Registration No. 2-90309
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 15 X
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 16 X
CARILLON FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1876 Waycross Road, Cincinnati, Ohio 45240
(Address of Principal Executive Offices)
(513) 595-2600
egistrant's Telephone Number)
John F. Labmeier, Esq.
The Union Central Life Insurance Company
P.O. Box 40888
Cincinnati, Ohio 45240
(Name and Address of Agent for Service)
Copy to:
Jones and Blouch L.L.P.
Suite 405 West
1025 Thomas Jefferson St., N.W.
Washington, D.C. 20007
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
the Registrant has registered an indefinite amount of securities
under the Securities Act of 1933. A Rule 24f-2 Notice for
Registrant's 1995 fiscal year was filed on February 27, 1996.
It is proposed that this filing will become effective (check
appropriate box)
__ immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1996 pursuant to paragraph (b) of Rule 485
__ 60 days after filing pursuant to paragraph (a) of Rule 485
__ on (date) pursuant to paragraph (a) of Rule 485
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
CARILLON FUND, INC.
- ------------------------------------------------------------------
Carillon Fund, Inc. (the "Fund"), is a no-load, diversified,
open-end management investment company which is intended to meet a
wide range of investment objectives with its four separate
Portfolios: Equity Portfolio, Bond Portfolio, Capital Portfolio
and S&P 500 Index Portfolio. Each Portfolio generally operates as
a separate fund issuing its own shares.
The Equity Portfolio seeks primarily long-term appreciation
of capital, without incurring unduly high risk, by investing
primarily in common stocks and other equity securities. Current
income is a secondary objective.
The Bond Portfolio seeks as high a level of current income as
is consistent with reasonable investment risk, by investing
primarily in long-term, fixed-income, investment-grade corporate
bonds.
The Capital Portfolio seeks to provide the highest total
return through a combination of income and capital appreciation
consistent with the reasonable risks associated with an investment
portfolio of above-average quality by investing in equity
securities, debt instruments and money market instruments.
The S&P 500 Index Portfolio seeks investment results that
correspond to the total return performance of U.S. common stocks,
as represented by the S&P 500 Index.
There can be no assurance that any Portfolio will achieve its
objectives.
This Prospectus sets forth concisely the information that a
prospective investor should know before investing in the Fund, and
it should be read and kept for future reference. A Statement of
Additional Information dated May 1, 1996, which contains further
information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference into this
Prospectus. A copy of the Statement of Additional Information may
be obtained without charge by calling the Fund at (513) 595-2600,
or by writing the Fund at P.O. Box 40409, Cincinnati, Ohio
45240-0409.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
May 1, 1996
UCCF 514 4-96<PAGE>
<PAGE>
CARILLON FUND, INC.
TABLE OF CONTENTS
Page
The Fund . . . . . . . . . . . . . 2
Annual Fund Operating Expenses . . . . 3
Financial Highlights . . . . . . . 4
Investment Objectives and Policies . . . . . 7
Equity Portfolio. . . . . . . 7
Bond Portfolio. . . . . . . . 7
Capital Portfolio . . . . . . 8
S&P 500 Index Portfolio . . . . . 9
Principal Risk Factors. . . . . . 10
Repurchase Agreements . . . . 11
Reverse Repurchase Agreements . . . . . 11
Futures Contracts and
Options on Futures Contracts. . . . . 11
Options . . . . . . . . . . . 12
Options on Securities Indices . . . . . 12
Collateralized Mortgage Obligations . . . . 13
Lending Portfolio Securities. . . . . . 13
Other Information . . . . . . 13
The Fund and Its Management. . . . . . 13
Investment Adviser. . . . . . 13
Advisory Fee. . . . . . . . . 14
Expenses. . . . . . . . . . . 14
Capital Stock . . . . . . . . 14
Purchase and Redemption of Shares. . . . . . 14
Dividends and Distributions. . . . . . 15
Taxes. . . . . . . . . . . . . . . 15
Custodian, Transfer and
Dividend Disbursing Agent . . . . 15
Appendix
Bond and Commercial Paper Ratings . . . 16
THE FUND
Carillon Fund, Inc. (the "Fund"), a Maryland corporation, is
a no-load, diversified, open-end investment company.
The Fund has four Portfolios, which in many ways operate as
separate funds issuing separate classes of common stock. An
interest in the Fund is limited to the assets of the Portfolio in
which shares are held, and shareholders of each Portfolio are
entitled to a pro rata share of all dividends and distributions
arising from the net income and capital gains on the investments
of such Portfolio.
Currently, the shares of the Fund are sold only to The Union
Central Life Insurance Company ("Union Central")
and to certain of its separate accounts to fund the benefits under
certain variable annuity contracts and variable universal life
insurance policies (the "contracts") issued by Union Central. The
separate accounts invest in shares of the Fund in accordance
with allocation instructions received from Contract Owners.
To the extent that the shares of the Fund's four Portfolios
are sold to Union Central in order to fund the benefits
under the contracts, the structure of the Fund permits Contract
Owners, within the limitations described in the contracts, to
determine the type of investment underlying their contracts in
response to or in anticipation of changes in market or economic
conditions. Contract Owners should consider that the investment
return experience of the Portfolio or Portfolios they select
will affect the value of the contract and the amount of annuity
payments received under a contract. See the attached
Prospectus for the Flexible Premium Deferred Variable Annuity for
a description of the relationship between increases or
decreases in the net asset value of Fund shares (and any
distributions on such shares) and the benefits provided under a
contract.<PAGE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
EXPENSES (as a percentage of average net assets)
S&P 500
Equity Bond Capital Index
Portfolio Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees .59% .49% .68% .30%
Other Expenses .07% .16% .09% .30%*
Total Operating Expenses .66% .65% .77% .60%*
</TABLE>
EXAMPLE
The table below shows the amount of expenses a Shareholder
would pay on a $1,000 investment assuming a 5% annual
return.+
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity Portfolio $ 7 $ 21 $ 37 $ 82
Bond Portfolio $ 7 $ 21 $ 36 $ 81
Capital Portfolio $ 8 $ 25 $ 43 $ 96
S&P 500 Index Portfolio $ 6 $ 19 $ -- $ --
</TABLE>
The purpose of this table is to assist the Contract Owner
in understanding the various expenses that the Contract
Owner will bear indirectly by providing information on expenses
associated with the Contract's investment in the Fund. This
table does not include any contract or variable account charges.
This table should not be considered a representation of
past or future expenses and the actual expenses that will
be paid may be greater or lesser than those shown.
- ---------------
* "Other Expenses" for the S&P 500 Index Portfolio are based on
estimates. Total Operating Expenses in excess of .60% for that
Portfolio are paid by the investment adviser.
+ The 5% annual return is a standardized rate prescribed for the
purpose of this example and does not represent the past or future
return of the Fund.<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
The financial information in the tables which follow
(pages 4-6), insofar as it pertains to each of the five years in
the period ended December 31, 1995, have been audited in
conjunction with the annual audit of the financial statements of
the Fund . The financial statements for the year ended December
31, 1995, have been audited by Deloitte & Touche LLP, whose
unqualified report thereon is included in the Statement of
Additional Information. The financial statements for the four
years ended December 31, 1994 have been audited by Price
Waterhouse LLP, whose reports expressed unqualified opinions on
those statements. These financial highlights should be read in
conjunction with the financial statements and notes thereto
included in the Statement of Additional Information. Further
information about the performance of the Fund is contained in the
Fund's annual report which may be obtained without charge. (See
"Other Information" below.)
<TABLE>
<CAPTION>
Equity Portfolio
Year ended December 31,
1995 1994 1993 1992 1991
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $14.30 $14.58 $13.74 $12.60 $ 8.81
Investment Activities:
Net investment income .24 .20 .16 .19 .20<F1>
Net realized and
unrealized gains (losses) 3.36 .31 1.69 1.27 3.79
Total from Investment Operations 3.60 .51 1.85 1.46 3.99
Distributions:
Net investment income (.23) (.19) (.16) (.19) (.20)
Net realized gains (1.13) (.60) (.85) (.13) --
Total Distributions (1.36) (.79) (1.01) (.32) (.20)
Net Asset Value,
End of year $16.54 $14.30 $14.58 $13.74 $12.60
Ratios/Supplemental Data:
Total Return <F2> 26.96% 3.42% 14.11% 11.78% 45.55%
Ratio of Expenses to
Average Net Assets .66% .69% .70% .72% .75%<F1>
Ratio of Net Investment
Income to Average Net Assets 1.73% 1.45% 1.18% 1.47% 1.79%<F1>
Portfolio Turnover Rate 34.33% 40.33% 37.93% 46.75% 55.17%
Net Assets, End of Period
(in thousands) $219,563 $157,696 $138,239 $102,306 $79,352
</TABLE>
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $10.79 $10.88 $ 8.57 $ 9.62 $12.72
Investment Activities:
Net investment income .28<F1> .58 .38 .34 .55
Net realized and
unrealized gains (losses) (1.91) .69 2.33 (.22) 1.08
Total from Investment Operations (1.63) 1.27 3.71 .12 1.63
Distributions:
Net investment income (.31) (.59) (.34) (.35) (.56)
Net realized gains (.04) (.77) (.06) (.82) (4.17)
Total Distributions (.35) (1.36) (.40) (1.17) (4.73)
Net Asset Value,
End of year $ 8.81 $10.79 $10.88 $ 8.57 $ 9.62
Ratios/Supplemental Data:
Total Return<F2> (15.45%) 11.79% 31.79% .85% 12.72%
Ratio of Expenses to
Average Net Assets .82%<F1> .95% .95% .97% .89%
Ratio of Net Investment
Income to Average Net Assets 2.98%<F1> 5.34% 3.74% 3.30% 3.78%
Portfolio Turnover Rate 99.90% 61.49% 57.98% 70.17% 84.23%
Net Assets, End of Period
(in thousands) $52,514 $56,194 $37,723 $28,915 $17,956
<FN>
<F1>
Net of expenses waived by the Adviser of $.002 per share in 1991 and $.01 per share in 1990.
<F2>
Total Return does not reflect expenses that apply to the separate account or the related insurance
policies. Inclusion of these charges would reduce the Total Return figures for all periods shown.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(Continued)
Bond Portfolio
Year ended December 31,
1995 1994 1993 1992 1991
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $10.04 $11.30 $10.91 $10.96 $10.10
Investment Activities:
Net investment income .88 .77 .73 .82 .86
Net realized and
unrealized gains (losses) .98 (.95) .54 (.01) .87
Total from Investment Operations 1.86 (.18) 1.27 .81 1.73
Distributions:
Net investment income (.83) (.78) (.73) (.82) (.87)
Net realized gains (.30) (.15) (.04) -- --
Total Distributions (.83) (1.08) (.88) (.86) (.87)
Net Asset Value,
End of year $11.07 $10.04 $11.30 $10.91 $10.96
Ratios/Supplemental Data:
Total Return<F1> 19.03% (1.63%) 11.94% 7.65% 17.89%
Ratio of Expenses to
Average Net Assets .65% .68% .66% .69% .73%
Ratio of Net Investment
Income to Average Net Assets 7.43% 7.21% 6.65% 7.59% 8.27%
Portfolio Turnover Rate 111.01% 70.27% 137.46% 40.91% 39.82%
Net Assets, End of Period
(in thousands) $73,568 $55,929 $54,128 $38,557 $31,009
</TABLE>
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $10.02 $ 9.82 $ 9.96 $10.51 $11.22
Investment Activities: .81 .83 .85 .82 1.12
Net investment income
Net realized and
unrealized gains (losses) .03 .20 (.13) (.51) .67
Total from Investment Operations .84 1.03 .72 .31 1.79
Distributions:
Net investment income (.76) (.83) (.86) (.86) (1.13)
Net realized gains -- -- -- -- (1.37)
Total Distributions (.76) (.83) (.86) (.86) (2.50)
Net Asset Value,
End of year $10.10 $10.02 $ 9.82 $ 9.96 $10.51
Ratios/Supplemental Data:
Total Return<F1> 8.66% 10.72% 7.36% 3.15% 16.59%
Ratio of Expenses to
Average Net Assets .79% .86% .82% .72% .65%
Ratio of Net Investment
Income to Average Net Assets 8.57% 8.38% 8.34% 8.34% 8.65%
Portfolio Turnover Rate 110.90% 17.70% 24.11% 80.35% 103.44%
Net Assets, End of Period
(in thousands) $24,446 $15,941 $12,460 $15,796 $11,487
<FN>
<F1>
Total Return does not reflect expenses that apply to the separate account or the related insurance
policies. Inclusion of these charges would reduce the Total Return figures for all periods shown.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(Continued)
Capital Portfolio
Year ended December 31, Period Ended
--------------------------------------------- December 31,
1995 1994 1993 1992 1991 1990<F1>
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $13.19 $13.81 $12.99 $12.82 $10.57 $10.95
Investment Activities:
Net investment income .64 .52 .43 .42 .47 .34
Net realized and
unrealized gains (losses) 1.15 (.39) 1.17 .56 2.25 (.40)
Total from
Investment Operations 1.79 .13 1.60 .98 2.72 (.06)
Distributions:
Net investment income (.64) (.52) (.42) (.42) (.47) (.32)
Net realized gains (.62) (.23) (.36) (.39) -- --
Total Distributions (1.26) (.75) (.78) (.81) (.47) (.32)
Net Asset Value,
End of period $13.72 $13.19 $13.81 $12.99 $12.82 $10.57
Ratios/Supplemental Data:
Total Return<F2> 14.28% .94% 12.72% 7.93% 26.10% (.54%)
Ratio of Expenses
to Average Net Assets .77% .80% .82% .88% .95% 1.03%<F3>
Ratio of Net Investment
Income to Average
Net Assets 4.99% 4.25% 3.31% 3.49% 4.05% 5.08%3
Portfolio Turnover Rate 43.83% 41.89% 32.42% 39.74% 47.93% 16.02%
Net Assets,
End of Period
(in thousands) $145,623 $119,263 $100,016 $68,674 $41,844 $23,813
<FN>
<F1>
Period from May 1, 1990 (commencement of operations) through December 31, 1990.
<F2>
Total Return does not reflect expenses that apply to the separate account or the related insurance
policies. Inclusion of these charges would reduce the Total Return figures for all periods shown.
<F3>
Annualized
</FN>
</TABLE>
S&P 500 Index Portfolio
The financial highlights table is not presented because the activity for the
period from December 29, 1995 to December 31, 1995 did not round to $.01 in
any category of the reconciliation of beginning to ending net asset value
per share of $10.00. The total return and the ratios and supplemental data
were all less than 0.1%. The net assets at December 31, 1995 were $305,148.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Each Portfolio has a different investment objective which it
pursues through separate investment policies. The differences in
objectives and policies among the various Portfolios can be
expected to affect the investment return of each Portfolio and the
degree of market and financial risks to which each Portfolio is
subject. The investment objectives of each Portfolio (described on
the cover of this Prospectus) are fundamental policies and may not
be changed without shareholder approval. There can be no assurance
that the investment objectives of any Portfolio will be realized.
Equity Portfolio
The investment objectives of the Equity Portfolio are to seek
long-term appreciation of capital with secondary opportunities
for growth in current income, without incurring unduly high risks.
A major portion of the Portfolio will be invested in common
stocks. The Portfolio's investment policy is to seek special
opportunities in securities that are selling at a discount from
theoretical price/earnings ratios and that seem capable of
recovering from their temporary out-of-favor status. A portion of
the Portfolio may be invested in money market instruments pending
investment or to effectively utilize cash reserves.
Since no one class or type of security at all times affords the
greatest promise of capital appreciation and growth in income, the
Portfolio may invest all or a portion of its assets in preferred
stocks, bonds, convertible preferred stocks, convertible bonds,
and convertible debentures if it is believed that such investments
will further its investment objectives. When market conditions for
equity securities are adverse, and for temporary defensive
purposes, the Portfolio may invest in Government securities, money
market instruments, or other fixed-income securities, or retain
cash or cash equivalents. However, the Portfolio will remain well
invested in equities to take advantage of stocks' relatively
higher long-term potential.
The Equity Portfolio's policy of investing is based upon the
belief that the pricing mechanism of the securities market lacks
total efficiency and has a tendency to inflate prices of some
securities and depress prices of other securities in different
market climates. Management believes that favorable changes in
market prices are more likely to begin when securities are
out-of-favor, price/earnings ratios are relatively low, investment
expectations are limited, and there is little interest in a
particular security or industry. Management believes that
securities with relatively low price/earnings ratios in relation
to their profitability are better positioned to benefit from
favorable but generally unanticipated events than are securities
with relatively high price/earnings ratios which are more
susceptible to unexpected adverse developments. The current
institutionally-dominated market tends to ignore the numerous
second tier issues whose market capitalizations are below those of
a limited number of established large companies. Although this
segment of the market may be more volatile and speculative, it is
expected that a well-diversified Portfolio represented in this
segment of the market has potential long-term rewards greater than
the potential rewards from investments in more highly capitalized
equities.
Bond Portfolio
The investment objectives of the Bond Portfolio are to provide
as high a level of current income as is believed to be consistent
with reasonable investment risk and to seek preservation and
growth of shareholders' capital. In seeking to achieve these
objectives, it is anticipated that the Portfolio will invest at
least 75% of the value of its assets in publicly-traded straight
debt securities rated BBB or Baa or higher by a nationally
recognized rating service such as Standard & Poor's or Moody's, or
obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities or cash and cash equivalents. Up to
25% of the Bond Portfolio's total assets may be invested in
straight debt securities that are unrated or less than
investment-grade bonds, in convertible debt securities,
convertible preferred and preferred stocks, or other securities.
Debt securities that are unrated or less than investment-grade
bonds are often referred to as "high-yield" bonds because they
generally offer higher interest rates. High-yield bonds run a
higher risk of default. In the case of default, they are more
difficult to sell and could present a liquidity problem to the
Portfolio. (See "Principal Risk Factors," page 10.) As of March
31, 1996, 20% of the debt securities held by the Bond Portfolio
were unrated or less than investment-grade bonds. For a more
complete discussion of the risk factors associated with high-yield
bonds, see the discussion below under "Principal Risk Factors,"
and "Certain Risk Factors Relating to High-Yield, High-Risk Bonds"
in the Statement of Additional Information.
The Bond Portfolio will not directly purchase common stocks.
However, it may retain up to 10% of the value of its
total assets in common stocks acquired either by conversion of
fixed-income securities or by the exercise of warrants attached
thereto.
The Bond Portfolio may also write covered call options on U.S.
Treasury Securities and options on futures contracts for such
securities. See "Options," page 12.
The Bond Portfolio may invest without limit in money market
instruments pending investment in accordance with its
investment policies or when market conditions dictate a
"defensive" investment strategy. To the extent a portion is
invested in commercial paper rated "A" or "Prime" it will be
included in the 75% guideline noted above.
A description of the corporate bond ratings assigned by Standard
& Poor's and Moody's is included in the Appendix.
Capital Portfolio
The Capital Portfolio seeks to obtain the highest total return
through a combination of income and capital appreciation
consistent with the reasonable risks associated with an investment
portfolio of above-average quality. The Capital Portfolio
invests in equity, debt and money market securities.
There are no percentage limitations on the type of securities in
which the Capital Portfolio may invest. The Capital Portfolio may
invest entirely in equity securities, entirely in debt, entirely
in money market instruments, or in any combination of these type
of securities at the sole discretion of the investment adviser,
subject only to the investment objective of the Capital Portfolio
and the policies adopted by the Board of Directors. The investment
adviser determines the proportion of Capital Portfolio assets
invested in equity, debt and money market securities based on
fundamental value analysis; analysis of historical long-term
returns among equity, debt and money market investments; and other
market influencing factors. The fundamental value analysis
considers the adviser's outlook over both the near and long-term,
for corporate profitability, short and long-term interest rates,
stock price earnings ratios for the market in total and individual
stocks and inflation rates. When the investment climate as
indicated by the fundamental factors is near historical
relationships, the Portfolio will be structured approximately 63%
in equity, 30% in debt and 7% in money market securities. In
addition, market influencing factors relating to monetary policy,
equity momentum, market sentiment, economic influences and market
cycles are taken into consideration in making the asset allocation
decision.
Deviations from historical fundamental market relationships on
either a current or anticipated basis, along with the
influences of market factors, may result under most foreseeable
circumstances in changes as much as 40%, plus or minus, in the
percentages allocated to equity, debt or money market securities
within the Portfolio.
Equity Securities. In its equity investments, the Capital
Portfolio emphasizes a combination of several themes in order
to diversify its investment exposure. Most stocks purchased by the
Portfolio display one or more of the following criteria:
* Low price earnings ratios in relation to their return on
equity.
* High asset values in relation to stock price.
* Foreign shares, listed on the New York or American Stock
Exchanges or purchased in the form of American Depository
Receipts, of companies judged to represent better fundamental
value than those of similar domestic companies.
* A high level of dividend payment providing a yield that is
competitive with debt investments.
Debt Securities. The Capital Portfolio may invest in rated or
unrated debt securities, including obligations of the U.S.
Government and its agencies, and corporate debt obligations rated
BBB or Baa or higher by a nationally recognized rating service
such as Standard & Poor's or Moody's, or, if not rated, of
equivalent quality as determined by the investment adviser.
Only 25% of the value of any bonds held by the Capital Portfolio
may be unrated or less than investment-grade bonds. For a
discussion of the risk factors associated with "high-yield" bonds,
see the "Bond Portfolio" on page 7 and "Certain Risk Factors
Relating to High-Yield, High-Risk Bonds" in the Statement of
Additional Information.
Money Market Instruments. The Capital Portfolio may at any time
be 100% invested in money market instruments although it likely
will invest in these securities only temporarily pending
investment in equity and debt securities, or on a limited basis.
The following securities, which are described in the Statement of
Additional Information, are considered money market instruments if
their remaining maturities are less than 13 months: repurchase
agreements, U.S. government obligations, government agency
securities, certificates of deposit, time deposits, bankers'
acceptances, commercial paper and corporate debt securities.
The Capital Portfolio may also write covered call options on
U.S. Treasury Securities and options on futures contracts
for such securities. See "Options," page 12.
S&P 500 Index Portfolio
The S&P 500 Index Portfolio ("Index Portfolio") seeks investment
results that correspond to the total return performance of U.S.
common stocks, as represented by the Standard & Poor's 500
Composite Stock Index (the "S&P 500"). The S&P 500 is a
well-known stock market index that includes common stocks of
companies representing approximately 71% of the market value of
all common stocks publicly traded in the United States. The
investment adviser believes that the performance of the S&P 500 is
representative of the performance of publicly traded common stocks
in general. As with all mutual funds, there can be no assurance
that the Index Portfolio will achieve its investment objective.
Index funds, such as the Index Portfolio, seek to create, to the
extent feasible, a portfolio which substantially replicates
the total return of the securities comprising the applicable
index, taking into consideration redemptions, sales of additional
shares, and other adjustments described below. Index funds are
not managed through traditional methods of fund management, which
typically involve frequent changes in a portfolio of securities on
the basis of economic, financial, and market analyses. Therefore,
brokerage costs, transfer taxes, and certain other transaction
costs for index funds may be lower than those incurred by
non-index, traditionally managed funds. Precise replication of
the holdings of the Index Portfolio and the capitalization
weighting of the securities in the S&P 500 is not feasible, but
the Index Portfolio seeks a high correlation between the total
return performance of securities comprising the S&P 500 and the
investment results of the Index Portfolio. The Index Portfolio
will attempt to achieve, in both rising and falling markets, a
correlation of at least 95% between the total return of its net
assets before expenses and the total return of the S&P 500. A
correlation of 100% would represent perfect correlation between
Index Portfolio and index performance. It is anticipated that the
correlation of the Index Portfolio's performance to that of the
S&P 500 will increase as the size of the Index Portfolio
increases. There can be no assurance that the Index Portfolio
will achieve this correlation.
The Index Portfolio may invest up to 5% of its assets in
Standard & Poor's Depositary Receipts(R) ("SPDRs(R)").
SPDRs are units of beneficial interest in a unit investment trust,
representing proportionate undivided interests in a portfolio
of securities in substantially the same weighting as the component
common stocks of the S&P 500.
