S-6/A 1 l83814as-6a.txt OHIO NATIONAL VARIABLE ACCOUNT R S-6/A 1 File No.333-40636 811-4320 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Pre-Effective Amendment No. 1 to FORM S-6 FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2 Exact name of trust: OHIO NATIONAL VARIABLE ACCOUNT R Name of depositor: OHIO NATIONAL LIFE ASSURANCE CORPORATION Complete address of depositor's principal executive offices: One Financial Way Cincinnati, Ohio 45242 Name and complete address of agent for service: Ronald L. Benedict, Esq. Ohio National Life Assurance Corporation P.O. Box 237 Cincinnati, Ohio 45201 Notice to: W. Randolph Thompson, Esq. Of Counsel Jones & Blouch L.L.P. Suite 405 West 1025 Thomas Jefferson Street, N.W. Washington, D.C. 20007 It is proposed that this filing will become effective (check appropriate box): immediately upon filing pursuant to paragraph (b) -- on ____________ pursuant to paragraph (b) -- 60 days after filing pursuant to paragraph (a)(i) -- on (date) pursuant to paragraph (a)(i) -- 75 days after filing pursuant to paragraph (a)(ii) -- on (date) pursuant to paragraph (a)(ii) of Rule 485. -- If appropriate, check the following box: This post-effective amendment designates a new effective date for a -- previously filed post-effective amendment. Title and amount of securities being registered: LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACTS (Vari-Vest Survivor). Registrant has heretofore registered an indefinite amount of such flexible premium variable life insurance contracts under the Securities Act of l933 pursuant to Rule 24f-2. The registrant hereby amends this registration statement on such date as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. 2 PART I PROSPECTUS 3 PROSPECTUS VARI-VEST SURVIVOR LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACT OHIO NATIONAL LIFE ASSURANCE CORPORATION OHIO NATIONAL VARIABLE ACCOUNT R One Financial Way Cincinnati, Ohio 45242 Telephone (800) 366-6654 This prospectus describes a last survivor flexible premium variable life insurance contract (the "contract") offered through Ohio National Variable Account R ("VAR"), a separate account of ours. We are Ohio National Life Assurance Corporation, a subsidiary of The Ohio National Life Insurance Company ("Ohio National Life"). The contract has a minimum stated amount of $100,000 and a sales charge which is deducted from accumulation value upon surrender, lapse, partial surrender or a decrease in stated amount during the first twenty contract years. Because of the substantial nature of the surrender charge, the contract is not suitable for short term investment purposes. The contract generally will not be issued when both of the insured persons are over 80. We may issue the contract when one insured is over 80, but not over 85. The contract is "flexible" because, subject to certain restrictions, it permits you to: - adjust the timing and amount of your premium payments, - direct net premiums to one or more of the subaccounts of the variable account or to the general account, - choose from two death benefit plans, and - increase or decrease the level of death benefits under such plans. The contract is "variable" because the value of the contract will change with the performance of the investments selected. The flexible and variable features of the contract give you the opportunity to meet your changing life insurance needs and to adjust to changing economic conditions within the framework of a single insurance policy. For this reason, it may not be to your advantage to purchase a contract as a means of obtaining additional insurance if you already own another flexible premium variable life insurance policy. The contract provides life insurance coverage to age 100 of the younger insured. You may choose either a level or variable death benefit plan. The level plan provides a fixed benefit (the "stated amount") to be paid on the death of the second insured. The level plan contract operates in a manner similar to a whole life insurance policy, except that its accumulation value varies with investment performance. The variable plan contract provides a death benefit equal to the sum of the stated amount and the contract's accumulation value upon the death of the second insured. Accordingly, the variable plan death benefit generally varies dollar for dollar with the contract's accumulation value. Under either plan, we insure the death benefit against adverse investment performance by guaranteeing that the death benefit will never be less than the contract's stated amount, provided you pay the Minimum Premium. When you purchase a contract, you will be required to pay an initial premium. You must pay the minimum premium described in your contract to keep the death benefit guarantee in effect. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE. IT SHOULD BE ACCOMPANIED BY THE CURRENT FUND PROSPECTUSES. ATTENTION PENNSYLVANIA RESIDENTS AND CONTRACTHOLDERS, THIS PROSPECTUS MUST BE ACCOMPANIED BY APPENDIX B, WHICH IS A DESCRIPTION OF THE DIFFERENT CHARGES APPLICABLE TO CONTRACTS SOLD OR SOLICITED IN PENNSYLVANIA. Form 5741 4 The contract affords you substantial flexibility with your premium payments. You may adopt a planned premium schedule that indicates the level of your intended payments. The planned premium will fall somewhere between the minimum and maximum permitted by the Code. The exact amount of your planned premium will depend upon your objectives and your estimate of long-term investment performance. You will find the minimum and planned premiums on the specification page of your contract. If you do not pay premiums, at least as great as the minimum premium required to keep the death benefit guarantee in effect, the contract will remain in force only as long as the cash surrender value (less any contract indebtedness) will pay the next monthly deduction for contract charges. You may allocate your contract values among up to 10 of the investment accounts we offer. Each of the variable subaccounts invests in a corresponding Fund. The available Funds are listed below. The Fund portfolios are described in the accompanying Fund prospectuses. Your contract's accumulation value will reflect the investment performance of the subaccounts you select and is not guaranteed. Should the need arise, you may obtain access to the cash surrender value of your contract after the first contract year through loans or partial surrenders, without terminating your insurance coverage. In addition, you may surrender your contract at any time and receive its cash surrender value. AVAILABLE FUNDS OHIO NATIONAL FUND, INC. ADVISER (SUBADVISER) Equity Portfolio (Legg Mason Funds Management, Inc.) Money Market Portfolio Ohio National Investments, Inc. Bond Portfolio Ohio National Investments, Inc. Omni Portfolio (a flexible portfolio fund) Ohio National Investments, Inc. International Portfolio (Federated Global Investment Management Corp.) International Small Company Portfolio (Federated Global Investment Management Corp.) Capital Appreciation Portfolio (Jennison Associates, LLC) Small Cap Portfolio (Founders Asset Management LLC) Aggressive Growth Portfolio (Janus Capital Corporation) Core Growth Portfolio (Pilgrim Baxter & Associates, Ltd.) Growth & Income Portfolio (RS Investment Management, Co. LLC) Capital Growth Portfolio (RS Investment Management, Co. LLC) S&P 500 Index Portfolio Ohio National Investments, Inc. Social Awareness Portfolio Ohio National Investments, Inc. High Income Bond Portfolio (Federated Investment Counseling) Equity Income Portfolio (Federated Investment Counseling) Blue Chip Portfolio (Federated Investment Counseling) Nasdaq 100 Index Portfolio Ohio National Investments, Inc. GOLDMAN SACHS VARIABLE INSURANCE TRUST Goldman Sachs Growth and Income Fund Goldman Sachs Asset Management Goldman Sachs CORE U.S. Equity Fund Goldman Sachs Asset Management Goldman Sachs Capital Growth Fund Goldman Sachs Asset Management JANUS ASPEN SERIES Growth Portfolio Janus Capital Corporation Worldwide Growth Portfolio Janus Capital Corporation Balanced Portfolio Janus Capital Corporation LAZARD RETIREMENT SERIES, INC. Small Cap Portfolio Lazard Asset Management Emerging Markets Portfolio Lazard Asset Management
Form 5741 2 5 STRONG VARIABLE INSURANCE FUNDS, INC. Strong Mid Cap Growth Fund II Strong Capital Management, Inc. Strong Opportunity Fund II (a mid cap/small cap fund) Strong Capital Management, Inc. Strong Schafer Value Fund II Strong Capital Management, Inc. VARIABLE INSURANCE PRODUCTS FUND SOURCE CLASS 2 (FIDELITY) VIP Contrafund(R) Portfolio Fidelity Management and Research Company VIP Mid Cap Portfolio Fidelity Management and Research Company VIP Growth Portfolio Fidelity Management and Research Company PBHG INSURANCE SERIES FUND, INC. PBHG Technology & Telecommunications Pilgrim Baxter & Associates, Ltd. Portfolio
Form 5741 3 6 TABLE OF CONTENTS Definitions............................ 5 Introduction........................... 7 Assumptions and Scope of Prospectus.... 7 Summary................................ 8 Ohio National Financial Services Group............................. 8 Ohio National Life Assurance Corporation....................... 8 The Ohio Life Insurance Company...... 8 Ohio National Variable Account R..... 8 The Funds............................ 8 Death Benefits....................... 8 Accumulation Value................... 9 Premiums............................. 9 Charges and Deductions............... 10 Federal Tax Matters.................. 12 Ohio National Financial Services Group................................ 12 Ohio National Life Assurance Corporation....................... 12 The Ohio National Life Insurance Company ("Ohio National Life").... 12 Ohio National Variable Account R ("VAR")........................... 13 The Funds............................ 13 Mixed and Shared Funding............. 13 Death Benefits......................... 14 Plan A -- Level Benefit.............. 14 Plan B -- Variable Benefit........... 15 Change in Death Benefit Plan......... 16 Death Benefit Guarantee.............. 16 Changes in Stated Amount............. 17 Accumulation Value..................... 17 Determination of Variable Accumulation Values............... 18 Accumulation Unit Values............. 18 Net Investment Factor................ 18 Loans................................ 19 Surrender Privileges................. 20 Maturity............................. 20 Premiums............................... 21 Purchasing a Contract................ 21 Payment of Premiums.................. 21 Initial Premiums..................... 22 Term Insurance Conversion Credit..... 22 Minimum Premiums..................... 22 Planned Premiums..................... 22 Allocation of Premiums............... 23 Transfers............................ 23 Dollar Cost Averaging................ 23 TeleAccess........................... 24 Lapse................................ 24 Reinstatement........................ 24 Conversion........................... 25 Free Look............................ 25 Charges And Deductions................. 25 Premium Expense Charge............... 25 Ohio National Life Employee Discount.......................... 25 Monthly Deduction.................... 26 Risk Charge.......................... 26 Surrender Charge..................... 27 Service Charges...................... 27 Other Charges........................ 27 General Provisions..................... 28 Voting Rights........................ 28 Additions, Deletions or Substitutions of Investments.................... 29 Annual Report........................ 29 Limitation on Right to Contest....... 29 Misstatements........................ 30 Suicide.............................. 30 Beneficiaries........................ 30 Postponement of Payments............. 30 Assignment........................... 30 Non-Participating Contract........... 31 The General Account.................... 31 General Description.................. 31 Accumulation Value................... 31 Optional Insurance Benefits.......... 31 Settlement Options................... 32 Distribution of The Contract........... 32 Management of The Company.............. 33 Custodian.............................. 33 State Regulation of The Company........ 34 Federal Tax Matters.................... 34 Contract Proceeds.................... 34 Correction of Modified Endowment Contract.......................... 35 Right to Charge for Company Taxes.... 35 Employee Benefit Plans................. 35 Legal Proceedings...................... 35 Legal Matters.......................... 35 Experts................................ 35 Registration Statement................. 36 Financial Statements................... 36 Ohio National Life Assurance Corporation Financial Statements..... 37 Ohio National Variable Account R Financial Statements................. 55 Appendix A............................. 96 Hypothetical Historical Illustrations..................... 96 Appendix B............................. 105 Notice to Pennsylvania Contract owners............................ 105
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE COMPANY DOES NOT AUTHORIZE ANY INFORMATION OR REPRESENTATIONS REGARDING THE VARIABLE ASPECTS OF THE CONTRACT DESCRIBED IN THIS PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS, THE FUND PROSPECTUSES OR THE STATEMENTS OF ADDITIONAL INFORMATION OF THE FUNDS. Form 5741 4 7 DEFINITIONS Accumulation Value -- the sum of the contract's values in the subaccounts, the general account and the loan collateral account. Age -- either insured's age at his or her nearest birthday. Attained Age -- either insured's age at the end of the most recent contract year. Beneficiary -- the beneficiary designated by the contractowners in the application or in the latest notification of change of beneficiary filed with us. If the contractowner is the second insured and if no beneficiary survives the second insured, the second insured's estate will be the beneficiary. Cash Surrender Value -- the accumulation value less any applicable surrender charges. Code -- the Internal Revenue Code of 1986, as amended, and all related regulations. Commission -- the Securities and Exchange Commission. Contract -- the Vari-Vest Survivor flexible premium variable life insurance contract. Contract Date -- the date as of which insurance coverage and contract charges begin. The contract date is used to determine contract months and years. Contract Month -- each contract month starts on the same date in each calendar month as the contract date. Contract Year -- each contract year starts on the same date in each calendar year as the contract date. Contract Indebtedness -- the total of any unpaid contract loans. Contractowner(s) -- the person(s) so designated on the specification page of the contract. Corridor Percentage Test -- a method of determining the minimum death benefit as required by the Code to qualify the contract as a "life insurance contract." The minimum death benefit equals the cash value plus the cash value multiplied by a percentage which varies with age as specified by the Code. Death Benefit -- the amount payable upon the death of the second insured, before deductions for contract indebtedness and unpaid monthly deductions. Death Benefit Guarantee -- our guarantee that the contract will never lapse if you have met the minimum premium requirement during the Death Benefit Guarantee period. First Insured -- the first insured who dies. General Account -- our assets other than those allocated to our separate accounts. Guideline Annual Premium -- the level annual premium that would be payable through the contract maturity date for a specified stated amount of coverage if we scheduled premiums as to both timing and amount and such premiums were based on the 1980 Commissioners Standard Ordinary Mortality Table, net investment earnings at an annual effective rate of 4%, and fees and charges as set forth in the contract. This is the maximum premium permitted under the Code. Home Office -- our principal executive offices located at One Financial Way, Cincinnati, Ohio 45242. Initial Premium -- an amount you must pay to begin contract coverage. It must be at least equal to one monthly minimum premium. Insured -- a person upon whose life the contract is issued. Issue Date -- the date we approve your application and issue your contract. The issue date will be the same as the contract date except for backdated contracts, for which the contract date will be prior to the issue date. Loan Collateral Account -- an account to which accumulation value in an amount equal to a contract loan is transferred pro rata from the subaccounts of VAR and the general account. Loan Value -- the maximum amount that may be borrowed under the contract. The loan value equals the cash surrender value less the cost of insurance charges for the balance of the contract year. The loan value less contract indebtedness equals the amount you may borrow at any time. Form 5741 5 8 Maturity Date -- unless otherwise specified in the contract, the maturity date is the end of the contract year nearest the youngest insured's 100th birthday. Minimum Premium -- the monthly premium set forth on the contract specification page necessary to maintain the death benefit guarantee. Although the minimum premium is expressed as a monthly amount, you need not pay it each month. Rather, you must pay, cumulatively, premiums which equal or exceed the sum of the minimum premiums required during the applicable time period. Monthly Deduction -- the monthly charge against cash value which includes the cost of insurance, an administration charge, a risk charge for the death benefit guarantee and the cost of any optional insurance benefits added by rider. Net Premiums -- the premiums you pay less the premium expense charge. Planned Premium -- a schedule indicating the contractowner's planned premium payments under the contract. The schedule is a planning device only and need not be adhered to. Premium Expense Charge -- an amount deducted from gross premiums consisting of a distribution charge and any state premium tax and other state and local taxes applicable to your contract. Proceeds -- the amount payable on surrender, maturity or death. Process Day -- the first day of each contract month. Monthly deductions and any credits are made on this day. Pronouns -- "our", "us" or "we" means Ohio National Life Assurance Corporation. "You", "your" or "yours" means the insureds. If the insureds are not the contractowners, "you", "your" or "yours" means the contractowner when referring to contract rights, payments and notices. Receipt -- with respect to transactions requiring valuation of variable account assets, a notice or request is deemed received by us on the date actually received if received on a valuation date prior to 4:00 p.m. Eastern time. If received on a day that is not a valuation date or after 4:00 p.m. Eastern time on a valuation date, it is deemed received on the next valuation date. Second Insured -- the insured who dies after the first insured. Settlement Options -- methods of paying the proceeds other than in a lump sum. Stated Amount -- the minimum death benefit payable under the contract as long as the contract remains in force and which is set forth on the contract specification page. Subaccount -- a subdivision of VAR which invests exclusively in the shares of a corresponding portfolio of one of the Funds or of another mutual fund. Surrender Charge -- a charge assessed in connection with contract surrenders, lapses and decreases in stated amount, consisting of a charge applicable for 25 years from the contract date with respect to your initial stated amount and from the date of any increase in stated amount with respect to such increase. Surrender charges vary with your ages, sexes, underwriting classification and length of time you have held your policy. See the specification pages of your policy or the discussion under "Surrender Charges" below for more detailed information. Valuation Date -- each day on which the net asset value of Fund shares is determined. See the accompanying Fund prospectuses. Valuation Period -- the period between two successive valuation dates which begins at 4:00 p.m. Eastern time on one valuation date and ends at 4:00 p.m. Eastern time on the next valuation date. VAR -- Ohio National Variable Account R. Form 5741 6 9 INTRODUCTION As described on the cover page of this prospectus, the Vari-Vest Survivor contract is a last survivor flexible premium variable universal life insurance contract which enables you throughout your lifetime to accommodate to your changing insurance needs and to changing economic conditions within the framework of a single insurance policy. The contract provides for death benefits, cash values, loans, a variety of settlement options and other features traditionally associated with life insurance, however, the death benefit is not paid until the death of the second insured. The contract is similar to traditional life insurance in a number of respects. - The insureds receive insurance coverage to age 100 of the youngest insured at least equal to the stated amount as long as the contract has a positive cash surrender value or the death benefit guarantee is in effect. - You may surrender the contract at any time and receive its cash surrender value. After the first contract year, you may borrow up to the loan value of the contract. - To the extent that you elect to allocate net premiums to the general account, the investment return on the contract is guaranteed. The contract also has several significant features which differentiate it from traditional life insurance. - Within certain limits, you may adjust the timing and amount of your premium payments to suit your individual circumstances. - You direct the investment of your net premiums and resulting cash values, which will vary with the investment performance of the variable subaccounts you select. - Values are neither guaranteed nor limited to an assumed rate of interest. - You may elect a variable death benefit plan as an alternative to a level plan, the latter being similar in many respects to a traditional whole life policy. Under either death benefit plan you may increase or decrease the stated amount of insurance coverage any time after the first contract year. ASSUMPTIONS AND SCOPE OF PROSPECTUS This prospectus relates principally to VAR and contains only selected information regarding the general account. For details regarding elements of the contract involving the general account, see your contract. Unless otherwise indicated or required by the context, the discussion throughout this prospectus assumes that: - "you", the "contractowner", the "insureds" (including the first insured and the second insured) are the same people, - the death benefit guarantee is in effect, - the cash surrender value of your contract is sufficient to pay the next monthly deduction, - there is no outstanding contract indebtedness, - the death benefit is not determined by the corridor percentage test, - the contract is not backdated, - payments under the contract have not been made in a way that would cause the contract to be treated as a modified endowment contract under federal law. Form 5741 7 10 SUMMARY This summary presents selected information in the same order and uses the same headings as the body of the prospectus. See the table of contents to find fuller discussion of each item. See the "Definitions," above, for the meanings of various terms. OHIO NATIONAL FINANCIAL SERVICES GROUP: OHIO NATIONAL LIFE ASSURANCE CORPORATION -- We are a stock life insurance company established under the laws of Ohio on June 26, 1979. We are owned by Ohio National Life. THE OHIO NATIONAL LIFE INSURANCE COMPANY ("Ohio National Life") -- a stock life insurance company organized in 1909 under the laws of Ohio. It currently has assets in excess of $7 billion. Ohio National Life is now a subsidiary of Ohio National Financial Services, Inc., which is a subsidiary of Ohio National Mutual Holdings, Inc. Ohio National Life continues to control us and the Ohio National Fund. While Ohio National Life's experienced personnel and facilities are available to assist in administering our flexible product program, its assets do not back your contract. OHIO NATIONAL VARIABLE ACCOUNT R ("VAR") -- established by us on May 6, 1985 as a means of offering the types of contract described in this prospectus. Net premiums allocated to VAR are segregated from our other assets and are protected from claims and liabilities arising from our other lines of business. Our general account assets, however, are available to support benefits under the contract. There is a separate subaccount within VAR corresponding to each of the Funds listed on pages 2 and 3. The assets of each are invested exclusively in shares of one of the Funds. THE FUNDS The operations of each Fund, its investment adviser and its investment objectives and policies are described in its prospectus. Net premiums under the contract may be allocated to the subaccounts of the variable account which invest exclusively in Fund shares. Accordingly, the accumulation values you allocate to the subaccounts will vary with the investment performance of the Funds. The value of each Fund's investments fluctuates daily and is subject to the risk of changing economic conditions as well as the risk inherent in the ability of management to anticipate changes necessary in those investments to meet changes in economic conditions. For additional information concerning each Fund, including their investment objectives, see the accompanying prospectuses. Read the prospectuses carefully before investing. DEATH BENEFITS You may select one of two death benefit plans -- the level plan (Plan A) or the variable plan (Plan B). With certain limitations, you may also change death benefit plans during the life of the contract. The death benefit under the level plan is the stated amount. The death benefit under the variable plan is the stated amount plus the accumulation value on the date of death of the second insured. Under either plan, we may be required to increase the death benefit to satisfy the corridor percentage test included in the Code's definition of a "life insurance contract." Generally, favorable investment performance is reflected in increased accumulation value under the level plan and in increased insurance coverage under the variable plan. The death benefit will never be less than the stated amount as long as the contract has a positive cash surrender value or the death benefit guarantee is in force. The death benefit will be paid upon the death of the second insured according to your beneficiary's instructions or, at your option, applied in whole or in part under one or more settlement options. After the first contract year you may increase or decrease your stated amount. You cannot decrease the stated amount below the minimum stated amount shown on the contract specification page. Any increase or decrease in the stated amount must equal at least $5,000 and an increase will require additional evidence of insurability of both insureds. No more than two changes in face amount are allowed in any contract year. Form 5741 8 11 The contract includes a death benefit guarantee. Under this provision, we guarantee that the death benefit during the death benefit guarantee period will not be less than the stated amount, provided you pay the minimum premium. Accordingly, adverse subaccount investment performance will not cause the contract to lapse as long as the death benefit guarantee is in effect. ACCUMULATION VALUE The accumulation value of your contract equals the sum of the accumulation values in the general account, the subaccounts of VAR and the loan collateral account. The general account accumulation value will reflect the amount and timing of net premiums allocated to the general account and interest thereon. The accumulation value in the variable subaccounts will reflect deductions for a risk charge, the amount and timing of net premiums allocated to such subaccounts and their investment experience. Such investment experience is not guaranteed. In addition, the subaccount and the general account accumulation values will be charged pro rata in connection with contract loans, partial surrenders and monthly deductions. The loan collateral account will reflect amounts borrowed against the loan value of the contract. Loans -- after the first contract year, you may borrow against the loan value of your contract. The loan value will never be less than 90% of your cash surrender value. Loan interest is payable in advance at a rate of 5.0% (an effective compound annual rate of 5.26%). Any outstanding contract indebtedness will be deducted from proceeds payable at the insured's death or upon maturity or surrender. Loan amounts and any unpaid interest thereon will be withdrawn pro rata from the variable subaccounts and the general account. Accumulation value in each subaccount equal to the contract indebtedness so withdrawn will be transferred to the loan collateral account. If loan interest is not paid when due, it becomes loan principal. Accumulation value held in the loan collateral account earns interest daily at an annual rate guaranteed to be at least 4%. A loan may be repaid in whole or in part at any time while the contract is in force. When a loan repayment is made, accumulation value securing contract indebtedness in the loan collateral account equal to the loan repayment will be allocated first to the general account until the amount borrowed has been replaced. The balance of the repayment will then be allocated to the general account and the variable subaccounts using the same percentages as then in effect to allocate net premiums. Surrender Privileges -- at any time you may surrender your contract in full and receive the proceeds. Your contract also gives you a partial surrender right. At any time after the first year from the issue date, you may withdraw part of your cash surrender value. Such withdrawals will reduce your contract's death benefit and may be subject to a surrender charge. Withholding Payment After Premium Payment -- We may withhold payment of any increased accumulation value or loan value resulting from a recent premium payment until your premium check has cleared. This could take up to 15 days after we receive your check. PREMIUMS An initial premium is required to purchase a contract. In addition, you must pay a minimum premium to keep the death benefit guarantee in effect. You must have paid, cumulatively, total premiums that equal or exceed the monthly minimum premium indicated on the contract specification page multiplied by the number of contract months the contract has been in effect. If you fail to meet this requirement, the death benefit guarantee is no longer in effect and may generally not be reinstated. The monthly minimum premium indicated on the contract specification page will remain a level amount until you reach the end of the death benefit guarantee period shown on the contract specification page. You choose this period from among the available periods. Currently there are 2 different periods available: 5 years or to maturity. Not all options are available in all states. We may, at our discretion, refuse to accept a premium payment of less than $25 or one that would cause the contract, without an increase in death benefit, to be disqualified as life insurance or to be treated as a modified Form 5741 9 12 endowment contract under federal law. Otherwise, the amount and timing of premium payments is left to your discretion. To aid you in formulating your insurance plan under the contract, you will adopt a planned premium schedule at the time of purchase indicating your intended level of payments. The planned premium will generally be an amount greater than your minimum premium and less than your guideline annual premium. You do not have to follow the planned premium, as it is only a planning device. Allocation of Premiums -- you may allocate your net premiums among up to 10 of the variable subaccounts and to the general account in any combination of whole percentages. You indicate your initial allocation in the contract application. Thereafter, you may transfer accumulation values and reallocate future premiums. Transfers -- we allow transfers of accumulation values among the subaccounts of VAR and to the general account at any time. Transfers from the general account to the subaccounts are subject to certain restrictions. Lapse -- provided you pay the minimum premiums required to maintain the death benefit guarantee, your contract will not lapse during the death benefit guarantee period. If you fail to pay the minimum premiums, the death benefit guarantee expires. Without the death benefit guarantee, the contract will remain in force as long as the cash surrender value less any outstanding contract indebtedness is sufficient to pay the next monthly deduction. When the cash surrender value will not pay the next monthly deduction, you will have a 61 day grace period in which to increase your cash surrender value by paying additional premiums. If you do not pay sufficient additional premiums during the grace period, the contract will lapse and terminate without value. Reinstatement -- once a contract has lapsed, you may request reinstatement of the contract any time within five years of the lapse. Satisfactory proof of insurability of both insureds payment of a reinstatement premium are required for reinstatement. Free Look -- following the initial purchase of your contract or any subsequent increase in the stated amount, you are entitled to a free look period. During the free look period, you may cancel the contract or increase, as applicable, and we will refund all the money you have paid. The free look period expires 20 days from your receipt of the contract or increase. CHARGES AND DEDUCTIONS We make charges against or deductions from premium payments, accumulation values and contract surrenders as follows: (a) from premiums we deduct a premium expense charge. The premium expense charge includes: - a 4.00% deduction from premium payments for 20 years. This charge compensates us for our sales and distribution expenses, including agents' commissions, advertising and printing, - a deduction for the state premium tax and any other state and local taxes applicable to your contract. Currently, state premium taxes vary from 0% to 4%; (b) against the accumulation value we make a monthly deduction covering: - the cost of insurance, - administrative expenses ($10), - the risk of providing the death benefit guarantee ($0.00 or $0.03 per thousand of stated amount, depending on the death benefit guarantee period you choose), and the cost of any optional insurance benefit added by rider; (c) against the assets of the variable subaccounts we assess a daily charge equal to an annualized rate of 0.75% of such assets to compensate us for assuming certain mortality and expense risks; and (d) from accumulation value we deduct surrender charges in the event of full surrender, certain partial surrenders and decreases in stated amount. Surrender charges vary based on your ages, sexes, underwriting Form 5741 10 13 classifications and the length of time you have held your policy. See the specification pages of your policy for more detailed information. The following table illustrates the maximum surrender charge per $1,000 of stated amount for a male and female insureds at the same age and rating classification. In no event will the surrender charge be more than $60 per $1,000 of stated amount. MAXIMUM SURRENDER CHARGE PER $1,000 OF STATED AMOUNT
AGE AND SEX SUPER PREFERRED SMOKER ----------- --------------- ------ Male 35; Female 35.......................................... $18.50 $20.05 Male 45; Female 45.......................................... 23.43 25.89 Male 55; Female 55.......................................... 31.91 35.72 Male 65; Female 65.......................................... 47.58 53.29 Male 75; Female 75.......................................... 56.44 56.09
(e) against the assets of each fund, the following management fees and other expenses:
TOTAL FUND EXPENSES TOTAL TOTAL FUND WITHOUT WAIVERS EXPENSES MANAGEMENT OTHER WAIVERS OR AND WITH WAIVERS FEES EXPENSES REDUCTIONS REDUCTIONS OR REDUCTIONS ---------- -------- ---------- ---------- ------------- OHIO NATIONAL FUND, INC.: Money Market.............................. 0.30% 0.11% 0.41% 0.05% 0.36% Equity.................................... 0.80% 0.12% 0.92% 0.00% 0.92% Bond...................................... 0.60% 0.17% 0.77% 0.00% 0.77% Omni...................................... 0.54% 0.13% 0.67% 0.00% 0.67% S&P 500 Index............................. 0.38% 0.11% 0.49% 0.00% 0.49% International............................. 0.90% 0.36% 1.26% 0.05% 1.21% International Small Company............... 1.00% 1.06% 2.06% 0.00% 2.06% Capital Appreciation...................... 0.80% 0.15% 0.95% 0.00% 0.95% Small Cap................................. 0.80% 0.09% 0.89% 0.00% 0.89% Aggressive Growth......................... 0.80% 0.15% 0.95% 0.00% 0.95% Growth & Income........................... 0.85% 0.10% 0.95% 0.00% 0.95% Capital Growth............................ 0.90% 0.19% 1.09% 0.00% 1.09% High Income Bond.......................... 0.75% 0.38% 1.13% 0.00% 1.13% Equity Income............................. 0.75% 0.53% 1.28% 0.00% 1.28% Blue Chip................................. 0.90% 0.45% 1.35% 0.00% 1.35% Core Growth............................... 0.95% 0.11% 1.06% 0.00% 1.06% Nasdaq 100 Index*......................... 0.75% 0.20% 0.95% 0.00% 0.95% GOLDMAN SACHS VARIABLE INSURANCE TRUST: Goldman Sachs Growth and Income........... 0.75% 0.47% 1.22% 0.22% 1.00% Goldman Sachs CORE U.S. Equity............ 0.70% 0.20% 0.90% 0.00% 0.90% Goldman Sachs Capital Growth.............. 0.75% 0.94% 1.69% 0.69% 1.00% JANUS ASPEN SERIES (SERVICE SHARES): Growth.................................... 0.65% 0.27% 0.92% 0.00% 0.92% Worldwide Growth.......................... 0.65% 0.30% 0.95% 0.00% 0.95% Balanced.................................. 0.65% 0.27% 0.92% 0.00% 0.92% LAZARD RETIREMENT SERIES, INC.: Small Cap................................. 0.75% 6.56% 7.31% 6.06% 1.25% Emerging Markets.......................... 1.00% 8.59% 9.59% 7.99% 1.60%
Form 5741 11 14
TOTAL FUND EXPENSES TOTAL TOTAL FUND WITHOUT WAIVERS EXPENSES MANAGEMENT OTHER WAIVERS OR AND WITH WAIVERS FEES EXPENSES REDUCTIONS REDUCTIONS OR REDUCTIONS ---------- -------- ---------- ---------- ------------- PBHG INSURANCE SERIES FUND, INC.: PBHG Technology & Communications.......... 0.85% 0.24% 1.09% 0.00% 1.09% STRONG VARIABLE INSURANCE FUNDS, INC.: Strong Mid Cap Growth II.................. 1.00% 0.17% 1.17% 0.02% 1.15% Strong Opportunity II..................... 1.00% 0.14% 1.14% 0.00% 1.14% Strong Schafer Value II................... 1.00% 0.57% 1.57% 0.37% 1.20% VARIABLE INSURANCE PRODUCTS FUND (FIDELITY): VIP Contrafund............................ 0.58% 0.37% 0.95% 0.00% 0.95% VIP Mid Cap............................... 0.57% 0.68% 1.25% 0.00% 1.25% VIP Growth................................ 0.58% 0.35% 0.93% 0.00% 0.93%
* charges for the Nasdaq 100 Index Portfolio are estimated. In addition to the foregoing charges and deductions, we assess the following three service charges: - for partial surrenders the lesser of $25 or 2% of the amount surrendered, - up to $15 (currently the charge is $3 and is waived on the first four transfers during any contract year) for transfers of accumulation value among the subaccounts and the general account and, - up to $100 (currently no charge is being made) for any special illustration of contract benefits that you may request. Currently we impose lesser charges for transfers and illustrations, but we only guarantee that such charges will never exceed the amounts stated above. We also reserve the right to assess the assets of each subaccount for any taxes payable by us on account of such assets. Certain expenses and an investment advisory fee will be assessed against Fund assets, as described in the Fund prospectuses. FEDERAL TAX MATTERS All death benefits paid under the contract will generally be excludable from the beneficiary's gross income for federal income tax purposes. Under current federal tax law, as long as the contract qualifies as a "life insurance contract", any increases in accumulation value attributable to favorable investment performance should accumulate on a tax deferred basis in the same manner as with traditional whole life insurance. Partial withdrawals and surrenders, however, may result in the taxation of the portion of such withdrawals or surrenders drawn from the increase in accumulation value resulting from favorable investment performance. If payments are made in excess of a rate that would pay up a contract after seven level annual payments, there may be taxation of, including a penalty tax on, portions of the proceeds of loans, withdrawals or surrenders. OHIO NATIONAL FINANCIAL SERVICES GROUP OHIO NATIONAL LIFE ASSURANCE CORPORATION We were established on June 26, 1979 under the laws of Ohio to facilitate the issuance of certain nonparticipating insurance policies. We are a wholly-owned stock subsidiary of Ohio National Life. We are licensed to sell life insurance in 47 states, the District of Columbia and Puerto Rico. THE OHIO NATIONAL LIFE INSURANCE COMPANY ("OHIO NATIONAL LIFE") Ohio National Life was organized under the laws of Ohio on September 9, 1909 as a stock life insurance company. Ohio National is now a subsidiary of Ohio National Financial Services, Inc., which is a subsidiary of Ohio National Mutual Holdings, Inc. It writes life, accident and health insurance and annuities in 47 states, the Form 5741 12 15 District of Columbia and Puerto Rico. Currently it has assets in excess of $7.5 billion and equity in excess of $710 million. Ohio National Life provided us with the initial capital to finance our operations. From time to time, Ohio National Life may make additional capital contributions, although it is under no legal obligation to do so and its assets do not support the benefits provided under your contract. OHIO NATIONAL VARIABLE ACCOUNT R ("VAR") We established VAR on May 6, 1985 pursuant to the insurance laws of the State of Ohio. VAR is registered with the Securities and Exchange Commission (the "Commission") under the Investment Company Act of 1940 ("1940 Act") as a unit investment trust. Such registration does not involve supervision by the Commission of the management or investment policies of the variable account or of us. Under Ohio law, VAR's assets are held exclusively for the benefit of contractowners and persons entitled to payments under the contract. VAR's assets are not chargeable with liabilities arising out of our other business. We keep VAR's assets physically segregated from assets of our general account. We maintain records of all purchases and redemptions of Fund shares by each of VAR's subaccounts. VAR has subaccounts corresponding to each of the Funds listed on pages 2 and 3. VAR may in the future add or delete investment subaccounts. Each investment subaccount will invest exclusively in shares representing interests in one of the Funds. The income and realized and unrealized gains or losses on the assets of each subaccount are credited to or charged against that subaccount without regard to income or gains or losses from any other subaccount. THE FUNDS The Funds are mutual funds registered under the Investment Company Act of 1940. Fund shares are sold only to insurance company separate accounts to fund variable annuity contracts and variable life insurance policies and, in some cases, to qualified plans. The value of each Fund's investments fluctuates daily and is subject to the risk that Fund management may not anticipate or make changes necessary in the investments to meet changes in economic conditions. The Funds receive investment advice from their investment advisers. The Funds pay each of the investment advisers a fee as described in the Fund prospectuses. In some cases, the investment adviser pays part of its fee to a subadviser. Affiliates of certain Funds may compensate us based upon a percentage of the Fund's average daily net assets that are allocated to VAR. These percentages vary by Fund. This is intended to compensate us for administrative and other services we provide to the Funds and their affiliates. For additional information concerning the Funds, including their investment objectives, see the Fund prospectuses. Read them carefully before investing. They may contain information about other funds that are not available as investment options for these contracts. You cannot be sure that any Fund will achieve its stated objectives and policies. The investment policies, objectives and/or names of some of the Funds may be similar to those of other investment companies managed by the same investment adviser or subadviser. However, similar funds often do not have comparable investment performance. The investment results of the Funds may be higher or lower than those of the other funds. MIXED AND SHARED FUNDING In addition to being offered to VAR, certain Fund shares are offered to Ohio National Life's separate accounts for variable annuity contracts. Fund shares may also be offered to other insurance company separate accounts and qualified plans. It is conceivable that in the future it may become disadvantageous for one or more of variable life Form 5741 13 16 and variable annuity separate accounts, or separate accounts of other life insurance companies, and qualified plans, to invest in Fund shares. Although neither we nor any of the Funds currently foresee any such disadvantage, the Board of Directors or Trustees of each Fund will monitor events to identify any material conflict among different types of owners and to determine if any action should be taken. That could possibly include the withdrawal of VAR's participation in a Fund. Material conflicts could result from such things as: - changes in state insurance law; - changes in federal income tax law; - changes in the investment management of any portfolio of one of the Funds, or - differences between voting instructions given by different types of contractowners. DEATH BENEFITS As long as the contract remains in force we will, upon receipt of due proof of the death of both insureds, pay the contract proceeds to the beneficiary. The contract does not pay a death benefit upon the death of the first insured. The amount of the death benefit payable will be determined as of the date of death of the second insured, or on the next following valuation date if the date of death is not a valuation date. Unless a settlement option is elected, the proceeds will be paid according to your beneficiary's selection from the settlement options listed in the contract. We offer both beneficiaries and contractowners a wide variety of settlement options listed in the contract. The contract provides for two death benefit plans: a level plan ("Plan A") and a variable plan ("Plan B"). Generally, you designate the death benefit plan in your contract application. Subject to certain restrictions, you may change the death benefit plan from time to time. As long as the contract remains in force, the death benefit under either plan will never be less than the stated amount of the contract. PLAN A -- LEVEL BENEFIT The death benefit is the greater of: - the contract's stated amount on the date of the death of the second insured or - the death benefit determined by the corridor percentage test. The death benefit determined by the corridor percentage test equals the accumulation value of the contract on the date of death of the second insured plus such accumulation value multiplied by the corridor percentage. The corridor percentage varies with attained age of the younger insured, as indicated in the following table:
