustee of the LB Creditor Trust v. Morgan Stanley & Co., Inc., et. al., was initiated on October 22, 2010 (the “Creditor Trust Action”), in the Supreme Court of the State of New York in the County of New York but has subsequently been removed to the U.S. Bankruptcy Court for the Southern District of New York. The second action, Edward S. Weisfelner, as Trustee of the LB Litigation Trust v. Holmes TTEE, et. al., was initiated on December 23, 2010 (the “Litigation Trust Action”), in the U.S. Bankruptcy Court for the Southern District of New York. Both actions attempt to recover the proceeds paid out to the holders of Lyondell shares at the time of the 2007 merger. The value of the proceeds to the Fund totalled $1,772,400.
On January 4, 2012, the Fund was named in a second amended complaint in the Creditor Trust Action. On April 9, 2014, plaintiffs filed a third amended complaint. In response, on July 30, 2014, the defendant group, including the Fund, filed an omnibus motion to dismiss. The outcome of these proceedings on the Portfolio cannot be predicted.
As a result of the aforementioned reorganization involving the Target Equity/Income Portfolio, any future claims that may result from these complaints will be assumed by the Target VIP Portfolio as the Survivor Portfolio. Management of the Fund continues to assess the cases and has not yet determined the potential effect, if any, on the net asset value of the Target VIP Portfolio.
Also, in December 2007, the S&P 500® Index and Strategic Value Portfolios, shareholders of the Tribune Company, participated in a similar cash out merger in which shareholders received $34 per share of consideration. The value of the proceeds received by the S&P 500® Index and Strategic Value Portfolios, was $37,910 and $384,200, respectively. The company subsequently filed for bankruptcy and several legal complaints have been initiated by groups of Tribune Company creditors seeking to recover, or clawback, proceeds received by shareholders based on fraudulent transfer claims (the “Tribune Bankruptcy”).
The first action, Official Committee of Unsecured Creditors of Tribune Company v. FitzSimons, et. al. (“FitzSimons”) was initiated on November 1, 2010 in the U.S. Bankruptcy Court for the District of Delaware. As a result of these proceedings, the Court agreed to allow individual creditors to file similar complaints in U.S. state courts. The Fund is specifically named in a complaint in the U.S. District Court, Southern District of Ohio, Western Division, Deutsche Bank Trust Company Americas, et. al. v. American Electric Power, et. al., that was initiated in June of 2011. The Fund, along with the Strategic Value Portfolio, is also named in a similar complaint in the U.S. District Court, Eastern District of Pennsylvania, Deutsche Bank Trust Company Americas, et. al. v. Ametek Inc. Employees Master Retirement Trust, et. al. These Tribune litigation actions have been consolidated into a single Multidistrict Litigation (“MDL”) in the U.S. District Court, Southern District of New York. Pursuant to a Court order dated September 7, 2012, certain defendants in the MDL, including the Fund, filed a motion to dismiss on November 6, 2012. The Court granted the motion to dismiss on September 23, 2013. Pending an appeal, only the actual fraudulent transfer claims as alleged in FitzSimons remain. The outcome of these proceedings on the two Portfolios of the Fund cannot be predicted. Management of the Fund continues to assess these litigation matters and any offers of settlement.
150 |
Ohio National Fund, Inc. |
The Board of Directors and Shareholders of Ohio National Fund, Inc.
We have audited the accompanying statements of assets and liabilities of the Equity Portfolio, Money Market Portfolio, Bond Portfolio, Omni Portfolio, International Portfolio, Capital Appreciation Portfolio, International Small-Mid Company Portfolio, Aggressive Growth Portfolio, Small Cap Growth Portfolio, Mid Cap Opportunity Portfolio, S&P 500 Index Portfolio, Strategic Value Portfolio, High Income Bond Portfolio, Capital Growth Portfolio, Nasdaq-100 Index Portfolio, Bristol Portfolio, Bryton Growth Portfolio, Balanced Portfolio, Target VIP Portfolio, Bristol Growth Portfolio and Risk Managed Balanced Portfolio (each a Portfolio and collectively, the Portfolios of the Ohio National Fund, Inc.), including the schedules of investments, as of December 31, 2014, and the related statements of operations for each of the years or periods then ended, the statements of changes in net assets for each of the years or periods in the two-year period then ended and the financial highlights for each of the years or periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolios’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2014, by correspondence with custodians and brokers or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Portfolios as of December 31, 2014, the results of their operations for each of the years or periods then ended, the changes in their net assets for each of the years or periods in the two-year period then ended and the financial highlights for each of the years or periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
Columbus, Ohio
February 19, 2015
151 |
Ohio National Fund, Inc. |
December 31, 2014 |
(1) | Review and Approval of Advisory and Sub-advisory Agreements |
At a meeting held on November 20, 2014, the Board of Directors, including a majority of the Directors who are not “interested persons” of the Fund (the “Independent Directors”), approved the continuation of the Investment Advisory Agreement with ONI (the “Adviser”) and, as applicable, the sub-advisory agreement with the Sub-Adviser (each a “Sub-Adviser,” and together the “Sub-Advisers”) for each of the Portfolios identified below. The Independent Directors were separately represented by independent legal counsel in connection with their consideration of the approval of the continuation of these agreements.
The Directors noted that the Adviser is responsible for monitoring the investment performance and other responsibilities of the various Sub-Advisers that have day-to-day responsibility for the decisions made for certain of the Fund’s investment portfolios. They also noted that the Adviser reports to the Fund’s Board on its analysis of each Sub-Adviser’s performance at the regular meetings of the Board, which are held at least quarterly. Where warranted, the Adviser will add or remove a particular Sub-Adviser from a watchlist that it maintains. Watchlist criteria include, for example: (a) fund performance over various time periods; (b) fund risk issues, such as changes in key personnel involved with fund management or changes in investment philosophy or process; and (c) organizational risk issues, such as regulatory, compliance or legal concerns, or changes in the ownership of the Sub-Adviser.