Although the Adviser will attempt to invest as much of the Index
Portfolio's assets as is practical in stocks comprising the S&P
500 and futures contracts and options relating thereto, a portion
of the Index Portfolio may be invested in money market instruments
pending investment or to meet redemption requests or other needs
for liquid assets. In addition, for temporary defensive purposes,
the Index Portfolio may invest in Government securities, money
market instruments, or other fixed-income securities, or retain
cash or cash equivalents.
Principal Risk Factors
Because the Portfolios are intended to serve a variety of
investment objectives, they are subject to varying degrees of
financial and market risks and current income volatility.
Financial risk refers to the ability of an issuer of a debt
security to pay principal and interest on that security and to the
earning stability and overall financial soundness of an issuer of
an equity security. Market risk refers to the volatility of the
reaction of the price of the security to changes in conditions in
the securities markets in general and, with respect to debt
securities, changes in the overall level of interest rates.
Current income volatility refers to the degree and rapidity with
which changes in the overall level of interest rates become
reflected in the level of current income of the portfolio.
The Equity Portfolio should be subject to moderate levels of
both market and financial risk, since it invests in equity
securities chosen primarily for potential long-term appreciation.
The Bond Portfolio invests most of its assets in investment-
grade corporate bonds, and these should be subject to little
financial risk, to moderately high levels of market risk, and to
moderately low current income volatility.
The Capital Portfolio invests in equity, debt and money market
instruments, and therefore the financial and market risks
to which it is subject will vary from time to time depending on
the extent of its holdings in each of those classes of securities.
The Portfolio is subject to the further risk that in order to meet
its objectives, the Adviser must determine the proper mix
of equity, debt and money market securities. Moreover, the timing
of movements from one type of security to another could
have a negative effect on the Portfolio's overall objective.
Inherent in the fact that the Adviser has great latitude with
respect to portfolio composition is the risk that it may not
properly ascertain the appropriate mix of securities for any
particular economic cycle.
The market value of fixed-income debt securities is affected by
changes in general market interest rates. If interest rates
fall, the market value of fixed-income securities tends to rise;
but if interest rates rise, the value of fixed-income securities
tends to fall. This market risk affects all fixed-income
securities, but lower-rated and unrated securities may be subject
to a greater market risk than higher-rated (lower-yield)
securities.
Bonds rated below the four highest grades used by Standard &
Poor's or Moody's are frequently referred to as "junk"
bonds, reflecting the greater market and investment risks
associated with such bonds. Such risks relate not only to the
greater financial weakness of the issuers of such securities but
also to other factors including: (i) the sensitivity of such
securities to interest rates and economic changes (high-yield,
high-risk bonds are very sensitive to adverse economic and
corporate developments; their yields will fluctuate over time and
either an economic downturn or rising interest rates could create
financial stress on the issuers of such bonds, possibly resulting
in their defaulting on their obligations); (ii) the payment
expectations of holders of such securities (high-yield, high-risk
bonds may contain redemption or call provisions which if
exercised in a period of lower interest rates would result in
their being replaced by lower yielding securities); (iii) the
liquidity of such securities (there may be little trading in
certain high-yield, high-risk bonds which may make it more
difficult to dispose of the securities and more difficult to
determine their fair value). See "Certain Risk Factors Relating to
High-Yield, High-Risk Bonds" in the Statement of Additional
Information for a further discussion of the risks summarized
above.
The S&P 500 Index Portfolio is subject to equity market risk
(i.e., the possibility that common stock prices will decline
over short or even extended periods). The U.S. stock market tends
to be cyclical, with periods when stock prices generally rise and
periods when stock prices generally decline.
To illustrate the volatility of stock prices, the following
table sets forth the average returns of the S&P 500 for the
period from 1926 to 1995:
<TABLE>
<CAPTION>
S&P 500 Returns (1926-1995)
Over Various Time Horizons
----------------------------
1 Year 5 Years 10 Years 20 Years
----- ------- -------- --------
<S> <C> <C> <C> <C>
Best +54.0% +23.9% +20.1% +16.9%
Worst -43.3 -12.5 - 0.9 +3.1
Average +12.5 +10.3 +10.7 +10.7
Standard Deviation 20.3 8.2 5.4 3.3
</TABLE>
As shown, common stocks have provided annual total returns
(capital appreciation plus dividend income) averaging 10.7%
for all 10-year periods from 1926 to 1995. Average return may not
be useful for forecasting future returns in any particular
period, as stock returns are quite volatile from year to year.
Repurchase Agreements
A repurchase agreement is a transaction where a Portfolio
buys a security at one price and simultaneously agrees
to sell that same security back to the original owner at a higher
price. The Adviser reviews the creditworthiness of the other
party to the agreement and must find it satisfactory before
engaging in a repurchase agreement. A majority of such
agreements will mature in seven days or less. In the event of the
bankruptcy of the other party, the Portfolio could experience
delays in recovering its money, may realize only a partial
recovery or even no recovery, and may also incur disposition
costs. It is not anticipated that any Portfolio will regularly
utilize repurchase agreements extensively, since they are intended
to be used to invest otherwise idle cash.
Reverse Repurchase Agreements
The S&P 500 Index Portfolio may enter into reverse repurchase
agreements. Under reverse repurchase agreements, the Portfolio
transfers possession of portfolio securities to banks in return
for cash in an amount equal to a percentage of the portfolio
securities' market value and agrees to repurchase the securities
at a future date by repaying the cash with interest. The Portfolio
retains the right to receive interest and principal payments from
the securities while they are in the possession of the financial
institutions. Cash or liquid high quality debt obligations from
the Portfolio's portfolio equal in value to the repurchase price
(including any accrued interest) will be segregated by the
Custodian on the Portfolio's records while a reverse repurchase
agreement is in effect.
Futures Contracts and Options on Futures Contracts
For hedging purposes, including protecting the price or
interest rate of securities that the Portfolio intends to buy,
the S&P 500 Index Portfolio may enter into futures contracts that
relate to securities in which it may directly invest and
indices comprised of such securities and may purchase and write
call and put options on such contracts. As a temporary
investment strategy until the Index Portfolio reaches $25 million
in net assets, the Index Portfolio may invest up to 100%
of its assets in such futures and/or options contracts.
Thereafter, the Portfolio may invest up to 20% of its assets in
such futures and/or options contracts.
A financial futures contract is a contract to buy or sell a
specified quantity of financial instruments such as U.S.
Treasury bills, notes and bonds, commercial paper and bank
certificates of deposit or the cash value of a financial
instrument index at a specified future date at a price agreed upon
when the contract is made. A stock index futures contract is a
contract to buy or sell specified units of a stock index at a
specified future date at a price agreed upon when the contract is
made. The value of a unit is based on the current value of the
contract index. Under such contracts no delivery of the actual
stocks making up the index takes place. Rather, upon expiration
of the contract, settlement is made by exchanging cash in an
amount equal to the difference between the contract price and the
closing price of the index at expiration, net of variation
margin previously paid.
Substantially all futures contracts are closed out before
settlement date or called for cash settlement. A futures
contract is closed out by buying or selling an identical
offsetting futures contract. Upon entering into a futures
contract, the Portfolio is required to deposit an initial margin
with the Custodian for the benefit of the futures broker. The
initial margin serves as a "good faith" deposit that the Portfolio
will honor their futures commitments. Subsequent payments (called
"variation margin") to and from the broker are made on a daily
basis as the price of the underlying investment fluctuates.
In the event of the bankruptcy of the futures broker that holds
margin on behalf of the Portfolio, the Portfolio may be entitled
to return of margin owed to it only in proportion to the amount
received by the broker's other customers. The Adviser will
attempt to minimize this risk by monitoring the creditworthiness
of the futures brokers with which the Portfolio does
business.
Because the value of index futures depends primarily on the
value of their underlying indexes, the performance of the
broad-based contracts will generally reflect broad changes in
common stock prices. However, because the Portfolio may
not be invested in precisely the same proportion as the S&P 500,
it is likely that the price changes of the Portfolio's index
futures positions will not match the price changes of the
Portfolio's other investments.
Options on futures contracts give the purchaser the right to
assume a position at a specified price in a futures contract at
any time before expiration of the option contract.
Options
The Bond and Capital Portfolios may engage in certain limited
options strategies as hedging techniques. These options strategies
are limited to selling/writing call option contracts on U.S.
Treasury Securities and call option contracts on futures on such
securities held by the Portfolio (covered calls). The Portfolio
may purchase call option contracts to close out a position
acquired through the sale of a call option. The Portfolio will
only write options that are traded on a domestic exchange or board
of trade.
The S&P 500 Index Portfolio may write and purchase covered
put and call options on securities in which it may directly
invest. Option transactions of the Portfolio will be conducted so
that the total amount paid on premiums for all put and call
options outstanding will not exceed 5% of the value of the
Portfolio's total assets. Further, the Portfolio will not
write put or call options or combination thereof if, as a result,
the aggregate value of all securities or collateral used to cover
its outstanding options would exceed 25% of the value of the
Portfolio's total assets.
A call option is a short-term contract (generally nine months
or less) which gives the purchaser of the option the right to
purchase from the seller of the option (the Portfolio) the
underlying security or futures contract at a fixed exercise
price at any time prior to the expiration of the option period
regardless of the market price of the underlying instrument
during the period. A futures contract obligates the buyer to
purchase and the seller to sell a predetermined amount of a
security at a predetermined price at a selected time in the
future. A call option on a futures contract gives the purchaser
the right to assume a "long" position in a futures contract, which
means that if the option is exercised the seller of the option
(the Portfolio) would have the legal right (and obligation) to
sell the underlying security to the purchaser at the specified
price and future time.
As consideration for the call option, the buyer pays the
seller (the Portfolio) a premium, which the seller retains
whether or not the option is exercised. The selling of a call
option will benefit the Portfolio if, over the option period, the
underlying security or futures contract declines in value or does
not appreciate to a price higher than the total of the exercise
price and the premium. The Portfolio risks an opportunity loss of
profit if the underlying instrument appreciates to a price
higher than the exercise price and the premium. When the Adviser
anticipates that interest rates will increase, the Portfolio
may write call options in order to hedge against an expected
decline in value of portfolio securities.
The Portfolio may close out a position acquired through
selling a call option by buying a call option on the same
security or futures contract with the same exercise price and
expiration date as the option previously sold. A profit or loss
on the transaction will result depending on the premium paid for
buying the closing call option. If a call option on a futures
contract is exercised, the Portfolio intends to close out the
position immediately by entering into an offsetting transaction or
by delivery of the underlying security (or other related
securities).
Options transactions may increase the Portfolio's portfolio
turnover rate and attendant transaction costs, and may
be somewhat more speculative than other investment strategies. It
may not always be possible to close out an options position,
and with respect to options on futures contracts there is a risk
of imperfect correlation between price movements of a futures
contract (or option thereon) and the underlying security. Options
strategies and related risks and limitations are described
in more detail in the Statement of Additional Information.
Options on Securities Indices
The S&P 500 Index Portfolio may purchase or sell options on
the S&P 500, subject to the limitations set forth above
and provided such options are traded on a national securities
exchange or in the over-the-counter market. Options on
securities indices are similar to options on securities except
there is no transfer of a security and settlement is in cash. A
call option on a securities index grants the purchaser of the
call, for a premium paid to the seller, the right to receive in
cash
an amount equal to the difference between the closing value of the
index and the exercise price of the option times a multiplier
established by the exchange upon which the option is traded.
Collateralized Mortgage Obligations
The Portfolios other than the S&P 500 Index Portfolio may
invest in collateralized mortgage obligations ("CMOs")
or mortgage-backed bonds issued by financial institutions such as
commercial banks, savings and loan associations, mortgage
banks and securities broker-dealers (or affiliates of such
institutions established to issue these securities). To a limited
extent, the Portfolios may also invest in a variety of more risky
CMOs, including interest only ("IOs"), principal only ("Pos"),
inverse floaters, or a combination of these securities. See
"Money Market Instruments and Investment Techniques" in the
Statement of Additional Information for a further discussion.
Lending Portfolio Securities
The S&P 500 Index Portfolio may lend portfolio securities
with a value up to 10% of its total assets. Such loans
may be terminated at any time. The Portfolio will continuously
maintain as collateral cash or obligations issued by the U.S.
government, its agencies or instrumentalities in an amount equal
to not less than 100% of the current market value (on a daily
marked-to-market basis) of the loaned securities plus declared
dividends and accrued interest.
The Portfolio will retain most rights of beneficial
ownership, including the right to receive dividends, interest or
other distributions on loaned securities. The Portfolio will call
loans to vote proxies if a material issue affecting the
investment is to be voted upon. Should the borrower of the
securities fail financially, the Portfolio may experience delay
in recovering the securities or loss of rights in the collateral.
Loans are to be made only to borrowers that are deemed by
the Adviser to be of good financial standing.
Other Information
In addition to the investment policies described above, each
Portfolio's investment program is subject to further
restrictions which are described in the Statement of Additional
Information. Unless otherwise specified, each Portfolio's
investment objectives, policies and restrictions are not
fundamental policies and may be changed without shareholder
approval. Shareholder inquiries and requests for the Fund's annual
report should be directed to the Fund at (513) 595-2600,
or at P.O. Box 40409, Cincinnati, Ohio 45240-0409.
THE FUND AND ITS MANAGEMENT
The Fund is a mutual fund, technically known as an open-end,
diversified, management investment company. The Board of Directors
is responsible for supervising the business affairs and
investments of the Fund, which are managed on a daily basis by the
Fund's investment adviser. The Fund was incorporated under the
laws of the State of Maryland on January 30, 1984. The Fund is a
series fund with four classes of stock, one for each Portfolio.
The S&P 500 Index Portfolio was authorized on September 15, 1995
and commenced operations on December 29, 1995. Union Central has
invested approximately $10.3 million in this Portfolio.
Investment Adviser
The Fund's investment adviser is Carillon Advisers, Inc. (the
"Adviser"), P.O. Box 40407, Cincinnati, Ohio 45240. The Adviser
was incorporated under the laws of Ohio on August 18, 1986, as
successor to the advisory business of Carillon Investments, Inc.,
the investment adviser for the Fund since 1984. The Adviser is a
wholly-owned subsidiary of Union Central, a mutual life insurance
company organized in 1867 under the laws of Ohio. Subject to the
direction and authority of the Fund's Board of Directors, the
Adviser manages the investment and reinvestment of the assets of
each Portfolio and provides administrative services and manages
the Fund's business affairs.
George L. Clucas has been primarily responsible for the
day-to-day management of the Equity Portfolio since 1988
and the Capital Portfolio since its inception in 1990. Mr. Clucas
is Director, President and Chief Executive Officer of the
Fund, and President and Chief Executive Officer of the Adviser.
He has been affiliated with the Adviser and Union Central
since 1987. Steven R. Sutermeister (since 1990) has been primarily
responsible for the day-to-day management of the Bond
Portfolio. Mr. Sutermeister is Vice President of the Adviser and
has been affiliated with the Adviser and Union Central since
1990. Previously, he was Senior Vice President of Washington
Square Capital, Inc.
Advisory Fee
The Fund pays the Adviser, as full compensation for all
facilities and services furnished, a monthly fee computed
separately for each Portfolio on a daily basis, at an annual rate,
as follows:
(a) for the Equity Portfolio .65% of the first $50,000,000,
.60% of the next $100,000,000, and .50% of all over
$150,000,000 of the current value of the net assets;
(b) for the Bond Portfolio .50% of the first $50,000,000,
.45% of the next $100,000,000, and .40% of all over
$150,000,000 of the current value of the net assets; and
(c) for the Capital Portfolio .75% of the first $50,000,000,
.65% of the next $100,000,000, and .50% of all over
$150,000,000 of the current value of the net assets.
(d) for the S&P 500 Index Portfolio .30% of the current
value of the net assets.
The fee paid for the Capital Portfolio is somewhat higher than
the average fee paid in the industry. However, breakpoints at
which fees are reduced are set at lower than normal amounts. It is
the desire of the Fund and Adviser to reflect in the fee
arrangement the effort involved in advising the separate
Portfolios.
Expenses
The Fund's expenses are deducted from total income before
dividends are paid. These expenses, which are accrued
daily, include: the fee of the Adviser; taxes; legal, dividend
disbursing, bookkeeping and transfer agent, custodian and
auditing fees; and printing and other expenses relating to the
Fund's operations which are not expressly assumed by the
Adviser under its investment advisory agreement with the Fund.
Certain expenses are paid by the particular Portfolio that
incurs them, while other expenses are allocated among the
Portfolios on the basis of their relative size (i.e., the amount
of their net assets). The Adviser will pay any expenses of the
S&P 500 Index Portfolio, other than the advisory fee for that
Portfolio, to the extent that such expenses exceed .30% of that
Portfolio's net assets.
Capital Stock
The Fund currently has four classes of stock, one for each
Portfolio. Shares (including fractional shares) of each
Portfolio have equal rights with regard to voting, redemptions,
dividends, distributions, and liquidations with respect to that
Portfolio. When issued, shares are fully paid and nonassessable
and do not have preemptive or conversion rights or
cumulative voting rights. The Fund's sole shareholder, Union
Central, will vote Fund shares allocated to its registered
separate accounts in accordance with instructions received from
Contract Owners. However, by virtue of Fund shares
allocated to its other separate accounts, Union Central currently
has voting control and can make fundamental changes
regardless of the voting instructions received from Contract
Owners.
PURCHASE AND REDEMPTION OF SHARES
The Fund offers its shares, without sales charge, only for
purchase by Union Central and its separate accounts to fund
benefits under both variable annuity contracts and variable
universal life insurance policies. The Fund's Board of Directors
will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of variable annuity
contractowners investing in the Fund and interests of holders of
variable universal life insurance policies investing in the
Fund. Union Central will report any potential or existing
conflicts to the Directors of the Fund. If a material
irreconcilable conflict arises, Union Central will, at its own
cost, remedy such conflict up to and including establishing a new
registered management company and segregating the assets
underlying the variable annuity contracts and variable universal
life insurance policies. It is possible that at some later date
the Fund may offer shares to other investors. The Fund
continuously offers shares in each of its Portfolios at prices
equal to the respective net asset values of the shares of each
Portfolio.
The Fund redeems all full and fractional shares of the Fund for
cash. No redemption fee is charged. The redemption
price is the net asset value per share. Payment for shares
redeemed will generally be made within seven days after receipt
of a proper notice of redemption.
The net asset value of the shares of each Portfolio of the Fund
is determined once daily, Monday through Friday, as of the close
of regular trading on the New York Stock Exchange (normally 4:00
p.m., Eastern Time), when there are purchases or redemptions of
Fund shares, except (i) when the New York Stock Exchange is closed
(currently New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas
Day); (ii) the day following Thanksgiving Day; (iii) December 24,
1996; and (iv) any day on which changes in the value of the
Portfolio securities of the Fund will not materially affect the
current net asset value of the shares of a Portfolio. Such
determination is made by adding the values of all securities and
other assets of the Portfolio, subtracting liabilities and
expenses, and dividing by the number of shares of the Portfolio
outstanding. Expenses, including the investment advisory
fee payable to the Adviser, are accrued daily.
Securities held by the Portfolios, except for money market
instruments maturing in 60 days or less, are valued at their
market value if market quotations are readily available.
Otherwise, such securities are valued at fair value as determined
in good faith by the Board of Directors, although the actual
calculations may be made by persons acting pursuant to the
direction of the Board.
All money market instruments with a remaining maturity of 60
days or less are valued on an amortized cost basis.
DIVIDENDS AND DISTRIBUTIONS
It is the Fund's intention to distribute substantially all of
the net investment income, if any, of each Portfolio. For
dividend purposes, net investment income of the Equity, Bond,
Capital and S&P 500 Index Portfolios consists of all dividends
or interest earned by such Portfolio less estimated expenses
(including the investment advisory fee). All net realized capital
gains, if any, of each Portfolio are distributed periodically, no
less frequently than annually. All dividends and distributions
are reinvested in additional shares of the respective Portfolio at
net asset value.
TAXES
Each Portfolio has qualified and has elected to be taxed as a
"regulated investment company" under the provisions of
Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). If a Portfolio qualifies as a "regulated
investment company" and complies with the appropriate provisions
of the Code, the Portfolio will be relieved of federal
income tax on the amounts distributed.
Since the sole shareholder of the Fund is Union Central, no
discussion is included herein as to the federal income tax
consequences at the shareholder level. For information concerning
the federal tax consequences to purchasers of the contracts,
see the attached Prospectus for such contracts.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
Firstar Trust Company, Mutual Fund Services, P.O. Box 701,
Milwaukee, Wisconsin 53201-0701, acts as Custodian
of the Fund's assets, and is its bookkeeping, transfer and
dividend disbursing agent.<PAGE>
APPENDIX
CORPORATE BOND RATINGS
Moody's Investors Services, Inc.
Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt-edge." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they
comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation
of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium-grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective elements
may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments
may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements
of danger with respect to principal or interest.
Ca Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in
default or have other marked shortcomings.
Standard & Poor's Corporation
AAA This is the highest rating assigned by Standard & Poor's to
a debt obligation and indicates an extremely strong
capacity to pay principal and interest.
AA Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong,
and in the majority of instances they differ from AAA issues only
in a small degree.
A Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible
to the adverse effect of changes in circumstances and economic
conditions.
BBB Bonds rated BBB are regarded as having an adequate capacity
to pay principal and interest. Whereas they
normally exhibit protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB-B-CCC-CC Bonds rated BB, B, CCC, and CC are regarded, on
balance, as predominately speculative with respect
to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
COMMERCIAL PAPER RATINGS
Moody's Investors Services, Inc.
A Prime rating is the highest commercial paper rating assigned
by Moody's Investors Services, Inc. Issuers rated Prime
are further referred to by use of numbers 1, 2 and 3 to denote
relative strength within this highest classification. Among the
factors considered by Moody's in assigning ratings for an issuer
are the following: (1) management; (2) economic evaluation
of the industry and an appraisal of speculative type risks which
may be inherent in certain areas; (3) competition and customer
acceptance of products; (4) liquidity; (5) amount and quality of
long-term debt; (6) ten-year earnings trends; (7) financial
strength of a parent company and the relationships which exist
with the issuer; and (8) recognition by management of
obligations which may be present or may arise as a result of
public interest questions and preparations to meet such
obligations.
Standard & Poor's Corporation
Commercial paper rated A by Standard & Poor's Corporation has
the following characteristics: Liquidity ratios are
better than the industry average. Long-term senior debt rating is
"A" or better. In some cases, BBB credits may be
acceptable. The issuer has access to at least two additional
channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established, the issuer
has a strong position within its industry and the reliability and
quality of management is unquestioned. Issuers rated A are
further referred to by use of numbers 1, 2 and 3 to denote
relative strength within this classification.
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
CARILLON FUND, INC.
- ----------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1996
This Statement of Additional Information is not a
prospectus. Much of the information contained in this Statement
of Additional Information expands upon subjects discussed in the
Prospectus. Accordingly, this Statement should be read in
conjunction with Carillon Fund, Inc.'s ("Fund") current
Prospectus, dated May 1, 1996, which may be obtained by calling
the Fund at (513) 595-2600, or writing the Fund at P.O. Box
40409, Cincinnati, Ohio 45240-0409.
TABLE OF CONTENTS
Page
Investment Policies (7) 2
Money Market Instruments and Investment Techniques 2
Certain Risk Factors Relating to High-Yield, High-Risk Bonds 6
Futures Contracts 6
Options 7
Lending Portfolio Securities 11
Investment Restrictions 12
Portfolio Turnover 15
Management of the Fund (13) 16
Directors and Officers 16
Investment Adviser 18
Payment of Expenses 19
Advisory Fee 20
Investment Advisory Agreement 20
Administration 21
Service Agreement 22
Securities Activities of Adviser 22
Determination of Net Asset Value (14) 23
Purchase and Redemption of Shares (14) 23
Taxes (15) 24
Portfolio Transactions and Brokerage 24
General Information (2) 25
Capital Stock 25
Voting Rights 26
Additional Information 27
Independent Auditors 27
( ) indicates page on which the corresponding section appears in
the Prospectus.
UCCF 515 4-96<PAGE>
<PAGE>
CARILLON FUND, INC.