CORRIDOR ATTAINED CORRIDOR ATTAINED CORRIDOR CORRIDOR ATTAINED AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE ATTAINED AGE PERCENTAGE ------------ ---------- -------- ---------- -------- ---------- ------------ ---------- 40 & below 150% 52 71 % 64 22 % 91 4 % 41 143 53 64 65 20 92 3 % 42 136 54 57 66 19 93 2 % 43 129 55 50 67 18 94 1 % 44 122 56 46 68 17 95 & above 0 % 45 115 57 42 69 16 46 109 58 38 70 15 47 103 59 34 71 13 48 97 60 30 72 11 49 91 61 28 73 9 50 85 62 26 74 7 51 78 63 24 75-90 5
Form 5741 14 17 Illustration of Plan A. Assume that the younger insured's attained age at time of the second insured's death is 40 and that the stated amount of the contract is $100,000. Under these circumstances, any time the accumulation value of the contract is less than $40,000, the death benefit will be the stated amount. However, any time the accumulation value exceeds $40,000, the death benefit will be greater than the contract's $100,000 stated amount due to the corridor percentage test. This is because the death benefit for the second insured who dies at the younger insured's age 40 must be at least equal to the accumulation value plus 150% of the accumulation value. Consequently, each additional dollar added to accumulation value above $40,000 will increase the death benefit by $2.50. Similarly, to the extent accumulation value exceeds $40,000, each dollar taken out of accumulation value will reduce the death benefit by $2.50. If, for example, the accumulation value is reduced from $48,000 to $40,000, the death benefit will be reduced from $120,000 to $100,000. However, further reductions in the accumulation value below the $40,000 level will not affect the death benefit so long as the reductions are due to performance. Reductions due to surrenders, loans and partial surrenders do affect the death benefit. In the foregoing example, the breakpoint of $40,000 of accumulation value for using the corridor percentage test to calculate the death benefit was determined by dividing the $100,000 stated amount by 100% plus 150% (the corridor percentage at age 40, as shown in the table above). For your contract, you may make the corresponding determination by dividing your stated amount by 100% plus the corridor percentage for the younger insured's age (see the table above). The calculation will yield a dollar amount which will be your breakpoint for using the corridor percentage test. If your accumulation value is greater than such dollar figure, your death benefit will be determined by the corridor percentage test. If it is less, your death benefit will be your stated amount. PLAN B -- VARIABLE BENEFIT The death benefit is equal to the greater of: - the stated amount plus the accumulation value on the date of death of the second insured or - the death benefit determined by the corridor percentage as described above and using the foregoing table of corridor percentages. Illustration of Plan B. Again assume that the younger insured's attained age at the time of the second insured's death is 40 and that the stated amount of the contract is $100,000. Under these circumstances, a contract with accumulation value of $20,000 will have a death benefit of $120,000 ($100,000 + $20,000). An accumulation value of $60,000 will yield a death benefit of $160,000 ($100,000 + $60,000). The death benefit under this illustration, however, must be at least equal to the accumulation value plus 150% of the contract's accumulation value. As a result, if the accumulation value of the contract exceeds $66,667, the death benefit will be greater than the stated amount plus accumulation value. Each additional dollar of accumulation value above $66,667 will increase the death benefit by $2.50. Under this illustration, a contract with an accumulation value of $80,000 will provide a death benefit of $200,000 ($80,000 + 150% (LOGO) $80,000). Similarly, to the extent that accumulation value exceeds $66,667, each dollar taken out of accumulation value reduces the death benefit by $2.50. If, for example, the accumulation value is reduced from $80,000 to $68,000, the death benefit will be reduced from $200,000 to $170,000. In the foregoing example, the breakpoint of $66,667 of accumulation value for using the corridor percentage test to calculate the death benefit was determined by dividing the $100,000 stated amount by 150% (the corridor percentage at age 40, as shown in the table above). For your contract, you may make the corresponding determination by dividing your stated amount by the corridor percentage for the younger insured's age (see the table above). The calculation will yield a dollar amount which will be your breakpoint for using the corridor percentage test. If your accumulation value is greater than such dollar figure, your death benefit will be Form 5741 15 18 determined by the corridor percentage test. If it is less, your death benefit will be your stated amount plus your accumulation value. CHANGE IN DEATH BENEFIT PLAN Generally, after the first contract year, you may change your death benefit plan on any process day by sending us a written request. Changing death benefit plans from Plan B to Plan A will not require evidence of insurability. Changing death benefit plans from Plan A to Plan B may require evidence of insurability. The effective date of any such change will be the process day on or following the date of receipt of your request. As a general rule, when you wish to have favorable investment performance reflected in higher accumulation value, you should elect the Plan A death benefit. Conversely, when you wish to have favorable investment performance reflected in increased insurance coverage, you should generally elect the Plan B death benefit. If you change your death benefit plan from Plan B to Plan A, your stated amount will be increased by the amount of your accumulation value to equal the death benefit which would have been payable under Plan B on the effective date of the change. For example, a Plan B contract with a $100,000 stated amount and $20,000 accumulation value ($120,000 death benefit) would be converted to a Plan A contract with $120,000 stated amount. Again, the death benefit would remain the same on the effective date of the change. A change in the death benefit option will not alter the amount of the accumulation value or the death benefit payable under the contract on the effective date of the change. However, switching between the variable and the level plans will alter your insurance program with consequent effects on the level of your future death benefits, accumulation values and premiums. For a given stated amount, the death benefit will be greater under Plan B than under Plan A, but the monthly deduction will be greater under Plan B than under Plan A. Furthermore, assuming your accumulation value continues to increase, your future cost of insurance charges will be higher after a change from Plan A to Plan B and lower after a change from Plan B to Plan A. If your accumulation value decreases in the future, the opposite will be true. Changes in the cost of insurance charges have no effect on your death benefit under Plan A. Under Plan B, however, increased cost of insurance charges will reduce the future accumulation value and death benefit to less than they otherwise would be. DEATH BENEFIT GUARANTEE We guarantee that the contract will not lapse during the death benefit guarantee period provided you pay the minimum premium. (See "Premiums -- Minimum Premiums.") Accordingly, as long as the death benefit guarantee is in effect, the contract will not lapse even if, because of adverse investment performance, the cash surrender value falls below the amount needed to pay the next monthly deduction. A charge per $1,000 of stated amount will be made for each month the death benefit guarantee is in effect. The charge is $0.00 if you choose a 5 year guarantee or $0.03 if you choose the guarantee to maturity. (Only the 5 year guarantee is available in Massachusetts and Texas.) If on any process day the minimum premium requirement is not met, we will send you a notice of the required payment. If we do not receive the required payment within 61 days of the date of the mailing of such notice, the death benefit guarantee will no longer be in effect. Generally, the death benefit guarantee may not be reinstated once it has been lost. However, we may at our discretion permit you to reinstate the death benefit guarantee if you: - double your stated amount or - increase your stated amount by $100,000 or more. A new minimum premium will be required to maintain the reinstated death benefit guarantee. Form 5741 16 19 CHANGES IN STATED AMOUNT Subject to certain limitations, you may at any time after the first contract year increase or decrease your stated amount by sending us a written request. We may limit you to two such changes in each contract year. Any change must be of at least $5,000. The effective date of the increase or decrease will be the process day on or following approval of the request. A change in stated amount will affect the monthly insurance charges and surrender charges. Increases. An increase is treated in a similar manner to the purchase of a new contract. To obtain an increase, you must both be alive and must submit a supplemental application to us with satisfactory proof of insurability of both insureds. Depending on your accumulation value, you may or may not have to pay additional premiums to obtain an increase. If you must pay an additional premium, we must receive it by the effective date of the increase. After an increase, a portion of premium payments will be allocated to such increase. The amount so allocated will bear the same relationship to total premium payments as the guideline annual premium for such increase bears to the guideline annual premium for your initial stated amount plus the guideline annual premiums for all increases. Only the increase in stated amount will be subject to the additional surrender charge. With respect to premiums allocated to an increase, you will have the same free look and conversion rights with respect to an increase as with the initial purchase of your contract. Decreases. You may decrease your stated amount after the first year from the issue date or the date of any increase, subject to the following limitations: - The stated amount after any requested decrease may not be less than the minimum stated amount of $100,000. - We will not permit a decrease in stated amount if the contract's cash value is such that reducing the stated amount would cause the death benefit after the decrease to be determined by the corridor percentage test. - We will not permit a decrease in stated amount if the decrease would disqualify the contract as life insurance under the Code. If you decrease your stated amount, we will deduct any applicable surrender charge from your accumulation value. For purposes of calculating the amount of that surrender charge and the cost of insurance charge on your remaining coverage, a decrease in stated amount will reduce your existing stated amount in the following order: - the stated amount provided by your most recent increase, - your next most recent increases successively, and - your initial stated amount. ACCUMULATION VALUE Your contract provides certain accumulation value benefits. Subject to certain limitations, you may obtain access to the accumulation value of your contract. You may borrow against your contract's loan value and you may surrender your contract in whole or in part. The accumulation value of your contract is the sum of the accumulation values in the subaccounts, the general account and the loan collateral account. The following discussion relates only to the variable subaccounts of VAR. The general account and the loan collateral account are discussed elsewhere in this prospectus. Form 5741 17 20 DETERMINATION OF VARIABLE ACCUMULATION VALUES Your accumulation value in VAR may increase or decrease depending on the investment performance of the subaccounts you choose. There is no guaranteed minimum accumulation value in VAR. The accumulation value of your contract will be calculated initially on the later of the issue date or when we first receive a premium payment. After that, it is calculated on each valuation date. On the initial valuation date, your accumulation value will equal the initial premium paid minus the premium expense charge and the first monthly deduction. On each subsequent valuation date, your accumulation value will be (1) plus any transactions referred to in (2), (3) and (4) and minus any transactions referred to in (5), (6) and (7) which occur during the current valuation period, where: (1) is the sum of each subaccount's accumulation value as of the previous valuation date multiplied by each subaccount's net investment factor for the current valuation period; (2) is net premiums allocated to VAR; (3) is transfers from the loan collateral account as a result of loan repayments and reallocations of accumulation value from the general account; (4) is interest on contract indebtedness credited to the variable subaccounts; (5) is transfers to the loan collateral account in connection with contract loans and reallocations of accumulation value to the general account; (6) is any partial surrender made (and any surrender charge imposed); and (7) is the monthly deduction. ACCUMULATION UNIT VALUES We use accumulation units as a measure of value for bookkeeping purposes. When you allocate net premiums to a subaccount, we credit your contract with accumulation units. In addition, other transactions, including loans, partial and full surrenders, transfers, surrender and service charges, and monthly deductions, affect the number of accumulation units credited to your contract. The number of units credited or debited in connection with any such transaction is determined by dividing the dollar amount of such transaction by the unit value of the affected subaccount. We determine the unit value of each subaccount on each valuation date. The number of units so credited or debited will be based on the unit value on the valuation date on which the premium payment or transaction request is received by us at our home office. The number of units credited will not change because of subsequent changes in unit value. The dollar value of each subaccount's units will reflect asset charges and the investment performance of the corresponding portfolio of the Funds. The accumulation unit value of each subaccount's unit initially was $10. The unit value of a subaccount on any valuation date is calculated by multiplying the subaccount unit value on the previous valuation date by its net investment factor for the current valuation period. NET INVESTMENT FACTOR We use a net investment factor to measure investment performance of each subaccount and to determine changes in unit value from one valuation period to the next. The net investment factor for a valuation period is (a) divided by (b) minus (c) where: (a) is (i) the value of the assets of the subaccount at the end of the preceding valuation period, plus (ii) the investment income and capital gains, realized or unrealized, credited to the assets of the subaccount during the valuation period for which the net investment factor is being determined, minus, (iii) any Form 5741 18 21 amount charged against the subaccount for taxes or any amount set aside during the valuation period by us to provide for taxes we determine are attributable to the operation or maintenance of that subaccount (currently there are no such taxes); (b) is the value of the assets of the subaccount at the end of the preceding valuation period; and (c) is a charge no greater than 0.0020626% on a daily basis. This corresponds to 0.75% on an annual basis for mortality and expense risks. LOANS After the first contract year, you may borrow up to the loan value of your contract. The loan value is the cash surrender value less the cost of insurance charges on your contract to the end of the current contract year. The loan value will never be less than 90% of the cash surrender value. We will generally distribute the loan proceeds to you within seven days from receipt of your request for the loan at our home office, although payment of the proceeds may be postponed under certain circumstances. (See "General Provisions -- Postponement of Payments".) In some circumstances, loans may involve tax liability. (See "Federal Tax Matters".) When a loan is made, accumulation value in an amount equal to the loan will be taken from the general account and each subaccount in proportion to your accumulation value in the general account and each subaccount. This value is then held in the loan collateral account and earns interest at an effective rate guaranteed to be at least 4% per year. Such interest is credited to the subaccounts and the general account in accordance with the premium allocation then in effect. We charge interest on loans in advance each year at a rate of 7.4% per year, equivalent to an effective annual rate of 8%. When we make a loan, we add to the amount of the loan the interest covering the period until the end of the contract year. At the beginning of each subsequent contract year, if you fail to pay the interest in cash, we will transfer sufficient accumulation value from the general account and each subaccount to pay the interest for the following contract year. The allocation will be in proportion to your accumulation value in each subaccount. You may repay a loan at any time, in whole or in part, before we pay the contract proceeds. When you repay a loan, interest already charged covering any period after the repayment will reduce the amount necessary to repay the loan. Premiums paid in excess of any planned premiums when there is a loan outstanding will be first applied to reduce or repay such loan, unless you request otherwise. Upon repayment of a loan, the loan collateral account will be reduced by the amount of the repayment and the repayment will be allocated first to the general account, until the amount borrowed from the general account has been repaid. Unless we are instructed otherwise, the balance of the repayment will then be applied to the subaccounts and the general account according to the premium allocation then in effect. Any outstanding contract indebtedness will be subtracted from the proceeds payable at the second insured's death and from cash surrender value upon complete surrender or maturity. A loan, whether or not repaid, will have a permanent effect on a contract's cash surrender value (and the death benefit under Plan B contracts) because the investment results of the subaccounts will apply only to the amount remaining in the subaccounts. The longer the loan is outstanding, the greater the effect is likely to be. The effect could be favorable or unfavorable. If investment results are greater than the rate being credited upon the amount of the loan while the loan is outstanding, contract values will not increase as rapidly as they would have if no loan had been made. If investment results are below that rate, contract values will be higher than they would have been had no loan been made. Certain policy loans may result in currently taxable income and tax penalties. If you are considering the use of policy loans as retirement income, you should consult your personal tax adviser regarding potential tax Form 5741 19 22 consequences that may arise if you do not make necessary payments to keep the policy from lapsing. The amount of the premium payments necessary to keep the policy from lapsing will increase with your age. SURRENDER PRIVILEGES As an alternative to obtaining access to your accumulation value by using the loan provisions described above, you may obtain your cash surrender value by exercising your surrender or partial surrender privileges. Surrenders, however, may involve tax liability. You may surrender your contract in full at any time by sending a written request together with the contract to our home office. The cash surrender value of the contract equals the accumulation value less any applicable surrender charges. Upon surrender, the amount of any outstanding loans will be deducted from the cash surrender value to determine the proceeds. The proceeds will be determined on the valuation date on which the request for a surrender is received. Proceeds will generally be paid within seven days of receipt of a request for surrender. After the first year after the issue date, you may obtain a portion of your accumulation value upon partial surrender of the contract. Partial surrenders cannot be made more than twice during any contract year. The amount of any partial surrender may not exceed the cash surrender value, minus: - any outstanding contract indebtedness, - an amount sufficient to cover the next two monthly deductions and - the service charge of $25 or 2% of the amount surrendered, if less. We will reduce the accumulation value of your contract by the amount of any partial surrender. In doing so, we will deduct the accumulation value taken by a partial surrender from each increase and your initial stated amount in proportion to the amount such increases and initial stated amount bear to the total stated amount. Under Plan A, a partial surrender reduces your stated amount. Such a surrender will result in a dollar for dollar reduction in the death proceeds except when the death proceeds of your contract are determined by the corridor percentage test. The stated amount remaining after a partial surrender may be no less than the minimum stated amount of $100,000. If increases in stated amount have occurred previously, a partial surrender will first reduce the stated amount of the most recent increase, then the next most recent increases successively, then the initial stated amount. Under Plan B, a partial surrender reduces your accumulation value. Such a reduction will result in a dollar for dollar reduction in the death proceeds except when the death proceeds are determined by the corridor percentage test. Because the Plan B death benefit is the sum of the accumulation value and stated amount, a partial surrender under Plan B does not reduce your stated amount but instead reduces accumulation value. If the proceeds payable under either death benefit option both before and after the partial surrender are determined by the corridor percentage test, a partial surrender generally will result in a reduction in proceeds equal to the amount paid upon such surrender plus such amount multiplied by the applicable corridor percentage. During the first 25 contract years and for 25 years after the effective date of an increase, a partial surrender charge in addition to the service charge of the lesser of $25 or 2% of the amount surrendered will be made on the amount of partial surrenders in any contract year that exceeds 10% of the cash surrender value as of the end of the previous contract year. MATURITY We will pay you your accumulation value, reduced by any outstanding contract indebtedness, on the maturity date. The maturity date is listed on the specification page and is generally the end of the contract year nearest the Form 5741 20 23 100th birthday of the youngest insured. If we consent, you may instead continue your contract as an extended endowment after the maturity date. In such case, the death benefit after the maturity date will equal your contract's cash surrender value. PREMIUMS PURCHASING A CONTRACT To purchase a contract, you must complete an application and submit it to us at our home office through the agent selling the contract. Generally, we will not issue a contract to a person older than age 80, but we may do so at our sole discretion. Typically if one (but not both) of the insureds is over 80, but not over 85, we will issue the contract, based on insurability. Non-smoker rates are available if you are age 18 or over. We will only issue contracts with stated amounts of $100,000 or more. All applications require evidence of insurability. Acceptance of any application is subject to our insurance underwriting rules. The review period for routine applications will generally last one week. Approval of applications that require supplemental medical information, however, may be delayed six weeks or more while such information is obtained and reviewed. You must pay an initial premium in order for your contract to take effect. The contract takes effect as of the contract date. However, if you pay the initial premium at the time you submit your application, we will, pursuant to the Limited Temporary Life Insurance Agreement contained in such application, provide you with insurance coverage equal to your stated amount (up to $1,000,000) for a period of up to 60 days, starting on the later of the date of your application and the date you complete any required medical examination and ending on the date we approve or reject your application. We do not pay interest on initial premiums during the review period. The contract date will be the same as the issue date, except in the case of a backdated contract where the contract date will be earlier than the issue date. At your request, we will backdate a contract as much as six months where permitted by state law. This procedure may be to your advantage where backdating will lower your age at issue and thereby lower your cost of insurance and surrender charges which are scaled by age. A backdated contract will be treated as though it had been in force since the contract date. Consequently, the initial premium required for a backdated contract will be larger than for a contract which is not backdated because you must pay the minimum premium, pay monthly deductions and pay all other charges associated with the contract for the period between the contract date and the issue date. On the later of the issue date and the date we receive your initial premium, net premiums are allocated to the Money Market subaccount. On the first process day following the issue date or, if later, when we receive your initial premium, such net premiums will be allocated among the subaccounts and the general account in accordance with your instructions as indicated in your application. If we reject your application during the review period or you choose to cancel your contract during the free look period, we will refund to you all amounts you have paid under the contract. PAYMENT OF PREMIUMS We allocate premium payments to the various subaccounts the same day if received by us at our home office before 4:00 p.m. Eastern time. If a premium payment is dishonored, you will be liable to us for any changes in the market value between the date received and the date we are notified that the payment was dishonored. We will deduct any amount due for this reason from your contract value. Unlike a traditional insurance policy, the contract does not require a fixed schedule of premium payments. Within certain limits, you may determine the amount and timing of your premium payments. As described below, such limits include an initial premium requirement and a minimum premium requirement. Your contract specification page will also include a schedule of planned premiums. Form 5741 21 24 INITIAL PREMIUMS You must pay an initial premium before we will make your contract effective. This premium may be submitted with your contract application or sent directly to us at our home office. The amount of the initial premium will be at least one monthly minimum premium. The initial premium for a backdated contract may be substantially greater. TERM INSURANCE CONVERSION CREDIT We will apply a term insurance conversion credit as premium paid in the first contract year. The conversion credit is based on (but not necessarily equal to) the amount of annual premium for the Ohio National Life Assurance Corporation term life insurance policy being converted to, or exchanged for, the new contract. Consult your agent for details. MINIMUM PREMIUMS You must pay the minimum premium to keep the death benefit guarantee in effect. Failure to make premium payments sufficient to maintain the death benefit guarantee will not necessarily cause your contract to lapse. However, once the death benefit guarantee does not apply to your contract, it may not be reinstated. The monthly deduction for the death benefit guarantee will not be imposed on contracts for which the death benefit guarantee is no longer in effect. To pay the minimum premium, you must have paid at any time cumulative premiums, less any partial surrenders and contract indebtedness, equal to the monthly minimum premium multiplied by the number of contract months the contract has been in effect. The monthly minimum premium indicated on the contract specification page will remain a level amount until the end of the death benefit guarantee period. PLANNED PREMIUMS When you purchase a contract, you will be asked to adopt a planned premium schedule. The schedule is a planning device which indicates the level of premiums you intend to pay under the contract. You are not required to adhere to it. You may adopt, in consultation with your agent, any planned premium schedule that you wish. The amount of scheduled payments, however, should generally be set between the minimum premium necessary to keep the death benefit guarantee in effect and the maximum premium permitted for your contract to qualify as life insurance under the Code. The guideline annual premium is a level amount which should provide the benefits under the contract through age 100 of the youngest insured and is based on guaranteed assumptions with respect to expenses and cost of insurance charges and investment performance of 4%. In choosing your planned premium schedule, you will need to make a judgment as to the long-term rate of investment return which you expect under the contract. The higher your assumption as to the long-term rate of investment return, the lower your planned premium needs to be for a given insurance objective, and vice versa. There is no assurance that your planned premiums will provide the death proceeds or other benefits sought under the contract. By definition, the value of such benefits depends on the investment performance of the subaccounts which cannot be predicted. In any event, you may need to pay greater or lesser premiums than are indicated in the planned premium schedule to attain your insurance objectives. We will furnish you an annual report which will show personalized hypothetical illustrations of your contract values under various performance scenarios and assumed rates of return one year from the date of the report based on planned premiums, guaranteed cost of insurance and guaranteed interest with respect to the general account. We may charge for this report. As previously indicated, at any time you may pay more or less than the amount indicated in the planned premium schedule. We may at our discretion, however, refuse to accept any premium payment of less than $25 or Form 5741 22 25 so large that it would cause the contract, without an increase in death benefit, to be disqualified as life insurance or to be treated as a modified endowment contract under federal law. ALLOCATION OF PREMIUMS In the contract application, you may direct the allocation of your net premium payments among up to 10 of the subaccounts of VAR and the general account. Your initial allocation will take effect on the first process day following the issue date or, if later, when we receive your initial premium payment. Pending such allocation, net premiums will be held in the Money Market subaccount. If you fail to indicate an allocation in your contract application, we will leave your net premiums in the Money Market subaccount until we receive allocation instructions. The amount allocated to any subaccount or the general account must equal a whole percentage. You may change the allocation of your future net premiums at any time upon written notice to us. Premiums allocated to an increase will be credited to the subaccounts and the general account in accordance with your premium allocation then in effect on the later of the date of the increase or the date we receive such a premium. TRANSFERS You may transfer the accumulation value of your contract among the subaccounts of VAR and to the general account at any time. Each amount transferred must be at least $300 unless a smaller amount constitutes the entire accumulation value of the subaccount from which the transfer is being made, in which case you may only transfer the entire amount. There is a service charge of $3 for each transfer, but we are presently waiving that charge for the first four transfers during a contract year. Such fee is guaranteed not to exceed $15 in the future. Transfers from the general account to the subaccounts are subject to additional restrictions. No more than 25% of the accumulation value in the general account as of the end of the previous contract year, or $1,000, if greater, may be transferred to one or more of the subaccounts in any contract year. To the extent that transfers, surrenders and loans from a subaccount exceed net purchase payments and transfers into that subaccount, securities of the corresponding portfolio of the Fund may have to be sold. Excessive sales of a portfolio's securities on short notice could be detrimental to that portfolio and to contractowners with values allocated to the corresponding subaccount. To protect the interests of all contractowners we may limit the number, frequency, method or amount of transfers. Transfers from any Fund on any one day may be limited to 1% of the previous day's total net assets of that Fund if we or the Fund, in our or their discretion, believe that the Fund might otherwise be damaged. If and when transfers must be so limited, some transfer requests will not be made. In determining which requests will be made, scheduled transfers (pursuant to a preexisting Dollar Cost Averaging program) will be made first, followed by mailed written requests in the order postmarked and, lastly, telephone and facsimile requests in the order received. If your transfer requests are not made, we will notify you. Current rules of the Commission preclude us from processing at a later date those requests that were not made. Accordingly, a new transfer request would have to be submitted in order to make a transfer that was not made because of these limitations. DOLLAR COST AVERAGING We administer a Dollar Cost Averaging ("DCA") program enabling you to preauthorize automatic monthly or quarterly transfers of a specified dollar amount: - from any variable subaccount to any of the other subaccounts or the general account, or - if established at the time the contract is issued and limited to accumulation values attributed to your initial premium payment, from the general account to any other subaccounts. Form 5741 23 26 The DCA program is only available on contracts having a total accumulation value of at least $10,000. Each transfer under the DCA program must be at least $300, and at least 12 transfers must be scheduled. No transfer fee will be charged for DCA transfers. We may discontinue the DCA program at any time. DCA generally has the effect of reducing the risk of purchasing at the top of a market cycle by reducing the average cost of indirectly purchasing Fund shares through the subaccounts to less than the average price of the shares on the same purchase dates. This is because greater numbers of shares are purchased when the share prices are lower than when prices are higher. However, DCA does not assure you of a profit, nor does it protect against losses in a declining market. In addition, in a rising market, DCA will produce a lower rate of return than will a single up-front investment. Moreover, for transfers from a subaccount not having a stabilized net asset value, DCA will have the effect of reducing the average price of shares being redeemed. TELEACCESS If you give us a pre-authorization form, contract and unit values and interest rates can be checked and transfers may be made by telephoning us between 7:00 a.m. and 7:00 p.m. (Eastern time) on days we are open for business, at 1-800-366-6654, #8. You may only make one telephone transfer per day. We will honor pre-authorized telephone transfer instructions from anyone who provides the personal identifying information requested via TeleAccess. We will not honor telephone transfer requests after the contractowner's death. For added security, we send the contractowner a written confirmation of all telephone transfers on the next business day. However, if we cannot complete a transfer as requested, our customer service representative will contact the contractowner in writing sent within 48 hours of the TeleAccess request. YOU MAY THINK THAT YOU HAVE LIMITED THIS ACCESS TO YOURSELF, OR TO YOURSELF AND YOUR REPRESENTATIVE. HOWEVER, ANYONE GIVING US THE NECESSARY IDENTIFYING INFORMATION CAN USE TELEACCESS ONCE YOU AUTHORIZE ITS USE. LAPSE Provided you pay the minimum premium and thereby keep the death benefit guarantee in effect, your contract will not lapse during the death benefit guarantee period. If you fail to pay the minimum premium and, as a result, the death benefit guarantee is not in effect, the contract will remain in force as long as the cash surrender value less any contract indebtedness is sufficient to pay the next monthly deduction. If the cash surrender value less any contract indebtedness is insufficient to pay the next monthly deduction, you will be given a 61 day grace period within which to make a premium payment to avoid lapse. The premium required to avoid lapse will be equal to the amount needed to allow the cash surrender value less any contract indebtedness to cover the monthly deduction for two contract months. This required premium will be indicated in a written notice which we will send to you at the beginning of the grace period. The grace period begins when we mail the notice. The contract will continue in force throughout the grace period, but if the required premium is not received, the contract will terminate without value at the end of the grace period. If you die during the grace period, the death benefit will be reduced by the amount of any unpaid monthly deduction. However, the contract will never lapse due to insufficient cash surrender value as long as the death benefit guarantee is in effect. REINSTATEMENT If the contract lapses, you may apply for reinstatement anytime within five years. Your contract will be reinstated if you supply proof of insurability and pay the monthly cost of insurance charges from the grace period plus a reinstatement premium. The reinstatement premium, after deduction of the premium expense charge, must be sufficient to cover the monthly deduction for two contract months following the effective date of reinstatement. If a loan was outstanding at the time of lapse, we will require reinstatement or repayment of the loan and accrued interest at 6% per year before permitting reinstatement of the contract. Form 5741 24 27 CONVERSION Once during the first two years following the issue date and the date of any increase in stated amount, you may convert your contract or increase, as applicable, to a fixed benefit last survivor flexible premium life insurance policy by transferring all of your accumulation value to the general account. After such a transfer, values and death benefits under your contract will be determinable and guaranteed. Accumulation values will be determined as of the date we receive a conversion request at our home office. There will be no change in stated amount as a result of the conversion and no evidence of insurability is required. Outstanding loans need not be repaid in order to convert your contract. Transfers of accumulation value to the general account in connection with such a conversion will be made without charge. FREE LOOK You have a limited right to cancel your contract or any increase in stated amount. We will cancel the contract or increase if you notify us or our agent before 20 days from the date you receive the contract or increase. Within seven days after we receive your notice to cancel, we will return all of the money you paid for the cancelled contract or increase. CHARGES AND DEDUCTIONS We make charges against or deductions from premium payments, accumulation values and contract surrenders in the manner described below. PREMIUM EXPENSE CHARGE Each premium payment is subject to a premium expense charge. The premium expense charge has two components: a federal tax charge and a charge for the state premium tax and any other state and local taxes applicable to your contract. Distribution Charge. The contract is subject to a charge of 4% of premiums paid in the first 20 years. This charge is intended to help defray the distribution cost attributable to this contract. State Premium Tax. Your premium payments will be subject to the state premium tax and any other state or local taxes applicable to your contract. Currently, most state premium taxes range from 0% to 4%. OHIO NATIONAL LIFE EMPLOYEE DISCOUNT Ohio National Life and its affiliated companies offer a credit on the purchase of contracts by any of their employees, directors or retirees, or their spouse or the surviving spouse of a deceased retiree, covering any of the foregoing or any of their minor children, or any of their children ages 18 to 21 who is either (i) living in the purchaser's household or (ii) a full-time college student being supported by the purchaser, or any of the purchaser's minor grandchildren under the Uniform Gifts to Minors Act. This credit is treated as additional premium under the contract. The amount of the initial credit equals 40% of the first contract year's maximum commissionable premium or 40% of the maximum commissionable premium of an increase, which is credited to the general account of the employee's contract effective one day after the latest of the following three dates: - the policy approval date, - the policy effective date, or - the date the initial payment is received. Form 5741 25 28 The subsequent credit, which is based on 3.5% of first year premium in excess of the maximum commissionable premium plus 3.5% of premiums paid in contract years two through six, is credited to the general account of the employee's contract at the beginning of the seventh contract year. For any increase that occurs during the first six contract years, the 40% initial credit on the increase described above substitutes for the 3.5% subsequent credit on that portion of the premium attributable to the increase. MONTHLY DEDUCTION As of the contract date and each subsequent process day, we will deduct from the accumulation value of your contract a monthly deduction to cover certain charges and expenses incurred in connection with the contract. The monthly deduction consists of: - the cost of insurance, - an administration charge of $10 for the cost of establishing and maintaining contract records and processing applications and notices, - a monthly charge per $1,000 of stated amount to compensate us for underwriting costs. - a risk charge for the risk associated with the death benefit guarantee, and - the cost of additional insurance benefits provided by rider. Your cost of insurance is determined on a monthly basis, and is determined separately for your initial stated amount and each subsequent increase in the stated amount. The monthly cost of insurance rate is based on your sexes, attained ages, and rate classifications. The cost of insurance is calculated by multiplying (i) by the result of (ii) minus (iii), where: (i) is the cost of insurance rate as described in the contract. Such actual cost will be based on our expectations as to future mortality experience. It will not, however, be greater than the guaranteed cost of insurance rates set forth in the contract. Such rates for smokers and non-smokers are based on the 1980 Commissioner's Standard Ordinary, Male or Female, Smoker or Nonsmoker, mortality table age near birthday. The cost of insurance charge is guaranteed not to exceed such table rates for the insured's risk class; (ii) is the death benefit at the beginning of the contract month divided by 1.0032737; and (iii) is accumulation value at the beginning of the contract month. In connection with certain employer-related plans, cost of insurance rates may not be based on sex. The monthly charge per $1,000 of stated amount is based on the age of the younger insured. It is:
ISSUE AGE OF THE LOAD PER $1,000 OF YOUNGER INSURED STATED AMOUNT ---------------- ------------------ 18-35 $0.033 36-74 $0.035 75+ $0.050
The monthly charge for the death benefit guarantee is $0.00, or $0.03 per $1,000 of your stated amount, depending upon which death benefit guarantee period you choose. RISK CHARGE Your accumulation value in VAR, but not your accumulation value in the general account, will also be subject to a risk charge intended to compensate us for assuming certain mortality and expense risks in connection with the contract. Such charge will be assessed at a daily rate of 0.0020471% against each of the variable subaccounts. This Form 5741 26 29 corresponds to an annual rate of 0.75%. The risks we assume include the risks of greater than anticipated mortality and expenses. SURRENDER CHARGE After the free look period and during the first 25 years of your contract and following any increase in stated amount, a surrender charge is assessed in connection with all complete surrenders, all lapses, all decreases in stated amount and certain partial surrenders. Surrender charges vary depending on your ages, sexes, underwriting, classifications and the length of time you have held your policy. See the specification page of your policy for more detailed information. If you surrender your contract in full or it lapses when a surrender charge applies, we will deduct the total charge from your accumulation value. If you decrease the stated amount of your contract while a surrender charge applies, your accumulation value will be charged with the portion of the total surrender charge attributable to the stated amount cancelled by the decrease. Partial surrenders in any contract year totaling 10% or less of the cash surrender value of your contract as of the end of the previous contract year are not subject to any surrender charge. Partial surrenders in any contract year in excess of 10% of the cash surrender value of your contract as of the end of the previous contract year will be subject to that percentage of the total surrender charges that is equal to the percentage of cash surrender value withdrawn minus 10%. For example, assume a contract which now has, and at the end of the previous contract year had, an accumulation value of $11,100 and a surrender charge of $1,100. The cash surrender value of the contract is therefore $10,000. If you decide to withdraw 25% of such cash surrender value ($2,500), we will impose a charge equal to 15% (25% minus 10%) of the total surrender charge (.15 x $1,100 = $165) and reduce your accumulation value by that amount, as well as by the $2,500 you withdrew. SERVICE CHARGES A charge (currently $3 and guaranteed not to exceed $15) will be imposed on each transfer of accumulation values among the subaccounts of the variable account and the general account. Currently, the Company is not assessing this charge on the first four transfers made in any contract year. For partial surrenders, a service fee will be charged equal to the lesser of $25 or 2% of the amount surrendered. A fee, not to exceed $100, is charged for any illustration of benefits and values that you may request after the issue date. OTHER CHARGES We may also charge the assets of each subaccount and the general account to provide for any taxes that may become payable by us in respect of such assets. Under current law, no such taxes are anticipated. In addition, the Funds pay certain expenses that affect the value of your contract. The principal expenses at the Fund level are an investment advisory fee and Fund operating expenses. The Funds pay their Advisers annual fees on the basis of each portfolio's average daily net assets during the month for which the fees are paid. The fees are described in the Fund prospectuses. Form 5741 27 30 The total expenses of each of the Funds in 1999, as a percent of each Fund's net assets, were:
TOTAL FUND EXPENSES TOTAL TOTAL FUND WITHOUT WAIVERS EXPENSES MANAGEMENT OTHER WAIVERS OR AND WITH WAIVERS FEES EXPENSES REDUCTIONS REDUCTIONS* OR REDUCTIONS ---------- -------- ---------- ----------- ------------- OHIO NATIONAL FUND, INC.: Money Market*............................ 0.30% 0.11% 0.41% 0.05% 0.36% Equity................................... 0.80% 0.12% 0.92% 0.00% 0.92% Bond..................................... 0.60% 0.17% 0.77% 0.00% 0.77% Omni..................................... 0.54% 0.13% 0.67% 0.00% 0.67% S&P 500 Index............................ 0.38% 0.11% 0.49% 0.00% 0.49% International*........................... 0.90% 0.36% 1.26% 0.05% 1.21% International Small Company.............. 1.00% 1.06% 2.06% 0.00% 2.06% Capital Appreciation..................... 0.80% 0.15% 0.95% 0.00% 0.95% Small Cap................................ 0.80% 0.09% 0.89% 0.00% 0.89% Aggressive Growth........................ 0.80% 0.15% 0.95% 0.00% 0.95% Growth & Income.......................... 0.85% 0.10% 0.95% 0.00% 0.95% Capital Growth........................... 0.90% 0.19% 1.09% 0.00% 1.09% High Income Bond......................... 0.75% 0.38% 1.13% 0.00% 1.13% Equity Income............................ 0.75% 0.53% 1.28% 0.00% 1.28% Blue Chip................................ 0.90% 0.45% 1.35% 0.00% 1.35% Core Growth.............................. 0.95% 0.11% 1.06% 0.00% 1.06% Nasdaq 100 Index**....................... 0.75% 0.20% 0.95% 0.00% 0.95% GOLDMAN SACHS VARIABLE INSURANCE TRUST: Goldman Sachs Growth and Income*......... 0.75% 0.47% 1.22% 0.22% 1.00% Goldman Sachs CORE U.S. Equity........... 0.70% 0.20% 0.90% 0.00% 0.90% Goldman Sachs Capital Growth*............ 0.75% 0.94% 1.69% 0.69% 1.00% JANUS ASPEN SERIES (SERVICE SHARES): Growth**................................. 0.65% 0.27% 0.92% 0.00% 0.92% Worldwide Growth**....................... 0.65% 0.30% 0.95% 0.00% 0.95% Balanced**............................... 0.65% 0.27% 0.92% 0.00% 0.92% LAZARD RETIREMENT SERIES, INC.: Small Cap*............................... 0.75% 6.56% 7.31% 6.06% 1.25% Emerging Markets*........................ 1.00% 8.59% 9.59% 7.99% 1.60% PBHG INSURANCE SERIES FUND, INC.: PBHG Technology & Communications......... 0.85% 0.24% 1.09% 0.00% 1.09% STRONG VARIABLE INSURANCE FUNDS, INC.: Strong Mid Cap Growth II*................ 1.00% 0.17% 1.17% 0.02% 1.15% Strong Opportunity II.................... 1.00% 0.14% 1.14% 0.00% 1.14% Strong Schafer Value II*................. 1.00% 0.57% 1.57% 0.37% 1.20% VARIABLE INSURANCE PRODUCTS FUND (FIDELITY): VIP Contrafund........................... 0.58% 0.37% 0.95% 0.00% 0.95% VIP Mid Cap.............................. 0.57% 0.68% 1.25% 0.00% 1.25% VIP Growth............................... 0.58% 0.35% 0.93% 0.00% 0.93%
GENERAL PROVISIONS VOTING RIGHTS We will vote the Fund shares held in the various subaccounts of VAR at Fund shareholder meetings in accordance with your instructions. If, however, the 1940 Act or any regulation thereunder should change and we determine that it is permissible to vote the Fund shares in our own right, we may elect to do so. The number of votes as to which you have the right to instruct will be determined by dividing your contract's accumulation value in a subaccount by the net asset value per share of the corresponding Fund portfolio. Fractional shares will be counted. Form 5741 28 31 The number of votes as to which you have the right to instruct will be determined as of the date coincident with the date established by the Fund for determining shareholders eligible to vote at the Fund meeting. Voting instructions will be solicited in writing prior to such meeting in accordance with procedures established by the Fund. We will vote Fund shares attributable to contracts as to which no instructions are received, and any Fund shares held by VAR which are not attributable to contracts, in proportion to the voting instructions which are received with respect to contracts participating in VAR. Each person having a voting interest will receive proxy material, reports and other material relating to the Funds. We may, when required by state insurance regulatory authorities, disregard voting instructions if the instructions require that shares be voted so as to cause a change in subclassification or investment objective of the Fund or disapprove an investment advisory contract of the Fund. In addition, we may disregard voting instructions in favor of changes initiated by a contractowner in the investment policy or the investment adviser of the Fund if we reasonably disapprove of such changes. A change would be disapproved only if the proposed change is contrary to state law or prohibited by state regulatory authorities or we determined that the change would be inconsistent with the investment objectives of VAR or would result in the purchase of securities for VAR which vary from the general quality and nature of investments and investment techniques utilized by other separate accounts created by us or any of our affiliates which have similar investment objectives. In the event that we disregard voting instructions, a summary of that action and the reason for such action will be included in your next semi-annual report. ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS We reserve the right, subject to compliance with applicable law, to make additions to, deletions from or substitutions for the shares held by any subaccount or which any subaccount may purchase. If shares of the Funds should no longer be available for investment or if, in the judgment of management, further investment in shares of the Funds would be inappropriate in view of the purposes of the contract, we may substitute shares of any other investment company for shares already purchased, or to be purchased in the future. No substitution of securities will take place without notice to and the consent of contractowners and without prior approval of the Commission, all to the extent required by the 1940 Act. In addition, the investment policy of VAR will not be changed without the approval of the Ohio Superintendent of Insurance and such approval will be on file with the state insurance regulator of the state where your contract was delivered. ANNUAL REPORT Each year we will send you a report which shows the current accumulation value, the cash surrender value, the stated amount, any contract indebtedness, any partial withdrawals since the date of the last report, investment experience credited since the last report, premiums paid and all charges imposed since the last annual report. We will also send you all reports required by the 1940 Act. We will also make available an illustration report. This report will be based on planned premiums, guaranteed cost of insurance and guaranteed interest, if any. It will show the estimated accumulation value of your contract one year from the date of the report. Although there is generally no charge, we may charge a fee of not more than $100 for this report and if you ask for more than one annual report. LIMITATION ON RIGHT TO CONTEST We will not contest the insurance coverage provided under the contract, except for any subsequent increase in stated amount, after the contract has been in force for a period of two years from the contract date. This provision does not apply to any rider which grants disability or accidental death benefits. Any increase in the stated amount will not be contested after such increase has been in force for two years following the effective date Form 5741 29 32 of the increase. Any increase will be contestable within the two year period only with regard to statements concerning the increase. MISSTATEMENTS If the age or sex of an insured has been misstated in an application, including a reinstatement application, the amount payable under the contract by reason of the death of the second insured will be 1.0032737 multiplied by the sum of (i) and (ii) where: (i) is the accumulation value on the date of death of the second insured; and (ii) is the death benefit, less the accumulation value on the date of death of the second insured, multiplied by the ratio of (a) the cost of insurance actually deducted at the beginning of the contract month in which the death of the second insured occurs to (b) the cost of insurance that should have been deducted at the insured's true age or sex. SUICIDE The contract does not cover the risk of suicide or self-destruction within two years from the contract date or two years from the date of any increase in stated amount with respect to that increase, whether the insured is sane or insane. In the event of suicide within two years of the contract date, we will refund premiums paid, without interest, less any contract indebtedness and less any partial surrender. In the event of suicide within two years of an increase in stated amount, we will refund any premiums allocated to the increase, without interest, less a deduction for a share of any contract indebtedness outstanding and any partial surrenders made since the increase. The share of indebtedness and partial surrenders so deducted will be determined by dividing the total face amount at the time of death by the face amount of the increase. BENEFICIARIES The primary and contingent beneficiaries are designated by the contractowner(s) on the application. If changed, the primary beneficiary or contingent beneficiary is as shown in the latest change filed with us. If more than one beneficiary survives the insureds, the proceeds of the contract will be paid in equal shares to the survivors in the appropriate beneficiary class unless requested otherwise by the contractowner(s). POSTPONEMENT OF PAYMENTS Payment of any amount upon a complete or partial surrender, a contract loan, or benefits payable at death or maturity may be postponed whenever: - the New York Stock Exchange is closed other than customary week-end and holiday closings, or trading on the Exchange is restricted as determined by the Commission; - the Commission by order permits postponement for the protection of contractowners; or - an emergency exists, as determined by the Commission, as a result of which disposal of securities is not reasonably practicable or it is not reasonably practicable to determine the value of VAR's net assets. We may also withhold payment of any increased accumulation value or loan value resulting from a recent premium payment until your premium check has cleared. This could take up to 15 days after we receive your check. ASSIGNMENT The contract may be assigned as collateral security. We must be notified in writing if the contract has been assigned. Each assignment will be subject to any payments made or action taken by us prior to our notification of Form 5741 30 33 such assignment. We are not responsible for the validity of an assignment. The contractowner's rights and the rights of the beneficiary may be affected by an assignment. NON-PARTICIPATING CONTRACT The contract does not share in our surplus distributions. No dividends are payable with respect to the contract. THE GENERAL ACCOUNT By virtue of exclusionary provisions, interests in the general account have not been registered under the Securities Act of 1933 and the general account has not been registered as an investment company under the 1940 Act. Accordingly, neither the general account nor any interests therein are subject to the provisions of these Acts. GENERAL DESCRIPTION The general account consists of all assets owned by us other than those in the variable account and any other separate accounts we may establish. Subject to applicable law, we have sole discretion over the investment of the assets of the general account. You may elect to allocate net premiums to the general account or to transfer accumulation value to the general account from the subaccounts of the variable account. The allocation or transfer of funds to the general account does not entitle a contractowner to share in the investment experience of the general account. Instead, we guarantee that your accumulation value in the general account will accrue interest daily at an effective annual rate of at least 4%, without regard to the actual investment experience of the general account. Consequently, if you pay the planned premiums, allocate all net premiums only to the general account and make no transfers, partial surrenders, or contract loans, the minimum amount and duration of your death benefit will be determinable and guaranteed. Transfers from the general account to VAR are partially restricted and allocation of substantial sums to the general account reduces the flexibility of the contract. ACCUMULATION VALUE The accumulation value in the general account on the later of the issue date or the day we receive your initial premium is equal to the portion of the net premium allocated to the general account, minus a pro rata portion of the first monthly deduction. Thereafter, until the maturity date, we guarantee that the accumulation value in the general account will not be less than the amount of the net premiums allocated or accumulation value transferred to the general account, plus interest at the rate of 4% per year, plus any excess interest which we credit, less the sum of all charges and interest thereon allocable to the general account and any amounts deducted from the general account in connection with partial surrenders and loans and interest thereon or transfers to VAR or the loan collateral account. We guarantee that interest credited to your accumulation value in the general account will not be less than an effective annual rate of 4% per year. We may, at our sole discretion, credit a higher rate of interest, although we are not obligated to do so. The contractowner assumes the risk that interest credited may not exceed the guaranteed minimum rate of 4% per year. The accumulation value in the general account will be calculated on each valuation date. OPTIONAL INSURANCE BENEFITS Subject to certain requirements, one or more optional insurance benefits may be added to your contract, including riders providing additional joint life term insurance, individual term insurance, double coverage, first to die waiver, option to split coverage, waiver of premium, preferred loan and continuation of coverage. More detailed information concerning such riders may be obtained from your agent. The cost of any optional insurance benefits will be deducted as part of the monthly deduction. Form 5741 31 34 SETTLEMENT OPTIONS In addition to a lump sum payment of benefits under the contract, any proceeds may be paid in any of the five methods described in your contract. The five settlement options are (i) Proceeds at interest (ii) Payment for a period of time (iii) Life Income (iv) Payment of a certain amount or (v) Joint and Survivor life income. For more details, contact your agent. A settlement option may be designated by notifying us in writing at our home office. Any amount left with us for payment under a settlement option will be transferred to the general account. During the life of the insureds, the contractowners may select a settlement option. If a settlement option has not been chosen at the second insured's death, the beneficiary may choose one. If a beneficiary is changed, the settlement option selection will no longer be in effect unless the contractowner's requests that it continue. A settlement option may be elected only if the amount of the proceeds is $5,000 or more. We can change the interval of payments if necessary to increase the payments to at least $25 each. DISTRIBUTION OF THE CONTRACT The contract is sold by individuals who, in addition to being licensed as life insurance agents, are also registered representatives (a) of The O.N. Equity Sales Company ("ONESCO"), a wholly-owned subsidiary of Ohio National Life, or (b) of other broker-dealers that have entered into distribution agreements with the principal underwriter of the contracts. ONESCO and the other broker-dealers are responsible for supervising and controlling the conduct of their registered representatives in connection with the offer and sale of the contract. ONESCO and the other broker-dealers are registered with the Commission under the Securities Exchange Act of 1934 and are members of the National Association of Securities Dealers, Inc. Ohio National Equities, Inc. ("ONEQ"), another wholly-owned subsidiary of Ohio National Life, is the principal underwriter of the contracts. Under a distribution and service agreement with ONEQ, we reimburse it for any expenses incurred by it in connection with the distribution of the contracts. This agreement may be terminated at any time by either party on 60 days' written notice. During 1999, VAR received $33,750,069 in premium payments for variable life insurance contracts. From this amount, we paid ONEQ $10,322,617 in sales loads. The officers and directors of ONEQ are: David B. O'Maley.......................... Director and Chairman John J. Palmer............................ Director and President Thomas A. Barefield....................... Senior Vice President Trudy K. Backus........................... Director and Vice President James I. Miller II........................ Director and Vice President Ronald L. Benedict........................ Director and Secretary Barbara A. Turner......................... Operations Vice President, Treasurer and Compliance Officer
Form 5741 32 35 MANAGEMENT OF THE COMPANY
NAME RELATIONSHIP WITH COMPANY* ---- -------------------------- Trudy K. Backus Vice President, Individual Insurance Services Thomas A. Barefield Senior Vice President, Institutional Sales Howard C. Becker Senior Vice President, Individual Insurance & Corporate Services Ronald L. Benedict Corporate Vice President, Counsel & Secretary Robert A. Bowen Senior Vice President, Information Systems Roylene M. Broadwell Vice President & Treasurer Michael A. Boedeker Vice President and Senior Investment Officer Christopher A. Carlson Vice President and Senior Investment Officer David W. Cook Senior Vice President & Actuary Dennis C. Twarogowski Vice President, Career Marketing Ronald J. Dolan Director and Executive Vice President & Chief Financial Officer John Houser III Vice President, Claims Thomas O. Olson Vice President, Underwriting David B. O'Maley Director and Chairman, President & Chief Executive Officer John J. Palmer Director & Executive Vice President, Strategic Initiatives George B. Pearson Vice President, PGA Marketing D. Gates Smith Executive Vice President, Agency and Group Distribution Michael D. Stohler Vice President, Mortgages & Real Estate Stuart G. Summers Director and Executive Vice President & General Counsel
--------------- * The principal occupation of each of the above is an officer of Ohio National Life, with the same title as with us. The principal business address of each is: One Financial Way Cincinnati, Ohio 45242 Our officers, directors and employees who have access to the assets of the variable account are covered by fidelity bonds issued by United States Fidelity & Guaranty Company in the aggregate amount of $3,000,000. CUSTODIAN Pursuant to a written agreement, Firstar Bank, NA, 425 Walnut Street, Cincinnati, Ohio, serves as custodian of the assets of VAR. The fee of the custodian for services rendered to VAR is paid by us. The custodian also provides valuation and certain recordkeeping services to VAR, which include, without limitation, maintaining a record of all purchases, redemptions and distributions relating to Fund shares, the amounts thereof and the number of shares from time to time standing to the credit of VAR. Form 5741 33 36 STATE REGULATION OF THE COMPANY We are organized under the laws of the State of Ohio and are subject to regulation by the Superintendent of Insurance of Ohio. An annual statement is filed with the Superintendent on or before March 1 of each year covering the operations and reporting on our financial condition as of December 31 of the preceding year. Periodically, the Superintendent examines our assets and liabilities and those of VAR and verifies their adequacy. A full examination of our operations is conducted by the National Association of Insurance Commissioners at least every five years. In addition, we are subject to the insurance laws and regulations of other states in which we are licensed to operate. Generally, the insurance department of any other state applies the laws of the state of domicile in determining permissible investments. FEDERAL TAX MATTERS The following description is a brief summary of some of the Code provisions which, in our opinion, are currently in effect. This summary does not purport to be complete or to cover all situations, including the possible tax consequences of changes in ownership. Counsel and other competent tax advisers should be consulted for more complete information. Tax laws can change, even with respect to contracts that have already been issued. Tax law revisions, with unfavorable consequences to contracts offered by this prospectus, could have retroactive effect on previously issued contracts or on subsequent voluntary transactions in previously issued contracts. CONTRACT PROCEEDS The contract contains provisions not found in traditional life insurance contracts providing only for fixed benefits. However, under the Code, as amended by the Tax Reform Act of 1984, the contract should qualify as a life insurance contract for federal income tax purposes as long as certain conditions are met. Consequently, the proceeds of the contract payable to the beneficiary on the death of the second insured will generally be excluded from the beneficiary's income for purposes of federal income tax. Current tax rules and penalties on distributions from life insurance contracts apply to any life insurance contract issued or materially changed on or after June 21, 1988 that is funded more heavily (faster) than a traditional whole life plan designed to be paid-up after the payment of level annual premiums over a seven-year period. Thus, for such a contract (called a "modified endowment contract" in the Code), any distribution, including surrenders, partial surrenders, maturity proceeds, and loans secured by the contract, during the insured's lifetime (but not payments received as an annuity or as a death benefit) would be included in the contractowner's gross income to the extent that the contract's cash surrender value exceeds the owner's investment in the contract. In addition, a ten percent penalty tax applies to any such distribution from such a contract, to the extent includible in gross income, except if made: - after the taxpayer's attaining age 59 1/2, - as a result of his or her disability or - in one of several prescribed forms of annuity payments. Loans received under the contract will be construed as indebtedness of the contractowner in the same manner as loans under a fixed benefit life insurance policy and no part of any loan under the contract is expected to constitute income to the contractowner. Interest payable with respect to such loans is not tax deductible. If the contract is surrendered or lapsed, any policy loan then in effect is treated as taxable income to the extent that the contract's accumulation value (including the loan amount) then exceeds your "basis" in the contract. (Your "basis" equals the total amount of premiums that were paid into the contract less any withdrawals from the contract.) Form 5741 34 37 Federal estate and local estate, inheritance and other tax consequences of contract ownership or receipt of contract proceeds depend upon the circumstances of each contractowner and beneficiary. CORRECTION OF MODIFIED ENDOWMENT CONTRACT If you have made premium payments in excess of the amount that would be permitted without your contract being treated as a modified endowment contract under the Code, you may, upon timely written request, prevent that tax treatment by receiving a refund, without deduction of any charges, of the excess premium paid, plus interest thereon at the rate of 6% per year. Under the Code, such a corrective action must be completed by no later than 60 days after the end of the year following the date the contract became a modified endowment contract. RIGHT TO CHARGE FOR COMPANY TAXES We are presently taxed as a life insurance company under the provisions of the Code. The Tax Reform Act of 1984 specifically provides for adjustments in reserves for flexible premium policies, and we will reflect flexible premium life insurance operations in our tax return in accordance with such Act. Currently, no charge is assessed against VAR for our federal taxes, or provision made for such taxes, that may be attributable to VAR. However, we may in the future charge each subaccount of VAR for its portion of any tax charged to us in respect of that subaccount or its assets. Under present law, we may incur state and local taxes (in addition to premium taxes) in several states. At present, these taxes are not significant. If they increase, however, we may decide to assess charges for such taxes, or make provision for such taxes, against VAR. Any such charges against VAR or its subaccounts could have an adverse effect on the investment performance of the subaccounts. EMPLOYEE BENEFIT PLANS Employers and employee organizations should consider, in consultation with counsel, the impact of Title VII of the Civil Rights Act of 1964 on the purchase of a contract in connection with an employment-related insurance or benefit plan. The United States Supreme Court held, in a 1983 decision, that, under Title VII, optional annuity benefits under a deferred compensation plan could not vary on the basis of sex. LEGAL PROCEEDINGS There are no legal proceedings to which VAR is a party or to which the assets of any of the subaccounts thereof are subject. We are not involved in any litigation that is of material importance in relation to our total assets or that relates to VAR. LEGAL MATTERS Jones & Blouch, L.L.P., Washington, D.C., has served as special counsel with regard to legal matters relating to federal securities laws applicable to the issuance of the last survivor flexible premium variable life insurance contract described in this prospectus. All matters of Ohio law pertaining to the contract including the validity of the contract and our right to issue the contract under the Insurance Law of the State of Ohio have been passed upon by Ronald L. Benedict, Corporate Vice President, Counsel and Secretary of Ohio National Life. EXPERTS The financial statements of VAR as of December 31, 1999 and for each of the periods indicated herein and the financial statements of the Company as of December 31, 1999 and 1998 and for the periods indicated herein Form 5741 35 38 included in this prospectus have been included herein in reliance upon the reports of KPMG LLP, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. Actuarial matters included in this prospectus have been examined by David W. Cook, FSA, MAAA, as stated in the opinion filed as an exhibit to the registration statement. REGISTRATION STATEMENT A registration statement has been filed with the Commission under the Securities Act of 1933, as amended, with respect to the Vari-Vest Survivor contract. This prospectus does not contain all the information set forth in the registration statement. Reference is made to such registration statement for further information concerning us, VAR, and the contract. Statements contained in this prospectus as to the contents of the contract and other legal instruments are summaries. For a complete statement of the terms thereof, reference is made to such instruments as filed. FINANCIAL STATEMENTS Our financial statements which are included in this prospectus should be considered only as bearing on our ability to meet our obligations under your contract. They should not be considered as bearing on the investment performance of the assets held in VAR. Form 5741 36 39 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) Financial Statements December 31, 1999 and 1998 With Independent Auditors' Report Thereon and for the period January 1, 2000 to June 30, 2000 (Unaudited) Form 5741 37 40 INDEPENDENT AUDITORS' REPORT The Board of Directors Ohio National Life Assurance Corporation: We have audited the accompanying balance sheets of Ohio National Life Assurance Corporation (the Company) as of December 31, 1999 and 1998, and the related statements of income, stockholder's equity and cash flows for each of the years in the three-year period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ohio National Life Assurance Corporation as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1999 in conformity with generally accepted accounting principles. /s/ KPMG LLP Cincinnati, Ohio January 28, 2000 Form 5741 38 41 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) BALANCE SHEETS YEARS ENDED DECEMBER 31, 1999 AND 1998 AND YEAR TO DATE AS OF 6/30/2000 (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
6/30/2000 (UNAUDITED) 1999 1998 ----------- ---------- --------- ASSETS Investments (notes 4, 7 and 8): Fixed maturities available-for-sale, at fair value $ 635,857 532,963 606,434 Fixed maturities held-to-maturity, at amortized cost 97,545 98,542 97,576 Mortgage loans on real estate, net 255,884 262,516 229,647 Policy loans 47,333 44,001 40,597 Short-term investments 10,339 68,954 8,997 ---------- ---------- --------- Total investments 1,046,958 1,006,976 983,251 Cash 18,809 4,166 6,203 Accrued investment income 12,159 11,515 11,963 Deferred policy acquisition costs 184,257 177,062 138,582 Reinsurance recoverables 138,741 117,612 105,119 Other assets 2,936 3,177 3,791 Assets held in Separate Accounts 177,978 164,473 103,306 ---------- ---------- --------- Total assets $1,581,838 1,484,981 1,352,215 ========== ========== ========= LIABILITIES AND STOCKHOLDER'S EQUITY Future policy benefits and claims (note 5) $1,145,825 $1,081,024 1,001,501 Other policyholder funds 2,253 2,300 2,357 Accrued Federal income tax (note 6): Current -- 820 1,796 Deferred 7,094 1,735 11,355 Other liabilities 12,853 12,865 19,705 Liabilities related to Separate Accounts 177,978 164,473 103,306 ---------- ---------- --------- Total liabilities $1,346,003 1,263,217 1,140,020 ---------- ---------- --------- Stockholder's equity (notes 3 and 9): Class A common stock; authorized 10,000 shares of $3,000 par value; issued and outstanding 3,200 shares 9,600 9,600 9,600 Additional paid-in capital 27,025 27,025 27,025 Accumulated other comprehensive (loss) income (9,725) (7,382) 12,211 Retained earnings 208,935 192,521 163,359 ---------- ---------- --------- Total stockholder's equity 235,835 221,764 212,195 Commitments and contingencies (notes 11 and 12) ---------- ---------- --------- Total liabilities and stockholder's equity $1,581,838 1,484,981 1,352,215 ========== ========== =========
See accompanying notes to financial statements. Form 5741 39 42 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 AND YEAR TO DATE AS OF 6/30/2000 (IN THOUSANDS)
1/1/2000 TO 6/30/2000 (UNAUDITED) 1999 1998 1997 ----------- -------- ------- ------- Revenues (note 11): Universal life, annuity and investment product policy charges $35,571 66,550 60,609 51,020 Traditional life and accident and health insurance premiums 5,637 8,708 10,975 10,512 Net investment income (note 4) 40,134 76,688 69,547 61,348 Other income 38 Net realized (losses) gains on investments (note 4) (1,666) (1,571) 201 1,411 ------- -------- ------- ------- 79,714 150,375 141,332 124,291 ------- -------- ------- ------- Benefits and expenses (notes 10 and 11): Benefits and claims 42,139 80,794 76,663 67,230 Amortization of deferred policy acquisition costs 3,145 9,131 12,249 5,487 Other operating costs and expenses 9,177 15,585 12,446 13,156 ------- -------- ------- ------- 54,461 105,510 101,358 85,873 ------- -------- ------- ------- Income before Federal income tax 25,253 44,865 39,974 38,418 ------- -------- ------- ------- Federal income tax (note 6): Current expense 6,434 13,071 16,013 14,361 Deferred tax expense (benefit) 2,405 2,632 (1,771) 315 ------- -------- ------- ------- 8,839 15,703 14,242 14,676 ------- -------- ------- ------- Net income $16,414 29,162 25,732 23,742 ======= ======== ======= =======
See accompanying notes to financial statements. Form 5741 40 43 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) STATEMENTS OF STOCKHOLDER'S EQUITY YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 AND YEAR TO DATE AS OF 6/30/2000 (IN THOUSANDS)
ACCUMULATED ADDITIONAL OTHER TOTAL CAPITAL PAID-IN COMPREHENSIVE RETAINED STOCKHOLDER'S SHARES CAPITAL INCOME (LOSS) EARNINGS EQUITY ------- ---------- ------------- -------- ------------- 1997: Balance, beginning of year $9,600 27,025 1,293 113,885 151,803 Comprehensive income: Net income -- -- -- 23,742 23,742 Other comprehensive income (note 13) -- -- 9,034 -- 9,034 ------- Total comprehensive income 32,776 ------ ------ ------- ------- ------- Balance, end of year $9,600 27,025 10,327 137,627 184,579 ====== ====== ======= ======= ======= 1998: Balance, beginning of year $9,600 27,025 10,327 137,627 184,579 Comprehensive income: Net income -- -- -- 25,732 25,732 Other comprehensive income (note 13) -- -- 1,884 -- 1,884 ------- Total comprehensive income 27,616 ------ ------ ------- ------- ------- Balance, end of year $9,600 27,025 12,211 163,359 212,195 ====== ====== ======= ======= ======= 1999: Balance, beginning of year $9,600 27,025 12,211 163,359 212,195 Comprehensive income: Net income -- -- -- 29,162 29,162 Other comprehensive loss (note 13) -- -- (19,593) -- (19,593) ------- Total comprehensive income 9,569 ------ ------ ------- ------- ------- Balance, end of year $9,600 27,025 (7,382) 192,521 221,764 ====== ====== ======= ======= ======= 1/1/2000 to 6/30/2000 (unaudited): Balance, beginning of year $9,600 27,025 (7,382) 192,521 221,764 Comprehensive income: Net income 16,414 16,414 Other comprehensive income (note (13) (2,343) (2,343) Total Comprehensive income 14,071 ------ ------ ------- ------- ------- Balance, end of year $9,600 27,025 (9,725) 208,935 235,835 ====== ====== ======= ======= =======
See accompanying notes to financial statements. Form 5741 41 44 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997 AND YEAR TO DATE AS OF 6/30/2000 (IN THOUSANDS)
