UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

(Amendment No.      )

Filed by the Registrant  x

Filed by a Party other than the Registrant  o

Check the appropriate box:

OHIO NATIONAL FUND, INC.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

o  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

      (1) Title of each class of securities to which transaction applies: 

      (2) Aggregate number of securities to which transaction applies: 

      (4) Proposed maximum aggregate value of transaction: 

      (5) Total fee paid: 

o  Fee paid previously with preliminary materials.

      (1) Amount Previously Paid: 

      (2) Form, Schedule or Registration Statement No.: 

      (3) Filing Party: 

      (4) Date Filed: 

Ohio National Fund(SM)

June      , 2006

Dear Ohio National or National Security Variable Contract Owner:

      Enclosed are information and voting instructions from your Ohio National Fund (the “Fund”) Board of Directors regarding a shareholders meeting on August 11, 2006, to elect directors and seek your approval of an amended Investment Advisory Agreement with Ohio National Investments, Inc. permitting the allocation of expenses of the Fund’s Chief Compliance Officer and his staff to the Fund and requiring the Adviser to provide the Board with any materials it requests, and assist in the collection of such materials from subadvisers, for purposes of reviewing and approving advisory and subadvisory agreements.

      The proxy statement provides information about the nominees for director and the other proposal. Your Board of Directors believes that the election of the nominees and your approval of the proposal are in your best interests. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE NOMINEES AND THE PROPOSAL.

      Although you are not a Fund shareholder, it is your right to instruct us how to vote the shares attributed to your variable contract. If you have any questions, you may contact our corporate secretary, Marc L. Collins, at 1-800-366-6654.

      Please complete, sign and return the voting instructions promptly in the envelope provided. No postage is needed if you mail it in the United States. You also may vote by the internet or by telephone by following the directions on the enclosed voting instruction form. Your instructions are important! As always, we thank you for your confidence and support.

Sincerely,

/s/ John J. Palmer

John J. Palmer

President

PS — www.ohionational.com offers you 24-hour access to policy and contract values for variable life insurance, fixed and variable annuities, and group annuity contracts. You may also transfer funds among investment options and change future allocations online. If you haven’t had an opportunity to log on and check out this valuable tool, I encourage you to do so.

[OHIO NATIONAL FINANCIAL SERVICES LOGO]

Ohio National Fund, Inc.

One Financial Way

Montgomery, Ohio 45242

Notice of Meeting of Shareholders

August 11, 2006

      A meeting of the shareholders of the Ohio National Fund, Inc. will be held at the Fund’s office at One Financial Way in Montgomery, Ohio. The meeting will begin at 10:00 a.m. Eastern time on August 11, 2006.

      The meeting has been called for the following purposes:

      You are entitled to receive this notice and to vote at the special meeting if you were a shareholder of record of the Fund at the close of business on June      , 2006.

      For the reasons given in the attached Proxy Statement, we (the Fund’s Board of Directors) recommend that you vote FOR the nominees and the proposal.

June      , 2006

Ohio National Fund, Inc.

One Financial Way

Montgomery, Ohio 45242

Proxy Statement

Meeting of Shareholders

August 11, 2006

      We, the Board of Directors of Ohio National Fund, Inc. (the “Fund”), are soliciting proxies for a meeting of the shareholders. The meeting will be held at 10:00 a.m. Eastern time on August 11, 2006. We are sending you this proxy statement and its enclosures if you are a Fund shareholder or if you have a variable contract with values allocated to one or more of the Fund’s portfolios. We are mailing the statement on or about June      , 2006. Each shareholder of record as of the close of business on June      , 2006 is entitled to one vote for each share owned at that time.

      You may revoke your proxy before the meeting by giving written notice to the Secretary of the Fund or by appearing in person at the meeting and notifying the Secretary that you intend to revoke your proxy. Your latest proxy revokes any earlier ones. All proxies that are properly signed and received in time and not revoked will be voted as marked. If you sign and return a proxy but do not show how you want to vote, we will vote it in favor of the proposals. We will vote the interests of any variable contract owners from whom we receive no voting instructions in proportion with the instructions that we do receive before the meeting.