- --------------------------------------------------------
INVESTMENT POLICIES
The following specific policies supplement the Fund's
"Investment Objectives and Policies" set forth in the Prospectus.
Money Market Instruments and Investment Techniques
Certain money market instruments and investment techniques
are described below. Money market instruments may be purchased
extensively by the Capital Portfolio. They may also be purchased
by the Equity, Bond and S&P 500 Index ("Index Portfolio")
Portfolios to a very limited extent (to invest otherwise idle
cash) or on a temporary basis (if invested in money market
instruments for defensive purposes).
Small Bank Certificates of Deposit. The Fund may invest in
certificates of deposit issued by commercial banks, savings
banks, and savings and loan associations having assets of less
than $1 billion, provided that the principal amount of such
certificates is insured in full by the Federal Deposit Insurance
Corporation ("FDIC"). The FDIC presently insures accounts up to
$100,000, but interest earned above such amount is not insured by
the FDIC.
Repurchase Agreements. A repurchase agreement is an instrument
under which the purchaser (i.e., one of the Portfolios) acquires
ownership of the obligation (the underlying security) and the
seller (the "issuer" of the repurchase agreement) agrees, at the
time of sale, to repurchase the obligation at a mutually agreed
upon time and price, thereby determining the yield during the
purchaser's holding period. This results in a fixed rate of
return insulated from market fluctuations during such period.
The underlying securities will only consist of securities in
which the respective Portfolio may otherwise invest. Repurchase
agreements usually are for short periods, normally under one
week, and are considered to be loans under the Investment Company
Act of 1940. Repurchase agreements will be fully collateralized
at all times and interest on the underlying security will not be
taken into account for valuation purposes. The investments by a
Portfolio in repurchase agreements may at times be substantial
when, in the view of the Adviser, unusual market, liquidity, or
other conditions warrant.
If the issuer of the repurchase agreement defaults and does
not repurchase the underlying security, the Portfolio might incur
a loss if the value of the underlying security declines, and the
Fund might incur disposition costs in liquidating the underlying
security. In addition, if the issuer becomes involved in
bankruptcy proceedings, the Portfolio may be delayed or prevented
from obtaining the underlying security for its own purposes. In
order to minimize any such risk, the Portfolio will only engage
in repurchase agreements with recognized securities dealers and
banks determined to present minimal credit risk by the Adviser,
under the direction and supervision of the Board of Directors.
U.S. Government Obligations. Securities issued and guaranteed as
to principal and interest by the United States Government include
a variety of Treasury securities, which differ only in their
interest rates, maturities and times of issuance. Treasury bills
have a maturity of one year or less. Treasury notes have
maturities of one to seven years and Treasury bonds generally
have a maturity of greater than five years.
Government Agency Securities. Government agency securities that
are permissible investments consist of securities either issued
or guaranteed by agencies or instrumentalities of the United
States Government. Agencies of the United States Government
which issue or guarantee obligations include, among others,
Export-Import Banks of the United States, Farmers Home
Administration, Federal Housing Administration, Government
National Mortgage Association ("GNMA"), Maritime Administration,
Small Business Administration and The Tennessee Valley Authority.
Obligations of instrumentalities of the United States Government
include securities issued or guaranteed by, among others, the
Federal National Mortgage Association ("FNMA"), Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation ("FHLMC"), Federal
Intermediate Credit Banks, Banks for Cooperatives, and the U.S.
Postal Service. Some of these securities, such as those
guaranteed by GNMA, are supported by the full faith and credit of
the U.S. Treasury; others, such as those issued by The Tennessee
Valley Authority, are supported by the right of the issuer to
borrow from the Treasury; while still others, such as those
issued by the Federal Land Banks, are supported only by the
credit of the instrumentality. The Fund's primary usage of these
types of securities will be GNMA certificates and FNMA and FHLMC
mortgage- backed obligations which are discussed in more detail
below.
Certificates of Deposit. Certificates of deposit are generally
short-term, interest-bearing negotiable certificates issued by
banks or savings and loan associations against funds deposited in
the issuing institution.
Time Deposits. Time Deposits are deposits in a bank or other
financial institution for a specified period of time at a fixed
interest rate for which a negotiable certificate is not received.
Bankers' Acceptance. A bankers' acceptance is a time draft drawn
on a commercial bank by a borrower usually in connection with an
international commercial transaction (to finance the import,
export, transfer or storage of goods). The borrower is liable
for payment as well as the bank, which unconditionally guarantees
to pay the draft at its face amount on the maturity date. Most
acceptances have maturities of six months or less and are traded
in secondary markets prior to maturity.
Commercial Paper. Commercial paper refers to short-term,
unsecured promissory notes issued by corporations to finance
short-term credit needs. Commercial paper is usually sold on a
discount basis and has a maturity at the time of issuance not
exceeding nine months.
Corporate Debt Securities. Corporate debt securities with a
remaining maturity of less than one year tend to become extremely
liquid and are traded as money market securities. Such issues
with between one and two years remaining to maturity tend to have
greater liquidity and considerably less market value fluctuations
than longer-term issues.
When-issued and Delayed-delivery Securities. From time to time,
in the ordinary course of business, each Portfolio of the Fund
may purchase securities on a when-issued or delayed- delivery
basis i.e., delivery and payment can take place a month or more
after the date of the transactions. The securities so purchased
are subject to market fluctuation and no interest accrues to the
purchaser during this period. At the time a Portfolio makes the
commitment to purchase securities on a when-issued or delayed-
delivery basis, the Fund will record the transaction and
thereafter reflect the value, each day, of such security in
determining the net asset value of such Portfolio. At the time
of delivery of the securities, the value may be more or less than
the purchase price. Each Portfolio will also establish a
segregated account with the Fund's custodian bank in which it
will maintain cash or cash equivalents or other Portfolio
securities equal in value to commitments for such when-issued or
delayed-delivery securities.
GNMA Certificates GNMA certificates are mortgage- backed
securities representing part ownership of a pool of mortgage
loans on which timely payment of interest and principal is
guaranteed by the full faith and credit of the U.S. government.
GNMA certificates differ from typical bonds because principal is
repaid monthly over the term of the loan rather than returned in
a lump sum at maturity. Because both interest and principal
payments (including prepayments) on the underlying mortgage loans
are passed through to the holder of the certificate, GNMA
certificates are called "pass-through" securities.
Although the mortgage loans in the pool have maturities of
up to 30 years, the actual average life of the GNMA certificates
typically will be substantially less because the mortgages are
subject to normal principal amortization and may be prepaid prior
to maturity. Prepayment rates vary widely and may be affected by
changes in market interest rates. In periods of falling interest
rates, the rate of prepayment tends to increase, thereby
shortening the actual average life of the GNMA certificates.
Conversely, when interest rates are rising, the rate of
prepayment tends to decrease, thereby lengthening the actual
average life of the GNMA certificates. Accordingly, it is not
possible to predict accurately the average life of a particular
pool. Reinvestment of prepayments may occur at higher or lower
rates that the original yield on the certificates. Due to the
prepayment feature and the need to reinvest prepayments of
principal at current rates, GNMA certificates can be less
effective than typical bonds of similar maturities at
"locking-in" yields during periods of declining interest
rates, although they may have comparable risks of decline
in value during periods of rising interest rates.
FNMA and FHLMC Mortgage-Backed Obligations The Federal National
Mortgage Association ("FNMA"), a federally chartered and
privately owned corporation, issues pass-through securities
representing an interest in a pool of conventional mortgage
loans. FNMA guarantees the timely payment of principal and
interest but this guarantee is not backed by the full faith and
credit of the U.S. government. The Federal Home Loan Mortgage
Corporation ("FHLMC"), a corporate instrumentality of the United
States, issues participation certificates that represent an
interest in a pool of conventional mortgage loans. FHLMC
guarantees the timely payment of interest and the ultimate
collection of principal and maintains reserves to protect holders
against losses due to default, but the certificates are not
backed by the full faith and credit of the U.S. government. As is
the case with GNMA certificates, the actual maturity of and
realized yield on particular FNMA and FHLMC pass-through
securities will vary based on the prepayment experience of the
underlying pool of mortgages.
Mortgage-Related Securities Each Portfolio of the Fund other
than the S&P 500 Index Portfolio may invest in collateralized
mortgage obligations ("CMOs") or mortgage- backed bonds issued by
financial institutions such as commercial banks, savings and loan
associations, mortgage banks and securities broker-dealers (or
affiliates of such institutions established to issue these
securities). CMOs are obligations fully collateralized directly
or indirectly by a pool of mortgages on which payments of
principal and interest are dedicated to payment of principal and
interest on the CMOs. Payments on the underlying mortgages (both
interest and principal) are passed through to the holders,
although not necessarily on a pro rata basis, on the same
schedule as they are received. Mortgage- backed bonds are general
obligations of the issuer fully collateralized directly or
indirectly by a pool of mortgages. The mortgages serve as
collateral for the issuer's payment obligations on the bonds, but
interest and principal payments on the mortgages are not passed
through either directly (as with GNMA certificates and FNMA and
FHLMC pass-through securities) or on a modified basis (as with
CMOs). Accordingly, a change in the rate of prepayments on the
pool of mortgages could change the effective maturity of a CMO
but not that of a mortgage-backed bond (although, like many
bonds, mortgage-backed bonds may be callable by the issuer prior
to maturity).
Each Portfolio of the Fund other than the S&P 500 Index
Portfolio may also invest in a variety of more risky CMOs,
including interest only ("IOs"), principal only ("POs"), inverse
floaters, or a combination of these securities. Stripped
mortgage-backed securities ("SMBS") are usually structured with
several classes that receive different proportions of the
interest and principal distributions from a pool of mortgage
assets. A common type of SMBS will have one class receiving all
of the interest from the mortgage assets (an IO), while the other
class will receive all of the principal (a PO). However, in some
instances, one class will receive some of the interest and most
of the principal while the other class will receive most of the
interest and the remainder of the principal. If the underlying
mortgage assets experience greater-than-anticipated or
less-than-anticipated prepayments of principal, the Fund may
fail to fully recoup its initial investment or obtain its
initially assumed yield on some of these securities.
The market value of the class consisting entirely of principal
payments generally is unusually
volatile in response to changes in interest rates. The yields on
classes of SMBS that have more uncertain timing of cash flows are
generally higher than prevailing market yields on other mortgage-
backed securities because there is a greater risk that the
initial investment will not be fully recouped or received as
planned over time.
Each Portfolio of the Fund other than the S&P 500 Index
Portfolio may invest in another CMO class known as leveraged
inverse floating rate debt instruments ("inverse floaters"). The
interest rate on an inverse floater resets in the opposite
direction from the market rate of interest to which the inverse
floater is indexed. An inverse floater may be considered to be
leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index
rate of interest. The higher degree of leverage inherent in
inverse floaters is associated with greater volatility in their
market values. Accordingly, the duration of an inverse floater
may exceed its stated final maturity.
Certain CMOs may be deemed to be illiquid securities for
purposes of the Fund's 10% limitation on investments in such
securities. The investment adviser limits investments in more
risky CMOs (IOs, POs, inverse floaters) to no more than 5% of its
total assets.
<PAGE>
Certain Risk Factors Relating to High-Yield, High-Risk Bonds
The descriptions below are intended to supplement the
material in the Prospectus regarding high-yield, high-risk bonds.
Sensitivity to Interest Rates and Economic Changes. High-yield
bonds are very sensitive to adverse economic changes and
corporate developments and their yields will fluctuate over time.
During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial
stress that would adversely affect their ability to service their
principal and interest payment obligations, to meet projected
business goals, and to obtain additional financing. If the
issuer of a bond defaulted on its obligations to pay interest or
principal or entered into bankruptcy proceedings, the Portfolio
may incur losses or expenses in seeking recovery of amounts owed
to it. In addition, periods of economic uncertainty and changes
can be expected to result in increased volatility of market
prices of high-yield bonds and the Portfolio's net asset value.
Payment Expectations. High-yield bonds may contain redemption or
call provisions. If an issuer exercised these provisions in a
declining interest rate market, the Portfolio would have to
replace the security with a lower-yielding security, resulting in
a decreased return for investors. Conversely, a high-yield
bond's value will decrease in a rising interest rate market, as
will the value of the Portfolio's assets. If the Portfolio
experiences unexpected net redemptions, this may force it to sell
high-yield bonds without regard to their investment merits,
thereby decreasing the asset base upon which expenses can be
spread and possibly reducing the Portfolio's rate of return.
Liquidity and Valuation. There may be little trading in the
secondary market for particular bonds, which may affect adversely
the Portfolio's ability to value accurately or dispose of such
bonds. Adverse publicity and investor perceptions, whether or
not based on fundamental analysis, may decrease the values and
liquidity of high-yield bonds, especially in a thin market.
Futures Contracts
For hedging purposes, including protecting the price or
interest rate of securities that the Portfolio intends to buy,
the S&P 500 Index Portfolio may enter into futures contracts that
relate to securities in which it may directly invest and indices
comprised of such securities and may purchase and write call and
put options on such contracts. As a temporary investment
strategy until the Index Portfolio reaches $25 million in net
assets, the Index Portfolio may invest up to 100% of its assets
in such futures and/or options contracts. Thereafter, the
Portfolio may invest up to 20% of its assets in such futures
and/or options contracts. The Index Portfolio does not intend to
enter into futures contracts that are not traded on exchanges or
boards of trade.
A financial futures contract is a contract to buy or sell a
specified quantity of financial instruments such as U.S. Treasury
bills, notes and bonds, commercial paper and bank certificates of
deposit or the cash value of a financial instrument index at a
specified future date at a price agreed upon when the contract is
made. A stock index futures contract is a contract to buy or
sell specified units of a stock index at a specified future date
at a price agreed upon when the contract is made. The value of a
unit is based on the current value of the contract index. Under
such contracts no delivery of the actual stocks making up the
index takes place. Rather, upon expiration of the contract,
settlement is made by exchanging cash in an amount equal to the
difference between the contract price and the closing price of
the index at expiration, net of variation margin previously paid.
Substantially all futures contracts are closed out before
settlement date or called for cash settlement. A futures
contract is closed out by buying or selling an identical
offsetting futures contract. Upon entering into a futures
contract, the Portfolio is required to deposit an initial margin
with the Custodian for the benefit of the futures broker. The
initial margin serves as a "good faith" deposit that the
Portfolio will honor their futures commitments. Subsequent
payments (called "variation margin"} to and from the broker are
made on a daily basis as the price of the underlying investment
fluctuates. In the event of the bankruptcy of the futures broker
that holds margin on behalf of the Portfolio, the Portfolio may
be entitled to return of margin owed to it only in proportion to
the amount received by the broker's other customers. The Adviser
will attempt to minimize this risk by monitoring the
creditworthiness of the futures brokers with which the Portfolio
does business.
Because the value of index futures depends primarily on the
value of their underlying indexes, the performance of the broad-
based contracts will generally reflect broad changes in common
stock prices. However, because the Portfolio may not be invested
in precisely the same proportion as the S&P 500, it is likely
that the price changes of the Portfolio's index futures positions
will not match the price changes of the Portfolio's other
investments.
Options on futures contracts give the purchaser the right to
assume a position at a specified price in a futures contract at
any time before expiration of the option contract.
Options
The Bond and Capital Portfolios may sell (write) listed
options on U.S. Treasury Securities and options on contracts for
the future delivery of U.S. Treasury Securities as a means of
hedging the value of such securities owned by the Portfolio. The
S&P 500 Index Portfolio may enter into futures contracts that
relate to securities in which it may directly invest and indices
comprised of such securities and may purchase and write call and
put options on such contracts.
As a writer of a call option, a Portfolio may terminate its
obligation by effecting a closing purchase transaction. This is
accomplished by purchasing an option of the same series as the
option previously written. However, once the Portfolio has been
assigned an exercise notice, the Portfolio will be unable to
effect a closing purchase transaction. There can be no assurance
that a closing purchase transaction can be effected when the
Portfolio so desires.
The Portfolio will realize a profit from a closing
transaction if the price of the transaction is less than the
premium received from writing the option; the Portfolio will
realize a loss from a closing transaction if the price of the
transaction is more than the premium received from writing the
option. Since the market value of call options generally
reflects increases in the value of the underlying security, any
loss resulting from the closing transaction may be wholly or
partially offset by unrealized appreciation of the underlying
security. Conversely, any gain resulting from the closing
transaction may be wholly or partially offset by unrealized
depreciation of the underlying security. The principal factors
affecting the market value of call options include supply and
demand, the current market price and price volatility of the
underlying security, and the time remaining until the expiration
date.
Although the Bond and Capital Portfolios will write only
options on U.S. Treasury Securities and options on futures
contracts with respect to such securities which are traded on a
national exchange or Board of Trade, and the S&P 500 Index
Portfolio will write only options on securities among the
Standard & Poor's 500 Composite Stock Price Index (the "S&P
500"*) and options of futures contracts with respect to such
securities, there is no assurance that a liquid secondary market
will exist for any particular option. In the event it is not
possible to effect a closing transaction, the Portfolio will not
be able to sell the underlying security, until the option expires
or the option is exercised by the holder.
* The S&P 500 is an unmanaged index of stocks comprised of 500
industrial, financial, utility and transportation companies.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard &
Poor's 500(R)", "Standard & Poor's Depositary Receipts(R)",
"SPDRs(R)", and "500" are trademarks of McGraw-Hill, Inc. The
Carillon S&P 500 Index Portfolio is not sponsored, endorsed, sold
or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the
Portfolio or in SPDRs. *
The Portfolio will effect a closing transaction to realize a
profit on an outstanding call option, to prevent an underlying
security from being called, to permit the sale of an underlying
security prior to the expiration date of the option, or to allow
for the writing of another call option on the same underlying
security with either a different exercise price or expiration
date or both.
Possible reasons for the absence of a liquid secondary
market on an exchange include the following: (a) insufficient
trading interest in certain options; (b) restrictions on
transactions imposed by an exchange; (c) trading halts,
suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities;
(d) inadequacy of the facilities of an exchange or the Clearing
Corporation to handle trading volume; or (e) a decision by one or
more exchanges to discontinue the trading of options or impose
restrictions on types of orders. There can be no assurance that
higher than anticipated trading activity or order flow or other
unforeseen events might not at times render the trading
facilities inadequate and thereby result in the institution of
special trading procedures or restrictions which could interfere
with the Portfolio's ability to effect closing transactions.
The Bond and Capital Portfolios may write call options on
futures contracts on U.S. Treasury Securities as a hedge against
the adverse effect of expected increases in interest rates on the
value of Portfolio securities, in order to establish more
definitely the effective return on securities held by the
Portfolio. The S&P 500 Index Portfolio will write call options
on futures contracts on the S&P 500 or securities included
therein only for hedging purposes to protect the price of
securities it intends to buy and when such transactions enable it
to correlate its investment performance more closely to that of
the S&P 500 than would a direct purchase of securities included
in the S&P 500. The Portfolios will not write options on futures
contracts for speculative purposes.
A futures contract on a debt security is a binding
contractual commitment which will result in an obligation to make
or accept delivery, during a specified future time, of securities
having standardized face value and rate of return. Selling a
futures contract on debt securities (assuming a short position)
would give the Portfolio a legal obligation and right as seller
to make future delivery of the security against payment of the
agreed price.
Upon the exercise of a call option on a futures contract,
the writer of the option (the Portfolio) is obligated to sell the
futures contract (to deliver a long position to the option
holder) at the option exercise price, which will presumably be
lower than the current market price of the contract in the
futures market. However, as with the trading of futures, most
participants in the options markets do not seek to realize their
gains or losses by exercise of their option rights. Instead, the
holder of an option will usually realize a gain or loss by buying
or selling an offsetting option at a market price that will
reflect an increase or a decrease from the premium originally
paid. Nevertheless, if an option on a futures contract written
by the Portfolio is exercised, the Portfolio intends to either
close out the futures contract by purchasing an offsetting
futures contract, or deliver the underlying securities
immediately, in order to avoid assuming a short position. There
can be no assurance that the Portfolio will be able to enter into
an offsetting transaction with respect to a particular contract
at a particular time, but it may always deliver the underlying
security.
As a writer of options on futures contracts, the Portfolio
will receive a premium but will assume a risk of adverse movement
in the price of the underlying futures contract. If the option
is not exercised, the Portfolio will gain the amount of the
premium, which may partially offset unfavorable changes in the
value of securities held in the Portfolio. If the option is
exercised, the Portfolio might incur a loss in the option
transaction which would be reduced by the amount of the premium
it has received.
While the holder or writer of an option on a futures
contract may normally terminate its position by selling or
purchasing an offsetting option, the Portfolio's ability to
establish and close out options positions at fairly established
prices will be subject to the maintenance of a liquid market.
The Portfolio will not write options on futures contracts unless,
in the Adviser's opinion, the market for such options has
sufficient liquidity that the risks associated with such options
transactions are not at unacceptable levels.
Risks. While options will be sold in an effort to reduce certain
risks, those transactions themselves entail certain other risks.
Thus, while the Portfolio may benefit from the use of options,
unanticipated changes in interest rates or security price
movements may result in a poorer overall performance for the
Portfolio than if it had not entered into any options
transactions. The price of U.S. Treasury Securities futures are
volatile and are influenced, among other things, by changes in
prevailing interest rates and anticipation of future interest
rate changes. The price of S&P 500 futures are also volatile and
are influenced, among other things, by changes in conditions in
the securities markets in general. .
In the event of an imperfect correlation between a futures
position (and a related option) and the Portfolio position which
is intended to be protected, the desired protection may not be
obtained. The correlation between changes in prices of futures
contracts and of the securities being hedged is generally only
approximate. The amount by which such correlation is imperfect
depends upon many different circumstances, such as variations in
speculative market demand for futures and for debt securities
(including technical influences in futures trading) and
differences between the financial instruments being hedged and
the instruments underlying the standard options on futures
contracts available for trading.
Due to the imperfect correlation between movements in the
prices of futures contracts and movements in the prices of the
underlying debt securities, the price of a futures contract may
move more than or less than the price of the securities being
hedged. If the price of the future moves less than the price of
the securities which are the subject of the hedge, the hedge will
not be fully effective and if the price of the securities being
hedged has moved in an unfavorable direction, the Portfolio would
be in a better position than if it had not hedged at all. If the
price of the futures moves more than the price of the security,
the Portfolio will experience either a gain or loss on the option
on the future which will not be completely offset by movements in
the price of the securities which are the subject of the hedge.
The market prices of futures contracts and options thereon
may be affected by various factors. If participants in the
futures market elect to close out their contracts through
offsetting transactions rather than meet margin deposit
requirements, distortions in the normal relationship between the
debt securities and futures markets could result. Price
distortions could also result if investors in futures contracts
make or take delivery of underlying securities rather than engage
in closing transactions. This could occur, for example, if there
is a lack of liquidity in the futures market. From the point of
view of speculators, the deposit requirements in the futures
markets are less onerous than margins requirements in the
securities markets; accordingly, increased participation by
speculators in the futures market could cause temporary price
distortions. A correct forecast of interest rate trends by the
adviser may still not result in a successful hedging transaction
because of possible price distortions in the futures market and
because of the imperfect correlation between movements in the
prices of debt securities and movements in the prices of futures
contracts. A well-conceived hedge may be unsuccessful to some
degree because of market behavior or unexpected interest rate
trends.
Limitations on the Use of Options on Futures. The Portfolio will
only write options on futures that are traded on exchanges and
are standardized as to maturity date and underlying financial
instrument. The principal exchanges in the United States for
trading options on Treasury Securities are the Board of Trade of
the City of Chicago and the Chicago Mercantile Exchange. These
exchanges and trading options on futures are regulated under the
Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC").
It is the Fund's opinion that it is not a "commodity pool"
as defined under the Commodity Exchange Act and in accordance
with rules promulgated by the CFTC.
The Portfolio will not write options on futures contracts
for which the aggregate premiums exceed 5% of the fair market
value of the Portfolio's assets, after taking into account
unrealized profits and unrealized losses on any such contracts it
has entered into (except that, in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount
generally may be excluded in computing the 5%).
All of the futures options transactions employed by the
Portfolio will be BONA FIDE hedging transactions, as that term is
used in the Commodity Exchange Act and has been interpreted and
applied by the CFTC. To ensure that its futures options
transactions meet this standard, the Fund will enter into such
transactions only for the purposes and with the intent that CFTC
has recognized to be appropriate.