1/1/2000 TO 6/30/2000 (UNAUDITED) 1999 1998 1997 ----------- --------- -------- -------- Cash flows from operating activities: Net income $ 16,414 29,162 25,732 23,742 Adjustments to reconcile net income to net cash provided by operating activities: Capitalization of deferred policy acquisition costs (14,200) (26,790) (28,516) (23,855) Amortization of deferred policy acquisition costs 3,178 9,131 12,443 5,787 Amortization and depreciation 1,028 184 213 1,297 Realized losses (gains) on invested assets, net 709 1,571 (201) (1,411) Increase (decrease) in accrued investment income (644) 448 (1,780) (1,518) Increase in reinsurance receivables and other assets (20,772) (11,995) (24,669) (6,225) Increase in policyholder account balances 31,736 14,650 19,025 6,672 (Decrease) increase in other policyholder funds (47) (57) (145) 215 (Decrease) increase in current Federal income tax payable (820) (976) 921 184 Increase (decrease) in other liabilities (128) (6,724) 4,831 2,539 Deferred income taxes 2,632 (1,771) 315 Other, net 2,406 919 (864) (5,396) --------- --------- -------- -------- Net cash provided by operating activities 18,860 12,155 5,219 2,346 --------- --------- -------- -------- Cash flows from investing activities: Proceeds from maturity of fixed maturities available-for-sale 101,968 32,314 32,256 84,974 Proceeds from maturity of fixed maturities held-to-maturity 11,207 7,944 7,964 11,039 Proceeds from repayment of mortgage loans on real estate 22,184 22,351 38,862 46,468 Cost of fixed maturities available-for-sale acquired (202,235) (14,965) (123,507) (136,593) Cost of fixed maturities held-to-maturity acquired (10,000) (8,079) (48,181) (25,966) Cost of mortgage loans on real estate acquired (15,689) (55,270) (53,186) (84,114) Change in policy loans, net (3,332) (3,404) (2,471) (3,191) --------- --------- -------- -------- Net cash used in investing activities (95,897) (19,109) (148,263) (107,383) --------- --------- -------- -------- Cash flows from financing activities: Increase in universal life and investment product account balances 120,137 227,664 265,733 205,445 Decrease in universal life and investment product account balances (87,072) (162,790) (133,570) (110,729) --------- --------- -------- -------- Net cash provided by financing activities 33,065 64,874 132,163 94,716 --------- --------- -------- -------- Net increase (decrease) in cash and cash equivalents (43,972) 57,920 (10,881) (10,321) Cash and cash equivalents, beginning of year 73,120 15,200 26,081 36,402 --------- --------- -------- -------- Cash and cash equivalents, end of year $ 29,148 73,120 15,200 26,081 ========= ========= ======== ========
See accompanying notes to financial statements. Form 5741 42 45 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) (1) ORGANIZATION AND BUSINESS DESCRIPTION Ohio National Life Assurance Corporation (ONLAC or the Company) is a stock life insurance company, wholly owned by The Ohio National Life Insurance Company (ONLIC), a stock life insurance company. ONLAC is a life and health insurer licensed in 47 states, the District of Columbia and Puerto Rico. The Company offers term life, universal life, disability and annuity products through independent agents and other distribution channels and competes with other insurers throughout the United States. The Company is subject to regulation by the Insurance Departments of states in which it is licensed and undergoes periodic examinations by those departments. The following is a description of the most significant risks facing life and health insurers and how the Company mitigates those risks: Legal/Regulatory Risk is the risk that changes in the legal or regulatory environment in which an insurer operates will create additional expenses not anticipated by the insurer in pricing its products. That is, regulatory initiatives designed to reduce insurer profits, new legal theories or insurance company insolvencies through guaranty fund assessments may create costs for the insurer beyond those recorded in the financial statements. The Company mitigates this risk by offering a wide range of products and by operating throughout the United States, thus reducing its exposure to any single product or jurisdiction, and also by employing underwriting practices which identify and minimize the adverse impact of this risk. Credit Risk is the risk that issuers of securities owned by the Company or mortgagors on mortgage loans on real estate owned by the Company will default or that other parties, including reinsurers, which owe the Company money, will not pay. The Company minimizes this risk by adhering to a conservative investment strategy, by maintaining sound reinsurance and credit and collection policies and by providing for any amounts deemed uncollectible. Interest Rate Risk is the risk that interest rates will change and cause a decrease in the value of an insurer's investments. This change in rates may cause certain interest-sensitive products to become uncompetitive or may cause disintermediation. The Company mitigates this risk by charging fees for non-conformance with certain policy provisions, by offering products that transfer this risk to the purchaser, and/or by attempting to match the maturity schedule of its assets with the expected payouts of its liabilities. To the extent that liabilities come due more quickly than assets mature, an insurer would have to borrow funds or sell assets prior to maturity and potentially recognize a gain or loss. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies followed by the Company that materially affect financial reporting are summarized below. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) which differ from statutory accounting practices prescribed or permitted by regulatory authorities (see Note 3). Form 5741 43 46 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) (a) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES The Company is required to classify its fixed maturity securities as either held-to-maturity, available-for-sale or trading. Fixed maturity securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity and are stated at amortized cost. Fixed maturity securities not classified as held-to-maturity are classified as available-for-sale and are stated at fair value, with the unrealized gains and losses, net of adjustments to deferred policy acquisition costs and deferred Federal income tax, reported as a separate component of shareholder's equity. The adjustment to deferred policy acquisition costs represents the change in amortization of deferred policy acquisition costs that would have been required as a charge or credit to operations had such unrealized amounts been realized. The Company has no fixed maturity securities classified as trading. Mortgage loans on real estate are carried at the unpaid principal balance less valuation allowances. The Company provides valuation allowances for impairments of mortgage loans on real estate based on a review by portfolio managers. The measurement of impaired loans is based on the present value of expected future cash flows discounted at the loan's effective interest rate or at the fair value of the collateral, if the loan is collateral dependent. Loans in foreclosure and loans considered to be impaired as of the balance sheet date are placed on non-accrual status and written down to the fair value of the existing property to derive a new cost basis. Cash receipts on non-accrual status mortgage loans on real estate are included in interest income in the period received. Realized gains and losses on the sale of investments are determined on the basis of specific security identification, net of associated deferred acquisition costs and capital gains expenses. Estimates for valuation allowances and other than temporary declines are included in realized gains and losses on investments. (b) REVENUES AND BENEFITS Traditional life insurance products include those products with fixed and guaranteed premiums and benefits and consist primarily of graded premium life and term life policies. Premiums for traditional non-participating life insurance products are recognized as revenue when due and collected. Benefits and expenses are associated with earned premiums so as to result in recognition of profits over the life of the contract. This association is accomplished by the provision for future policy benefits and the deferral and amortization of policy acquisition costs. Universal life products include universal life, variable universal life and other interest-sensitive life insurance policies. Investment products consist primarily of individual immediate and deferred annuities. Revenues for universal life and investment products consist of net investment income and cost of insurance, policy administration and surrender charges that have been earned and assessed against policy account balances during the period. Policy benefits and claims that are charged to expense include benefits and claims incurred in the period in excess of related policy account balances, maintenance costs and interest credited to policy account balances. Form 5741 44 47 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) Accident and health insurance premiums are recognized as revenue in accordance with the terms of the policies. Policy claims are charged to expense in the period that the claims are incurred. (c) DEFERRED POLICY ACQUISITION COSTS The costs of acquiring new business, principally commissions, certain expenses of the policy issue and underwriting department and certain variable agency expenses have been deferred. For traditional non- participating life insurance products, these deferred acquisition costs are predominantly being amortized with interest over the premium paying period of the related policies. Such anticipated premium revenue was estimated using the same assumptions as were used for computing liabilities for future policy benefits. For universal life and investment products, deferred policy acquisition costs are being amortized with interest over the lives of the policies in relation to the present value of estimated future gross profits from projected interest margins, cost of insurance, policy administration and surrender charges. Deferred policy acquisition costs are adjusted to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale (see Note 2(a)). (d) SEPARATE ACCOUNTS Separate Account assets and liabilities represent contractholders' funds which have been segregated into accounts with specific investment objectives. The investment income and gains or losses of these accounts accrue directly to the contractholders. The activity of the Separate Accounts is not reflected in the statements of income and cash flows except for the fees the Company receives for administrative services and risks assumed. (e) FUTURE POLICY BENEFITS Future policy benefits for traditional life policies have been calculated using a net level premium method based on estimates of mortality, morbidity, investment yields and withdrawals which were used or which were being experienced at the time the policies were issued, rather than the assumptions prescribed by state regulatory authorities (see Note 5). Future policy benefits for annuity policies in the accumulation phase, universal life and variable universal life policies have been calculated based on participants' aggregate account balances. (f) FEDERAL INCOME TAX ONLAC is included as part of the consolidated Federal income tax return of its ultimate parent, Ohio National Mutual Holdings, Inc. The Company uses the asset and liability method of accounting for income tax. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is Form 5741 45 48 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce the deferred tax assets to the amounts expected to be realized. (g) REINSURANCE CEDED Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded are reported on a gross basis. (h) CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all short-term investments with original maturities of three months or less to be cash equivalents. (i) COMPREHENSIVE INCOME Comprehensive income is the total of net income and all non-owner changes in equity. (j) USE OF ESTIMATES In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and revenues and expenses for the reporting period. Actual results could differ significantly from those estimates. The estimates susceptible to significant change are those used in determining deferred policy acquisition costs, the liability for future policy benefits and claims, contingencies, and the valuation allowance for mortgage loans on real estate. Although some variability is inherent in these estimates, management believes the amounts provided are adequate. (3) BASIS OF PRESENTATION The accompanying financial statements have been prepared in accordance with GAAP which differs from statutory accounting practices prescribed or permitted by regulatory authorities. Annual Statements for ONLAC filed with the Department of Insurance of the State of Ohio, are prepared on a basis of accounting practices prescribed or permitted by such regulatory authority. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (NAIC), as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. The Company has no material permitted statutory accounting practices. The statutory basis capital and surplus of ONLAC as of December 31, 1999 and 1998 was $119,569 and $114,373, respectively. The statutory basis net income of ONLAC for the years ended December 31, 1999, 1998, and 1997 was $20,567, $16,524, and $15,540, respectively. Form 5741 46 49 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) (4) INVESTMENTS An analysis of investment income and realized gains (losses) by investment type follows for the years ended December 31:
REALIZED GAINS (LOSSES) INVESTMENT INCOME ON INVESTMENTS --------------------------- ------------------------ 1999 1998 1997 1999 1998 1997 ------- ------ ------ ------- ---- ----- Fixed maturities available-for-sale $43,620 40,678 34,847 $(2,454) 300 346 Fixed maturities held-to-maturity 7,779 5,036 4,222 830 2 185 Mortgage loans on real estate 21,608 19,636 18,007 98 58 900 Short-term 1,293 1,824 2,121 Other 3,339 2,898 2,749 ------- ------ ------ ------- ---- ----- Total 77,639 70,072 61,946 (1,526) 360 1,431 Investment expenses (951) (525) (598) DAC amortization 11 (194) -- Change in valuation allowance for mortgage loans on real estate (56) 35 (20) ------- ------ ------ ------- ---- ----- Net investment income $76,688 69,547 61,348 ======= ====== ====== Net realized (losses) gains on investments $(1,571) 201 1,411 ======= ==== =====
The components of unrealized gains on fixed maturities available-for-sale, net, were as follows as of December 31:
1999 1998 -------- ------- Gross unrealized gains (losses) $(19,337) 32,911 Adjustment to deferred policy acquisition costs 8,407 (11,803) Deferred Federal income tax 3,548 (8,897) -------- ------- $ (7,382) 12,211 ======== =======
Form 5741 47 50 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) The amortized cost and estimated fair value of fixed maturities available-for-sale and fixed maturities held-to-maturity were as follows:
DECEMBER 31, 1999 DECEMBER 31, 1998 ----------------------------------------------- ----------------------------------------------- GROSS GROSS ESTIMATED GROSS GROSS ESTIMATED AMORTIZED UNREALIZED UNREALIZED FAIR AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE COST GAINS LOSSES VALUE --------- ---------- ---------- --------- --------- ---------- ---------- --------- Fixed maturities available-for- sale: U.S. Treasury securities and obligations of U.S. government operations and agencies $ 52,716 1,215 (616) 53,315 52,778 9,530 -- 62,308 Obligations of states and political subdivisions 4,066 22 (33) 4,055 5,202 265 (36) 5,431 Corporate securities 349,968 3,517 (21,568) 331,917 377,168 21,463 (6,381) 392,250 Mortgage-backed securities 145,550 580 (2,454) 143,676 138,375 8,210 (140) 146,445 -------- ----- ------- ------- ------- ------ ------ ------- $552,300 5,334 (24,671) 532,963 573,523 39,468 (6,557) 606,434 ======== ===== ======= ======= ======= ====== ====== ======= Fixed maturities held-to-maturity: Corporate securities $ 96,007 1,224 (4,380) 92,851 95,011 8,008 (14) 103,005 Other 2,535 19 -- 2,554 2,565 483 -- 3,048 -------- ----- ------- ------- ------- ------ ------ ------- $ 98,542 1,243 (4,380) 95,405 97,576 8,491 (14) 106,053 ======== ===== ======= ======= ======= ====== ====== =======
The amortized cost and estimated fair value of fixed maturities available-for-sale and fixed maturities held-to-maturity as of December 31, 1999, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
FIXED MATURITY SECURITIES --------------------------------------------------- AVAILABLE-FOR-SALE HELD-TO-MATURITY ----------------------- ------------------------ AMORTIZED ESTIMATED AMORTIZED ESTIMATED COST FAIR VALUE COST FAIR VALUE --------- ---------- --------- ----------- Due in one year or less $ 860 866 154 149 Due after one year through five years 63,763 63,580 11,389 11,027 Due after five years through ten years 146,564 141,997 26,179 25,346 Due after ten years 341,113 326,520 60,820 58,883 -------- ------- ------ ------ $552,300 532,963 98,542 95,405 ======== ======= ====== ======
Sales of fixed maturities available-for-sale in 1999 resulted in proceeds of $29,040, with gross realized gain of $155 and gross realized losses of $1,140, excluding calls. There were no sales of fixed maturities available-for-sale in 1998 and 1997. Investments with an amortized cost of $4,008 and $3,460 as of December 31, 1999 and 1998, respectively, were on deposit with various regulatory agencies as required by law. Realized gains on fixed maturities held-to-maturity relate to calls. The Company generally initiates foreclosure proceedings on all mortgage loans on real estate delinquent sixty days. There were no foreclosures of mortgage loans on real estate during 1999, and no foreclosures are in process as of December 31, 1999. Form 5741 48 51 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) (5) FUTURE POLICY BENEFIT AND CLAIMS The liability for future policy benefits for universal life policies and investment contracts (approximately 86% of the total liability for future policy benefits as of December 31, 1999 and 1998) has been established based on the aggregate account value without reduction for surrender charges. The average interest rate to be credited on investment product policies was 6.3% and 5.6% as of December 31, 1999 and 1998, respectively. The liability for future policy benefits for traditional life products are based on the following mortality and interest rate assumptions without consideration for withdrawals. The mortality table and interest assumptions used for the majority of new policies are the 1980 CSO table with 4% to 5% interest. With respect to older policies, the mortality table and interest assumptions used are primarily the 1958 CSO table with 4% interest and the 1980 CSO table with 4%-6% interest. The liability for future policy benefits for individual accident and health policies include liabilities for active lives, disabled lives and unearned premiums. The liability for active lives are calculated on a two-year preliminary term basis at 3% to 6% interest, using either the 1964 Commissioner's Disability Table (policies issued prior to 1990) or the 1985 Commissioner's Individual Disability Table A (policies issued after 1989). The liability for disabled lives are calculated using either the 1985 Commissioner's Individual Disability Table A at 5% to 5.5% interest (claims incurred after 1989) or the 1971 modification of the 1964 Commissioner's Disability Table, at 3.5% interest (claims incurred prior to 1990). (6) FEDERAL INCOME TAX In prior years, under superseded tax acts, the Company deferred income and accumulated amounts into a Policyholders' Surplus Account (PSA). Management considers the likelihood of distributions from the PSA to be remote; therefore, no Federal income tax has been provided for such distributions in the financial statements. Any distributions from the PSA, however, will continue to be taxable at the then current tax rate. The balance of the PSA is approximately $5,257 as of December 31, 1999. Total income taxes for the year ended December 31, 1999, 1998, and 1997 were allocated as follows:
1999 1998 1997 ------- ------ ------ Operations $15,703 14,242 14,676 Unrealized gains (losses) on securities available-for-sale (12,445) 947 5,080 ------- ------ ------ $ 3,258 15,189 19,756 ======= ====== ======
Form 5741 49 52 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) Total Federal income tax expense for the years ended December 31, 1999, 1998, and 1997 differs from the amount computed by applying the U.S. Federal income tax rate to income before Federal income tax as follows:
1999 1998 1997 --------------- --------------- --------------- AMOUNT % AMOUNT % AMOUNT % ------- ---- ------- ---- ------- ---- Computed (expected) tax expense $15,703 35.0 $13,991 35.0 $13,447 35.0 Differential earnings -- 0.0 (225) (0.6) 611 1.6 Tax exempt interest and dividends received deduction (87) (0.6) (57) (0.1) (20) (0.1) Other, net 87 0.6 533 1.3 638 1.7 ------- ---- ------- ---- ------- ---- Total expense and effective rate $15,703 35.0 $14,242 35.6 $14,676 38.2 ======= ==== ======= ==== ======= ====
Total Federal income tax paid during the years ended December 31, 1999, 1998, and 1997 was $14,540, $15,092, and $14,176 (net of refunds of $493, $1,773, and $0), respectively. The tax effects of temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities that give rise to significant components of the net deferred tax liability as of December 31, 1999 and 1998 are as follows:
1999 1998 ------- ------- Deferred tax assets: Future policy benefits $28,087 32,780 Mortgage loans and real estate 830 811 Other 5,487 76 ------- ------- Total gross deferred tax assets 34,404 33,667 ------- ------- Deferred tax liabilities: Deferred policy acquisition costs 35,236 33,201 Fixed maturities available-for-sale 723 11,821 Other 180 -- ------- ------- Total gross deferred tax liabilities 36,139 45,022 ------- ------- Net deferred tax liability $(1,735) (11,355) ======= =======
The Company has determined that a deferred tax asset valuation allowance was not needed as of December 31, 1999 and 1998. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers primarily the scheduled reversal of deferred tax liabilities and tax planning strategies in making this assessment and believes it is more likely than not the Company will realize the benefits of the deductible differences remaining at December 31, 1999. Form 5741 50 53 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) (7) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, Disclosures about Fair Value of Financial Instruments (SFAS 107) requires disclosure of fair value information about existing on and off-balance sheet financial instruments. SFAS 107 excludes certain assets and liabilities, including insurance contracts, other than policies such as annuities that are classified as investment contracts, from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The tax ramifications of the related unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. The following methods and assumptions were used by the Company in estimating its fair value disclosures: Cash, Short-Term Investments, Policy Loans and Other Policyholder Funds -- The carrying amount reported in the balance sheet for these instruments approximate their fair value. Investment Securities -- Fair value for fixed maturity securities is based on quoted market prices, where available. For fixed maturity securities not actively traded, fair value is estimated using values obtained from independent pricing services, or in the case of private placements, is estimated by discounting expected future cash flows using a current market rate applicable to the yield, credit quality and duration of the investments. Separate Account Assets and Liabilities -- The fair value of assets held in Separate Accounts is based on quoted market prices. The fair value of liabilities related to Separate Accounts is the accumulated contract value in the Separate Account portfolios. Mortgage Loans on Real Estate -- The fair value for mortgage loans on real estate is estimated using discounted cash flow analyses, using interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. Deferred and Immediate Annuities and Investment Contracts -- Fair value for the Company's liabilities under investment type contracts is disclosed using two methods. For investment contracts without defined maturities, fair value is the amount payable on demand. For investment contracts with known or determined maturities, fair value is estimated using discounted cash flow analysis. Interest rates used are similar to currently offered contracts with maturities consistent with those remaining for the contracts being valued. Form 5741 51 54 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) The carrying amount and estimated fair value of financial instruments subject to SFAS 107 and policy reserves on insurance contracts were as follows as of December 31:
1999 1998 ---------------------- ---------------------- CARRYING ESTIMATED CARRYING ESTIMATED AMOUNT FAIR VALUE AMOUNT FAIR VALUE -------- ---------- -------- ---------- ASSETS Investments: Fixed maturities available-for-sale $532,963 532,963 606,434 606,434 Fixed maturities held-to-maturity 98,542 95,405 97,576 106,053 Mortgage loans on real estate 262,516 256,824 229,647 250,380 Policy loans 44,001 44,001 40,597 40,597 Short-term investments 68,954 68,954 8,997 8,997 Cash 4,166 4,166 6,203 6,203 Assets held in Separate Accounts 164,473 164,473 103,306 103,306 LIABILITIES Deferred and immediate annuity contracts $107,777 106,111 104,464 105,010 Other policyholder funds 2,300 2,300 2,357 2,357 Liabilities related to Separate Accounts 164,473 164,473 103,306 103,306
(8) ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE SIGNIFICANT CONCENTRATIONS OF CREDIT RISK Mortgage loans are collateralized by the underlying properties. Collateral must meet or exceed 125% of the loan at the time the loan is made. The Company grants mainly commercial mortgage loans to customers throughout the United States. The Company has a diversified loan portfolio with no exposure greater than 10% in any state at December 31, 1999. The summary below depicts loan exposure of remaining principal balances type at December 31:
1999 1998 -------- ------- MORTGAGE ASSETS BY TYPE: Retail $ 85,080 75,553 Office 56,260 50,323 Apartment 62,304 48,017 Industrial 41,588 36,926 Other 19,657 21,145 -------- ------- 264,889 231,964 Less valuation allowances 2,373 2,317 -------- ------- Total mortgage loans on real estate, net $262,516 229,647 ======== =======
(9) REGULATORY RISK-BASED CAPITAL AND DIVIDEND RESTRICTIONS ON RETAINED EARNINGS Based upon the December 31, 1999 and 1998 financial statements, the Company exceeds all required risk-based capital levels. Form 5741 52 55 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) The payment of dividends by the Company to its parent, ONLIC, is limited by Ohio law. As of December 31, 1999, $97,977 of retained earnings, as presented in the accompanying financial statements, is restricted as to dividend payments in 1999. (10) RELATED PARTY TRANSACTIONS The Company shares common facilities and management with ONLIC. A written agreement, which either party may terminate upon thirty days notice, provides that ONLIC furnish personnel, space and supplies, accounting, data processing and related services to ONLAC. This agreement resulted in charges to the Company of approximately $14,000, $12,800, and $11,400 in 1999, 1998, and 1997, respectively. (11) REINSURANCE In the ordinary course of business, the Company reinsures certain risks with its parent, ONLIC, and other insurance companies. Amounts in the accompanying financial statements related to ceded business are as follows:
1999 1998 1997 ---------------------- ---------------------- ---------------------- NON- NON- NON- AFFILIATE AFFILIATE AFFILIATE AFFILIATE AFFILIATE AFFILIATE --------- --------- --------- --------- --------- --------- Premiums $25,495 21,669 25,760 24,316 20,473 18,953 Benefits incurred 12,943 12,704 12,797 9,707 12,075 7,140 Commission and expense allowances 2,889 2,984 2,987 2,514 2,374 3,241 Reinsurance recoverable: Reserves for future policy benefits 50,111 57,064 44,773 48,077 36,543 40,455 Policy and contract claims payable 1,609 1,663 2,356 3,645 1,318 987
Net traditional life and accident and health premium income in 1999, 1998, and 1997 is summarized as follows:
1999 1998 1997 ------- ------- ------- Direct premiums earned $53,701 58,686 48,313 Reinsurance assumed 2,172 2,365 2,181 Reinsurance ceded (47,165) (50,076) (39,982) ------- ------- ------- Net premiums earned $ 8,708 10,975 10,512 ======= ======= =======
Reinsurance does not discharge the Company from its primary liability to policyholders and to the extent that a reinsurer should be unable to meet its obligations, the Company would be liable to policyholders. (12) CONTINGENCIES The Company is a defendant in various legal actions arising in the normal course of business. While the outcome of such matters cannot be predicted with certainty, management believes such matters will be resolved without material adverse impact on the financial condition of the Company. Form 5741 53 56 OHIO NATIONAL LIFE ASSURANCE CORPORATION (A WHOLLY-OWNED SUBSIDIARY OF THE OHIO NATIONAL LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS -- CONTINUED DECEMBER 31, 1999, 1998, AND 1997 (IN THOUSANDS) (13) COMPREHENSIVE INCOME The components of other comprehensive income, including the related Federal tax amounts, were as follows for the years ended December 31:
1999 1998 1997 -------- ------ ------ Unrealized (losses) gains on securities available-for-sale arising during the period: Net of adjustment to deferred policy acquisition costs $(26,481) 3,358 14,126 Related Federal tax benefit (expense) 10,500 (1,131) (4,944) -------- ------ ------ Net (15,981) 2,227 9,182 -------- ------ ------ Reclassification adjustment for net losses on securities available-for-sale realized during the period: Gross 5,557 527 227 Related federal tax benefit (1,945) (184) (79) -------- ------ ------ Net 3,612 343 148 -------- ------ ------ Total other comprehensive (loss) income $(19,593) 1,884 9,034 ======== ====== ======
Form 5741 54 57 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF ASSETS AND CONTRACT OWNERS' EQUITY JUNE 30, 2000 (UNAUDITED) MONEY CAPITAL EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ----------- ---------- ---------- ----------- ----------- ---------- Assets -- Investments at market value (note 2)............................... $33,798,637 $3,242,747 $2,255,235 $11,440,299 $22,099,706 $6,972,645 =========== ========== ========== =========== =========== ========== Contract owners' equity Contracts in accumulation period (note 3).................................. $33,798,637 $3,242,747 $2,255,235 $11,440,299 $22,099,706 $6,972,645 =========== ========== ========== =========== =========== ========== SMALL CAP SUBACCOUNT ----------- Assets -- Investments at market value (note 2)............................... $26,993,211 =========== Contract owners' equity Contracts in accumulation period (note 3).................................. $26,993,211 ===========
INTERNATIONAL SMALL AGGRESSIVE CORE GROWTH & S&P 500 SOCIAL COMPANY GROWTH GROWTH INCOME INDEX AWARENESS SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ----------- ---------- ---------- ----------- ----------- ---------- Assets -- Investments at market value (note 2)............................... $ 4,863,093 $4,194,541 $5,210,146 $13,475,134 $18,909,364 $ 423,568 =========== ========== ========== =========== =========== ========== Contract owners' equity Contracts in accumulation period (note 3).................................. $ 4,863,093 $4,194,541 $5,210,146 $13,475,134 $18,909,364 $ 423,568 =========== ========== ========== =========== =========== ========== BLUE CHIP SUBACCOUNT ----------- Assets -- Investments at market value (note 2)............................... $ 178,338 =========== Contract owners' equity Contracts in accumulation period (note 3).................................. $ 178,338 ===========
JANUS ASPEN SERIES HIGH ------------------------------------------ EQUITY INCOME CAPITAL WORLDWIDE INCOME BOND GROWTH GROWTH GROWTH BALANCED SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT -------------- ---------- ---------- ----------- ------------- ------------ Assets -- Investments at market value (note 2)... $ 32,625 $ 20,992 $2,592,053 $ 8,821,684 $ 6,715,136 $1,565,826 =========== ========== ========== =========== =========== ========== Contract owners' equity Contracts in accumulation period (note 3)............. $ 32,625 $ 20,992 $2,592,053 $ 8,821,684 $ 6,715,136 $1,565,826 =========== ========== ========== =========== =========== ==========
STRONG VARIABLE FUNDS GOLDMAN SACHS ---------------------------------------- ------------------------------------------ SCHAFER MID-CAP VIT GROWTH VIT CORE VIT CAPITAL OPPORTUNITY II VALUE II GROWTH & INCOME US EQUITY GROWTH SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT -------------- ---------- ---------- ----------- ------------- ------------ Assets -- Investments at market value (note 2)............................... $ 314,610 $ 336,004 $1,273,324 $ 914,796 $ 40,038 $ 154,089 =========== ========== ========== =========== =========== ========== Contract owners' equity Contracts in accumulation period (note 3).................................. $ 314,610 $ 336,004 $1,273,324 $ 914,796 $ 40,038 $ 154,089 =========== ========== ========== =========== =========== ========== Assets -- Investments at market value (note 2)............................... Contract owners' equity Contracts in accumulation period (note 3)..................................
LAZARD RETIREMENT MORGAN STANLEY ----------------------- U.S. REAL EMERGING SMALL ESTATE MARKET CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT -------------- ---------- ---------- Assets -- Investments at market value (note 2)............................... $ 353,974 $ 623,256 $ 162,586 =========== ========== ========== Contract owners' equity Contracts in accumulation period (note 3).................................. $ 353,974 $ 623,256 $ 162,586 =========== ========== ==========
The accompanying notes are an integral part of these financial statements. Form 5741 55 58 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF OPERATIONS For Six Months Ended June 30, 2000 (Unaudited)
EQUITY SUBACCOUNT ------------------------------------------------------ SIX MONTHS YEARS ENDED ENDED --------------------------------------- 6/30/2000 1999 1998 1997 ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends................. $ 22,176 $ 103,759 $ 374,943 $ 453,946 Risk & administrative expense (note 4)................................. (124,651) (236,084) (222,953) (190,776) ----------- ----------- ---------- ---------- Net investment activity............ (102,475) (132,325) 151,990 263,170 ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains........... 115,765 13,411,033 582,686 1,475,813 Realized gain (loss)............... (158,113) 1,165,160 433,578 431,237 Unrealized gain (loss)............. (1,086,069) (8,842,357) 276,272 1,699,778 ----------- ----------- ---------- ---------- Net gain (loss) on investments... (1,128,417) 5,733,836 1,292,536 3,606,828 ----------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity from operations.................. $(1,230,892) $ 5,601,511 $1,444,526 $3,869,998 =========== =========== ========== ========== MONEY MARKET SUBACCOUNT --------------------------------------------------- SIX MONTHS YEARS ENDED ENDED ------------------------------------- 6/30/2000 1999 1998 1997 ---------- ---------- --------- ---------- Investment activity: Reinvested dividends................. $104,455 $ 157,294 $ 92,380 $ 55,657 Risk & administrative expense (note 4)................................. (13,288) (23,933) (13,276) (7,949) -------- ---------- --------- ---------- Net investment activity............ 91,167 133,361 79,104 47,708 -------- ---------- --------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains........... 0 0 0 0 Realized gain (loss)............... 3,788 (31,917) (1,729) 241 Unrealized gain (loss)............. 0 0 0 0 -------- ---------- --------- ---------- Net gain (loss) on investments... 3,788 (31,917) (1,729) 241 -------- ---------- --------- ---------- Net increase (decrease) in contract owners' equity from operations.................. $ 94,955 $ 101,444 $ 77,375 $ 47,949 ======== ========== ========= ==========
BOND SUBACCOUNT OMNI SUBACCOUNT ------------------------------------------------------ ------------------------ SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED ENDED --------------------------------------- ENDED ---------- 6/30/2000 1999 1998 1997 6/30/2000 1999 ----------- ----------- ---------- ---------- ---------- ---------- Investment activity: Reinvested dividends................. $ 34,163 $ 120,071 $ 83,140 $ 68,280 $ 41,417 $ 259,003 Risk & administrative expense (note 4)................................. (7,288) (13,410) (9,252) (6,130) (42,857) (89,113) ----------- ----------- ---------- ---------- -------- ---------- Net investment activity............ 26,875 106,661 73,888 62,150 (1,440) 169,890 ----------- ----------- ---------- ---------- -------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains........... 0 0 0 0 16,146 411,548 Realized gain (loss)............... (8,622) (6,506) 2,811 1,394 176,653 431,731 Unrealized gain (loss)............. 31,008 (103,003) (21,734) 4,309 105,006 164,688 ----------- ----------- ---------- ---------- -------- ---------- Net gain (loss) on investments... 22,386 (109,509) (18,923) 5,703 297,805 1,007,967 ----------- ----------- ---------- ---------- -------- ---------- Net increase (decrease) in contract owners' equity from operations.................. $ 49,261 $ (2,848) $ 54,965 $ 67,853 $296,365 $1,177,857 =========== =========== ========== ========== ======== ========== OMNI SUBACCOUNT ----------------------- YEARS ENDED ----------------------- 1998 1997 --------- ---------- Investment activity: Reinvested dividends................. $ 301,587 $ 285,077 Risk & administrative expense (note 4)................................. (83,337) (65,184) --------- ---------- Net investment activity............ 218,250 219,893 --------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains........... 1,760 480,048 Realized gain (loss)............... 332,951 73,429 Unrealized gain (loss)............. (101,784) 562,929 --------- ---------- Net gain (loss) on investments... 232,927 1,116,406 --------- ---------- Net increase (decrease) in contract owners' equity from operations.................. $ 451,177 $1,336,299 ========= ==========
The accompanying notes are an integral part of these financial statements. Form 5741 56 59 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF OPERATIONS For Six Months Ended June 30, 2000 (Unaudited)
INTERNATIONAL SUBACCOUNT ------------------------------------------------------ SIX MONTHS YEARS ENDED ENDED --------------------------------------- 6/30/2000 1999 1998 1997 ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends................. $ -- $ 0 $ 630,410 $ 983,741 Risk & administrative expense (note 4)................................. (91,060) (125,913) (124,053) (112,268) ----------- ----------- ---------- ---------- Net investment activity............ (91,060) (125,913) 506,357 871,473 ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains........... 157,840 0 695,117 1,415,674 Realized gain (loss)............... 691,782 (55,726) (45,820) 186,736 Unrealized gain (loss)............. (1,847,025) 10,000,013 (670,437) (2,391,042) ----------- ----------- ---------- ---------- Net gain (loss) on investments... (997,403) 9,944,287 (21,140) (788,632) ----------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity from operations.................. $(1,088,463) $ 9,818,374 $ 485,217 $ 82,841 =========== =========== ========== ========== CAPITAL APPRECIATION SUBACCOUNT --------------------------------------------------- SIX MONTHS YEARS ENDED ENDED ------------------------------------- 6/30/2000 1999 1998 1997 ---------- ---------- --------- ---------- Investment activity: Reinvested dividends................. $ 62,029 $ 181,793 $ 155,395 $ 130,659 Risk & administrative expense (note 4)................................. (26,627) (56,169) (45,565) (28,303) --------- ---------- --------- ---------- Net investment activity............ 35,402 125,624 109,830 102,356 --------- ---------- --------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains........... 8,097 700,498 539,044 244,214 Realized gain (loss)............... (72,069) 36,655 33,861 34,042 Unrealized gain (loss)............. 222,376 (450,311) (390,779) 129,929 --------- ---------- --------- ---------- Net gain (loss) on investments... 158,404 286,842 182,126 408,185 --------- ---------- --------- ---------- Net increase (decrease) in contract owners' equity from operations.................. $ 193,806 $ 412,466 $ 291,956 $ 510,541 ========= ========== ========= ==========
SMALL CAP SUBACCOUNT ------------------------------------------------------ SIX MONTHS YEARS ENDED ENDED --------------------------------------- 6/30/2000 1999 1998 1997 ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends................. $ -- $ 0 $ 0 $ 0 Risk & administrative expense (note 4)................................. (94,738) (100,544) (54,057) (38,798) ----------- ----------- ---------- ---------- Net investment activity............ (94,738) (100,544) (54,057) (38,798) ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains........... 309,255 5,797,375 107 271,143 Realized gain...................... 602,346 307,091 57,223 84,498 Unrealized gain (loss)............. 3,750,340 5,205,819 930,451 130,287 ----------- ----------- ---------- ---------- Net gain (loss) on investments... 4,661,941 11,310,285 987,781 485,928 ----------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity from operations.................. $ 4,567,203 $11,209,741 $ 933,724 $ 447,130 =========== =========== ========== ========== INTERNATIONAL SMALL COMPANY SUBACCOUNT --------------------------------------------------- SIX MONTHS YEARS ENDED ENDED ------------------------------------- 6/30/2000 1999 1998 1997 ---------- ---------- --------- ---------- Investment activity: Reinvested dividends................. $ 0 $ 0 $ 54,153 $ 52,943 Risk & administrative expense (note 4)................................. (20,780) (20,937) (13,819) (9,551) --------- ---------- --------- ---------- Net investment activity............ (20,780) (20,937) 40,334 43,392 --------- ---------- --------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains........... 21,621 479,458 180,539 83,769 Realized gain...................... 130,652 202,058 8,238 32,076 Unrealized gain (loss)............. (971,919) 1,832,353 (187,295) (35,010) --------- ---------- --------- ---------- Net gain (loss) on investments... (819,646) 2,513,869 1,482 80,835 --------- ---------- --------- ---------- Net increase (decrease) in contract owners' equity from operations.................. $(840,426) $2,492,932 $ 41,816 $ 124,227 ========= ========== ========= ==========
The accompanying notes are an integral part of these financial statements. Form 5741 57 60 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF OPERATIONS For Six Months Ended June 30, 2000 (Unaudited)