In considering the Investment Advisory and sub-advisory agreements, the Board requested and reviewed a significant amount of information relating to each Portfolio, the Adviser and the Sub-Advisers, including the following: (1) performance data for each Portfolio for various time periods, including year-to-date through October 31, 2014, (2) comparative performance, advisory fee and expense ratio information for a peer group of funds in the respective Portfolio’s Morningstar category (a “Morningstar Peer Group”), as well as management fee peer comparison charts showing where each Portfolio’s advisory fee was located in the dispersion of its peer funds’ advisory fees; (3) comparable performance information for each Portfolio’s relevant benchmark index or indices; (4) comparative data regarding advisory fees, including data regarding the fees charged by the Adviser and Sub-Advisers for managing other institutional funds and institutional accounts using investment strategies and techniques similar to those used in managing the Portfolios; (5) comparative data regarding the expense ratio of each Portfolio, as compared to its Morningstar Peer Group; (6) profitability analyses for the Adviser with respect to each Portfolio; and (7) other information regarding the nature, extent and quality of services provided by the Adviser and the Sub-Advisers, as applicable. The Directors also took into account information on the services provided by the Adviser and each Sub-Adviser and performance, fee and expense ratio information regarding each Portfolio provided to them periodically throughout the year. They also met with a representative of the Adviser to review the relative performance of each Portfolio, as compared with its benchmark(s) and peers, and in particular discussed those Portfolios that were on the watchlist.
The Directors, including all of the Independent Directors, were assisted by experienced independent legal counsel throughout the contract review process. The Independent Directors discussed the proposed continuations in private session with such counsel at which no representatives of management, the Adviser or any Sub-Adviser were present. The Directors, including all of the Independent Directors, relied upon the advice of independent legal counsel and their own business judgment in determining the material factors to be considered in evaluating the Advisory Agreement and each sub-advisory agreement and the weight to be given to each such factor. The conclusions reached by the Directors were based on a comprehensive evaluation of all of the information provided and were not the result of any one factor. Moreover, each Director may have afforded different weight to the various factors in reaching his or her conclusions with respect to the Advisory Agreement and each sub-advisory agreement.
Nature, Extent and Quality of Services
The Board evaluated the nature, extent and quality of the advisory services provided to the Portfolios by the Adviser. As part of its review, the Board reviewed information regarding the Adviser’s operations, procedures and personnel. The Directors took into account information they received during the previous year at Board meetings and other discussions and through periodic reports regarding the Adviser’s performance of its duties. The Directors considered the capabilities and resources that the Adviser has dedicated to performing services on behalf of the Fund and its Portfolios. The quality of administrative and other services, including the Adviser’s role in monitoring the performance and quality of compliance of the Sub-Advisers, also was considered. The Directors also considered the quality of the compliance programs of the Adviser and its responsiveness to inquiries and requests from the Board.
For each Portfolio subject to a sub-advisory agreement (all Portfolios other than the Money Market Portfolio, Bond Portfolio, S&P 500® Index Portfolio, Nasdaq-100® Index Portfolio and the fixed income portion of the Omni Portfolio), the Board considered similar criteria as applied to each Sub-Adviser, including the nature, extent and quality of the sub-advisory services provided by each Sub-Adviser. In addition to the criteria used to review the Adviser, the Directors reviewed information on each Sub-Adviser’s portfolio management and brokerage practices, including any soft dollar benefits received. The Directors also reviewed the performance record of each Portfolio managed by the applicable Sub-Adviser. The Board also considered the quality of each Sub-Adviser’s compliance program as it relates to the applicable Portfolio. It was the Directors’ conclusion that overall, they were satisfied with the nature, extent and quality of services provided to the Fund and each of the Portfolios.
152 | (continued) |
Ohio National Fund, Inc. |
Additional Information (Unaudited) (Continued) | December 31, 2014 |
Investment Performance
A representative of the Adviser reviewed with the Directors each Portfolio’s performance year-to-date and for the 1-, 3- and 5-year periods ended October 31, 2014, as compared to the Portfolio’s Morningstar Peer Group and benchmark(s). The Board also considered the Adviser’s effectiveness in monitoring the performance of each Sub-Adviser and the Adviser’s timeliness in responding to performance issues. A Portfolio-by-Portfolio discussion of each Portfolio’s performance and the Board’s conclusions regarding that performance is set forth below.
Fees and Expenses
The Board considered the advisory fee for each Portfolio, as well as the difference of each Portfolio’s fee from the average advisory fee for the Portfolio’s Morningstar Peer Group and the fee’s percentile ranking within the peer group. The Board also considered charts showing, for each Portfolio, how the Portfolio’s advisory fees compared to the advisory fees of the funds in its peer group. The charts showed the number of funds in the peer group within each defined range of advisory fees, and the range that included the Portfolio. The Board also reviewed the difference between each Portfolio’s overall expense ratio and that of its Morningstar Peer Group, as well as the expense ratio’s percentile ranking within the peer group. For these purposes, the Morningstar Peer Groups excluded funds with net assets over $1 billion and all funds identified as being funds of funds. The Morningstar Peer Groups also excluded non-index funds for the S&P 500® Index Portfolio and the Nasdaq-100® Index Portfolio and excluded index funds for all other Portfolios.
In addition, the Board looked at the average net assets for each fund in the respective peer group, and then compared the advisory fee that would have been paid by the Portfolio if the Portfolio had had net assets equal to the peer group’s average net assets. The Board considered that comparison on an absolute and percentile ranking basis.
For all Portfolios other than those sub-advised by Suffolk, an affiliate of the Adviser, the Board also considered the amount of net advisory fee retained by the Adviser, after payment of the sub-advisory fee, as well as the proportion the net fee represented of the total advisory fee, in light of the services provided by the Adviser to the Portfolio. In this regard, in those cases where the Sub-Adviser provides sub-advisory services to a similar fund with an unaffiliated investment adviser, the Board reviewed a comparison of the advisory and sub-advisory fees paid by the similar fund to the fees for the Portfolio.
The Board also considered the fees paid to Sub-Advisers. With respect to the Portfolios sub-advised by Suffolk, the Board evaluated the reasonableness of the total fees received by the Adviser. With respect to those Portfolios sub-advised by a Sub-Adviser that is not affiliated with the Adviser, the Board relied to a degree on the Adviser’s negotiation of each sub-advisory agreement on an arm’s-length basis, noting that in the past the Adviser has negotiated decreases in the sub-advisory fee for certain Portfolios and that the Adviser had always passed on the decrease by reducing its advisory fee by the same amount. Additionally, the Board considered the fees charged by the Adviser and Sub-Advisers to their separately managed institutional accounts and other accounts, and had no concerns with those rates relative to the fees charged to the Portfolio. The Directors also recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds and separately managed accounts.