Custodial Procedures and Margins. The Fund's Custodian acts as
the Fund's escrow agent as to securities on which the Fund has
written call options and with respect to margin which the Fund
must deposit in connection with the writing of call options on
futures contracts. The Clearing Corporation (CC) will release
the securities or the margin from escrow on the expiration of the
call, or when the Fund enters into a closing purchase
transaction. In this way, assets of the Fund will never be
outside the control of the Fund's custodian, although such
control might be limited by the escrow receipts issued.
At the time the Portfolio sells a call option on a contract
for future delivery of U.S. Treasury Securities ("Treasury
futures contract"), it is required to deposit with its custodian,
in an escrow account, a specified amount of cash or U.S.
Government securities ("initial margin"). The account will be in
the name of the CC. The amount of the margin generally is a
small percentage of the contract amount. The margin required is
set by the exchange on which the contract is traded and may be
modified during the term of the contract. The initial margin is
in the nature of a performance bond or good faith deposit, and it
is released from escrow upon termination of the option assuming
all contractual obligations have been satisfied. The Portfolio
will earn interest income on its initial margin deposits.
In accordance with the rules of the exchange on which the
option is traded, it might be necessary for the Portfolio to
supplement the margin held in escrow. This will be done by
placing additional cash or U.S. Government securities in the
escrow account. If the amount of required margin should
decrease, the CC will release the appropriate amount from the
escrow account.
The assets in the margin account will be released to the CC
only if the Portfolio defaults or fails to honor its commitment
to the CC and the CC represents to the custodian that all
conditions precedent to its right to obtain the assets have been
satisfied.
Lending Portfolio Securities
The S&P 500 Index Portfolio may lend portfolio securities
with a value up to 10% of its total assets. Such loans may be
terminated at any time. The Portfolio will continuously maintain
as collateral cash or obligations issued by the U.S. government,
its agencies or instrumentalities in an amount equal to not less
than 100% of the current market value (on a daily marked-
to-market basis) of the loaned securities plus declared dividends
and accrued interest. While portfolio securities are on loan,
the borrower will pay the Portfolio any income accruing thereon,
and the Portfolio may invest or reinvest the collateral
(depending on whether the collateral is cash or U.S. Government
securities) in portfolio securities, thereby earning additional
income. Loans are typically subject to termination by the
Portfolio in the normal settlement time, currently five business
days after notice, or by the borrower on one day's notice.
Borrowed securities must be returned when the loan is terminated.
Any gain or loss in the market price of the borrowed securities
which occurs during the term of the loan inures to the Portfolio
and its shareholders. The Portfolio may pay reasonable finders',
borrowers', administrative, and custodial fees in connection with
a loan of its securities. The Adviser will review and monitor
the creditworthiness of such borrowers on an ongoing basis.
The S&P 500 Index Portfolio may invest in Standard & Poor's
Depositary Receipts(R) ("SPDRs(R)"). SPDRs are units of
beneficial interest in a unit investment trust, representing
proportionate undivided interests in a portfolio of securities in
substantially the same weighting as the component common stocks
of the S&P 500. While the investment objective of such a unit
investment trust is to provide investment results that generally
correspond to the price and yield performance of the component
common stocks of the S&P 500, there can be no assurance that this
investment objective will be met fully. As SPDRs are securities
issued by an investment company, non-fundamental restriction (6)
below restricts purchases of SPDRs to 5% of the Portfolio's
assets.
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental restrictions
relating to the investment of assets of the Portfolios and other
investment activities. These are fundamental policies and may
not be changed without the approval of holders of the majority of
the outstanding voting shares of each Portfolio affected (which
for this purpose means the lesser of: [i] 67% of the shares
represented at a meeting at which more than 50% of the
outstanding shares are represented, or [ii] more than 50% of the
outstanding shares). A change in policy affecting only one
Portfolio may be effected with the approval of the majority of
the outstanding voting shares of that Portfolio only. The Fund's
fundamental investment restrictions provide that no Portfolio of
the Fund is allowed to:
(1) Issue senior securities (except that each Portfolio may
borrow money as described in restriction [9] below).
(2) With respect to 75% of the value of its total assets,
invest more than 5% of its total assets in securities (other than
securities issued or guaranteed by the United States Government
or its agencies or instrumentalities) of any one issuer.
(3) Purchase more than either: (i) 10% in principal amount
of the outstanding debt securities of an issuer, or (ii) 10% of
the outstanding voting securities of an issuer, except that such
restrictions shall not apply to securities issued or guaranteed
by the United States Government or its agencies or
instrumentalities.
(4) Invest more than 25% of its total assets in the
securities of issuers primarily engaged in the same industry.
For purposes of this restriction, gas, gas transmission,
electric, water, and telephone utilities each will be considered
a separate industry. This restriction does not apply to
obligations of banks or savings and loan associations or to
obligations issued or guaranteed by the United States Government,
its agencies or instrumentalities.
(5) Purchase or sell commodities, commodity contracts, or
real estate, except that each Portfolio may purchase securities
of issuers which invest or deal in any of the above, and except
that each Portfolio may invest in securities that are secured by
real estate. This restriction does not apply to obligations
issued or guaranteed by the United States Government, its
agencies or instrumentalities or to futures contracts or options
purchased by the S&P 500 Index Portfolio in compliance with non-
fundamental restrictions [8 and 9] below.
(6) Purchase any securities on margin (except that the Fund
may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities) or make
short sales of securities or maintain a short position.
(7) Make loans, except through the purchase of obligations
in private placements or by entering into repurchase agreements
(the purchase of publicly traded obligations not being considered
the making of a loan).
(8) Lend its securities, except that the S&P 500 Index
Portfolio may lend securities in compliance with non- fundamental
restriction [7] below.
(9) Borrow amounts in excess of 10% of its total assets,
taken at market value at the time of the borrowing, and then only
from banks (and, in the case of the S&P 500 Index Portfolio by
entering into reverse repurchase agreements) as a temporary
measure for extraordinary or emergency purposes, or to meet
redemption requests that might otherwise require the untimely
disposition of securities, and not for investment or leveraging.
(10) Mortgage, pledge, hypothecate or in any manner
transfer, as security for indebtedness, any securities owned or
held by such Portfolio.
(11) Underwrite securities of other issuers except insofar
as the Fund may be deemed an underwriter under the Securities Act
of 1933 in selling shares of each Portfolio and except as it may
be deemed such in a sale of restricted securities.
(12) Invest more than 10% of its total assets in repurchase
agreements maturing in more than seven days, "small bank"
certificates of deposit that are not readily marketable, and
other illiquid investments.
The Fund has also adopted the following additional
investment restrictions that are not fundamental and may be
changed by the Board of Directors without shareholder approval.
Under these restrictions, no Portfolio of the Fund may:
(1) Invest in securities of foreign issuers except American
Depository Receipts, securities listed for trading on the New
York or American Stock Exchange, and Canadian bank short-term
obligations.
(2) Participate on a joint (or a joint and several) basis in
any trading account in securities (but this does not prohibit the
"bunching" of orders for the sale or purchase of Portfolio
securities with the other Portfolios or with other accounts
advised or sponsored by the Adviser or any of its affiliates to
reduce brokerage commissions or otherwise to achieve best overall
execution).
(3) Purchase or retain the securities of any issuer, if, to
the knowledge of the Fund, officers and directors of the Fund,
the Adviser or any affiliate thereof each owning beneficially
more than 1/2% of one of the securities of such issuer, own in
the aggregate more than 5% of the securities of such issuer.
(4) Purchase or sell interests in oil, gas, or other mineral
exploration or development programs, or real estate mortgage
loans, except that each Portfolio may purchase securities of
issuers which invest or deal in any of the above, and except that
each Portfolio may invest in securities that are secured by real
estate mortgages. This restriction does not apply to obligations
or other securities issued or guaranteed by the United States
Government, its agencies or instrumentalities.
(5) Invest in companies for the purpose of exercising
control (alone or together with the other Portfolios).
(6) Purchase securities of other investment companies with
an aggregate value in excess of 5% of the Portfolio's total
assets, except in connection with a merger, consolidation,
acquisition or reorganization, or by purchase in the open market
of securities of closed-end investment companies where no
underwriter or dealer's commission or profit, other than
customary broker's commission, is involved, and only if
immediately thereafter not more than 10% of such Portfolio's
total assets, taken at market value, would be invested in such
securities.
The Fund has also adopted the following additional
investment restrictions that are not fundamental and may be
changed by the Board of Directors without shareholder approval.
Under these restrictions:
The S&P 500 Index Portfolio of the Fund may not:
(7) Lend portfolio securities with an aggregate value of
more than 10% of its total assets.
(8) Invest more than 20% of its assets in futures contracts
and/or options on futures contracts, except as a temporary
investment strategy until the Index Portfolio reaches $25 million
in net assets, the Index Portfolio may invest up to 100% of its
assets in such futures and/or options contracts.
(9) Invest in options unless no more than 5% of its assets
is paid for premiums for outstanding put and call options
(including options on futures contracts) and unless no more than
25% of the Portfolio's assets consist of collateral for
outstanding options.
If a percentage restriction (for either fundamental or
nonfundamental policies) is adhered to at the time of investment,
a later increase or decrease in percentage beyond the specified
limit resulting from a change in values of portfolio securities
or amount of net assets shall not be considered a violation.
In addition to the investment restrictions described above,
the Fund will comply with restrictions contained in any current
insurance laws in order that the assets of The Union Central Life
Insurance Company's ("Union Central") separate accounts may be
invested in Fund shares.
PORTFOLIO TURNOVER
Each Portfolio has a different expected annual rate of
Portfolio turnover, which is calculated by dividing the lesser of
purchases or sales of Portfolio securities during the fiscal year
by the monthly average of the value of the Portfolio's securities
(excluding from the computation all securities, including
options, with maturities at the time of acquisition of one year
or less). A high rate of Portfolio turnover generally involves
correspondingly greater brokerage commission expenses, which must
be borne directly by the Portfolio. Turnover rates may vary
greatly from year to year as well as within a particular year and
may also be affected by cash requirements for redemptions of each
Portfolio's shares and by requirements which enable the Fund to
receive certain favorable tax treatments. The Portfolio turnover
rates will, of course, depend in large part on the level of
purchases and redemptions of shares of each Portfolio. Higher
Portfolio turnover can result in corresponding increases in
brokerage costs to the Portfolios of the Fund and their
shareholders. However, because rate of Portfolio turnover is not
a limiting factor, particular holdings may be sold at any time,
if investment judgment or Portfolio operations make a sale
advisable.
The annual Portfolio turnover rates for the Equity Portfolio
were 34.33% and 40.33%, respectively, for 1995 and 1994. The
annual Portfolio turnover rates for the Bond Portfolio were
111.01% and 70.27%, respectively, for 1995 and 1994. The annual
Portfolio turnover rates for the Capital Portfolio were 43.83%
and 41.89%, respectively, for 1995 and 1994. The annual turnover
rate for the S&P 500 Index Portfolio is expected to be less than
50%.
<PAGE>
MANAGEMENT OF THE FUND
Directors and Officers
The directors and executive officers of the Fund and their
principal occupations during the past five years are set forth
below. Unless otherwise noted, the address of each executive
officer and director is 1876 Waycross Road, Cincinnati, Ohio
45240.
<TABLE>
<CAPTION>
Position(s)
Name, Address with Principal Occupation(s)
and Age the Fund During Past Five Years
- ------------- ----------- ----------------------
<S> <C> <C>
George M. Callard, M.D. Director Cardiovascular Surgeon and
3021 Erie Avenue Professor of Clinical
Cincinnati, Ohio 45208 Surgery, University of
(Age 62) Cincinnati
George L. Clucas* Director, Senior Vice President,
(52) President and Union Central; Director,
Chief Executive President and Chief
Officer Executive Officer,
Carillon Advisers, Inc.
("Adviser"); Director,
Carillon Investments,
Inc. ("CII")
Theodore H. Emmerich Director Consultant; former Partner,
1201 Edgecliff Place Ernst & Whinney, Accountants
Cincinnati, Ohio 45206
(69)
James M. Ewell Director Retired Senior Vice
9000 Indian Ridge Road President and Director,
Cincinnati, Ohio 45243 The Procter and Gamble
(80) Company
Richard H. Finan Director Attorney at Law;
11137 Main Street President Pro Tempore
Cincinnati, Ohio 45241 of the Ohio State Senate
(61)
Jean Patrice Director Former Executive Director,
Harrington, S.C. Cincinnati Youth
3217 Whitfield Avenue Collaborative; President
Cincinnati, Ohio 45220 Emeritus (formerly,
(70) President) College of
Mount St. Joseph
John H. Jacobs* Director Senior Vice President,
(49) Union Central; prior to
December, 1992, Officer
and employee, Union Central
Charles W. McMahon Director Retired Senior Vice
2031 W. Galbraith Road, #E President and Director,
Cincinnati, Ohio 45239 Union Central
(77)
Harry Rossi* Director Director Emeritus, Union
641 Flagstaff Drive Central; Director,
Cincinnati, Ohio 45215 Adviser; former Chairman,
(76) President and Chief
Executive Officer,
Union Central
Stephen R. Hatcher Senior Vice Senior Vice President and
(53) President Chief Financial
Officer, Union Central
John F. Labmeier Vice President Second Vice President,
(47) and Secretary Associate General
Counsel and Assistant
Secretary, Union Central;
Vice President and Secretary,
CII; Secretary, Adviser
Thomas G. Knipper Controller Assistant Controller,
(38) Union Central; prior to
July, 1995, Treasurer of
The Gateway Trust and Vice
President and Controller
of Gateway Advisers, Inc.;
prior to April 1992,
Senior Manager of
Deloitte & Touche
Joseph A. Tucker Treasurer Assistant to the Treasurer,
(61) Union Central; prior to
October 1992, Officer
and employee, Union Central
John M. Lucas Assistant Assistant Counsel and
(45) Secretary Assistant to the Secretary,
Union Central; prior to
October, 1992, Officer
and employee, Union Central
</TABLE>
* Messrs. Clucas, Jacobs and Rossi are considered to be
"interested persons" of the Fund (within the meaning of the
Investment Company Act of 1940) because of their affiliation with
the Adviser.
Each of the directors also serves as a trustee of Carillon
Investment Trust.
All directors who are not "interested persons" of the
Company are members of the Audit Committee.
As of the date of this Statement of Additional Information,
officers and directors of the Fund do not own any of the
outstanding shares of the Fund. Directors who are not officers
or employees of Union Central or Adviser are paid a fee plus
actual out-of-pocket expenses by the Fund for each meeting of the
Board of Directors attended. Total fees and expenses incurred
for 1995 were $41,944.<PAGE>
<TABLE>
<CAPTION>
Compensation Table
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Total
Person, Compensation Retirement Retirement Compensation
Position From Benefits Benefits From Registrant
Registrant Accrued As Upon and Fund
Part of Retirement Complex*
Fund Expenses Paid to
Directors
<S> <C> <C> <C> <C>
George M. Callard, 7,300** -- -- 10,600
M.D.
Director
George L. Clucas N/A N/A N/A N/A
Director
Theodore H. Emmerich 7,500 -- -- 10,800
Director
James M. Ewell 7,300 -- -- 10,600
Director
Richard H. Finan 7,300 -- -- 10,600
Director
Jean Patrice
Harrington, S.C. 7,300 -- -- 10,600
Director
John H. Jacobs N/A N/A N/A N/A
Director
Charles W. McMahon 7,300** -- -- 10,600
Director
Harry Rossi N/A N/A N/A N/A
Director
</TABLE>
* Each of the Directors also serves as a Trustee of Carillon
Investment Trust.
** Messrs. Callard and McMahon have been deferring their
compensation each year. As of December 31, 1995, the total
amount deferred, including interest, was as follows: Dr. Callard
- -$52,325; Mr. McMahon - $23,988.
Investment Adviser
The Fund has entered into an Investment Advisory Agreement
("Agreement") with Carillon Advisers, Inc. ("Adviser") whose
principal business address is 1876 Waycross Road, Cincinnati,
Ohio 45240 (P.O. Box 40407, Cincinnati, Ohio 45240). The
Adviser was incorporated under the laws of Ohio on August 18,
1986, and is a wholly-owned subsidiary of Union Central.
Executive officers and directors of the Adviser who are
affiliated with the Fund are George L. Clucas, President and
Chief Executive Officer; Thomas G. Knipper, Treasurer; and John
F. Labmeier, Secretary.
Pursuant to the Agreement, the Fund has retained the Adviser
to manage the investment of the Fund's assets, including the
placing of orders for the purchase and sale of Portfolio
securities. The Adviser is at all times subject to the direction
and supervision of the Board of Directors of the Fund.
The Adviser continuously furnishes an investment program for
each Portfolio, is responsible for the actual management of each
Portfolio and has responsibility for making decisions to buy,
sell or hold any particular security. The Adviser obtains and
evaluates such information and advice relating to the economy,
securities markets, and specific securities as it considers
necessary or useful to continuously manage the assets of the
Portfolios in a manner consistent with their investment
objectives, policies and restrictions. The Adviser considers
analyses from various sources, makes necessary investment
decisions and effects transactions accordingly. The Adviser also
performs certain administrative functions for the Fund. The
Adviser may utilize the advisory services of subadvisers for one
or more of the Portfolios.
Payment of Expenses
Under the terms of the Agreement, in addition to managing
the Fund's investments, the Adviser, at its expense, maintains
certain of the Fund's books and records (other than those
provided by Firstar Trust Company, by agreement) and furnishes
such office space, facilities, equipment, and clerical help as
the Fund may reasonably require in the conduct of business. In
addition, the Adviser pays for the services of all executive,
administrative, clerical, and other personnel, including officers
of the Fund, who are employees of Union Central. The Adviser
also bears the cost of telephone service, heat, light, power and
other utilities provided to the Fund. Expenses not expressly
assumed by the Adviser under the Agreement will be paid by the
Fund.
Each Portfolio pays all other expenses incurred in its
operation and a portion of the Fund's general administration
expenses allocated on the basis of the asset size of the
respective Portfolios. Expenses other than the Adviser's fee
that are borne directly and paid individually by a Portfolio
include, but are not limited to, brokerage commissions, dealer
markups, expenses incurred in the acquisition of Portfolio
securities, transfer taxes, transaction expenses of the
custodian, pricing services used by only one or more Portfolios,
and other costs properly payable by only one or more Portfolios.
Expenses which are allocated on the basis of size of the
respective Portfolios include custodian (portion based on asset
size), dividend disbursing agent, transfer agent, bookkeeping
services (except annual per Portfolio base charge), pricing,
shareholder's and directors' meetings, directors' fees, proxy
statement and Prospectus preparation, registration fees and
costs, fees and expenses of legal counsel not including employees
of the Adviser, membership dues of industry associations,
postage, insurance premiums including fidelity bond, and all
other costs of the Fund's operation properly payable by the Fund
and allocable on the basis of size of the respective Portfolios.
The Adviser will pay any expenses of the S&P 500 Index Portfolio,
other than the advisory fee for that Portfolio, to the extent
that such expenses exceed .30% of that Portfolio's net assets.
Depending on the nature of a legal claim, liability or
lawsuit, litigation costs, payment of legal claims or liabilities
and any indemnification relating thereto may be directly
applicable to a Portfolio or allocated on the basis of the size
of the respective Portfolios. The directors have determined that
this is an appropriate method of allocation of expenses.
The Agreement also provides that if the total operating
expenses of the Fund, exclusive of the advisory fee, taxes,
interest, brokerage fees and certain legal claims and liabilities
and litigation and indemnification expenses, as described in the
Agreement, for any fiscal year exceed 1.0% of the average daily
net assets of the Fund, the Adviser will reimburse the Fund for
such excess, up to the amount of the advisory fee for that year.
Such amount, if any, will be calculated daily and credited on a
monthly basis.
Advisory Fee
As full compensation for the services and facilities
furnished to the Fund and expenses of the Fund assumed by the
Adviser, the Fund pays the Adviser monthly compensation
calculated daily as described on page 11 of the Prospectus. The
compensation after all waivers for each Portfolio was as
follows:
<TABLE>
<CAPTION>
Equity Bond Capital S&P 500 Index
Year Portfolio Portfolio Portfolio Portfolio
- ---- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
1995 $1,108,596 $314,237 $913,378 -0-
1994 $924,881 $273,068 $766,664 N/A
1993 $750,859 $232,954 $593,388 N/A
</TABLE>
There is no assurance that the Portfolios will reach a net
asset level high enough to realize a reduction in the rate of the
advisory fee. Any reductions in the rate of advisory fee will be
applicable to each Portfolio separately in accordance with the
schedule of fees applicable to each Portfolio.
Investment Advisory Agreement
The Investment Advisory Agreement was initially approved by
the Fund's Board of Directors, including a majority of the
directors who are not interested persons of the Adviser, on March
22, 1984. Unless earlier terminated as described below, the
Agreement will continue in effect from year to year if approved
annually: (a) by the Board of Directors of the Fund or by a
majority of the outstanding shares of the Fund, including a
majority of the outstanding shares of each Portfolio; and (b) by
a majority of the directors who are not parties to such contract
or interested persons (as defined by the Investment Company Act
of 1940) of any such party. The Agreement is not assignable and
may be terminated without penalty by the Fund on 60 days notice,
and by the Adviser on 90 days notice. On March 25, 1996, the
Agreement was approved for continuance for one (1) year by the
Board of Directors by unanimous vote of those present, including
a majority of the directors who are not parties to such contract
or interested persons of any such party.
On March 21, 1990, the Board of Directors took steps to
activate the Capital Portfolio of the Fund by authorizing the
issuance of shares of that Portfolio to a separate account of
Union Central. The Board of Directors also approved an amendment
to the Investment Advisory Agreement so as to make the Agreement
applicable to the Capital Portfolio and to specify the advisory
fee payable by it. The Board determined that the amendment did
not affect the interests of the classes of Fund shares other than
Capital Portfolio shares and that therefore only the holders of
Capital Portfolio shares were entitled to vote on the amendment.
On May 1, 1990, the Union Central separate account invested $15.2
million in the Capital Portfolio in exchange for 1,390,516 shares
at a price of $10.95 per share. Union Central, as legal owner of
the Capital Portfolio shares purchased by its separate account
and as sole shareholder of the Capital Portfolio, approved the
Agreement as amended.
On September 15, 1995, the Board of Directors took steps to
activate the S&P 500 Index Portfolio of the Fund by authorizing
the issuance of shares of that Portfolio. On December 13, 1995,
the Board of Directors also approved an amendment to the
Investment Advisory Agreement so as to make the Agreement
applicable to the Index Portfolio and to specify the advisory fee
payable by it. The Board determined that the amendment did not
affect the interests of the classes of Fund shares other than
Index Portfolio shares and that therefore only the holders of
Index Portfolio shares were entitled to vote on the amendment.
The sole shareholder of the Index Portfolio approved the
Agreement as amended on January 3, 1996.
The Investment Advisory Agreement provides that the Adviser
shall not be liable to the Fund or to any shareholder for any
error of judgment or mistake of law or for any loss suffered by
the Fund or by any shareholder in connection with matters to
which the Investment Advisory Agreement relates, except a loss
resulting from willful misfeasance, bad faith, gross negligence,
or reckless disregard on the part of the Adviser in the
performance of its duties thereunder. In the case of
administration services, the Adviser will be held to a normal
standard of liability.
The Agreement in no way restricts the Adviser from acting as
investment manager or adviser to others.
If the question of continuance of the Agreement (or adoption
of any new Agreement) is presented to shareholders, continuance
(or adoption) with respect to a Portfolio shall be effective only
if approved by a majority vote of the outstanding voting
securities of that Portfolio. If the shareholders of any one or
more of the Portfolios should fail to approve the Agreement, the
Adviser may nonetheless serve as an adviser with respect to any
Portfolio whose shareholders approved the Agreement.