      The Fund’s investment adviser, Ohio National Investments, Inc. (the “Adviser”) will pay the printing, mailing and legal costs for soliciting the proxies and all other costs. In addition to solicitation by mail, officers and representatives of the Fund and officers and employees of the Adviser and its affiliates, without extra compensation, may conduct additional solicitations personally, by telephone or by any other means available.

      As of April 17, 2006, 100% of the issued and outstanding shares of the Fund were owned of record by The Ohio National Life Insurance Company (“ONLI”), Ohio National Life Assurance Corporation (“ONLAC”) (together with ONLI called “Ohio National Life”) and National Security Life and Annuity Company (“National Security” or “NSLAC”). The address of Ohio National Life and National Security is One Financial Way, Montgomery, Ohio 45242. These shares were allocated to Ohio National Life and National Security’s separate accounts as follows:

      Each share is entitled to one vote. For free copies of the Fund’s most recent annual and semi-annual financial reports, contact R. Todd Brockman (Treasurer) at One Financial Way, Montgomery, Ohio 45242. Telephone 1-800-366-6654.

SUMMARY OF PROPOSALS

      The purpose of the meeting is for shareholders to vote on the following proposals:

      A plurality vote of the eligible shareholders is required for the election of each director and the affirmative vote of a majority of the outstanding voting securities is required for the approval of the proposal. Under the Investment Company Act of 1940 (the “1940 Act”), the affirmative vote of a majority of the outstanding voting securities means the lesser of:

      If you are the owner of a Ohio National Life or National Security variable annuity or variable life insurance policy, you are not actually a Fund shareholder. Ohio National Life or National Security is the legal owner of the Fund shares represented by your variable contract values. However, Ohio National Life and National Security want you to return the Voting Instructions so that they can vote the Fund shares represented by your variable contract values in accordance with your instructions. The persons named as proxies in the enclosed Voting Instructions intend to vote all of the shares of the Fund proportionately in accordance with the instructions given by those contract owners who respond with their Voting Instructions.

      “Broker non-votes” are shares held by a broker or nominee for which an executed proxy is received by the Fund, but are not voted as to one or more proposals because instructions have not been received from beneficial owners or persons entitled to vote and the broker or nominee does not have discretionary voting power. For purposes of determining the presence of a quorum for transacting business at the Meeting, abstentions and broker non-votes are treated as shares that are present and entitled to vote. So long as a quorum is present, abstentions and broker non-votes will be cast in proportion to the votes received from other shareholders.

      If sufficient votes in favor of the proposals are not received by the time scheduled for the Meeting, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies. Any adjournment will require the affirmative vote of a majority of the votes cast on the question in person or by proxy at the session of the Meeting to be adjourned. The persons named as proxies will vote in favor of such adjournment those proxies which they are entitled to vote in favor of the proposals. They will vote against such adjournment those proxies required to be voted against the proposals.

      The Board of Directors unanimously recommends that you vote in favor of all the director nominees and FOR the proposal to amend the Investment Advisory Agreement.

Election of Directors

      At the meeting, the entire Board, consisting of five directors, is to be elected. Although the Fund does not have regularly scheduled meetings for the purpose of electing directors, the directors are expected to serve for approximately three years or until their respective successors are elected and qualified. The nominees for election as directors are listed under “Director Nominees.” All of the nominees are presently serving on the Board.

      Nomination of directors is a function of the Board’s Independent Directors Committee. The Independent Directors Committee consists of those directors (the “Independent Directors”) who are not “interested persons” as defined in the 1940 Act. Other than serving as Fund directors, the Independent Directors have no affiliation with the Fund or its Adviser or with any other entity affiliated with the Fund, Ohio National Life or National Security.

      Each of the candidates for director will be voted on, individually, by all the shareholders voting as a whole and not by portfolios. Each of the nominees has consented to being named in this proxy statement and to serving as a director if elected. If any nominee becomes unable or unwilling to accept election, the persons named as proxies will exercise their voting power in favor of such other persons as the Independent Directors Committee may recommend. We do not expect any of the nominees to be unable or unwilling to serve if elected. Directors serve a vital function in governing the Fund and looking out for shareholders’ interests. Thus, it is important for you to vote for the nominees.