AGGRESSIVE GROWTH SUBACCOUNT CORE GROWTH SUBACCOUNT ------------------------------------------------------ ------------------------ SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED ENDED --------------------------------------- ENDED ---------- 6/30/2000 1999 1998 1997 6/30/2000 1999 ----------- ----------- ---------- ---------- ---------- ---------- Investment activity: Reinvested dividends................ $ 0 $ 0 $ 0 $ 24,808 $ 0 $ 0 Risk & administrative expense (note 4)................................ (15,377) (26,551) (23,847) (16,668) (16,431) (14,942) ----------- ----------- ---------- ---------- -------- ---------- Net investment activity........... (15,377) (26,551) (23,847) 8,140 (16,431) (14,942) ----------- ----------- ---------- ---------- -------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains.......... 0 0 258,472 9,068 86,768 763,382 Realized gain (loss).............. 9,024 (41,002) 22,270 (3,358) 91,156 115,808 Unrealized gain (loss)............ (389,462) 248,666 (6,276) 231,511 639,644 875,700 ----------- ----------- ---------- ---------- -------- ---------- Net gain (loss) on investments.................. (380,438) 207,664 274,466 237,221 817,568 1,754,890 ----------- ----------- ---------- ---------- -------- ---------- Net increase (decrease) in contract owners' equity from operations............ $ (395,815) $ 181,113 $ 250,619 $ 245,361 $801,137 $1,739,948 =========== =========== ========== ========== ======== ========== CORE GROWTH SUBACCOUNT ------------------------ YEARS ENDED ------------------------ 1998 1997 (a) ---------- ---------- Investment activity: Reinvested dividends................ $ 0 $ 161 Risk & administrative expense (note 4)................................ (7,627) (3,844) ---------- ---------- Net investment activity........... (7,627) (3,683) ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains.......... 0 0 Realized gain (loss).............. 1,725 3,379 Unrealized gain (loss)............ 101,913 (3,039) ---------- ---------- Net gain (loss) on investments.................. 103,638 340 ---------- ---------- Net increase (decrease) in contract owners' equity from operations............ $ 96,011 $ (3,343) ========== ==========
GROWTH & INCOME SUBACCOUNT ------------------------------------------------------ SIX MONTHS YEARS ENDED ENDED --------------------------------------- 6/30/2000 1999 1998 1997 (a) ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends................ $ 0 $ 17,648 $ 40,476 $ 7,733 Risk & administrative expense (note 4)................................ (51,490) (60,687) (27,216) (4,646) ----------- ----------- ---------- ---------- Net investment activity........... (51,490) (43,039) 13,260 3,087 ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains.......... 219,550 1,905,785 0 90,978 Realized gain..................... 369,457 74,709 10,734 7,768 Unrealized gain (loss)............ (438,897) 2,666,425 252,938 94,008 ----------- ----------- ---------- ---------- Net gain (loss) on investments.................. 150,110 4,646,919 263,672 192,754 ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations................. $ 98,620 $ 4,603,880 $ 276,932 $ 195,841 =========== =========== ========== ========== S&P 500 INDEX SUBACCOUNT ---------------------------------------------------- SIX MONTHS YEARS ENDED ENDED -------------------------------------- 6/30/2000 1999 1998 1997 (a) ---------- ---------- ---------- ---------- Investment activity: Reinvested dividends................ $132,131 $ 355,574 $ 108,830 $ 33,016 Risk & administrative expense (note 4)................................ (68,007) (103,243) (26,947) (2,986) -------- ---------- ---------- ---------- Net investment activity........... 64,124 252,331 81,883 30,030 -------- ---------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains.......... 23,095 1,388,105 328,825 94,770 Realized gain..................... 161,005 199,621 20,356 5,779 Unrealized gain (loss)............ (243,207) 1,477,659 619,923 (52,996) -------- ---------- ---------- ---------- Net gain (loss) on investments.................. (59,107) 3,065,385 969,104 47,553 -------- ---------- ---------- ---------- Net increase in contract owners' equity from operations................. $ 5,017 $3,317,716 $1,050,987 $ 77,583 ======== ========== ========== ==========
--------------- (a) Period from January 3, 1997, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 58 61 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF OPERATIONS For Six Months Ended June 30, 2000 (Unaudited)
SOCIAL AWARENESS SUBACCOUNT EQUITY INCOME SUBACCOUNT ----------------------------------------------------- ------------------------- SIX MONTHS YEARS ENDED SIX MONTHS ENDED --------------------------------------- ENDED YEAR ENDED 6/30/2000 1999 1998 1997 (a) 6/30/2000 1999 (c) ----------- ----------- ------------ ---------- ----------- ----------- Investment activity: Reinvested dividends.................. $ 0 $ 2,088 $ 2,652 $ 983 $ 31 $ 0 Risk & administrative expense (note 4).................................. (1,682) (3,374) (3,609) (394) (51) 0 ----------- ----------- ---------- ---------- -------- ---------- Net investment activity............. (1,682) (1,286) (957) 589 (20) 0 ----------- ----------- ---------- ---------- -------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............ 0 0 0 29,015 0 0 Realized gain (loss)................ 18,332 (62,411) (31,042) 926 48 0 Unrealized gain (loss).............. 40,686 131,316 (102,278) (31,805) (417) 0 ----------- ----------- ---------- ---------- -------- ---------- Net gain (loss) on investments.... 59,018 68,905 (133,320) (1,864) (369) 0 ----------- ----------- ---------- ---------- -------- ---------- Net increase (decrease) in contract owners' equity from operations................... $ 57,336 $ 67,619 $ (134,277) $ (1,275) $ (389) $ 0 =========== =========== ========== ========== ======== ========== BLUE CHIP SUBACCOUNT ------------------------- FOR SIX YEAR MONTHS ENDED ENDED 6/30/2000 1999 (c) ------------ ---------- Investment activity: Reinvested dividends.................. $ 14 $ 0 Risk & administrative expense (note 4).................................. (168) 0 --------- ---------- Net investment activity............. (154) 0 --------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............ 36 1 Realized gain (loss)................ 161 0 Unrealized gain (loss).............. (3,228) 10 --------- ---------- Net gain (loss) on investments.... (3,031) 11 --------- ---------- Net increase (decrease) in contract owners' equity from operations................... $ (3,185) $ 11 ========= ==========
JANUS ASPEN SERIES ----------------------- HIGH INCOME SUBACCOUNT CAPITAL GROWTH SUBACCOUNT GROWTH SUBACCOUNT ------------------------- ------------------------- ----------------------- SIX MONTHS FOR SIX SIX MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED ENDED YEAR ENDED 6/30/2000 1999 (c) 6/30/2000 1999 (c) 6/30/2000 1999 (b) ----------- ----------- ------------ ---------- ---------- ---------- Investment activity: Reinvested dividends.................. $ 546 $ 526 $ 0 $ 0 $127,075 $ 6,902 Risk & administrative expense (note 4).................................. (121) (17) (6,204) (84) (28,204) (14,713) ----------- ----------- ---------- ---------- -------- ---------- Net investment activity............. 425 509 (6,204) (84) 98,871 (7,811) ----------- ----------- ---------- ---------- -------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............ 0 0 1,346 25,879 212,421 6,806 Realized gain (loss)................ (2,952) 1 (9,962) 776 93,713 9,588 Unrealized gain (loss).............. 337 (347) (57,079) (6,339) (326,356) 1,075,487 ----------- ----------- ---------- ---------- -------- ---------- Net gain (loss) on investments.... (2,615) (346) (65,695) 20,316 (20,222) 1,091,881 ----------- ----------- ---------- ---------- -------- ---------- Net increase (decrease) in contract owners' equity from operations................... $ (2,190) $ 163 $ (71,899) $ 20,232 $ 78,649 $1,084,070 =========== =========== ========== ========== ======== ========== JANUS ASPEN SERIES ------------------------- WORLDWIDE GROWTH SUBACCOUNT ------------------------- FOR SIX MONTHS ENDED YEAR ENDED 6/30/2000 1999 (b) ------------ ---------- Investment activity: Reinvested dividends.................. $ 24,019 $ 1,005 Risk & administrative expense (note 4).................................. (21,028) (6,966) --------- ---------- Net investment activity............. 2,991 (5,961) --------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............ 71,624 0 Realized gain (loss)................ 18,847 3,506 Unrealized gain (loss).............. (95,286) 954,815 --------- ---------- Net gain (loss) on investments.... (4,815) 958,321 --------- ---------- Net increase (decrease) in contract owners' equity from operations................... $ (1,824) $ 952,360 ========= ==========
--------------- (a) Period from January 3, 1997, date of commencement of operations. (b) Period from May 3, 1999, date of commencement of operations. (c) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 59 62 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF OPERATIONS For Six Months Ended June 30, 2000 (Unaudited)
JANUS ASPEN SERIES STRONG VARIABLE ANNUITY FUNDS ------------------------- ------------------------------------------------------ BALANCE SUBACCOUNT OPPORTUNITY II SUBACCOUNT SCHAFER VALUE SUBACCOUNT ------------------------- ------------------------- ------------------------- SIX MONTHS SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED 6/30/2000 1999 (c) 6/30/2000 1999 (c) 6/30/2000 1999 (c) ----------- ----------- ------------ ---------- ----------- ----------- Investment activity: Reinvested dividends.................. $ 26,047 $ 583 $ 0 $ 0 $ 0 $ 20 Risk & administrative expense (note 4).................................. (2,515) (18) (360) (3) (491) (3) ----------- ----------- ---------- ---------- -------- ---------- Net investment activity............. 23,532 565 0 (3) (491) 17 ----------- ----------- ---------- ---------- -------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............ 72,937 0 0 0 0 91 Realized gain (loss)................ 1,730 191 1,641 0 6,039 36 Unrealized gain (loss).............. (79,710) 1,157 (7,099) 246 (19,508) (122) ----------- ----------- ---------- ---------- -------- ---------- Net gain (loss) on investments.... (5,043) 1,348 (5,458) 246 (13,469) 5 ----------- ----------- ---------- ---------- -------- ---------- Net increase (decrease) in contract owners' equity from operations................... $ 18,489 $ 1,913 $ (5,458) $ 243 $(13,960) $ 22 =========== =========== ========== ========== ======== ========== STRONG VARIABLE ANNUITY FUNDS ------------------------- MID-CAP GROWTH SUBACCOUNT ------------------------- SIX MONTHS ENDED YEAR ENDED 6/30/2000 1999 (c) ------------ ---------- Investment activity: Reinvested dividends.................. $ 0 $ 0 Risk & administrative expense (note 4).................................. (3,218) (107) --------- ---------- Net investment activity............. (3,218) (107) --------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............ 0 0 Realized gain (loss)................ (24,263) 453 Unrealized gain (loss).............. (7,284) 25,711 --------- ---------- Net gain (loss) on investments.... (31,547) 26,164 --------- ---------- Net increase (decrease) in contract owners' equity from operations................... $ (34,765) $ 26,057 ========= ==========
GOLDMAN SACHS -------------------------------------------------------------------------------- VIT GROWTH & INCOME VIT CORE US EQUITY VIT CAPITAL GROWTH SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------------- ------------------------- ----------------------- SIX MONTHS SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED 6/30/2000 1999 (b) 6/30/2000 1999 (c) 6/30/2000 1999 (c) ----------- ----------- ------------ ---------- ---------- ---------- Investment activity: Reinvested dividends.................. $ 0 $ 7,699 $ 0 $ 25 $ 0 $ 18 Risk & administrative expense (note 4).................................. (3,131) (1,357) (76) (4) (361) (12) ----------- ----------- ---------- ---------- -------- ---------- Net investment activity............. (3,131) 6,342 (76) 21 (361) 6 ----------- ----------- ---------- ---------- -------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............ 0 0 0 88 0 521 Realized gain (loss)................ (336) (1,291) 121 (15) (44) 415 Unrealized gain..................... 11,825 5,904 101 283 7,073 472 ----------- ----------- ---------- ---------- -------- ---------- Net gain on investments........... 11,489 4,613 222 356 7,029 1,408 ----------- ----------- ---------- ---------- -------- ---------- Net increase in contract owners' equity from operations................... $ 8,358 $ 10,955 $ 146 $ 377 $ 6,668 $ 1,414 =========== =========== ========== ========== ======== ========== MORGAN STANLEY ------------------------- US REAL ESTATE SUBACCOUNT ------------------------- SIX MONTHS ENDED YEAR ENDED 6/30/2000 1999 (c) ------------ ---------- Investment activity: Reinvested dividends.................. $ 649 $ 0 Risk & administrative expense (note 4).................................. (391) 0 --------- ---------- Net investment activity............. 0 0 --------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............ 0 0 Realized gain (loss)................ (422) 0 Unrealized gain..................... 13,917 0 --------- ---------- Net gain on investments........... 13,495 0 --------- ---------- Net increase in contract owners' equity from operations................... $ 13,495 $ 0 ========= ==========
--------------- (b) Period from May 3, 1999, date of commencement of operations. (c) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 60 63 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF OPERATIONS For Six Months Ended June 30, 2000 (Unaudited)
LAZARD RETIREMENT ------------------------------------------------------ EMERGING MARKET SMALL CAP SUBACCOUNT SUBACCOUNT -------------------------- ------------------------ SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED 6/30/2000 1999 (c) 6/30/2000 1999 (c) ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends............ $ 0 $ 1,046 $ 0 $ 3 Risk & administrative expense (note 4)..................... (2,224) (606) (384) (5) ----------- ----------- -------- ---------- Net investment activity...... (2,224) 440 (384) (2) ----------- ----------- -------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains..... 0 0 0 37 Realized gain (loss)......... 8,463 5,449 1,740 0 Unrealized gain (loss)....... (53,694) 107,388 6,550 536 ----------- ----------- -------- ---------- Net gain (loss) on investments............. (45,231) 112,837 8,290 573 ----------- ----------- -------- ---------- Net increase (decrease) in contract owners' equity from operations............ $ (47,455) $ 113,277 $ 7,906 $ 571 =========== =========== ======== ==========
--------------- (c) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 61 64 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For Six Months Ended June 30, 2000 (Unaudited) EQUITY MONEY MARKET SUBACCOUNT SUBACCOUNT ----------------------------------------------------- ------------------------- SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED ENDED --------------------------------------- ENDED ----------- 6/30/2000 1999 1998 1997 6/30/2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity........... $ (102,475) $ (132,325) $ 151,990 $ 263,170 $ 91,167 $ 133,361 Reinvested capital gains.......... 115,765 13,411,033 582,686 1,475,813 0 0 Realized gain (loss).............. (158,113) 1,165,160 433,578 431,237 3,788 (31,917) Unrealized gain (loss)............ (1,086,069) (8,842,357) 276,272 1,699,778 0 0 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations............ (1,230,892) 5,601,511 1,444,526 3,869,998 94,955 101,444 ----------- ----------- ----------- ----------- ----------- ----------- Equity transactions: Sales: Contract purchase payments........ 2,427,210 5,012,273 5,167,419 4,850,686 6,078,794 6,289,867 Transfers from fixed & other subaccounts.................... 2,546,072 2,442,831 1,599,312 2,585,503 1,886,010 5,592,228 ----------- ----------- ----------- ----------- ----------- ----------- 4,973,282 7,455,104 6,766,731 7,436,189 7,964,804 11,882,095 ----------- ----------- ----------- ----------- ----------- ----------- Redemptions: Withdrawals & surrenders (note 5)............................. 736,269 1,283,863 975,495 930,275 434,586 22,532 Transfers to fixed & other subaccounts.................... 3,157,558 6,010,815 2,231,174 2,061,907 8,563,769 11,367,686 Cost of insurance & administrative fee (note 5)................... 917,372 2,060,563 2,044,300 1,775,339 196,652 283,708 ----------- ----------- ----------- ----------- ----------- ----------- 4,811,199 9,355,241 5,250,969 4,767,521 9,195,007 11,673,926 ----------- ----------- ----------- ----------- ----------- ----------- Net equity transactions...... 162,083 (1,900,137) 1,515,762 2,668,668 (1,230,203) 208,169 ----------- ----------- ----------- ----------- ----------- ----------- Net change in contract owners' equity.......... (1,068,809) 3,701,374 2,960,288 6,538,666 (1,135,248) 309,613 Contract owners' equity: Beginning of period................. 34,867,446 31,166,072 28,205,784 21,667,118 4,377,995 4,068,382 ----------- ----------- ----------- ----------- ----------- ----------- End of period....................... $33,798,637 $34,867,446 $31,166,072 $28,205,784 $ 3,242,747 $ 4,377,995 =========== =========== =========== =========== =========== =========== MONEY MARKET SUBACCOUNT ------------------------- YEARS ENDED ------------------------- 1998 1997 ----------- ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity........... $ 79,104 $ 47,708 Reinvested capital gains.......... 0 0 Realized gain (loss).............. (1,729) 241 Unrealized gain (loss)............ 0 0 ----------- ----------- Net increase (decrease) in contract owners' equity from operations............ 77,375 47,949 ----------- ----------- Equity transactions: Sales: Contract purchase payments........ 9,924,762 6,067,434 Transfers from fixed & other subaccounts.................... 2,863,761 1,593,336 ----------- ----------- 12,788,523 7,660,770 ----------- ----------- Redemptions: Withdrawals & surrenders (note 5)............................. 48,825 8,519 Transfers to fixed & other subaccounts.................... 9,721,391 7,321,910 Cost of insurance & administrative fee (note 5)................... 257,277 225,524 ----------- ----------- 10,027,493 7,555,953 ----------- ----------- Net equity transactions...... 2,761,030 104,817 ----------- ----------- Net change in contract owners' equity.......... 2,838,405 152,766 Contract owners' equity: Beginning of period................. 1,229,977 1,077,211 ----------- ----------- End of period....................... $ 4,068,382 $ 1,229,977 =========== ===========
The accompanying notes are an integral part of these financial statements. Form 5741 62 65 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For Six Months Ended June 30, 2000 (Unaudited) BOND OMNI SUBACCOUNT SUBACCOUNT ----------------------------------------------------- ------------------------- SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED ENDED --------------------------------------- ENDED ----------- 6/30/2000 1999 1998 1997 6/30/2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity........... $ 26,875 $ 106,661 $ 73,888 $ 62,150 $ (1,440) $ 169,890 Reinvested capital gains.......... 0 0 0 0 16,146 411,548 Realized gain (loss).............. (8,622) (6,506) 2,811 1,394 176,653 431,731 Unrealized gain (loss)............ 31,008 (103,003) (21,734) 4,309 105,006 164,688 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations............ 49,261 (2,848) 54,965 67,853 296,365 1,177,857 ----------- ----------- ----------- ----------- ----------- ----------- Equity transactions: Sales: Contract purchase payments........ 226,123 419,790 345,106 244,107 841,396 2,179,009 Transfers from fixed & other subaccounts.................... 862,964 256,378 567,357 131,403 227,552 934,257 ----------- ----------- ----------- ----------- ----------- ----------- 1,089,087 676,168 912,463 375,510 1,068,948 3,113,266 ----------- ----------- ----------- ----------- ----------- ----------- Redemptions: Withdrawals & surrenders (note 5)............................. 36,350 103,237 13,218 21,828 308,321 600,731 Transfers to fixed & other subaccounts.................... 673,115 243,107 129,183 131,854 1,091,892 2,971,645 Cost of insurance & administrative fee (note 5)................... 52,461 122,471 100,579 70,289 333,641 841,801 ----------- ----------- ----------- ----------- ----------- ----------- 761,926 468,815 242,980 223,971 1,733,854 4,414,177 ----------- ----------- ----------- ----------- ----------- ----------- Net equity transactions...... 327,161 207,353 669,483 151,539 (664,906) (1,300,911) ----------- ----------- ----------- ----------- ----------- ----------- Net change in contract owners' equity.......... 376,422 204,505 724,448 219,392 (368,541) (123,054) Contract owners' equity: Beginning of period................. 1,878,813 1,674,308 949,860 730,468 11,808,840 11,931,894 ----------- ----------- ----------- ----------- ----------- ----------- End of period....................... $ 2,255,235 $ 1,878,813 $ 1,674,308 $ 949,860 $11,440,299 $11,808,840 =========== =========== =========== =========== =========== =========== OMNI SUBACCOUNT ------------------------- YEARS ENDED ------------------------- 1998 1997 ----------- ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity........... $ 218,250 $ 219,893 Reinvested capital gains.......... 1,760 480,048 Realized gain (loss).............. 332,951 73,429 Unrealized gain (loss)............ (101,784) 562,929 ----------- ----------- Net increase (decrease) in contract owners' equity from operations............ 451,177 1,336,299 ----------- ----------- Equity transactions: Sales: Contract purchase payments........ 2,470,020 1,966,189 Transfers from fixed & other subaccounts.................... 2,614,095 907,850 ----------- ----------- 5,084,115 2,874,039 ----------- ----------- Redemptions: Withdrawals & surrenders (note 5)............................. 705,842 187,562 Transfers to fixed & other subaccounts.................... 2,318,267 312,223 Cost of insurance & administrative fee (note 5)................... 802,634 648,661 ----------- ----------- 3,826,743 1,148,446 ----------- ----------- Net equity transactions...... 1,257,372 1,725,593 ----------- ----------- Net change in contract owners' equity.......... 1,708,549 3,061,892 Contract owners' equity: Beginning of period................. 10,223,345 7,161,453 ----------- ----------- End of period....................... $11,931,894 $10,223,345 =========== ===========
The accompanying notes are an integral part of these financial statements. Form 5741 63 66 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For Six Months Ended June 30, 2000 (Unaudited) INTERNATIONAL CAPITAL APPRECIATION SUBACCOUNT SUBACCOUNT ----------------------------------------------------- ------------------------- SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED ENDED --------------------------------------- ENDED ----------- 6/30/2000 1999 1998 1997 6/30/2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity........... $ (91,060) $ (125,913) $ 506,357 $ 871,473 $ 35,402 $ 125,624 Reinvested capital gains.......... 157,840 0 695,117 1,415,674 8,097 700,498 Realized gain (loss).............. 691,782 (55,726) (45,820) 186,736 (72,069) 36,655 Unrealized gain (loss)............ (1,847,025) 10,000,013 (670,437) (2,391,042) 222,376 (450,311) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations............ (1,088,463) 9,818,374 485,217 82,841 193,806 412,466 ----------- ----------- ----------- ----------- ----------- ----------- Equity transactions: Sales: Contract purchase payments........ 1,516,634 3,266,962 4,027,966 4,352,514 763,021 1,870,385 Transfers from fixed & other subaccounts.................... 1,061,068 954,384 965,930 2,121,595 1,026,998 851,618 ----------- ----------- ----------- ----------- ----------- ----------- 2,577,702 4,221,346 4,993,896 6,474,109 1,790,019 2,722,003 ----------- ----------- ----------- ----------- ----------- ----------- Redemptions: Withdrawals & surrenders (note 5)............................. 529,570 881,527 618,889 469,189 170,130 262,934 Transfers to fixed & other subaccounts.................... 2,365,939 4,697,047 2,112,568 2,136,043 2,215,343 1,789,041 Cost of insurance & administrative fee (note 5)................... 614,287 1,206,179 1,348,113 1,269,503 213,651 574,371 ----------- ----------- ----------- ----------- ----------- ----------- 3,509,796 6,784,753 4,079,570 3,874,735 2,599,124 2,626,346 ----------- ----------- ----------- ----------- ----------- ----------- Net equity transactions...... (932,094) (2,563,407) 914,326 2,599,374 (809,105) 95,657 ----------- ----------- ----------- ----------- ----------- ----------- Net change in contract owners' equity.......... (2,020,557) 7,254,967 1,399,543 2,682,215 (615,299) 508,123 Contract owners' equity: Beginning of period................. 24,120,263 16,865,296 15,465,753 12,783,538 7,587,944 7,079,821 ----------- ----------- ----------- ----------- ----------- ----------- End of period....................... $22,099,706 $24,120,263 $16,865,296 $15,465,753 $ 6,972,645 $ 7,587,944 =========== =========== =========== =========== =========== =========== CAPITAL APPRECIATION SUBACCOUNT ------------------------- YEARS ENDED ------------------------- 1998 1997 ----------- ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity........... $ 109,830 $ 102,356 Reinvested capital gains.......... 539,044 244,214 Realized gain (loss).............. 33,861 34,042 Unrealized gain (loss)............ (390,779) 129,929 ----------- ----------- Net increase (decrease) in contract owners' equity from operations............ 291,956 510,541 ----------- ----------- Equity transactions: Sales: Contract purchase payments........ 2,206,184 1,458,697 Transfers from fixed & other subaccounts.................... 951,520 1,299,231 ----------- ----------- 3,157,704 2,757,928 ----------- ----------- Redemptions: Withdrawals & surrenders (note 5)............................. 170,616 54,331 Transfers to fixed & other subaccounts.................... 518,403 775,912 Cost of insurance & administrative fee (note 5)................... 548,283 377,999 ----------- ----------- 1,237,302 1,208,242 ----------- ----------- Net equity transactions...... 1,920,402 1,549,686 ----------- ----------- Net change in contract owners' equity.......... 2,212,358 2,060,227 Contract owners' equity: Beginning of period................. 4,867,463 2,807,236 ----------- ----------- End of period....................... $ 7,079,821 $ 4,867,463 =========== ===========
The accompanying notes are an integral part of these financial statements. Form 5741 64 67 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For Six Months Ended June 30, 2000 (Unaudited) INTERNATIONAL SMALL SMALL CAP COMPANY SUBACCOUNT SUBACCOUNT ----------------------------------------------------- ------------------------- SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED ENDED --------------------------------------- ENDED ----------- 6/30/2000 1999 1998 1997 6/30/2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Increase (decrease) in contract Owners' equity from operations: Net investment activity........... $ (94,738) $ (100,544) $ (54,057) $ (38,798) $ (20,780) $ (20,937) Reinvested capital gains.......... 309,255 5,797,375 107 271,143 21,621 479,458 Realized gain..................... 602,346 307,091 57,223 84,498 130,652 202,058 Unrealized gain (loss)............ 3,750,340 5,205,819 930,451 130,287 (971,919) 1,832,353 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations............ 4,567,203 11,209,741 933,724 447,130 (840,426) 2,492,932 ----------- ----------- ----------- ----------- ----------- ----------- Equity transactions: Sales: Contract purchase payments........ 1,627,205 2,645,343 2,614,149 2,181,009 381,004 603,036 Transfers from fixed & other subaccounts.................... 3,052,529 3,174,822 1,096,254 1,438,960 1,098,858 1,743,233 ----------- ----------- ----------- ----------- ----------- ----------- 4,679,734 5,820,165 3,710,403 3,619,969 1,479,862 2,346,269 ----------- ----------- ----------- ----------- ----------- ----------- Redemptions: Withdrawals & surrenders (note 5)............................. 456,570 515,999 258,338 141,409 48,198 109,397 Transfers to fixed & other subaccounts.................... 3,865,077 2,004,103 795,000 1,146,251 649,911 1,506,122 Cost of insurance & administrative fee (note 5)................... 673,209 1,018,712 705,650 579,612 139,000 207,469 ----------- ----------- ----------- ----------- ----------- ----------- 4,994,856 3,538,814 1,758,988 1,867,272 837,109 1,822,988 ----------- ----------- ----------- ----------- ----------- ----------- Net equity transactions...... (315,122) 2,281,351 1,951,415 1,752,697 642,753 523,281 ----------- ----------- ----------- ----------- ----------- ----------- Net change in contract owners' equity.......... 4,252,081 13,491,092 2,885,139 2,199,827 (197,673) 3,016,213 Contract owners' equity: Beginning of period................. 22,741,130 9,250,038 6,364,899 4,165,072 5,060,766 2,044,553 ----------- ----------- ----------- ----------- ----------- ----------- End of period....................... $26,993,211 $22,741,130 $ 9,250,038 $ 6,364,899 $ 4,863,093 $ 5,060,766 =========== =========== =========== =========== =========== =========== INTERNATIONAL SMALL COMPANY SUBACCOUNT ------------------------- YEARS ENDED ------------------------- 1998 1997 ----------- ----------- Increase (decrease) in contract Owners' equity from operations: Net investment activity........... $ 40,334 $ 43,392 Reinvested capital gains.......... 180,539 83,769 Realized gain..................... 8,238 32,076 Unrealized gain (loss)............ (187,295) (35,010) ----------- ----------- Net increase (decrease) in contract owners' equity from operations............ 41,816 124,227 ----------- ----------- Equity transactions: Sales: Contract purchase payments........ 666,312 537,053 Transfers from fixed & other subaccounts.................... 218,614 450,868 ----------- ----------- 884,926 987,921 ----------- ----------- Redemptions: Withdrawals & surrenders (note 5)............................. 56,018 221,380 Transfers to fixed & other subaccounts.................... 219,547 218,387 Cost of insurance & administrative fee (note 5)................... 178,599 140,673 ----------- ----------- 454,164 580,440 ----------- ----------- Net equity transactions...... 430,762 407,481 ----------- ----------- Net change in contract owners' equity.......... 472,578 531,708 Contract owners' equity: Beginning of period................. 1,571,975 1,040,267 ----------- ----------- End of period....................... $ 2,044,553 $ 1,571,975 =========== ===========
The accompanying notes are an integral part of these financial statements. Form 5741 65 68 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For Six Months Ended June 30, 2000 (Unaudited) AGGRESSIVE GROWTH CORE GROWTH SUBACCOUNT SUBACCOUNT ----------------------------------------------------- ------------------------- SIX MONTHS YEARS ENDED SIX MONTHS YEARS ENDED ENDED --------------------------------------- ENDED ----------- 6/30/2000 1999 1998 1997 6/30/2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity........... $ (15,377) $ (26,551) $ (23,847) $ 8,140 $ (16,431) $ (14,942) Reinvested capital gains.......... 0 0 258,472 9,068 86,768 763,382 Realized gain (loss).............. 9,024 (41,002) 22,270 (3,358) 91,156 115,808 Unrealized gain (loss)............ (389,462) 248,666 (6,276) 231,511 639,644 875,700 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations............ (395,815) 181,113 250,619 245,361 801,137 1,739,948 ----------- ----------- ----------- ----------- ----------- ----------- Equity transactions: Sales: Contract purchase payments........ 553,299 1,136,033 1,348,654 969,362 380,830 438,214 Transfers from fixed & other subaccounts.................... 593,087 499,516 423,659 544,712 1,118,396 1,317,575 ----------- ----------- ----------- ----------- ----------- ----------- 1,146,386 1,635,549 1,772,313 1,514,074 1,499,226 1,755,789 ----------- ----------- ----------- ----------- ----------- ----------- Redemptions: Withdrawals & surrenders (note 5)............................. 57,111 182,042 86,262 84,536 99,010 82,138 Transfers to fixed & other subaccounts.................... 350,517 1,139,574 460,387 418,423 558,547 853,515 Cost of insurance & administrative fee (note 5)................... 139,036 338,621 347,236 278,191 122,829 166,365 ----------- ----------- ----------- ----------- ----------- ----------- 546,664 1,660,237 893,885 781,150 780,386 1,102,018 ----------- ----------- ----------- ----------- ----------- ----------- Net equity transactions...... 599,722 (24,688) 878,428 732,924 718,840 653,771 ----------- ----------- ----------- ----------- ----------- ----------- Net change in contract owners' equity.......... 203,907 156,425 1,129,047 978,285 1,519,977 2,393,719 Contract owners' equity: Beginning of period................. 3,990,634 3,834,209 2,705,162 1,726,877 3,690,169 1,296,450 ----------- ----------- ----------- ----------- ----------- ----------- End of period....................... $ 4,194,541 $ 3,990,634 $ 3,834,209 $ 2,705,162 $ 5,210,146 $ 3,690,169 =========== =========== =========== =========== =========== =========== CORE GROWTH ------------------------- YEARS ENDED ------------------------- 1998 1997 (a) ----------- ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity........... $ (7,627) $ (3,683) Reinvested capital gains.......... 0 0 Realized gain (loss).............. 1,725 3,379 Unrealized gain (loss)............ 101,913 (3,039) ----------- ----------- Net increase (decrease) in contract owners' equity from operations............ 96,011 (3,343) ----------- ----------- Equity transactions: Sales: Contract purchase payments........ 459,093 377,379 Transfers from fixed & other subaccounts.................... 378,819 631,937 ----------- ----------- 837,912 1,009,316 ----------- ----------- Redemptions: Withdrawals & surrenders (note 5)............................. 16,609 1,885 Transfers to fixed & other subaccounts.................... 327,440 116,828 Cost of insurance & administrative fee (note 5)................... 117,857 62,827 ----------- ----------- 461,906 181,540 ----------- ----------- Net equity transactions...... 376,006 827,776 ----------- ----------- Net change in contract owners' equity.......... 472,017 824,433 Contract owners' equity: Beginning of period................. 824,433 0 ----------- ----------- End of period....................... $ 1,296,450 $ 824,433 =========== ===========
--------------- (a) Period from January 3, 1997, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 66 69 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For Six Months Ended June 30, 2000 (Unaudited)
GROWTH & INCOME SUBACCOUNT ---------------------------------------------------- SIX MONTHS YEARS ENDED ENDED -------------------------------------- 6/30/2000 1999 1998 1997 (a) ----------- ----------- ----------- ---------- Increase in contract owners' equity from operations: Net investment activity.......... $ (51,490) $ (43,039) $ 13,260 $ 3,087 Reinvested capital gains......... 219,550 1,905,785 0 90,978 Realized gain.................... 369,457 74,709 10,734 7,768 Unrealized gain (loss)........... (438,897) 2,666,425 252,938 94,008 ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations................ 98,620 4,603,880 276,932 195,841 ----------- ----------- ---------- ---------- Equity transactions: Sales: Contract purchase payments..... 1,504,672 2,601,488 2,034,257 536,293 Transfers from fixed & other subaccounts................. 1,101,639 2,589,201 2,464,502 1,270,995 ----------- ----------- ---------- ---------- 2,606,311 5,190,689 4,498,759 1,807,288 ----------- ----------- ---------- ---------- Redemptions: Withdrawals & surrenders (note 5).......................... 152,777 263,243 37,971 436 Transfers to fixed & other subaccounts................. 1,939,323 1,254,948 582,153 95,943 Cost of insurance & administrative fee (note 5).......................... 390,854 645,343 376,090 64,105 ----------- ----------- ---------- ---------- 2,482,954 2,163,534 996,214 160,484 ----------- ----------- ---------- ---------- Net equity transactions..... 123,357 3,027,155 3,502,545 1,646,804 ----------- ----------- ---------- ---------- Net change in contract owners' equity.......... 221,977 7,631,035 3,779,477 1,842,645 Contract owners' equity: Beginning of period.............. 13,253,157 5,622,122 1,842,645 0 ----------- ----------- ---------- ---------- End of period.................... $13,475,134 $13,253,157 $5,622,122 $1,842,645 =========== =========== ========== ========== S&P 500 INDEX SUBACCOUNT ---------------------------------------------------- SIX MONTHS YEARS ENDED ENDED -------------------------------------- 6/30/2000 1999 1998 1997 (a) ----------- ----------- ----------- ---------- Increase in contract owners' equity from operations: Net investment activity.......... $ 64,124 $ 252,331 $ 81,883 $ 30,030 Reinvested capital gains......... 23,095 1,388,105 328,825 94,770 Realized gain.................... 161,005 199,621 20,356 5,779 Unrealized gain (loss)........... (243,207) 1,477,659 619,923 (52,996) ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations................ 5,017 3,317,716 1,050,987 77,583 ----------- ----------- ---------- ---------- Equity transactions: Sales: Contract purchase payments..... 2,423,900 5,028,217 2,194,159 560,773 Transfers from fixed & other subaccounts................. 2,023,869 7,673,684 4,432,311 775,750 ----------- ----------- ---------- ---------- 4,447,769 12,701,901 6,626,470 1,336,523 ----------- ----------- ---------- ---------- Redemptions: Withdrawals & surrenders (note 5).......................... 397,234 491,958 110,446 727 Transfers to fixed & other subaccounts................. 3,199,016 3,445,258 714,255 83,751 Cost of insurance & administrative fee (note 5).......................... 620,935 1,121,691 407,189 62,142 ----------- ----------- ---------- ---------- 4,217,185 5,058,907 1,231,890 146,620 ----------- ----------- ---------- ---------- Net equity transactions..... 230,584 7,642,994 5,394,580 1,189,903 ----------- ----------- ---------- ---------- Net change in contract owners' equity.......... 235,601 10,960,710 6,445,567 1,267,486 Contract owners' equity: Beginning of period.............. 18,673,763 7,713,053 1,267,486 0 ----------- ----------- ---------- ---------- End of period.................... $18,909,364 $18,673,763 $7,713,053 $1,267,486 =========== =========== ========== ==========
--------------- (a) Period from January 3, 1997, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 67 70 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For Six Months Ended June 30, 2000 (Unaudited)
SOCIAL AWARENESS SUBACCOUNT EQUITY INCOME SUBACCOUNT ---------------------------------------------------- ------------------------- SIX MONTHS YEARS ENDED SIX MONTHS ENDED -------------------------------------- ENDED YEAR ENDED 6/30/2000 1999 1998 1997 (a) 6/30/2000 1999 (c) ----------- ----------- ----------- ---------- ----------- ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity.......... $ (1,682) $ (1,286) $ (957) $ 589 $ (20) $ 0 Reinvested capital gains......... 0 0 0 29,015 0 0 Realized gain (loss)............. 18,332 (62,411) (31,042) 926 48 0 Unrealized gain (loss)........... 40,686 131,316 (102,278) (31,805) (417) 0 ----------- ----------- ---------- ---------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations.................. 57,336 67,619 (134,277) (1,275) (389) 0 ----------- ----------- ---------- ---------- ----------- ----------- Equity transactions: Sales: Contract purchase payments..... 62,768 158,628 292,044 35,077 1,312 0 Transfers from fixed & other subaccounts................. 25,611 116,135 229,481 319,587 36,379 0 ----------- ----------- ---------- ---------- ----------- ----------- 88,379 274,763 521,525 354,664 37,691 0 ----------- ----------- ---------- ---------- ----------- ----------- Redemptions: Withdrawals & surrenders (note 5).......................... 5,191 6,911 7,059 50 0 0 Transfers to fixed & other subaccounts................. 168,354 363,431 148,460 13,740 4,074 0 Cost of insurance & administrative fee (note 5).......................... 13,927 36,077 37,586 4,380 603 0 ----------- ----------- ---------- ---------- ----------- ----------- 187,472 406,419 193,105 18,170 4,677 0 ----------- ----------- ---------- ---------- ----------- ----------- Net equity transactions..... (99,093) (131,656) 328,420 336,494 33,014 0 ----------- ----------- ---------- ---------- ----------- ----------- Net change in contract owners' equity.......... (41,757) (64,037) 194,143 335,219 32,625 0 Contract owners' equity: Beginning of period.............. 465,325 529,362 335,219 0 0 0 ----------- ----------- ---------- ---------- ----------- ----------- End of period.................... $ 423,568 $ 465,325 $ 529,362 $ 335,219 $ 32,625 $ 0 =========== =========== ========== ========== =========== =========== BLUE CHIP SUBACCOUNT ------------------------ SIX MONTHS ENDED YEAR ENDED 6/30/2000 1999 (c) ----------- ---------- Increase (decrease) in contract owners' equity from operations: Net investment activity.......... $ (154) $ 0 Reinvested capital gains......... 36 1 Realized gain (loss)............. 161 0 Unrealized gain (loss)........... (3,228) 10 ---------- ---------- Net increase (decrease) in contract owners' equity from operations.................. (3,185) 11 ---------- ---------- Equity transactions: Sales: Contract purchase payments..... 16,551 0 Transfers from fixed & other subaccounts................. 392,824 462 ---------- ---------- 409,375 462 ---------- ---------- Redemptions: Withdrawals & surrenders (note 5).......................... 3 0 Transfers to fixed & other subaccounts................. 226,309 0 Cost of insurance & administrative fee (note 5).......................... 2,008 5 ---------- ---------- 228,320 5 ---------- ---------- Net equity transactions..... 181,055 457 ---------- ---------- Net change in contract owners' equity.......... 177,870 468 Contract owners' equity: Beginning of period.............. 468 0 ---------- ---------- End of period.................... $ 178,338 $ 468 ========== ==========
--------------- (a) Period from January 3, 1997, date of commencement of operations. (c) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 68 71 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For Six Months Ended June 30, 2000 (Unaudited)
JANUS ASPEN SERIES ------------------------- HIGH INCOME SUBACCOUNT CAPITAL GROWTH SUBACCOUNT GROWTH SUBACCOUNT ------------------------- ------------------------- ------------------------- SIX MONTHS SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED 6/30/2000 1999 (c) 6/30/2000 1999 (c) 6/30/2000 1999 (b) ----------- ----------- ----------- ----------- ----------- ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity.......... $ 425 $ 509 $ (6,204) $ (84) $ 98,871 $ (7,811) Reinvested capital gains......... 0 0 1,346 25,879 212,421 6,806 Realized gain (loss)............. (2,952) 1 (9,962) 776 93,713 9,588 Unrealized gain (loss)........... 337 (347) (57,079) (6,339) (326,356) 1,075,487 ----------- ----------- ---------- ---------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations.................. (2,190) 163 (71,899) 20,232 78,649 1,084,070 ----------- ----------- ---------- ---------- ----------- ----------- Equity transactions: Sales: Contract purchase payments..... 4,619 0 391,425 16,540 1,308,199 1,227,956 Transfers from fixed & other subaccounts................. 23,671 58,507 2,329,260 284,457 2,520,801 4,493,684 ----------- ----------- ---------- ---------- ----------- ----------- 28,290 58,507 2,720,685 300,997 3,829,000 5,721,640 ----------- ----------- ---------- ---------- ----------- ----------- Redemptions: Withdrawals & surrenders (note 5).......................... 559 171 18,454 261 98,975 69,942 Transfers to fixed & other subaccounts................. 61,982 0 298,765 22,030 938,251 388,605 Cost of insurance & administrative fee (note 5).......................... 1,004 62 37,832 620 248,117 147,785 ----------- ----------- ---------- ---------- ----------- ----------- 63,545 233 355,051 22,911 1,285,343 606,332 ----------- ----------- ---------- ---------- ----------- ----------- Net equity transactions..... (35,255) 58,274 2,365,634 278,086 2,543,657 5,115,308 ----------- ----------- ---------- ---------- ----------- ----------- Net change in contract owners' equity.......... (37,445) 58,437 2,293,735 298,318 2,622,306 6,199,378 Contract owners' equity: Beginning of period.............. 58,437 0 298,318 0 6,199,378 0 ----------- ----------- ---------- ---------- ----------- ----------- End of period.................... $ 20,992 $ 58,437 $2,592,053 $ 298,318 $ 8,821,684 $ 6,199,378 =========== =========== ========== ========== =========== =========== JANUS ASPEN SERIES ----------------------- WORLDWIDE GROWTH SUBACCOUNT ----------------------- SIX MONTHS ENDED YEAR ENDED 6/30/2000 1999 (b) ---------- ---------- Increase (decrease) in contract owners' equity from operations: Net investment activity.......... $ 2,991 $ (5,961) Reinvested capital gains......... 71,624 0 Realized gain (loss)............. 18,847 3,506 Unrealized gain (loss)........... (95,286) 954,815 ---------- ---------- Net increase (decrease) in contract owners' equity from operations.................. (1,824) 952,360 ---------- ---------- Equity transactions: Sales: Contract purchase payments..... 938,873 447,177 Transfers from fixed & other subaccounts................. 2,635,357 2,495,368 ---------- ---------- 3,574,230 2,942,545 ---------- ---------- Redemptions: Withdrawals & surrenders (note 5).......................... 41,097 18,171 Transfers to fixed & other subaccounts................. 333,048 119,927 Cost of insurance & administrative fee (note 5).......................... 169,752 70,180 ---------- ---------- 543,897 208,278 ---------- ---------- Net equity transactions..... 3,030,333 2,734,267 ---------- ---------- Net change in contract owners' equity.......... 3,028,509 3,686,627 Contract owners' equity: Beginning of period.............. 3,686,627 0 ---------- ---------- End of period.................... $6,715,136 $3,686,627 ========== ==========
--------------- (b) Period from May 3, 1999, date of commencement of operations. (c) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 69 72 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For Six Months Ended June 30, 2000 (Unaudited)
STRONG VARIABLE ANNUITY FUNDS JANUS ASPEN SERIES -------------------------------------------------------- ------------------------- BALANCE SUBACCOUNT OPPORTUNITY II SUBACCOUNT SCHAFER VALUE II SUBACCOUNT ------------------------- -------------------------- --------------------------- SIX MONTHS SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED 6/30/2000 1999 (c) 6/30/2000 1999 (c) 6/30/2000 1999 (c) ----------- ----------- ------------ ----------- ------------ ------------ Increase (decrease) in contract owners' equity from operations: Net investment activity.......... $ 23,532 $ 565 $ (360) $ (3) $ (491) $ 17 Reinvested capital gains......... 72,937 0 0 0 0 91 Realized gain (loss)............. 1,730 191 1,641 0 6,039 36 Unrealized gain (loss)........... (79,710) 1,157 (7,099) 246 (19,508) (122) ----------- ----------- ---------- ---------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations.................. 18,489 1,913 (5,818) 243 (13,960) 22 ----------- ----------- ---------- ---------- ----------- ----------- Equity transactions: Sales: Contract purchase payments..... 132,985 950 6,009 27 4,929 69 Transfers from fixed & other subaccount.................. 2,316,441 69,482 778,245 3,529 427,441 8,647 ----------- ----------- ---------- ---------- ----------- ----------- 2,449,426 70,432 784,254 3,556 432,370 8,716 ----------- ----------- ---------- ---------- ----------- ----------- Redemptions: Withdrawals & surrenders (note 5).......................... 98 0 (55) 0 15 0 Transfers to fixed & other subaccounts................. 947,658 0 464,535 795 88,715 0 Cost of insurance & administrative fee (note 5).......................... 26,518 160 2,316 34 2,401 13 ----------- ----------- ---------- ---------- ----------- ----------- 974,274 160 466,796 829 91,131 13 ----------- ----------- ---------- ---------- ----------- ----------- Net equity transactions..... 1,475,152 70,272 317,458 2,727 341,239 8,703 ----------- ----------- ---------- ---------- ----------- ----------- Net change in contract owners' equity.......... 1,493,641 72,185 311,640 2,970 327,279 8,725 Contract owners' equity: Beginning of period.............. 72,185 0 2,970 0 8,725 0 ----------- ----------- ---------- ---------- ----------- ----------- End of period.................... $ 1,565,826 $ 72,185 $ 314,610 $ 2,970 $ 336,004 $ 8,725 =========== =========== ========== ========== =========== =========== STRONG VARIABLE ANNUITY FUNDS ------------------------ MID-CAP GROWTH II SUBACCOUNT ------------------------ SIX MONTHS ENDED YEAR ENDED 6/30/2000 1999 (c) ----------- ---------- Increase (decrease) in contract owners' equity from operations: Net investment activity.......... $ (3,218) $ (107) Reinvested capital gains......... 0 0 Realized gain (loss)............. (24,263) 453 Unrealized gain (loss)........... (7,284) 25,711 ---------- ---------- Net increase (decrease) in contract owners' equity from operations.................. (34,765) 26,057 ---------- ---------- Equity transactions: Sales: Contract purchase payments..... 155,226 4,910 Transfers from fixed & other subaccount.................. 1,047,989 277,711 ---------- ---------- 1,203,215 282,621 ---------- ---------- Redemptions: Withdrawals & surrenders (note 5).......................... 11,870 0 Transfers to fixed & other subaccounts................. 150,826 15,869 Cost of insurance & administrative fee (note 5).......................... 24,504 735 ---------- ---------- 187,200 16,604 ---------- ---------- Net equity transactions..... 1,016,015 266,017 ---------- ---------- Net change in contract owners' equity.......... 981,250 292,074 Contract owners' equity: Beginning of period.............. 292,074 0 ---------- ---------- End of period.................... $1,273,324 $ 292,074 ========== ==========
--------------- (c) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 70 73 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For Six Months Ended June 30, 2000 (Unaudited)
GOLDMAN SACHS ------------------------------------------------------------------------------- VIT GROWTH & INCOME VIT CORE US EQUITY VIT CAPITAL GROWTH SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------------- ----------------------- ------------------------- SIX MONTHS SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED 6/30/2000 1999 (b) 6/30/2000 1999 (c) 6/30/2000 1999 (c) ----------- ----------- ---------- ---------- ----------- ----------- Increase in contract owners' equity from operations: Net investment activity.......... $ (3,131) $ 6,342 $ (76) $ 21 $ (361) $ 6 Reinvested capital gains......... 0 0 0 88 0 521 Realized gain (loss)............. (336) (1,291) 121 (15) (44) 415 Unrealized gain.................. 11,825 5,904 101 283 7,073 472 ----------- ----------- ---------- ---------- ----------- ----------- Net increase in contract owners' equity from operations.................. 8,358 10,955 146 377 6,668 1,414 ----------- ----------- ---------- ---------- ----------- ----------- Equity transactions: Sales: Contract purchase payments..... 158,582 224,791 5,216 27 35,992 506 Transfers from fixed & other subaccounts................. 190,162 587,752 29,278 11,931 105,395 27,948 ----------- ----------- ---------- ---------- ----------- ----------- 348,744 812,543 34,494 11,958 141,387 28,454 ----------- ----------- ---------- ---------- ----------- ----------- Redemptions: Withdrawals & surrenders (note 5).......................... 20,615 (148) 6 0 0 0 Transfers to fixed & other subaccounts................. 82,456 121,177 1,214 4,541 3,581 15,776 Cost of insurance & administrative fee (note 5).......................... 26,835 14,869 1,154 22 4,391 86 ----------- ----------- ---------- ---------- ----------- ----------- 129,906 135,898 2,374 4,563 7,972 15,862 ----------- ----------- ---------- ---------- ----------- ----------- Net equity transactions..... 218,838 676,645 32,120 7,395 133,415 12,592 ----------- ----------- ---------- ---------- ----------- ----------- Net change in contract owners' equity.......... 227,196 687,600 32,266 7,772 140,083 14,006 Contract owners' equity: Beginning of period.............. 687,600 0 7,772 0 14,006 0 ----------- ----------- ---------- ---------- ----------- ----------- End of period.................... $ 914,796 $ 687,600 $ 40,038 $ 7,772 $ 154,089 $ 14,006 =========== =========== ========== ========== =========== =========== MORGAN STANLEY ----------------------- US REAL ESTATE SUBACCOUNT ----------------------- SIX MONTHS ENDED YEAR ENDED 6/30/2000 1999 (c) ---------- ---------- Increase in contract owners' equity from operations: Net investment activity.......... $ 258 $ 0 Reinvested capital gains......... 0 0 Realized gain (loss)............. (422) 0 Unrealized gain.................. 13,917 0 ---------- ---------- Net increase in contract owners' equity from operations.................. 13,753 0 ---------- ---------- Equity transactions: Sales: Contract purchase payments..... 22,674 0 Transfers from fixed & other subaccounts................. 414,881 0 ---------- ---------- 437,555 0 ---------- ---------- Redemptions: Withdrawals & surrenders (note 5).......................... 3 0 Transfers to fixed & other subaccounts................. 95,048 0 Cost of insurance & administrative fee (note 5).......................... 2,283 0 ---------- ---------- 97,334 0 ---------- ---------- Net equity transactions..... 340,221 0 ---------- ---------- Net change in contract owners' equity.......... 353,974 0 Contract owners' equity: Beginning of period.............. 0 0 ---------- ---------- End of period.................... $ 353,974 $ 0 ========== ==========
--------------- (b) Period from May 3, 1999, date of commencement of operations. (c) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 71 74 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For Six Months Ended June 30, 2000 (Unaudited)
LAZARD RETIREMENT --------------------------------------------------- EMERGING MARKET SMALL CAP SUBACCOUNT SUBACCOUNT ------------------------- ----------------------- SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED 6/30/2000 1999 (c) 6/30/2000 1999 (c) ----------- ----------- ---------- ---------- Increase (decrease) in contract owners' equity from operations: Net investment activity.......... $ (2,224) $ 440 $ (384) $ (2) Reinvested capital gains......... 0 0 0 37 Realized gain.................... 8,463 5,449 1,740 0 Unrealized gain (loss)........... (53,694) 107,388 6,550 536 ----------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity from operations.................. (47,455) 113,277 7,906 571 ----------- ----------- ---------- ---------- Equity transactions: Sales: Contract purchase payments..... 91,007 22,776 14,267 106 Transfers from fixed & other subaccounts................. 79,499 563,737 146,432 42,908 ----------- ----------- ---------- ---------- 170,506 586,513 160,699 43,014 ----------- ----------- ---------- ---------- Redemptions: Withdrawals & surrenders (note 5).......................... 7,098 536 312 0 Transfers to fixed & other subaccounts................. 56,338 108,799 46,899 0 Cost of insurance & administrative fee (note 5).......................... 20,200 6,614 2,330 63 ----------- ----------- ---------- ---------- 83,636 115,949 49,541 63 ----------- ----------- ---------- ---------- Net equity transactions..... 86,870 470,564 111,158 42,951 ----------- ----------- ---------- ---------- Net change in contract owners' equity.......... 39,415 583,841 119,064 43,522 Contract owners' equity: Beginning of period.............. 583,841 0 43,522 0 ----------- ----------- ---------- ---------- End of period.................... $ 623,256 $ 583,841 $ 162,586 $ 43,522 =========== =========== ========== ==========
--------------- (c) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 72 75 OHIO NATIONAL VARIABLE ACCOUNT R NOTES TO FINANCIAL STATEMENTS (1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Ohio National Variable Account R (the Account) is a separate account of The Ohio National Life Assurance Corporation (ONLAC). All obligations arising under variable life insurance contracts are general corporate obligations of ONLAC. ONLAC is a wholly-owned subsidiary of The Ohio National Life Insurance Company. The account has been registered as a unit investment trust under the Investment Company Act of 1940. Assets of the Account are invested in portfolio shares of Ohio National Fund, Inc., Janus Aspen Series, Strong Variable Insurance Funds, Inc., Goldman Sachs Variable Insurance Trust, and Lazard Retirement Funds (collectively the Funds). The Funds are diversified open-end management investment companies. The Funds' investments are subject to varying degrees of market, interest and financial risks; the issuers' abilities to meet certain obligations may be affected by economic developments in their respective industries. Investments are valued at the net asset value of fund shares held at June 30, 2000. Share transactions are recorded on the trade date. Income and capital gain distributions are recorded on the ex-dividend date. Net realized capital gains and losses are determined on the basis of average cost. ONLAC performs investment advisory services on behalf of the Ohio National Fund, Inc. in which the Account invests. For these services, the Company receives fees from the mutual funds. These fees are paid to an affiliate of the Company. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (2) INVESTMENTS At June 30, 2000 the aggregate cost and number of shares of the underlying funds owned by the respective subaccounts were:
MONEY CAPITAL EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ----------- ---------- ----------- ----------- ------------- -------------- Aggregate Cost................ $35,968,084 $3,242,747 $2,333,093 $ 9,261,495 $15,539,034 $7,196,070 Number of Shares.............. 1,323,465 324,275 225,028 495,037 1,084,701 560,007 SMALL CAP SUBACCOUNT ----------- Aggregate Cost................ $16,350,718 Number of Shares.............. 714,352
INTERNATIONAL SMALL AGGRESSIVE CORE GROWTH & S&P 500 SOCIAL COMPANY GROWTH GROWTH INCOME INDEX AWARENESS SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------- ---------- ----------- ----------- ----------- -------------- Aggregate Cost................ $ 4,175,992 $4,208,867 $3,595,927 $10,900,660 $17,107,985 $ 385,648 Number of Shares.............. 280,957 387,630 256,430 723,148 1,173,256 36,854 EQUITY INCOME SUBACCOUNT ----------- Aggregate Cost................ $ 33,043 Number of Shares.............. 2,618
HIGH JANUS ASPEN INCOME CAPITAL JANUS ASPEN WORLDWIDE JANUS ASPEN BLUE CHIP BOND GROWTH GROWTH GROWTH BALANCED SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ----------- ---------- ----------- ----------- ----------- -------------- Aggregate Cost................ $ 181,555 $ 21,001 $2,655,471 $ 8,072,554 $ 5,855,607 $1,644,380 Number of Shares.............. 17,855 2,364 84,283 268,218 139,811 59,492 STRONG OPPORTUNITY II SUBACCOUNT ----------- Aggregate Cost................ $ 321,462 Number of Shares.............. 11,631
(continued) Form 5741 73 76 OHIO NATIONAL VARIABLE ACCOUNT R NOTES TO FINANCIAL STATEMENTS (CONTINUED)
GOLDMAN GOLDMAN GOLDMAN LAZARD STRONG STRONG SACHS VIT SACHS VIT SACHS VIT MORGAN RETIREMENT SCHAFER MID-CAP GROWTH & CORE US CAPITAL STANLEY US EMERGING VALUE II GROWTH II INCOME EQUITY GROWTH REAL ESTATE MARKET SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ---------- ---------- ---------- ---------- ---------- ----------- ---------- Aggregate Cost................ $355,632 $1,254,897 $897,066 $39,653 $146,545 $340,056 $569,563 Number of Shares.............. 36,843 40,004 83,391 2,895 10,775 33,616 61,224 LAZARD RETIREMENT SMALL CAP SUBACCOUNT ---------- Aggregate Cost................ $155,500 Number of Shares.............. 15,082
(3) CONTRACTS IN ACCUMULATION PERIOD At June 30, 2000 the accumulation units and value per unit of the respective subaccounts and products were:
ACCUMULATION UNITS VALUE PER UNIT VALUE ------------------ ---------------- ----------- EQUITY SUBACCOUNT................................... 960,971.1235 35.171335 $33,798,637 MONEY MARKET SUBACCOUNT............................. 174,610.7502 18.571292 $ 3,242,747 BOND SUBACCOUNT..................................... 105,863.7319 21.303190 $ 2,255,235 OMNI SUBACCOUNT..................................... 359,527.9592 31.820332 $11,440,299 INTERNATIONAL SUBACCOUNT............................ 795,555.9750 27.778944 $22,099,705 CAPITAL APPRECIATION SUBACCOUNT..................... 383,712.8345 18.171521 $ 6,972,646 SMALL CAP SUBACCOUNT................................ 583,356.1527 46.272266 $26,993,211 INTERNATIONAL SMALL COMPANY SUBACCOUNT.............. 200,401.8025 24.266716 $ 4,863,094 AGGRESSIVE GROWTH SUBACCOUNT........................ 289,555.5962 14.486132 $ 4,194,541 CORE GROWTH SUBACCOUNT.............................. 203,205.5367 25.639783 $ 5,210,146 GROWTH & INCOME SUBACCOUNT.......................... 578,955.6783 23.274897 $13,475,134 S&P 500 INDEX SUBACCOUNT............................ 897,418.9980 21.070830 $18,909,363 SOCIAL AWARENESS SUBACCOUNT......................... 33,989.9499 12.461574 $ 423,568 EQUITY INCOME SUBACCOUNT............................ 2,972.2058 10.976534 $ 32,625 BLUE CHIP SUBACCOUNT................................ 18,323.8438 9.732589 $ 178,338 HIGH INCOME BOND SUBACCOUNT......................... 2,087.0946 10.058216 $ 20,992 CAPITAL GROWTH SUBACCOUNT........................... 166,750.6549 15.544484 $ 2,592,053 JANUS ASPEN GROWTH SUBACCOUNT....................... 677,495.1257 13.021029 $ 8,821,684 JANUS ASPEN WORLDWIDE GROWTH SUBACCOUNT............. 438,672.5631 15.307853 $ 6,715,135 JANUS ASPEN BALANCED SUBACCOUNT..................... 141,455.3235 11.069405 $ 1,565,826 STRONG OPPORTUNITY II SUBACCOUNT.................... 27,175.5106 11.576961 $ 314,610 STRONG SCHAFER VALUE II SUBACCOUNT.................. 32,774.5709 10.251972 $ 336,004 STRONG MID-CAP GROWTH II SUBACCOUNT................. 94,355.1807 13.495015 $ 1,273,325 GOLDMAN SACHS GROWTH & INCOME SUBACCOUNT............ 95,134.6493 9.615800 $ 914,795 GOLDMAN SACHS CORE US EQUITY SUBACCOUNT............. 710.9680 10.931168 $ 7,772 GOLDMAN SACHS CAPITAL GROWTH SUBACCOUNT............. 13,547.6801 11.373841 $ 154,089 MORGAN STANLEY US REAL ESTATE....................... 30,276.7055 11.691306 $ 353,974 LAZARD RETIREMENT EMERGING MARKET SUBACCOUNT........ 54,043.9995 11.532384 $ 623,256 LAZARD RETIREMENT SMALL CAP SUBACCOUNT.............. 14,098.9323 11.531771 $ 162,586
(4) RISK AND ADMINISTRATIVE EXPENSE Although variable life payments differ according to the investment performance of the Accounts, they are not affected by mortality or expense experience because ONLAC assumes the expense risk and the mortality risk under the contracts. ONLAC charges the Accounts' assets for assuming those risks. Such charge will be assessed at a daily rate of 0.0020471% which corresponds to an annual rate of .75% of the contract value. (continued) Form 5741 74 77 OHIO NATIONAL VARIABLE ACCOUNT R NOTES TO FINANCIAL STATEMENTS (CONTINUED) (5) CONTRACT CHARGES Each premium payment is subject to a premium expense charge. The premium expense charge has two components: (a) Sales Load. Each contract is subject to a level sales load of all premiums paid of 4%. (b) State Premium Tax. Premium payments will be subject to the state premium tax and any other state or local taxes that currently range from 2% to 4%. Total premium expense charges in the Account amounted to approximately $000,000 during 2000. A surrender charge is assessed in connection with all complete surrenders, all decreases in stated amount and certain partial surrenders consisting of two components: (1) a contingent deferred sales charge, and (2) a contingent deferred insurance underwriting charge. The contingent deferred sales charge is a percentage of premiums paid in the first two contract years. The contingent deferred sales charge percentages are scaled by age at issue or increase. The contingent deferred insurance underwriting charge varies with age at issue or increase. A service charge is imposed on each transfer of cash values among the subaccounts. Currently, ONLAC is not assessing this charge on the first four transfers made in any contract year. For partial surrenders, a service fee is charged. ONLAC charges a monthly deduction from the contract value for the cost of insurance, a $5.00 or $7.00 record keeping and processing charge, a risk charge of $.01 per $1,000 of the stated amount for the risk associated with the death benefit guarantee, and the cost of additional insurance benefits provided by rider. (6) FEDERAL INCOME TAXES Operations of the Account form a part of, and are taxed with, operations of ONLAC which is taxed as a life insurance company under the Internal Revenue Code. Taxes are the responsibility of the contract owner upon termination or withdrawal. No Federal income taxes are payable under the present law on dividend income or capital gains distribution from the Fund shares held in the Account or on capital gains realized by the Account on redemption of the Fund shares. Form 5741 75 78 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF ASSETS AND CONTRACT OWNERS' EQUITY DECEMBER 31, 1999
MONEY CAPITAL EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION SMALL CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT -------------- ---------- ---------- ----------- ------------- ------------ ------------- Assets -- Investments at market value (note 2)... $34,867,446 $4,377,995 $1,878,813 $11,808,840 $24,120,263 $7,587,944 $22,741,130 =========== ========== ========== =========== =========== ========== =========== Contract owners' equity Contracts in accumulation period (note 3).............. $34,867,446 $4,377,995 $1,878,813 $11,808,840 $24,120,263 $7,587,944 $22,741,130 =========== ========== ========== =========== =========== ========== ===========
INTERNATIONAL SMALL AGGRESSIVE CORE GROWTH & S&P 500 SOCIAL COMPANY GROWTH GROWTH INCOME INDEX AWARENESS BLUE CHIP SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT -------------- ---------- ---------- ----------- ------------- ------------ ------------- Assets -- Investments at market value (note 2)... $ 5,060,766 $3,990,634 $3,690,169 $13,253,157 $18,673,763 $ 465,325 $ 468 =========== ========== ========== =========== =========== ========== =========== Contract owners' equity Contracts in accumulation period (note 3).............. $ 5,060,766 $3,990,634 $3,690,169 $13,253,157 $18,673,763 $ 465,325 $ 468 =========== ========== ========== =========== =========== ========== ===========
JANUS ASPEN SERIES HIGH ---------------------------------------- INCOME CAPITAL WORLDWIDE BOND GROWTH GROWTH GROWTH BALANCED SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT -------------- ---------- ---------- ----------- ------------- Assets -- Investments at market value (note 2)... $ 58,437 $ 298,318 $6,199,378 $ 3,686,627 $ 72,185 =========== ========== ========== =========== =========== Contract owners' equity Contracts in accumulation period (note 3).............. $ 58,437 $ 298,318 $6,199,378 $ 3,686,627 $ 72,185 =========== ========== ========== =========== ===========
STRONG VARIABLE FUNDS GOLDMAN SACHS ---------------------------------------- ------------------------------------------ SCHAFER MID-CAP VIT GROWTH VIT CORE VIT CAPITAL OPPORTUNITY II VALUE II GROWTH & INCOME US EQUITY GROWTH SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT -------------- ---------- ---------- ----------- ------------- ------------ Assets -- Investments at market value (note 2)... $ 2,970 $ 8,725 $ 292,074 $ 687,600 $ 7,772 $ 14,006 =========== ========== ========== =========== =========== ========== Contract owners' equity Contracts in accumulation period (note 3).............. $ 2,970 $ 8,725 $ 292,074 $ 687,600 $ 7,772 $ 14,006 =========== ========== ========== =========== =========== ==========
LAZARD RETIREMENT --------------------------- EMERGING SMALL MARKET CAP SUBACCOUNT SUBACCOUNT -------------- ---------- Assets -- Investments at market value (note 2)... $ 583,841 $ 43,522 =========== ========== Contract owners' equity Contracts in accumulation period (note 3).............. $ 583,841 $ 43,522 =========== ==========
The accompanying notes are an integral part of these financial statements. Form 5741 76 79 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF OPERATIONS For the Three Years Ended December 31
EQUITY MONEY MARKET SUBACCOUNT SUBACCOUNT ----------------------------------------- --------------------------------------- 1999 1998 1997 1999 1998 1997 ----------- ----------- ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends..................... $ 103,759 $ 374,943 $ 453,946 $ 157,294 $ 92,380 $ 55,657 Risk & administrative expense (note 4)... (236,084) (222,953) (190,776) (23,933) (13,276) (7,949) ----------- ----------- ----------- ----------- ---------- ---------- Net investment activity.............. (132,325) 151,990 263,170 133,361 79,104 47,708 ----------- ----------- ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............... 13,411,033 582,686 1,475,813 0 0 0 Realized gain (loss)................... 1,165,160 433,578 431,237 (31,917) (1,729) 241 Unrealized gain (loss)................. (8,842,357) 276,272 1,699,778 0 0 0 ----------- ----------- ----------- ----------- ---------- ---------- Net gain (loss) on investments....... 5,733,836 1,292,536 3,606,828 (31,917) (1,729) 241 ----------- ----------- ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations.......... $ 5,601,511 $ 1,444,526 $ 3,869,998 $ 101,444 $ 77,375 $ 47,949 =========== =========== =========== =========== ========== ==========
BOND OMNI SUBACCOUNT SUBACCOUNT ----------------------------------------- --------------------------------------- 1999 1998 1997 1999 1998 1997 ----------- ----------- ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends..................... $ 120,071 $ 83,140 $ 68,280 $ 259,003 $ 301,587 $ 285,077 Risk & administrative expense (note 4)... (13,410) (9,252) (6,130) (89,113) (83,337) (65,184) ----------- ----------- ----------- ----------- ---------- ---------- Net investment activity.............. 106,661 73,888 62,150 169,890 218,250 219,893 ----------- ----------- ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............... 0 0 0 411,548 1,760 480,048 Realized gain (loss)................... (6,506) 2,811 1,394 431,731 332,951 73,429 Unrealized gain (loss)................. (103,003) (21,734) 4,309 164,688 (101,784) 562,929 ----------- ----------- ----------- ----------- ---------- ---------- Net gain (loss) on investments....... (109,509) (18,923) 5,703 1,007,967 232,927 1,116,406 ----------- ----------- ----------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity from operations...................... $ (2,848) $ 54,965 $ 67,853 $ 1,177,857 $ 451,177 $1,336,299 =========== =========== =========== =========== ========== ==========
The accompanying notes are an integral part of these financial statements. Form 5741 77 80 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF OPERATIONS For the Three Years Ended December 31
INTERNATIONAL CAPITAL APPRECIATION SUBACCOUNT SUBACCOUNT ----------------------------------------- --------------------------------------- 1999 1998 1997 1999 1998 1997 ----------- ----------- ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends..................... $ 0 $ 630,410 $ 983,741 $ 181,793 $ 155,395 $ 130,659 Risk & administrative expense (note 4)... (125,913) (124,053) (112,268) (56,169) (45,565) (28,303) ----------- ----------- ----------- ----------- ---------- ---------- Net investment activity.............. (125,913) 506,357 871,473 125,624 109,830 102,356 ----------- ----------- ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............... 0 695,117 1,415,674 700,498 539,044 244,214 Realized gain (loss)................... (55,726) (45,820) 186,736 36,655 33,861 34,042 Unrealized gain (loss)................. 10,000,013 (670,437) (2,391,042) (450,311) (390,779) 129,929 ----------- ----------- ----------- ----------- ---------- ---------- Net gain (loss) on investments....... 9,944,287 (21,140) (788,632) 286,842 182,126 408,185 ----------- ----------- ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations.......... $ 9,818,374 $ 485,217 $ 82,841 $ 412,466 $ 291,956 $ 510,541 =========== =========== =========== =========== ========== ==========
SMALL CAP INTERNATIONAL SMALL COMPANY SUBACCOUNT SUBACCOUNT ----------------------------------------- --------------------------------------- 1999 1998 1997 1999 1998 1997 ----------- ----------- ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends..................... $ 0 $ 0 $ 0 $ 0 $ 54,153 $ 52,943 Risk & administrative expense (note 4)... (100,544) (54,057) (38,798) (20,937) (13,819) (9,551) ----------- ----------- ----------- ----------- ---------- ---------- Net investment activity.............. (100,544) (54,057) (38,798) (20,937) 40,334 43,392 ----------- ----------- ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............... 5,797,375 107 271,143 479,458 180,539 83,769 Realized gain.......................... 307,091 57,223 84,498 202,058 8,238 32,076 Unrealized gain (loss)................. 5,205,819 930,451 130,287 1,832,353 (187,295) (35,010) ----------- ----------- ----------- ----------- ---------- ---------- Net gain on investments.............. 11,310,285 987,781 485,928 2,513,869 1,482 80,835 ----------- ----------- ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations.......... $11,209,741 $ 933,724 $ 447,130 $ 2,492,932 $ 41,816 $ 124,227 =========== =========== =========== =========== ========== ==========
The accompanying notes are an integral part of these financial statements. Form 5741 78 81 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF OPERATIONS For the Three Years Ended December 31
AGGRESSIVE GROWTH CORE GROWTH SUBACCOUNT SUBACCOUNT ----------------------------------------- --------------------------------------- 1999 1998 1997 1999 1998 1997(a) ----------- ----------- ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends..................... $ 0 $ 0 $ 24,808 $ 0 $ 0 $ 161 Risk & administrative expense (note 4)... (26,551) (23,847) (16,668) (14,942) (7,627) (3,844) ----------- ----------- ----------- ----------- ---------- ---------- Net investment activity.............. (26,551) (23,847) 8,140 (14,942) (7,627) (3,683) ----------- ----------- ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............... 0 258,472 9,068 763,382 0 0 Realized gain (loss)................... (41,002) 22,270 (3,358) 115,808 1,725 3,379 Unrealized gain (loss)................. 248,666 (6,276) 231,511 875,700 101,913 (3,039) ----------- ----------- ----------- ----------- ---------- ---------- Net gain on investments.............. 207,664 274,466 237,221 1,754,890 103,638 340 ----------- ----------- ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations.......... $ 181,113 $ 250,619 $ 245,361 $ 1,739,948 $ 96,011 $ (3,343) =========== =========== =========== =========== ========== ==========
GROWTH & INCOME S&P 500 INDEX SUBACCOUNT SUBACCOUNT ----------------------------------------- --------------------------------------- 1999 1998 1997(a) 1999 1998 1997(a) ----------- ----------- ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends..................... $ 17,648 $ 40,476 $ 7,733 $ 355,574 $ 108,830 $ 33,016 Risk & administrative expense (note 4)... (60,687) (27,216) (4,646) (103,243) (26,947) (2,986) ----------- ----------- ----------- ----------- ---------- ---------- Net investment activity.............. (43,039) 13,260 3,087 252,331 81,883 30,030 ----------- ----------- ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............... 1,905,785 0 90,978 1,388,105 328,825 94,770 Realized gain.......................... 74,709 10,734 7,768 199,621 20,356 5,779 Unrealized gain (loss)................. 2,666,425 252,938 94,008 1,477,659 619,923 (52,996) ----------- ----------- ----------- ----------- ---------- ---------- Net gain on investments.............. 4,646,919 263,672 192,754 3,065,385 969,104 47,553 ----------- ----------- ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations.......... $ 4,603,880 $ 276,932 $ 195,841 $ 3,317,716 $1,050,987 $ 77,583 =========== =========== =========== =========== ========== ==========
--------------- (a) Period from January 3, 1997, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 79 82 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF OPERATIONS For the Three Years Ended December 31
MONTGOMERY ASSET SOCIAL AWARENESS EMERGING MARKET SUBACCOUNT SUBACCOUNT --------------------------------------- ------------------------------------- 1999 1998 1997(a) 1999 1998 1997(b) ----------- ----------- ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends.......................... $ 2,088 $ 2,652 $ 983 $ 0 $ 438 $ 131 Risk & administrative expense (note 4)........ (3,374) (3,609) (394) (2,118) (1,165) (188) ----------- ----------- ----------- ----------- ---------- ---------- Net investment activity................... (1,286) (957) 589 (2,118) (727) (57) ----------- ----------- ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains.................... 0 0 29,015 0 0 0 Realized gain (loss)........................ (62,411) (31,042) 926 8,194 (3,512) (554) Unrealized gain (loss)...................... 131,316 (102,278) (31,805) 68,642 (58,655) (9,987) ----------- ----------- ----------- ----------- ---------- ---------- Net gain (loss) on investments............ 68,905 (133,320) (1,864) 76,836 (62,167) (10,541) ----------- ----------- ----------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity From operations....... $ 67,619 $ (134,277) $ (1,275) $ 74,718 $ (62,894) $ (10,598) =========== =========== =========== =========== ========== ==========
JANUS ASPEN SERIES ------------------------------------- BLUE HIGH CAPITAL WORLDWIDE CHIP INCOME GROWTH GROWTH GROWTH BALANCE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT 1999(d) 1999(d) 1999(d) 1999(c) 1999(c) 1999(d) ----------- ----------- ----------- ----------- ---------- ---------- Investment activity: Reinvested dividends.......................... $ 0 $ 526 $ 0 $ 6,902 $ 1,005 $ 583 Risk & administrative expense (note 4)........ 0 (17) (84) (14,713) (6,966) (18) ----------- ----------- ----------- ----------- ---------- ---------- Net investment activity................... 0 509 (84) (7,811) (5,961) 565 ----------- ----------- ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains.................... 1 0 25,879 6,806 0 0 Realized gain............................... 0 1 776 9,588 3,506 191 Unrealized gain (loss)...................... 10 (347) (6,339) 1,075,487 954,815 1,157 ----------- ----------- ----------- ----------- ---------- ---------- Net gain (loss) on investments............ 11 (346) 20,316 1,091,881 958,321 1,348 ----------- ----------- ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations...................... $ 11 $ 163 $ 20,232 $ 1,084,070 $ 952,360 $ 1,913 =========== =========== =========== =========== ========== ==========
--------------- (a) Period from January 3, 1997, date of commencement of operations. (b) Period from April 1, 1997, date of commencement of operations. (c) Period from May 3, 1999, date of commencement of operations. (d) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 80 83 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF OPERATIONS For the Three Years Ended December 31
STRONG VARIABLE ANNUITY FUNDS GOLDMAN SACHS ------------------------------------------ --------------------------------------- SCHAFER MID-CAP VIT GROWTH & VIT CORE VIT CAPITAL OPPORTUNITY II VALUE GROWTH INCOME US EQUITY GROWTH SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT 1999(d) 1999(d) 1999(d) 1999(c) 1999(d) 1999(d) -------------- ----------- ----------- ------------ ---------- ----------- Investment activity: Reinvested dividends..................... $ 0 $ 20 $ 0 $ 7,699 $ 25 $ 18 Risk & administrative expense (note 4)... (3) (3) (107) (1,357) (4) (12) ----------- ----------- ----------- ----------- ---------- ---------- Net investment activity............. (3) 17 (107) 6,342 21 6 ----------- ----------- ----------- ----------- ---------- ---------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains............... 0 91 0 0 88 521 Realized gain.......................... 0 36 453 (1,291) (15) 415 Unrealized gain (loss)................. 246 (122) 25,711 5,904 283 472 ----------- ----------- ----------- ----------- ---------- ---------- Net gain (loss) on investments...... 246 5 26,164 4,613 356 1,408 ----------- ----------- ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations......... $ 243 $ 22 $ 26,057 $ 10,955 $ 377 $ 1,414 =========== =========== =========== =========== ========== ==========
LAZARD RETIREMENT ---------------------------- EMERGING SMALL MARKET CAP SUBACCOUNT SUBACCOUNT 1999(d) 1999(d) -------------- ----------- Investment activity: Reinvested dividends...................... $ 1,046 $ 3 Risk & administrative expense (note 4).... (606) (5) ----------- ----------- Net investment activity.............. 440 (2) ----------- ----------- Realized & unrealized gain (loss) on Investments: Reinvested capital gains................ 0 37 Realized gain (loss).................... 5,449 0 Unrealized gain......................... 107,388 536 ----------- ----------- Net gain on investments.............. 112,837 573 ----------- ----------- Net increase in contract owners' equity from operations.......... $ 113,277 $ 571 =========== ===========
--------------- (c) Period from May 3, 1999, date of commencement of operations. (d) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 81 84 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For the Three Years Ended December 31 EQUITY MONEY MARKET SUBACCOUNT SUBACCOUNT --------------------------------------- ------------------------ 1999 1998 1997 1999 1998 ----------- ----------- ----------- ----------- ---------- Increase in contract owners' equity from operations: Net investment activity............................... $ (132,325) $ 151,990 $ 263,170 $ 133,361 $ 79,104 Reinvested capital gains.............................. 13,411,033 582,686 1,475,813 0 0 Realized gain (loss).................................. 1,165,160 433,578 431,237 (31,917) (1,729) Unrealized gain (loss)................................ (8,842,357) 276,272 1,699,778 0 0 ----------- ----------- ----------- ----------- ---------- Net increase in contract owners' equity from operations..................................... 5,601,511 1,444,526 3,869,998 101,444 77,375 ----------- ----------- ----------- ----------- ---------- Equity transactions: Sales: Contract purchase payments............................ 5,012,273 5,167,419 4,850,686 6,289,867 9,924,762 Transfers from fixed & other subaccounts.............. 2,442,831 1,599,312 2,585,503 5,592,228 2,863,761 ----------- ----------- ----------- ----------- ---------- 7,455,104 6,766,731 7,436,189 11,882,095 12,788,523 ----------- ----------- ----------- ----------- ---------- Redemptions: Withdrawals & surrenders (note 5)..................... 1,283,863 975,495 930,275 22,532 48,825 Transfers to fixed & other subaccounts................ 6,010,815 2,231,174 2,061,907 11,367,686 9,721,391 Cost of insurance & administrative fee (note 5)....... 2,060,563 2,044,300 1,775,339 283,708 257,277 ----------- ----------- ----------- ----------- ---------- 9,355,241 5,250,969 4,767,521 11,673,926 10,027,493 ----------- ----------- ----------- ----------- ---------- Net equity transactions.......................... (1,900,137) 1,515,762 2,668,668 208,169 2,761,030 ----------- ----------- ----------- ----------- ---------- Net change in contract owners' equity.......... 3,701,374 2,960,288 6,538,666 309,613 2,838,405 Contract owners' equity: Beginning of period..................................... 31,166,072 28,205,784 21,667,118 4,068,382 1,229,977 ----------- ----------- ----------- ----------- ---------- End of period........................................... $34,867,446 $31,166,072 $28,205,784 $ 4,377,995 $4,068,382 =========== =========== =========== =========== ========== MONEY MARKET ------------ SUBACCOUNT ------------ 1997 ------------ Increase in contract owners' equity from operations: Net investment activity............................... $ 47,708 Reinvested capital gains.............................. 0 Realized gain (loss).................................. 241 Unrealized gain (loss)................................ 0 ---------- Net increase in contract owners' equity from operations..................................... 47,949 ---------- Equity transactions: Sales: Contract purchase payments............................ 6,067,434 Transfers from fixed & other subaccounts.............. 1,593,336 ---------- 7,660,770 ---------- Redemptions: Withdrawals & surrenders (note 5)..................... 8,519 Transfers to fixed & other subaccounts................ 7,321,910 Cost of insurance & administrative fee (note 5)....... 225,524 ---------- 7,555,953 ---------- Net equity transactions.......................... 104,817 ---------- Net change in contract owners' equity.......... 152,766 Contract owners' equity: Beginning of period..................................... 1,077,211 ---------- End of period........................................... $1,229,977 ==========
The accompanying notes are an integral part of these financial statements. Form 5741 82 85 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For the Three Years Ended December 31 BOND OMNI SUBACCOUNT SUBACCOUNT --------------------------------------- ------------------------- 1999 1998 1997 1999 1998 ----------- ----------- ----------- ----------- ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity.............................. $ 106,661 $ 73,888 $ 62,150 $ 169,890 $ 218,250 Reinvested capital gains............................. 0 0 0 411,548 1,760 Realized gain (loss)................................. (6,506) 2,811 1,394 431,731 332,951 Unrealized gain (loss)............................... (103,003) (21,734) 4,309 164,688 (101,784) ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity from operations........................ (2,848) 54,965 67,853 1,177,857 451,177 ----------- ----------- ----------- ----------- ----------- Equity transactions: Sales: Contract purchase payments........................... 419,790 345,106 244,107 2,179,009 2,470,020 Transfers from fixed & other subaccounts............. 256,378 567,357 131,403 934,257 2,614,095 ----------- ----------- ----------- ----------- ----------- 676,168 912,463 375,510 3,113,266 5,084,115 ----------- ----------- ----------- ----------- ----------- Redemptions: Withdrawals & surrenders (note 5).................... 103,237 13,218 21,828 600,731 705,842 Transfers to fixed & other subaccounts............... 243,107 129,183 131,854 2,971,645 2,318,267 Cost of insurance & administrative fee (note 5)...... 122,471 100,579 70,289 841,801 802,634 ----------- ----------- ----------- ----------- ----------- 468,815 242,980 223,971 4,414,177 3,826,743 ----------- ----------- ----------- ----------- ----------- Net equity transactions......................... 207,353 669,483 151,539 (1,300,911) 1,257,372 ----------- ----------- ----------- ----------- ----------- Net change in contract owners' equity......... 204,505 724,448 219,392 (123,054) 1,708,549 Contract owners' equity: Beginning of period.................................... 1,674,308 949,860 730,468 11,931,894 10,223,345 ----------- ----------- ----------- ----------- ----------- End of period.......................................... $ 1,878,813 $ 1,674,308 $ 949,860 $11,808,840 $11,931,894 =========== =========== =========== =========== =========== OMNI SUBACCOUNT ----------- 1997 ----------- Increase (decrease) in contract owners' equity from operations: Net investment activity.............................. $ 219,893 Reinvested capital gains............................. 480,048 Realized gain (loss)................................. 73,429 Unrealized gain (loss)............................... 562,929 ----------- Net increase (decrease) in contract owners' equity from operations........................ 1,336,299 ----------- Equity transactions: Sales: Contract purchase payments........................... 1,966,189 Transfers from fixed & other subaccounts............. 907,850 ----------- 2,874,039 ----------- Redemptions: Withdrawals & surrenders (note 5).................... 187,562 Transfers to fixed & other subaccounts............... 312,223 Cost of insurance & administrative fee (note 5)...... 648,661 ----------- 1,148,446 ----------- Net equity transactions......................... 1,725,593 ----------- Net change in contract owners' equity......... 3,061,892 Contract owners' equity: Beginning of period.................................... 7,161,453 ----------- End of period.......................................... $10,223,345 ===========
The accompanying notes are an integral part of these financial statements. Form 5741 83 86 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For the Three Years Ended December 31 INTERNATIONAL CAPITAL APPRECIATION SUBACCOUNT SUBACCOUNT --------------------------------------- ------------------------ 1999 1998 1997 1999 1998 ----------- ----------- ----------- ----------- ---------- Increase in contract owners' equity from operations: Net investment activity............................... $ (125,913) $ 506,357 $ 871,473 $ 125,624 $ 109,830 Reinvested capital gains.............................. 0 695,117 1,415,674 700,498 539,044 Realized gain (loss).................................. (55,726) (45,820) 186,736 36,655 33,861 Unrealized gain (loss)................................ 10,000,013 (670,437) (2,391,042) (450,311) (390,779) ----------- ----------- ----------- ----------- ---------- Net increase in contract owners' equity from operations..................................... 9,818,374 485,217 82,841 412,466 291,956 ----------- ----------- ----------- ----------- ---------- Equity transactions: Sales: Contract purchase payments............................ 3,266,962 4,027,966 4,352,514 1,870,385 2,206,184 Transfers from fixed & other subaccounts.............. 954,384 965,930 2,121,595 851,618 951,520 ----------- ----------- ----------- ----------- ---------- 4,221,346 4,993,896 6,474,109 2,722,003 3,157,704 ----------- ----------- ----------- ----------- ---------- Redemptions: Withdrawals & surrenders (note 5)..................... 881,527 618,889 469,189 262,934 170,616 Transfers to fixed & other subaccounts................ 4,697,047 2,112,568 2,136,043 1,789,041 518,403 Cost of insurance & administrative fee (note 5)....... 1,206,179 1,348,113 1,269,503 574,371 548,283 ----------- ----------- ----------- ----------- ---------- 6,784,753 4,079,570 3,874,735 2,626,346 1,237,302 ----------- ----------- ----------- ----------- ---------- Net equity transactions.......................... (2,563,407) 914,326 2,599,374 95,657 1,920,402 ----------- ----------- ----------- ----------- ---------- Net change in contract owners' equity.......... 7,254,967 1,399,543 2,682,215 508,123 2,212,358 Contract owners' equity: Beginning of period..................................... 16,865,296 15,465,753 12,783,538 7,079,821 4,867,463 ----------- ----------- ----------- ----------- ---------- End of period........................................... $24,120,263 $16,865,296 $15,465,753 $ 7,587,944 $7,079,821 =========== =========== =========== =========== ========== CAPITAL APPRECIATION SUBACCOUNT -------------------- 1997 -------------------- Increase in contract owners' equity from operations: Net investment activity............................... $ 102,356 Reinvested capital gains.............................. 244,214 Realized gain (loss).................................. 34,042 Unrealized gain (loss)................................ 129,929 ---------- Net increase in contract owners' equity from operations..................................... 510,541 ---------- Equity transactions: Sales: Contract purchase payments............................ 1,458,697 Transfers from fixed & other subaccounts.............. 1,299,231 ---------- 2,757,928 ---------- Redemptions: Withdrawals & surrenders (note 5)..................... 54,331 Transfers to fixed & other subaccounts................ 775,912 Cost of insurance & administrative fee (note 5)....... 377,999 ---------- 1,208,242 ---------- Net equity transactions.......................... 1,549,686 ---------- Net change in contract owners' equity.......... 2,060,227 Contract owners' equity: Beginning of period..................................... 2,807,236 ---------- End of period........................................... $4,867,463 ==========
The accompanying notes are an integral part of these financial statements. Form 5741 84 87 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For the Three Years Ended December 31
SMALL CAP INTERNATIONAL SMALL COMPANY SUBACCOUNT SUBACCOUNT --------------------------------------- ------------------------------------- 1999 1998 1997 1999 1998 1997 ----------- ----------- ----------- ----------- ---------- ---------- Increase in contract owners' equity from operations: Net investment activity.................... $ (100,544) $ (54,057) $ (38,798) $ (20,937) $ 40,334 $ 43,392 Reinvested capital gains................... 5,797,375 107 271,143 479,458 180,539 83,769 Realized gain.............................. 307,091 57,223 84,498 202,058 8,238 32,076 Unrealized gain (loss)..................... 5,205,819 930,451 130,287 1,832,353 (187,295) (35,010) ----------- ----------- ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations.............. 11,209,741 933,724 447,130 2,492,932 41,816 124,227 ----------- ----------- ----------- ----------- ---------- ---------- Equity transactions: Sales: Contract purchase payments................. 2,645,343 2,614,149 2,181,009 603,036 666,312 537,053 Transfers from fixed & other subaccounts... 3,174,822 1,096,254 1,438,960 1,743,233 218,614 450,868 ----------- ----------- ----------- ----------- ---------- ---------- 5,820,165 3,710,403 3,619,969 2,346,269 884,926 987,921 ----------- ----------- ----------- ----------- ---------- ---------- Redemptions: Withdrawals & surrenders (note 5).......... 515,999 258,338 141,409 109,397 56,018 221,380 Transfers to fixed & other subaccounts..... 2,004,103 795,000 1,146,251 1,506,122 219,547 218,387 Cost of insurance & administrative fee (note 5)................................ 1,018,712 705,650 579,612 207,469 178,599 140,673 ----------- ----------- ----------- ----------- ---------- ---------- 3,538,814 1,758,988 1,867,272 1,822,988 454,164 580,440 ----------- ----------- ----------- ----------- ---------- ---------- Net equity transactions............... 2,281,351 1,951,415 1,752,697 523,281 430,762 407,481 ----------- ----------- ----------- ----------- ---------- ---------- Net change in contract owners' equity........................... 13,491,092 2,885,139 2,199,827 3,016,213 472,578 531,708 Contract owners' equity: Beginning of period.......................... 9,250,038 6,364,899 4,165,072 2,044,553 1,571,975 1,040,267 ----------- ----------- ----------- ----------- ---------- ---------- End of period................................ $22,741,130 $ 9,250,038 $ 6,364,899 $ 5,060,766 $2,044,553 $1,571,975 =========== =========== =========== =========== ========== ==========
The accompanying notes are an integral part of these financial statements. Form 5741 85 88 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For the Three Years Ended December 31 AGGRESSIVE GROWTH CORE GROWTH SUBACCOUNT SUBACCOUNT --------------------------------------- ------------------------ 1999 1998 1997 1999 1998 ----------- ----------- ----------- ----------- ---------- Increase (decrease) in contract owners' equity from operations: Net investment activity............................... $ (26,551) $ (23,847) $ 8,140 $ (14,942) $ (7,627) Reinvested capital gains.............................. 0 258,472 9,068 763,382 0 Realized gain (loss).................................. (41,002) 22,270 (3,358) 115,808 1,725 Unrealized gain (loss)................................ 248,666 (6,276) 231,511 875,700 101,913 ----------- ----------- ----------- ----------- ---------- Net increase in contract owners' equity from operations... 181,113 250,619 245,361 1,739,948 96,011 ----------- ----------- ----------- ----------- ---------- Equity transactions: Sales: Contract purchase payments............................ 1,136,033 1,348,654 969,362 438,214 459,093 Transfers from fixed & other subaccounts.............. 499,516 423,659 544,712 1,317,575 378,819 ----------- ----------- ----------- ----------- ---------- 1,635,549 1,772,313 1,514,074 1,755,789 837,912 ----------- ----------- ----------- ----------- ---------- Redemptions: Withdrawals & surrenders (note 5)..................... 182,042 86,262 84,536 82,138 16,609 Transfers to fixed & other subaccounts................ 1,139,574 460,387 418,423 853,515 327,440 Cost of insurance & administrative fee (note 5)....... 338,621 347,236 278,191 166,365 117,857 ----------- ----------- ----------- ----------- ---------- 1,660,237 893,885 781,150 1,102,018 461,906 ----------- ----------- ----------- ----------- ---------- Net equity transactions.......................... (24,688) 878,428 732,924 653,771 376,006 ----------- ----------- ----------- ----------- ---------- Net change in contract owners' equity.......... 156,425 1,129,047 978,285 2,393,719 472,017 Contract owners' equity: Beginning of period..................................... 3,834,209 2,705,162 1,726,877 1,296,450 824,433 ----------- ----------- ----------- ----------- ---------- End of period........................................... $ 3,990,634 $ 3,834,209 $ 2,705,162 $ 3,690,169 $1,296,450 =========== =========== =========== =========== ========== ---------- 1997(A) ---------- Increase (decrease) in contract owners' equity from operations: Net investment activity............................... $ (3,683) Reinvested capital gains.............................. 0 Realized gain (loss).................................. 3,379 Unrealized gain (loss)................................ (3,039) ---------- Net increase in contract owners' equity from operations... (3,343) ---------- Equity transactions: Sales: Contract purchase payments............................ 377,379 Transfers from fixed & other subaccounts.............. 631,937 ---------- 1,009,316 ---------- Redemptions: Withdrawals & surrenders (note 5)..................... 1,885 Transfers to fixed & other subaccounts................ 116,828 Cost of insurance & administrative fee (note 5)....... 62,827 ---------- 181,540 ---------- Net equity transactions.......................... 827,776 ---------- Net change in contract owners' equity.......... 824,433 Contract owners' equity: Beginning of period..................................... 0 ---------- End of period........................................... $ 824,433 ==========
--------------- (a) Period from January 3, 1997, date of commencement of operations The accompanying notes are an integral part of these financial statements. Form 5741 86 89 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For the Three Years Ended December 31
GROWTH & INCOME SUBACCOUNT S&P 500 INDEX SUBACCOUNT --------------------------------------- ------------------------------------- 1999 1998 1997(a) 1999 1998 1997(a) ----------- ----------- ----------- ----------- ---------- ---------- Increase in contract owners' equity from operations: Net investment activity....................... $ (43,039) $ 13,260 $ 3,087 $ 252,331 $ 81,883 $ 30,030 Reinvested capital gains...................... 1,905,785 0 90,978 1,388,105 328,825 94,770 Realized gain................................. 74,709 10,734 7,768 199,621 20,356 5,779 Unrealized gain (loss)........................ 2,666,425 252,938 94,008 1,477,659 619,923 (52,996) ----------- ----------- ----------- ----------- ---------- ---------- Net increase in contract owners' equity from operations........................ 4,603,880 276,932 195,841 3,317,716 1,050,987 77,583 ----------- ----------- ----------- ----------- ---------- ---------- Equity transactions: Sales: Contract purchase payments.................. 2,601,488 2,034,257 536,293 5,028,217 2,194,159 560,773 Transfers from fixed & other subaccounts.... 2,589,201 2,464,502 1,270,995 7,673,684 4,432,311 775,750 ----------- ----------- ----------- ----------- ---------- ---------- 5,190,689 4,498,759 1,807,288 12,701,901 6,626,470 1,336,523 ----------- ----------- ----------- ----------- ---------- ---------- Redemptions: Withdrawals & surrenders (note 5)........... 263,243 37,971 436 491,958 110,446 727 Transfers to fixed & other subaccounts...... 1,254,948 582,153 95,943 3,445,258 714,255 83,751 Cost of insurance & administrative fee (note 5)....................................... 645,343 376,090 64,105 1,121,691 407,189 62,142 ----------- ----------- ----------- ----------- ---------- ---------- 2,163,534 996,214 160,484 5,058,907 1,231,890 146,620 ----------- ----------- ----------- ----------- ---------- ---------- Net equity transactions.................. 3,027,155 3,502,545 1,646,804 7,642,994 5,394,580 1,189,903 ----------- ----------- ----------- ----------- ---------- ---------- Net change in contract owners' equity............................... 7,631,035 3,779,477 1,842,645 10,960,710 6,445,567 1,267,486 Contract owners' equity: Beginning of period........................... 5,622,122 1,842,645 0 7,713,053 1,267,486 0 ----------- ----------- ----------- ----------- ---------- ---------- End of period................................. $13,253,157 $ 5,622,122 $ 1,842,645 $18,673,763 $7,713,053 $1,267,486 =========== =========== =========== =========== ========== ==========
--------------- (a) Period from January 3, 1997, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 87 90 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For the Three Years Ended December 31
MONTGOMERY ASSET EMERGING SOCIAL AWARENESS SUBACCOUNT MARKET SUBACCOUNT --------------------------------------- ------------------------------------- 1999 1998 1997(a) 1999 1998 1997(b) ----------- ----------- ----------- ----------- ---------- ---------- Increase (decrease) in contract owners' equity from operations: Net investment activity....................... $ (1,286) $ (957) $ 589 $ (2,118) $ (727) $ (57) Reinvested capital gains...................... 0 0 29,015 0 0 0 Realized gain (loss).......................... (62,411) (31,042) 926 8,194 (3,512) (554) Unrealized gain (loss)........................ 131,316 (102,278) (31,805) 68,642 (58,655) (9,987) ----------- ----------- ----------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity from operations......... 67,619 (134,277) (1,275) 74,718 (62,894) (10,598) ----------- ----------- ----------- ----------- ---------- ---------- Equity transactions: Sales: Contract purchase payments.................. 158,628 292,044 35,077 154,989 190,059 44,409 Transfers from fixed & other subaccounts.... 116,135 229,481 319,587 155,921 69,940 58,741 ----------- ----------- ----------- ----------- ---------- ---------- 274,763 521,525 354,664 310,910 259,999 103,150 ----------- ----------- ----------- ----------- ---------- ---------- Redemptions: Withdrawals & surrenders (note 5)........... 6,911 7,059 50 2,952 1,469 0 Transfers to fixed & other subaccounts...... 363,431 148,460 13,740 581,568 18,913 6,244 Cost of insurance & administrative fee (note 5)....................................... 36,077 37,586 4,380 31,888 26,219 6,032 ----------- ----------- ----------- ----------- ---------- ---------- 406,419 193,105 18,170 616,408 46,601 12,276 ----------- ----------- ----------- ----------- ---------- ---------- Net equity transactions.................. (131,656) 328,420 336,494 (305,498) 213,398 90,874 ----------- ----------- ----------- ----------- ---------- ---------- Net change in contract owners' equity............................... (64,037) 194,143 335,219 (230,780) 150,504 80,276 Contract owners' equity: Beginning of period........................... 529,362 335,219 0 230,780 80,276 0 ----------- ----------- ----------- ----------- ---------- ---------- End of period................................. $ 465,325 $ 529,362 $ 335,219 $ 0 $ 230,780 $ 80,276 =========== =========== =========== =========== ========== ==========
--------------- (a) Period from January 3, 1997, date of commencement of operations. (b) Period from April 1, 1997, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 88 91 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For the Three Years Ended December 31
JANUS ASPEN SERIES ------------------------------------ BLUE HIGH CAPITAL WORLDWIDE CHIP INCOME GROWTH GROWTH GROWTH BALANCE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT 1999(d) 1999(d) 1999(d) 1999(c) 1999(c) 1999(d) ----------- ----------- ----------- ---------- ---------- ---------- Increase in contract owners' equity from operations: Net investment activity........................ $ 0 $ 509 $ (84) $ (7,811) $ (5,961) $ 565 Reinvested capital gains....................... 1 0 25,879 6,806 0 0 Realized gain.................................. 0 1 776 9,588 3,506 191 Unrealized gain (loss)......................... 10 (347) (6,339) 1,075,487 954,815 1,157 ----------- ----------- ----------- ---------- ---------- ---------- Net increase in contract owners' equity from operations......................... 11 163 20,232 1,084,070 952,360 1,913 ----------- ----------- ----------- ---------- ---------- ---------- Equity transactions: Sales: Contract purchase payments................... 0 0 16,540 1,227,956 447,177 950 Transfers from fixed & other subaccounts..... 462 58,507 284,457 4,493,684 2,495,368 69,482 ----------- ----------- ----------- ---------- ---------- ---------- 462 58,507 300,997 5,721,640 2,942,545 70,432 ----------- ----------- ----------- ---------- ---------- ---------- Redemptions: Withdrawals & surrenders (note 5)............ 0 171 261 69,942 18,171 0 Transfers to fixed & other subaccounts....... 0 0 22,030 388,605 119,927 0 Cost of insurance & administrative fee (note 5)........................................ 5 62 620 147,785 70,180 160 ----------- ----------- ----------- ---------- ---------- ---------- 5 233 22,911 606,332 208,278 160 ----------- ----------- ----------- ---------- ---------- ---------- Net equity transactions................... 457 58,274 278,086 5,115,308 2,734,267 70,272 ----------- ----------- ----------- ---------- ---------- ---------- Net change in contract owners' equity... 468 58,437 298,318 6,199,378 3,686,627 72,185 Contract owners' equity: Beginning of period............................ 0 0 0 0 0 0 ----------- ----------- ----------- ---------- ---------- ---------- End of period.................................. $ 468 $ 58,437 $ 298,318 $6,199,378 $3,686,627 $ 72,185 =========== =========== =========== ========== ========== ==========
--------------- (c) Period from May 3, 1999, date of commencement of operations. (d) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 89 92 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For the Three Years Ended December 31
STRONG VARIABLE ANNUITY FUNDS GOLDMAN SACHS ------------------------------------------ --------------------------------------- SCHAFER MID-CAP VIT GROWTH & VIT CORE VIT CAPITAL OPPORTUNITY II VALUE GROWTH INCOME US EQUITY GROWTH SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT 1999(d) 1999(d) 1999(d) 1999(c) 1999(d) 1999(d) -------------- ----------- ----------- ------------ ---------- ----------- Increase in contract owners' equity from operations: Net investment activity.................. $ (3) $ 17 $ (107) $ 6,342 $ 21 $ 6 Reinvested capital gains................. 0 91 0 0 88 521 Realized gain............................ 0 36 453 (1,291) (15) 415 Unrealized gain (loss)................... 246 (122) 25,711 5,904 283 472 ----------- ----------- ----------- ---------- ---------- ---------- Net increase in contract owners' equity from operations............ 243 22 26,057 10,955 377 1,414 ----------- ----------- ----------- ---------- ---------- ---------- Equity transactions: Sales: Contract purchase payments............. 27 69 4,910 224,791 27 506 Transfers from fixed & other subaccounts......................... 3,529 8,647 277,711 587,752 11,931 27,948 ----------- ----------- ----------- ---------- ---------- ---------- 3,556 8,716 282,621 812,543 11,958 28,454 ----------- ----------- ----------- ---------- ---------- ---------- Redemptions: Withdrawals & surrenders (note 5)...... 0 0 0 (148) 0 0 Transfers to fixed & other subaccounts......................... 795 0 15,869 121,177 4,541 15,776 Cost of insurance & administrative fee (note 5)............................ 34 13 735 14,869 22 86 ----------- ----------- ----------- ---------- ---------- ---------- 829 13 16,604 135,898 4,563 15,862 ----------- ----------- ----------- ---------- ---------- ---------- Net equity transactions............. 2,727 8,703 266,017 676,645 7,395 12,592 ----------- ----------- ----------- ---------- ---------- ---------- Net change in contract owners' equity.......................... 2,970 8,725 292,074 687,600 7,772 14,006 Contract owners' equity: Beginning of period...................... 0 0 0 0 0 0 ----------- ----------- ----------- ---------- ---------- ---------- End of period............................ $ 2,970 $ 8,725 $ 292,074 $ 687,600 $ 7,772 $ 14,006 =========== =========== =========== ========== ========== ==========
--------------- (c) Period from May 3, 1999, date of commencement of operations. (d) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 90 93 OHIO NATIONAL VARIABLE ACCOUNT R STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY For the Three Years Ended December 31
LAZARD RETIREMENT ------------------------- EMERGING SMALL MARKET CAP SUBACCOUNT SUBACCOUNT 1999(d) 1999(d) ----------- ----------- Increase in contract owners' equity from operations: Net investment activity........................ $ 440 $ (2) Reinvested capital gains....................... 0 37 Realized gain (loss)........................... 5,449 0 Unrealized gain................................ 107,388 536 ----------- ----------- Net increase in contract owners' equity from operations......................... 113,277 571 ----------- ----------- Equity transactions: Sales: Contract purchase payments................... 22,776 106 Transfers from fixed & other subaccounts..... 563,737 42,908 ----------- ----------- 586,513 43,014 ----------- ----------- Redemptions: Withdrawals & surrenders (note 5)............ 536 0 Transfers to fixed & other subaccounts....... 108,799 0 Cost of insurance & administrative fee (note 5)........................................ 6,614 63 ----------- ----------- 115,949 63 ----------- ----------- Net equity transactions................... 470,564 42,951 ----------- ----------- Net change in contract owners' equity... 583,841 43,522 Contract owners' equity: Beginning of period............................ 0 0 ----------- ----------- End of period.................................. $ 583,841 $ 43,522 =========== ===========
--------------- (d) Period from November 1, 1999, date of commencement of operations. The accompanying notes are an integral part of these financial statements. Form 5741 91 94 OHIO NATIONAL VARIABLE ACCOUNT R NOTES TO FINANCIAL STATEMENTS (1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Ohio National Variable Account R (the Account) is a separate account of The Ohio National Life Assurance Corporation (ONLAC). All obligations arising under variable life insurance contracts are general corporate obligations of ONLAC. ONLAC is a wholly-owned subsidiary of The Ohio National Life Insurance Company. The account has been registered as a unit investment trust under the Investment Company Act of 1940. Assets of the Account are invested in portfolio shares of Ohio National Fund, Inc., Janus Aspen Series, Strong Variable Insurance Funds, Inc., Goldman Sachs Variable Insurance Trust, and Lazard Retirement Funds (collectively the Funds). The Funds are diversified open-end management investment companies. The Funds' investments are subject to varying degrees of market, interest and financial risks; the issuers' abilities to meet certain obligations may be affected by economic developments in their respective industries. Investments are valued at the net asset value of fund shares held at December 31, 1999. Share transactions are recorded on the trade date. Income and capital gain distributions are recorded on the ex-dividend date. Net realized capital gains and losses are determined on the basis of average cost. ONLAC performs investment advisory services on behalf of the Ohio National Fund, Inc. in which the Account invests. For these services, the Company receives fees from the mutual funds. These fees are paid to an affiliate of the Company. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (2) INVESTMENTS At December 31, 1999 the aggregate cost and number of shares of the underlying funds owned by the respective subaccounts were:
MONEY CAPITAL EQUITY MARKET BOND OMNI INTERNATIONAL APPRECIATION SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ----------- ---------- ----------- ----------- ------------- -------------- Aggregate Cost................ $35,950,824 $4,377,995 $1,987,682 $ 9,735,042 $15,712,565 $8,033,744 Number of Shares.............. 1,316,896 437,799 189,072 523,767 1,120,986 626,740 SMALL CAP SUBACCOUNT ----------- Aggregate Cost................ $15,848,978 Number of Shares.............. 719,292
INTERNATIONAL SMALL AGGRESSIVE CORE GROWTH & S&P 500 SOCIAL COMPANY GROWTH GROWTH INCOME INDEX AWARENESS SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------- ---------- ----------- ----------- ----------- -------------- Aggregate Cost................ $ 3,401,745 $3,615,498 $2,715,595 $10,239,786 $16,629,176 $ 468,092 Number of Shares.............. 249,964 338,447 217,337 705,819 1,155,126 45,142 BLUE CHIP SUBACCOUNT ----------- Aggregate Cost................ $ 458 Number of Shares.............. 44
JANUS ASPEN HIGH INCOME CAPITAL JANUS ASPEN WORLDWIDE JANUS ASPEN STRONG BOND GROWTH GROWTH GROWTH BALANCED OPPORTUNITY II SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ----------- ---------- ----------- ----------- ----------- -------------- Aggregate Cost................ $ 58,784 $ 304,657 $5,123,891 $ 2,731,811 $ 71,028 $ 2,724 Number of Shares.............. 6,339 10,649 184,231 77,207 2,585 114 STRONG SCHAFER VALUE II SUBACCOUNT ----------- Aggregate Cost................ $ 8,846 Number of Shares.............. 957
(continued) Form 5741 92 95 OHIO NATIONAL VARIABLE ACCOUNT R NOTES TO FINANCIAL STATEMENTS (CONTINUED)
GOLDMAN GOLDMAN GOLDMAN LAZARD STRONG SACHS VIT SACHS VIT SACHS VIT RETIREMENT LAZARD MID-CAP GROWTH & CORE US CAPITAL EMERGING RETIREMENT GROWTH II INCOME EQUITY GROWTH MARKET SMALL CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ----------- ---------- ----------- ----------- ----------- -------------- Aggregate Cost................ $ 266,363 $ 681,696 $ 7,489 $ 13,535 $ 476,453 $ 42,986 Number of Shares.............. 9,617 63,141 556 1,000 53,028 4,432
(3) CONTRACTS IN ACCUMULATION PERIOD At December 31, 1999 the accumulation units and value per unit of the respective subaccounts and products were:
ACCUMULATION UNITS VALUE PER UNIT VALUE ------------------ -------------- ----------- EQUITY SUBACCOUNT.................................... 956,501.9114 36.453086 $34,867,446 MONEY MARKET SUBACCOUNT.............................. 241,831.3196 18.103505 $ 4,377,995 BOND SUBACCOUNT...................................... 90,239.7040 20.820247 $ 1,878,813 OMNI SUBACCOUNT...................................... 380,821.9971 31.008817 $11,808,840 INTERNATIONAL SUBACCOUNT............................. 823,798.9415 29.279308 $24,120,263 CAPITAL APPRECIATION SUBACCOUNT...................... 429,436.9536 17.669517 $ 7,587,944 SMALL CAP SUBACCOUNT................................. 591,731.8723 38.431477 $22,741,130 INTERNATIONAL SMALL COMPANY SUBACCOUNT............... 178,215.6181 28.396871 $ 5,060,766 AGGRESSIVE GROWTH SUBACCOUNT......................... 251,874.7415 15.843725 $ 3,990,634 CORE GROWTH SUBACCOUNT............................... 174,597.4169 21.135299 $ 3,690,169 GROWTH & INCOME SUBACCOUNT........................... 571,171.3135 23.203471 $13,253,157 S&P 500 INDEX SUBACCOUNT............................. 887,540.5166 21.039899 $18,673,763 SOCIAL AWARENESS SUBACCOUNT.......................... 41,478.8627 11.218364 $ 465,325 BLUE CHIP SUBACCOUNT................................. 45.1620 10.364605 $ 468 HIGH INCOME BOND SUBACCOUNT.......................... 5,678.1831 10.291509 $ 58,437 CAPITAL GROWTH SUBACCOUNT............................ 21,002.7969 14.203709 $ 298,318 JANUS ASPEN GROWTH SUBACCOUNT........................ 482,511.0310 12.848159 $ 6,199,378 JANUS ASPEN WORLDWIDE GROWTH SUBACCOUNT.............. 244,886.3836 15.054438 $ 3,686,627 JANUS ASPEN BALANCED SUBACCOUNT...................... 6,543.3186 11.031897 $ 72,185 STRONG OPPORTUNITY II SUBACCOUNT..................... 266.0292 11.164799 $ 2,970 STRONG SCHAFER VALUE II SUBACCOUNT................... 847.8621 10.290266 $ 8,725 STRONG MID-CAP GROWTH II SUBACCOUNT.................. 22,599.1256 12.924122 $ 292,074 GOLDMAN SACHS GROWTH & INCOME SUBACCOUNT............. 71,764.9366 9.581286 $ 687,600 GOLDMAN SACHS CORE US EQUITY SUBACCOUNT.............. 710.9680 10.931168 $ 7,772 GOLDMAN SACHS CAPITAL GROWTH SUBACCOUNT.............. 1,252.2793 11.184743 $ 14,006 LAZARD RETIREMENT EMERGING MARKET SUBACCOUNT......... 46,635.2870 12.519300 $ 583,841 LAZARD RETIREMENT SMALL CAP SUBACCOUNT............... 4,127.5970 10.544030 $ 43,522
(4) RISK AND ADMINISTRATIVE EXPENSE Although variable life payments differ according to the investment performance of the Accounts, they are not affected by mortality or expense experience because ONLAC assumes the expense risk and the mortality risk under the contracts. ONLAC charges the Accounts' assets for assuming those risks. Such charge will be assessed at a daily rate of 0.0020471% which corresponds to an annual rate of .75% of the contract value. (continued) Form 5741 93 96 OHIO NATIONAL VARIABLE ACCOUNT R NOTES TO FINANCIAL STATEMENTS (CONTINUED) (5) CONTRACT CHARGES Each premium payment is subject to a premium expense charge. The premium expense charge has two components: (a) Sales Load. Each contract is subject to a level sales load of all premiums paid of 4%. (b) State Premium Tax. Premium payments will be subject to the state premium tax and any other state or local taxes that currently range from 2% to 4%. Total premium expense charges in the Account amounted to approximately $1,630,880.00 during 1999. A surrender charge is assessed in connection with all complete surrenders, all decreases in stated amount and certain partial surrenders consisting of two components: (1) a contingent deferred sales charge, and (2) a contingent deferred insurance underwriting charge. The contingent deferred sales charge is a percentage of premiums paid in the first two contract years. The contingent deferred sales charge percentages are scaled by age at issue or increase. The contingent deferred insurance underwriting charge varies with age at issue or increase. A service charge is imposed on each transfer of cash values among the subaccounts. Currently, ONLAC is not assessing this charge on the first four transfers made in any contract year. For partial surrenders, a service fee is charged. ONLAC charges a monthly deduction from the contract value for the cost of insurance, a $5.00 or $7.00 record keeping and processing charge, a risk charge of $.01 per $1,000 of the stated amount for the risk associated with the death benefit guarantee, and the cost of additional insurance benefits provided by rider. (6) FEDERAL INCOME TAXES Operations of the Account form a part of, and are taxed with, operations of ONLAC which is taxed as a life insurance company under the Internal Revenue Code. Taxes are the responsibility of the contract owner upon termination or withdrawal. No Federal income taxes are payable under the present law on dividend income or capital gains distribution from the Fund shares held in the Account or on capital gains realized by the Account on redemption of the Fund shares. Form 5741 94 97 OHIO NATIONAL VARIABLE ACCOUNT R INDEPENDENT AUDITORS' REPORT The Board of Directors of The Ohio National Life Assurance Corporation and Contract Owners of Ohio National Variable Account R: We have audited the accompanying statements of assets and contract owners' equity of Ohio National Variable Account R (comprised of the Equity, Money Market, Bond, Omni, International, Capital Appreciation (formerly Small Cap Growth), Small Cap, International Small Company (formerly Global Contrarian), Aggressive Growth, Core Growth, Growth & Income, S&P 500 Index, Social Awareness, Blue Chip, High Income Bond, Capital Growth, Janus Aspen Series -- Growth, Janus Aspen Series -- Worldwide Growth, Janus Aspen Series -- Balanced, Strong Variable Funds -- Opportunity II, Strong Variable Funds -- Schafer Value II, Strong Variable Funds -- Mid-Cap Growth, Goldman Sachs VIT Growth & Income, Goldman Sachs VIT Core US Equity, Goldman Sachs VIT Capital Growth, Lazard Retirement Emerging Market, and Lazard Retirement Small Cap subaccounts) (collectively, the Account) as of December 31, 1999 and the related statements of operations and changes in contract owners' equity for each of the periods indicated herein. These financial statements are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1999, by correspondence with the transfer agents of the underlying mutual funds. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ohio National Variable Account R as of December 31, 1999, and the results of its operations and its changes in contract owners' equity for each of the periods indicated herein in conformity with generally accepted accounting principles. KPMG LLP Cincinnati, Ohio February 18, 2000 Form 5741 95 98 APPENDIX A ILLUSTRATIONS OF CASH SURRENDER VALUES, DEATH BENEFITS AND ACCUMULATED PREMIUMS. The following tables help to show how contract values change with investment performance. The tables illustrate how the death benefit of a contract of an insured of a given age and the cash surrender value (reflecting the deduction of sales load) would vary over time if the return on the assets held in the Funds was a constant, gross, after-tax, annual rate of 0%, 6% or 12%. Because of compounding, the death benefits and cash surrender values would be different from those shown if the returns averaged 0%, 6%, or 12%, but fluctuated over and under those averages throughout the years. The amounts shown for the death benefit and cash surrender value as of each contract year show that the net investment return on the assets held in the subaccounts is lower than the gross, after-tax returns on Fund assets. This is because certain fees and charges are deducted from the gross return. They are the daily investment management fees incurred by the Funds. These are currently equivalent to an average of 1.79% of the value of the average daily net assets of the Funds to which contract values may be allocated. This average takes into account the waivers and reimbursements detailed in the Charges and Deductions section of this prospectus. These waivers and reimbursements may be terminated in future years. If the waivers and reimbursements are terminated, the average fund expenses may increase as may the underlying cost of the contract. The daily charge to VAR for assuming mortality and expense risks is equivalent to an annual charge of 0.75%. Gross annual rates of return of 0%, 6%, and 12% produce average net annual rates of return for all Funds of approximately 1.67%, 4.33%, and 10.33%. Each page of illustrations includes two tables. The top table shows the death benefits and cash surrender values assuming we assess current contract charges ("current tables"). Current charges are not guaranteed and may be changed. The lower table shows the death benefits and cash surrender values assuming we assess the maximum contract charges allowable. The tables assume a premium tax deduction of 2.09% (the charge deducted from your contract will reflect premium taxes in your jurisdiction), that no portion of your net premiums have been allocated to the general account and that planned premiums are paid on the first day of each contract year. The tables also assume that you have made no transfers, partial surrenders, loans, changes in death benefit option or changes in stated amount. Additionally, the tables assume that there are no optional insurance benefits and the current tables assume that our current cost of insurance charges will not be changed. Finally, the tables reflect the fact that no charges for federal, state or local taxes are made now against VAR. If such a charge is made in the future, it will take a higher gross rate of return to produce after-tax returns of 0%, 6% and 12% than it does now. Below is a list of the sample illustrations presented on the following pages of this prospectus. Upon request, we will furnish a comparable illustration based on the insureds age, sex, risk class, death benefit plan, stated amount and planned premium. VARI-VEST SURVIVOR
BOTH INSUREDS BOTH INSUREDS AGE DEATH BENEFIT PLAN PLANNED PREMIUM STATED AMOUNT RISK CLASS PAGE ------------- ------------------ --------------- ------------- ------------- ---- 55 Plan A 12,480 $ 1,000,000 Preferred Nonsmoker 97 55 Plan B 12,480 1,000,000 Preferred Nonsmoker 98 55 Plan A 14,040 1,000,000 Nonsmoker 99 55 Plan B 14,040 1,000,000 Nonsmoker 100 65 Plan A 19,680 1,000,000 Preferred Nonsmoker 101 65 Plan B 19,680 1,000,000 Preferred Nonsmoker 102 65 Plan A 22,440 1,000,000 Nonsmoker 103 65 Plan B 22,440 1,000,000 Nonsmoker 104
HYPOTHETICAL HISTORICAL ILLUSTRATIONS We may produce hypothetical illustrations of the contract (such as those listed above) based upon the actual historical investment performance (total return) of the Funds from the inception of each Fund or one-, five- and ten-year periods. Such illustrations reflect all contract and subsequent charges, including the cost of insurance (specific to the age, sex, stated amount, risk classification and type of death benefit), planned premium, premium tax, risk charge, sales load, administration charge and surrender charge for the contract being illustrated. We will also provide individualized illustrations upon request. Being based upon past performance, neither hypothetical illustrations nor other performance data indicate future performance. Form 5741 96 99 MALE ISSUE AGE 55 PREFERRED NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 55 PREFERRED NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100) INITIAL PREMIUM: $12,480.00 STATED AMOUNT INCLUDES CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 12,480 13,104 0 1,000,000 0 1,000,000 0 1,000,000 2 12,480 26,863 0 1,000,000 0 1,000,000 0 1,000,000 3 12,480 41,310 9,781 1,000,000 5,366 1,000,000 1,230 1,000,000 4 12,480 56,480 26,463 1,000,000 18,732 1,000,000 11,868 1,000,000 5 12,480 72,408 44,614 1,000,000 32,499 1,000,000 22,165 1,000,000 6 12,480 89,132 64,504 1,000,000 46,770 1,000,000 32,242 1,000,000 7 12,480 106,693 86,320 1,000,000 61,576 1,000,000 42,112 1,000,000 8 12,480 125,132 110,225 1,000,000 76,902 1,000,000 51,745 1,000,000 9 12,480 144,492 136,439 1,000,000 92,777 1,000,000 61,147 1,000,000 10 12,480 164,821 165,163 1,000,000 109,185 1,000,000 70,283 1,000,000 15 12,480 282,765 356,437 1,000,000 199,749 1,000,000 111,751 1,000,000 20 12,480 433,296 663,528 1,000,000 305,740 1,000,000 144,910 1,000,000 Age 60 12,480 72,408 44,614 1,000,000 32,499 1,000,000 22,165 1,000,000 Age 65 12,480 164,821 165,163 1,000,000 109,185 1,000,000 70,283 1,000,000 Age 70 12,480 282,765 356,437 1,000,000 199,749 1,000,000 111,751 1,000,000
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 12,480 13,104 0 1,000,000 0 1,000,000 0 1,000,000 2 12,480 26,863 0 1,000,000 0 1,000,000 0 1,000,000 3 12,480 41,310 9,781 1,000,000 5,336 1,000,000 1,230 1,000,000 4 12,480 56,480 26,463 1,000,000 18,732 1,000,000 11,868 1,000,000 5 12,480 72,408 44,614 1,000,000 32,499 1,000,000 22,165 1,000,000 6 12,480 89,132 64,349 1,000,000 46,617 1,000,000 32,092 1,000,000 7 12,480 106,693 85,799 1,000,000 61,069 1,000,000 41,623 1,000,000 8 12,480 125,132 109,067 1,000,000 75,790 1,000,000 50,684 1,000,000 9 12,480 144,492 134,294 1,000,000 90,738 1,000,000 59,226 1,000,000 10 12,480 164,821 161,588 1,000,000 105,814 1,000,000 67,142 1,000,000 15 12,480 282,765 335,121 1,000,000 179,938 1,000,000 93,962 1,000,000 20 12,480 433,296 594,566 1,000,000 236,524 1,000,000 82,897 1,000,000 Age 60 12,480 72,408 44,614 1,000,000 32,499 1,000,000 22,165 1,000,000 Age 65 12,480 164,821 161,588 1,000,000 105,814 1,000,000 67,142 1,000,000 Age 70 12,480 282,765 335,121 1,000,000 179,938 1,000,000 93,962 1,000,000
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 97 100 MALE ISSUE AGE 55 PREFERRED NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 55 PREFERRED NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100) INITIAL PREMIUM: $12,480.00 STATED AMOUNT INCLUDES CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 12,480 13,104 0 1,012,297 0 1,011,612 0 1,010,928 2 12,480 26,863 0 1,025,732 0 1,023,599 0 1,021,550 3 12,480 41,310 9,763 1,040,393 5,321 1,035,951 1,216 1,031,846 4 12,480 56,480 26,418 1,056,378 18,694 1,048,654 11,835 1,041,795 5 12,480 72,408 44,515 1,073,785 32,418 1,061,688 22,098 1,051,368 6 12,480 89,132 64,325 1,092,885 46,629 1,075,189 32,131 1,060,691 7 12,480 106,693 86,028 1,113,848 61,354 1,089,174 41,945 1,069,765 8 12,480 125,132 109,776 1,136,846 76,575 1,103,645 51,507 1,078,577 9 12,480 144,492 135,773 1,162,063 92,311 1,118,601 60,821 1,087,111 10 12,480 164,821 164,201 1,189,701 108,537 1,134,037 69,848 1,095,348 15 12,480 282,765 351,726 1,373,036 197,161 1,218,471 110,315 1,131,625 20 12,480 433,296 645,520 1,662,450 297,743 1,314,673 141,257 1,158,187 Age 60 12,480 72,408 44,515 1,073,785 32,418 1,061,688 22,098 1,051,368 Age 65 12,480 164,821 164,201 1,189,701 108,537 1,134,037 69,848 1,095,348 Age 70 12,480 282,765 351,726 1,373,036 197,161 1,218,471 110,315 1,131,625
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 12,480 13,104 0 1,012,297 0 1,011,612 0 1,010,928 2 12,480 26,863 0 1,025,732 0 1,023,599 0 1,021,550 3 12,480 41,310 9,763 1,040,393 5,321 1,035,951 1,216 1,031,846 4 12,480 56,480 26,418 1,056,378 18,694 1,048,654 11,835 1,041,795 5 12,480 72,408 44,515 1,073,785 32,418 1,061,688 22,098 1,051,368 6 12,480 89,132 64,155 1,092,715 46,464 1,075,024 31,971 1,060,531 7 12,480 106,693 85,448 1,113,268 60,802 1,088,622 41,420 1,069,240 8 12,480 125,132 108,467 1,135,537 75,349 1,102,419 50,362 1,077,432 9 12,480 144,492 133,306 1,159,596 90,040 1,116,330 58,734 1,085,024 10 12,480 164,821 160,011 1,185,511 104,743 1,130,243 66,416 1,091,916 15 12,480 282,765 323,502 1,344,812 173,550 1,194,860 90,423 1,111,733 20 12,480 433,296 533,761 1,550,691 210,628 1,227,558 71,891 1,088,821 Age 60 12,480 72,408 44,515 1,073,785 32,418 1,061,688 22,098 1,051,368 Age 65 12,480 164,821 160,011 1,185,511 104,743 1,130,243 66,416 1,091,916 Age 70 12,480 282,765 323,502 1,344,812 173,550 1,194,860 90,423 1,111,733
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 98 101 MALE ISSUE AGE 55 NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 55 NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100) INITIAL PREMIUM: $14,040.00 STATED AMOUNT PLUS CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 14,040 14,742 0 1,000,000 0 1,000,000 0 1,000,000 2 14,040 30,221 0 1,000,000 0 1,000,000 0 1,000,000 3 14,040 46,474 15,138 1,000,000 10,114 1,000,000 5,471 1,000,000 4 14,040 63,540 33,986 1,000,000 25,241 1,000,000 17,474 1,000,000 5 14,040 81,459 54,526 1,000,000 40,814 1,000,000 29,114 1,000,000 6 14,040 100,274 76,899 1,000,000 56,818 1,000,000 40,364 1,000,000 7 14,040 120,029 101,345 1,000,000 73,322 1,000,000 51,277 1,000,000 8 14,040 140,773 128,084 1,000,000 90,350 1,000,000 61,862 1,000,000 9 14,040 162,554 157,350 1,000,000 107,917 1,000,000 72,115 1,000,000 10 14,040 185,423 189,360 1,000,000 125,996 1,000,000 81,989 1,000,000 15 14,040 318,111 401,659 1,000,000 224,424 1,000,000 125,212 1,000,000 20 14,040 487,458 742,856 1,000,000 337,118 1,000,000 156,233 1,000,000 Age 60 14,040 81,459 54,526 1,000,000 40,814 1,000,000 29,114 1,000,000 Age 65 14,040 185,423 189,360 1,000,000 125,996 1,000,000 81,989 1,000,000 Age 70 14,040 318,111 401,659 1,000,000 224,424 1,000,000 125,212 1,000,000
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 14,040 14,742 0 1,000,000 0 1,000,000 0 1,000,000 2 14,040 30,221 0 1,000,000 0 1,000,000 0 1,000,000 3 14,040 46,474 15,138 1,000,000 10,114 1,000,000 5,471 1,000,000 4 14,040 63,540 33,986 1,000,000 25,241 1,000,000 17,474 1,000,000 5 14,040 81,459 54,526 1,000,000 40,814 1,000,000 29,114 1,000,000 6 14,040 100,274 76,899 1,000,000 56,818 1,000,000 40,364 1,000,000 7 14,040 120,029 101,263 1,000,000 73,240 1,000,000 51,196 1,000,000 8 14,040 140,773 127,754 1,000,000 90,022 1,000,000 61,542 1,000,000 9 14,040 162,554 156,548 1,000,000 107,130 1,000,000 71,353 1,000,000 10 14,040 185,423 187,797 1,000,000 124,471 1,000,000 80,526 1,000,000 15 14,040 318,111 388,955 1,000,000 211,934 1,000,000 113,580 1,000,000 20 14,040 487,458 698,751 1,000,000 287,367 1,000,000 109,373 1,000,000 Age 60 14,040 81,459 54,526 1,000,000 40,814 1,000,000 29,114 1,000,000 Age 65 14,040 185,423 187,797 1,000,000 124,471 1,000,000 80,526 1,000,000 Age 70 14,040 318,111 388,955 1,000,000 211,934 1,000,000 113,580 1,000,000
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 99 102 MALE ISSUE AGE 55 NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 55 NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100) INITIAL PREMIUM: $14,040.00 STATED AMOUNT PLUS CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT --------------------- ---------------------------- ---------------------------- ---------------------------- TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 14,040 14,742 0 1,013,911 0 1,013,139 0 1,012,367 2 14,040 30,221 0 1,029,126 0 1,026,717 0 1,024,402 3 14,040 46,474 15,118 1,045,748 10,096 1,040,726 5,456 1,036,086 4 14,040 63,540 33,934 1,063,894 25,197 1,055,157 17,437 1,047,397 5 14,040 81,459 54,413 1,083,683 40,721 1,069,991 29,039 1,058,309 6 14,040 100,274 76,679 1,105,239 56,644 1,085,204 40,227 1,068,787 7 14,040 120,029 100,959 1,128,779 73,028 1,100,848 51,054 1,078,874 8 14,040 140,773 127,457 1,154,527 89,890 1,116,960 61,527 1,088,597 9 14,040 162,554 156,379 1,182,669 107,233 1,133,523 71,636 1,097,926 10 14,040 185,423 187,905 1,213,405 125,012 1,150,512 81,324 1,106,824 15 14,040 318,111 393,675 1,414,985 220,026 1,241,336 122,767 1,144,077 20 14,040 487,458 710,779 1,727,709 322,933 1,339,863 149,798 1,166,728 Age 60 14,040 81,459 54,413 1,083,683 40,721 1,069,991 29,039 1,058,309 Age 65 14,040 185,423 187,905 1,213,405 125,012 1,150,512 81,324 1,106,824 Age 70 14,040 318,111 393,675 1,414,985 220,026 1,241,336 122,767 1,144,077
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED --------------------- ---------------------------- ---------------------------- ---------------------------- TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 14,040 14,742 0 1,013,911 0 1,013,139 0 1,012,367 2 14,040 30,221 0 1,029,126 0 1,026,717 0 1,024,402 3 14,040 46,474 15,118 1,045,748 10,096 1,040,726 5,456 1,036,086 4 14,040 63,540 33,934 1,063,894 25,197 1,055,157 17,437 1,047,397 5 14,040 81,459 54,413 1,083,683 40,721 1,069,991 29,039 1,058,309 6 14,040 100,274 76,679 1,105,239 56,644 1,085,204 40,227 1,068,787 7 14,040 120,029 100,866 1,128,686 72,937 1,100,757 50,966 1,078,786 8 14,040 140,773 127,072 1,154,142 89,522 1,116,592 61,176 1,088,246 9 14,040 162,554 155,426 1,181,716 106,337 1,132,627 70,794 1,097,084 10 14,040 185,423 186,004 1,211,504 123,253 1,148,753 79,699 1,105,199 15 14,040 318,111 375,668 1,396,978 204,604 1,225,914 109,502 1,130,812 20 14,040 487,458 628,500 1,645,430 257,107 1,274,037 96,268 1,113,198 Age 60 14,040 81,459 54,413 1,083,683 40,721 1,069,991 29,039 1,058,309 Age 65 14,040 185,423 186,004 1,211,504 123,253 1,148,753 79,699 1,105,199 Age 70 14,040 318,111 375,668 1,396,978 204,604 1,225,914 109,502 1,130,812
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 100 103 MALE ISSUE AGE 65 PREFERRED NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 65 PREFERRED NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100) INITIAL PREMIUM: $19,680.00 STATED AMOUNT INCLUDES CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 19,680 20,664 0 1,000,000 0 1,000,000 0 1,000,000 2 19,680 42,361 0 1,000,000 0 1,000,000 0 1,000,000 3 19,680 65,143 19,312 1,000,000 12,296 1,000,000 5,815 1,000,000 4 19,680 89,064 46,234 1,000,000 34,036 1,000,000 23,207 1,000,000 5 19,680 114,182 75,576 1,000,000 56,457 1,000,000 40,151 1,000,000 6 19,680 140,555 107,572 1,000,000 79,571 1,000,000 56,638 1,000,000 7 19,680 168,246 142,475 1,000,000 103,384 1,000,000 72,646 1,000,000 8 19,680 197,323 180,571 1,000,000 127,899 1,000,000 88,151 1,000,000 9 19,680 227,853 222,186 1,000,000 153,132 1,000,000 103,141 1,000,000 10 19,680 259,910 267,667 1,000,000 179,076 1,000,000 117,574 1,000,000 15 19,680 445,899 567,950 1,000,000 318,074 1,000,000 178,423 1,000,000 20 19,680 683,275 1,053,201 1,000,000 467,857 1,000,000 208,704 1,000,000 Age 70 19,680 114,182 75,576 1,000,000 56,457 1,000,000 40,151 1,000,000
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 19,680 20,664 0 1,000,000 0 1,000,000 0 1,000,000 2 19,680 42,361 0 1,000,000 0 1,000,000 0 1,000,000 3 19,680 65,143 18,152 1,000,000 11,180 1,000,000 4,744 1,000,000 4 19,680 89,064 43,297 1,000,000 31,248 1,000,000 20,567 1,000,000 5 19,680 114,182 69,792 1,000,000 51,040 1,000,000 35,092 1,000,000 6 19,680 140,555 97,613 1,000,000 70,361 1,000,000 48,144 1,000,000 7 19,680 168,246 126,691 1,000,000 88,948 1,000,000 59,483 1,000,000 8 19,680 197,323 156,894 1,000,000 106,443 1,000,000 68,779 1,000,000 9 19,680 227,853 188,041 1,000,000 122,405 1,000,000 75,616 1,000,000 10 19,680 259,910 219,897 1,000,000 136,283 1,000,000 79,477 1,000,000 15 19,680 445,899 383,707 1,000,000 150,732 1,000,000 31,882 1,000,000 20 19,680 683,275 541,997 1,000,000 Age 70 19,680 114,182 69,792 1,000,000 51,040 1,000,000 35,092 1,000,000
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 101 104 MALE ISSUE AGE 65 PREFERRED NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 65 PREFERRED NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100) INITIAL PREMIUM: $19,680.00 STATED AMOUNT INCLUDES CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 19,680 20,664 0 1,019,498 0 1,018,415 0 1,017,333 2 19,680 42,361 0 1,040,529 0 1,037,162 0 1,033,927 3 19,680 65,143 19,215 1,063,525 12,211 1,056,521 5,741 1,050,051 4 19,680 89,064 46,029 1,088,659 33,862 1,076,492 23,061 1,065,691 5 19,680 114,182 75,195 1,116,125 56,146 1,097,076 39,900 1,080,830 6 19,680 140,555 106,921 1,146,131 79,060 1,118,270 56,239 1,095,449 7 19,680 168,246 141,424 1,178,904 102,589 1,140,069 72,049 1,109,529 8 19,680 197,323 178,941 1,214,691 126,714 1,162,464 87,295 1,123,045 9 19,680 227,853 219,743 1,253,763 151,423 1,185,443 101,951 1,135,971 10 19,680 259,910 264,098 1,296,408 176,676 1,208,986 115,965 1,148,275 15 19,680 445,899 548,181 1,572,451 307,204 1,331,474 172,389 1,196,659 20 19,680 683,275 960,501 1,978,011 426,541 1,444,051 190,116 1,207,626 Age 70 19,680 114,182 75,195 1,116,125 56,146 1,097,076 39,900 1,080,830
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 19,680 20,664 0 1,019,498 0 1,018,415 0 1,017,333 2 19,680 42,361 0 1,040,278 0 1,036,918 0 1,033,690 3 19,680 65,143 17,987 1,062,297 11,035 1,055,345 4,616 1,048,926 4 19,680 89,064 42,870 1,085,500 30,884 1,073,514 20,259 1,062,889 5 19,680 114,182 68,867 1,109,797 50,283 1,091,213 34,476 1,075,406 6 19,680 140,555 95,829 1,135,039 68,956 1,108,166 47,045 1,086,255 7 19,680 168,246 123,508 1,160,988 86,540 1,124,020 57,673 1,095,153 8 19,680 197,323 151,523 1,187,273 102,547 1,138,297 65,969 1,101,719 9 19,680 227,853 179,351 1,213,371 116,369 1,150,389 71,449 1,105,469 10 19,680 259,910 206,300 1,238,610 127,262 1,159,572 73,531 1,105,841 15 19,680 445,899 296,662 1,320,932 107,876 1,132,146 11,803 1,036,073 20 19,680 683,275 176,445 1,193,955 Age 70 19,680 114,182 68,867 1,109,797 50,283 1,091,213 34,476 1,075,406
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 102 105 MALE ISSUE AGE 65 NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 65 NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100) INITIAL PREMIUM: $22,440.00 STATED AMOUNT PLUS CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 22,440 23,562 0 1,000,000 0 1,000,000 0 1,000,000 2 22,440 48,302 416 1,000,000 0 1,000,000 0 1,000,000 3 22,440 74,279 28,238 1,000,000 20,221 1,000,000 12,817 1,000,000 4 22,440 101,555 58,450 1,000,000 44,524 1,000,000 32,165 1,000,000 5 22,440 130,195 91,269 1,000,000 69,465 1,000,000 50,879 1,000,000 6 22,440 160,267 126,951 1,000,000 95,050 1,000,000 68,941 1,000,000 7 22,440 191,842 165,775 1,000,000 121,276 1,000,000 86,324 1,000,000 8 22,440 224,996 208,058 1,000,000 148,143 1,000,000 102,999 1,000,000 9 22,440 259,808 254,168 1,000,000 175,660 1,000,000 118,943 1,000,000 10 22,440 296,360 304,503 1,000,000 203,817 1,000,000 134,106 1,000,000 15 22,440 508,434 636,654 1,000,000 351,536 1,000,000 193,425 1,000,000 20 22,440 779,100 1,180,212 1,277,951 503,121 1,000,000 206,551 1,000,000 Age 70 22,440 130,195 91,269 1,000,000 69,465 1,000,000 50,879 1,000,000
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 22,440 23,562 0 1,000,000 0 1,000,000 0 1,000,000 2 22,440 48,302 375 1,000,000 0 1,000,000 0 1,000,000 3 22,440 74,279 27,651 1,000,000 19,651 1,000,000 12,264 1,000,000 4 22,440 101,555 56,660 1,000,000 42,809 1,000,000 30,525 1,000,000 5 22,440 130,195 87,447 1,000,000 65,848 1,000,000 47,467 1,000,000 6 22,440 160,267 120,050 1,000,000 88,594 1,000,000 62,925 1,000,000 7 22,440 191,842 154,476 1,000,000 110,807 1,000,000 76,669 1,000,000 8 22,440 224,996 190,691 1,000,000 132,166 1,000,000 88,387 1,000,000 9 22,440 259,808 228,638 1,000,000 152,274 1,000,000 97,687 1,000,000 10 22,440 296,360 268,241 1,000,000 170,640 1,000,000 104,078 1,000,000 15 22,440 508,434 494,707 1,000,000 216,200 1,000,000 71,643 1,000,000 20 22,440 779,100 823,012 1,000,000 79,609 1,000,000 Age 70 22,440 130,195 87,447 1,000,000 65,848 1,000,000 47,467 1,000,000
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 103 106 MALE ISSUE AGE 65 NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 65 NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100) INITIAL PREMIUM: $22,440.00 STATED AMOUNT PLUS CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 22,440 23,562 0 1,022,355 0 1,021,117 0 1,019,879 2 22,440 48,302 365 1,046,325 0 1,042,476 0 1,038,776 3 22,440 74,279 28,091 1,072,401 20,092 1,064,402 12,703 1,057,013 4 22,440 101,555 58,123 1,100,753 44,247 1,086,877 31,932 1,074,562 5 22,440 130,195 90,640 1,131,570 68,952 1,109,882 50,462 1,091,392 6 22,440 160,267 125,844 1,165,054 94,179 1,133,389 68,261 1,107,471 7 22,440 191,842 163,945 1,201,425 119,891 1,157,371 85,282 1,122,762 8 22,440 224,996 205,173 1,240,923 146,043 1,181,793 101,479 1,137,229 9 22,440 259,808 249,784 1,283,804 172,593 1,206,613 116,806 1,150,826 10 22,440 296,360 298,032 1,330,342 199,468 1,231,778 131,191 1,163,501 15 22,440 508,434 599,856 1,624,126 331,441 1,355,711 182,369 1,206,639 20 22,440 779,100 1,013,088 2,030,598 428,110 1,445,620 173,964 1,191,474 Age 70 22,440 130,195 90,640 1,131,570 68,952 1,109,882 50,462 1,091,392
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 22,440 23,562 0 1,022,355 0 1,021,117 0 1,019,879 2 22,440 48,302 322 1,046,282 0 1,042,434 0 1,038,736 3 22,440 74,279 27,462 1,071,772 19,484 1,063,794 12,117 1,056,427 4 22,440 101,555 56,168 1,098,798 42,390 1,085,020 30,171 1,072,801 5 22,440 130,195 86,380 1,127,310 64,975 1,105,905 46,756 1,087,686 6 22,440 160,267 117,987 1,157,197 86,968 1,126,178 61,651 1,100,861 7 22,440 191,842 150,786 1,188,266 108,011 1,145,491 74,564 1,112,044 8 22,440 224,996 184,444 1,220,194 127,624 1,163,374 85,103 1,120,853 9 22,440 259,808 218,490 1,252,510 145,204 1,179,224 92,787 1,126,807 10 22,440 296,360 252,295 1,284,605 160,014 1,192,324 97,034 1,129,344 15 22,440 508,434 389,003 1,413,273 162,843 1,187,113 45,571 1,069,841 20 22,440 779,100 344,289 1,361,799 Age 70 22,440 130,195 86,380 1,127,310 64,975 1,105,905 46,756 1,087,686
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 104 107 APPENDIX B NOTICE TO PENNSYLVANIA CONTRACTOWNERS Contracts issued in the state of Pennsylvania or issued to Pennsylvania residents have different charges and deductions detailed below. In addition, because of the different charges, Pennsylvania contract owners should refer to the following hypothetical illustrations instead of the hypothetical illustrations detailed in Appendix A. PREMIUM LOAD For contracts issued in Pennsylvania, this deduction is assessed at 4.5% of the premium payments for 20 years. MAXIMUM SURRENDER CHARGE For Pennsylvania contracts, the Maximum Surrender Charge per $1,000 of stated amount is as follows:
AGE AND SEX SUPER PREFERRED SMOKER ----------- --------------- ------ Male 35; Female 35 $15.13 $16.45 Male 45; Female 45 19.19 21.47 Male 55; Female 55 26.78 30.50 Male 65; Female 65 41.67 47.43 Male 75; Female 75 56.74 56.38"
HYPOTHETICAL ILLUSTRATIONS The following pages are hypothetical illustrations for Pennsylvania contracts only. Form 5741 105 108 MALE ISSUE AGE 55 PREFERRED NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 55 PREFERRED NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100) INITIAL PREMIUM: $12,480.00 STATED AMOUNT INCLUDES CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 12,480 13,104 0 1,000,000 0 1,000,000 0 1,000,000 2 12,480 26,863 0 1,000,000 0 1,000,000 0 1,000,000 3 12,480 41,310 14,344 1,000,000 9,918 1,000,000 5,828 1,000,000 4 12,480 56,480 30,786 1,000,000 23,080 1,000,000 16,237 1,000,000 5 12,480 72,408 48,723 1,000,000 36,638 1,000,000 26,328 1,000,000 6 12,480 89,132 68,419 1,000,000 50,715 1,000,000 36,211 1,000,000 7 12,480 106,693 90,056 1,000,000 65,334 1,000,000 45,888 1,000,000 8 12,480 125,132 113,821 1,000,000 80,502 1,000,000 55,347 1,000,000 9 12,480 144,492 139,920 1,000,000 96,229 1,000,000 64,575 1,000,000 10 12,480 164,821 168,592 1,000,000 112,529 1,000,000 73,568 1,000,000 15 12,480 282,765 360,534 1,000,000 202,945 1,000,000 114,454 1,000,000 20 12,480 433,296 671,234 1,000,000 309,779 1,000,000 147,371 1,000,000 Age 60 12,480 72,408 48,723 1,000,000 36,638 1,000,000 26,328 1,000,000 Age 65 12,480 164,821 168,592 1,000,000 112,529 1,000,000 73,568 1,000,000 Age 70 12,480 282,765 360,534 1,000,000 202,945 1,000,000 114,454 1,000,000
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 12,480 13,104 0 1,000,000 0 1,000,000 0 1,000,000 2 12,480 26,863 0 1,000,000 0 1,000,000 0 1,000,000 3 12,480 41,310 14,344 1,000,000 9,918 1,000,000 5,828 1,000,000 4 12,480 56,480 30,786 1,000,000 23,080 1,000,000 16,237 1,000,000 5 12,480 72,408 48,723 1,000,000 36,638 1,000,000 26,328 1,000,000 6 12,480 89,132 68,264 1,000,000 50,562 1,000,000 36,061 1,000,000 7 12,480 106,693 89,534 1,000,000 64,827 1,000,000 45,397 1,000,000 8 12,480 125,132 112,661 1,000,000 79,388 1,000,000 54,284 1,000,000 9 12,480 144,492 137,772 1,000,000 94,186 1,000,000 62,651 1,000,000 10 12,480 164,821 165,009 1,000,000 109,152 1,000,000 70,420 1,000,000 15 12,480 282,765 339,154 1,000,000 183,071 1,000,000 96,608 1,000,000 20 12,480 433,296 602,133 1,000,000 240,324 1,000,000 85,121 1,000,000 Age 60 12,480 72,408 48,723 1,000,000 36,638 1,000,000 26,328 1,000,000 Age 65 12,480 164,821 165,009 1,000,000 109,152 1,000,000 70,420 1,000,000 Age 70 12,480 282,765 339,154 1,000,000 183,071 1,000,000 96,608 0
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 106 109 MALE ISSUE AGE 55 PREFERRED NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 55 PREFERRED NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100) INITIAL PREMIUM: $12,480.00 STATED AMOUNT PLUS CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 12,480 13,104 0 1,012,242 0 1,011,561 0 1,010,880 2 12,480 26,863 0 1,025,630 0 1,023,508 0 1,021,469 3 12,480 41,310 14,327 1,040,257 9,902 1,035,832 5,814 1,031,744 4 12,480 56,480 30,741 1,056,221 23,042 1,048,522 16,205 1,041,685 5 12,480 72,408 48,623 1,073,623 36,556 1,061,556 26,262 1,051,262 6 12,480 89,132 68,240 1,092,740 50,574 1,075,074 36,100 1,060,600 7 12,480 106,693 89,764 1,113,744 65,113 1,089,093 45,721 1,069,701 8 12,480 125,132 113,371 1,136,811 80,175 1,103,615 55,109 1,078,549 9 12,480 144,492 139,253 1,162,133 95,761 1,118,641 64,249 1,087,129 10 12,480 164,821 167,627 1,189,917 111,880 1,134,170 73,132 1,095,422 15 12,480 282,765 355,794 1,374,884 200,340 1,219,430 113,010 1,132,100 20 12,480 433,296 653,037 1,668,567 301,702 1,317,232 143,684 1,159,214 Age 60 12,480 72,408 48,623 1,073,623 36,556 1,061,556 26,262 1,051,262 Age 65 12,480 164,821 167,627 1,189,917 111,880 1,134,170 73,132 1,095,422 Age 70 12,480 282,765 355,794 1,374,884 200,340 1,219,430 113,010 1,132,100
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 12,480 13,104 0 1,012,242 0 1,011,561 0 1,010,880 2 12,480 26,863 0 1,025,630 0 1,023,508 0 1,021,469 3 12,480 41,310 14,327 1,040,257 9,902 1,035,832 5,814 1,031,744 4 12,480 56,480 30,741 1,056,221 23,042 1,048,522 16,205 1,041,685 5 12,480 72,408 48,623 1,073,623 36,556 1,061,556 26,262 1,051,262 6 12,480 89,132 68,070 1,092,570 50,409 1,074,909 35,940 1,060,440 7 12,480 106,693 89,184 1,113,164 64,559 1,088,539 45,194 1,069,174 8 12,480 125,132 112,061 1,135,501 78,948 1,102,388 53,962 1,077,402 9 12,480 144,492 136,782 1,159,662 93,487 1,116,367 62,159 1,085,039 10 12,480 164,821 163,429 1,185,719 108,078 1,130,368 69,693 1,091,983 15 12,480 282,765 327,467 1,346,557 176,647 1,195,737 93,051 1,112,141 20 12,480 433,296 540,694 1,556,224 214,171 1,229,701 74,016 1,089,546 Age 60 12,480 72,408 48,623 1,073,623 36,556 1,061,556 26,262 1,051,262 Age 65 12,480 164,821 163,429 1,185,719 108,078 1,130,368 69,693 1,091,983 Age 70 12,480 282,765 327,467 1,346,557 176,647 1,195,737 93,051 1,112,141
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 107 110 MALE ISSUE AGE 55 NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 55 NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100) INITIAL PREMIUM: $14,040.00 STATED AMOUNT INCLUDES CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 14,040 14,742 0 1,000,000 0 1,000,000 0 1,000,000 2 14,040 30,221 2,657 1,000,000 260 1,000,000 0 1,000,000 3 14,040 46,474 19,685 1,000,000 14,681 1,000,000 10,057 1,000,000 4 14,040 63,540 38,290 1,000,000 29,573 1,000,000 21,831 1,000,000 5 14,040 81,459 58,616 1,000,000 44,938 1,000,000 33,266 1,000,000 6 14,040 100,274 80,798 1,000,000 60,751 1,000,000 44,323 1,000,000 7 14,040 120,029 105,072 1,000,000 77,073 1,000,000 55,047 1,000,000 8 14,040 140,773 131,681 1,000,000 93,950 1,000,000 65,463 1,000,000 9 14,040 162,554 160,847 1,000,000 111,378 1,000,000 75,549 1,000,000 10 14,040 185,423 192,823 1,000,000 129,362 1,000,000 85,286 1,000,000 15 14,040 318,111 406,006 1,000,000 227,743 1,000,000 127,970 1,000,000 20 14,040 487,458 751,404 1,000,000 341,474 1,000,000 158,795 1,000,000 Age 60 14,040 81,459 58,616 1,000,000 44,938 1,000,000 33,266 1,000,000 Age 65 14,040 185,423 192,823 1,000,000 129,362 1,000,000 85,286 1,000,000 Age 70 14,040 318,111 406,006 1,000,000 227,743 1,000,000 127,970 1,000,000
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 14,040 14,742 0 1,000,000 0 1,000,000 0 1,000,000 2 14,040 30,221 2,657 1,000,000 260 1,000,000 0 1,000,000 3 14,040 46,474 19,685 1,000,000 14,681 1,000,000 10,057 1,000,000 4 14,040 63,540 38,290 1,000,000 29,573 1,000,000 21,831 1,000,000 5 14,040 81,459 58,616 1,000,000 44,938 1,000,000 33,266 1,000,000 6 14,040 100,274 80,798 1,000,000 60,751 1,000,000 44,323 1,000,000 7 14,040 120,029 104,989 1,000,000 76,991 1,000,000 54,966 1,000,000 8 14,040 140,773 131,350 1,000,000 93,622 1,000,000 65,143 1,000,000 9 14,040 162,554 160,044 1,000,000 110,590 1,000,000 74,786 1,000,000 10 14,040 185,423 191,257 1,000,000 127,834 1,000,000 83,820 1,000,000 15 14,040 318,111 393,275 1,000,000 215,221 1,000,000 116,307 1,000,000 20 14,040 487,458 707,313 1,000,000 291,599 1,000,000 111,781 1,000,000 Age 60 14,040 81,459 58,616 1,000,000 44,938 1,000,000 33,266 1,000,000 Age 65 14,040 185,423 191,257 1,000,000 127,834 1,000,000 83,820 1,000,000 Age 70 14,040 318,111 393,275 1,000,000 215,221 1,000,000 116,307 1,000,000
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past of future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 108 111 MALE ISSUE AGE 55 NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 55 NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100) INITIAL PREMIUM: $14,040.00 STATED AMOUNT PLUS CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 14,040 14,742 0 1,013,849 0 1,013,081 0 1,012,313 2 14,040 30,221 2,652 1,029,012 255 1,026,615 0 1,024,311 3 14,040 46,474 19,666 1,045,596 14,664 1,040,594 10,041 1,035,971 4 14,040 63,540 38,238 1,063,718 29,529 1,055,009 21,794 1,047,274 5 14,040 81,459 58,504 1,083,504 44,845 1,069,845 33,191 1,058,191 6 14,040 100,274 80,578 1,105,078 60,577 1,085,077 44,186 1,068,686 7 14,040 120,029 104,686 1,128,666 76,779 1,100,759 54,824 1,078,804 8 14,040 140,773 131,053 1,154,493 93,490 1,116,930 65,128 1,088,568 9 14,040 162,554 159,875 1,182,755 110,693 1,133,573 75,069 1,097,949 10 14,040 185,423 191,365 1,213,655 128,375 1,150,665 84,620 1,106,910 15 14,040 318,111 397,973 1,417,063 223,319 1,242,409 125,511 1,144,601 20 14,040 487,458 718,991 1,734,521 327,148 1,342,678 152,302 1,167,832 Age 60 14,040 81,459 58,504 1,083,504 44,845 1,069,845 33,191 1,058,191 Age 65 14,040 185,423 191,365 1,213,655 128,375 1,150,665 84,620 1,106,910 Age 70 14,040 318,111 397,973 1,417,063 223,319 1,242,409 125,511 1,144,601
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 14,040 14,742 0 1,013,849 0 1,013,081 0 1,012,313 2 14,040 30,221 2,652 1,029,012 255 1,026,615 0 1,024,311 3 14,040 46,474 19,666 1,045,596 14,664 1,040,594 10,041 1,035,971 4 14,040 63,540 38,238 1,063,718 29,529 1,055,009 21,794 1,047,274 5 14,040 81,459 58,504 1,083,504 44,845 1,069,845 33,191 1,058,191 6 14,040 100,274 80,578 1,105,078 60,577 1,085,077 44,186 1,068,686 7 14,040 120,029 104,592 1,128,572 76,688 1,100,668 54,736 1,078,716 8 14,040 140,773 130,668 1,154,108 93,122 1,116,562 64,777 1,088,217 9 14,040 162,554 158,920 1,181,800 109,796 1,132,676 74,226 1,097,106 10 14,040 185,423 189,461 1,211,751 126,613 1,148,903 82,992 1,105,282 15 14,040 318,111 379,909 1,398,999 207,849 1,226,939 112,207 1,131,297 20 14,040 487,458 636,330 1,651,860 261,038 1,276,568 98,558 1,114,088 Age 60 14,040 81,459 58,504 1,083,504 44,845 1,069,845 33,191 1,058,191 Age 65 14,040 185,423 189,461 1,211,751 126,613 1,148,903 82,992 1,105,282 Age 70 14,040 318,111 379,909 1,398,999 207,849 1,226,939 112,207 1,131,297
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 109 112 MALE ISSUE AGE 65 PREFERRED NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 65 PREFERRED NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100) INITIAL PREMIUM: $19,680.00 STATED AMOUNT INCLUDES CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 19,680 20,664 0 1,000,000 0 1,000,000 0 1,000,000 2 19,680 42,361 0 1,000,000 0 1,000,000 0 1,000,000 3 19,680 65,143 24,217 1,000,000 17,229 1,000,000 10,774 1,000,000 4 19,680 89,064 50,716 1,000,000 38,557 1,000,000 27,762 1,000,000 5 19,680 114,182 79,680 1,000,000 60,609 1,000,000 44,343 1,000,000 6 19,680 140,555 111,341 1,000,000 83,389 1,000,000 60,493 1,000,000 7 19,680 168,246 145,969 1,000,000 106,914 1,000,000 76,202 1,000,000 8 19,680 197,323 183,845 1,000,000 131,180 1,000,000 91,435 1,000,000 9 19,680 227,853 225,316 1,000,000 156,214 1,000,000 106,188 1,000,000 10 19,680 259,910 270,728 1,000,000 182,004 1,000,000 120,409 1,000,000 15 19,680 445,899 572,451 1,000,000 321,132 1,000,000 180,697 1,000,000 20 19,680 683,275 1,064,071 1,134,862 472,816 1,000,000 211,074 1,000,000 Age 70 19,680 114,182 79,680 1,000,000 60,609 1,000,000 44,343 1,000,000
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 19,680 20,664 0 1,000,000 0 1,000,000 0 1,000,000 2 19,680 42,361 0 1,000,000 0 1,000,000 0 1,000,000 3 19,680 65,143 23,055 1,000,000 16,112 1,000,000 9,701 1,000,000 4 19,680 89,064 47,774 1,000,000 35,765 1,000,000 25,118 1,000,000 5 19,680 114,182 73,886 1,000,000 55,182 1,000,000 39,274 1,000,000 6 19,680 140,555 101,360 1,000,000 74,159 1,000,000 51,981 1,000,000 7 19,680 168,246 130,144 1,000,000 92,441 1,000,000 63,007 1,000,000 8 19,680 197,323 160,098 1,000,000 109,663 1,000,000 72,009 1,000,000 9 19,680 227,853 191,059 1,000,000 125,392 1,000,000 78,581 1,000,000 10 19,680 259,910 222,787 1,000,000 139,066 1,000,000 82,188 1,000,000 15 19,680 445,899 387,361 1,000,000 153,056 1,000,000 33,542 1,000,000 20 19,680 683,275 551,087 1,000,000 0 0 0 0 Age 70 19,680 114,182 73,886 1,000,000 55,182 1,000,000 39,274 1,000,000
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 110 113 MALE ISSUE AGE 65 PREFERRED NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 65 PREFERRED NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100) INITIAL PREMIUM: $19,680.00 STATED AMOUNT PLUS CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 19,680 20,664 0 1,019,411 0 1,018,334 0 1,017,258 2 19,680 42,361 0 1,040,370 0 1,037,019 0 1,033,798 3 19,680 65,143 24,120 1,063,310 17,144 1,056,334 10,700 1,049,890 4 19,680 89,064 50,511 1,088,411 38,384 1,076,284 27,617 1,065,517 5 19,680 114,182 79,300 1,115,870 60,299 1,096,869 44,092 1,080,662 6 19,680 140,555 110,691 1,145,901 82,878 1,118,088 60,095 1,095,305 7 19,680 168,246 144,918 1,178,738 106,119 1,139,939 75,605 1,109,425 8 19,680 197,323 182,215 1,214,635 129,994 1,162,414 90,578 1,122,998 9 19,680 227,853 222,870 1,253,870 154,504 1,185,504 104,996 1,135,996 10 19,680 259,910 267,152 1,296,742 179,599 1,209,189 118,796 1,148,386 15 19,680 445,899 552,562 1,575,302 310,199 1,332,939 174,630 1,197,370 20 19,680 683,275 970,561 1,987,311 431,094 1,447,844 192,320 1,209,070 Age 70 19,680 114,182 79,300 1,115,870 60,299 1,096,869 44,092 1,080,662
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 19,680 20,664 0 1,019,411 0 1,018,334 0 1,017,258 2 19,680 42,361 0 1,040,118 0 1,036,774 0 1,033,561 3 19,680 65,143 22,891 1,062,081 15,967 1,055,157 9,574 1,048,764 4 19,680 89,064 47,348 1,085,248 35,402 1,073,302 24,812 1,062,712 5 19,680 114,182 72,962 1,109,532 54,426 1,090,996 38,659 1,075,229 6 19,680 140,555 99,578 1,134,788 72,755 1,107,965 50,883 1,086,093 7 19,680 168,246 126,962 1,160,782 90,035 1,123,855 61,198 1,095,018 8 19,680 197,323 154,727 1,187,147 105,766 1,138,186 69,199 1,101,619 9 19,680 227,853 182,361 1,213,361 119,351 1,150,351 74,410 1,105,410 10 19,680 259,910 209,169 1,238,759 130,032 1,159,622 76,234 1,105,824 15 19,680 445,899 299,825 1,322,565 109,974 1,132,714 13,373 1,036,113 20 19,680 683,275 181,298 1,198,048 0 0 0 0 Age 70 19,680 114,182 72,962 1,109,532 54,426 1,090,966 38,659 1,075,229
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 111 114 MALE ISSUE AGE 65 NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 65 NONSMOKER DEATH BENEFIT TYPE: A (MATURITY AGE 100) INITIAL PREMIUM: $22,440.00 STATED AMOUNT INCLUDES CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 22,440 23,562 0 1,000,000 0 1,000,000 0 1,000,000 2 22,440 48,302 5,744 1,000,000 1,908 1,000,000 0 1,000,000 3 22,440 74,279 33,113 1,000,000 25,128 1,000,000 17,753 1,000,000 4 22,440 101,555 62,896 1,000,000 49,016 1,000,000 36,696 1,000,000 5 22,440 130,195 95,336 1,000,000 73,587 1,000,000 55,046 1,000,000 6 22,440 160,267 130,686 1,000,000 98,840 1,000,000 72,774 1,000,000 7 22,440 191,842 169,241 1,000,000 124,783 1,000,000 89,862 1,000,000 8 22,440 224,996 211,316 1,000,000 151,409 1,000,000 106,270 1,000,000 9 22,440 259,808 257,300 1,000,000 178,740 1,000,000 121,983 1,000,000 10 22,440 296,360 307,592 1,000,000 206,757 1,000,000 136,942 1,000,000 15 22,440 508,434 641,507 1,000,000 354,745 1,000,000 195,746 1,000,000 20 22,440 779,100 1,192,264 1,269,465 508,570 1,000,000 209,000 1,000,000 Age 70 22,440 130,195 95,336 1,000,000 73,587 1,000,000 55,046 1,000,000
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH POLICY YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ----------- ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 22,440 23,562 0 1,000,000 0 1,000,000 0 1,000,000 2 22,440 48,302 5,703 1,000,000 1,868 1,000,000 0 1,000,000 3 22,440 74,279 32,525 1,000,000 24,557 1,000,000 17,199 1,000,000 4 22,440 101,555 61,104 1,000,000 47,298 1,000,000 35,054 1,000,000 5 22,440 130,195 91,507 1,000,000 69,964 1,000,000 51,629 1,000,000 6 22,440 160,267 123,770 1,000,000 92,370 1,000,000 66,745 1,000,000 7 22,440 191,842 157,913 1,000,000 114,289 1,000,000 80,184 1,000,000 8 22,440 224,996 193,900 1,000,000 135,389 1,000,000 91,619 1,000,000 9 22,440 259,808 231,689 1,000,000 155,284 1,000,000 100,666 1,000,000 10 22,440 296,360 271,206 1,000,000 173,473 1,000,000 106,820 1,000,000 15 22,440 508,434 498,967 1,000,000 218,850 1,000,000 73,473 1,000,000 20 22,440 779,100 834,891 1,000,000 83,185 1,000,000 0 0 Age 70 22,440 130,195 91,507 1,000,000 69,964 1,000,000 51,629 1,000,000
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 112 115 MALE ISSUE AGE 65 NONSMOKER INITIAL STATED AMOUNT: $1,000,000 FEMALE ISSUE AGE 65 NONSMOKER DEATH BENEFIT TYPE: B (MATURITY AGE 100) INITIAL PREMIUM: $22,440.00 STATED AMOUNT PLUS CASH VALUE SUMMARY OF VALUES AND BENEFITS ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 00.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS CURRENT CURRENT CURRENT -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 22,440 23,562 0 1,022,256 0 1,021,024 0 1,019,793 2 22,440 48,302 5,693 1,046,143 1,862 1,042,312 0 1,038,630 3 22,440 74,279 32,966 1,072,156 24,999 1,064,189 17,640 1,056,830 4 22,440 101,555 62,570 1,100,470 48,739 1,086,639 36,463 1,074,363 5 22,440 130,195 94,709 1,131,279 73,074 1,109,644 54,630 1,091,200 6 22,440 160,267 129,580 1,164,790 97,970 1,133,180 72,094 1,107,304 7 22,440 191,842 167,411 1,201,231 123,398 1,157,218 88,820 1,122,640 8 22,440 224,996 208,430 1,240,850 149,308 1,181,728 104,749 1,137,169 9 22,440 259,808 252,910 1,283,910 175,668 1,206,668 119,843 1,150,843 10 22,440 296,360 301,107 1,330,697 202,398 1,231,988 134,020 1,163,610 15 22,440 508,434 604,488 1,627,288 334,532 1,357,272 184,630 1,207,370 20 22,440 779,100 1,023,856 2,040,606 432,813 1,449,563 176,120 1,192,870 Age 70 22,440 130,195 94,709 1,131,279 73,074 1,109,644 54,630 1,091,200
ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN 12.00%(10.33% NET) 6.00%(4.33% NET) 0.00%(-1.67% NET) ASSUMED COST OF INSURANCE AND EXPENSE CHARGES
PLANNED PREMIUMS GUARANTEED GUARANTEED GUARANTEED -------------------- ---------------------------- ---------------------------- ---------------------------- END OF TOTAL ACCUMULATED END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR END OF YEAR POLICY ANNUAL AT 5% CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR OUTLAY INTEREST VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT ------ ------ ----------- -------------- ----------- -------------- ----------- -------------- ----------- 1 22,440 23,562 0 1,022,256 0 1,021,024 0 1,019,793 2 22,440 48,302 5,650 1,046,100 1,820 1,042,270 0 1,038,589 3 22,440 74,279 32,336 1,071,526 24,391 1,063,581 17,053 1,056,243 4 22,440 101,555 60,613 1,098,513 46,880 1,084,780 34,701 1,072,601 5 22,440 130,195 90,443 1,127,013 69,092 1,105,662 50,918 1,087,488 6 22,440 160,267 121,709 1,156,919 90,746 1,125,956 65,473 1,100,683 7 22,440 191,842 154,225 1,188,045 111,494 1,145,314 78,080 1,111,900 8 22,440 224,996 187,651 1,220,071 130,845 1,163,265 88,334 1,120,754 9 22,440 259,808 221,532 1,252,532 148,207 1,179,207 95,761 1,126,761 10 22,440 296,360 255,233 1,284,823 162,829 1,192,419 99,766 1,129,356 15 22,440 508,434 392,655 1,415,395 165,203 1,187,943 47,278 1,070,018 20 22,440 779,100 350,730 1,367,480 0 0 0 0 Age 70 22,440 130,195 90,443 1,127,013 69,092 1,105,662 50,918 1,087,488
The hypothetical gross annual investment results shown above are illustrative only and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors, including allocations made by the owner among the investment options and the actual investment results of those options. The cash surrender value and death benefit for a policy would be different from those shown even if the actual rates of investment averaged 0%, 6% and 12% over a period of years but fluctuated above or below those averages for individual contract years. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. This illustration assumes current cost of insurance and expense charges remain unchanged. Form 5741 113 116 PART II OTHER INFORMATION 117 CONTENTS OF REGISTRATION STATEMENT This registration statement comprises the following papers and documents: The facing sheet The prospectus consisting of pages Representations pursuant to Section 26(e)(2)(A) of the Investment Company Act of 1940, as amended, Ohio National Life Assurance Corporation represents that the fees and charges deducted under the contract, in the aggregate, are reasonable in relation to the expenses expected to be incurred and the risks assumed by Ohio National Life Assurance Corporation. The signatures Written consents of the following persons: KPMG LLP Jones & Blouch L.L.P. Ronald L. Benedict, Esq. David W. Cook, FSA, MAAA Exhibits: All relevant exhibits, which have previously been filed with the Commission and are incorporated herein by reference, are as follows: (1) Resolution of the Board of Directors of the Depositor authorizing establishment of Ohio National Variable Account R was filed as Exhibit 1.(1) of the Registrant's registration statement on Form S-6 on June 7, 1985 (File no. 2-98265). (3)(a) Principal Underwriting Agreement for Variable Life Insurance, with compensation schedule, between the Depositor and Ohio National Equities, Inc. was filed as Exhibit (3)(a) of the Registrant's registration statement on Form S-6 on April 27, 1998 (File no. 333-16133). 118 (3)(b) Registered Representative's Sales Contract with Variable Life Supplement was filed as Exhibit (3)(b) of the Registrant's Form S-6, Post-effective Amendment no. 5, on April 18, 1991 (File no. 2-98265). (3)(c) Schedule of Sales Commissions was filed as Exhibit 1.(3)(c) of the Registrant's Form S-6 on October 15, 1986 (File no. 2-98265). (3)(d) Variable Contract Distribution Agreements (with compensation schedules) between the Depositor and Ohio National Equities, Inc. were filed as Exhibit (3)(d) of Post-effective Amendment no. 23 of Ohio National Variable Account A registration statement on Form N-4 (File no. 2-91213). (5) Last Survivor Flexible Premium Life Insurance Policy, Form 00-VL-2 was filed as an exhibit to the Registrant's registration statement on Form S-6 on June 30, 2000 (File no. 333-40636). (6)(a) Articles of Incorporation of the Depositor were filed as Exhibit 1.(6)(a) of the Registrant's Form S-6 on June 7, 1985 (File no. 2-98265). (6)(b) Code of Regulations (by-laws) of the Depositor were filed as Exhibit 1.(6)(b) of the Registrant's Form S-6 on June 7, 1985 (File no. 2-98265). (8) Service Agreement between the Depositor and The Ohio National Life Insurance Company was filed as Exhibit 1.(8) of the Registrant's Form S-6 on June 7, 1985 (File no. 2-98265). (10) Variable Life Insurance Application Supplement: Suitability Information was filed as an exhibit to the Registrant's registration statement on Form S-6 on June 30, 2000 (File no. 333-40636) (11) Memorandum describing the Depositor's purchase, transfer, redemption and conversion procedures for the contracts was filed as Exhibit 1.(11) of the Registrant's Form S-6 on June 30, 2000 (File no. 333-40724). 119 SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the registrant, Ohio National Variable Account R has caused this registration statement to be signed on its behalf in the City of Montgomery and State of Ohio on the 18th day of September, 2000. OHIO NATIONAL VARIABLE ACCOUNT R (Registrant) By OHIO NATIONAL LIFE ASSURANCE CORPORATION (Depositor) By /s/ John J. Palmer ------------------------------------ John J. Palmer Executive Vice President, Strategic Initiatives Attest: /s/ Ronald L. Benedict ---------------------- Ronald L. Benedict Corporate Vice President, Counsel and Secretary 120 Pursuant to the requirements of the Securities Act of 1933, the depositor has duly caused this registration statement to be signed on its behalf by the undersigned thereunto duly authorized in the City of Montgomery and the State of Ohio on the 18th day of September, 2000. OHIO NATIONAL LIFE ASSURANCE CORPORATION (Depositor) By /s/ John J. Palmer ------------------------------------ John J. Palmer Executive Vice President, Strategic Initiatives Attest: /s/ Ronald L. Benedict ---------------------- Ronald L. Benedict Corporate Vice President, Counsel and Secretary Pursuant to the requirements of the Securities Act of 1933, this post-effective amendment to the registration statement has been signed below by the following persons in the capacities with the depositor and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ David B. O'Maley Chairman, President ----------------------------- and Chief Executive David B. O'Maley Officer and Director September 18, 2000 /s/ Ronald J. Dolan Executive Vice President ---------------------------- and Chief Financial Officer Ronald J. Dolan and Director September 18, 2000 /s/ John J. Palmer Executive Vice President, ----------------------------- Strategic Initiatives John J. Palmer and Director September 18, 2000 /s/ Stuart G. Summers Executive Vice President and ----------------------------- General Counsel and Stuart G. Summers Director September 18, 2000 /s/ D. Gates Smith ----------------------------- Executive Vice President, D. Gates Smith Agency and Group Distribution September 18, 2000 and Director /s/ Roylene M. Broadwell Vice President & Treasurer September 18, 2000 ----------------------------- Roylene M. Broadwell
121 INDEX OF CONSENTS AND EXHIBITS Page Number Exhibit in Sequential Number Description Numbering System Consent of KPMG LLP Consent of Jones & Blouch L.L.P. Consent of Ronald L. Benedict, Esq. Consent of David W. Cook, FSA, MAAA 122 CONSENTS 123 INDEPENDENT AUDITORS' CONSENT The Board of Directors of Ohio National Life Assurance Corporation and Contract Owners of Ohio National Variable Account R: We consent to use of our reports dated February 18, 2000 for the Ohio National Variable Account R and January 28, 2000 for Ohio National Life Assurance Corporation as included herein and to the reference to our firm under the heading "Experts" herein. Cincinnati, Ohio September 18, 2000 124 [OHIO NATIONAL FINANCIAL SERVICES LETTERHEAD] September 18, 2000 The Board of Directors Ohio National Life Assurance Corporation One Financial Way Cincinnati, OH 45242 Re: Ohio National Variable Account R (1940 Act File No. 811-4320) Pre-Effective Amendment No. 1 to Registration Statement File No. 333-40636 Ladies and Gentlemen: The undersigned hereby consents to the use of my name under the caption of "Legal Opinions" in the registration statement on Form S-6 of the above captioned registrant. Sincerely, /s/Ronald L. Benedict ------------------------------------ Ronald L. Benedict Corporate Vice President, Counsel and Secretary RLB/nh VARS6II 125 [OHIO NATIONAL FINANCIAL SERVICES LETTERHEAD] September 18, 2000 Ohio National Life Assurance Corporation One Financial Way Cincinnati, Ohio 45242 Re: Ohio National Variable Account R (1940 Act File No. 811-4320) Registration Statement File No. 333-40636 Gentlemen: I hereby consent to the use of my name under the heading "Experts" in the prospectuses included in the Pre-Effective Amendment No. 1 to the above-captioned registration statement on Form S-6. Sincerely, /s/ David W. Cook ------------------------------ David W. Cook, FSA, MAAA Senior Vice President and Actuary DWC/nh 126 Jones & Blouch L.L.P. Suite 405-West 1025 Thomas Jefferson St., N.W. Washington, DC 20007 (202) 223-3500 September 18, 2000 VIA EDGAR TRANSMISSION Board of Directors Ohio National Life Assurance Corporation One Financial Way Cincinnati, OH 45201 Re: Ohio National Variable Account R Pre-Effective Amendment No. 1 to Registration Statement on Form S-6 File No. 333-40636 ---------------------------------- Dear Sirs: We hereby consent to the reference to this firm under the caption "Legal Matters" in the prospectus contained in the above-referenced Pre-Effective Amendment No. 1 to the registration statement to be filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933. Very truly yours, /s/ JONES & BLOUCH L.L.P. ------------------------- Jones & Blouch L.L.P.