Administration
The Adviser is responsible for providing certain
administrative functions to the Fund and has entered into an
Administration Agreement with Carillon Investments, Inc. ("CII")
under which CII furnishes substantially all of such services for
an annual fee of .20% of the average net assets of the Bond,
Capital and Equity Portfolios, and .05% of the average net assets
of the S&P 500 Index Portfolio. The fee is borne by the Adviser,
not the Fund. Under the Administration Agreement, CII is
obligated to provide persons for clerical, accounting,
bookkeeping, administrative and other similar services, to supply
office space, stationery and office supplies, and to prepare tax
returns, reports to stockholders, and filings with the Securities
and Exchange Commission and state securities authorities.
Service Agreement
Under a Service Agreement between the Adviser and Union
Central, Union Central has agreed to make available to the
Adviser the services of certain employees of Union Central on a
part-time basis for the purpose of better enabling the Adviser to
fulfill its obligations to the Fund under the Agreement.
Pursuant to the Service Agreement, the Adviser shall reimburse
Union Central for all costs allocable to the time spent on the
affairs of the Adviser by the employees provided by Union
Central. In performing their services for the Adviser pursuant
to the Service Agreement, the specified employees shall report
and be solely responsible to the officers and directors of the
Adviser or persons designated by them. Union Central shall have
no responsibility for the investment recommendations or decisions
of the Adviser. The obligation of performance under the
Agreement is solely that of the Adviser and Union Central
undertakes no obligation in respect thereto except as otherwise
expressly provided in the Service Agreement. The Service
Agreement was approved by the shareholders of the Equity, Bond
and Capital Portfolios at a meeting held on March 20, 1992. The
sole shareholder of the S&P 500 Index Portfolio approved the
Service Agreement on January 3, 1996.
Securities Activities of Adviser
Securities held by the Fund may also be held by Union
Central or by other separate accounts or mutual funds for which
the Adviser acts as an adviser. Because of different investment
objectives or other factors, a particular security may be bought
by Union Central or by the Adviser or for one or more of its
clients, when one or more other clients are selling the same
security. If purchases or sales of securities for one or more of
the Fund's Portfolios or other clients of the Adviser or Union
Central arise for consideration at or about the same time,
transactions in such securities will be made, insofar as
feasible, for the Fund's Portfolios, Union Central, and other
clients in a manner deemed equitable to all. To the extent that
transactions on behalf of more than one client of the Adviser
during the same period may increase the demand for securities
being purchased or the supply of securities being sold, there may
be an adverse effect on price.
On occasions when the Adviser deems the purchase or sale of
a security to be in the best interests of the Fund as well as
other accounts or companies, it may, to the extent permitted by
applicable laws and regulations, but will not be obligated to,
aggregate the securities to be sold or purchased for the Fund (or
for two or more Portfolios) with those to be sold or purchased
for other accounts or companies in order to obtain more favorable
execution and low brokerage commissions. In that event,
allocation of the securities purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser
in the manner it considers to be most equitable and consistent
with its fiduciary obligations to the Fund Portfolio(s) and to
such other accounts or companies. In some cases this procedure
may adversely affect the size of the position obtainable for a
Portfolio.
<PAGE>
DETERMINATION OF NET ASSET VALUE
As described on page 12 of the Prospectus, the net asset
value of shares of the Fund is determined once daily, Monday
through Friday as of the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m., Eastern Time), when there are
purchases or redemptions of Fund shares, except: (i) when the New
York Stock Exchange is closed (currently New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day); (ii) the day
following Thanksgiving Day; (iii) December 24, 1996, and (iv) any
day on which changes in the value of the Portfolio securities of
the Fund will not materially affect the current net asset value
of the shares of a Portfolio.
Securities held by the Portfolios, except for money market
instruments maturing in 60 days or less, will be valued as
follows: Securities which are traded on stock exchanges
(including securities traded in both the over-the-counter market
and on exchange), or listed on the NASDAQ National Market System,
are valued at the last sales price as of the close of the New
York Stock Exchange on the day the securities are being valued,
or, lacking any sales, at the closing bid prices. Securities
traded only in the over-the-counter market are valued at the last
bid prices quoted by brokers that make markets in the securities
at the close of trading on the New York Stock Exchange.
Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by
or under the direction of the Board of Directors.
Money market instruments with a remaining maturity of 60
days or less are valued on an amortized cost basis. Under this
method of valuation, the instrument is initially valued at cost
(or in the case of instruments initially valued at market value,
at the market value on the day before its remaining maturity is
such that it qualifies for amortized cost valuation); thereafter,
the Fund assumes a constant proportionate amortization in value
until maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the
instrument. While this method provides certainty in valuation,
it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price that would be
received upon sale of the instrument.
PURCHASE AND REDEMPTION OF SHARES
The Fund offers its shares, without sales charge, only to
Union Central and its separate accounts. It is possible that at
some later date the Fund may offer shares to other investors.
The Fund is required to redeem all full and fractional
shares of the Fund for cash at the net asset value per share.
Payment for shares redeemed will generally be made within seven
days after receipt of a proper notice of redemption. The right
to redeem shares or to receive payment with respect to any
redemption may only be suspended for any period during which: (a)
trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission or such
exchange is closed for other than weekends and holidays; (b) an
emergency exists, as determined by the Securities and Exchange
Commission, as a result of which disposal of Portfolio securities
or determination of the net asset value of a Portfolio is not
reasonably practicable; and (c) the Securities and Exchange
Commission by order permits postponement for the protection of
shareholders.
TAXES
Each Portfolio of the Fund will be treated as a separate
entity for federal income tax purposes. Each Portfolio has
qualified and has elected to be taxed as a "regulated investment
company" under the provisions of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). If a Portfolio
qualifies as a "regulated investment company" and complies with
the provisions of the Code by distributing substantially all of
its net income (both ordinary income and capital gain), the
Portfolio will be relieved from federal income tax on the amounts
distributed.
In order to qualify as a regulated investment company, in
each taxable year each Portfolio must, among other things: (a)
derive at least 90 percent of its gross income from dividends,
interest, payments with respect to loans of securities, and gains
from the sale or other disposition of stocks or securities or
foreign currencies (subject to the authority of the Secretary of
the Treasury to exclude certain foreign currency gains) or other
income (including, but not limited to, gains from options,
futures, or forward contracts which are ancillary to the
Portfolio's principal business of investing in stocks or
securities or options and futures with respect to stocks or
securities) derived with regard to its investing in such stocks,
securities or currencies; and (b) derive less than 30 percent of
its gross income from gains (without deduction for losses)
realized on the sale or other disposition of any of the following
held for less than three months: securities, options, futures or
forward contracts (other than options, futures or forward
contracts on foreign currencies) or certain foreign currencies.
In order to meet the requirements noted above, the Fund may be
required to defer disposing of certain options, futures contracts
and securities beyond the time when it might otherwise be
advantageous to do so. These requirements may also affect the
Fund's investments in various ways, such as by limiting the
Fund's ability to:(a) sell investments held for less than three
months; (b) effect closing transactions on options written less
than three months previously; (c) write options for a period of
less than three months; and (d) write options on securities held
for less than the long-term capital gains holding period. For a
discussion of tax consequences to owners of annuity contracts,
see the Prospectus for those contracts.
The discussion of "Taxes" in the Prospectus, in conjunction
with the foregoing, is a general and abbreviated summary of the
applicable provisions of the Code and Treasury Regulations
currently in effect as interpreted by the Courts and the Internal
Revenue Service.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is primarily responsible for the investment
decisions of each Portfolio, including decisions to buy and sell
securities, the selection of brokers and dealers to effect the
transactions, the placing of investment transactions, and the
negotiation of brokerage commissions, if any. No Portfolio has
any obligation to deal with any dealer or group of dealers in the
execution of transactions in Portfolio securities. In placing
orders, it is the policy of the Fund to obtain the most favorable
net results, taking into account various factors, including
price, dealer spread or commission, if any, size of the
transaction, and difficulty of execution. While the Adviser
generally seeks reasonably competitive spreads or commissions,
the Portfolios will not necessarily be paying the lowest spread
or commission available.
If the securities in which a particular Portfolio of the
Fund invests are traded primarily in the over-the-counter market,
where possible the Portfolio will deal directly with the dealers
who make a market in the securities involved unless better prices
and execution are available elsewhere. Such dealers usually act
as principals for their own account. On occasion, securities may
be purchased directly from the issuer. Bonds and money market
instruments are generally traded on a net basis and do not
normally involve either brokerage commissions or transfer taxes.
The cost of Portfolio securities transactions of each Portfolio
will consist primarily of brokerage commission or dealer or
underwriter spreads.
While the Adviser seeks to obtain the most favorable net
results in effecting transactions in the Portfolio securities,
brokers who provide supplemental investment research to the
Adviser may receive orders for transactions by the Fund. Such
supplemental research service ordinarily consists of assessments
and analyses of the business or prospects of a company, industry,
or economic sector. If, in the judgment of the Adviser, the Fund
will be benefited by such supplemental research services, the
Adviser is authorized to pay commissions to brokers furnishing
such services which are in excess of commissions which another
broker may charge for the same transaction. Information so
received will be in addition to and not in lieu of the services
required to be performed by the Adviser under its Investment
Advisory Agreement. The expenses of the Adviser will not
necessarily be reduced as a result of the receipt of such
supplemental information. In some cases, the Adviser may use
such supplemental research in providing investment advice to its
other advisory accounts.
During 1995, 34% of the Fund's total brokerage was allocated
to brokers who furnish statistical data or research information.
Brokerage commissions paid during 1995, 1994 and 1993 were
$349,679, $232,642 and $226,635, respectively.
GENERAL INFORMATION
Capital Stock
The Fund was incorporated in Maryland on January 30, 1984.
The authorized capital stock of the Fund consists of sixty-
million shares of common stock, par value ten cents ($0.10) per
share. Fifty-five million shares of the authorized capital stock
is currently divided into the following classes: Equity
Portfolio consisting of twenty-million authorized shares; Capital
Portfolio consisting of fifteen-million authorized shares; Bond
Portfolio consisting of ten-million authorized shares; and S&P
500 Index Portfolio consisting of ten-million authorized shares.
The balance of the shares may be issued to the existing
Portfolios, or to new Portfolios having the number of shares and
descriptions, powers, and rights, and the qualifications,
limitations, and restrictions as the Board of Directors may
determine. The Board of Directors may also change the
designation of any Portfolio and may increase or decrease the
number of authorized shares of any Portfolio, but may not
decrease the number of authorized shares of any Portfolio below
the number of shares then outstanding.
Each issued and outstanding share is entitled to participate
equally in dividends and distributions declared by the respective
Portfolio and, upon liquidation or dissolution, in net assets of
such Portfolio remaining after satisfaction of outstanding
liabilities.
Voting Rights
In accordance with an amendment to the Maryland General
Corporation Law, the Board of Directors of the Fund has adopted
an amendment to its Bylaws providing that unless otherwise
required by the Investment Company Act of 1940, the Fund shall
not be required to hold an annual shareholder meeting unless the
Board of Directors determines to hold an annual meeting. The
Fund intends to hold shareholder meetings only when required by
law and such other times as may be deemed appropriate by its
Board of Directors.
All shares of common stock have equal voting rights
(regardless of the net asset value per share) except that on
matters affecting only one Portfolio, only shares of the
respective Portfolio are entitled to vote. The shares do not
have cumulative voting rights. Accordingly, the holders of more
than 50% of the shares of the Fund voting for the election of
directors can elect all of the directors of the Fund if they
choose to do so and in such event the holders of the remaining
shares would not be able to elect any directors.
Matters in which the interests of all Portfolios are
substantially identical (such as the election of directors or the
approval of independent public accountants) will be voted on by
all shareholders without regard to the separate Portfolios.
Matters that affect all Portfolios but where the interests of the
Portfolios are not substantially identical (such as approval of
the Investment Advisory Agreement) would be voted on separately
by each Portfolio. Matters affecting only one Portfolio, such as
a change in its fundamental policies, are voted on separately by
that Portfolio.
Matters requiring separate shareholder voting by Portfolio
shall have been effectively acted upon with respect to any
Portfolio if a majority of the outstanding voting securities of
that Portfolio votes for approval of the matter, notwithstanding
that: (1) the matter has not been approved by a majority of the
outstanding voting securities of any other Portfolio; or (2) the
matter has not been approved by a majority of the outstanding
voting securities of the Fund.
The phrase "a majority of the outstanding voting securities"
of a Portfolio (or of the Fund) means the vote of the lesser of:
(1) 67% of the shares of the Portfolio (or the Fund) present at a
meeting if the holders of more than 50% of the outstanding shares
are present in person or by proxy; or (2) more than 50% of the
outstanding shares of the Portfolio (or the Fund).
As noted in the Prospectus, Union Central currently has
voting control of the Fund. With voting control, Union Central
could make fundamental and substantial changes (such as electing
a new Board of Directors, changing the investment adviser or
advisory fee, changing a Portfolio's fundamental investment
objectives and policies, etc.) regardless of the views of
Contract Owners. However, under current interpretations of
presently applicable law, Contract Owners are entitled to give
voting instructions with respect to Fund shares held in
registered separate accounts and therefore all Contract Owners
would receive advance notice before any such changes could be
made.
Additional Information
This Statement of Additional Information and the Prospectus
do not contain all the information set forth in the registration
statement and exhibits relating thereto, which the Fund has filed
with the Securities and Exchange Commission, Washington, D.C.,
under the Securities Act of 1933 and the Investment Company Act
of 1940, to which reference is hereby made.
INDEPENDENT AUDITORS
The financial statements of the Fund have been audited by
Deloitte & Touche LLP, 1700 Courthouse Plaza NE, Dayton, Ohio
45402, independent auditors, whose report follows. The financial
statements are included in this Statement of Additional
Information in reliance upon the report of Deloitte & Touche LLP,
given upon their authority as experts in auditing and accounting.
<PAGE>
CARILLON FUND, INC.
FINANCIAL STATEMENTS
December 31, 1995
<PAGE>
<PAGE>
Independent Auditor's Report
==================================================
To the Board of Trustees and Shareholders of Carillon Fund, Inc.
We have audited the accompanying statements of assets and
liabilities of the Equity Portfolio, the Capital Portfolio, and
the Bond Portfolio of Carillon Fund, Inc., (the "Fund"),
including the schedules of investments, as of December 31, 1995,
the related statements of operations, and the statements of
changes in net assets and financial highlights for the year then
ended. These financial statements and financial highlights
("financial statements") are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements based on our audits. The financial
highlights for the other years presented and the statements of
changes in net assets for the year ended December 31, 1994 were
audited by other auditors whose report, dated February 6, 1995,
expressed an unqualified opinion on those statements.
We conducted our audit 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, 1995, by correspondence with the custodian and
brokers. 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 audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements as of December 31,
1995, present fairly, in all material respects, the financial
position of the Fund, as of December 31, 1995, and the results
of its operations, the changes in its net assets, and the
financial highlights for the year then ended, in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Dayton, Ohio
February 2, 1996
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
- ----------------------------------------------------------------
DECEMBER 31, 1995
EQUITY PORTFOLIO
- ----------------------------------------------------------------
COMMON STOCKS - 91.72%
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
AEROSPACE - DEFENSE - 2.78%
Lockheed Martin Corporation 40,000 $3,160,000
Raytheon Company 30,000 1,417,500
Thiokol Corporation 45,000 1,524,375
----------
6,101,875
AIR TRANSPORTATION - .64%
Atlantic Southeast Airlines Incorporated 65,000 1,397,500
----------
APPLIANCE - .32%
Scotsman Industries Incorporated 40,000 705,000
----------
AUTO & TRUCK - .46%
Ford Motor Company 35,000 1,015,000
----------
AUTO PARTS - 1.97%
Breed Technologies Incorporated 65,000 1,202,500
Donnelly Corporation 48,500 715,375
Masland Corporation* 70,000 980,000
Strattec Security Corporation* 80,000 1,420,000
----------
4,317,875
----------
BANK & BANK HOLDING COMPANIES - 7.27%
ABN AMRO Holdings NV Sponsored ADR 31,574 1,439,847
Banco Latinoamericano De Exportationes
Sponsored ADR 75,000 3,487,500
Deutsche Bank AG Sponsored ADR 42,000 1,994,538
Dresdner Bank AG Sponsored ADR 55,000 1,471,761
GBC Bancorp California 40,900 715,750
River Forest Bancorporation 70,000 1,785,000
Southtrust Corporation 55,000 1,409,375
Wilmington Trust Corporation 40,000 1,235,000
Zions Bancorporation 30,000 2,407,500
----------
15,946,271
----------
BUILDING & HOUSING - 1.79%
ABT Building Products Company* 115,000 1,638,750
Falcon Products Incorporated 147,730 1,938,956
Rottlund Company Incorporated* 50,000 350,000
----------
3,927,706
----------
BUILDING MATERIAL - .91%
NCI Building Systems, Incorporated* 80,700 1,997,325
----------
BUSINESS-MECHANICS & SOFTWARE - 2.13%
DH Technology , Incorporated* 135,000 3,307,500
Macneal - Schwendler Corporation 85,000 1,360,000
----------
4,667,500
----------
CHEMICAL - 2.43%
Bayer AG Sponosored ADR 135,000 3,570,062
Ciba-Geigy Sponsored ADR 27,000 1,190,848
Shanghai Petro Chemical Company Ltd
Sponsored ADR* 20,000 570,000
----------
5,330,910
----------
CONGLOMERATE - .68%
Mannesman AG Sponsored ADR 4,700 1,499,703
----------
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
EQUITY PORTFOLIO
- -------------------------------------------------------------------
COMMON STOCKS (continued)
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
CONSUMER - .07%
Supercuts Incorporated* 20,000 $ 161,500
----------
CONTAINER - 1.79%
AEP Industries, Incorporated 107,550 2,366,100
Alltrista Corporation* 86,000 1,548,000
----------
3,914,100
----------
DRUGS - 1.20%
Merck & Company Incorporated 40,000 2,630,000
----------
ELECTRIC - UTILITIES - 3.75%
Cinergy Corporation 29,400 900,375
CMS Energy Corporation 50,000 1,493,750
Duke Power Company 12,500 592,188
Empresa Nacional de Electricidad
Sponsored ADR 30,000 1,717,500
Public Service Company of New Mexico* 54,000 951,750
Texas Utilities Electric Company 45,000 1,850,625
Utilitcorp United Incorporated 25,000 734,375
----------
8,240,563
----------
ELECTRONIC - .04%
Recoton Corporation* 4,400 81,714
----------
ENERGY - MISCELLANEOUS - 1.60%
Giant Industries Incorporated 120,000 1,470,000
Holly Corporation 90,000 2,036,250
----------
3,506,250
----------
ENGINEERING & CONSTRUCTION - .19%
Mestek, Incorporated* 36,200 425,350
----------
ENTERTAINMENT & LEISURE - .59%
Artco, Incorporated 100,000 1,300,000
----------
FINANCIAL SERVICE - 2.64%
CMAC Investment Corporation 25,500 1,122,000
Dean Witter Discover & Company 45,000 2,115,000
Jefferies Group, Incorporated 32,000 1,512,000
Raymond James Financial Corporation 50,000 1,056,250
----------
5,805,250
----------
FOOD, BEVERAGE, & TOBACCO - 1.60%
Goodmark Foods Incorporated 85,000 1,508,750
Morningstar Group Incorporated* 183,000 1,464,000
Todhunter International, Incorporated* 70,000 542,500
----------
3,515,250
----------
GOLD & PRECIOUS METALS - 1.08%
Echo Bay Mines Limited 90,000 933,750
Minorco Sponsored ADR 50,000 1,431,250
----------
2,365,000
----------
HEALTH & BEAUTY AIDS - .41%
Perrigo Company* 75,000 890,625
----------
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
EQUITY PORTFOLIO
- -------------------------------------------------------------------
COMMON STOCKS (continued)
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
HEALTH CARE - 3.45%
Advocat, Incorporated* 100,500 $1,118,063
Lunar Corporation* 103,200 2,838,000
Orthofix International NV* 113,036 833,640
Research Industries Corporation* 35,000 945,000
Sofamor / Danek Group* 65,200 1,850,050
----------
7,584,753
----------
HEALTH CARE SERVICE - .98%
Rightchoice Managed Care Incorporated
- Class A* 105,500 1,371,500
United Wisconsin Services, Incorporated 34,700 763,400
----------
2,134,900
----------
HOSPITAL SUPPLY & SERVICE - 1.92%
Allied Healthcare Products Incorporated 90,100 1,441,600
Sterile Concepts Holdings, Incorporated 50,900 738,050
Utah Medical Products Incorporated* 103,200 2,044,650
----------
4,224,300
----------
HOUSEHOLD PRODUCT - 4.31%
Chromcraft Revington Incorporated* 75,000 1,996,875
Conso Products Company* 97,500 1,779,375
Fingerhut Companies, Incorporated 40,000 555,000
Helen of Troy Limited, Bermuda* 115,000 2,415,000
Lifetime-Hoan Corporation* 174,482 1,613,959
Winsloew Furniture Incorporated* 188,300 1,106,263
----------
9,466,472
----------
HOUSING - 1.18%
Schult Homes Corporation 50,000 875,000
Toll Brothers, Incorporated* 75,000 1,725,000
----------
2,600,000
----------
INSURANCE - 8.26%
AEGON N.V. Sponsored ADR 43,755 1,925,220
Capital American Financial Corporation 30,000 678,750
Gainsco Incorporated 217,762 2,477,043
Harleysville Group Incorporated 45,300 1,466,588
Penncorp Financial Group Incorporated 95,000 2,790,625
PXRE Corporation 41,000 1,086,500
RLI Corporation 68,625 1,715,625
Sphere Drake Holdings Limited 70,000 980,000
Torchmark Corporation 40,000 1,810,000
Transnational RE Corporation - Class A 40,000 980,000
Triad Guaranty Incorporated* 45,000 1,192,500
United Insurance Companies Incorporated* 54,400 1,026,800
----------
18,129,651
----------
INVESTMENT COMPANIES - .51%
Allied Capital Corporation 25,000 340,625
Chile Fund Incorporated* 30,000 780,000
----------
1,120,625
----------
MACHINERY-AGRICULTURE & CONSTRUCTION
- 2.13%
AGCO Corporation* 18,000 918,000
Astec Industries Incorporated* 75,000 740,625
Lindsay Manufacturing Company* 78,575 3,025,138
----------
4,683,763
----------
MACHINERY - INDUSTRIAL - .57%
Alamo Group Incorporated 70,000 1,260,000
----------
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
EQUITY PORTFOLIO
- -------------------------------------------------------------------
COMMON STOCKS (continued)
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
MANUFACTURING - MISCELLANEOUS - 1.56%
Foamex International Incorporated* 75,000 $553,125
Griffon Corporation* 170,000 1,530,000
ILC Technology, Incorporated* 79,300 733,525
Versa Technologies Incorporated 40,500 617,625
----------
3,434,275
----------
METAL & MINERAL - 1.32%
AK Steel Holding Corporation 25,000 856,250
J & L Specialty Steel Incorporated* 50,000 937,500
Pohang Iron & Steel Company* 50,000 1,093,750
----------
2,887,500
----------
NON-FERROUS METAL - .59%
Western Mining Holdings Corporation
Ltd Sponsored ADR 50,000 1,306,250
OFFICE PRODUCT - .54%
Nam Tai Electronics, Incorporated* 101,700 1,194,975
----------
OIL & GAS - DOMESTIC 3.78%
Apache Corporation 73,118 2,156,981
Horsham Corporation 150,000 2,025,000
Newfield Exploration Company* 48,000 1,296,000
Plains Resources Incorporated* 120,000 1,080,000
Pogo Producing Company* 36,000 1,017,000
Swift Energy Company* 60,000 720,000
----------
8,294,981
----------
OIL & GAS - INTERNATIONAL - 2.27%
Repsol S.A. Sponsored ADR 60,000 1,972,500
Total S.A. Sponsored ADR 42,014 1,428,476
World Fuel Services Incorporated 24,500 388,938
YPF S.A. Sponsored ADR 55,000 1,189,375
----------
4,979,289
----------
OIL & GAS - SERVICE - 2.06%
Global Industries Incorporated* 100,000 3,000,000
Offshore Logistics Incorporated* 120,000 1,515,000
----------
4,515,000
----------
PAPER & FOREST PRODUCTS - 1.42%
Consolidated Papers, Incorporated* 18,000 1,010,250
Federal Paper Board Incorporated 25,000 1,296,875
Longview Fibre Company 50,000 812,500
----------
3,119,625
----------
PRODUCTION - .59%
Briggs & Stratton Corporation 30,000 1,301,250
----------
RAILROAD - .96%
Illinois Central Corporation - Class A 55,000 2,110,625
----------
REAL ESTATE - 10.05%
Associated Estates Realty Corporation 65,000 1,397,500
CBL & Associates Properties Incorporated 70,000 1,522,500
Columbus Realty Trust 90,000 1,743,750
Duke Realty Investments Incorporated 28,000 878,500
Felcor Suite Hotels Incorporated 52,600 1,459,650
Health Care Property Investors,
Incorporated 50,000 1,756,250
Healthcare Realty Trust Incorporated* 8,700 200,100
<CAPTION>
EQUITY PORTFOLIO
- -------------------------------------------------------------------
COMMON STOCKS (continued)
- -------------------------------------------------------------------
SHARES VALUE
------ -----
<S> <C> <C>
REAL ESTATE - continued
IRT Property Company 120,000 $1,110,000
LTC Properties Incorporated 65,000 975,000
Merry Land & Investments Company 75,000 1,771,875
Mid-America Apartment Communities 80,000 1,980,000
NAB Asset Corporation* 51,000 229,500
National Health Investors Incorporated 40,000 1,325,000
Post Properties Incorporated 35,000 1,115,625
Public Storage Incorporated 80,000 1,520,000
Shurgard Storage Centers Incorporated 70,000 1,890,000
Winston Hotels Incorporated 100,000 1,187,500
----------
22,062,750
----------
RETAIL - FOOD AND DRUGS - .42%
Dairy Farm International Limited
- Sponsored ADR 200,000 920,000
RETAIL - GENERAL - 2.84%
Claire's Stores Incorporated 100,000 1,762,500
Crown Books Corporation* 44,800 548,800
Dart Group Corporation - Class A 7,500 701,250
Forschner Group Incorporated* 65,000 804,375
Roberds Incorporated* 90,000 810,000
Shopko Stores, Incorporated 90,700 1,020,375
Tractor Supply Company* 30,000 592,500
----------
6,239,800
----------
SAVINGS & LOAN - 1.04%
Standard Federal Bancorporation 57,900 2,279,813
----------
SERVICE - MISCELLANEOUS - .89%
PCA International Incorporated 100,200 1,102,200
TBC Corporation* 100,000 862,500
----------
1,964,700
----------
SHOES - .25%
K-Swiss Incorporated - Class A 50,000 543,750
----------
TELEPHONE - .38%
Stet Societa Finanziaria Telefonica 30,000 836,250
----------
TEXTILE & APPAREL - .26%
Cone Mills Corporation* 40,000 450,000
Speizman Industries Incorporated* 40,000 115,000
----------
565,000
----------
TRUCKING - .85%
Landstar System, Incorporated* 40,000 1,070,000
U.S. Xpress Enterprises, Incorporated
- Class A* 110,000 797,496
----------
1,867,496
----------
Total Common Stocks
(cost $158,454,956) $201,370,060
-----------
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
EQUITY PORTFOLIO
- -------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 7.95%
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COMMERCIAL PAPER - 5.90%
CBI Industries Incorporated
(6.040% due 01/25/96) 2,000,000 $ 1,991,947
Circus Circus Enterprises Incorporated
(6.000% due 01/10/96) 2,000,000 1,997,000
Columbia Healthcare Corporation
(6.050% due 01/08/96) 1,000,000 998,824
Crown Cork & Seal Company
(5.990% due 01/12/96) 1,000,000 998,170
Crown Cork & Seal Company
(6.020% due 01/26/96) 1,000,000 995,819
Illinois Power Fuel Company
(5.990% due 01/26/96) 1,000,000 995,840
Tele-Communications Incorporated
(6.100% due 02/14/96) 1,000,000 992,544
Tyson Foods Incorporated
(6.060% due 01/11/96) 2,000,000 1,996,633
Yellow Freight System Incorporated
(6.000% due 01/03/96) 1,000,000 999,667
Yellow Freight System Incorporated
(6.000% due 01/31/96) 1,000,000 995,000
------------
12,961,444
------------
VARIABLE RATE DEMAND NOTES <F1> - 2.05%
General Mills, Incorporated
(5.290% due 01/03/96) 1,278,820 1,278,820
Pitney Bowes Credit Corporation
(5.295% due 01/03/96) 2,933,267 2,933,267
Wisconsin Electric Power Company
(5.337% due 01/03/96) 291,728 291,728
------------
4,503,815
------------
Total Short-Term Investments
(cost $17,465,259) $17,465,259
------------
TOTAL INVESTMENTS - 99.67%
(cost $175,920,205) $218,835,319 <F2>
OTHER ASSETS AND LIABILITIES - .33% $ 727,928
------------
TOTAL NET ASSETS - 100.00% $219,563,247
============
_____________
*Non-income producing
(ADR) American Depository Receipt
<FN>
<F1>
Interest rates vary periodically based on current market rates. The
maturity shown for each variable rate demand note is the later of the
next scheduled interest rate adjustment date or the date on which
principal can be recovered through demand. Information shown is as of
December 31, 1995.