      The Board of Directors met four times during the fiscal year ended December 31, 2005. Each Director attended at least 75% of the meetings during that fiscal year. Since the Fund is not required to convene annual shareholder meetings, the Fund does not have a policy requiring director attendance at such meetings.

Compensation of Directors

      The Independent Directors received aggregate total compensation of $114,400 from the Fund Complex in 2005, including an aggregate total of $109,000 from the Fund. (The “Fund Complex” consists of the Fund and another mutual fund having the same Adviser as the Fund, Dow Target Variable Fund LLC. It is described below under “Investment Advisory Services.”) Directors and officers of the Fund who are also officers or employees of the Fund, the Adviser, Ohio National Life, National Security or any entity affiliated with any of them, receive no compensation from the Fund. For the Fiscal year ended December 31, 2005, the current directors were compensated as follows:

      The Fund has no pension, retirement or deferred compensation plan for its directors or officers. All the compensation paid to the directors, as listed above, is in cash and not in Fund securities.

Committees of the Board

      The Board has no special nominating or compensation committees. These functions are the responsibility of the Board’s Independent Directors Committee, which adopted a written charter on March 14, 2006. The Independent Directors Committee meets periodically with its own independent legal counsel to review matters of Fund governance. They also review investment advisory agreements and subadvisory agreements before the Fund or Adviser enters into those agreements and at least once each year to consider whether or not those agreements should be continued. The Independent Directors Committee met four times in 2005. Three of the four members were present at all four meetings. Mr. Love was excused from one of the meetings. In addition to their formal committee meetings, the Independent Directors and their independent legal counsel confer informally from time to time to discuss issues related to the responsibilities of the Independent Directors.

      The Independent Directors’ independent legal counsel is the law firm of Baker & Hostetler LLP. Baker & Hostetler has had extensive experience in 1940 Act and related mutual fund legal issues. The Independent Directors have determined that the firm has not engaged in any material business or representation on behalf of the Adviser, Ohio National Life, National Security or any of their affiliates.

      The Independent Directors Committee does not have a policy with regard to consideration of any director candidates recommended by shareholders. The separate accounts of Ohio National Life and National Security are the only shareholders of the Fund. The separate accounts are not operating entities, and have no officers or directors, so the Board does not feel it is appropriate to have a policy regarding shareholder nominations.

      Nomination of directors is a function of the Independent Directors Committee. The Independent Directors Committee does not have any minimum qualifications that a nominee must meet for a position on the Board of Directors. The Committee will take into account a wide variety of criteria in considering a potential candidate’s qualifications to serve as a director, including the ability of the candidate to contribute to the functioning of the Board and carrying out the responsibilities of the Board. The Committee may also consider other criteria, including, but not limited to (i) relevant experience, (ii) educational background, (iii) reputation for high ethical standards and personal and professional integrity, (iv) knowledge of the investment company industry, (v) financial, technical or other expertise, and (vi) time commitment to the performance of the duties of a director.

      The Independent Directors Committee may use any process it deems appropriate for the purpose of evaluating candidates for director, which may include, without limitation, personal interviews, background checks, written submissions by the candidates and third-party references.

      The Independent Directors also constitute the Board’s Audit Committee. The Audit Committee is responsible for recommending to the entire Board the engagement or discharge of the Fund’s independent auditors. The Board has ratified the written charter adopted by the Audit Committee on November 5, 2002 and amended on November 18, 2003. The Audit Committee meets at least twice a year with the independent registered public accounting firm to review the results of the auditing engagement and to discuss the independent registered public accounting firm’s audit plan for the next ensuing year-end audit of the Fund’s financial reports. The Audit Committee met four times in 2005. All four members attended those meetings. The Audit Committee has elected Mr. Bushman as its Chairman. Messrs. Bushman and Campanella have been designated by the Board as “audit committee financial experts.”

Director Nominees

      All directors and officers of the Fund hold identical positions with the other entity in the Fund Complex, The Dow Target Variable Fund LLC.