Profitability
The Board reviewed the advisory fee paid to the Adviser for each Portfolio and noted the pre-tax profit margins reported by the Adviser for each Portfolio. The Directors then considered a Management Practice, Inc. report on “Mutual Fund Profitability in 2013,” which showed the range of pre-tax profit margins of 16 public company investment advisers in 2013 for their respective fund complexes, as well as the average pre-tax profit margin by type of fund (equity, alternative, fixed income or money market). The Directors noted that the profit margins, with respect to the Portfolios that were profitable to the Adviser, were all within the range of profit margins for the 16 fund complexes (with the exception of the International Portfolio, which the Directors noted was below the average profit margin for equity funds). The Directors also noted that the Adviser, and not the Portfolios, is responsible for paying sub-advisory fees to the Portfolio Sub-Advisers. The Board also evaluated whether the net advisory fee received by the Adviser for each Portfolio, after paying sub-advisory fees to the Sub-Adviser, was reasonable, given the level of the Adviser’s services to the Portfolio. The Directors took into account the fact that the Adviser is contractually obligated to reimburse each Portfolio for certain of its expenses should they exceed a specified amount. Additionally, the Directors acknowledged that calculating the Adviser’s profitability related to a specific Portfolio can be challenging and imprecise because of the difficulties in appropriately allocating the Adviser’s expenses across the Portfolios.
The Board also noted that the Adviser has been subsidizing the Money Market Portfolio to assure that it continues to be available to all of Ohio National Fund, Inc.’s shareholders (i.e., the shareholders of every Portfolio), so that shareholders in other Portfolios can elect to invest in the Money Market Portfolio to the extent they want to take a more defensive posture. Consequently, because the Adviser’s subsidization of the Money Market Portfolio benefits the shareholders of every Portfolio, the Board acknowledged that a portion of the costs incurred by the Adviser in subsidizing the Money Market Portfolio should be considered with respect to the Adviser’s profitability from managing each of the other Portfolios.
The Board also considered the reasonableness of the sub-advisory fees paid by the Adviser to each Sub-Adviser. The Directors relied on the ability of the Adviser to negotiate the terms of each sub-advisory agreement, including the sub-advisory fee, at arm’s-length, noting that the Adviser is not affiliated with any Portfolio Sub-Adviser other than Suffolk. Accordingly, the cost of services provided by each unaffiliated
153 | (continued) |
Ohio National Fund, Inc. |
Additional Information (Unaudited) (Continued) | December 31, 2014 |
Sub-Adviser and the profitability to the Sub-Adviser of its relationship with the applicable Portfolio were not material factors in the Board’s deliberations. For similar reasons, the Board concluded that the potential realization of economies of scale by the Portfolios from the sub-advisory arrangements with the unaffiliated Sub-Advisers should not be a material factor in the Board’s deliberations.
In considering the reasonableness of the sub-advisory fees payable by the Adviser to Suffolk, the Directors noted that the Adviser, not the Portfolios, is responsible for paying sub-advisory fees to Suffolk and concluded, because of the affiliate relationship, that the allocation of the advisory fee between the Adviser and Suffolk was not relevant. Accordingly, the cost of services provided by Suffolk and the profitability to Suffolk of its relationship with the applicable Portfolios were not material factors in the Board’s deliberations. For similar reasons, the Board concluded that the potential realization of economies of scale by the applicable Portfolios from the sub-advisory arrangements with Suffolk should not be a material factor in the Board’s deliberations.
After considering all of the above, the Board concluded that the profitability of the Adviser with respect to each Portfolio was reasonable.
Economies of Scale
The Directors noted that all of the advisory and sub-advisory fee schedules contain breakpoints that would reduce the applicable advisory or sub-advisory fees on assets above a specified level as the applicable Portfolio’s assets increase. The Directors also noted that a Portfolio would realize additional economies of scale if the Portfolio’s net assets increase over time proportionately more than certain other expenses. The Directors took into account that many of the Portfolios had a small amount of net assets relative to peer funds. After considering each Portfolio’s current size and potential for growth, the Board concluded that each Portfolio is likely to benefit from economies of scale as the Portfolio’s net assets increase.
Portfolio-by-Portfolio Analysis
In addition to the foregoing, the Directors considered the specific factors and related conclusions set forth below with respect to each Portfolio’s performance and fees and expenses. Except as otherwise indicated, the performance data described below for each Portfolio is for periods ending October 31, 2014 and the advisory fee and expense data described below is through September 30, 2014 for a Portfolio’s Morningstar peer group.
Equity Portfolio (Adviser – ONI, Sub-Adviser – ClearBridge). The Portfolio outperformed its benchmark index and peer group average for the year-to-date, 1- and 3-year periods, while underperforming its benchmark index and outperforming its peer group average for the 5-year period. The Directors noted that the Portfolio’s advisory fee was higher than the peer group average, but still within the range of its peers, and recognized that the Portfolio’s expense ratio was slightly above the peer group average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
Money Market Portfolio (Adviser – ONI). The Portfolio outperformed its peer group average for the year-to-date 1-, 3- and 5-year periods. The Directors noted that the Portfolio’s advisory fee and expense ratio were well below average relative to its peer group and that the Adviser has a negative profit margin for the Portfolio. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory fee was reasonable.
Bond Portfolio (Adviser – ONI). The Adviser noted that during 2014 Morningstar had changed the peer group for the Portfolio from “Intermediate Term Bond” to “Corporate Bond,” which consists of only 16 funds, and indicated its belief that the 140 fund “Intermediate Term Bond” peer group used in previous years was more appropriate because of its larger size and comparable duration to that of the Portfolio. The Adviser pointed out that the Portfolio’s underperformance as to its benchmark index and the “Corporate Bond” peer group average for the year-to-date, 1-, 3- and 5- year periods would be expected in the market environment over the relevant periods, because of its shorter duration. The Adviser also provided comparative performance information for the “Intermediate Term Bond” peer group, noting that the Portfolio had outperformed that peer group average over the year-to-date, 1-, 3- and 5- year periods. The Directors concluded that the “Intermediate Term Bond” peer group was more appropriate for consideration of performance, based on the Adviser’s explanation. The Directors also noted that, although the Portfolio’s advisory fee was above the peer group average for both peer groups, the Portfolio’s expense ratio was below each peer group’s average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory fee was reasonable.