<F2>
Gross unrealized appreciation and depreciation of securities at
December 31, 1995 for financial reporting purposes was $49,383,954 and
$6,468,840 respectively; tax amounts were substantially the same.
</FN>
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE> CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
- ------------------------------------------------------------
DECEMBER 31, 1995
CAPITAL PORTFOLIO
- ------------------------------------------------------------
COMMON STOCKS - 37.39%
- ------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
AUTO PARTS - .85%
Breed Technologies, Incorporated 28,500 $ 527,240
Strattec Security Corporation* 40,000 710,000
-----------
1,237,240
-----------
BANK & BANK HOLDING COMPANIES - 3.01%
ABN AMRO Holdings NV Sponsored ADR 21,049 959,883
Banco Latinoamericano
de Exportaciones ADR* 30,000 1,395,000
Deutsche Bank AG Sponsored ADR 18,000 854,802
Dresdner Bank AG Sponsored ADR 20,000 535,186
River Forest Bancorporation 25,000 637,500
-----------
4,382,371
-----------
BUILDING & HOUSING - .90%
ABT Building Products Company* 45,000 641,250
Falcon Products, Incorporated 50,820 667,013
-----------
1,308,263
-----------
BUILDING MATERIAL - .51%
NCI Building Systems Incorporated* 30,000 742,500
-----------
BUSINESS - MECHANICS & SOFTWARE - .68%
DH Technology, Incorporated* 40,260 986,370
-----------
CHEMICAL - 1.88%
Bayer AG Sponsored ADR 75,000 1,983,367
Ciba - Geigy Sponsored ADR 17,000 749,793
-----------
2,733,160
-----------
CONGLOMERATE - .59%
Lonrho Plc Sponosred ADR 150,000 409,875
Mannesman AG Sponsored ADR 1,400 446,720
-----------
856,595
-----------
CONTAINER - 1.17%
AEP Industries, Incorporated 45,831 1,008,282
Alltrista Corporation* 38,800 698,400
-----------
1,706,682
-----------
DRUGS - .77%
Merck & Company Incorporated 17,000 1,117,750
-----------
ELECTRIC - UTILITIES - .83%
CMS Energy Corporation 20,000 597,500
Texas Utilities Electric Company 15,000 616,875
-----------
1,214,375
-----------
ENERGY - .77%
Nuevo Energy Company* 30,000 671,250
Swift Energy Company* 37,200 446,400
-----------
1,117,650
-----------
ENERGY - MISCELLANEOUS - .31%
Holly Corporation 20,000 452,500
-----------
ENGINEERING & CONSTRUCTION - .12%
Mestek, Incorporated* 15,300 179,775
-----------
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CAPITAL PORTFOLIO
- ----------------------------------------------------------
COMMON STOCKS (continued)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
SHARES VALUE
FINANCIAL SERVICE - .48%
Dean Witter, Discover & Company 15,000 $ 705,000
-----------
FOOD, BEVERAGE, & TOBACCO - .13%
Todhunter International, Incorporated * 25,000 193,750
-----------
GOLD & PRECIOUS METALS - 1.27%
Free State Consolidated Gold Mines
Limited ADR 20,000 145,000
Minorco Sponsored ADR 29,000 830,125
Royal Oak Mines , Incorporated* 125,000 445,313
Santa Fe Pacific Gold Corporation 35,000 424,375
-----------
1,844,813
-----------
HEALTH CARE - .97%
Orthofix International NV* 38,000 280,250
Sofamor / Danek Group* 40,000 1,135,000
-----------
1,415,250
-----------
HEALTH CARE SERVICE - .40%
Rightchoice Managed Care Incorporated
- Class A* 45,000 585,000
-----------
HOSPITAL SUPPLY & SERVICE - .43%
Allied Healthcare Products Incorporated 39,500 632,000
-----------
HOUSEHOLD PRODUCT - 1.53%
Chromcraft Revington Incorporated* 25,000 665,625
Helen of Troy Limited, Bermuda* 55,000 1,155,000
Lifetime - Hoan Corporation 44,141 408,304
-----------
2,228,929
-----------
INSURANCE - 2.18%
Gainsco Incorporated 63,000 716,625
RLI Corporation 30,480 762,000
Torchmark Corporation 22,000 995,500
United Insurance Companies, Incorporated* 36,800 694,600
-----------
3,168,725
-----------
INVESTMENT COMPANIES - 1.98%
Allied Capital Corporation 30,000 408,750
BlackRock Strategic Term Trust 75,000 571,875
France Growth Fund, Incorporated 59,000 582,625
New Germany Fund 70,000 813,750
Templeton Global Income Fund 75,000 515,625
-----------
2,892,625
-----------
MACHINERY - AGRICULTURE & CONSTRUCTION - .92%
Astec Industries Incorporated* 50,000 493,750
Lindsay Manufacturing Company* 21,939 844,652
-----------
1,338,402
-----------
MACHINERY - INDUSTRIAL - .38%
Alamo Group Incorporated 30,900 556,200
-----------
MANUFACTURING - MISCELLANEOUS - .95%
Griffon Corporation* 55,000 495,000
ILC Technology, Incorporated* 30,500 282,125
Versa Technologies, Incorporated 40,000 610,000
-----------
1,387,125
-----------
METAL & MINERAL - .48%
Pohang Iron & Steel Company* 32,000 700,000
-----------
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CAPITAL PORTFOLIO
- ------------------------------------------------------------
COMMON STOCKS (continued)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
OIL & GAS - DOMESTIC - .77%
Horsham Corporation 40,000 $ 540,000
Plains Resources, Incorporated* 65,000 585,000
-----------
1,125,000
-----------
OIL & GAS - INTERNATIONAL - .96%
YPF S.A. Sponsored ADR 25,000 540,625
Repsol S.A. Sponsored ADR 26,000 854,750
-----------
1,395,375
-----------
OIL & GAS - SERVICE - 1.01%
Global Industries Incorporated* 30,000 900,000
Offshore Logistics, Incorporated* 45,000 568,125
-----------
1,468,125
-----------
PAPER & FOREST PRODUCTS - .46%
Consolidated Papers Incorporated* 12,000 673,500
-----------
REAL ESTATE - 8.48%
Associated Estates Realty Corporation 50,000 1,075,000
Bradley Real Estate Incorporated 41,000 553,500
CBL & Associates Properties Incorporated 45,000 978,750
Columbus Realty Trust 46,000 891,250
Duke Realty Investments Incorporated 36,000 1,129,500
Felcor Suite Hotels Incorporated 27,000 749,250
Glimcher Realty Trust 45,000 776,250
Health Care Property Investors,
Incorporated 26,296 923,647
IRT Property Company 85,000 786,250
LTC Properties Incorporated 46,000 690,000
Merry Land & Investments Company 47,000 1,110,375
Mid-America Apartment Communities 52,000 1,287,000
NAB Asset Corporation* 49,000 220,500
Shurgard Storage Centers Incorporated 43,000 1,161,000
-----------
12,332,272
-----------
RETAIL - GENERAL - .31%
Shopko Stores, Incorporated 40,000 450,000
-----------
SAVINGS & LOAN -.68%
Standard Federal Bancorporation 25,000 984,375
-----------
SERVICE - MISCELLANEOUS - .23%
PCA International Incorporated 30,000 330,000
-----------
Total Common Stocks (cost $46,324,013) $54,441,697
-----------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
PREFERRED STOCK - .44%
- -----------------------------------------------------------------
SHARES VALUE
------ -----
<S> <C> <C>
METALS & MINERALS - .44%
Freeport McMoran Copper Series Gold 20,000 $ 650,000
-----------
Total Preferred Stock (cost $709,837) $ 650,000
-----------
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CAPITAL PORTFOLIO
- ------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 13.07%
- ------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
U.S. TREASURY NOTES - 13.07%
7.500% due 02/29/96 $ 750,000 $ 752,578
7.625% due 04/30/96 500,000 504,063
7.250% due 11/15/96 500,000 508,438
6.125% due 12/31/96 900,000 908,438
8.000% due 01/15/97 1,000,000 1,027,187
6.750% due 02/28/97 650,000 661,171
8.500% due 04/15/97 500,000 520,313
6.750% due 05/31/97 1,000,000 1,020,625
7.875% due 04/15/98 500,000 528,125
5.500% due 02/28/99 1,000,000 1,006,562
6.375% due 07/15/99 1,000,000 1,033,437
6.000% due 10/15/99 5,900,000 6,030,902
8.875% due 05/15/00 500,000 567,813
7.500% due 11/15/01 500,000 551,093
6.375% due 08/15/02 3,250,000 3,414,531
Total U.S. Treasury Notes
(cost $18,398,484) $19,035,276
-----------
<CAPTION>
- ------------------------------------------------------------
MORTGAGE - BACKED SECURITIES - 17.68%
- ------------------------------------------------------------
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS
- .76%
FHLMC (8.500% due 06/15/17) $1,100,000 $ 1,103,509
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION
- 3.36%
8.000% due 10/01/96 467,072 470,253
7.500% due 06/01/07 67,593 68,777
5.470% due 11/15/07 <F1> 1,000,000 993,500
9.500% due 10/01/08 282,814 302,218
6.250% due 01/15/09 1,181,675 1,160,606
8.250% due 03/01/12 138,273 143,290
8.500% due 03/01/16 134,793 140,300
7.500% due 07/01/17 80,515 82,227
11.000% due 04/01/19 82,858 91,869
11.000% due 11/01/19 117,762 130,569
11.000% due 05/01/20 292,010 323,819
11.000% due 06/01/20 362,916 402,318
7.000% due 09/15/22 596,485 583,141
-----------
4,892,887
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
- 10.82%
10.000% due 02/01/04 11,005 11,683
9.500% due 09/01/05 203,091 215,488
9.000% due 11/01/05 74,056 78,348
7.500% due 02/25/06 1,645,000 1,700,058
7.500% due 03/25/07 1,200,000 1,248,612
8.000% due 05/01/07 179,696 186,192
7.000% due 07/25/07 1,500,000 1,551,810
6.000% due 12/01/08 982,678 973,077
5.500% due 01/01/09 997,437 971,942
6.000% due 03/01/09 1,101,724 1,090,960
5.500% due 04/01/09 1,012,760 986,712
9.500% due 12/25/18 869,078 923,690
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CAPITAL PORTFOLIO
- ------------------------------------------------------------
MORTGAGE - BACKED SECURITIES (continued)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(continued)
8.500% due 03/01/19 $ 21,853 $ 22,873
7.500% due 07/25/20 1,000,000 1,023,330
8.000% due 07/25/20 1,000,000 1,035,330
8.000% due 12/25/20 1,500,000 1,558,380
4.980% due 10/25/21 <F1> 1,000,000 939,770
6.344% due 05/25/22 <F1> 1,241,593 1,245,467
-----------
15,763,722
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -.67%
7.990% due 12/16/15 126,397 128,310
9.000% due 11/15/16 177,234 188,859
10.500% due 11/20/19 442,564 485,590
9.000% due 12/15/19 164,993 175,366
-----------
978,125
-----------
NON-GOVERNMENTAL AGENCY - 2.07%
GE Capital Mtg. Services, Inc.
(6.000% due 08/25/09) 600,150 569,020
Prudential Home Mortgage Securities
(7.500% due 07/25/10) 540,869 548,139
Merrill Lynch Mortgage Investors
(7.000% due 09/15/17) 2,000,000 1,897,500
-----------
3,014,659
-----------
Total Mortgage-Backed Securities
(cost $25,055,728) $25,752,902
-----------
<CAPTION>
- ------------------------------------------------------------
CORPORATE BONDS AND NOTES - 6.41%
- ------------------------------------------------------------
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
BANK & BANK HOLDING COMPANIES - .40%
Boatmens Bancshares, Inc. Sub. Note
(9.250% due 11/01/01) $ 260,000 $ 300,093
Comerica Inc., Sub. Note
(9.750% due 05/01/99) 250,000 277,649
-----------
577,742
-----------
CONGLOMERATES - .47%
Teledyne Corp.
(10.000% due 06/01/04) 151,000 152,125
Westinghouse Electric Corp. Deb.
(8.875% due 06/01/01) 500,000 521,642
-----------
673,767
-----------
FINANCIAL SERVICES - .81%
Pacific Gulf Properties, Inc.
Sub. Convertible Deb.
(8.375% due 02/15/01) 750,000 693,750
The Helicon Group, L.P.
(9.000% due 11/01/03) 500,000 480,000
-----------
1,173,750
-----------
GAMING INDUSTRY - .18%
Circus Circus Enterprises, Inc.
Senior Sub. Note
(10.625% due 06/15/97) 250,000 266,225
-----------
INSURANCE - .35%
The Penn Central Corp.
(9.750% due 08/01/99) 130,000 132,119
Reliance Financial Services Corp.
Senior Note 9.480% due 11/01/00) 375,000 379,688
-----------
511,807
-----------
MISCELLANEOUS - .65%
Parisian Inc. Sub. Notes
(9.875% due 07/15/03) 500,000 420,000
Toll Corporation Sub. Note
(10.500% due 03/15/02) 500,000 525,625
-----------
945,625
-----------
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CAPITAL PORTFOLIO
- ------------------------------------------------------------
CORPORATE BONDS AND NOTES (continued)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
OIL & GAS EXPLORATION SERVICES - 1.63%
Columbia Gas Systems Inc. (5.22% PFD) $ 1,757 $ 69,402
Maxus Energy Debentures
(11.250% due 05/01/13) 208,000 211,640
Rowan Companies, Inc. Senior Note
(11.875% due 12/01/01) 750,000 808,125
Tenneco Inc. (10.000% due 08/01/98) 700,000 770,265
Trans Texas Gas, Corp. Senior Notes
(11.500% due 06/15/02) 500,000 516,250
-----------
2,375,682
-----------
SAVINGS & LOAN - .10%
Golden West Financial Corp. Sub. Note
(10.250% due 12/01/00) 130,000 152,875
-----------
TELEPHONE & TELECOMMUNICATIONS - .12%
United Telecommunications, Inc. Note
(9.750% due 04/01/00) 156,000 176,981
-----------
UTILITIES - ELECTRIC- 1.70%
Connecticut Light & Power Co.
1st Ref Mtg. (7.625% due 04/01/97) 691,000 702,083
El Paso Electric 1st Mtg.
(6.750% due 05/01/98) <F2> 500,000 515,000
New Orleans Public Service Inc.
1st Mtg. Note (8.670% due 04/01/05) 1,200,000 1,257,514
-----------
2,474,597
-----------
Total Corporate Bond and Notes
(cost $9,098,447) $ 9,329,051
-----------
<CAPTION>
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS - 24.37%
- ------------------------------------------------------------
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COMMERCIAL PAPER - 19.85%
CBI Industries Incorporated
(6.040% due 01/25/96) $2,000,000 $ 1,991,947
Circus Circus Enterprises Incorporated
(6.000% due 01/10/96) 2,000,000 1,997,000
Columbia Healthcare Corporation
(6.030% due 01/09/96) 1,000,000 998,667
Columbia Healthcare Corporation
(6.000% due 02/02/96) 1,000,000 994,667
Conagra Incorporation
(6.030% due 01/16/96) 2,000,000 1,994,975
Crown Cork & Seal Company
(5.900% due 02/23/96) 2,000,000 1,982,628
Illinois Power Fuel Company
(5.990% due 01/26/96) 2,000,000 1,991,681
Nabisco Incorporated
(6.030% due 01/08/96) 2,000,000 1,997,655
Niantic Bay Fuel Trust
(6.000% due 01/02/96) 2,000,000 1,999,667
Penn Power & Light
(6.020% due 01/04/96) 2,000,000 1,998,997
Sprint Corp. (6.020% due 01/18/96) 2,000,000 1,994,314
Tele-Communications, Incorporated
(6.120% due 02/09/96) 1,000,000 993,370
Tele-Communications, Incorporated
(6.100% due 02/14/96) 1,000,000 992,544
Tyson Foods Incorporated
(6.060% due 01/11/96) 2,000,000 1,996,633
Union Oil Company of California
(6.000% due 01/22/96) 1,000,000 996,500
Union Oil Company of California
(5.930% due 02/09/96) 1,000,000 993,576
White Consolidated Industries
Incorporated (5.970% due 01/08/96) 1,000,000 998,839
Yellow Freight System Incorporated
(6.010% due 01/22/96) 2,000,000 1,992,988
-----------
28,906,648
-----------
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CAPITAL PORTFOLIO
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS (continued)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
VARIABLE RATE DEMAND NOTES <F3> - 4.52%
General Mills, Incorporated
(5.290% due 01/03/96) $2,065,990 $ 2,065,990
Pitney Bowes Credit Corporation
(5.295% due 01/03/96) 1,756,782 1,756,782
Sara Lee Corporation
(5.275% due 01/03/96) 2,187,278 2,187,278
Southwestern Bell Telephone Company
(5.275% due 01/03/96) 142,711 142,711
Wisconsin Electric Power Company
(5.337% due 01/03/96) 421,858 421,858
-----------
6,574,619
-----------
Total Short-Term Investments
(cost $35,481,267) $35,481,267
-----------
TOTAL INVESTMENTS - 99.36%
(cost $135,067,776) $144,690,193 <F4>
OTHER ASSETS AND LIABILITIES - 0.64% $ 932,315
-----------
TOTAL NET ASSETS - 100.00% $145,622,508
===========
_______________
*Non-Income producing
(ADR) American Depository Receipt
<FN>
<F1>
Interest rates vary periodically based on current market rates. Rates shown
are as of December 31, 1995.
<F2>
Interest payments in default.
<F3>
Interest rates vary periodically based on current market rates. The maturity
shown for each variable rate demand note is the later of the next scheduled
interest rate adjustment date or the date on which principal can be recovered
through demand. Information shown is as of December 31, 1995.
<F4>
Gross unrealized appreciation and depreciation of securities at December 31,
1995 for financial reporting purposes was $12,049,175 and $2,426,758
respectively; tax amounts were substantially the same.
</FN>
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
- ---------------------------------------------------------------
DECEMBER 31, 1995
BOND PORTFOLIO
- ---------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 31.43%
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
U.S. TREASURY NOTES - 21.79%
6.000% due 10/15/99 $4,000,000 $ 4,088,747
6.750% due 04/30/00 2,000,000 2,105,000
7.750% due 02/15/01 2,500,000 2,761,717
5.875% due 02/15/04 2,000,000 2,040,624
7.500% due 02/15/05 3,500,000 3,972,500
6.500% due 08/15/05 1,000,000 1,065,312
----------
16,033,900
----------
U.S. TREASURY STRIPS - 5.45%
0.000% due 02/15/00 3,250,000 2,611,569
0.000% due 08/15/02 2,000,000 1,399,220
----------
4,010,789
----------
U.S. TREASURY BOND - 4.19%
6.250% due 08/15/23 3,000,000 3,083,439
----------
Total U.S. Treasury Obiligations
(cost $21,702,281) $23,128,128
----------
</TABLE>
- ---------------------------------------------------------------
MORTGAGE - BACKED SECURITIES - 14.72%
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS
- 3.57%
FNMA (9.500% due 12/25/18) $ 274,061 $ 294,199
FHLMC (8.811% due 11/15/20)<F1> 850,536 943,924
FHLMC (8.250% due 12/15/20) 1,000,000 1,067,680
FNMA (5.804% due 12/25/23)<F1> 500,000 322,190
----------
2,627,993
----------
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 3.50%
7.500% due 02/01/02 65,841 67,343
9.500% due 04/01/05 121,154 126,189
7.500% due 06/01/07 148,765 151,370
11.000% due 05/01/10 80,427 89,048
12.500% due 08/01/10 23,966 27,044
8.000% due 11/01/16 80,826 83,200
9.500% due 02/01/18 77,227 81,547
6.500% due 07/01/23 949,009 940,192
8.250% due 01/15/24 1,000,000 1,011,630
----------
2,577,563
----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 2.99%
12.000% due 04/01/00 85,644 91,879
9.000% due 08/01/01 59,317 62,394
8.500% due 01/01/02 72,957 76,012
10.500% due 06/01/04 26,261 27,870
10.500% due 05/01/05 217,116 230,414
6.500% due 06/01/08 1,355,660 1,363,495
8.000% due 08/01/17 332,276 344,010
----------
2,196,074
----------
</TABLE>
The accompanying notes are an integral part of the
financial statments.