Other Officers of the Fund

Director Ownership in the Fund

      None of the Directors directly own shares of the Fund. As of December 31, 2005, the Directors as a group owned variable contracts that entitled them to give voting instructions with respect to less than 1% of the outstanding shares of the Fund. The following table shows the dollar range of the shares beneficially owned by each Director as of December 31, 2005:

Ownership of Securities of the Adviser and Related Companies

      As of December 31, 2005, no Independent Directors nor any of their immediate family members owned, beneficially or of record, securities of the Adviser, any subadviser, the distributor, or any person (other than a registered investment company) directly or indirectly, controlling, controlled by or under common control with the Adviser, any subadviser or the distributor.

Shareholder Communication

      The Board of Directors does not have a process in place for shareholders to send communications to the Board. Ohio National Life and National Security own all the shares of the Fund through their separate accounts, which themselves are not operating entities. The Board, therefore, does not feel it is necessary to have a process in place for the shareholders of the Fund to send communications to the Board. As an owner of a Ohio National Life or National Security variable annuity or variable life insurance policy, however, you may send communications to Ohio National Life or National Security, One Financial Way, Montgomery, Ohio 45242.

Required Vote

      A plurality vote of the eligible shareholders is required for the election of each director. The proposal will be voted on by all the shareholders voting as a whole and not by portfolios.

      Your Board of Directors, including all of the Independent Directors, unanimously recommends that you vote FOR each nominee.

Amended Investment Advisory Agreement

Allocation of Chief Compliance Officer Expenses

      Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”) under the 1940 Act, each investment company must adopt compliance policies and procedures and designate an individual as the Chief Compliance Officer (the “CCO”). The investment company’s policies and procedures must be reasonably designed to prevent violation of federal securities laws by the fund and provide for the oversight of compliance by the fund’s service providers, including any investment adviser. The investment company’s CCO is required to administer the investment company’s compliance policies and procedures and to meet, at least annually, with the independent directors of the investment company and provide a written report to its board. Similarly, investment advisers are required to adopt policies and procedures designed to prevent violations by the adviser of the Investment Advisers Act of 1940 and to designate a CCO to administer those policies and procedures. Investment companies and investment advisers were required to comply with these requirements by October 5, 2004.

      In accordance with the rules, the Fund and Adviser have each established the position of CCO with authority to employ the necessary resources to meet the SEC requirements. This position, for both the Fund and the Adviser, is currently held by Dennis Taney. The Investment Advisory Agreement between the Fund and the Adviser (the “Agreement”), adopted prior to October, 2004, provides that the Adviser will furnish at its own expense or pay the expenses of the Fund for necessary executive and other personnel for managing the affairs of the Fund. Currently, therefore, the Adviser pays the expenses, including salaries, of the Fund’s CCO and his staff. The proposed amended Agreement would permit the Adviser to allocate to the Fund, subject to the approval of the Fund’s Board of Directors, including a majority of the Directors who are not interested persons of the Fund, the portion of the expenses of the CCO and his staff that are attributable to work done for the Fund.

      The Board of Directors of the Fund believes that it is appropriate for the Fund to bear the expenses of the Fund’s CCO and his staff that are attributable to their compliance work for the Fund. The CCO and his staff play a necessary and vital role in ensuring the Fund is operated in compliance with federal securities laws. While the Fund’s CCO is also the CCO for the Adviser, many of the CCO’s responsibilities and functions are provided solely for the Fund. In the release adopting the rules requiring investment companies and investment advisers to designate a CCO, the SEC contemplated that one individual would likely serve as both the CCO for a fund and for the fund’s investment adviser since the positions would overlap. The Board feels that it is inequitable for the

Adviser to bear all of the cost of the CCO since the Fund is now required by federal law to designate a CCO and since certain of the CCO’s work is done solely for the Fund.

Provision of Certain Materials to the Board of Directors by the Adviser

      Pursuant to Section 15(c) of the 1940 Act, the Board of Directors has a duty to request and evaluate such information as may be reasonably necessary to evaluate the terms of any advisory or subadvisory agreement, and the Adviser has a duty to provide such information. Currently, the Agreement does not explicitly address this duty of the Adviser. The Board of Directors desires to amend the Agreement to require that the Adviser provide any and all materials the Board requests for purposes of reviewing and approving the Agreement under Section 15(c) of the 1940 Act and assist in the collection of any and all materials from the subadvisers that the Board requests for purposes of reviewing and approving the subadvisory agreements. While the Adviser believes it is already legally required to provide such material to the Board upon the Board’s request, it has no objections to the proposed amended Agreement and has agreed to submit the amended Agreement to the shareholders for approval.