Omni Portfolio (Adviser – ONI, Sub-Adviser – Suffolk). The Omni Portfolio outperformed its benchmark index for the year-to-date, 1- and 3-year periods and its peer group average for the year-to-date, 1-, 3- and 5-year periods, while underperforming the benchmark index for the 5-year period. The Adviser pointed out that the Portfolio had performed in the top 3 percent of its peer group for the year-to-date, 1- and 3-year periods. The Board noted that the Portfolio’s advisory fee and expense ratio were below the Portfolio’s peer group average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
International Portfolio (Adviser – ONI, Sub-Adviser – Federated Global). The International Portfolio underperformed its benchmark index and peer group average for the year-to-date, 1-, 3- and 5-year periods. The Adviser pointed out that this underperformance primarily relates to recent periods (2013 and 2014), noting that the Portfolio was in the top 8% of its peer group for 5-year performance through October 31, 2013. The Adviser explained that the Sub-Adviser does not follow benchmark country weightings and that the Portfolio’s recent performance has been hurt by its overweighting of positions in Germany and Austria, among other countries. The Adviser noted that the Portfolio remains on the
154 | (continued) |
Ohio National Fund, Inc. |
Additional Information (Unaudited) (Continued) | December 31, 2014 |
watchlist and emphasized that the Sub-Adviser is reexamining its model for managing the Portfolio and working to turn performance around. The Directors indicated that they were more focused on the longer term and that they believed it was appropriate to give the Sub-Adviser time to see if its efforts to turn performance around will work. The Adviser indicated that it would monitor performance closely to determine whether the changes made by the Sub-Adviser are effective, going forward. The Board noted that while the Portfolio’s advisory fee was above the peer group average, its expense ratio had been at the group average when considered last year and was significantly below the peer group average for the period ended September 30, 2014 due to an extraordinary fee waiver. Overall, the Board concluded that the Portfolio’s long term performance was adequate and that the advisory and sub-advisory fees were reasonable.
Capital Appreciation Portfolio (Adviser – ONI, Sub-Adviser – Jennison). The Portfolio underperformed its benchmark index for the year-to-date, 1-, 3- and 5-year periods and its peer group average for the year-to-date and 1-year periods, but outperformed its peer group average for the 3- and 5-year periods. The Adviser pointed out that the Portfolio has a significant investment in small and mid cap stocks, in addition to large cap stocks, and would be expected to underperform the large cap-only benchmark in the market environments over the relevant periods. The Board noted that the Portfolio’s advisory fee was higher than the peer group average, but still within the range of its peers, and recognized that the expense ratio was only slightly above average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
International Small-Mid Company Portfolio (Adviser – ONI, Sub-Adviser – Federated Global). The Portfolio outperformed its benchmark index for the 3- and 5-year periods, while underperforming its peer group average for the 3-year and 5-year periods and both the benchmark index and its peer group average for the year-to-date and 1-year periods. The Adviser pointed out that this underperformance primarily relates to recent periods (the first and second quarters of 2014), noting that the Portfolio outperformed its benchmark index for the longer periods and that it had outperformed its peer group average since the end of the second quarter of 2014. The Adviser indicated that the Sub-Adviser had made changes to is model for managing the portfolio and that the performance seemed to be starting to turn around. The Adviser added that the Portfolio remains on the watchlist and indicated that it would monitor performance closely to determine whether the changes made by the Sub-Adviser are effective, going forward, The Board noted that the Portfolio’s advisory fee was slightly below the peer group average and the expense ratio was below average relative to the peer group. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
Aggressive Growth Portfolio (Adviser – ONI, Sub-Adviser – Janus). The Portfolio underperformed its benchmark index and peer group average for the year-to-date, 1-, 3- and 5-year periods. The Adviser pointed out, however, that the Portfolio’s performance had begun to rebound in the third quarter of 2014. The Board noted that the Portfolio’s advisory fee and expense ratio were both above average compared to its peer group, but that the advisory fee and expense ratio were still within the range of the Portfolio’s peers. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
Small Cap Growth Portfolio (Adviser – ONI, Sub-Adviser – Janus). The Portfolio outperformed its benchmark and peer group average for the year-to-date, 1-, 3- and 5-year periods. The Board noted that the Portfolio’s advisory fee and expense ratio were each equal to the peer group average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
Mid Cap Opportunity Portfolio (Adviser – ONI, Sub-Adviser – Goldman Sachs). The Board noted that the Portfolio outperformed its peer group average over the year-to-date, 1-, 3- and 5-year periods and outperformed its benchmark index for the year-to-date and 3-year periods, while underperforming the benchmark index for the 1-year and 5-year periods. The Board also noted that the Portfolio’s advisory fee was above the peer group average, although the Portfolio’s expense ratio was below the peer group average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
S&P 500® Index Portfolio (Adviser – ONI). While the Portfolio underperformed its benchmark for the year-to-date, 1-, 3- and 5-year periods, the Board noted that its performance generally was in line with the S&P 500® Index when expenses were excluded. The Board did not rely on peer group comparison figures for the Portfolio because the Board considers peer groups for index funds to be generally irrelevant. The Board noted that, while the advisory fee was above the peer group average, the overall expense ratio is the statistic most important to index fund shareholders, and the Portfolio’s expense ratio was lower than the average for the peer group. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory fees were reasonable.