<PAGE>
BOND PORTFOLIO
- ---------------------------------------------------------------
MORTGAGE - BACKED SECURITIES (continued)
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - .34%
11.000% due 03/15/10 $ 63,528 $ 70,913
11.250% due 09/15/13 51,651 57,979
10.750% due 02/15/16 8,635 9,564
9.000% due 05/15/20 107,121 113,448
----------
251,904
----------
NON-GOVERNMENTAL AGENCY - 4.32%
Securitized Asset Sales, Inc.
(6.500% due 07/25/08) 323,178 309,543
CMC2 Securities Inc.
(0.000% due 12/25/08) 441,484 320,906
Country Wide Mortgage-Backed
Securities, Inc.
(6.000% due 03/01/09) 923,433 864,564
Capstead Mortgage Securities Corp.
(10.950% due 02/01/14) 271,628 295,436
Greenwich Capital Acceptance
(7.527% due 08/25/24)<F1> 989,978 890,980
Residential Funding Mortgage
Securities, Inc.
(7.125% due 11/25/25) 487,366 495,071
----------
3,176,500
----------
Total Mortgage-Backed Securities
(cost $10,529,312) $10,830,034
----------
</TABLE>
- ---------------------------------------------------------------
CORPORATE BONDS AND NOTES - 48.56%
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
BANK & BANK HOLDING COMPANIES - 2.24%
Comerica Inc. Sub Capital
(9.750% due 05/01/99) $ 500,000 $ 555,297
Nationsbank Corp. Sub
Notes (7.625% due 04/15/05) 1,000,000 1,094,780
----------
1,650,077
----------
BROADCASTING / CABLE - 4.24%
Adelphia Communications Series B PIK
(9.500% due 02/15/04) 573,925 487,836
CF Cable TV Inc. Notes
(9.125% due 07/15/07) 1,000,000 1,027,500
Jones Intercable, Inc.
(9.625% due 03/15/02) 500,000 536,875
Time Warner Inc. (0.000% due 08/15/06) 1,000,000 1,069,486
----------
3,121,697
----------
CONGLOMERATES - 1.36%
Figgie International Inc. Notes
(9.875% due 10/01/99) 1,000,000 997,500
----------
CONSUMER PRODUCTS - 3.88%
First Brands Corp. Senior Sub Notes
(9.125% due 04/01/99) 500,000 515,000
Hasbro Inc. Convertible Deb.
(6.000% due 11/15/98) 500,000 548,125
Nabisco Inc. Deb.
(7.550% due 06/15/15)<F1> 1,000,000 1,048,124
Revlon Consumer Products Corp.
Senior Sec. Notes
(0.000% due 03/15/98) 1,000,000 740,000
----------
2,851,249
----------
FINANCE COMPANIES - .71%
GMAC Senior Notes (7.000% due 03/01/00) 500,000 519,690
----------
FOOD, BEVERAGE, & TOBACCO - .66%
RJR Nabisco, Inc. Capital Corporation
(7.625% due 09/15/03) 500,000 484,283
----------
FOREIGN - 1.37%
Quebec Province CDA Deb.
(7.125% due 02/09/24) 1,000,000 1,007,950
----------
</TABLE>
The accompanying notes are an integral part of the
financial statments.
<PAGE>
BOND PORTFOLIO
- ---------------------------------------------------------------
CORPORATE BONDS AND NOTES (continued)
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
GAMING INDUSTRY - 6.41%
Boomtown, Inc. 1st Mtg.
(11.500% due 11/01/03) $1,000,000 $ 835,000
Casino America, Inc.
(11.500% due 11/15/01) 1,000,000 932,500
Circus Circus Enterprises, Inc.
Senior Notes
(6.750% due 07/15/03) 1,000,000 1,010,359
Empress River Casino Finance Corp.
Senior Notes
(10.750% due 04/01/02) 1,000,000 1,020,000
Hollywood Casino Corp.
Senior Notes (12.750% due 11/01/03) 1,000,000 915,000
ITT Corporation (6.750% due 11/15/05) 1,000,000 1,023,118
----------
5,735,977
----------
HEALTH CARE - 3.60%
Columbia / HCA Healthcare Corp.
(7.690% due 06/15/25) 500,000 551,687
Foundation Health Corp. Notes
(7.750% due 06/01/03) 500,000 526,528
Tenet Healthcare Corp.
(10.125% due 03/01/05) 500,000 553,750
Universal Health Services Senior Notes
(8.750% due 08/15/05) 1,000,000 1,020,000
----------
2,651,965
----------
INDUSTRIAL POWER PRODUCTION - .90%
Calpine Corp. Senior Note
(9.250% due 02/01/04) 750,000 660,000
----------
INSURANCE - 6.01%
Berkley (W.R.) Corp. Deb.
(9.875% due 05/15/08) 500,000 627,651
Home Holdings, Inc. Senior Notes
(7.750% due 12/15/98) 1,000,000 897,500
Leucadia National Corp. Senior Sub.
(8.250% due 06/15/05) 1,000,000 1,056,682
Leucadia National Corp.
(10.375% due 06/15/02) 1,000,000 1,081,851
The Penn Central Corp.
(9.750% due 08/01/99) 500,000 508,149
Reliance Group Holdings, Inc.
(9.480% due 11/01/00)<F1> 245,000 248,063
----------
4,419,896
----------
MANUFACTURING - 2.67%
International Wire Group Inc.
(11.750% due 06/01/05) 500,000 475,000
Terex Corp. Senior Sec. Note
(13.750% due 05/15/02) 1,000,000 887,500
UCAR Global Enterprises Inc.
(12.000% due 01/15/05) 530,000 602,875
----------
1,965,375
----------
OIL & GAS - PETROLEUM REFINING - 2.38%
Coastal Corp. Senior Notes
(9.750% due 08/01/03) 1,000,000 1,193,097
Penzoil Company Note
(9.625% due 11/15/99) 500,000 560,130
----------
1,753,227
----------
OIL & GAS
- - FIELD EXPLORATION SERVICES - 5.34%
Mesa Incorporated
(12.750% due 06/30/96) 243,000 216,270
Mitchell Energy Development Corp.
Senior Note
(6.750% due 02/15/04) 750,000 759,744
PDV America, Inc. Senior Note
(7.750% due 08/01/00) 1,000,000 970,000
Triton Incorporated Senior Sub. Note
(0.000% due 11/01/97) 1,000,000 862,500
Union Texas Petroleum
(8.375% due 03/15/05) 1,000,000 1,122,970
----------
3,931,484
----------
PAPER & FOREST PRODUCTS - .73%
Westvaco Corp. (10.300% due 01/15/19) 500,000 533,693
----------
RETAIL - FOOD - .56%
Great American Cookie Company
(10.875% due 01/15/01) 500,000 415,000
----------
RETAIL - GENERAL - 1.49%
Hook - SuperX Inc.
(10.125% due 06/01/02) 1,000,000 1,094,960
----------
</TABLE>
The accompanying notes are an integral part of the
financial statments.
<PAGE>
BOND PORTFOLIO
- ---------------------------------------------------------------
CORPORATE BONDS AND NOTES (continued)
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
SAVINGS & LOANS - 1.09%
Western Financial Savings Bank Deb.
(8.500% due 07/01/03) $ 750,000 $ 803,457
----------
TRANSPORTATION - 1.53%
NWA Trust Senior Notes - Class B
(10.230% due 06/21/14)<F1> 975,384 1,127,837
----------
Total Corporate Bonds & Notes
(cost $34,480,965) $35,725,317
----------
</TABLE>
- ---------------------------------------------------------------
COMMON STOCKS - .09%
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
OIL & GAS - DOMESTIC - .03%
Mesa Incorproated* 6,417 $ 24,064
----------
TRAVEL & RECREATION - .06%
Host Marriot* 752 9,964
Marriott International 752 28,764
----------
38,728
----------
Total Common Stocks (cost $62,998) $ 62,792
----------
<CAPTION>
- -------------------------------------------------------------
WARRANTS - .02%
- -------------------------------------------------------------
SHARES VALUE
------ -----
<S> <C> <C>
GAMING INDUSTRY - .01%
Boomtown Incorporated Warrants 1,000 $ 1,000
Hemmeter Enterprises Warrants 6,000 9,000
----------
10,000
----------
RETAIL - FOOD - .01%
Great American Cookie Warrants 90 2,250
----------
Total Warrants (cost $28,050) $ 12,250
----------
<CAPTION>
- ---------------------------------------------------------------
PREFERRED STOCKS - 1.22%
- ---------------------------------------------------------------
SHARES VALUE
------ -----
<S> <C> <C>
PACKAGING - 1.22%
Earthshell Container Corporation
Series A
Cumulative Senior Convertible 8%<F2> 500 $ 900,000
----------
Total Preferred Stocks (cost $500,000) $ 900,000
----------
</TABLE>
The accompanying notes are an integral part of the
financial statments.
<PAGE>
BOND PORTFOLIO
- ---------------------------------------------------------------
SHORT-TERM INVESTMENTS - 2.16%
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
VARIABLE RATE DEMAND NOTES<F3> - 2.16%
General Mills, Incorporated
(5.2909% due 01/03/96) $ 562,987 $ 562,987
Pitney Bowes Credit Corporation
(5.295% due 01/03/96) 88,438 88,438
Sara Lee Corporation
(5.275% due 01/03/96) 573,324 573,324
Southwestern Bell Telephone Company
(5.275% due 01/03/96) 32,607 32,607
Wisconsin Electric Power Company
(5.337% due 01/03/96) 330,833 330,833
----------
1,588,189
----------
Total Short-Term Investments
(cost $1,588,189) $ 1,588,189
----------
TOTAL INVESTMENTS - 98.20%
(cost $68,891,795) $72,246,710 <F4>
OTHER ASSETS AND LIABILITIES - 1.80% $ 1,320,989
----------
TOTAL NET ASSETS - 100.00% $73,567,699
===========
_____________
*Non-income Producing
(PIK) Payment in Kind
<FN>
<F1>
Interest rates vary periodically based on current market rates. Rates shown
are as of December 31, 1995.
<F2>
144 A - Privately placed security traded among qualified institutional
buyers.
<F3>
Interest rates vary periodically based on current market rates. The maturity
shown for each variable rate demand note is the later of the next scheduled
interest rate adjustment date or the date on which principal can be recovered
through demand. Information shown is as of December 31, 1995.
<F4>
Gross unrealized appreciation and depreciation of securities at December 31,
1995 for financial reporting purposes was $4,048,528 and $693,613
respectively; tax amounts were substantially the same.
</FN>
</TABLE>
The accompanying notes are an integral part of the
financial statments.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Equity Capital Bond
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investments in securities,
at value (cost $175,920,205; $218,835,319 $144,690,193 $72,246,710
$135,067,776; $68,891,795)
Receivables:
Shares sold 613,564 346,931 200,974
Interest and dividends 500,951 974,672 1,239,833
Prepaid expenses 4,007 9,131 2,529
------------ ------------ -----------
219,953,841 146,020,927 73,690,046
------------ ------------ -----------
LIABILITIES
Investment securities
purchased 242,864 --- ---
Investment advisory fees 105,836 83,450 29,747
Custodial and portfolio
accounting fees 5,550 6,824 5,817
Professional fees 9,055 7,919 7,643
Deferred compensation
for directors --- --- 78,097
Bank overdraft 26,250 299,101 ---
Other accrued expenses 1,039 1,125 1,043
------------ ------------ -----------
390,594 398,419 122,347
------------ ------------ -----------
NET ASSETS
Paid-in capital 166,237,225 133,657,394 70,344,243
Undistributed net
investment income 448,232 369,776 573,990
Accumulated net realized
gain/(loss) 9,962,676 1,972,921 (705,449)
Net unrealized appreciation 42,915,114 9,622,417 3,354,915
$219,563,247 $145,622,508 $73,567,699
============ ============ ===========
Shares authorized
($.10 par value) 20,000,000 15,000,000 10,000,000
============ ============ ===========
Shares outstanding 13,271,036 10,615,444 6,646,535
============ ============ ===========
Net asset value,
offering and redemption price
per share (Net assets/shares
outstanding) $ 16.54 $ 13.72 $ 11.07
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF OPERATIONS
- -----------------------------------------------------------
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Equity Capital Bond
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 1,334,466 $ 6,396,152 $ 5,599,409
Dividends (net of foreign
withholding taxes of
$77,205; $35,722; $0) 3,125,590 1,327,680 211
----------- ----------- -----------
4,460,056 7,723,832 5,599,620
----------- ----------- -----------
EXPENSES
Investment advisory fees 1,108,596 913,378 314,237
Custodial fees and expenses 42,765 26,602 19,216
Portfolio accounting fees 32,383 42,247 37,387
Professional fees 9,683 10,278 9,724
Directors' fees 13,981 13,982 13,981
Transfer agent fees 5,766 5,760 5,778
Registration and filing fees 5,560 4,666 5,650
Other 11,247 10,099 9,074
----------- ----------- -----------
1,229,981 1,027,012 415,047
----------- ----------- -----------
NET INVESTMENT INCOME 3,230,075 6,696,820 5,184,573
----------- ----------- -----------
REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS
Net realized gain/loss)
on investments 9,962,775 1,973,190 (162,632)
Net change in unrealized
appreciation/depreciation
of investments 31,418,181 8,952,302 6,104,034
----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 41,380,956 10,925,492 5,941,402
----------- ----------- -----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $44,611,031 $17,622,312 $11,125,975
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------
<TABLE>
<CAPTION>
Equity Portfolio
For the Year Ended December 31,
-------------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 3,230,075 $ 2,179,435
Net realized gain on investments 9,962,775 12,644,565
Net change in unrealized
appreciation/(depreciation)
of investments 31,418,181 (10,119,382)
------------ ------------
44,611,031 4,704,618
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (3,023,061) (2,008,382)
Net realized gain on investments (12,644,665) (5,834,819)
------------ ------------
(15,667,726) (7,843,201)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 29,948,214 24,726,975
Net asset value of shares
issued to shareholders
in reinvestment of dividends
and distributions 15,667,726 7,843,201
Payments for shares redeemed (12,692,274) (9,973,908)
------------ ------------
32,923,666 22,596,268
------------ ------------
NET INCREASE IN NET ASSETS 61,866,971 19,457,685
NET ASSETS
Beginning of year 157,696,276 138,238,591
------------ ------------
End of year (including
undistributed net investment
income of $448,232 in 1995
and $241,218 in 1994) $219,563,247 $157,696,276
============ ============
FUND SHARE TRANSACTIONS:
Sold 1,968,821 1,706,967
Issued in reinvestment of
dividends and distributions 1,111,633 535,871
Redeemed (837,546) (693,517)
------------ ------------
Net increase from
fund share transactions 2,242,908 1,549,321
============ ============
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------
<TABLE>
<CAPTION>
Capital Portfolio
For the Year Ended December 31,
-------------------------------
1995 1994
---- ----
<C> <C>
OPERATIONS
Net investment income $ 6,696,820 $ 4,674,137
Net realized gain on investments 1,973,190 5,500,010
Net unrealized appreciation/
(depreciation) of investments 8,952,302 (9,024,428)
------------ ------------
17,622,312 1,149,719
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (6,389,872) (4,389,579)
Net realized gain on investments (5,716,244) (1,768,494)
------------ ------------
(12,106,116) (6,158,073)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 21,179,705 25,455,114
Net asset value of shares
issued to shareholders
in reinvestment of dividends
and distributions 12,106,115 6,158,073
Payments for shares redeemed (12,442,444) (7,358,153)
------------ ------------
20,843,376 24,255,034
------------ ------------
NET INCREASE IN NET ASSETS 26,359,572 19,246,680
NET ASSETS
Beginning of year 119,262,936 100,016,256
End of year
(including undistributed
net investment income of
$369,776 in 1995 and
$278,793 in 1994) $145,622,508 $119,262,936
============ ============
FUND SHARE TRANSACTIONS:
Sold 1,579,714 1,885,321
Issued in reinvestment of
dividends and distributions 922,915 458,326
Redeemed (928,220) (547,407)
------------ ------------
Net increase from fund
share transactions 1,574,409 1,796,240
============ ============
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Bond Portfolio
For the Year Ended December 31,
-------------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 5,184,573 $ 3,971,668
Net realized (loss) on investments (162,632) (305,057)
Net unrealized appreciation/
(depreciation) of investments 6,104,034 (4,551,099)
----------- -----------
11,125,975 (884,488)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (5,049,814) (4,072,051)
Net realized gain on investments --- (1,473,887)
----------- -----------
(5,049,814) (5,545,938)
----------- -----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 12,251,770 12,029,310
Net asset value of shares
issued to shareholders
in reinvestment of dividends
and distributions 5,049,814 5,545,938
Payments for shares redeemed (5,739,318) (9,343,895)
----------- -----------
11,562,266 8,231,353
----------- -----------
NET INCREASE IN NET ASSETS 17,638,427 1,800,927
NET ASSETS
Beginning of year 55,929,272 54,128,345
----------- -----------
End of year (including
undistributed net investment
income of $573,990 in 1995
and $201,471 in 1994) $73,567,699 $55,929,272
=========== ===========
FUND SHARE TRANSACTIONS:
Sold 1,141,491 1,136,443
Issued in reinvestment of
dividends and distributions 469,937 532,039
Redeemed (538,145) (886,187)
----------- -----------
Net increase from
share transactions 1,073,283 782,295
=========== ===========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------
DECEMBER 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Carillon Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a no-load,
diversified, open-end management investment company. The shares
of the Fund are sold only to The Union Central Life Insurance
Company (Union Central) and its separate accounts to fund the
benefits under certain variable insurance products. The Fund's
shares are offered in four different series - Equity Portfolio,
Capital Portfolio, Bond Portfolio, and S&P 500 Index Portfolio.
The Equity Portfolio seeks long-term appreciation of capital by
investing primarily in common stocks and other equity
securities. The Capital Portfolio seeks the highest total
return through a combination of income and capital appreciation
consistent with the reasonable risks associated with an
investment portfolio of above-average quality by investing in
equity securities, debt instruments, and money market
instruments. The Bond Portfolio seeks a high level of current
income as is consistent with reasonable investment risk by
investing primarily in long-term, fixed-income, investment-grade
corporate bonds. The financial statements for the S&P 500 Index
Portfolio are presented separately.
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.
Securities valuation - Securities held by the Equity, Capital,
and Bond Portfolios, except for money market instruments
maturing in 60 days or less, are valued as follows: Securities
traded on stock exchanges (including securities traded in both
the over-the-counter market and on an exchange), or listed on
the NASDAQ National Market System, are valued at the last sales
price as of the close of the New York Stock Exchange on the day
the securities are being valued, or, lacking any sales, at the
closing bid prices. Securities traded only in the over-the-
counter market are valued at the last bid price, as of the close
of trading on the New York Stock Exchange, quoted by brokers
that make markets in the securities. Other securities for which
market quotations are not readily available are valued at fair
value as determined in good faith under procedures adopted by
the Board of Directors. Money market instruments with a
remaining maturity of 60 days or less held by the Equity,
Capital, and Bond Portfolios are valued at amortized cost which
approximates market.
Securities transactions and investment income - Securities
transactions are recorded on the trade date (the date the order
to buy or sell is executed). Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual
basis. Accretion of market discounts are deferred until sale.
Accretion of original issue discounts are recognized currently.
Gains and losses on sales of investments are calculated on the
identified cost basis for financial reporting and tax purposes.
The cost of investments is substantially the same for financial
reporting and tax purposes.
Federal taxes - It is the intent of the Fund to comply with the
requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its net
investment income and any net realized capital gains. Regulated
investment companies owned by the segregated asset accounts of a
life insurance company, held in connection with variable annuity
contracts, are exempt from excise tax on undistributed income.
Therefore, no provision for income or excise taxes has been
recorded. The Bond Portfolio has a capital loss carryforward
for tax purposes of $704,492 at December 31, 1995, of which
$446,614 expires in 2002, and $257,878 expires in 2003.
Dividends and capital gains distributions - Dividends from net
investment income in the Equity, Capital and Bond Portfolios are
declared and paid quarterly. Net realized capital gains are
distributed periodically, no less frequently than annually.
Dividends from net investment income and capital gains
distributions are recorded on the ex-dividend date. All
dividends and distributions are reinvested in additional shares
of the respective Portfolio at the net asset value per share.
The amount of dividends and distributions are determined in
accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in
nature, such amounts are reclassified within the capital
accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and
distributions which exceed net investment income and net
realized capital gains for financial reporting purposes but not
for tax purposes are reported as dividends in excess of net
investment income or distributions in excess of net realized
capital gains. To the extent they exceed net investment income
and net realized capital gains for tax purposes, they are
reported as distributions of paid-in-capital.
Expenses - Allocable expenses of the Fund are charged to each
Portfolio based on the ratio of the net assets of each Portfolio
to the combined net assets of the Fund. Nonallocable expenses
are charged to each Portfolio based on specific identification.
<PAGE>
NOTE 2 - TRANSACTIONS WITH AFFILIATES
Investment advisory fees - The Fund pays investment advisory
fees to Carillon Advisers, Inc. (the Adviser), under terms of an
Investment Advisory Agreement (the Agreement). Certain officers
and directors of the Adviser are affiliated with the Fund. The
Fund pays the Adviser, as full compensation for all services and
facilities furnished, a monthly fee computed separately for each
Portfolio on a daily basis, at an annual rate, as follows:
(a) for the Equity Portfolio - .65% of the first
$50,000,000, .60% of the next $100,000,000, and .50% of all over
$150,000,000 of the current net asset value:
(b) for Capital Portfolio - .75% of the first $50,000,000,
.65% of the next $100,000,000, and .50% of all over $150,000,000
of the current net asset value.
(c) for the Bond Portfolio - .50% of the first
$50,000,000, .45% of the next $100,000,000, and .40% of all over
$150,000,000 of the current net asset value.
The Agreement provides that if the total operating expenses of
the Fund, exclusive of the advisory fee and certain other
expenses as described in the Agreement, for any fiscal quarter
exceed an annual rate of 1% of the average daily net assets of
the Fund, the Adviser will reimburse the Fund for such excess,
up to the amount of the advisory fee for that year. Such
amount, if any, will be calculated daily and credited on a
monthly basis. No such reimbursements were required for the
periods presented in the financial statements.
In addition to providing investment advisory services, the
Adviser is responsible for providing certain administrative
functions to the Fund. The Adviser has entered into an
Administration Agreement with Carillon Investments, Inc. (the
Distributor) under which the Distributor furnishes substantially
all of such services for an annual fee of .20% of the Fund's
average net assets. The fee is borne by the Adviser, not the
Fund.
Carillon Advisers, Inc. and Carillon Investments, Inc. are
wholly-owned subsidiaries of Union Central.
Directors' fees - Each director who is not affiliated with the
Adviser receives fees from the Fund for service as a director.
Members of the Board of Directors who are not affiliated with
the Adviser are eligible to participate in a deferred
compensation plan. The value of each director's deferred
compensation account will increase or decrease at the same rate
as if it were invested in shares of the Scudder Money Market
Fund.
NOTE 3 - SUMMARY OF PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities for the year ended December
31, 1995, excluding short-term obligations, follow:
<TABLE>
<CAPTION>
Equity Capital Bond
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
Total Cost of Purchases of:
Common Stocks $81,844,932 $30,431,474 $ -----
U.S. Government Securities ----- 16,949,124 23,228,059
Corporate Bonds ----- 7,156,718 57,777,602
----------- ----------- -----------
$81,844,932 $54,537,316 $81,005,661
=========== =========== ===========
Total Proceeds from Sales of:
Common Stocks $56,668,208 $14,222,567 $ -----
U.S. Government Securities ----- 23,511,177 23,527,665
Corporate Bonds ----- 7,440,376 44,784,519
----------- ----------- -----------
$56,668,208 $45,174,120 $68,312,184
=========== =========== ===========
</TABLE>
<PAGE>
NOTE 4 -FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
Equity Portfolio
Year Ended December 31,
---------------------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 14.30 $ 14.58 $ 13.74 $ 12.60 $ 8.81
Investment Activities:
Net investment income .24 .20 .16 .19 .20<F1>
Net realized and
unrealized gains/
(losses) 3.36 .31 1.69 1.27 3.79
-------- -------- -------- -------- --------
Total from Investment
Operations 3.60 .51 1.85 1.46 3.99
-------- -------- -------- -------- --------
Distributions:
Net investment income (.23) (.19) (.16) (.19) (.20)
Net realized gains (1.13) (.60) (.85) (.13) ---
-------- -------- -------- -------- --------
Total Distributions (1.36) (.79) (1.01) (.32) (.20)
-------- -------- -------- -------- --------
Net Asset Value,
End of Year $ 16.54 $ 14.30 $ 14.58 $ 13.74 $12.60
======== ======== ======== ======== ========
Total Return 26.96% 3.42% 14.11% 11.78% 45.55%
Ratios/Supplemental Data:
- ------------------------
Ratio of Expenses to
Average Net Assets .66% .69% .70% .72% .75%<F1>
Ratio of Net Investment
Income to Average
Net Assets 1.73% 1.45% 1.18% 1.47% 1.79%<F1>
Portfolio Turnover Rate 34.33% 40.33% 37.93% 46.75% 55.17%
Net Assets,
End of Year (000's) $219,563 $157,696 $138,239 $102,306 $79,352
<FN>
<F1>
Net of expenses waived by the Adviser of $.002 per share.
</FN>
</TABLE>
<PAGE>
NOTE 4 -FINANCIAL HIGHLIGHTS (continued)
Computed on the basis of a share of capital stock
outstanding throughout the year.
<TABLE>
<CAPTION>
Capital Portfolio
Year Ended December 31,
----------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 13.19 $ 13.81 $ 12.99 $ 12.82 $ 10.57
Investment Activities:
Net investment income .64 .52 .43 .42 .47
Net realized and
unrealized gains/(losses) 1.15 (.39) 1.17 .56 2.25
------- ------- ------- ------- -------
Total from Investment
Operations 1.79 .13 1.60 .98 2.72
------- ------- ------- ------- -------
Distributions:
Net investment income (.64) (.52) (.42) (.42) (.47)
Net realized gains (.62) (.23) (.36) (.39) ---
------- ------- ------- ------- -------
Total Distributions (1.26) (.75) (.78) (.81) (.47)
------- ------- ------- ------- -------
Net Asset Value,
End of Year $ 13.72 $ 13.19 $ 13.81 $ 12.99 $ 12.82
======= ======= ======= ======= =======
Total Return 14.28% .94% 12.72% 7.93% 26.10%
Ratios/Supplemental Data:
- ------------------------
Ratio of Expenses to
Average Net Assets .77% .80% .82% .88% .95%
Ratio of Net
Investment Income to
Average Net Assets 4.99% 4.25% 3.31% 3.49% 4.05%
Portfolio Turnover Rate 43.83% 41.89% 32.42% 39.74% 47.93%
Net Assets,
End of Year (000's) $145,623 $119,263 $100,016 $68,674 $41,844
</TABLE>
<PAGE>
NOTE 4 -FINANCIAL HIGHLIGHTS (continued)
Computed on the basis of a share of capital stock
outstanding throughout the year.
<TABLE>
<CAPTION>
Bond Portfolio
Year Ended December 31,
-----------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $10.04 $11.30 $10.91 $10.96 $10.10
------- ------- ------- ------- -------
Investment Activities:
Net investment income .88 .77 .73 .82 .86
Net realized and
unrealized gains/(losses) .98 (.95) .54 (.01) .87
------- ------- ------- ------- -------
Total from Investment
Operations 1.86 (.18) 1.27 .81 1.73
------- ------- ------- ------- -------
Distributions:
Net investment income (.83) (.78) (.73) (.82) (.87)
------- ------- ------- ------- -------
Net realized gains --- (.30) (.15) (.04) ---
------- ------- ------- ------- -------
Total Distributions (.83) (1.08) (.88) (.86) (.87)
------- ------- ------- ------- -------
Net Asset Value,
End of Year $ 11.07 $ 10.04 $ 11.30 $ 10.91 $ 10.96
======= ======= ======= ======= =======
Total Return 19.03% (1.63%) 11.94% 7.65% 17.89%
Ratios/Supplemental Data:
- ------------------------
Ratio of Expenses to
Average Net Assets .65% .68% .66% .69% .73%
Ratio of Net Investment
Income to Average
Net Assets 7.43% 7.21% 6.65% 7.59% 8.27%
Portfolio Turnover Rate 111.01% 70.27% 137.46% 40.91% 39.82%
Net Assets,
End of Year (000's) $73,568 $55,929 $54,128 $38,557 $31,009
</TABLE>
<PAGE>
<PAGE>
Independent Auditor's Report
- ------------------------------------------------------
To the Board of Trustees and Shareholders of
S&P 500 Index Portfolio
We have audited the accompanying statement of net assets of the S&P 500 Index
Portfolio of Carillon Fund, Inc. (the "Fund"), as of December 31, 1995, the
related statement of operations, and the statement of changes in net assets
for the period from December 29, 1995 (date of inception) to December 31,
1995. These financial statements are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit 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,
1995, by correspondence with the custodian and a broker. 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 audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements as of December 31, 1995, present
fairly, in all material respects, the financial position of the Fund, as of
December 31, 1995, and the results of its operations and the changes in its
net assets for the period presented in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Dayton, Ohio
February 2, 1996
<PAGE>
S&P 500 INDEX PORTFOLIO
STATEMENT OF NET ASSETS
- --------------------------------------------------
December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investment in securities, at value:
$300,000 United States Treasury Bill
due September 9, 1996
(Amortized cost $289,225) $ 289,225
Variation margin receivable on 1
Standard & Poor's 500 Index Futures Contract
(Strike price 624.10 expiring June 1996) 25
Cash 15,898
-----------
Total Assets 305,148
-----------
LIABILITIES ---
NET ASSETS
Paid-in capital 305,000
Undistributed net investment income 123
Net unrealized appreciation
on futures contract 25
$ 305,148
===========
Shares authorized ($.10 par value) 10,000,000
===========
Shares outstanding 30,500
===========
Net asset value, offering and
redemption price per share
(Net assets / shares outstanding) $ 10.00
===========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
S&P 500 INDEX PORTFOLIO
STATEMENT OF OPERATIONS
- ------------------------------------------------
<TABLE>
<CAPTION>
For the Period From December 29, 1995
to December 31, 1995
<S> <C>
INVESTMENT INCOME
Interest $ 123
EXPENSES ---
--------
NET INVESTMENT INCOME 123
--------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net change in unrealized appreciation
on futures contract 25
--------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 148
========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
S&P 500 INDEX PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------
<TABLE>
<CAPTION>
For the Period From December 29, 1995
to December 31, 1995
<S> <C>
OPERATIONS
Net investment income $ 123
Net change in unrealized
appreciation on futures contract 25
--------
148
--------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 305,000
Net asset value of share issued
to shareholders in reinvestment
of dividends and distributions ---
Payments for shares redeemed ---
--------
305,000
--------
NET INCREASE IN NET ASSETS 305,148
NET ASSETS
Beginning of period -----
--------
End of period
(including undistributed
net investment income of $123) $305,148
========
FUND SHARE TRANSACTIONS:
Sold 30,500
Issued in reinvestment of
dividends and distributions ----
Redeemed ----
--------
Net increase from fund share
transactions 30,500
========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
S&P 500 INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------
December 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The S&P 500 Index Portfolio (Index) is a series of Carillon Fund,
Inc. (the Fund), a no-load, diversified, open-end management
investment company registered under the Investment Company Act of
1940, as amended. The shares of Index are sold only to The Union
Central Life Insurance Company (Union Central) and its separate
accounts to fund benefits under certain variable insurance
products. Index seeks investment results that correspond to the
total return performance of U.S. commons stocks, as represented in
the Standard & Poors 500 Index. Index commenced operations on
December 29, 1995.
The Funds shares are offered in four different series - Equity
Portfolio, Capital Portfolio, Bond Portfolio, and the S&P 500
Index Portfolio. The financial statements for the Equity Capital
and Bond Portfolios are presented separately.
Securities valuation - Securities, except for money market
instruments maturing in 60 days or less, are valued as follows:
Securities traded on stock exchanges (including securities traded
in both the over-the-counter market and on an exchange), or listed
on the NASDAQ National Market System, are valued at the last sales
price as of the close of the New York Stock Exchange on the day
the securities are being valued, or, lacking any sales, at the
closing bid prices. Securities traded only in the over-the-
counter market are valued at the last bid price, as of the close
of trading on the New York Stock Exchange, quoted by brokers that
make markets in the securities. Other securities for which market
quotations are not readily available are valued at fair value as
determined in good faith under procedures adopted by the Board of
Directors. Money market instruments with a remaining maturity of
60 days or less are valued at amortized cost which approximates
market.
Securities transactions and investment income - Securities
transactions are recorded on the trade date (the date the order to
buy or sell is executed). Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual
basis. Gains and losses on sales of investments are calculated on
the identified cost basis for financial reporting and tax
purposes. The cost of investments is substantially the same for
financial reporting and tax purposes.
Federal taxes - It is the intent of Index to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its net investment
income and any net realized capital gains. Regulated investment
companies owned by the segregated asset accounts of a life
insurance e company, held in connection with variable annuity
contracts, are exempt from excise tax on undistributed income.
Therefore, no provision for income or excise taxes has been
recorded.
Dividends and capital gains distributions - Dividends from net
investment income are declared and paid quarterly. Net realized
capital gains are distributed periodically, no less frequently
than annually. Dividends from net investment income and capital
gains distributions are recorded on the ex-dividend date. All
dividends and distributions are reinvested in additional shares of
the respective Portfolio at the net asset value per share.
The amount of dividends and distributions are determined in
accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on
their federal tax-basis treatment; temporary differences do not
require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for
financial reporting purposes but not for tax purposes are reported
as dividends in excess of net investment income or distributions
in excess of net realized capital gains. To the extent they
exceed net investment income and net realized capital gains for
tax purposes, they are reported as distributions of paid-in-capital
Expenses - Allocable expenses of the Fund are charged to each
Portfolio based on the ratio of the net assets of each Portfolio
to the combined net assets of the Fund. Nonallocable expenses are
charged to each Portfolio based on specific identification.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
Investment advisory fees - Index pays investment advisory fees to
Carillon Advisers, Inc. (the Adviser), under terms of an
Investment Advisory Agreement (the Agreement). Certain officers
and directors of the Adviser are affiliated with Index. Index
pays the Adviser, as full compensation for all services and
facilities furnished, a monthly fee computed on a daily basis, at
an annual rate of 0.30% of the current net asset value. The
Agreement provides that the Adviser will limit the operating
expenses of Index, other than the advisory fee, to an annual rate
of 0.30% of the average daily net assets. The Adviser will
reimburse Index for expenses exceeding this rate. No such
reimbursements were required for the period presented in the
financial statements.
In addition to providing investment advisory services, the Adviser
is responsible for providing certain administrative functions to
the Fund. The Adviser has entered into an Administration
Agreement with Carillon Investments, Inc. (the Distributor) under
which the Distributor furnishes substantially all of such services
for an annual fee of .05% of the Funds average net assets. The
fee is borne by the Adviser, not the Fund.
Carillon Advisers, Inc. and Carillon Investments, Inc. are
wholly-owned subsidiaries of Union Central.
Directors fees - Each director who is not affiliated with the
Adviser receives fees from the Fund for service as a director.
Members of the Board of Directors who are not affiliated with the
Adviser are eligible to participate in a deferred compensation
plan. The value of each directors deferred compensation account
will increase or decrease at the same rate as if it were invested
in shares of the Scudder Money Market Fund.
NOTE 3 - FUTURES CONTRACTS
Index may purchase futures contracts on the Standard & Poors 500
Stock Index. These contracts provide for the sale of a specified
quantity of a financial instrument at a fixed price at a future
date. When Index enters into a futures contract, it is required
to deposit and maintain as collateral such initial margin as
required by the exchange on which the contract is traded. Under
terms of the contract, Index agrees to receive from or pay to the
broker an amount equal to the daily fluctuation in the value of
the contract (known as the variation margin). The variation
margin is recorded as unrealized gain or loss until the contract
expires or is otherwise closed, at which time the gain or loss is
realized. Index invests in futures as a substitute to investing
in the 500 common stock positions in the Standard & Poors 500
Index. The potential risk to Index is that the change in the
value in the underlying securities may not correlate to the value
of the contracts. At December 31, 1995 Index had one open futures
contract on the Standard & Poors 500 Index expiring in June 1996.
The opening notional value of the contract was $312,050 and the
market value on December 31, 1995 was $312,075. The initial
margin requirement of $10,000 was satisfied by segregating a
portion of the U.S. Treasury Bill into a separate custodial
account held in the brokers name.
NOTE 4 - FINANCIAL HIGHLIGHTS
The financial highlights table is not presented because the
activity for the period presented did not round to $.01 in any
category of the reconciliation of beginning to ending net asset
value per share. The total return and the ratios and supplemental
data were all less than 0.1%. The net assets at December 31, 1995
were $305,148.
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
CARILLON FUND, INC.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements of Carillon Fund, Inc. are
included in Part B.
(b) Exhibits
(1) Articles of Incorporation of Carillon Fund, Inc. -
previously filed (initial filing on April 3, 1984)
(2) By-laws of Carillon Fund, Inc. - previously filed
(initial filing on April 3, 1984)
(3) Not Applicable
(4) None
(5) (a) Investment Advisory Agreement - previously
filed (initial filing on April 3, 1984)
(b) Amendment to Investment Advisory Agreement -
previously filed (Post-Effective Amendment No. 3 - May 1, 1987)
(c) Amendment to Investment Advisory Agreement -
filed herewith
(6) None
(7) None
(8) (a) Custodian Agreement - previously filed
(Post-Effective Amendment No. 6 - May 1, 1990)
(b) Portfolio Accounting Agreement - previously
filed (Post-Effective Amendment No. 6 - May 1, 1990)
(9) (a) Transfer Agency Agreement - previously filed
(Post-Effective Amendment No. 6 - May 1, 1990)
(b) Service Agreement - previously filed
(Post-Effective Amendment No. 9 - May 1, 1992)
(10) Opinion and consent of counsel - previously filed
(Pre-Effective Amendment No. 1 - July 2, 1984)
(11) (a) Consent of Deloitte & Touche LLP - filed
herewith
(11) (b) Consent of Price Waterhouse LLP - filed
herewith
(12) None
(13) Letter regarding initial capital - previously filed
(Pre-Effective Amendment No. 1 - July 2, 1984)
(14) Not Applicable
(15) Not Applicable
(16) None
Item 25. Persons Controlled by or Under Common Control with
Registrant
The Union Central Life Insurance Company ("Union Central")
provided the initial investment in Carillon Fund, Inc. Union
Central votes the shares of the Fund held with respect to
registered variable contracts in accordance with instructions
received from such variable contract owners. Shares of the Fund
held in unregistered separate accounts and in its general assets
are voted by Union Central in its discretion.
Set forth below is a chart showing the entities controlled by
Union Central, the jurisdictions in which such entities are
organized, and the percentage of voting securities owned by the
person immediately controlling each such entity.
THE UNION CENTRAL LIFE INSURANCE COMPANY,
its Subsidiaries and Affiliates
I. The Union Central Life Insurance Company (Ohio)
A. Carillon Investments, Inc. (Ohio) - 100% owned
B. Carillon Marketing Agency, Inc. (Delaware) - 100% owned
a. Carillon Marketing Agency of Alabama, Inc. (Alabama)
- - 100% owned
b. Carillon Marketing Agency of Idaho, Inc. (Idaho) -
100% owned
c. Carillon Marketing Agency of Kentucky, Inc.
(Kentucky) - 100% owned
d. Carillon Marketing Agency of Maine, Inc. (Maine) -
100% owned
e. Carillon Insurance Agency of Massachusetts, Inc.
(Massachusetts) - 100% owned
f. Carillon Marketing Agency of New Mexico, Inc. (New
Mexico) - 100% owned
g. Carillon Marketing Agency of Ohio, Inc. (Ohio) -
100% owned
h. Carillon Marketing Agency of Pennsylvania, Inc.
(Pennsylvania) - 100% owned
I. Carillon Marketing Agency of Texas, Inc. (Texas) -
100% owned
C. Carillon Advisers, Inc. (Ohio) - 100% owned
a. First Summit Capital Management (Ohio) - 51% owned
D. The Manhattan Life Insurance Company (New York) - 73%
owned
II. Mutual Funds of the Carillon Group
A. Carillon Fund, Inc.* (Maryland)
B. Carillon Investment Trust** (Massachusetts)
* At January 31, 1996, The Union Central Life Insurance Company
owned 100% of the outstanding shares of Carillon Fund, Inc.
** At January 31, 1996, The Union Central Life Insurance Company
owned 77% of the outstanding shares of Carillon Investment Trust.
III. Summit Investment Trust (Massachusetts) - a mutual fund
whose investment adviser is First Summit Capital Management.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of January 31, 1996
-------------- -----------------------
<S> <C>
Equity Portfolio 1 (See Item 25)
Bond Portfolio 1 (See Item 25)
Capital Portfolio 1 (See Item 25)
S&P 500 Index Portfolio 1 (See Item 25)
</TABLE>
***
Item 28. Business and other Connections of Investment Adviser
Information regarding the officers and directors of Carillon
Advisers, Inc. ("CAI") and their business, profession or
employment of a substantial nature during the last two years is
set forth below. The address of all the persons listed below is
1876 Waycross Road, Cincinnati, Ohio 45240.
<TABLE>
<CAPTION>
Name and Position with Principal Occupation(s)
Address the Adviser During Past Two Years
- ------- ------------- ---------------------
<S> <C> <C>
Harry Rossi Director Director Emeritus, The Union
Central Life Insurance
Company ("Union Central");
Director, Carillon
Group of Mutual Funds
Larry R. Pike Director Chairman, President and Chief
Executive Officer,
Union Central
George L. Clucas Director, Senior Vice President, Union
President Central; Director, President
and Chief and Chief Executive Officer,
Executive Carillon Group of Mutual Funds
Officer
Steven R. Vice President Vice President, Union Central
Sutermeister
D. Stephen Cole Vice President Vice President, Union Central
Thomas G. Knipper Treasurer Assistant Controller, Union
Central; Controller,
Carillon Group of Mutual
Funds; prior to
July, 1995, Treasurer of
The Gateway Trust and Vice
President and Controller
of Gateway Advisers, Inc.
John F. Labmeier Secretary Second Vice President,
Associate General Counsel
and Assistant Secretary,
Union Central; Vice
President and Secretary,
Carillon Group of Mutual
Funds and Carillon
Investments, Inc.
Item 29. Principal Underwriters
None.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the Rules
thereunder will be maintained at the offices of the Fund or at
Firstar Trust Company (formerly known as First Wisconsin Trust
Company), Mutual Fund Services, P.O. Box 701, Milwaukee, WI
53201-0701.
Item 31. Management Services
All management-related service contracts are discussed in Part
A or B of this Registration Statement.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant, the registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(d) Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of its latest annual
report to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant, Carillon Fund,
Inc., certifies that it meets all of the requirements for
effectiveness of this Post-effective Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-effective Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cincinnati,
State of Ohio on the 29th day of April, 1996.
CARILLON FUND, INC.
(SEAL)
Attest: /s/ John F.Labmeier By: /s/ George L. Clucas
George L. Clucas, President
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 and
on the dates indicated.
</TABLE>
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <S>
/s/George L. Clucas President and Director 4/29/96
George L. Clucas (Principal Executive
Officer)
/s/Thomas G. Knipper Controller 4/29/96
Thomas G. Knipper (Principal Financial
and Accounting Officer)
*//s/George M. Callard Director 4/29/96
George M. Callard, M.D.
*//s/Theodore H. Emmerich Director 4/29/96
Theodore H. Emmerich
*//s/James M. Ewell Director 4/29/96
James M. Ewell
*//s/Richard H. Finan Director 4/29/96
Richard H. Finan
*//s/Jean Patrice Harrington Director 4/29/96
Jean Patrice Harrington, S.C.
*//s/John H. Jacobs Director 4/29/96
John H. Jacobs
*//s/Charles W. McMahon Director 4/29/96
Charles W. McMahon
*//s/ Harry Rossi Director 4/29/96
Harry Rossi
</TABLE>
*/ By /s/ John F. Labmeier , pursuant to Power of Attorney
previously filed.
<PAGE>
TABLE OF EXHIBITS
(5)(c) Amendment to Investment Advisory Agreement
(11)(a) Consent of Deloitte & Touche LLP
(11)(b) Consent of Price Waterhouse LLP
<PAGE>
AMENDMENT
TO
INVESTMENT ADVISORY AGREEMENT
BETWEEN
CARILLON FUND, INC. AND CARILLON ADVISERS, INC.
THIS IS AN AMENDMENT to the Investment Advisory Agreement
dated March 22, 1984 by and between Carillon Fund, Inc. ("Fund")
and Carillon Advisers, Inc. ("Adviser").
RECITALS:
1. On September 15, 1995, the Fund's Board of Directors took
steps to activate the S&P 500 Index Portfolio of the Fund by
authorizing the issuance of shares of that Portfolio to The Union
Central Life Insurance Company and certain of its separate
accounts;
2. On December 13, 1995, the Board of Directors approved an
amendment to the Investment Advisory Agreement between the Fund
and the Adviser so as to make the Agreement applicable to the S&P
500 Index Portfolio and to specify the advisory fee payable by
it.
NOW, THEREFORE, in consideration of the above and of the
mutual promises and covenants contained herein, the parties
hereto agree as follows:
1. All provisions of the Investment Advisory Agreement
between the Fund and the Adviser are hereby made applicable to
the S&P 500 Index Portfolio of the Fund.
2. The advisory fee payable by the S&P 500 Index Portfolio
to the Adviser shall be as follows: .30% of the current value of
net assets of that Portfolio.
3. The Adviser shall pay any expenses of the S&P 500 Index
Portfolio, other than the advisory fee for that Portfolio, to the
extent that such expenses exceed .30% of that Portfolio's net
assets.
4. The effective date of this Amendment shall be December
28, 1995.
EXECUTED at Hamilton County, Ohio as of the 28th day of
December, 1995.
CARILLON FUND, INC. CARILLON ADVISERS, INC.
By: /S/ John F. Labmeier By: /S/ George L. Clucas
John F. Labmeier George L. Clucas
Vice President President
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 15 to
Registration Statement under the Securities Act of 1933 and
Amendment No. 16 to Registration Statement under the Investment
Company Act of 1940, both filed under Registration Statement
No. 2-90309, of our reports dated February 2, 1996 on the
financial statements of the Equity Portfolio, the Capital
Portfolio, the Bond Portfolio and the S&P 500 Index Portfolio
of Carillon Fund, Inc., appearing in the
Statement of Additional Information, which is part of
such Registration Statement and to the
reference to us as experts, under the caption
"Independent Auditors" in the Statement of Additional Information.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Dayton, Ohio
April 24, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the reference to us in the Prospectus
constituting part of the Registration Statement (No. 2-90309,
Amendment No. 16) of Carillon Fund, Inc. Under the heading
"Financial Highlights."
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Cincinnati, Ohio
April 24, 1996