      Except as discussed in this proxy, all other terms of the Agreement would remain in effect. A copy of the Agreement as proposed to be amended and marked to reflect the changes is attached as Exhibit A.

Comparison of Current and Pro Forma Expenses

      The following tables describe the shareholder fees and annual operating expenses that you may pay if you buy and hold shares of the Fund with the current fees and expenses of the Fund and with estimated fees and expenses that would be in effect if the amended Agreement is adopted. For purposes of pro forma calculations, it is assumed that the Fund would have paid its allocation of the costs of the CCO and his staff for the entire fiscal year ended December 31, 2005.

Shareholder Fees (fees paid directly from your account): Not applicable

      The Fund has no sales charges, redemption fees, exchange fees or account fees. Those kinds of fees may be charged in connection with variable annuities and variable life insurance policies issued by Ohio National Life and National Security. Read your variable contract prospectus for a description of its fees and expenses.

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)

      The Fund has no distribution (12b-1) or service fees.

The Adviser has also agreed in its Advisory contract, which is renewed annually each August, to reimburse portfolios for certain excess operating expenses in excess of 1%, excluding management expenses. Such expenses may include fees for certain services such as legal or accounting services. The following reflects amounts the Adviser reimbursed to the indicated portfolios for the year ended December 31, 2005:

Example

      This example is intended to help you compare the cost of investing your variable contract assets in the Fund with the cost of investing them in other mutual funds.

      The example assumes that you invest $10,000 in the Fund for the time periods indicated. The example also assumes your investment has a 5% return each year and that the Fund’s operating expenses remain the same. The costs indicated below do not reflect the additional expenses of variable contracts nor any expense waivers or reimbursements. These costs would be higher if variable contract charges were added. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

Required Vote

      A vote of a majority of the outstanding voting securities is required for the approval of the amended Agreement. The proposal will be voted on by all the shareholders voting as a whole and not by portfolios.

      The Board of Directors considered the proposed amended Agreement, based on the factors discussed above and other information they considered relevant. Your Board of Directors, including all of the Independent Directors, unanimously recommends that you vote FOR the proposed amended Agreement.

INVESTMENT ADVISORY SERVICES

      The Adviser is a wholly-owned subsidiary of ONLI. The Adviser regularly furnishes to the Fund’s Board of Directors recommendations with respect to an investment program consistent with the investment policies of each portfolio. Upon approval of an investment program by the Fund’s Board of Directors, the Adviser implements the program by placing the orders for the purchase and sale of securities or, in the case of the Equity, International, Capital Appreciation, Millennium, International Small Company, Aggressive Growth, Small Cap Growth, Mid Cap Opportunity, Capital Growth, High Income Bond, Blue Chip, Bristol, Bryton Growth, U.S. Equity, Balanced, Covered Call, Target VIP and Target Equity/ Income Portfolios, and the equity component of the Omni portfolio, by delegating that implementation to Legg Mason, Federated Global, Jennison, Founders, Janus, RSIM, Eagle, Federated Investment, Federated Equity, Suffolk, ICON or First Trust as the case may be.

      The Adviser’s services are provided under the Agreement with the Fund. Under the Agreement, the Adviser provides personnel, including executive officers for the Fund. The Adviser also furnishes at its own expense or pays the expenses of the Fund for clerical and related administrative services (other than those provided by the custodian agreements with U.S. Bank and State Street Bank and Trust Company and an agency agreement with

U.S. Bancorp Fund Services), office space, and other facilities. The Fund pays corporate expenses incurred in its operations, including, among others, local income, franchise, issuance or other taxes; certain printing costs; brokerage commissions on portfolio transactions; custodial and transfer agent fees; auditing and legal expenses; and expenses relating to registration of its shares for sale and shareholders’ meetings.