Strategic Value Portfolio (Adviser – ONI, Sub-Adviser – Federated Equity). The Portfolio underperformed its benchmark index and its peer group average for the 3-year and 5-year periods and underperformed its benchmark index over the 1-year period, but outperformed its peer group average for the year-to-date and 1-year periods and outperformed its benchmark index for the year-to-date period. The Adviser pointed out that there is no good benchmark or peer group for this Portfolio, and that the benchmark and peer groups are not good indicators of how the Portfolio is performing. Instead, the Adviser said that the focus should be on whether the Portfolio is delivering dividend yield, while maintaining an adequate total return, which it has been doing. The Directors noted that the Portfolio’s advisory fee was above average for the peer group, while the expense ratio was below the peer group average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
155 | (continued) |
Ohio National Fund, Inc. |
Additional Information (Unaudited) (Continued) | December 31, 2014 |
High Income Bond Portfolio (Adviser – ONI, Sub-Adviser – Federated Investment). The Portfolio underperformed its benchmark index for the year-to-date, 1-, 3- and 5-year periods, while outperforming its peer group average for the year-to-date, 1-, 3- and 5-year periods. The Directors noted that the advisory fee was above the peer group average, while the expense ratio was below the peer group average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
Capital Growth Portfolio (Adviser – ONI, Sub-Adviser – Eagle). The Portfolio underperformed its benchmark index and peer group average for the year-to-date, 1-, 3- and 5-year periods. The Adviser indicated that the Portfolio remains on its watchlist. After a lengthy discussion, the Adviser agreed to closely monitor the performance of the Portfolio and proposed that the agreement with the Sub-Adviser should be renewed only through May 31, 2015. The Directors noted that although the advisory fee was above average for the peer group, the expense ratio was below average. Based upon its review, the Board concluded that approval of the continuation of the sub-advisory agreement only through May 31, 2015 was appropriate in order to address performance, and that the advisory and sub-advisory fees were reasonable.
Nasdaq-100® Index Portfolio (Adviser – ONI). While the Portfolio underperformed its benchmark for the year-to-date, 1-, 3- and 5-year periods, the Board noted that its performance generally was in line with the Nasdaq-100® Index when expenses were excluded. The Board did not rely on peer group comparison figures for the Portfolio because the Board considers peer groups for index funds to be generally irrelevant. The Board noted that the overall expense ratio is the statistic most important to index fund shareholders, and the Portfolio’s expense ratio was significantly below the average for the peer group. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory fees were reasonable.
Bristol Portfolio (Adviser – ONI, Sub-Adviser – Suffolk). The Portfolio outperformed its benchmark index for the year-to-date and 1-year periods and its peer group average for the year-to-date, 1- and 3-year periods, while the Portfolio underperformed its benchmark index for the 3- and 5-year periods and its peer group average for the 5-year period. The Directors noted that, although the Portfolio’s advisory fee was above the peer group average, the Portfolio’s expense ratio was below the peer group average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
Bryton Growth Portfolio (Adviser – ONI, Sub-Adviser – Suffolk). The Portfolio outperformed its benchmark index and peer group average for the year-to-date and 1-year periods, and underperformed its benchmark index and peer group average for the 3- and 5-year periods. The Directors noted that although the Portfolio’s advisory fee was slightly above the peer group average, the expense ratio was below the peer group average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
Balanced Portfolio (Adviser – ONI, Sub-Adviser – ICON). The Portfolio underperformed its benchmark for the year-to-date, 1-, 3- and 5-year periods and its peer group average for the year-to-date, 1- and 5-year periods, while outperforming its peer group average for the 3-year period. The Adviser pointed out that relative underperformance during strong upward trending markets is to be expected of the Portfolio due to its hedging strategy. The Directors noted that the Portfolio’s advisory fee was equal to the peer group average and that its expense ratio was below the peer group average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
Target VIP Portfolio (Adviser – ONI, Sub-Adviser – First Trust). The Portfolio outperformed its peer group average for the 3-year period, and underperformed its benchmark index and peer group average for the year-to-date, 1-year and 5-year periods and underperformed its benchmark index for the 3-year period. The Portfolio’s advisory fee and expense ratio were below its peer group average. Overall, the Board concluded that the performance of the Portfolio was satisfactory and that the advisory and sub-advisory fees were reasonable.
Bristol Growth Portfolio (Adviser – ONI, Sub-Adviser – Suffolk). The Portfolio outperformed its benchmark index for the 1-year period and its peer group average for the year-to-date and 1-year periods, but underperformed its benchmark index and peer group average for the 3- and 5-year periods and its benchmark index for the year-to-date period. The Directors considered that, although the Portfolio’s advisory fee was above its peer group average, its expense ratio was slightly below its peer group average. Overall, the Board concluded that the Portfolio’s performance was satisfactory and that the advisory and sub-advisory fees were reasonable.
After consideration of the foregoing, the Board reached the following conclusions regarding the Investment Advisory Agreement and, as applicable, the sub-advisory agreement with respect to each Portfolio, in addition to the conclusions set forth above: (a) ONI and the Sub-Adviser had demonstrated that they possessed the capability and resources to perform the duties required of them under the Investment Advisory Agreement and applicable sub-advisory agreement, respectively; (b) the investment philosophy, strategies and techniques of ONI (with respect to the Portfolios without a Sub-Adviser) and the Sub-Adviser were appropriate for pursuing the applicable Portfolio’s investment objective; (c) ONI (with respect to the Portfolios without a Sub-Adviser) and the Sub-Adviser were likely to execute their investment philosophy, strategies and techniques consistently over time; and (d) ONI and the Sub-Adviser maintained appropriate compliance programs. Based on all of the above-mentioned factors and their related conclusions, with no single factor or conclusion being determinative and with each Director not necessarily attributing the same weight to each factor, the Directors unanimously concluded that approval of the continuation of the Investment Advisory Agreement and, as applicable, the sub-advisory agreement was in the best interests of each Portfolio and its shareholders. Accordingly, the Board, including all of the Independent Directors, voted unanimously to approve the continuation of the Investment Advisory Agreement and, as applicable, the sub-advisory agreement for each Portfolio.
156 | (continued) |
Ohio National Fund, Inc. |
Additional Information (Unaudited) (Continued) | December 31, 2014 |
(2) | Expense Disclosure |
An individual may not buy or own membership interests of the Fund directly. An individual acquires an indirect interest in the Fund by purchasing a variable annuity contract or variable insurance policy and allocating premiums or purchase payments to Fund Portfolios available through the separate accounts of ONLIC, ONLAC, and NSLA. Separate accounts of these entities are the shareholders of the Fund.
As a shareholder of the Fund, a separate account incurs ongoing costs, including management fees and other Fund expenses. This example is intended to help a policy/contract owner understand ongoing costs (in dollars) associated with the underlying investment in the Fund’s Portfolios by the separate account shareholder and to compare these costs with the ongoing costs associated with investing in other mutual funds.
The example is based on an investment of $1,000 invested at July 1, 2014 and held through December 31, 2014.
Actual Expenses
The table below provides information about investment values and actual expenses associated with each Portfolio of the Fund. The information below, together with the amount of an underlying investment, can be used to estimate expenses paid over the period. An estimate can be obtained by simply dividing an underlying investment value by $1,000 (for example, an $8,600 investment value divided by $1,000 = 8.6), then multiplying the result by the number in the table under the heading entitled “Expenses Paid During Period”.
Portfolio | Beginning Investment Value 7/1/2014 | Ending Investment Value 12/31/2014 | Expense Paid During Period* 7/1/2014 – 12/31/2014 | Expense Ratio During Period 7/1/2014 – 12/31/2014 (Annualized) | ||||||||||||
Equity | $ | 1,000.00 | $ | 1,021.07 | $ | 4.18 | 0.82 | % | ||||||||
Money Market | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | % | |||||||||
Bond | 1,000.00 | $ | 1,021.98 | $ | 3.26 | 0.64 | % | |||||||||
Omni | 1,000.00 | $ | 1,021.32 | $ | 3.92 | 0.77 | % | |||||||||
International | 1,000.00 | $ | 1,020.11 | $ | 5.14 | 1.01 | % | |||||||||
Capital Appreciation | 1,000.00 | $ | 1,021.07 | $ | 4.18 | 0.82 | % | |||||||||
Company | 1,000.00 | $ | 1,019.21 | $ | 6.06 | 1.19 | % | |||||||||
Aggressive Growth | 1,000.00 | $ | 1,020.52 | $ | 4.74 | 0.93 | % | |||||||||
Small Cap Growth | 1,000.00 | $ | 1,020.82 | $ | 4.43 | 0.87 | % | |||||||||
Mid Cap Opportunity | 1,000.00 | $ | 1,020.47 | $ | 4.79 | 0.94 | % | |||||||||
S&P 500® Index | 1,000.00 | $ | 1,023.09 | $ | 2.14 | 0.42 | % | |||||||||
Strategic Value | 1,000.00 | $ | 1,021.27 | $ | 3.97 | 0.78 | % | |||||||||
High Income Bond | 1,000.00 | $ | 1,021.32 | $ | 3.92 | 0.77 | % | |||||||||
Capital Growth | 1,000.00 | $ | 1,020.16 | $ | 5.09 | 1.00 | % | |||||||||
Nasdaq-100® Index | 1,000.00 | $ | 1,022.84 | $ | 2.40 | 0.47 | % | |||||||||
Bristol | 1,000.00 | $ | 1,021.17 | $ | 4.08 | 0.80 | % | |||||||||
Bryton Growth | 1,000.00 | $ | 1,020.82 | $ | 4.43 | 0.87 | % | |||||||||
Balanced | 1,000.00 | $ | 1,022.13 | $ | 3.11 | 0.61 | % | |||||||||
Target VIP | 1,000.00 | $ | 1,021.42 | $ | 3.82 | 0.75 | % | |||||||||
Bristol Growth | 1,000.00 | $ | 1,020.92 | $ | 4.33 | 0.85 | % | |||||||||
Risk Managed Balanced | 1,000.00 | $ | 1,051.50 | $ | 7.19 | 1.39 | % |
157 | (continued) |
Ohio National Fund, Inc. |
Additional Information (Unaudited) (Continued) | December 31, 2014 |
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical investment values and hypothetical expenses based on each respective Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not an actual return. The hypothetical investment values and expenses may not be used to estimate the actual ending investment balance or expenses actually paid for the period by the shareholders. A policy/contract holder may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Portfolio | Beginning Investment Value 7/1/2014 | Ending Investment Value 12/31/2014 | Expense Paid During Period* 7/1/2014 – 12/31/2014 | Expense Ratio During Period 7/1/2014 – 12/31/2014 (Annualized) | ||||||||||||
Equity | $ | 1,000.00 | $ | 1,059.90 | $ | 4.26 | 0.82 | % | ||||||||
Money Market | 1,000.00 | $ | 1,000.00 | $ | 0.25 | 0.05 | % | |||||||||
Bond | 1,000.00 | $ | 1,013.60 | $ | 3.25 | 0.64 | % | |||||||||
Omni | 1,000.00 | $ | 1,049.30 | $ | 3.98 | 0.77 | % | |||||||||
International | 1,000.00 | $ | 890.70 | $ | 4.81 | 1.01 | % | |||||||||
Capital Appreciation | 1,000.00 | $ | 987.20 | $ | 4.11 | 0.82 | % | |||||||||
International Small-Mid Company | 1,000.00 | $ | 925.30 | $ | 5.77 | 1.19 | % | |||||||||
Aggressive Growth | 1,000.00 | $ | 1,092.50 | $ | 4.91 | 0.93 | % | |||||||||
Small Cap Growth | 1,000.00 | $ | 1,076.90 | $ | 4.55 | 0.87 | % | |||||||||
Mid Cap Opportunity | 1,000.00 | $ | 1,062.40 | $ | 4.89 | 0.94 | % | |||||||||
S&P 500® Index | 1,000.00 | $ | 1,058.80 | $ | 2.18 | 0.42 | % | |||||||||
Strategic Value | 1,000.00 | $ | 993.60 | $ | 3.92 | 0.78 | % | |||||||||
High Income Bond | 1,000.00 | $ | 981.90 | $ | 3.85 | 0.77 | % | |||||||||
Capital Growth | 1,000.00 | $ | 1,008.60 | $ | 5.06 | 1.00 | % | |||||||||
Nasdaq-100® Index | 1,000.00 | $ | 1,104.10 | $ | 2.49 | 0.47 | % | |||||||||
Bristol | 1,000.00 | $ | 1,060.00 | $ | 4.15 | 0.80 | % | |||||||||
Bryton Growth | 1,000.00 | $ | 1,002.40 | $ | 4.39 | 0.87 | % | |||||||||
Balanced | 1,000.00 | $ | 1,010.60 | $ | 3.09 | 0.61 | % | |||||||||
Target VIP | 1,000.00 | $ | 1,006.10 | $ | 3.79 | 0.75 | % | |||||||||
Bristol Growth | 1,000.00 | $ | 1,054.90 | $ | 4.40 | 0.85 | % | |||||||||
Risk Managed Balanced | 1,000.00 | $ | 1,018,20 | $ | 7.07 | 1.39 | % |
* | Expenses are equal to the average account value times the Fund’s annualized expense ratio multiplied by the number of days in the most recent fiscal half-year (184 days) divided by the number of days in the fiscal year (365 days). Please note that the expenses shown in these tables are meant to highlight ongoing Fund costs only and do not reflect any contract-level expenses or Fund transactional costs, such as sales charges (loads) or exchange fees (if any). Therefore, these tables are useful in comparing ongoing fund costs only, and will not fully assist a policy/contract owner in determining the relative total expenses of different funds. In addition, if transactional costs were included, costs may have been higher for these Portfolios as well as for a fund being compared. |
(3) | Other Federal Tax Information |
For corporate shareholders, the percentages of the total ordinary income dividends paid in 2014, and ordinary income consent dividends that were incurred for the 2014 tax year, that qualify for the corporate dividends received deduction are as follows:
Equity | 100.00 | % | ||
Money Market | 0.00 | % | ||
Bond | 0.00 | % | ||
Omni | 8.16 | % | ||
International | 0.00 | % | ||
Capital Appreciation | 100.00 | % | ||
International Small-Mid Company | 0.00 | % | ||
Aggressive Growth | 0.00 | % | ||
Small Cap Growth | 10.36 | % | ||
Mid Cap Opportunity | 0.00 | % | ||
S&P 500® Index | 88.32 | % |
Strategic Value | 37.15 | % | ||
High Income Bond | 0.00 | % | ||
Capital Growth | 0.00 | % | ||
Nasdaq-100® Index | 95.70 | % | ||
Bristol | 9.51 | % | ||
Bryton Growth | 3.98 | % | ||
Balanced | 26.37 | % | ||
Target VIP | 63.59 | % | ||
Bristol Growth | 13.04 | % | ||
Risk Managed Balanced | 0.00 | % | ||
Pursuant to Section 853 of the Internal Revenue Code, the Fund designates the following amounts as foreign taxes paid for the year ended December 31, 2014:
Creditable Foreign Taxes Paid | Per Share Amount | Portion of Ordinary Income Distribution Derived from Foreign Sourced Income | ||||||||
International | $ | 523,369 | $ | 0.0377 | 100.00% | |||||
International Small-Mid Company | $ | 60,081 | $ | 0.0244 | 100.00% |
Foreign taxes paid for purposes of Section 853 may be less than actual foreign taxes paid for financial statement purposes. None of the Portfolios listed above derived any income from ineligible foreign sources, as defined under Section 901(j) of the Internal Revenue Code.
158 | (continued) |
Ohio National Fund, Inc. |
December 31, 2014 |
Name and Address | Age | Position(s) with the Fund | Term of Office | Number of Portfolios | Principal Occupation(s) and Other | |||||||
Independent Directors | ||||||||||||
George M. Vredeveld One Financial Way Cincinnati, Ohio | 72 | Lead Independent Director, Member of Audit and Independent Directors Committees | Indefinite; Since March 1996 | 21 | Professor Emeritus, Finance: University of Cincinnati (January 2014 to present); Research Fellow and Member of Academic Council: Varna Free University, Varna, Bulgaria (2012 to present); Alpaugh Professor of Economics: Lindner College of Business, University of Cincinnati (2004-2013); Founder/President: Economics Center at the University of Cincinnati (1977-2012). | |||||||
John I. Von Lehman One Financial Way Cincinnati, Ohio | 62 | Director, Member of Audit and Independent Directors Committees | Indefinite; Since August 2007 | 21 | Executive Vice President, CFO, Secretary, and Director: The Midland Company (1988-2007); Director, Audit Committee and Corporate Governance Committee Member: American Financial Group, Inc.; Finance Committee and Investment Committee Member: Life Enriching Communities; Investment Committee: Xavier University Foundation. | |||||||
Madeleine W. Ludlow One Financial Way Cincinnati, Ohio | 60 | Director, Member of Audit and Independent Directors Committees | Indefinite; Since April 2012 | 21 | Founder/Managing Director: West Capital Partners LLC (2010-present), Ludlow Ward Capital Advisors LLC (2005-2009); Director, ALLETE, Inc. (2004-present). | |||||||
Interested Director | ||||||||||||
John J. Palmer One Financial Way Cincinnati, Ohio | 75 | Chairman and Director | Indefinite; Since July 1997 | 21 | Insurance industry consultant (April 2010 to present), Director: NSLA; President: Ohio National Fund, Inc. (1997-2010); Director and Vice Chairman: ONLIC (1997-2010); President and CEO: NSLA (2002-2010), Director: ONI and various affiliated companies (1997-2010), Tucson Symphony Orchestra, and Pima Canyon Estates Homeowners’ Association. | |||||||
Officers | ||||||||||||
Christopher A. Carlson One Financial Way Cincinnati, Ohio | 55 | President | Indefinite; Since March 2000 | 21 | Vice Chairman and Chief Investment Officer: ONLIC; President and Director: ONI; Chief Investment Officer: NSLA; Officer and Director of various other Ohio National-affiliated companies. Prior to March 2010, was Vice President of the Fund. | |||||||
Thomas A. Barefield One Financial Way Cincinnati, Ohio | 61 | Vice President | Indefinite; Since February 1998 | 21 | Vice Chairman and Chief Distribution Officer: ONLIC; Director and Vice President – Marketing: NSLA; Director: ONI; Senior Vice President: Ohio National Equities, Inc.; Recent graduate of class XXIX of Leadership Cincinnati. | |||||||
R. Todd Brockman One Financial Way Cincinnati, Ohio | 46 | Treasurer | Indefinite; Since August 2004 | 21 | Vice President, Mutual Fund Operations: ONLIC and NSLA; Treasurer: ONI. | |||||||
Kimberly A. Plante One Financial Way Cincinnati, Ohio | 40 | Secretary | Indefinite; Since March 2005 | 21 | Senior Associate Counsel: ONLIC; Secretary: ONI; Officer of various other Ohio National-affiliated companies. | |||||||
Julie T. Thomas One Financial Way Cincinnati, Ohio | 52 | Chief Compliance Officer | Indefinite; Since June 2013 | 21 | Second Vice President: ONLIC; Chief Compliance Officer: ONI, Suffolk, and other Ohio National-affiliated companies. | |||||||
Catherine E. Gehr One Financial Way Cincinnati, Ohio | 42 | Assistant Treasurer | Indefinite; Since March 2005 | 21 | Manager, Mutual Fund Operations: ONLIC; Assistant Treasurer: ONI. |
159 | (continued) |
Ohio National Fund, Inc. |
Information about Directors and Officers (Unaudited) (Continued) | December 31, 2014 |
Name and Address | Age | Position(s) with the Fund | Term of Office | Number of Portfolios | Principal Occupation(s) and Other | |||||||
Emily Bae One Financial Way Cincinnati, Ohio | 29 | Assistant Secretary | Indefinite; Since May 2013 | 21 | Assistant Secretary: ONI; Assistant Counsel: ONLIC. Prior to May 2013, was Counsel with Goodyear Tire & Rubber Company. |
160 |
Item 2. | Code Of Ethics. |
As of the end of the period covered by this report, Ohio National Fund, Inc. (the “Fund”) has adopted a code of ethics that applies to the Fund’s principal executive officer and principal financial officer. There were no substantive amendments or waivers to the Code of Ethics during the period covered by this report.
A copy of this Code of Ethics is filed as Exhibit EX-99.CODE to this Form N-CSR and is also available, without charge, upon request, by calling 877-781-6392 toll free.
Item 3. | Audit Committee Financial Expert. |
The Fund’s Board of Directors has determined that the Fund has an audit committee financial expert serving on its Audit Committee. The Audit Committee financial expert is Mr. John I. Von Lehman. Mr. Von Lehman is independent for purposes of Item 3 of Form N-CSR.
Item 4. | Principal Accountant Fees And Services. |
The aggregate fees for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Fund’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are listed below.
(a) | Audit Fees. |
Audits of the Portfolios for the year ended.
Fiscal year ended December 31, 2014: $267,750
Fiscal year ended December 31, 2013: $248,333
Consent on N-1A Annual Registration Statement filed with the SEC.
Fiscal year ended December 31, 2014: $5,000
Fiscal year ended December 31, 2013: $5,000
Merger related audit testwork.
Fiscal year ended December 31, 2013: $5,000
(b) | Audit-Related Fees. |
Consent on N-14 Filing filed with the SEC.
Fiscal year ended December 31, 2013: $6,000
Professional services rendered in connection with the consent on the Fund’s N-14 merger filing (paid by the Fund’s adviser (ONI)
(c) | Tax Fees. | None. | ||
(d) | All Other Fees. | None. |
(e)(1) | Audit Committee Pre-Approval Policies and Procedures: |
The Fund’s Audit Committee has adopted an Audit Committee Charter that requires that the Audit Committee oversee the quality and appropriateness of the accounting methods used in the preparation of the Fund’s financial statements, and the independent audit thereof; approve the selection and compensation of the independent auditors; and pre-approve the performance, by the independent auditors, of non-audit services for the Fund, its investment adviser, or any affiliated entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Fund.
(e)(2) | Services Approved Pursuant to Paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X: |
During the fiscal years ended December 31, 2013 and 2012, there were no non-audit services provided by the Fund’s principal accountant that would have required pre-approval by the Fund’s Audit Committee. The audit related fees aforementioned were pre-approved by the Fund’s Audit Committee chairman, although not required by paragraph (c) (7) (ii) of Regulation S-X, as the audit-related fees were less than five percent of the total amount of revenues paid to the Fund’s principal accountant.
(f) | Not applicable. |
(g) | There were no other non-audit services provided by the Fund’s principal accountant, other than items disclosed in item (b) above, in which a fee was billed to the Fund, the Fund’s adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for the last two fiscal years. |
(h) | Not applicable, as there were no non-audit services performed by the Fund’s principal accountant that were rendered to the Fund, the Fund’s adviser, or any entity controlling, controlled by, or under common control with the adviser that provided ongoing services to the registrant that were not pre-approved for the last two fiscal years. |
Item 5. | Audit Committee Of Listed Registrants. |
Not applicable.
Item 6. | Schedule of Investments. |
Not applicable.
Item 7. | Disclosure Of Proxy Voting Policies And Procedures For Closed-End Management Investment Companies. |
Not Applicable.
Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
Not Applicable.
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not Applicable.
Item 10. | Submission of Matters to a Vote of Security Holders. |
There were no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board of Directors.
Item 11. | Controls and Procedures. |
(a) | The Fund’s principal executive officer and principal financial officer have concluded, based on their evaluation conducted as of a date within 90 days of the filing of this report, that the Fund’s disclosure controls and procedures are adequately designed and are operating effectively to ensure (i) that material information relating to the Fund, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared; and (ii) that information required to be disclosed by the Fund on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. |
(b) | There were no changes in the Fund’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Fund’s internal control over financial reporting. |
Item 12. | Exhibits. |
(a)(1) | The Fund’s Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE. | |
(a)(2) | A separate certification for each principal executive officer and principal financial officer of the Fund as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is attached hereto as EX-99.CERT. | |
The certifications required by Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as EX-99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Ohio National Fund, Inc. | ||
By: | /s/ Christopher A. Carlson | |
Christopher A. Carlson | ||
President | ||
March 6, 2015 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Ohio National Fund, Inc. | ||
By: | /s/ Christopher A. Carlson | |
Christopher A. Carlson | ||
President | ||
March 6, 2015 | ||
By: | /s/ R. Todd Brockman | |
R. Todd Brockman | ||
Treasurer | ||
March 6, 2015 |