      Under a Service Agreement among the Fund, the Adviser and ONLI, ONLI has agreed to furnish the Adviser, at cost, the research facilities, services and personnel the Adviser may need to perform it duties under the Agreement. The Adviser has agreed to reimburse ONLI for its expenses in this regard. The Fund has not paid to the Adviser, or to any of its affiliates, any compensation for services other than under the Agreement during the last fiscal year. The Adviser is a wholly-owned subsidiary of ONLI. ONLI’s ultimate parent is Ohio National Mutual Holdings, Inc., a mutual insurance holding company owned by ONLI’s policyholders. The address of the Adviser, ONLI, the Fund and Ohio National Mutual Holdings, Inc. is One Financial Way, Montgomery, Ohio 45242.

      The president of the Adviser is Christopher A. Carlson. The Adviser’s directors are Mr. Carlson, Thomas A. Barefield, Therese S. McDonough, John J. Palmer and Marc L. Collins. Mr. Carlson is Senior Vice President and Chief Investment Officer of ONLI, Chief Investment Officer of National Security and Vice President of the Fund. Mr. Barefield is Senior Vice President — Institutional Sales of ONLI, Vice President — Marketing of National Security and Vice President of the Fund. Ms. McDonough is legal counsel to ONLI and its affiliates, Secretary of ONLI and Assistant Secretary of the Adviser and of National Security. Mr. Palmer is President of the Fund, Vice Chairman of ONLI and Chief Executive Officer of National Security. The Adviser’s Secretary, Mr. Collins, is also the Secretary of the Fund. He is principally employed as legal counsel to ONLI and its affiliates. The business address of each of these individuals is One Financial Way, Montgomery, Ohio 45242.

      The Agreement and Service Agreement were both entered into on May 1, 1996. As compensation for its services, the Adviser receives from the Fund annual fees under the Agreement on the basis of each portfolio’s average daily net assets during the month for which the fees are paid based on the following schedule:

Equity Portfolio

0.80% of first $500 million

0.75% of next $500 million

0.70% over $1 billion

Money Market Portfolio

0.30% of first $100 million

0.25% of next $150 million

0.23% of next $250 million

0.20% of next $500 million

0.15% over $1 billion

Small Cap Growth

0.95% of first $100 million

0.90% of next $50 million

0.80% of next 150 million

0.75% over $300 million

Mid Cap Opportunity Portfolio

0.85% of first $100 million

0.80% of next $100 million

0.75% of next $300 million

0.70% over $500 million

Capital Appreciation Portfolio

0.80% of first $100 million

0.75% of next $300 million

0.65% of next $600 million

0.60% over $1 billion

Millennium (formerly Discovery) Portfolio

0.80% of first $150 million

0.75% of next $150 million

0.70% of next $300 million

0.65% over $600 million

Aggressive Growth Portfolio

0.80% of first $100 million

0.75% of next $400 million

0.70% over $500 million

S&P 500 Index Portfolio

0.40% of first $100 million

0.35% of next $150 million

0.33% over $250 million

Bristol Portfolio

0.80% of first $100 million

0.70% of next $400 million

0.65% over $500 million

Bond Portfolio

0.60% of first $100 million

0.50% of next $150 million

0.45% of next $250 million

0.40% of next $500 million

0.30% of next $1 billion

0.25% over $2 billion

Omni Portfolio

0.60% of first $100 million

0.50% of next $150 million

0.45% of next $250 million

0.40% of next $500 million

0.30% of next $1 billion

0.25% over $2 billion

International Portfolio

0.85% of first $100 million

0.80% of next $100 million

0.70% over $200 million

Capital Growth Portfolio

0.90% of first $100 million

0.85% of next $100 million

0.80% of next $300 million

0.75% over $500 million

Blue Chip Portfolio

0.75% of first $100 million

0.70% of next $400 million

0.65% of next $500 million

International Small Company Portfolio

1.00% of first $100 million

0.90% of next $100 million

0.85% over $200 million

High Income Bond Portfolio

0.75% of first $75 million

0.70% of next $75 million

0.65% of next $75 million

0.60% over $225 million

Nasdaq-100 Index Portfolio

0.40% of first $100 million

0.35% of next $150 million

0.33% over $250 million

Covered Call Portfolio

0.80% of first $200 million

0.75% of next $300 million

0.70% over $500 million

U.S. Equity and Balanced Portfolios

0.75% of first $200 million

0.70% of next $300 million

0.65% over $500 million

Bryton Growth Portfolio

0.85% of first $100 million

0.75% of next $400 million

0.70% over $500 million

Target VIP and Target Equity/ Income Portfolios

0.60% of first $100 million

0.55% of next $400 million

0.50% over $500 million

However, the Adviser is presently waiving its fees in excess of the following percentages of average daily net assets for these portfolios:

      During 2005, the Adviser received $11,853,273 in total fees from the Fund’s portfolios.

      As of December 31, 2005, the Fund’s portfolios had the following total net assets (in millions of dollars):

Subadvisers

      Under the Agreement, the Fund authorizes the Adviser to retain subadvisers for its various portfolios subject to the approval of the Fund’s Board of Directors. With the approval of the Board, the Adviser has entered into agreements with the following subadvisers to manage the investment and reinvestment of the assets of the portfolios indicated, subject to supervision by the Adviser.

Legg Mason Capital Management, Inc.
Equity Portfolio

Suffolk Capital Management, LLC
Omni Portfolio
Bristol Portfolio
Bryton Growth Portfolio

Federated Global Investment Management Corp.
International Portfolio
International Small Company Portfolio

Federated Investment Management Company
High Income Bond Portfolio

Federated Equity Management Company of Pennsylvania
Blue Chip Portfolio

Jennison Associates LLC
Capital Appreciation Portfolio

Neuberger Berman Management Inc.
Millennium (formerly Discovery) Portfolio

Janus Capital Management, LLC
Aggressive Growth Portfolio
Small Cap Growth Portfolio

RS Investment Management L.P.
Mid Cap Opportunity Portfolio

Eagle Asset Management, Inc.
Capital Growth Portfolio

ICON Advisers, Inc.
U.S. Equity Portfolio
Balanced Portfolio
Covered Call Portfolio

First Trust Advisors, L.P.
Target VIP Portfolio
Target Equity/ Income Portfolio

      As compensation for subadvisory services, the Adviser pays fees to the subadvisers. These fees are paid from the Adviser’s assets and do not affect any portfolio’s expenses. The subadvisory fees are calculated as a percentage of the portfolio assets managed by the subadvisers based on the following schedules:

Equity Portfolio
0.45% of first $500 million
0.40% over $500 million

Capital Appreciation Portfolio
0.75% of first $10 million
0.50% of next $30 million
0.35% of next $25 million
0.25% of next $335 million
0.22% of next $600 million
0.20% over $1 billion

Aggressive Growth Portfolio
0.55% of first $100 million
0.50% of next $400 million
0.45% over $500 million

Millennium (formerly Discovery) Portfolio
0.55% of first $150 million
0.50% of next $150 million
0.40% over $300 million

High Income Bond Portfolio
0.50% of first $30 million
0.40% of next $20 million
0.30% of next $25 million
0.25% over $75 million

International Portfolio
0.45% of first $200 million
0.35% over $200 million

International Small Company Portfolio
0.75% of first $100 million
0.65% over $100 million

Mid Cap Opportunity Portfolio
0.60% of first $100 million
0.55% of next $100 million
0.50% over $500 million

Small Cap Growth Portfolio
0.65% of first $50 million
0.60% of next $100 million
0.50% over $150 million

Capital Growth Portfolio
0.59% of first $100 million
0.55% of next $100 million
0.50% over $200 million

Blue Chip Portfolio
0.50% of first $35 million
0.35% of next $65 million
0.25% over $100 million

Omni Portfolio
0.30% of first $100 million
0.25% of next $150 million
0.23% of next $250 million
0.20% of next $500 million
0.15% of next $1 billion
0.13% over $2 billion

Bristol Portfolio
0.45% of first $100 million
0.40% of nest $400 million
0.35% over $500 million

U.S. Equity and Balanced Portfolios
0.50 of first $200 million
0.45% of next $300 million
0.40% over $500 million

Target VIP and Target Equity/ Income Portfolios
0.35% of first $500 million
0.25% over $500 million

Covered Call Portfolio
0.55% of first $200 million
0.50% of next $300 million
0.45% over $500 million

Bryton Growth Portfolio
0.50% of first $100 million
0.45% of next $400 million
0.40% over $500 million

      The Board of Directors and shareholders initially voted to approve the current Investment Advisory, Service and subadvisory agreements for each portfolio on the dates listed below: