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 Port-
folios: 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 December 28, 1995, 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 REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
December 28, 1995
- ---------------------------------------------------------------
UCCF 514 12-95<PAGE>
<PAGE>
CARILLON FUND, INC.
TABLE OF CONTENTS
Page
The Fund .......................................... 2
Annual Fund Operating Expenses .................... 3
Financial Highlights .............................. 4
Investment Objectives and Policies ................ 6
Equity Portfolio ................................. 6
Bond Portfolio ................................... 7
Capital Portfolio ................................ 8
S&P 500 Index Portfolio .......................... 9
Principal Risk Factors ........................... 9
Repurchase Agreements ............................ 10
Reverse Repurchase Agreements .................... 11
Futures Contracts and
Options on Futures Contracts ................... 11
Options .......................................... 11
Options on Securities Indices .................... 12
Collateralized Mortgage Obligations .............. 12
Lending Portfolio Securities ..................... 12
Other Information ................................ 13
The Fund and Its Management ....................... 13
Investment Adviser ............................... 13
Advisory Fee ..................................... 13
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>
<PAGE>
ANNUAL FUND OPERATING EXPENSES
EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
S&P 500
Equity Bond Capital Index
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees .61% .50% .70% .30%
Other Expenses .08% .18% .10% .30%<F1>
Total Operating Expenses .69% .68% .80% .60%<F1>
<F1>
"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.
</TABLE>
EXAMPLE
The table below shows the amount of expenses a Shareholder would
pay on a $1,000 investment assuming a 5% annual return.<F1>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity Portfolio $ 7 $22 $38 $86
Bond Portfolio $ 7 $22 $38 $85
Capital Portfolio $ 8 $26 $44 $99
S&P 500 Index Portfolio $ 6 $19 $34 $75
<FN>
<F1>
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.
</FN>
</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.
<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, 1994, have been audited in conjunction with the
annual audit of the financial statements of the Fund by Price
Waterhouse LLP, independent accountants, whose unqualified report
thereon is included in the Statement of Additional Information.
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,
- -----------------------------------------------------------------------------
1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $14.58 $13.74 12.60 8.81 10.79
Investment Activities:
Net investment income .20 .16 .19 .20<F1> .28<F1>
Net realized and
unrealized gains
(losses) .31 1.69 1.27 3.79 (1.91)
------ ------ ----- ----- -----
Total from Investment
Operations .51 1.85 1.46 3.99 (1.63)
Distributions:
Net investment income (.19) (.16) (.19) (.20) (.31)
Net realized gains (.60) (.85) (.13) - (.04)
Total Distributions (.79) (1.01) (.32) (.20) (.35)
------ ------ ----- ----- -----
Net Asset Value,
End of period $14.30 $14.58 $13.74 $12.60 $8.81
====== ====== ====== ====== =====
Ratios/Supplemental
Data:
Total Return 3.42% 14.11% 11.78% 45.55% (15.45%)
Ratio of Expenses to
Average Net Assets .69% .70% .72% .75%<F1> .82%<F1>
Ratio of Net
Investment Income
to Average
Net Assets 1.45% 1.18% 1.47% 1.79%<F1> 2.98%<F1>
Portfolio Turnover
Rate 40.33% 37.93% 46.75% 55.17% 99.90%
Net Assets,
End of Period 157,696,276 138,238,591 102,306,028 79,352,448 52,513,701
<FN>
<F1>
Net of expenses waived by the Adviser of $.002 per share in 1991 and $.01 per
share in 1990.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Equity Portfolio
- ------------------------------------------------------------------------------
Year ended December 31,
- --------------------------------------------------------------------------------
1989 1988 1987 1986 1985
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period 10.88 8.57 9.62 12.72 10.43
Investment Activities:
Net investment income .58 .38 .34 .55 .54
Net realized and
unrealized gains
(losses) .69 2.33 (.22) 1.08 2.28
------ ------ ----- ----- -----
Total from Investment
Operations 1.27 3.71 .12 1.63 2.82
Distributions:
Net investment income (.59) (.34) (.35) (.56) (.53)
Net realized gains (.77) (.06) (.82) (4.17) -
------ ------ ----- ----- -----
Total Distributions (1.36) (.40) (1.17) (4.73) (.53)
Net Asset Value,
End of period $10.79 $10.88 $ 8.57 $ 9.62 $12.72
====== ====== ====== ====== ======
Ratios/Supplemental
Data:
Total Return 11.79% 31.79% .85% 12.72% 27.65%
Ratio of Expenses to
Average Net Assets .95% .95% .97% .89% 1.00%
Ratio of Net
Investment Income
to Average Net Assets 5.34% 3.74% 3.30% 3.78% 4.86%
Portfolio Turnover Rate 61.49% 57.98% 70.17% 84.23% 49.88%
Net Assets,
End of Period 56,193,553 37,723,446 28,914,896 17,955,862 20,463,116
/TABLE
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
Bond Portfolio
- ---------------------------------------------------------------------------------
Year ended December 31,
- ---------------------------------------------------------------------------------
1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.30 $10.91 $10.96 $10.10 $10.02
Investment Activities:
Net investment income .77 .73 .82 .86 .81
Net realized and
unrealized gains
(losses) (.95) .54 (.01) .87 .03
------ ------ ------ ------ ------
Total from Investment
Operations (.18) 1.27 .81 1.73 .84
Distributions:
Net investment income (.78) (.73) (.82) (.87) (.76)
Net realized gains (.30) (.15) (.04) - -
------ ------ ------ ------ ------
Total Distributions (1.08) (.88) (.86) (.87) (.76)
Net Asset Value,
End of period $10.04 $11.30 $10.91 $10.96 $10.10
Ratios/Supplemental Data:
Total Return (1.63%) 11.94% 7.65% 17.89% 8.66%
Ratio of Expenses to
Average Net Assets .68% .66% .69% .73% .79%
Ratio of Net Investment
Income to Average
Net Assets 7.21% 6.65% 7.59% 8.27% 8.57%
Portfolio Turnover
Rate 70.27% 137.46% 40.91% 39.82% 110.90%
Net Assets,
End of Period $55,929,272 $54,128,345 $38,556,504 $31,008,756 $24,445,631
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Bond Portfolio
- ---------------------------------------------------------------------------------
Year ended December 31,
- ---------------------------------------------------------------------------------
1989 1988 1987 1986 1985
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 9.82 $ 9.96 $10.51 $11.22 $10.44
Investment Activities:
Net investment income .83 .85 .82 1.12 1.00
Net realized and
unrealized gains
(losses) .20 (.13) (.51) .67 .77
------ ------ ------ ------ ------
Total from Investment
Operations 1.03 .72 .31 1.79 1.77
Distributions:
Net investment income (.83) (.86) (.86) (1.13) (.99)
Net realized gains - - - (1.37) -
------ ------ ------ ------ ------
Total Distributions (.83) (.86) (.86) (2.50) (.99)
Net Asset Value,
End of period $10.02 $ 9.82 $ 9.96 $10.51 $11.22
Ratios/Supplemental
Data:
Total Return 10.72% 7.36% 3.15% 16.59% 17.78%
Ratio of Expenses to
Average Net Assets .86% .82% .72% .65% .71%
Ratio of Net
Investment
Income to Average
Net Assets 8.38% 8.34% 8.34% 8.65% 9.94%
Portfolio Turnover
Rate 17.70% 24.11% 80.35% 103.44% 92.43%
Net Assets,
End of Period $15,940,670 $12,460,027 $15,796,363 $11,487,084 $14,688,626
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
Capital Portfolio
- -------------------------------------------------------------------------------
Year ended December 31, Period Ended
----------------------------------------- December 31,
1994 1993 1992 1991 1990<F1>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $13.81 $12.99 $12.82 $10.57 $10.95
Investment Activities:
Net investment income .52 .43 .42 .47 .34
Net realized and
unrealized gains
(losses) (.39) 1.17 .56 2.25 (.40)
------ ------ ------ ------ ------
Total from Investment
Operations .13 1.60 .98 2.72 (.06)
Distributions:
Net investment income (.52) (.42) (.42) (.47) (.32)
Net realized gains (.23) (.36) (.39) .00 .00
------ ------ ------ ------ ------
Total Distributions (.75) (.78) (.81) (.47) (.32)
Net Asset Value,
End of period $13.19 $13.81 $12.99 $12.82 $10.57
====== ====== ====== ====== ======
Ratios/Supplemental
Data:
Total Return .94% 12.72% 7.93% 26.10% (.54%)
Ratio of Expenses
to Average Net Assets .80% .82% .88% .95%
1.03%<F2>
Ratio of Net Investment
Income to Average
Net Assets 4.25% 3.31% 3.49% 4.05%
5.08%<F2>
Portfolio Turnover
Rate 41.89% 32.42% 39.74% 47.93% 16.02%
Net Assets,
End of Period $119,262,936 $100,016,256 $68,673,822 $41,843,772
$23,813,342
<FN>
<F1>
Period from May 1, 1990 (commencement of operations) through December 31, 1990.
<F2>
Annualized
</FN>
</TABLE>
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 9.) As of March 31,
1995, 22% 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 11.
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 11.
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").<F1> 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.
<F1>
The S&P 500 is an unmanaged index of common 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 and Poor's makes no representation
regarding the advisability of investing in the Portfolio or in
SPDRs.
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 1994:
<TABLE>
<CAPTION>
S&P 500 Returns (1926-1994)
Over Various Time Horizons
---------------------------
1 Year 5 Years 10 Years 20 Years
<S> <C> <C> <C> (C>
Best +53.9% +23.9% +20.1% +16.9%
Worst -43.3 -12.5 - 0.9 + 3.1
Average +12.2 +10.2 +10.7 +10.7
</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 1994. 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 33 1/3% 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 it is
anticipated that on or about January 2, 1996, Union Central will
invest approximately $10 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, 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 26, 1995; 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 and Capital
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.
Federal tax laws impose a four percent nondeductible excise tax on
each regulated investment company with respect to an amount, if
any, by which such company does not meet specified distribution
requirements. Each Portfolio intends to comply with such
distribution requirements and therefore does not expect to incur
the four percent nondeductible excise tax.
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>
<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>
<PAGE>
CARILLON FUND, INC.
- -------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
December 28, 1995
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 December
28, 1995, 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 (6)............................... 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 Accountants and Financial
Statements...........................................27
- -------
( ) indicates page on which the corresponding section appears in
the Prospectus.
- ----------------------------------------------------------------
UCCF 515 12-95<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")<F1> 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.
- ----------
<F1>
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 and Poor's makes no representation
regarding the advisability of investing in the Portfolio or in
SPDRs.
<PAGE>
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 33 1/3% 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.
SPDRs
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 33 1/3 % 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 40.33% and 37.93%, respectively, for 1994 and 1993. The
annual Portfolio turnover rates for the Bond Portfolio were 70.27%
and 137.46%, respectively, for 1994 and 1993. The annual Portfolio
turnover rates for the Capital Portfolio were 41.89% and 32.42%,
respectively, for 1994 and 1993. The annual turnover rate for the
S&P 500 Index Portfolio is expected to be less than 50%.
<PAGE>
<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>
Name, Address Position(s) 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 Surgery,
Cincinnati, Ohio 45208 University of Cincinnati
(Age: 62)
George L. Clucas* Director, Senior Vice President,
(52) President and Union Central; Director,
Chief Executive President and Chief Executive
Officer 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 President
9000 Indian Ridge Road and Director, The Procter and
Cincinnati, Ohio 45243 Gamble Company
(80)
Richard H. Finan Director Attorney at Law; President Pro
11137 Main Street Tempore of the Ohio State Senate
Cincinnati, Ohio 45241
(61)
Jean Patrice Director Former Executive Director,
Harrington, S.C. Cincinnati Youth Collaborative;
3217 Whitfield Avenue President Emeritus (formerly,
Cincinnati, Ohio 45220 President) College of Mount St.
(70) Joseph
John H. Jacobs* Director Senior Vice President, Union
(49) Central; prior to December, 1992,
Officer and employee, Union Central
Charles W. McMahon Director Retired Senior Vice President and
2031 W. Galbraith Road, #E Director, Union Central
Cincinnati, Ohio 45239
(76)
Harry Rossi* Director Director Emeritus, Union Central;
641 Flagstaff Drive Director, Adviser; former Chairman,
Cincinnati, Ohio 45215 President and Chief Executive
(76) Officer, Union Central
Stephen R. Hatcher Senior Vice Senior Vice President and Chief
(53) President Financial Officer, Union Central
John F. Labmeier Vice President Second Vice President, Associate
(46) and Secretary General Counsel and Assistant
Secretary, Union Central; Vice
President and Secretary, CII;
Secretary, Adviser
Thomas G. Knipper Controller Assistant Controller, Union
(38) 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, Union
(61) Central; prior to October 1992,
Officer and employee, Union Central
John M. Lucas Assistant Assistant Counsel and Assistant to
(44) Secretary the Secretary, Union Central; prior
to October, 1992, Officer and
employee, Union Central
- ---------------
* 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.
</TABLE>
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 1994 were
$43,515.
<PAGE>
<PAGE>
Compensation Table
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Total
Pension or Estimated Compensation
Retirement Annual From
Benefits Estimated Registrant
Aggregate Accrued Annual and Fund
Compensation As Part of Benefits Complex*
Name of Person, From Fund Upon Paid to
Position Registrant Expenses Retirement 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 7,300 -- -- 10,600
Harrington, S.C.
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
* 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, 1994, the total amount
deferred, including interest, was as follows: Dr. Callard -
$44,199; Mr. McMahon - $22,752.
</TABLE>
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 177, Cincinnati, Ohio 45201). 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>
1994 $924,881 $273,068 $766,664 N/A
1993 $750,859 $232,954 $593,388 N/A
1992 $570,315 $169,958 $408,581 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 27, 1995, 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. It is anticipated that Union
Central, as legal owner of the Index Portfolio shares as sole
shareholder of the Index Portfolio, will approve 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 Fund's average net assets. 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. It is anticipated that the sole shareholder of the
S&P 500 Index Portfolio will approve the Service Agreement on or
about 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, 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 26, 1995,
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 1994, 45% of the Fund's total brokerage was allocated to
brokers who furnish statistical data or research information.
Brokerage commissions paid during 1994, 1993 and 1992 were
$232,642, $226,635 and $220,110, 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 ACCOUNTANTS AND FINANCIAL STATEMENTS
The financial statements of the Fund have been audited by
Price Waterhouse LLP, independent accountants, whose report
follows. The financial statements included in this Statement of
Additional Information have been included in reliance upon the
report of Price Waterhouse LLP, given upon their authority as
experts in auditing and accounting.
Deloitte & Touche LLP has been retained by the Fund to examine
its 1995 financial statements. <PAGE>
<PAGE>
CARILLON FUND, INC.
SEMIANNUAL REPORT
JUNE 30, 1995
(unaudited)
<PAGE>
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
================================================================
JUNE 30, 1995
(Unaudited)
EQUITY PORTFOLIO
- ----------------------------------------------------------------
COMMON STOCKS - 87.61%
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
AEROSPACE - DEFENSE - 2.71%
Lockheed Martin Corporation 40,000 $ 2,525,000
Raytheon Company 15,000 1,164,375
Thiokol Corporation 45,000 1,361,250
------- ------------
5,050,625
------------
AIR TRANSPORTATION - 1.05%
Atlantic Southeast Airlines 65,000 1,958,121
------------
AUTO PARTS - 1.75%
Breed Technologies, Incorporated 40,000 960,000
Donnelly Corporation 48,500 782,062
Foamex International Incorporated* 75,000 548,438
Strattec Security Corporation* 80,000 980,000
------------
3,270,500
------------
BANK & BANK HOLDING COMPANIES-6.28%
ABN AMRO Holdings NV ADR 30,857 1,190,092
Banco Latinoamericano
de Exportaciones ADR 75,000 2,484,375
Deutsche Bank AG ADR Sponsored 26,100 1,267,170
Dresdner Bank AG ADR 55,000 1,589,450
GBC Bancorp California 40,900 490,800
River Forest Bancorp 19,500 789,750
Southtrust Corporation 55,000 1,271,875
Wilmington Trust Corporation 40,000 1,130,000
Zions Bancorporation 30,000 1,500,000
------------
11,713,512
------------
BUILDING MATERIAL - 1.96%
ABT Building Products
Corporation* 80,000 1,420,000
Falcon Products, Incorporated 104,000 1,322,925
NCI Building Systems, Incorporated 55,000 921,250
------------
3,664,175
------------
BUSINESS-MECHANICS & SOFTWARE- 2.32%
DH Technology Incorporated 90,000 2,475,000
Macneal - Schwendler Corporation 85,000 1,190,000
Olicom A/S* 50,000 656,250
------------
4,321,250
------------
CHEMICAL - 2.33%
Bayer AG ADR Sponsored 135,000 3,355,196
Ciba - Geigy AG ADR 27,000 988,961
------------
4,344,157
------------
COMPUTER - .86%
Quantum Corporation* 70,000 1,601,250
------------
CONGLOMERATE - .77%
Mannesman AG ADR 4,700 1,434,663
------------
CONTAINER - 2.11%
AEP Industries, Incorporated 107,550 2,285,438
Alltrista Corporation* 86,000 1,655,500
------------
3,940,938
------------
DIVERSIFIED - .68%
Griffon Corporation 120,000 960,000
Quixote Corporation 25,000 312,500
------------
1,272,500
------------
DRUGS - 2.00%
Merck & Company, Incorporated 40,000 1,960,000
Schering Plough Corporation 40,000 1,765,000
------------
3,725,000
------------
ELECTRONICS - 1.62%
Advance Circuits, Incorporated* 100,000 1,800,000
Digi International, Incorporated* 54,000 1,228,500
------------
3,028,500
------------
ENGINEERING & CONSTRUCTION - .24%
Mestek, Incorporated* 36,200 457,025
------------
ENTERTAINMENT & LEISURE - .25%
Artco, Incorporated 40,000 470,000
------------
FINANCIAL SERVICES - 3.75%
CMAC Investment Corporation 47,500 2,060,313
Dean Witter, Discover & Company 45,000 2,115,000
Jefferies Group, Incorporated 32,000 1,152,000
Raymond James Financial Corporation 50,000 968,750
Student Loan Marketing Association 15,000 703,125
------------
6,999,188
------------
FOOD, BEVERAGE, & TOBACCO - .35%
Todhunter International,
Incorporated* 70,000 647,500
GOLD & PRECIOUS METALS - 1.10%
Echo Bay Mines Limited 90,000 810,000
Minorco SA ADR Sponsored 50,000 1,237,500
------------
2,047,500
------------
HEALTH & BEAUTY AIDS - 1.51%
Helen of Troy Limited, Bermuda* 95,000 1,995,000
Perrigo Company* 75,000 829,688
------------
2,824,688
------------
HEALTH CARE - 5.36%
American Medical Electronics,
Incorporated* 85,000 828,750
Lunar Corporation* 88,800 2,508,600
Nellcor Incorporated* 20,000 900,000
Orthofix International NV* 75,000 1,284,375
Research Industries Corporation* 65,000 1,495,000
Sofamor / Danek Group, Incorporated* 65,200 1,475,150
St Jude Medical, Incorporated 30,000 1,503,750
------------
9,995,625
------------
HEALTH CARE SERVICES - 1.49%
Advocat, Incorporated* 75,500 839,938
Rightchoice Managed Care,
Incorporated, Class A* 105,500 1,266,000
United Wisconsin Services,
Incorporated 34,000 680,000
------------
2,785,938
------------
HOSPITAL SUPPLY & SERVICE - 1.70%
Allied Healthcare Products
Incorporated 90,100 1,464,125
Sterile Concepts Holdings 35,000 433,125
Utah Medical Products,
Incorporated* 103,200 1,277,100
------------
3,174,350
------------
HOUSEHOLD PRODUCTS - 3.00%
Chromcraft Revington Incorporated* 75,000 1,591,875
Fingerhut Companies 40,000 625,000
Lifetime-Hoan Corporation 153,420 1,725,975
Scotsman Industries, Incorporated 40,000 740,000
Winsloew Furniture Incorporated* 188,300 917,963
------------
5,600,813
------------
HOUSING - 1.15%
The Rottlund Company, Incorporated* 50,000 362,500
Schult Homes Corporation 50,000 568,750
Toll Brothers, Incorporated* 75,000 1,209,375
------------
2,140,625
------------
INSURANCE - 7.47%
Aegon NV ADR 63,300 2,207,588
Capitol American Financial
Corporation 30,000 682,500
Gainsco Incorporated 150,250 1,493,109
Harleysville Group Incorporated 45,300 1,132,500
Penncorp Financial Group
Incorporated 50,000 925,000
RLI Corporation 68,625 1,561,219
Sphere Drake Holdings Limited 70,000 1,076,250
Sunamerica 25,000 1,275,000
Torchmark Corporation 30,000 1,132,500
Transnational Re Corporation,
Class A* 40,000 802,500
Triad Guaranty Incorporated* 45,000 945,000
United Insurance Companies,
Incorporated 54,400 707,200
------------
13,940,366
------------
INVESTMENT COMPANIES - .60%
Allied Capital Corporation 25,000 296,875
Allied Capital Lending Corporation 1,363 17,719
Chile Fund 15,000 806,250
------------
1,120,844
------------
MACHINERY - AGRICULTURE &
CONSTRUCTION - 1.92%
Astec Industries Incorporated* 75,000 853,125
Lindsay Manufacturing Company* 78,575 2,730,481
------------
3,583,606
------------
MACHINERY - INDUSTRIAL - .65%
Alamo Group, Incorporated 70,000 1,207,500
------------
MISCELLANEOUS - ENERGY - 3.81%
Giant Industries Incorporated 70,000 595,000
Holly Corporation 75,000 1,734,375
Input / Output, Incorporated* 40,700 1,465,200
Repsol International S.A. ADR 40,000 1,265,000
Total S.A. ADR 41,008 1,240,492
Valero Energy Corporation 40,000 810,000
------------
7,110,067
------------
MISCELLANEOUS - MANUFACTURING - .71%
ILC Technology, Incorporated* 79,300 733,525
Versa Technologies, Incorporated 40,500 587,250
------------
1,320,775
------------
MISCELLANEOUS - SERVICE - .47%
PCA International, Incorporated 74,500 875,375
------------
NON- FERROUS METAL - .59%
Western Mines Holdings Limited ADR 50,000 1,100,000
------------
OIL & GAS - DOMESTIC - 4.04%
Apache Corporation 73,118 2,001,605
Columbia Gas System Incorporated* 30,000 952,500
Horsham Corporation 115,000 1,552,500
Newfield Exploration Company* 48,000 1,362,000
Petrocorp Incorporated* 74,000 610,500
Plains Resources Incorporated* 120,000 1,050,000
------------
7,529,105
------------
OIL & GAS - INTERNATIONAL - .56%
YPF S.A. Sponsored ADR, Class D 55,000 1,038,125
------------
OIL & GAS - SERVICE - 1.86%
Global Industries Limited* 80,000 1,780,000
Offshore Logistics, Incorporated* 120,000 1,680,000
------------
3,460,000
------------
POLLUTION CONTROL - .18%
International Recovery Corporation 22,500 331,875
------------
PRODUCTION - .55%
Briggs & Stratton 30,000 1,035,000
------------
PRINTING & PUBLISHING - .19%
CSS Industries, Inc* 20,000 360,000
------------
RAILROAD - .37%
Illinois Central Corporation,
Class A 20,000 690,000
------------
REAL ESTATE - 4.04%
Columbus Realty Trust 45,000 843,750
Health Care Property Investors,
Incorporated 50,000 1,600,000
IRT Property Company 120,000 1,170,000
Merry Land & Investment Company,
Incorporated 75,000 1,528,125
NAB Asset Corporation 51,000 277,313
National Health Investors
Incorporated 40,000 1,090,000
Shurgard Storage Centers 45,000 1,035,000
------------
7,544,188
------------
RETAIL - GENERAL - 4.48%
Bon-Ton Stores* 86,800 906,244
Claire's Stores, Incorporated 100,000 1,812,500
Crown Books Corporation* 55,000 618,750
Dart Group Corporation, Class A 7,500 632,813
Forschner Group Incorporated* 65,000 682,500
Penney JC Company 18,000 864,000
Roberds Incorporated* 90,000 855,000
Shopko Stores, Incorporated 90,700 975,025
Value City Department Stores,
Incorporated* 70,000 533,750
Venture Stores, Incorporated 48,000 474,000
------------
8,354,582
------------
SAVINGS & LOAN - 1.05%
Standard Federal Bank 57,900 1,946,888
------------
SEMICONDUCTOR - .70%
Advanced Micro Devices Incorporated 36,000 1,309,500
------------
SHOES - .35%
K- Swiss, Incorporated, Class A 50,000 650,000
------------
TELEPHONE - .82%
Societa Finanziaria
Telephonica S.A. ADR 30,000 829,260
Telefonica de Argentina ADR 28,000 693,000
------------
1,522,260
------------
TEXTILE & APPAREL - 1.60%
Cone Mills Corporation* 40,000 515,000
Conso Products Company* 55,000 770,000
Haggar Corporation 38,000 741,000
Jones Apparel Group, Incorporated* 25,000 746,875
Speizman Industries, Incorporated* 40,000 205,000
------------
2,977,875
------------
TRUCKING - .50%
U.S. Xpress Enterprises, Class A* 110,000 935,000
------------
UTILITIES - 3.76%
Cinergy Corporation 29,400 771,750
CMS Energy Corporation 50,000 1,231,250
Duke Power Company 12,500 518,750
Empresa Nacional Electricidad
SA ADR 30,000 1,477,500
Public Service Company of
New Mexico* 54,000 769,500
Texas Utilities Company 45,000 1,546,875
Utilicorp United Incorporated 25,000 703,125
------------
7,018,750
------------
Total Common Stocks
(cost $133,615,422) 163,430,124
------------
*Non-income producing
(ADR) American Depository Receipt
</TABLE>
The accompanying notes are an integral part of
the financial statements.<PAGE>
<PAGE>
EQUITY PORTFOLIO (continued)
- -----------------------------------------------------------
SHORT-TERM INVESTMENTS - 12.22%
- -----------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -------
<S> <C> <C>
COMMERCIAL PAPER - 7.99%
Cincinnati Bell Incorporated
(6.000% due 08/15/95) 1,000,000 $ 992,500
Circus Circus Enterprises,
Incorporated (6.040% due 08/02/95) 2,000,000 1,989,262
Columbia Healthcare Corporation
(6.020% due 07/26/95) 1,000,000 995,819
Columbia Healthcare Corporation
(6.020% due 08/24/95) 1,000,000 990,970
Conagra, Incorporated
(5.980% due 07/28/95) 1,000,000 995,515
Cox Enterprises, Incorporated
(6.000% due 08/15/95) 1,000,000 992,500
Pennzoil Company
(6.000% due 08/25/95) 2,000,000 1,981,667
Telecommunications, Incorporated
(6.360% due 07/18/95) 1,000,000 996,997
Telecommunications, Incorporated
(6.030% due 08/30/95) 1,000,000 989,500
Union Pacific Corporation
(6.060% due 07/21/95) 2,000,000 1,993,261
Yellow Freight System Incorporated
(5.930% due 08/04/95) 2,000,000 1,988,761
------------
Total Commercial Paper 14,906,752
------------
VARIABLE RATE DEMAND NOTES<F1>-4.23%
General Mills, Incorporated
(5.490% due 07/05/95) 1,776,558 1,776,558
Pitney Bowes Credit Corporation
(5.497% due 07/05/95) 4,900,022 4,900,022
outhwestern Bell Telephone Company
(5.477% due 07/05/95) 1,205,450 1,205,450
------------
Total Variable Rate Demand Notes 7,882,030
------------
Total Short-Term Investments
(cost $22,788,782) 22,788,782
------------
TOTAL INVESTMENTS - 99.83%
(cost $156,404,204) 186,218,906 <F2>
------------
OTHER ASSETS AND LIABILITIES - .17% 324,763
------------
TOTAL NET ASSETS - 100.00% $186,543,669
============
<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 June 30, 1995.
<F2>
Gross unrealized appreciation and depreciation of securities at June 30, 1995
for both financial reporting and tax purposes was $36,614,740 and $7,060,037,
respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.<PAGE>
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
===================================================================
JUNE 30, 1995
(Unaudited)
CAPITAL PORTFOLIO
- ---------------------------------------------------------------------------
COMMON STOCKS - 35.01%
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
APPAREL - .16%
Haggar Corporation 11,000 $ 214,500
----------
AUTO PARTS - .36%
Strattec Security Corporation* 40,000 490,000
----------
BANK & BANK HOLDING COMPANIES - 2.71%
ABN AMRO ADR 20,571 793,382
Banco Latinoamericano
de Exportaciones ADR 30,000 993,750
Deutsche Bank AG ADR Sponsored 16,200 786,520
Dresdner Bank AG ADR 20,000 577,982
River Forest Bancorp 12,500 506,250
----------
3,657,884
----------
BUILDING & HOUSING - 1.02%
ABT Building Products Corporation* 45,000 798,750
Falcon Products, Incorporated 46,200 584,950
----------
1,383,700
----------
BUSINESS - MECHANICS & SOFTWARE - .55%
DH Technology, Incorporated* 26,840 738,100
----------
CHEMICAL -1.84%
Bayer AG ADR Sponsored 75,000 1,863,997
Ciba-Geigy ADR 17,000 622,679
----------
2,486,676
----------
CONGLOMERATE - .58%
Lonrho PLC ADR 150,000 353,174
Mannesman AG ADR 1,400 427,347
----------
780,521
----------
CONTAINER - 1.28%
AEP Industries, Incorporated 45,831 973,909
Alltrista Corporation * 38,800 746,900
----------
1,720,809
----------
DRUGS - .62%
Merck & Company 17,000 833,000
----------
ELECTRONICS - .40%
Advance Circuits Incorporated* 30,000 540,000
----------
ENGINEERING & CONSTRUCTION - .14%
Mestek, Incorporated* 15,300 193,163
----------
FINANCIAL SERVICES - .52%
Dean Witter, Discover & Company 15,000 705,000
----------
FOOD, BEVERAGE, & TOBACCO - .17%
Todhunder International,
Incorporated* 25,000 231,250
----------
GOLD & PRECIOUS METALS - 1.87%
Echo Bay Mines Limited 25,000 225,000
Free State Consolidated
Gold Mines Limited ADR 20,000 247,500
Minorco ADR Sponsored 29,000 717,750
Placer Dome, Incorporated 20,000 522,500
Royal Oak Mines, Incorporated* 125,000 390,625
Santa Fe Pacific Gold Corporation 35,000 424,375
----------
2,527,750
----------
HEALTH CARE - 1.33%
Lunar Corporation* 40,400 1,141,300
Orthofix International NV* 38,000 650,750
----------
1,792,050
----------
HEALTH CARE SERVICES - .62%
Rightchoice Managed Care - Class A* 45,000 540,000
United Wisconsin Services,
Incorporated 15,000 300,000
----------
840,000
----------
HOSPITAL SUPPLY & SERVICES - .48%
Allied Healthcare Products
Incorporated 39,500 641,875
----------
HOUSEHOLD PRODUCTS - 1.43%
Chromcraft Revington Incorporated* 25,000 531,250
Helen of Troy Limited, Bermuda* 45,000 945,000
Lifetime-Hoan Corporation 40,129 451,451
----------
1,927,701
----------
INSURANCE - 2.10%
Capitol American Financial
Corporation 30,000 682,500
Gainsco Incorporated 60,000 596,250
RLI Corporation 30,480 693,420
Torchmark Corporation 10,000 377,500
United Insurance Companies,
Incorporated 36,800 478,400
----------
2,828,070
----------
INTERNATIONAL BOND - .91%
Global Yield Fund Incorporated 105,000 708,750
Templeton Global Income Fund 75,000 515,625
----------
1,224,375
----------
INVESTMENT COMPANIES - 1.53%
Allied Capital Corporation 30,000 356,250
Allied Capital Lending Corporation 1,636 21,268
Blackrock Strategic Term Trust 75,000 562,500
France Growth Fund, Incorporated 53,333 546,663
New Germany Fund 48,000 582,000
----------
2,068,681
----------
MACHINERY
- - AGRICULTURE & CONSTRUCTION - .99%
Astec Industries Incorporated* 50,000 568,750
Lindsay Manufacturing Company* 21,939 762,380
----------
1,331,130
----------
MACHINERY - INDUSTRIAL - .13%
Alamo Group, Incorporated 10,000 172,500
----------
MISCELLANEOUS - ENERGY - .95%
Holly Corporation 20,000 462,500
Repsol S.A. ADR 26,000 822,250
----------
1,284,750
----------
MISCELLANEOUS - MANUFACTURING - .64%
ILC Technology, Incorporated* 30,500 $ 282,125
Versa Technologies, Incorporated 40,000 580,000
----------
862,125
----------
NON-FERROUS METAL - .41%
Western Mines Holdings Limited ADR 25,000 550,000
----------
OIL & GAS - DOMESTIC - 1.24%
Horsham Corporation 40,000 540,000
Newfield Exploration Corporation* 20,000 567,500
Plains Resources, Incorporated* 65,000 568,750
----------
1,676,250
----------
OIL & GAS - INTERNATIONAL - .35%
YPF S.A. Sponsored ADR 25,000 471,875
----------
OIL & GAS - SERVICES - .96%
Global Industries Incorporated* 30,000 667,500
Offshore Logistics, Incorporated* 45,000 630,000
----------
1,297,500
----------
PRODUCTION - .38%
Briggs & Stratton 15,000 517,500
----------
REAL ESTATE - 5.75%
Associated Estates Realty 50,000 1,056,250
Columbus Realty Trust 46,000 862,500
Duke Realty Investments Incorporated 36,000 1,017,000
Glimcher Realty Trust 45,000 933,750
Health Care Property Investors,
Incorporated 26,296 841,472
IRT Property Company 85,000 828,750
Merry Land & Investment Company 47,000 957,625
NAB Asset Corporation 49,000 266,438
Shurgard Storage Centers 43,000 989,000
----------
7,752,785
----------
RETAIL - GENERAL - 1.22%
Bon-Ton Stores* 6,500 68,250
Claire's Stores, Incorporated 40,000 725,000
Shopko Stores, Incorporated 40,000 430,000
Value City Department Stores* 30,000 228,750
Venture Stores Incorporated 20,000 197,500
----------
1,649,500
----------
SAVINGS & LOAN - .62%
Standard Federal Bank 25,000 840,625
----------
UTILITIES - .75%
CMS Energy Corporation 20,000 492,500
Texas Utilities Company 15,000 515,625
----------
1,008,125
----------
Total Common Stocks
(cost $41,550,060) 47,239,770
----------
*Non-income producing
(ADR) American Depository Receipt
</TABLE>
The accompanying notes are an integral part of the financial statements.<PAGE>
<PAGE>
CAPITAL PORTFOLIO (continued)
- -------------------------------------------------------------------------
PREFERRED STOCK - .53%
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
METAL & MINERAL - .53%
Freeport McMoRan Copper & Gold 20,000 $ 712,500
----------
Total Preferred Stocks (cost $709,838) 712,500
----------
</TABLE>
- ------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 13.88%
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
U.S. TREASURY NOTES - 13.88%
7.500% due 02/29/96 750,000 $ 758,438
7.625% due 04/30/96 500,000 507,343
7.250% due 11/15/96 500,000 509,375
6.125% due 12/31/96 900,000 904,500
8.000% due 01/15/97 1,000,00 1,031,875
6.750% due 02/28/97 650,000 659,344
8.500% due 04/15/97 500,000 522,188
6.750% due 05/31/97 1,000,000 1,016,562
7.875% due 04/15/98 500,000 525,156
5.500% due 02/28/99 1,000,000 986,875
6.375% due 07/15/99 1,000,000 1,014,687
6.000% due 10/15/99 5,900,000 5,907,375
8.875% due 05/15/00 500,000 560,938
7.500% due 11/15/01 500,000 536,404
6.375% due 08/15/02 3,250,000 3,285,545
----------
Total U.S. Treasury Notes
(cost $18,398,484) 18,726,605
----------
</TABLE>
- ------------------------------------------------------------------------
MORTGAGE - BACKED SECURITIES -18.44%
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 3.03%
8.000% due 10/01/96 516,784 $ 521,528
7.500% due 06/01/07 79,559 80,085
9.500% due 10/01/08 316,233 332,829
8.250% due 03/01/12 153,676 157,065
8.500% due 03/01/16 152,700 157,476
8.500% due 06/15/17 1,100,000 1,111,880
7.500% due 07/01/17 83,834 83,842
11.000% due 04/01/19 88,524 97,456
11.000% due 11/01/19 118,272 130,205
11.000% due 05/01/20 324,036 356,741
11.000% due 06/01/20 440,015 484,337
7.000% due 09/15/22 596,485 573,013
----------
4,086,457
----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 5.87%
10.000% due 02/01/04 12,964 13,617
9.500% due 09/01/05 225,420 236,229
9.000% due 11/01/05 114,212 119,151
8.000% due 05/01/07 195,743 200,932
5.500% due 11/01/08 864,387 819,283
6.000% due 12/01/08 1,036,497 1,002,427
5.500% due 01/01/09 1,041,347 987,010
6.000% due 03/01/09 1,156,182 1,118,178
5.500% due 04/01/09 1,039,785 985,196
9.500% due 12/25/18 982,215 1,028,241
8.500% due 03/01/19 21,967 22,798
6.500% due 04/01/24 1,439,430 1,383,191
----------
7,916,253
----------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - 4.25%
7.990% due 12/16/15 4,738,590 4,790,997
9.000% due 11/15/16 178,701 188,776
10.500% due 11/20/19 520,811 569,939
9.000% due 12/15/19 171,929 181,405
----------
5,731,117
----------
MISCELLANEOUS - 3.09%
FHLMC Floater
(5.830% due 11/15/07)<F1> 1,000,000 993,500
GE Capital Mtg. Services, Inc.
(6.000% due 08/25/09) 614,831 561,489
Prudential Home Mortgage Securities
(7.500% due 07/25/10) 550,561 517,871
FNMA Floater
(5.460% due 10/25/21)<F1> 1,000,000 949,070
FNMA Interest Only Security
(9.000% due 04/25/22) 3,178,763 792,719
FNMA Floater
(6.594% due 05/25/22)<F1> 1,435,139 1,439,129
Merrill Lynch Mortgage Investors
(9.000% due 04/25/22) 2,000,000 1,897,500
----------
7,151,278
----------
Total Mortgage-Backed Securities
(cost $24,636,422) 24,885,105
----------
<FN>
<F1>
Interest rates vary periodically based on current market
rates. Rates shown are as of June 30, 1995.
</FN>
</TABLE>
- ------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 8.35%
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
BANKS - .42%
Boatmens Bancshares, Inc.
Sub. Note (9.250% due 11/01/01) 260,000 $ 292,714
Comerica Inc., Sub. Note
(9.750% due 05/01/99) 250,000 274,770
----------
567,484
----------
CONGLOMERATES - .51%
Teledyne, Inc. Sub. Deb. Series C
(10.000% due 6/1/04) 151,000 151,550
Westinghouse Electric Corporation Deb.
(8.875% due 6/1/01) 500,000 536,356
----------
687,906
----------
FINANCIAL SERVICES - 1.99%
Dean Witter, Discover & Company Note
(6.313% due 12/15/95)<F1> 1,000,000 1,000,708
Discover Credit Corporation Note
(6.539% due 07/24/95)<F1> 1,000,000 999,797
Pacific Gulf Properties, Inc.
Sub. Convertible Deb.
(8.375% due 2/15/01) 750,000 679,688
----------
2,680,193
----------
GAMING INDUSTRY - .20%
Circus Circus Enterprises, Inc.
Senior Sub. Note
(10.625% due 6/15/97) 250,000 268,204
----------
INSURANCE - .37%
Penn Central Corporation Sub.
Note (9.750% due 08/01/99) 30,000 130,252
Reliance Financial
Services Corporation
Senior Note(9.480% due 11/01/00)<F1> 375,000 375,469
----------
505,721
----------
MISCELLANEOUS - .38%
Toll Corporation Senior Sub. Note
(10.500% due 03/15/02) 500,000 515,000
----------
OIL & GAS EXPLORATION
SERVICES - 2.13%
Columbia Gas Systems Deb.
(10.500% due 06/01/12)<F2> 750,000 1,096,875
Maxus Energy Corporation Deb.
(11.250% due 05/01/13) 208,000 203,840
Rowan Companies, Inc. Senior Notes
(11.8750% due 12/01/01) 50,000 802,500
Tenneco Inc. Note
(10.000% due 08/01/98) 700,000 767,733
----------
2,870,948
----------
SAVINGS & LOAN - .11%
Golden West Financial Corporation
Sub. Note (10.250% due 12/1/00) 30,000 150,478
----------
TELEPHONE & TELECOMMUNICATIONS - .13%
United Telecommunications, Inc. Note
(9.750% due 04/01/00) 56,000 174,762
----------
UTILITIES - ELECTRIC - 2.10%
Connecticut Light & Power Company
1st Ref Mtg. (7.625% due 04/01/97) 691,000 702,206
Del Norte Funding Corporation
Secured Lease Obligation Debenture
(11.250% due 01/02/14) 800,000 424,000
El Paso Electric 1st Mtg
(6.750% due 05/01/98)<F2> 500,000 477,500
New Orleans Public Service Inc.
1st Mtg Notes (8.670% due 04/01/05) 1,200,000 1,235,706
----------
2,839,412
----------
Total Corporate Bonds and Notes
(cost $11,130,185) 11,260,108
----------
<FN>
<F1>
Interest rates vary periodically based on current market
rates. Rates shown are as of June 30, 1995.
<F2>
Interest payments in default.
</FN>
</TABLE>
- ------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 23.36%
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COMMERCIAL PAPER - 19.18%
American Home Products
(5.900% due 07/21/95) 1,000,000 $ 996,722
Cincinnati Bell Inc.
(6.000% due 08/15/95) 1,000,000 992,500
Circus Circus Enterprises, Inc.
(6.040% due 08/02/95) 2,000,000 1,989,262
Columbia Healthcare Corp
(6.070% due 07/18/95) 1,000,000 997,134
Columbia Healthcare Corp
(5.930% due 07/24/95) 1,000,000 996,211
Conagra Inc. (5.930% due 08/04/95) 2,000,000 1,988,799
Cox Enterprises
(6.000% due 08/15/95) 1,000,000 992,500
Crown Cork & Seal
(6.060% due 08/07/95) 1,000,000 993,772
GMAC (6.000% due 07/17/95) 1,000,000 997,333
IBM Credit Corporation
(5.940% due 07/05/95) 2,000,000 1,998,680
K-Mart Company (6.050% due 08/03/95) 1,000,000 994,454
K-Mart Company (6.020% due 08/11/95) 1,000,000 993,144
Pennzoil Company
(6.000% due 08/25/95) 2,000,000 1,981,667
Public Service Colorado Credit Corp
(6.100% due 07/06/95) 2,000,000 1,998,306
Tele-Communications Inc.
(6.360% due 07/18/95) 1,000,000 996,997
Tele-Communications Inc.
(6.360% due 07/20/95) 1,000,000 996,643
Textron Inc. (6.050% due 07/14/95) 1,000,000 997,815
Union Pacific Corporation
(6.060% due 07/21/95) 2,000,000 1,993,267
Yellow Freight System
(5.930% due 08/04/95) 2,000,000 1,988,799
----------
Total Commercial Paper 25,884,005
----------
VARIABLE RATE DEMAND NOTES<F1>-4.18%
General Mills, Inc.
(5.7200% due 7/5/95) 1,773,014 1,773,014
Pitney Bowes Credit Corporation
(5.7296% due 7/5/95) 1,458,019 1,458,019
Southwestern Bell Telephone Company
(5.7094% due 7/5/95) 2,410,300 2,410,300
-----------
Total Variable Rate Demand Notes 5,641,333
----------
Total Short-Term Investments
(cost $31,525,338) 31,525,338
----------
TOTAL INVESTMENTS - 99.57%
(cost $127,950,327) 134,349,426<F2>
-----------
OTHER ASSETS AND LIABILITIES - .43% 576,100
-----------
TOTAL NET ASSETS - 100.00% 134,925,526
===========
<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
June 30, 1995.
<F2>
Gross unrealized appreciation and depreciation of securities
at June 30, 1995 for financial reporting purposes was $9,232,071
and $2,832,972 respectively; tax amounts were substantially the
same.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.<PAGE>
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
==============================================================
JUNE 30, 1995
(Unaudited)
BOND PORTFOLIO
- ---------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 33.87%
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
U.S. TREASURY BONDS - 4.39%
6.250% due 08/15/23 3,000,000 $ 2,836,872
----------
U.S. TREASURY NOTES - 18.14%
6.375% due 07/15/99 1,000,000 1,014,687
6.000% due 10/15/99 4,000,000 4,005,000
6.750% due 04/30/00 2,000,000 2,061,250
7.750% due 02/15/01 2,500,000 2,705,467
5.875% due 02/15/04 2,000,000 1,954,374
----------
11,740,778
----------
U.S. TREASURY STRIPS - 11.34%
4.320% due 02/15/96<F1> 2,000,000 1,930,480
4.710% due 11/15/98<F1> 2,000,000 1,640,640
5.900% due 02/15/00<F1> 3,250,000 2,472,307
6.970% due 08/15/02<F1> 2,000,000 1,295,860
----------
7,339,287
----------
Total U.S. Treasury Obligations
(cost $21,373,823) 21,916,937
----------
<FN>
<F1>
Zero coupon bonds, rates shown are effective yields.
</FN>
</TABLE>
- ---------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES - 17.00%
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 2.50%
7.500% due 02/01/02 75,470 $ 76,153
9.500% due 04/01/05 134,174 138,660
7.500% due 06/01/07 175,100 176,258
11.000% due 05/01/10 88,965 97,806
12.500% due 08/01/10 27,418 30,742
8.000% due 11/01/16 95,220 96,320
9.500% due 02/01/18 77,649 80,949
6.500% due 07/01/23 955,874 920,048
----------
1,616,936
----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 3.62%
12.000% due 04/01/00 92,884 99,154
9.000% due 08/01/01 71,757 74,694
8.500% due 01/01/02 77,367 80,026
10.500% due 06/01/04 29,035 30,668
10.500% due 05/01/05 276,594 292,151
6.500% due 06/01/08 1,437,349 1,415,331
8.000% due 08/01/17 344,895 351,253
----------
2,343,277
----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - .48%
11.000% due 03/15/10 64,413 70,854
11.250% due 09/15/13 52,087 57,694
10.750% due 02/15/16 8,690 9,544
10.750% due 06/15/19 35,298 38,762
9.000% due 05/15/20 130,817 137,357
----------
314,211
----------
MISCELLANEOUS MORTGAGE-BACKED-10.40%
Residential Funding Mortgage
Securities, Inc.(7.500% due 02/25/07) 500,000 506,484
Securitized Asset Sales, Inc.
(6.500% due 07/25/08) 331,273 306,091
CMC2 Securities Inc.
(7.070% due 12/25/08)<F1> 454,609 302,883
Country Wide Mortgage-Backed
Securities, Inc. (6.00% due 03/01/09) 945,490 854,191
Capstead Mortgage Securities
Corporation (10.950% due 02/01/14) 296,429 319,343
FNMA Collateralized Mortgage
Obligation (9.500% due 12/25/18) 308,452 327,610
FNMA Inverse Floater
(5.964% due 05/15/20)<F1> 500,000 244,063
FHLMC Collateralized Mortgage
Obligation (8.811% due 11/15/20)<F1> 844,925 901,831
FHLMC Collateralized Mortgage
Obligation (8.250% due 12/15/20) 1,000,000 1,046,380
Greenwich Capital Acceptance
(6.617% due 08/25/24)<F1> 992,684 893,415
CHASE Mortgage Securities, Inc.
(7.500% due 11/29/26) 1,000,000 1,026,719
----------
6,729,010
----------
Total Mortgage-Backed Securities
(cost $10,841,641) 11,003,434
----------
<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 June 30, 1995.
</FN>
</TABLE>
- ---------------------------------------------------------------------
CORPORATE BONDS - 45.27%
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
BANKS - .85%
Comerica Inc. Sub. Note
(9.750% due 05/01/99) 500,000 $ 549,540
----------
BROADCASTING / CABLE - 4.22%
Adelphia Communications Corporation
Sr. PIK Note Series B
(9.500% due 02/15/04) 547,000 457,496
Granite Broadcasting Corporation
(10.375% due 05/15/05) 500,000 500,000
Jones Intercable (9.625% due 03/15/02) 500,000 521,250
Time Warner Inc. Note
(6.291% due 08/15/95)<F1> 275,000 1,254,281
----------
2,733,027
----------
CONGLOMERATES - 3.27%
Coastal Corporation Sr. Notes
(9.750% due 08/01/03) 1,000,000 1,147,274
Figgie International Notes
(9.875% due 10/01/99) 1,000,000 970,845
----------
2,118,119
----------
CONSUMER PRODUCTS - .77%
First Brands Corporation Sr. Sub.
Notes (9.125% due 04/01/99) 500,000 500,000
----------
FINANCE - .78%
GMAC Sr. Note (7.000% due 03/01/00) 500,000 505,740
----------
FOOD, BEVERAGE, & TOBACCO - 1.56%
RJR Nabisco Inc. Note
(7.625% due 09/15/03) 500,000 481,188
RJR Nabisco Inc. Deb.
(8.625% due 03/15/17) 500,000 526,232
----------
1,007,420
----------
GAMING INDUSTRY - 7.67%
Boomtown Inc. 1st Mtg.
Note (11.500% due 11/01/03) 1,000,000 910,000
Casino America
(11.500% due 11/15/01) 1,000,000 1,015,000
Empress River Casinos
(10.750% due 04/01/02) 1,000,000 1,007,500
Hollywood Casino Sr. Seed Note
(14.000% due 04/01/98) 1,000,000 1,100,000
Stations Casinos Sr. Sub. Note
(9.625% due 06/01/03) 1,000,000 930,000
----------
4,962,500
----------
HEALTH CARE - 2.45%
Foundation Health Sr. Notes
(7.750% due 06/01/03) 500,000 505,748
Healthtrust Inc. Sr. Sub. Note
(8.750% due 03/15/05) 500,000 547,500
National Medical Enterprises
(10.125% due 03/01/05) 500,000 528,750
----------
1,581,998
----------
INSURANCE - 5.30%
American Financial Group Sub. Note
(9.750% due 08/01/99) 500,000 500,970
Berkley (W.R.) Corporation Deb.
(9.875% due 05/15/08) 500,000 605,857
Leucadia National Corporation
Sr. Sub. Note
(10.375% due 06/15/02) 1,000,000 1,080,000
Leucadia National Corporation
Sr. Sub. Note
(8.250% due 06/15/05) 1,000,000 1,000,000
Reliance Financial Services
Corporation Deb.
(9.480% due 11/01/00)<F1> 245,000 245,306
----------
3,432,133
----------
MANUFACTURING - 1.66%
Ucar Global Enterprises Note
(12.000% due 01/15/05) 1,000,000 1,070,000
----------
MISCELLANEOUS - 1.78%
Calpine Corporation Sr. Notes
(9.250% due 02/01/04) 750,000 652,500
International Wire Group, Inc.
(11.750% due 06/01/05) 500,000 500,000
----------
1,152,500
----------
OIL & GAS FIELD EXPLORATION
SERVICES - 5.82%
Mesa Capital Corporation Notes
(12.750% due 06/30/96) 243,000 218,700
Mitchell Energy & Development
Corporation Sr. Note
(6.750% due 02/15/04) 750,000 730,776
PDV America Inc. Sr. Notes
(7.750% due 08/01/00) 1,000,000 928,113
Triton Energy Corporation Sr.
Sub. Notes (10.371% due 11/01/97)<F1> 1,000,000 810,000
Union Texas Petro
(8.375% due 03/15/05) 1,000,000 1,080,074
----------
3,767,663
----------
PAPER & FOREST PRODUCTS - .83%
Westvaco Corporation Deb.
(10.300% due 01/15/19) 500,000 537,159
----------
PETROLEUM REFINING - .86%
Pennzoil Company Note
(9.625% due 11/15/99) 500,000 553,268
----------
RETAIL - FOOD - 2.19%
Great American Cookie Inc. Sr.
Secured Notes Series B
(10.875% due 01/15/01)<F2> 500,000 430,000
Nabisco Inc. Deb.
(7.550% due 06/15/15) 1,000,000 989,738
----------
1,419,738
----------
RETAIL - GENERAL - 1.66%
Hook-SuperX, Inc. Notes
(10.125% due 06/01/02) 1,000,000 1,074,997
----------
SAVINGS & LOANS - 1.98%
Golden West Financial
Corporation Deb.
(10.250% due 05/15/97) 500,000 533,578
Western Financial Savings & Loan
Sub. Deb. (8.500% due 07/01/03) 750,000 750,000
----------
1,283,578
----------
TRANSPORTATION - 1.62%
NWA Trust Sr. Notes, Class B
(10.230% due 06/21/14) 987,692 1,046,954
----------
Total Corporate Bonds
(cost $28,642,981) 29,296,334
----------
- ---------
(PIK) Payment in kind.
<FN>
<F1>
Zero coupon bonds, rates shown are effective yields.
<F2>
144A-Privately placed security traded among qualified
institutional buyers.
</FN>
</TABLE>
- ---------------------------------------------------------------------
COMMON STOCKS - .10%
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
OIL & GAS - DOMESTIC - .05%
Mesa Inc.* 6,417 $ 30,481
----------
TRAVEL & RECREATION - .05%
Host Marriot Corporation* 752 7,990
Marriott International Corporation 752 26,978
----------
34,968
----------
Total Common Stocks (cost $62,998) 65,449
----------
</TABLE>
- ---------------------------------------------------------------------
WARRANTS - .04%
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
GAMING INDUSTRY - .03%
Boomtown Inc. Warrants* 1,000 $ 2,000
Hemmerter Enterprises Warrants* 6,000 18,000
20,000
----------
RETAIL - FOOD - .01%
Great American Cookie Warrants* 90 3,600
----------
Total Warrants (cost $28,050) 23,600
----------
</TABLE>
- ---------------------------------------------------------------------
PREFERRED STOCK - 1.39%
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
PACKAGING - 1.39%
Earthshell Container Corporation
Series A Cumulative Sr.
Convertible 8%<F1> 500 $ 900,000
----------
Total Preferred Stock (cost $500,000) 900,000
----------
<FN>
<F1>
144A-Privately placed security traded among qualified
institutional buyers.
</FN>
</TABLE>
- ---------------------------------------------------------------------
SHORT TERM INVESTMENTS - 1.04%
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
VARIABLE RATE DEMAND NOTES<F3> - 1.04%
General Mills, Inc.
(5.720% due 07/05/95) 80,000 $ 80,000
Pitney Bowes Credit Corporation
(5.730% due 07/05/95) 86,771 86,771
Southwestern Bell Telephone Company
(5.709% due 07/05/95) 508,580 508,580
----------
Total Variable Rate Demand Notes
(cost $675,351) 675,351
----------
TOTAL INVESTMENTS - 98.71%
(cost $62,124,844) 63,881,105<F2>
----------
OTHER ASSETS & LIABILITIES - 1.29% 832,842
----------
TOTAL NET ASSETS - 100.00% $64,713,947
==========
*Nonincome producing
<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 June 30, 1995.
<F2>
Gross unrealized appreciation and depreciation of securities
at June 30, 1995 for financial reporting purposes was
$2,671,233 and $914,972 respectively; tax amounts were substantially
the same.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.<PAGE>
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
===================================================================
JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Equity Capital Bond
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investments in
securities, at value $186,218,906 $134,349,426 $63,881,105
(cost $156,404,204;
$127,950,327; $62,124,844)
Cash 66,654 81,164 ---
Receivables:
Investments sold --- 10,696 ---
Shares sold 558,663 19,793 8,367
Interest and dividends 307,141 727,034 1,014,612
Prepaid expenses 4,771 4.402 3,644
------------ ------------ -----------
187,156,135 135,192,515 64,907,728
------------ ------------ -----------
LIABILITIES
Investment securities purchased 349,325 168,700 ---
Payable for shares redeemed 149,584 --- 74,752
Investment advisory fees 90,221 75,795 25,961
Custodial and portfolio
accounting fees 7,972 8,565 8,966
Professional fees 8,094 6,677 6,651
Deferred compensation for
directors --- --- 70,258
Other accrued expenses 7,270 7,252 7,193
------------ ------------ -----------
612,466 266,989 193,781
------------ ------------ -----------
NET ASSETS
Paid-in capital 154,317,832 127,651,395 63,265,925
Accumulated undistributed
net investment income 116,165 195,968 136,009
Accumulated undistributed
net realized gain / (loss) 2,294,970 679,064 (444,248)
Unrealized appreciation, net 29,814,702 6,399,099 1,756,261
------------ ------------ -----------
$186,543,669 $134,925,526 $64,713,947
============ ============ ===========
Shares authorized \
($.10 par value) 20,000,000 15,000,000 10,000,000
============ ============ ===========
Shares outstanding 12,518,367 10,174,861 6,001,450
============ ============ ===========
Net asset value,
offering and redemption price
per share
(Net assets/shares outstanding) $ 14.90 $ 13.26 $ 10.78
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.<PAGE>
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF OPERATIONS
========================================================================
SIX MONTHS ENDED JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Equity Capital Bond
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 668,618 $ 3,103,651 $ 2,412,641
Dividends (net of
foreign withholding
taxes of $76,698, $31,085, $0) 1,499,981 509,590 105
------------ ------------ -----------
2,168,599 3,613,241 2,412,746
------------ ------------ -----------
EXPENSES
Investment advisory fees 511,194 432,676 147,666
Portfolio accounting fees 17,037 20,053 18,575
Custodial fees and expenses 19,745 16,007 7,531
Directors' fees 6,877 6,878 6,877
Professional fees 6,211 6,539 6,236
Registration and filing fees 3,062 2,773 2,901
Transfer agent fees 2,873 2,871 2,880
Other 5,305 4,023 4,093
------------ ------------ -----------
572,304 491,820 196,759
------------ ------------ -----------
NET INVESTMENT INCOME 1,596,295 3,121,421 2,215,987
------------ ------------ -----------
REALIZED AND UNREALIZED
GAIN / (LOSS)
ON INVESTMENTS
Net realized gain / (loss)
on investments 2,295,070 888,354 (139,191)
Realized gains received from
investment companies --- 6,944 ---
Net unrealized appreciation
of investments 18,317,769 5,728,984 4,505,380
------------ ------------ -----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 20,612,839 6,624,282 4,366,189
------------ ------------ -----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $22,209,134 $ 9,745,703 $ 6,582,176
============ =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.<PAGE>
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================
<TABLE>
<CAPTION>
Equity Portfolio
-------------------------------
Six Months Year
Ended Ended
June 30, December 31,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
OPERATIONS
Net investment income $ 1,596,295 $ 2,179,435
Net realized gain on investments 2,295,070 12,644,565
Net unrealized appreciation /
(depreciation) of investments 18,317,769 (10,119,382)
Net increase resulting from operations 22,209,134 4,704,618
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (1,721,348) (2,008,382)
Net realized gain on investments (12,644,665) (5,834,819)
------------ ------------
Net decrease from distributions
to shareholders (14,366,013) (7,843,201)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from sales of shares 12,591,322 24,726,975
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions 14,366,013 7,843,201
Payments for shares redeemed (5,953,063) (9,973,908)
------------ ------------
Net increase from fund
share transactions 21,004,272 22,596,268
------------ ------------
NET INCREASE IN NET ASSETS 28,847,393 19,457,685
NET ASSETS
Beginning of year 157,696,276 138,238,591
------------ ------------
End of year (including
undistributed net investment
income of $116,165 in 1995 and
$241,218 in 1994) $ 186,543,669 $157,696,276
============ ============
SHARE TRANSACTIONS:
Sold 866,581 1,706,967
Issued in reinvestment of dividends 1,031,324 535,871
Redeemed (407,666) (693,517)
------------ ------------
Net increase from share transactions 1,490,239 1,549,321
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.<PAGE>
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Capital Portfolio
-------------------------------
Six Months Year
Ended Ended
June 30, December 31,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
OPERATIONS
Net investment income $ 3,121,421 $ 4,674,137
Net realized gain on investments 895,298 5,500,010
Net unrealized appreciation /
(depreciation) of investments 5,728,984 (9,024,428)
------------ ------------
Net increase resulting from operations 9,745,703 1,149,719
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (3,204,246) (4,389,579)
Net realized gain on investments (5,716,244) (1,768,494)
------------ ------------
Net decrease from distributions
to shareholders (8,920,490) (6,158,073)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from sales of shares 11,073,176 25,455,114
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions 8,920,490 6,158,073
Payments for shares redeemed (5,156,289) (7,358,153)
------------ ------------
Net increase from fund share
transactions 14,837,377 24,255,034
------------ ------------
NET INCREASE IN NET ASSETS 15,662,590 19,246,680
NET ASSETS
Beginning of year 119,262,936 100,016,256
------------ ------------
End of year (including undistributed
net investment income of $195,968
in 1995 and $278,793 in 1994) $ 134,925,526 $119,262,936
============ ============
SHARE TRANSACTIONS:
Sold 833,640 1,885,321
Issued in reinvestment of dividends 688,566 458,326
Redeemed (388,380) (547,407)
------------ ------------
Net increase from share transactions 1,133,826 1,796,240
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.<PAGE>
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Bond Portfolio
-------------------------------
Six Months Year
Ended Ended
June 30, December 31,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
OPERATIONS
Net investment income $ 2,215,987 $ 3,971,668
Net realized gain on investments (139,191) (305,057)
Net unrealized appreciation /
(depreciation) of investments 4,505,380 (4,551,099)
----------- -----------
Net increase resulting from operations 6,582,176 (884,488)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (2,281,449) (4,072,051)
Net realized gain on investments --- (1,473,887)
----------- -----------
Net decrease from distributions
to shareholders (2,281,449) (5,545,938)
----------- -----------
FUND SHARE TRANSACTIONS
Proceeds from sales of shares 5,576,980 12,029,310
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions 2,281,449 5,545,938
Payments for shares redeemed (3,374,481) (9,343,895)
----------- -----------
Net increase from fund share
transactions 4,483,948 8,231,353
----------- -----------
NET INCREASE IN NET ASSETS 8,784,675 1,800,927
NET ASSETS
Beginning of year 55,929,272 54,128,345
----------- -----------
End of year (including
undistributed net investment
income of $136,009 in 1995
and $201,470 in 1994) $64,713,947 $55,929,272
=========== ===========
SHARE TRANSACTIONS:
Sold 533,121 1,136,443
Issued in reinvestment of dividends 216,155 532,039
Redeemed (321,078) (886,187)
----------- -----------
Net increase from share transactions 428,198 782,295
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.<PAGE>
<PAGE>
CARILLON FUND, INC.
NOTES TO FINANCIAL STATEMENTS
=================================================================
JUNE 30, 1995
(Unaudited)
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 annuity contracts. The Fund's
shares are offered in three different series - Equity Portfolio,
Capital Portfolio, and Bond Portfolio.
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. 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.
Income 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 taxable 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 $446,614 at
December 31, 1994. The carryforward, if unused expires in 2002.
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.
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
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 six months ended
June 30, 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 $34,909,606 $18,632,501 $ ---
U.S. Government Securities --- 7,970,659 8,654,712
----------- ----------- -----------
Corporate Bonds --- 4,884,844 23,589,402
----------- ----------- -----------
$34,909,606 $31,488,004 $32,244,114
=========== =========== ===========
Total proceeds from sales of:
Common Stocks $27,098,871 $ 5,787,697 $ ---
U.S. Government Securities --- 14,738,709 8,465,063
Corporate Bonds --- 2,676,701 15,981,967
----------- ----------- -----------
$27,098,871 $23,203,107 $24,447,030
=========== =========== ===========
</TABLE>
<PAGE>
NOTE 4 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
Equity Portfolio
-----------------------------------------------------
Six Months
Ended
June 30, 1995 Year Ended December 31,
----------- --------------------------------------------
(Unaudited)
1994 1993 1992 1991 1990
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $14.30 $14.58 $13.74 $12.60 $ 8.81 $10.79
------ ------ ------ ------ ------ ------
Investment Activities:
Net investment income .12 .20 .16 .19 .20 .28
Net realized
and unrealized
gains / (losses) 1.74 .31 1.69 1.27 3.79 (1.91)
------ ------ ------ ------ ------ ------
Total from Investment
Operations 1.86 .51 1.85 1.46 3.99 (1.63)
------ ------ ------ ------ ------ ------
Distributions:
Net investment income (.13) (.19) (.16) (.19) (.20) (.31)
Net realized gains (1.13) (.60) (.85) (.13) --- (.04)
------ ------ ------ ------ ------ ------
Total Distributions (1.26) (.79) (1.01) (.32) (.20) (.35)
------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period $14.90 $14.30 $14.58 $13.74 $12.60 $ 8.81
====== ====== ====== ====== ====== ======
Total Return 13.67%<F3> 3.42% 14.11% 11.78% 45.5% (15.45%)
Ratios/Supplemental
Data:
- --------------------
Ratio of Expenses to
Average Net Assets .67%<F2> .69% .70% .72% .75%<F1> .82%<F1>
Ratio of Net
Investment
Income to Average
Net Assets 1.88%<F2> 1.45% 1.18% 1.47% 1.79%<F1> 2.98%<F1>
Portfolio
Turnover Rate 36.56%<F2> 40.33% 37.93% 46.75% 55.17% 99.90%
Net Assets,
End of Period (000's) $186,544 $157,696 $138,239 $102,306 $79,352 $52,514
<FN>
<F1>
Net of expenses waived by the Adviser of $.002 per share in 1991
and $.01 per share in 1990.
<F2>
Annualized.
<F3>
Total return is not annualized.
</FN>
</TABLE>
<PAGE>
NOTE 4 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
Capital Portfolio
-----------------------------------------------------------------
Six Months
Ended
June 30, 1995 Year Ended December 31,
------------- --------------------------------------------
(Unaudited)
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 .32 .52 .43 .42 .47 .34
Net realized
and unrealized
gains / (losses) .70 (.39) 1.17 .56 2.25 (.40)
------ ------ ------ ------ ------ ------
Total from
Investment Operations 1.02 .13 1.60 .98 2.72 (.06)
------ ------ ------ ------ ------ ------
Distributions:
Net investment income (.33) (.52) (.42) (.42) (.47) (.32)
Net realized gains (.62) (.23) (.36) (.39) --- ---
------ ------ ------ ------ ------ ------
Total Distributions (.95) (.75) (.78) (.81) (.47) (.32)
------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period $13.26 $13.19 $13.81 $12.99 $12.82 $10.57
====== ====== ====== ====== ====== ======
Total Return 7.98%<F3> .94% 12.72% 7.93% 26.10% (.54%)<F3>
Ratios/Supplemental
Data:
- --------------------
Ratio of Expenses to
Average Net Assets .78%<F2> .80% .82% .88% .95% 1.03%<F2>
Ratio of Net
Investment Income to
Average Net Assets 4.98%<F2> 4.25% 3.31% 3.49% 4.05% 5.08%<F2>
Portfolio Turnover
Rate 48.70%<F2> 41.89% 32.42% 39.74% 47.93% 16.02%
Net Assets,
End of Period (000's) $134,926 $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>
Annualized.
<F3>
Total return is not annualized.
</FN>
</TABLE>
<PAGE>
<PAGE>
NOTE 4 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
Bond Portfolio
-----------------------------------------------------------------
Six Months
Ended
June 30, 1995 Year Ended December 31,
------------- --------------------------------------------
(Unaudited)
1994 1993 1992 1991 1990
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.04 $11.30 $10.91 $10.96 $10.10 $10.02
Investment Activities:
Net investment income .38 .77 .73 .82 .86 .81
Net realized
and unrealized
gains/(losses) .75 (.95) .54 (.01) .87 .03
------ ------ ------ ------ ------ ------
Total from
Investment Operations 1.13 (.18) 1.27 .81 1.73 .84
------ ------ ------ ------ ------ ------
Distributions:
Net investment income (.39) (.78) (.73) (.82) (.87) (.76)
Net realized gains --- (.30) (.15) (.04) --- ---
------ ------ ------ ------ ------ ------
Total Distributions (.39) (1.08) (.88) (.86) (.87) (.76)
------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period $10.78 $10.04 $11.30 $10.91 $10.96 $10.10
====== ====== ====== ====== ====== ======
Total Return 11.38%<F2> (1.63%) 11.94% 7.65% 17.89% 8.66%
Ratios/Supplemental
Data:
- -------------------
Ratio of Expenses to
Average Net Assets .66%<F1> .68% .66% .69% .73% .79%
Ratio of Net
Investment Income
to Average Net Assets 7.39%<F1> 7.21% 6.65% 7.59% 8.27% 8.57%
Portfolio Turnover
Rate 85.66%<F1> 70.27% 137.46% 40.91% 39.82% 110.90%
Net Assets,
End of Period (000's) $64,714 $55,929 $54,128 $38,557 $31,009 $24,446
<FN>
<F1>
Annualized.
<F2>
Total return is not annualized.
</FN>
</TABLE>
<PAGE>
<PAGE>
CARILLON FUND, INC.
ANNUAL REPORT
DECEMBER 31, 1994<PAGE>
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
Carillon Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of the
Equity Portfolio, the Capital Portfolio and the Bond Portfolio
(constituting Carillon Fund, Inc., hereafter referred to as the "Fund") at
December 31, 1994, the results of each of their operations for the year
then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the
five years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "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. We conducted our audits of these
financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audits 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, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1994 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Cincinnati, Ohio
February 6, 1995
<PAGE>
<PAGE>
CARILLON FUND, INC., SCHEDULE OF INVESTMENTS, DECEMBER 31, 1994
===============================================================
<TABLE>
<CAPTION>
EQUITY PORTFOLIO Number of Shares Value
- ---------------- ---------------- -----
<S> <C> <C>
COMMON STOCKS - 85.61%
AEROSPACE - 3.02%
Nichols Research Corporation # 3,000 38,248
Raytheon Company 15,000 958,125
Thiokol Corporation 45,000 1,254,375
Martin Marietta Corporation 40,000 1,775,000
Esco Electronics Corporation # 99,000 730,125
----------
4,755,873
----------
AUTOMOBILE PARTS - .48%
Donnelly Corporation 48,500 763,875
----------
BANKS - 5.97%
ABN AMRO Holdings NV (ADR) 30,000 1,042,461
Banco Latino Americano
De Exportaciones (ADR) 30,000 937,500
Boston Bancorp 25,000 728,125
Compass Bancshares Inc. 45,000 990,000
Deutsche Bank AG (ADR) 2,900 1,347,083
Dresdner Bank AG (ADR) 55,000 1,444,178
GBC Bancorp California 40,900 582,825
River Forest Bancorp 19,500 638,625
Southtrust Corporation 35,000 630,000
Zions Bancorp 30,000 1,076,250
----------
9,417,047
----------
BUILDING & HOUSING - 1.25%
ABT Building Products Corporation # 65,000 910,000
Falcon Products, Inc. 90,500 1,063,375
----------
1,973,375
----------
BUSINESS - MECHANICS & SOFTWARE - 2.25%
DH Technology, Inc. # 90,000 2,160,000
MacNeal-Schwendler Corporation 85,000 881,875
Olicom A/S # 50,000 512,500
----------
3,554,375
----------
CHEMICALS - 2.74%
Bayer AG (ADR) # 115,000 2,663,514
Ciba-Giegy AG (ADR) 27,000 805,669
Great Lakes Chemical Corporation 15,000 855,000
----------
4,324,183
----------
CONGLOMERATES - .81%
Mannesman AG (ADR) 4,700 1,279,600
----------
CONSUMER PRODUCTS - .07%
American Educational Products Inc. # 55,000 110,000
----------
CONTAINERS - 2.13%
AEP Industries, Inc. 107,550 1,976,231
Alltrista Corporation # 70,000 1,382,500
----------
3,358,731
----------
DRUGS - 2.64%
Merck & Company, Inc. 40,000 1,525,000
Schering Plough Corporation 20,000 1,480,000
Warner-Lambert Company 15,000 1,155,000
----------
4,160,000
----------
ELECTRIC - 3.50%
CINergy Corporation 29,400 687,225
CMS Energy Corporation 50,000 1,143,750
Duke Power Company 12,500 476,563
Empresa Nacional De
Electricidad SA (ADR) 30,000 1,215,000
Public Service Company of New Mexico # 54,000 702,000
Texas Utilities Company 20,000 640,000
Utilicorp United Inc. 25,000 662,500
----------
5,527,038
----------
ELECTRONICS - 1.14%
Advance Circuits, Inc. # 100,000 1,312,500
Instrument Systems Corporation # 15,000 125,625
Intelligent Electronics Inc. 45,000 360,000
----------
1,798,125
----------
ENGINEERING & CONSTRUCTION - .22%
Mestek, Inc. # 36,200 352,950
----------
FINANCIAL SERVICES - 5.18%
Bear Stearns Companies, Inc. 60,000 922,500
CMAC Investment Corporation 47,500 1,371,563
Dean Witter, Discover & Company 18,000 609,750
Equicredit Corporation # 30,000 956,250
Jefferies Group, Inc. 32,000 952,000
Morgan Stanley Group, Inc. 23,000 1,357,000
Olympic Financial Ltd. # 40,000 235,000
Raymond James Financial Corporation 50,000 700,000
Southwest Securities Group, Inc. 15,000 95,625
Student Loan Marketing Association 30,000 975,000
----------
8,174,688
----------
FOOD, BEVERAGE & TOBACCO - .54%
Todhunter International, Inc. # 55,000 852,500
----------
FURNITURE - .84%
Chromcraft Revington, Inc. # 60,000 1,320,000
----------
GOLD & PRECIOUS METALS - 2.14%
De Beers Consolidated Mines, Ltd. (ADR) 52,500 1,227,188
Echo Bay Mines, Ltd. 90,000 956,250
Minorco SA (ADR) 50,000 1,193,750
----------
3,377,188
----------
HEALTH CARE - 4.89%
American Medical Electronics, In.c # 85,000 467,500
Lunar Corporation # 88,800 1,598,400
Nellcor Inc. # 50,000 1,650,000
Orthofix International N.V. # 55,000 632,500
Research Industries Inc. # 100,000 1,375,000
Sofamor/Danek Group Inc. # 60,700 789,100
St. Jude Medical, Inc. 30,000 1,192,500
----------
7,705,000
----------
HEALTH CARE SERVICES - 2.16%
Advocat, Inc. # 40,500 536,625
Novacare, Inc. # 64,500 467,625
Pharmchem Laboratores, Inc. # 30,000 60,000
RightChoice Managed Care, Inc.,
Class A # 80,000 1,120,000
United Wisconsin Services, Inc. 34,000 1,219,750
----------
3,404,000
----------
HEALTH & BEAUTY AIDS - .95%
Helen of Troy Ltd. # 55,000 935,000
Perrigo Company # 45,000 562,500
----------
1,497,500
----------
HOSPITAL SUPPLY & SERVICE - 1.22%
Allied Healthcare Products Inc. 69,900 1,153,350
Utah Medical Products Inc. # 90,000 765,000
----------
1,918,350
----------
HOUSEHOLD PRODUCTS - 1.35%
Lifetime-Hoan Corporation # 123,420 1,450,185
Scotsman Industries 40,000 685,000
----------
2,135,185
----------
HOUSING - .92%
The Rottlund Company, Inc. # 50,000 262,500
Schult Homes Corporation 35,000 441,875
Toll Brothers Inc. # 75,000 740,625
----------
1,445,000
----------
INSURANCE - 5.59%
AEGON NV (ADR) 25,320 1,607,820
Capitol American Financial Corporation 30,000 690,000
Gainsco Inc. 105,000 866,250
Harleysville Group Inc. 45,300 1,098,525
RLI Corporation 54,900 1,125,450
Sphere Drake Holdings Ltd. 70,000 971,250
Transnational Re Corporation, Class A # 40,000 940,000
Torchmark Corporation 30,000 1,046,250
United Insurance Companies, Inc. # 13,600 462,400
----------
8,807,945
----------
INVESTMENT COMPANY - .21%
Allied Capital Corporation 25,000 328,125
----------
MACHINERY - AGRICULTURE &
CONSTRUCTION - 1.75%
Astec Industries Inc. # 65,000 828,750
Lindsay Manufacturing Company # 63,575 1,923,144
----------
2,751,894
----------
MACHINERY - INDUSTRIAL - .72%
Alamo Group, Inc. 70,000 1,128,750
----------
METALS & MINERALS - .43%
Geneva Steel Company, Class A # 50,000 675,000
----------
NON FERROUS METALS - .74%
Western Mines Holdings Ltd. (ADR) 50,000 1,168,750
----------
OIL & GAS - DOMESTIC - 4.16%
Apache Corporation 50,000 1,250,000
Columbia Gas Systems Inc. # 30,000 705,000
DeKalb Energy Company, Class B # 49,200 1,045,500
Evergreen Resources, Inc. # 25,800 135,450
Horsham Corporation 90,000 1,147,500
Newfield Exploration Company # 40,000 790,000
Panhandle Eastern Corporation 31 625
Petrocorp Inc. # 82,000 891,750
Snyder Oil Corporation 40,000 595,000
----------
6,560,825
----------
OIL & GAS - INTERNATIONAL - .75%
YPF S.A., Class D (ADR) 55,000 1,175,625
----------
OIL & GAS - SERVICE - 2.67%
Global Industries Ltd. # 80,000 1,830,000
Oceaneering International, Inc. # 80,000 820,000
Offshore Logistics, Inc. # 120,000 1,560,000
----------
4,210,000
----------
POLLUTION CONTROL - .15%
International Recovery Corporation 15,000 228,750
----------
PRINTING & PUBLISHING - .22%
CSS Industries, Inc. # 20,000 345,000
----------
REAL ESTATE - 4.13%
Columbus Realty Trust 45,000 832,500
Health Care Property Investors, Inc. 50,000 1,506,250
IRT Property Company 120,000 1,230,000
Merry Land & Investment Company, Inc. 50,000 1,093,750
NAB Asset Corporation 51,000 178,500
National Health Investors Inc. 40,000 1,045,000
Shurgard Storage Centers, Inc.,
Class A 30,000 622,500
----------
6,508,500
----------
RETAIL - GENERAL - 4.75%
CML Group Inc. 70,000 708,750
Claire's Stores, Inc. 75,000 900,000
Crown Books Corporation # 55,000 852,500
Dart Group Corporation, Class A 15,000 1,155,000
Forschner Group Inc. # 39,500 493,750
Hancock Fabrics, Inc. 95,000 843,125
Roberds Inc. # 70,000 507,500
Shopko Stores, Inc. 90,700 861,650
Value City Department Stores, Inc. # 70,000 612,500
Venture Stores, Inc. 48,000 558,000
----------
7,492,775
----------
SAVINGS & LOANS - 1.90%
Metropolitan Financial Corporation 29,280 677,100
Standard Federal Bank 50,000 1,193,750
Washington Federal Savings and
Loan Association 64,770 1,125,379
----------
2,996,229
----------
SEMICONDUCTOR - 1.20%
Advanced Micro Devices Inc. # 25,000 621,875
Intel Corporation 20,000 1,277,500
----------
1,899,375
----------
SHOES - .62%
K - Swiss Inc., Class A 50,000 987,500
----------
SOFTWARE - .86%
Artisoft, Inc. 43,500 339,844
Digi International, Inc. # 54,000 1,012,500
----------
1,352,344
----------
TELEPHONE - .56%
Societa Finanziara
Telephonica SPA (ADR) 30,000 883,956
----------
TEXTILE & APPAREL - 1.46%
Cone Mills Corporation # 40,000 475,000
Delta Woodside Industries, Inc. 90,000 1,035,000
Jones Apparel Group, Inc. # 25,000 643,750
Speizman Industries, Inc. # 40,000 150,000
----------
2,303,750
----------
TRANSPORTATION - .49%
Atlantic Southeast Airlines, Inc. 50,000 775,000
----------
MISCELLANEOUS - ENERGY - 4.11%
Giant Industries, Inc. # 50,000 375,000
Holly Corporation 40,000 1,045,000
Input/Output, Inc. # 60,700 1,434,038
Maxus Energy Corporation # 200,000 675,000
Repsol SA (ADR) 40,000 1,090,000
Total SA (ADR) 41,008 1,209,736
Valero Energy Corporation 40,000 675,000
----------
6,503,774
----------
MISCELLANEOUS - MANUFACTURING - 1.22%
ILC Technology, Inc. # 79,300 624,488
Kaydon Corporation 30,800 739,200
Versa Technologies, Inc. 40,500 556,875
----------
1,920,563
----------
MISCELLANEOUS - SERVICE - .51%
PCA International, Inc. 74,500 772,938
Programming & Systems, Inc. # * 49,200 24,600
----------
797,538
----------
Total Common Stocks (cost $123,509,618) 135,006,551
----------
(ADR) American Depository Receipt
# Nonincome Producing
* Restricted security
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
<S> <C> <C>
SHORT-TERM INVESTMENTS - 14.88%
COMMERCIAL PAPER - 8.85%
Circus Circus Enterprises, Inc.
(5.680% due 1/12/95) 2,000,000 1,996,529
Columbia Healthcare Corporation
(5.860% due 1/12/95) 1,000,000 998,209
Columbia Healthcare Corporation
(5.760% due 1/20/95) 1,000,000 996,960
Conagra, Inc. (5.720% due 1/23/95) 2,000,000 1,993,009
Crown Cork & Seal, Inc.
(6.200% due 2/1/95) 1,000,000 994,661
Illinois Power Fuel Company
(6.250% due 2/3/95) 1,000,000 994,271
LCI Funding (5.950% due 2/1/95) * 1,000,000 994,876
Niantic Bay Fuel Trust
(5.640% due 1/12/95) 1,000,000 998,264
Public Service Colorado Credit
Corporation (5.900% due 1/25/95) 1,000,000 996,067
Puget Sound Power & Light Company
(6.200% due 1/26/95) 1,000,000 995,694
White Consolidated Industries, Inc.
(5.650% due 1/9/95) 1,000,000 998,744
White Consolidated Industries, Inc.
(5.780% due 1/10/95) 1,000,000 998,555
-----------
Total Commerical Paper 13,955,839
-----------
VARIABLE RATE DEMAN NOTES <F1> - 6.03%
Eli Lilly & Company (5.545% due 1/3/95) 149,174 149,174
General Mills, Inc. (5.730% due 1/4/95) 1,706,342 1,706,342
Pitney Bowes Credit Corporation
(5.729% due 1/4/95) 2,268,276 2,268,276
Sara Lee Corporation
(5.709% due 1/4/95) 3,757,655 3,757,655
Southwestern Bell Telephone Company
(5.709% due 1/4/95) 1,629,513 1,629,513
-----------
Total Variable Rate Demand Notes 9,510,960
-----------
Total Short-Term Investments
(cost $23,466,799) 23,466,799
-----------
TOTAL INVESTMENTS - 100.49%
(cost $146,976,417) 158,473,350<F2>
------------
OTHER ASSETS AND LIABILITIES - (.49%) (777,074)
-----------
TOTAL NET ASSETS - 100.00% 157,696,276
-----------
* Restricted security - 4 (2) issue.
<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 December 31, 1994.
<F2>
Gross unrealized appreciation and depreciation of securities at December
31, 1994 for both financial reporting and tax purposes were $22,131,268 and
$10,634,335, respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
CARILLON FUND, INC., SCHEDULE OF INVESTMENTS, DECEMBER 31, 1994
===============================================================
<TABLE>
<CAPTION>
CAPITAL PORTFOLIO Number of Shares Value
- ---------------- ---------------- -----
<S> <C> <C>
COMMON STOCKS - 26.08%
AEROSPACE - .14%
Esco Electronics Corporation # 23,800 175,521
---------
BANKS - BANK HOLDING COMPANIES - 2.00%
ABN AMRO (ADR) 20,000 694,974
Deutsche Bank AG (ADR) 1,000 464,511
Dresdner Bank AG (ADR) 20,000 525,156
GBC Gancorpo California 20,045 285,641
River Forest Bancorp 12,500 409,375
---------
2,379,657
---------
BUILDING & HOUSING - .67%
ABT Building Products Corporation # 34,000 476,000
Falcon Products, Inc. 28,000 329,000
---------
805,000
---------
BUSINESS - MECHANICS & SOFTWARE - .54%
DH Technology, Inc. # 26,840 644,160
---------
CHEMICALS - 1.40%
Bayer AG (ADR) # 50,000 1,158,050
Ciba-Geigy AG (ADR) 17,000 507,273
---------
1,665,323
---------
CONGLOMERATES - .32%
Mannesman AG (ADR) 1,400 381,158
---------
CONTAINERS - 1.20%
AEP Industries, Inc. 45,831 842,145
Alltrista Corporation # 30,000 592,500
---------
1,434,645
---------
DRUGS - .54%
Merck & Company 17,000 648,125
---------
ELECTRIC - .52%
CMS Energy Corporation 20,000 457,500
Texas Utilities Company 5,000 160,000
---------
617,500
---------
ELECTRONICS - .33%
Advance Circuits, Inc. # 30,000 393,750
---------
ENGINEERING & CONSTRUCTION - .13%
Mestek, Inc. # 15,300 149,175
---------
FINANCIAL SERVICES - .40%
Dean Witter, Discover & Company 2,500 84,688
Student Loan Marketing Association 12,000 390,000
---------
474,688
---------
FURNITURE - .35%
Chromcraft Revington, Inc. # 19,000 418,000
---------
GOLD & PRECIOUS METALS - 2.49%
ASA Ltd. Non Assessable 15,000 673,125
De Beers Consolidated Mines, Ltd.(ADR) 32,100 750,338
Echo Bay Mines Ltd. 25,000 265,625
Minorco SA (ADR) 20,000 477,500
Pegasus Gold, Inc. 33,000 375,375
Placer Dome, Inc. 20,000 435,000
---------
2,976,963
---------
HEALTH CARE - .88%
Lunar Corporation # 40,400 727,200
Sofamor/Danek Group, Inc. 25,000 325,000
---------
1,052,200
---------
HEALTH CARE SERVICES - .80%
RightChoice Managed Care, Inc., Class A # 30,000 420,000
United Wisconsin Services, Inc. 15,000 538,125
---------
958,125
---------
HOSPITAL SUPPLY & SERVICE - .40%
Allied Healthcare Products, Inc. 28,600 471,900
---------
HOUSEHOLD PRODUCT - .40%
Lifetime - Hoan Corporation # 40,129 471,516
---------
INSURANCE - 1.25%
Capitol American Financial Corporation 30,000 690,000
RLI Corporation 24,384 499,872
United Insurance Companies, Inc. # 9,200 312,800
---------
1,502,672
---------
INVESTMENT COMPANY - .33%
Allied Capital Corporation 30,000 393,750
---------
MACHINERY - AGRICULTURE
& CONSTRUCTION - .56%
Lindsay Manufacturing Company # 21,939 663,655
---------
MACHINERY - INDUSTRIA.L - .14%
Alamo Group, Inc. 10,000 161,250
---------
METALS & MINERALS - .36%
Lydenburg Platinum Ltd. (ADR) 20,000 425,000
---------
MUTUAL FUND - DOMESTIC - .44%
Blackrock Strategic Term Trust 75,000 534,375
---------
MUTUAL FUND - INTERNATIONAL - 1.81%
France Growth Fund, Inc. 53,333 486,664
Global Total Return Fund, Inc. 105,000 643,125
New Germany Fund, Inc. 48,000 552,000
Templeton Global Income Fund, Inc. 75,000 478,125
---------
2,159,914
---------
NON FERROUS METAL - .49%
Western Mines Holdings Ltd. (ADR) 25,000 584,375
---------
OIL & GAS - DOMESTIC - .76%
Horsham Corporation 40,000 510,000
Newfield Exploration Corporation # 20,000 395,000
Panhandle Eastern Corporation 8 152
---------
905,152
---------
OIL & GAS - SERVICE - 1.07%
Global Industries Ltd. # 30,000 686,250
Offshore Logistics, Inc. # 45,000 585,000
---------
1,271,250
---------
REAL ESTATE - 1.59%
Health Care Property Investors, Inc. 26,296 792,167
IRT Property Company 50,000 512,500
NAB Asset Corporation 49,000 171,500
Shurgard Storage Centers, Inc., Class A 20,000 415,000
---------
1,891,167
---------
RETAIL - GENERAL - 1.18%
Crown Books Corporation # 4,692 72,726
Dart Group Corporation, Class A 6,000 462,000
Shopko Stores, Inc. 40,000 380,000
Value City Department Stores, Inc. # 30,000 262,500
Venture Stores, Inc. 20,000 232,500
---------
1,409,726
---------
SAVINGS & LOAN - .68%
Standard Federal Bank 25,000 596,875
Washington Federal Savings and
Loan Association 12,100 210,238
---------
807,113
---------
TRANSPORTATION - .39%
Atlantic Southeast Arilines, Inc. 30,000 465,000
---------
MISCELLANEOUS - ENERGY - .86%
Holly Corporation 12,000 313,500
Repsol SA (ADR) 26,000 708,500
---------
1,022,000
---------
MISCELLANEOUS - MANUFACTURING - .66%
ILC Technology, Inc. # 30,500 240,188
Versa Technologies, Inc. 40,000 550,000
---------
790,188
---------
Total Common Stocks (cost $27,960,511) 31,103,993
---------
PREFERRED STOCK - .38%
GOLD & PRECIOUS METALS - .38%
Freeport McMoran Copper & Gold 13,500 455,625
---------
Total Preferred Stock (cost $503,820) 455,625
---------
- -------
(ADR) American Depository Receipt
# Nonincome producing
The accompanying notes are an integral part of the financial statements.<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
<S> <C> <C>
BONDS AND NOTES - 47.98%
U.S. GOVERNMENT AND AGENCIES - 38.37%
U.S. Treasury Note
(8.625% due 1/15/95) 250,000 250,156
(7.500% due 2/29/96) 750,000 750,469
(7.625% due 4/30/96) 500,000 500,781
(7.250% due 8/31/96) 1,500,000 1,491,093
(7.250% due 11/15/96) 500,000 496,093
(6.125% due 12/31/96) 900,000 874,968
(8.000% due 1/15/97) 1,000,000 1,005,312
(6.750% due 2/28/97) 650,000 637,000
(8.500% due 4/15/97) 500,000 507,500
(6.750% due 5/31/97) 1,000,000 977,500
(7.875% due 4/15/98) 500,000 500,625
(6.375% due 1/15/99) 1,500,000 1,424,063
(5.500% due 2/28/99) 1,000,000 918,125
(6.375% due 7/15/99) 1,000,000 944,375
(6.000% due 10/15/99) 5,900,000 5,474,096
(8.875% due 5/15/00) 500,000 522,968
(8.500% due 11/15/00) 250,000 257,813
(7.750% due 2/15/01) 1,150,000 1,144,609
(7.500% due 11/15/01) 1,250,000 1,226,952
(6.375% due 8/15/02) 3,250,000 2,976,795
(6.250% due 2/15/03) 750,000 678,046
Federal Home Loan Mortgage Corporation
#M90066 (8.000% due 10/1/96) 564,877 567,243
#303427 (7.500% due 6/1/07) 94,143 91,427
1422 FA Floater
(7.620% due 11/15/07)<F1> 1,000,000 993,500
#160063 (9.500% due 10/1/08) 342,718 349,233
#189253 (8.250% due 3/1/12) 159,837 155,782
#303013 (8.500% due 3/1/16) 155,894 152,649
77F CMO (8.500% due 6/15/17) 1,100,000 1,098,537
#298118 (7.500% due 7/1/17) 84,762 78,995
#533003 (11.000% due 4/1/19) 91,114 97,500
#543567 (11.000% due 11/1/19) 118,755 127,079
#546130 (11.000% due 5/1/20) 352,848 377,354
#550139 (11.000% due 6/1/20) 529,930 567,386
31-C PO (9.487% due 3/15/22)<F2> 4,475,000 2,933,228
1399-I PAC II (7.000% due 9/15/22) 596,485 517,637
Federal National Mortgage Association
#71133 (10.000% due 2/1/04) 14,822 15,371
#050341 (9.500% due 9/1/05) 243,100 250,140
#110410 (9.000% due 11/1/05) 118,953 120,360
#50579 (8.000% due 5/1/07) 208,720 204,686
#50658 (7.000% due 10/1/07) 754,209 708,150
#181654 (7.000% due 10/1/07) 681,276 639,671
#247436 (5.500% due 11/1/08) 887,491 772,508
#50951 (6.000% due 12/1/08) 1,078,001 962,223
#50972 (5.500% due 1/1/09) 1,082,823 942,533
#190678 (6.000% due 3/1/09) 1,200,000 1,071,120
#276222 (5.500% due 4/1/09) 1,065,515 927,041
88-29 B (9.500% due 12/25/18) 1,071,043 1,085,395
#72465 (8.500% due 3/1/19) 22,076 21,798
91-81S Inverse Floater
(20.498% due 8/25/21)<F1> 208,303 150,359
93-127 FA PAC
(7.070% due 10/25/21)<F1> 1,000,000 944,860
#274657 (6.500% due 4/1/24) 4,173,634 3,670,126
#283599 (6.000% due 5/1/24) 713,291 605,626
Government National Mortgage Association
#196774 (9.000% due 11/15/16) 190,004 192,073
#271584 (10.500% due 11/20/19) 605,366 637,063
#147989 (9.000% due 12/15/19) 172,963 174,486
---------
45,762,478
---------
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
<S> <C> <C>
BANKS - .44%
Boatmens Bancshares, Inc. Sub. Note
(9.250% due 11/1/01) 260,000 268,674
Comerica, Inc. Sub. Note
(9.750% due 5/1/99) 250,000 259,442
---------
528,116
---------
CONGLOMERATES - .53%
Teledyne, Inc. Subordinated
Debenture Series C
(10.000% due 6/1/04) 151,000 150,029
Westinghouse Electric Corporation
Debenture (8.875% due 6/1/01) 500,000 486,347
---------
636,376
---------
FINANCIAL SERVICES - .84%
Dean Witter Discover & Company Note
(6.4146% due 12/15/95)<F1> 1,000,000 1,000,000
GAMING INDUSTRY - .22%
Circus Circus Enterprises, Inc.
Senior Sub. Note
(10.625% due 6/15/97) 250,000 260,478
---------
INSURANCE - .71%
Penn Central Corporation Sub. Note
(9.750% due 8/1/99) 130,000 131,166
Reliance Finance Service Corporation
Senior Note
(9.480% due 11/1/00)<F1> 750,000 712,500
---------
843,666
---------
(9.480% due 11/1/00)<F1> 750,000 712,500
---------
MANUFACTURING - .09%
Weyerhaeuser Company Note
(9.375% due 1/1/98) 104,000 104,000
---------
OIL & GAS EXPLORATION SERVICES - 2.63%
Coastal Corporation Senior Sub. Note
(11.125% due 3/1/98) 260,000 260,975
Columbia Gas Systems Debentures
(10.500% due 6/1/12)<F2> 750,000 945,000
Maxus Energy Corporation Debentures
(11.250%d eu 5/1/13) 208,000 195,000
Mitchell Energy & Development
Corporation Senior Note
(9.250% due 1/15/02) 1,000,000 1,015,151
Tenneco Inc. Note (10.000% due 8/1/98) 700,000 727,288
---------
3,143,414
---------
SAVINGS AND LOANS - .12%
Golden West Financial Corporation Sub.
Note (10.250% due 12/01/00) 130,000 140,112
---------
TELEPHONE AND TELECOMMUNICATIONS - .14%
United Telecommunications, Inc. Note
(9.750% due 4/1/00) 156,000 163,496
---------
TRANSPORTATION - .13%
Ryder System, Inc. Note
(9.375% due 1/15/98) 156,000 156,070
---------
TRAVEL & RECREATION - .26%
Host Marriott Hospitality Inc. Senior
Notes Series M
(10.500% due 5/1/06) 311,000 308,279
---------
UTILITIES - ELECTRIC - 2.12%
Commonwealth Edison Company 1st Mtg.
(7.625% due 6/1/03) 1,100,000 1,003,223
Connecticut Light & Power Company
1st Ref. Mtg.
(7.625% due 4/1/97) 700,000 689,524
Del Norte Funding Corp. Secured
Lease Obligation Debenture
(11.250% due 1/2/14)<F2> 800,000 380,000
<FN>
<F1>
Interest rates vary periodically based on current market rates.
Rates are as of December 31, 1994.
<F2>
Interest payments in default.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL PORTFOLIO (continued)
Principal Amount Value
---------------- -----
<S> <C> <C>
El Paso Electric Company 1st Mtg.
(6.750% due 5/1/98)<F1> 500,000 453,750
---------
2,526,497
---------
MISCELLANEOUS - 1.38%
GE Capital Mtg. Services Inc. 94-22 B1
(6.000% due 8/25/09) 628,913 524,645
Pacific Gulf Properties Inc. Sub.
Convertible Debenture
(8.375% due 2/15/01) 750,000 669,375
Toll Corporation Senior Sub. Note
(10.500% due 3/15/02) 500,000 457,500
1,651,520
---------
Total Bonds and Notes (cost $59,649,674) 57,224,502
----------
SHORT-TERM INVESTMENTS - 24.37%
COMMERCIAL PAPER - 17.54%
Circus Circus Enterprises, Inc.
(5.680% due 1/12/95) 2,000,000 1,996,529
Columbia Healthcare Corporation
(5.760% due 1/20/95) 1,000,000 996,960
Conagra, Inc. (5.720% due 1/23/95) 1,000,000 996,504
Crown Cork & Seal Inc.
(6.200% due 2/1/95) 1,000,000 994,661
CSX Corporation (5.670% due 1/23/95) 1,000,000 996,397
CSX Corporation (5.640% due 1/24/95) 1,000,000 996,535
Dana Credit Corporation
(6.210% due 2/13/95) 1,000,000 992,583
Illinois Power Fuel Company
(6.250% due 2/3/95) 1,000,000 994,271
LCI Funding (5.810% due 1/17/95) * 1,000,000 997,418
LCI Funding (5.950% due 2/1/95) * 1,000,000 994,876
Niantic Bay Fuel Trust
(5.640% due 1/12/95) 1,000,000 998,277
Occidental Petroleum Corporation
(6.030% due 1/17/95) 1,000,000 997,320
Penn Fuel Corporation
(6.230% due 2/3/95) 1,000,000 1,997,135
Penn Fuel Corporation
(5.730% due 1/10/95) 2,000,000 994,289
Puget Sound Power & Light Company
(6.200% due 1/26/95) 1,000,000 995,694
Sears Roebuck Acceptance Corporation
(5.610% due 1/23/95) 2,000,000 1,993,143
White Consolidated Industries, Inc.
(5.650% due 1/9/95) 2,000,000 1,997,489
---------
Total Commercial Paper 20,930,081
---------
VARIABLE RATE DEMAND NOTES <F2> -6.83%
Barclays American Corporation
(5.800% due 1/2/95) 1,827,473 1,827,473
General Mills, Inc.
(5.730% due 1/4/95) 1,462,130 1,462,130
Pitney Bowes Credit Corporation
(5.729% due 1/4/95) 2,158,482 2,158,482
Sara Lee Corporation
(5.709% due 1/4/95) 2,345,499 2,345,499
Southwestern Bell Telephone Company
(5.709% due 1/4/95) 358,187 358,187
---------
Total Variable Rate Demand Notes 8,151,771
---------
Total Short-Term Investments
(cost $29,081,852) 29,081,852
----------
TOTAL INVESTMENTS - 98.83%
(cost $117,195,857) 117,865,972<F3>
-----------
OTHER ASSETS AND LIABILITIES - 1.17% 1,396,964
---------
TOTAL NET ASSETS - 100.00% 119,262,936
===========
* Restricted Security - 4 (2) issue.
<FN>
<F1>
Interest payments in default.
<F2>
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, 1994.
<F3>
Gross unrealized appreciation and depreciation of securities at December
31, 1994 for financial reporting purposes were $5,373,079 and $4,702,964
respectively; tax amounts were substantially the same.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
CARILLON FUND, INC., SCHEDULE OF INVESTMENTS, DECEMBER 31, 1994
===============================================================
<TABLE>
<CAPTION>
BOND PORTFOLIO Principal Amount Value
- -------------- ---------------- -----
<S> <C> <C>
BONDS - 89.55%
U.S. GOVERNMENT AND AGENCIES - 49.40%
U.S. Treasury Bond
(6.250% due 8/15/23) 3,000,000 2,436,557
U.S. Treasury Note
(8.250% due 7/15/98) 1,000,000 1,011,875
(7.125% due 10/15/98) 1,000,000 979,062
(6.375% due 7/15/99) 1,000,000 944,375
(6.000% due 10/15/99) 4,000,000 3,711,252
(7.750% due 2/15/01) 2,500,000 2,488,280
(5.875% due 2/15/04) 2,000,000 1,744,374
U.S. Treasury Strips
(4.320% due 2/15/96)<F2> 2,000,000 1,842,520
(4.710% due 11/15/98)<F2> 2,000,000 1,483,040
(7.730% due 2/15/00)<F2> 3,250,000 2,189,525
(6.970% due 8/15/02)<F2> 2,000,000 1,108,480
Federal Home Loan Mortgage Corporation
#200067 (7.500% due 2/1/02) 82,632 78,449
#303427 (7.500% due 6/1/07) 207,198 201,220
#430721 (11.000% due 5/1/10) 91,714 98,249
#170035 (12.500% due 8/1/10) 29,935 32,807
#283065 (8.000% due 11/1/16) 99,932 95,154
#302710 (9.500% due 2/1/18) 122,574 125,217
59-E (8.900% due 11/15/20) 808,283 818,484
106G (8.250% due 12/15/20) 1,000,000 969,970
#D37325 (6.500% due 7/1/23) 962,954 849,961
TPM #730041 (9.500% due 4/1/05) 144,393 146,694
Federal National Mortgage Association
#20184 (12.000% due 4/1/00) 99,682 105,102
#31488 (9.000% due 8/1/01) 87,486 88,689
#40695 (8.500% due 1/1/02) 81,583 81,405
#50207 (10.500% due 6/1/04) 31,183 32,489
#97687 (10.500% due 5/1/05) 285,278 297,224
93-118 S (9.5232% due 5/25/08)<F1> 441,841 340,218
#214275 (6.500% due 6/1/08) 1,478,338 1,351,541
#54501 (8.000% due 8/1/17) 350,523 335,736
88-30D (9.500% due 12/25/18) 332,448 344,500
93-142 SA (9.9948% due 10/25/22)<F1> 921,170 700,089
93-223 SE (8.6656% due 12/25/23)<F1> 500,000 232,500
Government Naitonal Mortgage Association
GPM #92018 (11.000% due 3/15/10) 65,248 69,469
GPM #99521 (11.250%d ue 9/15/13) 52,497 56,156
GPM #905304 (10.750%d ue 2/15/16) 8,743 9,249
GPM #911462 (10.750% due 6/15/19) 72,757 76,963
GPM #286577 (9.000% due 5/15/20) 153,710 155,055
---------
27,631,930
----------
MISCELLANEOUS MORTGAGE BACKED - 4.68%
SASI 1993-2B2 (6.500% due 7/25/08) 340,342 291,476
CMC2 1993 (12.825% due 12/25/08)<F2> 478,083 286,850
CWMBS 1994-8B1 (6.000% due 4/25/09) 970,095 807,905
CMSC C-42 (10.950% due 2/1/14) 324,416 339,187
Greenwich Capital Acceptance Corporation
(5.784% due 8/25/24)<F1> 997,165 893,086
---------
2,618,504
---------
(TPM) Tier payment mortgage.
(GPM) Graduated payment mortgage.
(PAC) Planned Amoritization Class.
<FN>
<F1>
Interest rates vary periodically based on current market rates. Rates shown
are as of December 31, 1994.
<F2>
Zero coupon bonds, rates shown are the effective yields at date of
purchase.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO (continued) Principal Amount Value
- -------------- ---------------- -----
<S> <C> <C>
BONDS (continued)
BANKS - 2.22%
Comerica, Inc. Sub. Note
(9.750% due 5/1/99) 500,000 518,885
Western Financial Savings &
oan Subordinated Debenture
(8.500% due 7/1/03) 750,000 720,000
---------
1,238,885
---------
BROADCASTING/CABLE - 2.90%
Time Warner Inc. Note
(6.291% due 8/15/02)<F2> 1,275,000 1,209,656
Adelphia Communications Corporation
Senior PIK Note
Series B (9.500% due 2/15/04) 523,055 410,598
---------
1,620,254
CONSUMER PRODUCTS - .89%
First Brands Corporation Senior
Sub. Note (9.125% due 4/1/99) 500,000 496,250
FINANCE - .83%
General Motors Acceptance
Corporation Senior Note
(7.000% due 3/1/00) 500,000 464,554
FOOD, BEVERAGE, & TOBACCO - 2.22%
RJR Nabisco Inc. Note
(7.625% due 9/15/03) 500,000 430,017
Ralcorp Holdings, Inc. Notes
(8.750% due 9/15/04) 350,000 341,688
RJR Nabisco Inc. Debenture
(8.625% due 3/15/17) 500,000 468,315
---------
1,240,020
---------
GAMING INDUSTRY - 6.22%
Aztar Corporation Senior Sub.
Note (11.000% due 10/15/02) 1,000,000 905,000
Boomtown Inc. 1st Mtg. Note
(11.500% due 11/1/03) 1,000,000 820,000
Empress River Casinos Senior Note
(10.750% due 4/1/02) 1,000,000 910,000
Stations Casinos Inc. Senior Sub.
Note (9.625% due 6/1/03) 1,000,000 845,000
---------
3,480,000
---------
HEALTH CARE - 1.67%
Foundation Health Corporation
Senior Note (7.750% due 6/1/03) 500,000 458,301
Healthtrust Inc. Senior Sub.
Note (8.750% due 3/15/05) 500,000 477,500
---------
935,801
---------
INSURANCE - 4.59%
Berkley (W.R.) Corporation
Debenture (9.875% due 5/15/08) 500,000 542,620
Leucadia National Corporation
Senior Sub Notes
(10.375% due 6/15/02) 1,000,000 1,045,000
Penn Central Corporation
Sub. Note (9.750% due 8/1/99) 500,000 504,485
Reliance Financial Services
Corporation Debenture
(8.480% due 11/1/00)<F1> 500,000 475,000
---------
2,567,105
---------
OIL AND GAS FIELD EXPLORATION
SERVICES - 6.15%
Mesa Capital Corporation Notes
(12.750% due 6/30/96) 243,000 222,345
Mitchell Energy & Development
Corporation Senior Note
(6.750% due 2/15/04) 750,000 653,950
PDV America Inc. Senior Note
(7.750% due 8/1/00) 1,000,000 880,886
Triton Energy Corporation
Senior Sub. Note
(10.371% due 11/1/97)<F2> 1,000,000 730,000
Western Atlas Inc. Notes
(7.875% due 6/15/04) 1,000,000 951,360
---------
3,438,541
---------
(PIK) Payment in Kind
<FN>
<F1>
Interest rates vary periodically based on current market rates.
Rates shown are as of December 31, 1994.
<F2>
Zero coupon bonds, rates shown are the effective yields at date of
purchase.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO (continued) Principal Amount Value
- -------------- ---------------- -----
<S> <C> <C>
BONDS (continued)
PAPER AND FOREST PRODUCTS - .96%
Westvaco Corporation Debenture
(10.300% due 1/15/19) 500,000 536,791
PETROLEUM REFINING - .93%
Pennzoil Company Note
(9.625% due 11/15/99) 500,000 519,853
---------
RETAIL - FOOD - .80%
Great American Cookie Inc.
Senior Secured Notes Series B
(10.875% due 1/15/01)<F1> 500,000 447,500
---------
RETAIL - GENERAL - .1.81%
Hook-SuperX, Inc. Notes
(10.125% due 6/1/02) 1,000,000 1,015,000
---------
SAVINGS AND LOANS - .93%
Golden West Financial Corporation
Debentures (10.250% due 5/15/97) 500,000 519,924
---------
TRANSPORTATION - 1.80%
NWA Trust Senior Notes Class B
(10.230% due 6/21/14) 1,000,000 1,005,000
---------
TRAVEL & RECREATION - .55%
Host Marriott Hospitality Inc.
Senior Note Series B
(10.500% due 5/1/06) 311,000 308,279
---------
Total Bonds and Notes
(cost $53,230,533) 50,084,191
---------
<CAPTION>
Number of Shares Value
---------------- -----
<S> <C> <C>
COMMON STOCKS - .16%
GAMING INDUSTRIES - .04%
Boomtown Inc. Warrants # 1,000 4,000
Hemmeter Enterprises Inc. Warrants # 6,000 21,000
---------
25,000
---------
OIL & GAS - DOMESTIC - .06%
Mesa Inc. # 6,417 31,283
---------
RETAIL - FOOD - .01%
Cookies USA, Inc. Warrants # 90 3,600
---------
TRAVEL & RECREATION - .05%
Host Marriott Corporation # 752 7,238
Marriott International Inc. 752 21,150
---------
28,388
---------
Total Common Stocks (cost $91,048) 88,271
---------
PREFERRED STOCK - 1.61%
PACKAGING - 1.61%
Earthshell Container Corporation
Series A Cumulative
Senior Convertible 8% <F1> 500 900,000
---------
Total Preferred Stock (cost $500,000) 900,000
---------
# Nonincome producing
<FN>
<F1>
I44A - Privately placed security traded among qualified institutional
buyers.
<F2>
Interest rates vary periodically based on current market rates.
Rates shown are as of December 31, 1994.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO (continued) Principal Amount Value
- -------------------------- ---------------- -----
<S> <C> <C>
SHORT-TERM INVESTMENTS - 7.27%
COMMERCIAL PAPER - 6.24%
Columbia Healthcare Corporation
(6.150% due 2/7/95) 1,500,000 1,490,519
Illinois Power Fuel Company
(6.170% due 1/4/95) 1,000,000 999,486
LCI Funding (6.230% due 1/3/95) 1,000,000 999,654
---------
Total Commercial Paper 3,489,659
---------
VARIABLE RATE DEMAND NOTES<F1>-1.03%
General Mills, Inc.
(5.730% due 1/4/95) 346,445 346,445
Southwestern Bell Telephone
Company (5.709% due 1/4/95) 231,179 231,179
---------
Total Variable Rate Demand Notes 577,624
---------
Total Short-Term Inestments
(cost $4,067,283) 4,067,283
---------
TOTAL INVESTMENTS - 98.59%
(cost $57,888,864) 55,139,745<F2>
---------
OTHER ASSETS & LIABILITIES - 1.41% 789,527
---------
TOTAL NET ASSETS - 100.00% 55,929,272
---------
* Restricted security - 4 (2) issue.
<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,
1994.
<F2>
Gross unrealized appreciation and depreciation of securities at December
31, 1994 for financial reporting purposes were $735,205 and $3,484,324,
respectively; for tax purposes, $735,205 and $3,614,137 respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Carillon Fund, Inc., Statements of Assets and Liabilities,
December 31, 1994
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Capital Bond
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investments in securities,
at value (cost $146,976,417;
$117,195,857; $57,888,864) $158,473,350 $117,865,972 $55,139,745
Cash 37,401 20,781 -
Receivables:
Shares sold 93,361 506,014 91,944
Interest and dividends 250,024 954,561 807,643
Prepaid expenses 2,084 1,945 1,457
------------ ------------ -----------
158,856,220 119,349,273 56,040,789
------------ ------------ -----------
LIABILITIES
Investment securities
purchased 1,061,550 - -
Payable for shares redeemed - - 7,108
Investment advisory fees 80,255 69,121 23,285
Custodial and portfolio
accounting fees 5,883 7,407 6,546
Professional fees 6,550 4,804 5,081
Deferred compensation for
directors - - 63,233
Other accrued expenses 5,706 5,005 6,264
------------ ------------ ----------
1,159,944 86,337 111,517
------------ ------------ ----------
NET ASSETS
Paid-in capital 133,313,560 112,814,018 58,781,977
Accumulated undistributed
net investment income 241,218 278,793 201,471
Accumulated undistributed
net realized gains/(loss) 12,644,565 5,500,010 (305,057)
Unrealized appreciation/
(depreciation) net 11,496,933 670,115 (2,749,119)
------------ ------------ -----------
$157,696,276 $119,262,936 $55,929,272
============ ============ ===========
Shares authorized
($.10 par value) 20,000,000 15,000,000 10,000,000
============ ============ ===========
Shares outstanding 11,028,128 9,041,035 5,573,252
============ ============ ===========
Net asset value, offering
and redemption price
per share (Net assets/
shares outstanding) $ 14.30 $ 13.19 $ 10.04
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
Carillon Fund, Inc., Statements of Operations,
December 31, 1994
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Capital Bond
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 805,586 $ 4,704,227 $ 4,343,530
Dividends (net of
foreign withholding
taxes of $110,633,
$45,113, $0) 2,413,847 846,934 212
Other 4,060 851
---------- ------------ ------------
3,219,433 5,555,221 4,344,593
---------- ------------ ------------
EXPENSES
Investment advisory fees 924,881 766,664 273,068
Custodial fees and expenses 34,920 28,005 16,156
Portfolio accounting fees 33,094 40,210 37,434
Professional fees 12,657 13,877 14,072
Directors' fees 14,498 14,519 14,498
Transfer agent fees 5,529 5,573 5,597
Registration and
filing fees 5,618 6,132 6,541
Other 8,801 6,104 5,559
---------- ------------ ------------
1,039,998 881,084 372,925
---------- ------------ ------------
NET INVESTMENT INCOME 2,179,435 4,674,137 3,971,668
---------- ------------ ------------
REALIZED AND UNREALIZED
GAIN/(LOSS)
ON INVESTMENTS
Net realized gain/(loss)
on investments 12,644,565 5,412,005 (305,057)
Realized gains received
from investment companies - 88,005 -
Net unrealized depreciation
of investments (10,119,382) (9,024,428) (4,551,099)
---------- ------------ ------------
NET REALIZED AND
UNREALIZED GAIN/(LOSS)
ON INVESTMENTS 2,525,183 (3,524,418) (4,856,156)
---------- ------------ ------------
NET INCREASE/(DECREASE)
IN NET ASSETS
FROM OPERATIONS $4,704,618 $ 1,149,719 $ (884,488)
========== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
Carillon Fund, Inc., Statement of Changes in Net Assets
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Equity Portfolio
----------------
Year ended December 31,
-----------------------
1994 1993
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 2,179,435 $ 1,431,589
Net realized gain on investments 12,644,565 5,829,342
Net unrealized appreciation/
(depreciation) of investments (10,119,382) 8,936,958
------------ ------------
Net increase in net assets
resulting from operations 4,704,618 16,197,889
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (2,008,382) (1,420,116)
Net realized gain on investments (5,834,819) (6,658,509)
------------ ------------
(3,138,582) 8,119,264
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from sales of shares
(1,706,967 shares for 1994 and
2,218,460 shares for 1993) 24,726,975 30,617,937
Net asset value of shares issued
to shareholders in
reinvestment of dividends and
distributions (535,871 shares
for 1994 and
596,125 shares for 1993) 7,843,201 8,078,625
Payments for shares redeemed
(693,517 shares
for 1994 and 780,328
shares for 1993) (9,973,908) (10,883,263)
------------ ------------
22,596,268 27,813,299
------------ ------------
NET INCREASE IN NET ASSETS 19,457,686 35,932,563
NET ASSETS
Beginning of year 138,238,591 102,306,028
------------ ------------
End of year (including
undistributed net
investment income of
$241,218 for 1994
and $68,016 for 1993) $157,696,276 $138,238,591
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
Carillon Fund, Inc., Statement of Changes in Net Assets
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Portfolio
------------------
Year ended December 31,
-----------------------
1994 1993
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 4,674,137 $ 2,785,731
Net realized gain on investments 5,500,010 1,485,953
Net unrealized appreciation/
(depreciation) of investments (9,024,428) 5,882,206
------------ ------------
Net increase in net assets
resulting from operations 1,149,719 10,153,890
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (4,389,579) (2,686,406)
Net realized gain on investments (1,768,494) (2,008,839)
------------ ------------
(5,008,354) 5,458,645
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from sales of shares
(1,885,321 shares for 1994 and
2,058,453 shares for 1993) 25,455,114 27,268,539
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions
(458,326 shares for 1994 and
357,989 shares for 1993) 6,158,073 4,695,246
Payments for shares redeemed
(547,407 shares for 1994 and
457,613 shares for 1993) (7,358,153) (6,079,996)
------------ ------------
24,255,034 25,883,789
------------ ------------
NET INCREASE IN NET ASSETS 19,246,680 31,342,434
NET ASSETS
Beginning of year 100,016,256 68,673,822
------------ ------------
End of year (including
undistributed net
investment income of
$278,793 for 1994
and $285,794 for 1993) $119,262,936 $100,016,256
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE>
Carillon Fund, Inc., Statement of Changes in Net Assets
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Bond Portfolio
----------------
Year ended December 31,
-----------------------
1994 1993
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 3,971,668 $ 3,117,389
Net realized gain/(loss)
on investments (305,057) 1,530,493
Net unrealized appreciation/
(depreciation) of investments (4,551,099) 374,516
------------ ------------
Net increase/(decrease) in net
assets resulting from operations (884,488) 5,022,398
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (4,072,051) (3,061,134)
Net realized gain on investments (1,473,887) (552,712)
------------ ------------
(6,430,426) 1,408,552
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from sales of shares
(1,136,443 shares for 1994 and
1,568,184 shares for 1993) 12,029,310 17,724,179
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions
(532,039 shares for 1994 and
322,598 shares for 1993) 5,545,938 3,613,847
Payments for shares redeemed
(886,187 shares for 1994 and
635,295 shares for 1993) (9,343,895) (7,174,737)
------------ ------------
8,231,353 14,163,289
------------ ------------
NET INCREASE IN NET ASSETS 1,800,927 15,571,841
NET ASSETS
Beginning of year 54,128,345 38,556,504
------------ ------------
End of year (including
undistributed net
investment income of
$201,470 for 1994
and $245,246 for 1993) $ 55,929,272 $ 54,128,345
============ ============
</TABLE>
The accompanying notes are an integral part of the financial
statements.<PAGE>
<PAGE>
CARILLON FUND, INC., NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------
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 (UCL) and its separate accounts to fund the benefits
under certain variable annuity contracts. The Fund's shares are
offered in three different series - Equity Portfolio, Capital
Portfolio, and Bond Portfolio.
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 which are 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.
Change in Accounting for Distributions to Shareholders
Effective January 1, 1993, the fund adopted Statement of
Position 93-2: DETERMINATION, DISCLOSURE AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES. Accordingly, permanent
book and tax basis differences relating to shareholder
distributions have been reclassified. During the year ended
December 31, 1994, the cumulative effect of such differences was
reclassified from undistributed net realized gains/(losses) to
undistributed net investment income. Amounts reclassified were
$2,148, $(291,738) and $56,606 for the Equity, Capital and Bond
Portfolios, respectively. These reclassifications are primarily
due to differing book and tax treatment for mortgage-backed
securities and market discount. Net investment income, net
realized gains/(losses), and net assets were not affected by this
change.
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,
except for the Bond Portfolio, where tax cost exceeds cost for
financial statement purposes by $129,813.
Income 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 taxable 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 $446,614 at
December 31, 1994. The carryforward, if unused expires in 2002.
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.
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
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 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 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; and
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 UCL.
Directors' fees
Each director who is not affiliated with the Adviser receives
fees from the Fund for services 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,
1994, excluding short-term obligations, follow:
<TABLE>
<CAPTION>
Equity Capital Bond
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
Total cost of purchases of:
Common stocks $61,327,056 $ 9,100,409 $ 20,850
U.S. Government securities - 31,833,599 15,366,086
Corporate bonds - 5,449,025 23,495,679
----------- ----------- -----------
$61,327,056 $46,383,033 $38,882,615
=========== =========== ===========
Total proceeds from sales of:
Common stocks $53,385,397 $27,036,411 -
U.S. Government securities - 3,027,304 $9,904,946
Corporate bonds - 3,639,312 25,789,693
----------- ----------- -----------
$53,385,397 $33,703,027 $35,694,639
=========== =========== ===========
/TABLE
<PAGE>
<PAGE>
NOTE 4 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
Equity Portfolio
- -----------------------------------------------------------------------------
Year ended December 31,
- -----------------------------------------------------------------------------
1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $14.58 $13.74 12.60 8.81 10.79
Investment Activities:
Net investment income .20 .16 .19 .20<F1> .28<F1>
Net realized and
unrealized gains
(losses) .31 1.69 1.27 3.79 (1.91)
------ ------ ----- ----- -----
Total from Investment
Operations .51 1.85 1.46 3.99 (1.63)
Distributions:
Net investment income (.19) (.16) (.19) (.20) (.31)
Net realized gains (.60) (.85) (.13) - (.04)
Total Distributions (.79) (1.01) (.32) (.20) (.35)
------ ------ ----- ----- -----
Net Asset Value,
End of period $14.30 $14.58 $13.74 $12.60 $8.81
====== ====== ====== ====== =====
Ratios/Supplemental
Data:
Total Return 3.42% 14.11% 11.78% 45.55% (15.45%)
Ratio of Expenses to
Average Net Assets .69% .70% .72% .75%<F1> .82%<F1>
Ratio of Net
Investment Income
to Average
Net Assets 1.45% 1.18% 1.47% 1.79%<F1> 2.98%<F1>
Portfolio Turnover
Rate 40.33% 37.93% 46.75% 55.17% 99.90%
Net Assets,
End of Period 157,696,276 138,238,591 102,306,028 79,352,448 52,513,701
<FN>
<F1>
Net of expenses waived by the Adviser of $.002 per share in 1991 and $.01 per
share in 1990.
</FN>
</TABLE>
<PAGE>
<PAGE>
NOTE 4 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<PAGE>
<TABLE>
<CAPTION>
Capital Portfolio
- -------------------------------------------------------------------------------
Year ended December 31,
-------------------------------------------------------
1994 1993 1992 1991 1990<F1>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of
period $13.81 $12.99 $12.82 $10.57 $10.95
Investment
Activities:
Net investment
income .52 .43 .42 .47 .34
Net realized and
unrealized gains
(losses) (.39) 1.17 .56 2.25 (.40)
------ ------ ------ ------ ------
Total from
Investment
Operations .13 1.60 .98 2.72 (.06)
Distributions:
Net investment
income (.52) (.42) (.42) (.47) (.32)
Net realized gains (.23) (.36) (.39) .00 .00
------ ------ ------ ------ ------
Total Distributions (.75) (.78) (.81) (.47) (.32)
Net Asset Value,
End of period $13.19 $13.81 $12.99 $12.82 $10.57
====== ====== ====== ====== ======
Ratios/Supplemental
Data:
Total Return .94% 12.72% 7.93% 26.10% (.54%)
Ratio of Expenses
to Average
Net Assets .80% .82% .88% .95% 1.03%<F2>
Ratio of Net
Investment Income
to Average
Net Assets 4.25% 3.31% 3.49% 4.05% 5.08%<F2>
Portfolio Turnover
Rate 41.89% 32.42% 39.74% 47.93% 16.02%
Net Assets,
End of Period $119,262,936 $100,016,256 $68,673,822 $41,843,772 $23,813,342
<FN>
<F1>
Period from May 1, 1990 (commencement of operations) through December 31, 1990.
<F2>
Annualized
</FN>
</TABLE>
<PAGE>
<PAGE>
NOTE 4 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
Bond Portfolio
- ---------------------------------------------------------------------------------
Year ended December 31,
- ---------------------------------------------------------------------------------
1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.30 $10.91 $10.96 $10.10 $10.02
Investment Activities:
Net investment income .77 .73 .82 .86 .81
Net realized and
unrealized gains
(losses) (.95) .54 (.01) .87 .03
------ ------ ------ ------ ------
Total from Investment
Operations (.18) 1.27 .81 1.73 .84
Distributions:
Net investment income (.78) (.73) (.82) (.87) (.76)
Net realized gains (.30) (.15) (.04) - -
------ ------ ------ ------ ------
Total Distributions (1.08) (.88) (.86) (.87) (.76)
Net Asset Value,
End of period $10.04 $11.30 $10.91 $10.96 $10.10
Ratios/Supplemental Data:
Total Return (1.63%) 11.94% 7.65% 17.89% 8.66%
Ratio of Expenses to
Average Net Assets .68% .66% .69% .73% .79%
Ratio of Net Investment
Income to Average
Net Assets 7.21% 6.65% 7.59% 8.27% 8.57%
Portfolio Turnover
Rate 70.27% 137.46% 40.91% 39.82% 110.90%
Net Assets,
End of Period $55,929,272 $54,128,345 $38,556,504 $31,008,756 $24,445,631
/TABLE
<PAGE>
<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 three separate Port-
folios: Equity Portfolio, Bond Portfolio, and Capital 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.
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, 1995, 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 REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
May 1, 1995
- --------------------------------------------------------------
UCCF 514 4-95<PAGE>
<PAGE>
CARILLON FUND, INC.
TABLE OF CONTENTS
Page
The Fund .......................................... 2
Annual Fund Operating Expenses .................... 3
Financial Highlights .............................. 4
Investment Objectives and Policies ................ 6
Equity Portfolio ................................. 6
Bond Portfolio ................................... 7
Capital Portfolio ................................ 8
Principal Risk Factors ........................... 9
Repurchase Agreements ............................ 9
Options .......................................... 9
Collateralized Mortgage Obligations .............. 10
Other Information ................................ 10
The Fund and Its Management ....................... 10
Investment Adviser ............................... 11
Advisory Fee ..................................... 11
Expenses ......................................... 11
Capital Stock .................................... 11
Purchase and Redemption of Shares ................. 12
Dividends and Distributions ....................... 12
Taxes ............................................. 12
Custodian, Transfer and
Dividend Disbursing Agent ........................ 12
Appendix
Bond and Commercial Paper Ratings ................ 13
-------------------------
THE FUND
Carillon Fund, Inc. (the "Fund"), a Maryland corporation, is a
no-load, diversified, open-end investment company. The Fund has
three 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 (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 three 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>
<PAGE>
SUPPLEMENT DATED December 28, 1995
TO THE PROSPECTUS DATED MAY 1, 1995 OF
CARILLON FUND, INC.
Effective December 28, 1995, the prospectus for Carillon Fund, Inc.
(the "Fund") dated May 1, 1995 (the "Prospectus") is amended by
including as a part thereof the following information.
As of December 28, 1995, a new S&P 500 Index Portfolio (the "Index
Portfolio") was added to the Fund. As the Index Portfolio is not
yet available under the contracts being offered pursuant to the
variable annuity prospectus which accompanies the Prospectus, all
information about the Index Portfolio and its investment objective,
policies and risks has been omitted from this supplement and the
Prospectus.
The date of the statement of additional information referenced on
the cover of the Prospectus is replaced by
May 1, 1995, as supplemented on December 28, 1995.
On page 2 of the Prospectus, the following sentence replaces the
first sentence of the second paragraph after the caption "The
Fund."
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 "con-
tracts") issued by Union Central.
The following language replaces the first sentence after the
caption "Purchase and Redemption of Shares" on page 12 of the
Prospectus.
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 invest-
ing 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.
<PAGE>
ANNUAL FUND OPERATING EXPENSES
EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
Equity Bond Capital
Portfolio Portfolio Portfolio
- ------------------------------------------------------------
<S> <C> <C> <C>
Management Fees .61% .50% .70%
Other Expenses* .08% .18% .10%
---- ---- ----
Total Operating Expenses .69% .68% .80%
</TABLE>
* "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.
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 $22 $38 $86
Bond Portfolio $ 7 $22 $38 $85
Capital Portfolio $ 8 $26 $44 $99
</TABLE>
** 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.
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.
<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, 1994, have been audited in conjunction with the
annual audit of the financial statements of the Fund by Price
Waterhouse LLP, independent accountants, whose unqualified report
thereon is included in the Statement of Additional Information.
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,
- -----------------------------------------------------------------------------
1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $14.58 $13.74 12.60 8.81 10.79
Investment Activities:
Net investment income .20 .16 .19 .20<F1> .28<F1>
Net realized and
unrealized gains
(losses) .31 1.69 1.27 3.79 (1.91)
------ ------ ----- ----- -----
Total from Investment
Operations .51 1.85 1.46 3.99 (1.63)
Distributions:
Net investment income (.19) (.16) (.19) (.20) (.31)
Net realized gains (.60) (.85) (.13) - (.04)
Total Distributions (.79) (1.01) (.32) (.20) (.35)
------ ------ ----- ----- -----
Net Asset Value,
End of period $14.30 $14.58 $13.74 $12.60 $8.81
====== ====== ====== ====== =====
Ratios/Supplemental
Data:
Total Return 3.42% 14.11% 11.78% 45.55% (15.45%)
Ratio of Expenses to
Average Net Assets .69% .70% .72% .75%<F1> .82%<F1>
Ratio of Net
Investment Income
to Average
Net Assets 1.45% 1.18% 1.47% 1.79%<F1> 2.98%<F1>
Portfolio Turnover
Rate 40.33% 37.93% 46.75% 55.17% 99.90%
Net Assets,
End of Period 157,696,276 138,238,591 102,306,028 79,352,448 52,513,701
<FN>
<F1>
Net of expenses waived by the Adviser of $.002 per share in 1991 and $.01 per
share in 1990.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Equity Portfolio
- ------------------------------------------------------------------------------
Year ended December 31,
- --------------------------------------------------------------------------------
1989 1988 1987 1986 1985
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period 10.88 8.57 9.62 12.72 10.43
Investment Activities:
Net investment income .58 .38 .34 .55 .54
Net realized and
unrealized gains
(losses) .69 2.33 (.22) 1.08 2.28
------ ------ ----- ----- -----
Total from Investment
Operations 1.27 3.71 .12 1.63 2.82
Distributions:
Net investment income (.59) (.34) (.35) (.56) (.53)
Net realized gains (.77) (.06) (.82) (4.17) -
------ ------ ----- ----- -----
Total Distributions (1.36) (.40) (1.17) (4.73) (.53)
Net Asset Value,
End of period $10.79 $10.88 $ 8.57 $ 9.62 $12.72
====== ====== ====== ====== ======
Ratios/Supplemental
Data:
Total Return 11.79% 31.79% .85% 12.72% 27.65%
Ratio of Expenses to
Average Net Assets .95% .95% .97% .89% 1.00%
Ratio of Net
Investment Income
to Average Net Assets 5.34% 3.74% 3.30% 3.78% 4.86%
Portfolio Turnover Rate 61.49% 57.98% 70.17% 84.23% 49.88%
Net Assets,
End of Period 56,193,553 37,723,446 28,914,896 17,955,862 20,463,116
/TABLE
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
Bond Portfolio
- ---------------------------------------------------------------------------------
Year ended December 31,
- ---------------------------------------------------------------------------------
1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.30 $10.91 $10.96 $10.10 $10.02
Investment Activities:
Net investment income .77 .73 .82 .86 .81
Net realized and
unrealized gains
(losses) (.95) .54 (.01) .87 .03
------ ------ ------ ------ ------
Total from Investment
Operations (.18) 1.27 .81 1.73 .84
Distributions:
Net investment income (.78) (.73) (.82) (.87) (.76)
Net realized gains (.30) (.15) (.04) - -
------ ------ ------ ------ ------
Total Distributions (1.08) (.88) (.86) (.87) (.76)
Net Asset Value,
End of period $10.04 $11.30 $10.91 $10.96 $10.10
Ratios/Supplemental Data:
Total Return (1.63%) 11.94% 7.65% 17.89% 8.66%
Ratio of Expenses to
Average Net Assets .68% .66% .69% .73% .79%
Ratio of Net Investment
Income to Average
Net Assets 7.21% 6.65% 7.59% 8.27% 8.57%
Portfolio Turnover
Rate 70.27% 137.46% 40.91% 39.82% 110.90%
Net Assets,
End of Period $55,929,272 $54,128,345 $38,556,504 $31,008,756 $24,445,631
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Bond Portfolio
- ---------------------------------------------------------------------------------
Year ended December 31,
- ---------------------------------------------------------------------------------
1989 1988 1987 1986 1985
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 9.82 $ 9.96 $10.51 $11.22 $10.44
Investment Activities:
Net investment income .83 .85 .82 1.12 1.00
Net realized and
unrealized gains
(losses) .20 (.13) (.51) .67 .77
------ ------ ------ ------ ------
Total from Investment
Operations 1.03 .72 .31 1.79 1.77
Distributions:
Net investment income (.83) (.86) (.86) (1.13) (.99)
Net realized gains - - - (1.37) -
------ ------ ------ ------ ------
Total Distributions (.83) (.86) (.86) (2.50) (.99)
Net Asset Value,
End of period $10.02 $ 9.82 $ 9.96 $10.51 $11.22
Ratios/Supplemental
Data:
Total Return 10.72% 7.36% 3.15% 16.59% 17.78%
Ratio of Expenses to
Average Net Assets .86% .82% .72% .65% .71%
Ratio of Net
Investment Income
to Average
Net Assets 8.38% 8.34% 8.34% 8.65% 9.94%
Portfolio Turnover
Rate 17.70% 24.11% 80.35% 103.44% 92.43%
Net Assets,
End of Period $15,940,670 $12,460,027 $15,796,363 $11,487,084 $14,688,626
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
Capital Portfolio
- --------------------------------------------------------------------------------
Year ended December 31, Period Ended
----------------------------------------- December 31,
1994 1993 1992 1991 1990<F1>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $13.81 $12.99 $12.82 $10.57 $10.95
Investment
Activities:
Net investment
income .52 .43 .42 .47 .34
Net realized and
unrealized gains
(losses) (.39) 1.17 .56 2.25 (.40)
------ ------ ------ ------ ------
Total from
Investment
Operations .13 1.60 .98 2.72 (.06)
Distributions:
Net investment
income (.52) (.42) (.42) (.47) (.32)
Net realized gains (.23) (.36) (.39) .00 .00
------ ------ ------ ------ ------
Total Distributions (.75) (.78) (.81) (.47) (.32)
Net Asset Value,
End of period $13.19 $13.81 $12.99 $12.82 $10.57
====== ====== ====== ====== ======
Ratios/Supplemental
Data:
Total Return .94% 12.72% 7.93% 26.10% (.54%)
Ratio of Expenses
to Average
Net Assets .80% .82% .88% .95% 1.03%<F2>
Ratio of Net
Investment Income
to Average
Net Assets 4.25% 3.31% 3.49% 4.05% 5.08%<F2>
Portfolio Turnover
Rate 41.89% 32.42% 39.74% 47.93% 16.02%
Net Assets,
End of Period $119,262,936 $100,016,256 $68,673,822 $41,843,772 $23,813,342
<FN>
<F1>
Period from May 1, 1990 (commencement of operations) through December 31, 1990.
<F2>
Annualized
</FN>
</TABLE>
<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 9.) As of March 31,
1995, 22% 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 9.
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 9.
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.
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.
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.
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 Treasury 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 satisfactory U.S. Treasury
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.
Collateralized Mortgage Obligations
The Portfolios 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.
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 three classes of stock, one for each Portfolio. The Capital
Portfolio was authorized during 1990 and on May 1, 1990, the
Variable Capital Account, a separate account of Union Central,
invested approximately $14,953,645 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) and Michael J. Schultz (since 1992) have
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. Mr. Schultz is Second Vice President of the Adviser
and has been affiliated with the Adviser and Union Central since
1992. Previously, he was affiliated with ICH Capital Management
Group.
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.
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).
Capital Stock
The Fund currently has three 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.
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
The Fund offers its shares, without sales charge, only for
purchase by Union Central and its separate accounts. 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, 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 26, 1995; 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 and Capital
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.
Federal tax laws impose a four percent nondeductible excise tax on
each regulated investment company with respect to an amount, if
any, by which such company does not meet specified distribution
requirements. Each Portfolio intends to comply with such
distribution requirements and therefore does not expect to incur
the four percent nondeductible excise tax.
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.
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>
CARILLON FUND, INC.
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STATEMENT OF ADDITIONAL INFORMATION
May 1, 1995
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,
1994, 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 (6)............................... 2
Money Market Instruments and Investment Techniques... 2
Certain Risk Factors Relating to High-Yield,
High-Risk Bonds..................................... 4
Options.............................................. 4
Investment Restrictions............................... 8
Portfolio Turnover....................................10
Management of the Fund (10)...........................11
Directors and Officers...............................11
Investment Adviser...................................13
Payment of Expenses..................................13
Advisory Fee.........................................14
Investment Advisory Agreement........................14
Administration.......................................15
Service Agreement....................................15
Securities Activities of Adviser.....................16
Determination of Net Asset Value (12).................16
Purchase and Redemption of Shares (12)................17
Taxes (12)............................................17
Portfolio Transactions and Brokerage..................18
General Information (2)...............................19
Capital Stock........................................19
Voting Rights........................................19
Additional Information...............................20
Independent Accountants and Financial
Statements...........................................20
- -------
( ) indicates page on which the corresponding section appears in
the Prospectus.
- ----------------------------------------------------------------
UCCF 515 4-95
<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 and Bond 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 The Fund 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).
The Fund 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.
The Fund 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.
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.
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.
As a writer of a call option, the 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 Portfolio 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, 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 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 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 Treasury 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 Treasury 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.
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.
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.
(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.
(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 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.
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 40.33% and 37.93%, respectively, for 1994 and 1993. The
annual Portfolio turnover rates for the Bond Portfolio were 70.27%
and 137.46%, respectively, for 1994 and 1993. The annual Portfolio
turnover rates for the Capital Portfolio were 41.89% and 32.42%,
respectively, for 1994 and 1993.
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.
<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>
Name and Position(s) with Principal Occupation(s)
Address the Fund During Past Five Years
- ------------- ---------------- -----------------------
<S> <C> <C>
George M. Callard, M.D. Director Cardiovascular Surgeon and
3021 Erie Avenue Professor of Clinical Surgery,
Cincinnati, Ohio 45208 University of Cincinnati
George L. Clucas* Director, Senior Vice President,
President and Union Central; Director,
Chief Executive President and Chief Executive
Officer 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
James M. Ewell Director Retired Senior Vice President
9000 Indian Ridge Road and Director, The Procter and
Cincinnati, Ohio 45243 Gamble Company
Richard H. Finan Director Attorney at Law; President Pro
11137 Main Street Tempore of the Ohio State Senate
Cincinnati, Ohio 45241
Jean Patrice Director Former Executive Director,
Harrington, S.C. Cincinnati Youth Collaborative;
3217 Whitfield Avenue President Emeritus (formerly,
Cincinnati, Ohio 45220 President) College of Mount St.
Joseph
John H. Jacobs* Director Senior Vice President, Union
Central; prior to December, 1992,
Officer and employee, Union Central
Charles W. McMahon Director Retired Senior Vice President and
2031 W. Galbraith Road, #E Director, Union Central
Cincinnati, Ohio 45239
Harry Rossi* Director Director Emeritus, Union Central;
641 Flagstaff Drive Director, Adviser; former Chairman,
Cincinnati, Ohio 45215 President and Chief Executive
Officer, Union Central
Stephen R. Hatcher Senior Vice Senior Vice President and Chief
President Financial Officer, Union Central
John F. Labmeier Vice President Second Vice President, Associate
and Secretary General Counsel and Assistant
Secretary, Union Central; Vice
President and Secretary, CII;
Secretary, Adviser
L. Michael Baranack Controller Assistant Controller, Union
Central; prior to April, 1991,
employee of Union Central
Joseph A. Tucker Treasurer Assistant to the Treasurer, Union
(61) Central; prior to October 1992,
Officer and employee, Union Central
John M. Lucas Assistant Assistant Counsel and Assistant to
(44) Secretary the Secretary, Union Central; prior
to October, 1992, Officer and
employee, Union Central
- ---------------
* 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 1994 were
$43,515.
<PAGE>
Compensation Table
</TABLE>
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Total
Pension or Estimated Compensation
Retirement Annual From
Benefits Estimated Registrant
Aggregate Accrued Annual and Fund
Compensation As Part of Benefits Complex*
Name of Person, From Fund Upon Paid to
Position Registrant Expenses Retirement 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 7,300 -- -- 10,600
Harrington, S.C.
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, 1994, the total
amount deferred, including interest, was as follows: Dr.
Callard -$44,199; Mr. McMahon - $22,752.
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 177, Cincinnati, Ohio 45201). 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; 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.
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
Year Portfolio Portfolio Portfolio
- ---- --------- --------- ---------
<S> <C> <C> <C>
1994 $924,881 $273,068 $766,664
1993 $750,859 $232,954 $593,388
1992 $570,315 $169,958 $408,581
</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 27, 1995, 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.
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 Fund's average net assets. 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
at a meeting held on March 20, 1992.
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.
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, 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 26, 1995,
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 1994, 45% of the Fund's total brokerage was allocated to
brokers who furnish statistical data or research information.
Brokerage commissions paid during 1994, 1993 and 1992 were
$232,642, $226,635 and $220,110, 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 Money Market
Portfolio (which is not being offered) 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 ACCOUNTANTS AND FINANCIAL STATEMENTS
The financial statements of the Fund have been examined by Price
Waterhouse LLP, independent accountants, whose report follows. The
financial statements included in this Statement of Additional
Information have been included in reliance upon the report of Price
Waterhouse LLP, given upon their authority as experts in auditing
and accounting.
<PAGE>
CARILLON FUND, INC.
ANNUAL REPORT
DECEMBER 31, 1994
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
Carillon Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of the
Equity Portfolio, the Capital Portfolio and the Bond Portfolio
(constituting Carillon Fund, Inc., hereafter referred to as the "Fund")
at December 31, 1994, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of
the two years in the period then ended and the financial highlights for
each of the five years in the period then ended, in conformity with
generally accepted accounting principles. These financial statements
and financial highlights (hereafter referred to as "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. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audits 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,
assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at December 31, 1994 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Cincinnati, Ohio
February 6, 1995
<PAGE>
CARILLON FUND, INC., SCHEDULE OF INVESTMENTS, DECEMBER 31, 1994
===============================================================
<TABLE>
<CAPTION>
EQUITY PORTFOLIO Number of Shares Value
- ---------------- ---------------- -----
<S> <C> <C>
COMMON STOCKS - 85.61%
AEROSPACE - 3.02%
Nichols Research Corporation # 3,000 38,248
Raytheon Company 15,000 958,125
Thiokol Corporation 45,000 1,254,375
Martin Marietta Corporation 40,000 1,775,000
Esco Electronics Corporation # 99,000 730,125
----------
4,755,873
----------
AUTOMOBILE PARTS - .48%
Donnelly Corporation 48,500 763,875
----------
BANKS - 5.97%
ABN AMRO Holdings NV (ADR) 30,000 1,042,461
Banco Latino Americano
De Exportaciones (ADR) 30,000 937,500
Boston Bancorp 25,000 728,125
Compass Bancshares Inc. 45,000 990,000
Deutsche Bank AG (ADR) 2,900 1,347,083
Dresdner Bank AG (ADR) 55,000 1,444,178
GBC Bancorp California 40,900 582,825
River Forest Bancorp 19,500 638,625
Southtrust Corporation 35,000 630,000
Zions Bancorp 30,000 1,076,250
----------
9,417,047
----------
BUILDING & HOUSING - 1.25%
ABT Building Products Corporation # 65,000 910,000
Falcon Products, Inc. 90,500 1,063,375
----------
1,973,375
----------
BUSINESS - MECHANICS & SOFTWARE - 2.25%
DH Technology, Inc. # 90,000 2,160,000
MacNeal-Schwendler Corporation 85,000 881,875
Olicom A/S # 50,000 512,500
----------
3,554,375
----------
CHEMICALS - 2.74%
Bayer AG (ADR) # 115,000 2,663,514
Ciba-Giegy AG (ADR) 27,000 805,669
Great Lakes Chemical Corporation 15,000 855,000
----------
4,324,183
----------
CONGLOMERATES - .81%
Mannesman AG (ADR) 4,700 1,279,600
----------
CONSUMER PRODUCTS - .07%
American Educational Products Inc. # 55,000 110,000
----------
CONTAINERS - 2.13%
AEP Industries, Inc. 107,550 1,976,231
Alltrista Corporation # 70,000 1,382,500
----------
3,358,731
----------
DRUGS - 2.64%
Merck & Company, Inc. 40,000 1,525,000
Schering Plough Corporation 20,000 1,480,000
Warner-Lambert Company 15,000 1,155,000
----------
4,160,000
----------
ELECTRIC - 3.50%
CINergy Corporation 29,400 687,225
CMS Energy Corporation 50,000 1,143,750
Duke Power Company 12,500 476,563
Empresa Nacional De
Electricidad SA (ADR) 30,000 1,215,000
Public Service Company of New Mexico # 54,000 702,000
Texas Utilities Company 20,000 640,000
Utilicorp United Inc. 25,000 662,500
----------
5,527,038
----------
ELECTRONICS - 1.14%
Advance Circuits, Inc. # 100,000 1,312,500
Instrument Systems Corporation # 15,000 125,625
Intelligent Electronics Inc. 45,000 360,000
----------
1,798,125
----------
ENGINEERING & CONSTRUCTION - .22%
Mestek, Inc. # 36,200 352,950
----------
FINANCIAL SERVICES - 5.18%
Bear Stearns Companies, Inc. 60,000 922,500
CMAC Investment Corporation 47,500 1,371,563
Dean Witter, Discover & Company 18,000 609,750
Equicredit Corporation # 30,000 956,250
Jefferies Group, Inc. 32,000 952,000
Morgan Stanley Group, Inc. 23,000 1,357,000
Olympic Financial Ltd. # 40,000 235,000
Raymond James Financial Corporation 50,000 700,000
Southwest Securities Group, Inc. 15,000 95,625
Student Loan Marketing Association 30,000 975,000
----------
8,174,688
----------
FOOD, BEVERAGE & TOBACCO - .54%
Todhunter International, Inc. # 55,000 852,500
----------
FURNITURE - .84%
Chromcraft Revington, Inc. # 60,000 1,320,000
----------
GOLD & PRECIOUS METALS - 2.14%
De Beers Consolidated Mines, Ltd. (ADR) 52,500 1,227,188
Echo Bay Mines, Ltd. 90,000 956,250
Minorco SA (ADR) 50,000 1,193,750
----------
3,377,188
----------
HEALTH CARE - 4.89%
American Medical Electronics, In.c # 85,000 467,500
Lunar Corporation # 88,800 1,598,400
Nellcor Inc. # 50,000 1,650,000
Orthofix International N.V. # 55,000 632,500
Research Industries Inc. # 100,000 1,375,000
Sofamor/Danek Group Inc. # 60,700 789,100
St. Jude Medical, Inc. 30,000 1,192,500
----------
7,705,000
----------
HEALTH CARE SERVICES - 2.16%
Advocat, Inc. # 40,500 536,625
Novacare, Inc. # 64,500 467,625
Pharmchem Laboratores, Inc. # 30,000 60,000
RightChoice Managed Care, Inc.,
Class A # 80,000 1,120,000
United Wisconsin Services, Inc. 34,000 1,219,750
----------
3,404,000
----------
HEALTH & BEAUTY AIDS - .95%
Helen of Troy Ltd. # 55,000 935,000
Perrigo Company # 45,000 562,500
----------
1,497,500
----------
HOSPITAL SUPPLY & SERVICE - 1.22%
Allied Healthcare Products Inc. 69,900 1,153,350
Utah Medical Products Inc. # 90,000 765,000
----------
1,918,350
----------
HOUSEHOLD PRODUCTS - 1.35%
Lifetime-Hoan Corporation # 123,420 1,450,185
Scotsman Industries 40,000 685,000
----------
2,135,185
----------
HOUSING - .92%
The Rottlund Company, Inc. # 50,000 262,500
Schult Homes Corporation 35,000 441,875
Toll Brothers Inc. # 75,000 740,625
----------
1,445,000
----------
INSURANCE - 5.59%
AEGON NV (ADR) 25,320 1,607,820
Capitol American Financial Corporation 30,000 690,000
Gainsco Inc. 105,000 866,250
Harleysville Group Inc. 45,300 1,098,525
RLI Corporation 54,900 1,125,450
Sphere Drake Holdings Ltd. 70,000 971,250
Transnational Re Corporation, Class A # 40,000 940,000
Torchmark Corporation 30,000 1,046,250
United Insurance Companies, Inc. # 13,600 462,400
----------
8,807,945
----------
INVESTMENT COMPANY - .21%
Allied Capital Corporation 25,000 328,125
----------
MACHINERY - AGRICULTURE &
CONSTRUCTION - 1.75%
Astec Industries Inc. # 65,000 828,750
Lindsay Manufacturing Company # 63,575 1,923,144
----------
2,751,894
----------
MACHINERY - INDUSTRIAL - .72%
Alamo Group, Inc. 70,000 1,128,750
----------
METALS & MINERALS - .43%
Geneva Steel Company, Class A # 50,000 675,000
----------
NON FERROUS METALS - .74%
Western Mines Holdings Ltd. (ADR) 50,000 1,168,750
----------
OIL & GAS - DOMESTIC - 4.16%
Apache Corporation 50,000 1,250,000
Columbia Gas Systems Inc. # 30,000 705,000
DeKalb Energy Company, Class B # 49,200 1,045,500
Evergreen Resources, Inc. # 25,800 135,450
Horsham Corporation 90,000 1,147,500
Newfield Exploration Company # 40,000 790,000
Panhandle Eastern Corporation 31 625
Petrocorp Inc. # 82,000 891,750
Snyder Oil Corporation 40,000 595,000
----------
6,560,825
----------
OIL & GAS - INTERNATIONAL - .75%
YPF S.A., Class D (ADR) 55,000 1,175,625
----------
OIL & GAS - SERVICE - 2.67%
Global Industries Ltd. # 80,000 1,830,000
Oceaneering International, Inc. # 80,000 820,000
Offshore Logistics, Inc. # 120,000 1,560,000
----------
4,210,000
----------
POLLUTION CONTROL - .15%
International Recovery Corporation 15,000 228,750
----------
PRINTING & PUBLISHING - .22%
CSS Industries, Inc. # 20,000 345,000
----------
REAL ESTATE - 4.13%
Columbus Realty Trust 45,000 832,500
Health Care Property Investors, Inc. 50,000 1,506,250
IRT Property Company 120,000 1,230,000
Merry Land & Investment Company, Inc. 50,000 1,093,750
NAB Asset Corporation 51,000 178,500
National Health Investors Inc. 40,000 1,045,000
Shurgard Storage Centers, Inc.,
Class A 30,000 622,500
----------
6,508,500
----------
RETAIL - GENERAL - 4.75%
CML Group Inc. 70,000 708,750
Claire's Stores, Inc. 75,000 900,000
Crown Books Corporation # 55,000 852,500
Dart Group Corporation, Class A 15,000 1,155,000
Forschner Group Inc. # 39,500 493,750
Hancock Fabrics, Inc. 95,000 843,125
Roberds Inc. # 70,000 507,500
Shopko Stores, Inc. 90,700 861,650
Value City Department Stores, Inc. # 70,000 612,500
Venture Stores, Inc. 48,000 558,000
----------
7,492,775
----------
SAVINGS & LOANS - 1.90%
Metropolitan Financial Corporation 29,280 677,100
Standard Federal Bank 50,000 1,193,750
Washington Federal Savings and
Loan Association 64,770 1,125,379
----------
2,996,229
----------
SEMICONDUCTOR - 1.20%
Advanced Micro Devices Inc. # 25,000 621,875
Intel Corporation 20,000 1,277,500
----------
1,899,375
----------
SHOES - .62%
K - Swiss Inc., Class A 50,000 987,500
----------
SOFTWARE - .86%
Artisoft, Inc. 43,500 339,844
Digi International, Inc. # 54,000 1,012,500
----------
1,352,344
----------
TELEPHONE - .56%
Societa Finanziara
Telephonica SPA (ADR) 30,000 883,956
----------
TEXTILE & APPAREL - 1.46%
Cone Mills Corporation # 40,000 475,000
Delta Woodside Industries, Inc. 90,000 1,035,000
Jones Apparel Group, Inc. # 25,000 643,750
Speizman Industries, Inc. # 40,000 150,000
----------
2,303,750
----------
TRANSPORTATION - .49%
Atlantic Southeast Airlines, Inc. 50,000 775,000
----------
MISCELLANEOUS - ENERGY - 4.11%
Giant Industries, Inc. # 50,000 375,000
Holly Corporation 40,000 1,045,000
Input/Output, Inc. # 60,700 1,434,038
Maxus Energy Corporation # 200,000 675,000
Repsol SA (ADR) 40,000 1,090,000
Total SA (ADR) 41,008 1,209,736
Valero Energy Corporation 40,000 675,000
----------
6,503,774
----------
MISCELLANEOUS - MANUFACTURING - 1.22%
ILC Technology, Inc. # 79,300 624,488
Kaydon Corporation 30,800 739,200
Versa Technologies, Inc. 40,500 556,875
----------
1,920,563
----------
MISCELLANEOUS - SERVICE - .51%
PCA International, Inc. 74,500 772,938
Programming & Systems, Inc. # * 49,200 24,600
----------
797,538
----------
Total Common Stocks (cost $123,509,618) 135,006,551
----------
(ADR) American Depository Receipt
# Nonincome Producing
* Restricted security
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
<S> <C> <C>
SHORT-TERM INVESTMENTS - 14.88%
COMMERCIAL PAPER - 8.85%
Circus Circus Enterprises, Inc.
(5.680% due 1/12/95) 2,000,000 1,996,529
Columbia Healthcare Corporation
(5.860% due 1/12/95) 1,000,000 998,209
Columbia Healthcare Corporation
(5.760% due 1/20/95) 1,000,000 996,960
Conagra, Inc. (5.720% due 1/23/95) 2,000,000 1,993,009
Crown Cork & Seal, Inc.
(6.200% due 2/1/95) 1,000,000 994,661
Illinois Power Fuel Company
(6.250% due 2/3/95) 1,000,000 994,271
LCI Funding (5.950% due 2/1/95) * 1,000,000 994,876
Niantic Bay Fuel Trust
(5.640% due 1/12/95) 1,000,000 998,264
Public Service Colorado Credit
Corporation (5.900% due 1/25/95) 1,000,000 996,067
Puget Sound Power & Light Company
(6.200% due 1/26/95) 1,000,000 995,694
White Consolidated Industries, Inc.
(5.650% due 1/9/95) 1,000,000 998,744
White Consolidated Industries, Inc.
(5.780% due 1/10/95) 1,000,000 998,555
-----------
Total Commerical Paper 13,955,839
-----------
VARIABLE RATE DEMAN NOTES <F1> - 6.03%
Eli Lilly & Company (5.545% due 1/3/95) 149,174 149,174
General Mills, Inc. (5.730% due 1/4/95) 1,706,342 1,706,342
Pitney Bowes Credit Corporation
(5.729% due 1/4/95) 2,268,276 2,268,276
Sara Lee Corporation
(5.709% due 1/4/95) 3,757,655 3,757,655
Southwestern Bell Telephone Company
(5.709% due 1/4/95) 1,629,513 1,629,513
-----------
Total Variable Rate Demand Notes 9,510,960
-----------
Total Short-Term Investments
(cost $23,466,799) 23,466,799
-----------
TOTAL INVESTMENTS - 100.49%
(cost $146,976,417) 158,473,350<F2>
------------
OTHER ASSETS AND LIABILITIES - (.49%) (777,074)
-----------
TOTAL NET ASSETS - 100.00% 157,696,276
-----------
* Restricted security - 4 (2) issue.
<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 December 31, 1994.
<F2>
Gross unrealized appreciation and depreciation of securities at December
31, 1994 for both financial reporting and tax purposes were $22,131,268 and
$10,634,335, respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
CARILLON FUND, INC., SCHEDULE OF INVESTMENTS, DECEMBER 31, 1994
===============================================================
<TABLE>
<CAPTION>
CAPITAL PORTFOLIO Number of Shares Value
- ---------------- ---------------- -----
<S> <C> <C>
COMMON STOCKS - 26.08%
AEROSPACE - .14%
Esco Electronics Corporation # 23,800 175,521
---------
BANKS - BANK HOLDING COMPANIES - 2.00%
ABN AMRO (ADR) 20,000 694,974
Deutsche Bank AG (ADR) 1,000 464,511
Dresdner Bank AG (ADR) 20,000 525,156
GBC Gancorpo California 20,045 285,641
River Forest Bancorp 12,500 409,375
---------
2,379,657
---------
BUILDING & HOUSING - .67%
ABT Building Products Corporation # 34,000 476,000
Falcon Products, Inc. 28,000 329,000
---------
805,000
---------
BUSINESS - MECHANICS & SOFTWARE - .54%
DH Technology, Inc. # 26,840 644,160
---------
CHEMICALS - 1.40%
Bayer AG (ADR) # 50,000 1,158,050
Ciba-Geigy AG (ADR) 17,000 507,273
---------
1,665,323
---------
CONGLOMERATES - .32%
Mannesman AG (ADR) 1,400 381,158
---------
CONTAINERS - 1.20%
AEP Industries, Inc. 45,831 842,145
Alltrista Corporation # 30,000 592,500
---------
1,434,645
---------
DRUGS - .54%
Merck & Company 17,000 648,125
---------
ELECTRIC - .52%
CMS Energy Corporation 20,000 457,500
Texas Utilities Company 5,000 160,000
---------
617,500
---------
ELECTRONICS - .33%
Advance Circuits, Inc. # 30,000 393,750
---------
ENGINEERING & CONSTRUCTION - .13%
Mestek, Inc. # 15,300 149,175
---------
FINANCIAL SERVICES - .40%
Dean Witter, Discover & Company 2,500 84,688
Student Loan Marketing Association 12,000 390,000
---------
474,688
---------
FURNITURE - .35%
Chromcraft Revington, Inc. # 19,000 418,000
---------
GOLD & PRECIOUS METALS - 2.49%
ASA Ltd. Non Assessable 15,000 673,125
De Beers Consolidated Mines, Ltd.(ADR) 32,100 750,338
Echo Bay Mines Ltd. 25,000 265,625
Minorco SA (ADR) 20,000 477,500
Pegasus Gold, Inc. 33,000 375,375
Placer Dome, Inc. 20,000 435,000
---------
2,976,963
---------
HEALTH CARE - .88%
Lunar Corporation # 40,400 727,200
Sofamor/Danek Group, Inc. 25,000 325,000
---------
1,052,200
---------
HEALTH CARE SERVICES - .80%
RightChoice Managed Care, Inc., Class A # 30,000 420,000
United Wisconsin Services, Inc. 15,000 538,125
---------
958,125
---------
HOSPITAL SUPPLY & SERVICE - .40%
Allied Healthcare Products, Inc. 28,600 471,900
---------
HOUSEHOLD PRODUCT - .40%
Lifetime - Hoan Corporation # 40,129 471,516
---------
INSURANCE - 1.25%
Capitol American Financial Corporation 30,000 690,000
RLI Corporation 24,384 499,872
United Insurance Companies, Inc. # 9,200 312,800
---------
1,502,672
---------
INVESTMENT COMPANY - .33%
Allied Capital Corporation 30,000 393,750
---------
MACHINERY - AGRICULTURE
& CONSTRUCTION - .56%
Lindsay Manufacturing Company # 21,939 663,655
---------
MACHINERY - INDUSTRIA.L - .14%
Alamo Group, Inc. 10,000 161,250
---------
METALS & MINERALS - .36%
Lydenburg Platinum Ltd. (ADR) 20,000 425,000
---------
MUTUAL FUND - DOMESTIC - .44%
Blackrock Strategic Term Trust 75,000 534,375
---------
MUTUAL FUND - INTERNATIONAL - 1.81%
France Growth Fund, Inc. 53,333 486,664
Global Total Return Fund, Inc. 105,000 643,125
New Germany Fund, Inc. 48,000 552,000
Templeton Global Income Fund, Inc. 75,000 478,125
---------
2,159,914
---------
NON FERROUS METAL - .49%
Western Mines Holdings Ltd. (ADR) 25,000 584,375
---------
OIL & GAS - DOMESTIC - .76%
Horsham Corporation 40,000 510,000
Newfield Exploration Corporation # 20,000 395,000
Panhandle Eastern Corporation 8 152
---------
905,152
---------
OIL & GAS - SERVICE - 1.07%
Global Industries Ltd. # 30,000 686,250
Offshore Logistics, Inc. # 45,000 585,000
---------
1,271,250
---------
REAL ESTATE - 1.59%
Health Care Property Investors, Inc. 26,296 792,167
IRT Property Company 50,000 512,500
NAB Asset Corporation 49,000 171,500
Shurgard Storage Centers, Inc., Class A 20,000 415,000
---------
1,891,167
---------
RETAIL - GENERAL - 1.18%
Crown Books Corporation # 4,692 72,726
Dart Group Corporation, Class A 6,000 462,000
Shopko Stores, Inc. 40,000 380,000
Value City Department Stores, Inc. # 30,000 262,500
Venture Stores, Inc. 20,000 232,500
---------
1,409,726
---------
SAVINGS & LOAN - .68%
Standard Federal Bank 25,000 596,875
Washington Federal Savings and
Loan Association 12,100 210,238
---------
807,113
---------
TRANSPORTATION - .39%
Atlantic Southeast Arilines, Inc. 30,000 465,000
---------
MISCELLANEOUS - ENERGY - .86%
Holly Corporation 12,000 313,500
Repsol SA (ADR) 26,000 708,500
---------
1,022,000
---------
MISCELLANEOUS - MANUFACTURING - .66%
ILC Technology, Inc. # 30,500 240,188
Versa Technologies, Inc. 40,000 550,000
---------
790,188
---------
Total Common Stocks (cost $27,960,511) 31,103,993
---------
PREFERRED STOCK - .38%
GOLD & PRECIOUS METALS - .38%
Freeport McMoran Copper & Gold 13,500 455,625
---------
Total Preferred Stock (cost $503,820) 455,625
---------
- -------
(ADR) American Depository Receipt
# Nonincome producing
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
<S> <C> <C>
BONDS AND NOTES - 47.98%
U.S. GOVERNMENT AND AGENCIES - 38.37%
U.S. Treasury Note
(8.625% due 1/15/95) 250,000 250,156
(7.500% due 2/29/96) 750,000 750,469
(7.625% due 4/30/96) 500,000 500,781
(7.250% due 8/31/96) 1,500,000 1,491,093
(7.250% due 11/15/96) 500,000 496,093
(6.125% due 12/31/96) 900,000 874,968
(8.000% due 1/15/97) 1,000,000 1,005,312
(6.750% due 2/28/97) 650,000 637,000
(8.500% due 4/15/97) 500,000 507,500
(6.750% due 5/31/97) 1,000,000 977,500
(7.875% due 4/15/98) 500,000 500,625
(6.375% due 1/15/99) 1,500,000 1,424,063
(5.500% due 2/28/99) 1,000,000 918,125
(6.375% due 7/15/99) 1,000,000 944,375
(6.000% due 10/15/99) 5,900,000 5,474,096
(8.875% due 5/15/00) 500,000 522,968
(8.500% due 11/15/00) 250,000 257,813
(7.750% due 2/15/01) 1,150,000 1,144,609
(7.500% due 11/15/01) 1,250,000 1,226,952
(6.375% due 8/15/02) 3,250,000 2,976,795
(6.250% due 2/15/03) 750,000 678,046
Federal Home Loan Mortgage Corporation
#M90066 (8.000% due 10/1/96) 564,877 567,243
#303427 (7.500% due 6/1/07) 94,143 91,427
1422 FA Floater
(7.620% due 11/15/07)<F1> 1,000,000 993,500
#160063 (9.500% due 10/1/08) 342,718 349,233
#189253 (8.250% due 3/1/12) 159,837 155,782
#303013 (8.500% due 3/1/16) 155,894 152,649
77F CMO (8.500% due 6/15/17) 1,100,000 1,098,537
#298118 (7.500% due 7/1/17) 84,762 78,995
#533003 (11.000% due 4/1/19) 91,114 97,500
#543567 (11.000% due 11/1/19) 118,755 127,079
#546130 (11.000% due 5/1/20) 352,848 377,354
#550139 (11.000% due 6/1/20) 529,930 567,386
31-C PO (9.487% due 3/15/22)<F2> 4,475,000 2,933,228
1399-I PAC II (7.000% due 9/15/22) 596,485 517,637
Federal National Mortgage Association
#71133 (10.000% due 2/1/04) 14,822 15,371
#050341 (9.500% due 9/1/05) 243,100 250,140
#110410 (9.000% due 11/1/05) 118,953 120,360
#50579 (8.000% due 5/1/07) 208,720 204,686
#50658 (7.000% due 10/1/07) 754,209 708,150
#181654 (7.000% due 10/1/07) 681,276 639,671
#247436 (5.500% due 11/1/08) 887,491 772,508
#50951 (6.000% due 12/1/08) 1,078,001 962,223
#50972 (5.500% due 1/1/09) 1,082,823 942,533
#190678 (6.000% due 3/1/09) 1,200,000 1,071,120
#276222 (5.500% due 4/1/09) 1,065,515 927,041
88-29 B (9.500% due 12/25/18) 1,071,043 1,085,395
#72465 (8.500% due 3/1/19) 22,076 21,798
91-81S Inverse Floater
(20.498% due 8/25/21)<F1> 208,303 150,359
93-127 FA PAC
(7.070% due 10/25/21)<F1> 1,000,000 944,860
#274657 (6.500% due 4/1/24) 4,173,634 3,670,126
#283599 (6.000% due 5/1/24) 713,291 605,626
Government National Mortgage Association
#196774 (9.000% due 11/15/16) 190,004 192,073
#271584 (10.500% due 11/20/19) 605,366 637,063
#147989 (9.000% due 12/15/19) 172,963 174,486
---------
45,762,478
---------
</TABLE>
<TABLE>
<CAPTION>
Principal Amount Value
---------------- -----
<S> <C> <C>
BANKS - .44%
Boatmens Bancshares, Inc. Sub. Note
(9.250% due 11/1/01) 260,000 268,674
Comerica, Inc. Sub. Note
(9.750% due 5/1/99) 250,000 259,442
---------
528,116
---------
CONGLOMERATES - .53%
Teledyne, Inc. Subordinated
Debenture Series C
(10.000% due 6/1/04) 151,000 150,029
Westinghouse Electric Corporation
Debenture (8.875% due 6/1/01) 500,000 486,347
---------
636,376
---------
FINANCIAL SERVICES - .84%
Dean Witter Discover & Company Note
(6.4146% due 12/15/95)<F1> 1,000,000 1,000,000
GAMING INDUSTRY - .22%
Circus Circus Enterprises, Inc.
Senior Sub. Note
(10.625% due 6/15/97) 250,000 260,478
---------
INSURANCE - .71%
Penn Central Corporation Sub. Note
(9.750% due 8/1/99) 130,000 131,166
Reliance Finance Service Corporation
Senior Note
(9.480% due 11/1/00)<F1> 750,000 712,500
---------
843,666
---------
(9.480% due 11/1/00)<F1> 750,000 712,500
---------
MANUFACTURING - .09%
Weyerhaeuser Company Note
(9.375% due 1/1/98) 104,000 104,000
---------
OIL & GAS EXPLORATION SERVICES - 2.63%
Coastal Corporation Senior Sub. Note
(11.125% due 3/1/98) 260,000 260,975
Columbia Gas Systems Debentures
(10.500% due 6/1/12)<F2> 750,000 945,000
Maxus Energy Corporation Debentures
(11.250%d eu 5/1/13) 208,000 195,000
Mitchell Energy & Development
Corporation Senior Note
(9.250% due 1/15/02) 1,000,000 1,015,151
Tenneco Inc. Note (10.000% due 8/1/98) 700,000 727,288
---------
3,143,414
---------
SAVINGS AND LOANS - .12%
Golden West Financial Corporation Sub.
Note (10.250% due 12/01/00) 130,000 140,112
---------
TELEPHONE AND TELECOMMUNICATIONS - .14%
United Telecommunications, Inc. Note
(9.750% due 4/1/00) 156,000 163,496
---------
TRANSPORTATION - .13%
Ryder System, Inc. Note
(9.375% due 1/15/98) 156,000 156,070
---------
TRAVEL & RECREATION - .26%
Host Marriott Hospitality Inc. Senior
Notes Series M
(10.500% due 5/1/06) 311,000 308,279
---------
UTILITIES - ELECTRIC - 2.12%
Commonwealth Edison Company 1st Mtg.
(7.625% due 6/1/03) 1,100,000 1,003,223
Connecticut Light & Power Company
1st Ref. Mtg.
(7.625% due 4/1/97) 700,000 689,524
Del Norte Funding Corp. Secured
Lease Obligation Debenture
(11.250% due 1/2/14)<F2> 800,000 380,000
<FN>
<F1>
Interest rates vary periodically based on current market rates.
Rates are as of December 31, 1994.
<F2>
Interest payments in default.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL PORTFOLIO (continued)
Principal Amount Value
---------------- -----
<S> <C> <C>
El Paso Electric Company 1st Mtg.
(6.750% due 5/1/98)<F1> 500,000 453,750
---------
2,526,497
---------
MISCELLANEOUS - 1.38%
GE Capital Mtg. Services Inc. 94-22 B1
(6.000% due 8/25/09) 628,913 524,645
Pacific Gulf Properties Inc. Sub.
Convertible Debenture
(8.375% due 2/15/01) 750,000 669,375
Toll Corporation Senior Sub. Note
(10.500% due 3/15/02) 500,000 457,500
1,651,520
---------
Total Bonds and Notes (cost $59,649,674) 57,224,502
----------
SHORT-TERM INVESTMENTS - 24.37%
COMMERCIAL PAPER - 17.54%
Circus Circus Enterprises, Inc.
(5.680% due 1/12/95) 2,000,000 1,996,529
Columbia Healthcare Corporation
(5.760% due 1/20/95) 1,000,000 996,960
Conagra, Inc. (5.720% due 1/23/95) 1,000,000 996,504
Crown Cork & Seal Inc.
(6.200% due 2/1/95) 1,000,000 994,661
CSX Corporation (5.670% due 1/23/95) 1,000,000 996,397
CSX Corporation (5.640% due 1/24/95) 1,000,000 996,535
Dana Credit Corporation
(6.210% due 2/13/95) 1,000,000 992,583
Illinois Power Fuel Company
(6.250% due 2/3/95) 1,000,000 994,271
LCI Funding (5.810% due 1/17/95) * 1,000,000 997,418
LCI Funding (5.950% due 2/1/95) * 1,000,000 994,876
Niantic Bay Fuel Trust
(5.640% due 1/12/95) 1,000,000 998,277
Occidental Petroleum Corporation
(6.030% due 1/17/95) 1,000,000 997,320
Penn Fuel Corporation
(6.230% due 2/3/95) 1,000,000 1,997,135
Penn Fuel Corporation
(5.730% due 1/10/95) 2,000,000 994,289
Puget Sound Power & Light Company
(6.200% due 1/26/95) 1,000,000 995,694
Sears Roebuck Acceptance Corporation
(5.610% due 1/23/95) 2,000,000 1,993,143
White Consolidated Industries, Inc.
(5.650% due 1/9/95) 2,000,000 1,997,489
---------
Total Commercial Paper 20,930,081
---------
VARIABLE RATE DEMAND NOTES <F2> -6.83%
Barclays American Corporation
(5.800% due 1/2/95) 1,827,473 1,827,473
General Mills, Inc.
(5.730% due 1/4/95) 1,462,130 1,462,130
Pitney Bowes Credit Corporation
(5.729% due 1/4/95) 2,158,482 2,158,482
Sara Lee Corporation
(5.709% due 1/4/95) 2,345,499 2,345,499
Southwestern Bell Telephone Company
(5.709% due 1/4/95) 358,187 358,187
---------
Total Variable Rate Demand Notes 8,151,771
---------
Total Short-Term Investments
(cost $29,081,852) 29,081,852
----------
TOTAL INVESTMENTS - 98.83%
(cost $117,195,857) 117,865,972<F3>
-----------
OTHER ASSETS AND LIABILITIES - 1.17% 1,396,964
---------
TOTAL NET ASSETS - 100.00% 119,262,936
===========
* Restricted Security - 4 (2) issue.
<FN>
<F1>
Interest payments in default.
<F2>
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, 1994.
<F3>
Gross unrealized appreciation and depreciation of securities at December
31, 1994 for financial reporting purposes were $5,373,079 and $4,702,964
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, 1994
===============================================================
<TABLE>
<CAPTION>
BOND PORTFOLIO Principal Amount Value
- -------------- ---------------- -----
<S> <C> <C>
BONDS - 89.55%
U.S. GOVERNMENT AND AGENCIES - 49.40%
U.S. Treasury Bond
(6.250% due 8/15/23) 3,000,000 2,436,557
U.S. Treasury Note
(8.250% due 7/15/98) 1,000,000 1,011,875
(7.125% due 10/15/98) 1,000,000 979,062
(6.375% due 7/15/99) 1,000,000 944,375
(6.000% due 10/15/99) 4,000,000 3,711,252
(7.750% due 2/15/01) 2,500,000 2,488,280
(5.875% due 2/15/04) 2,000,000 1,744,374
U.S. Treasury Strips
(4.320% due 2/15/96)<F2> 2,000,000 1,842,520
(4.710% due 11/15/98)<F2> 2,000,000 1,483,040
(7.730% due 2/15/00)<F2> 3,250,000 2,189,525
(6.970% due 8/15/02)<F2> 2,000,000 1,108,480
Federal Home Loan Mortgage Corporation
#200067 (7.500% due 2/1/02) 82,632 78,449
#303427 (7.500% due 6/1/07) 207,198 201,220
#430721 (11.000% due 5/1/10) 91,714 98,249
#170035 (12.500% due 8/1/10) 29,935 32,807
#283065 (8.000% due 11/1/16) 99,932 95,154
#302710 (9.500% due 2/1/18) 122,574 125,217
59-E (8.900% due 11/15/20) 808,283 818,484
106G (8.250% due 12/15/20) 1,000,000 969,970
#D37325 (6.500% due 7/1/23) 962,954 849,961
TPM #730041 (9.500% due 4/1/05) 144,393 146,694
Federal National Mortgage Association
#20184 (12.000% due 4/1/00) 99,682 105,102
#31488 (9.000% due 8/1/01) 87,486 88,689
#40695 (8.500% due 1/1/02) 81,583 81,405
#50207 (10.500% due 6/1/04) 31,183 32,489
#97687 (10.500% due 5/1/05) 285,278 297,224
93-118 S (9.5232% due 5/25/08)<F1> 441,841 340,218
#214275 (6.500% due 6/1/08) 1,478,338 1,351,541
#54501 (8.000% due 8/1/17) 350,523 335,736
88-30D (9.500% due 12/25/18) 332,448 344,500
93-142 SA (9.9948% due 10/25/22)<F1> 921,170 700,089
93-223 SE (8.6656% due 12/25/23)<F1> 500,000 232,500
Government Naitonal Mortgage Association
GPM #92018 (11.000% due 3/15/10) 65,248 69,469
GPM #99521 (11.250%d ue 9/15/13) 52,497 56,156
GPM #905304 (10.750%d ue 2/15/16) 8,743 9,249
GPM #911462 (10.750% due 6/15/19) 72,757 76,963
GPM #286577 (9.000% due 5/15/20) 153,710 155,055
---------
27,631,930
----------
MISCELLANEOUS MORTGAGE BACKED - 4.68%
SASI 1993-2B2 (6.500% due 7/25/08) 340,342 291,476
CMC2 1993 (12.825% due 12/25/08)<F2> 478,083 286,850
CWMBS 1994-8B1 (6.000% due 4/25/09) 970,095 807,905
CMSC C-42 (10.950% due 2/1/14) 324,416 339,187
Greenwich Capital Acceptance Corporation
(5.784% due 8/25/24)<F1> 997,165 893,086
---------
2,618,504
---------
(TPM) Tier payment mortgage.
(GPM) Graduated payment mortgage.
(PAC) Planned Amoritization Class.
<FN>
<F1>
Interest rates vary periodically based on current market rates. Rates shown
are as of December 31, 1994.
<F2>
Zero coupon bonds, rates shown are the effective yields at date of
purchase.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO (continued) Principal Amount Value
- -------------- ---------------- -----
<S> <C> <C>
BONDS (continued)
BANKS - 2.22%
Comerica, Inc. Sub. Note
(9.750% due 5/1/99) 500,000 518,885
Western Financial Savings &
oan Subordinated Debenture
(8.500% due 7/1/03) 750,000 720,000
---------
1,238,885
---------
BROADCASTING/CABLE - 2.90%
Time Warner Inc. Note
(6.291% due 8/15/02)<F2> 1,275,000 1,209,656
Adelphia Communications Corporation
Senior PIK Note
Series B (9.500% due 2/15/04) 523,055 410,598
---------
1,620,254
CONSUMER PRODUCTS - .89%
First Brands Corporation Senior
Sub. Note (9.125% due 4/1/99) 500,000 496,250
FINANCE - .83%
General Motors Acceptance
Corporation Senior Note
(7.000% due 3/1/00) 500,000 464,554
FOOD, BEVERAGE, & TOBACCO - 2.22%
RJR Nabisco Inc. Note
(7.625% due 9/15/03) 500,000 430,017
Ralcorp Holdings, Inc. Notes
(8.750% due 9/15/04) 350,000 341,688
RJR Nabisco Inc. Debenture
(8.625% due 3/15/17) 500,000 468,315
---------
1,240,020
---------
GAMING INDUSTRY - 6.22%
Aztar Corporation Senior Sub.
Note (11.000% due 10/15/02) 1,000,000 905,000
Boomtown Inc. 1st Mtg. Note
(11.500% due 11/1/03) 1,000,000 820,000
Empress River Casinos Senior Note
(10.750% due 4/1/02) 1,000,000 910,000
Stations Casinos Inc. Senior Sub.
Note (9.625% due 6/1/03) 1,000,000 845,000
---------
3,480,000
---------
HEALTH CARE - 1.67%
Foundation Health Corporation
Senior Note (7.750% due 6/1/03) 500,000 458,301
Healthtrust Inc. Senior Sub.
Note (8.750% due 3/15/05) 500,000 477,500
---------
935,801
---------
INSURANCE - 4.59%
Berkley (W.R.) Corporation
Debenture (9.875% due 5/15/08) 500,000 542,620
Leucadia National Corporation
Senior Sub Notes
(10.375% due 6/15/02) 1,000,000 1,045,000
Penn Central Corporation
Sub. Note (9.750% due 8/1/99) 500,000 504,485
Reliance Financial Services
Corporation Debenture
(8.480% due 11/1/00)<F1> 500,000 475,000
---------
2,567,105
---------
OIL AND GAS FIELD EXPLORATION
SERVICES - 6.15%
Mesa Capital Corporation Notes
(12.750% due 6/30/96) 243,000 222,345
Mitchell Energy & Development
Corporation Senior Note
(6.750% due 2/15/04) 750,000 653,950
PDV America Inc. Senior Note
(7.750% due 8/1/00) 1,000,000 880,886
Triton Energy Corporation
Senior Sub. Note
(10.371% due 11/1/97)<F2> 1,000,000 730,000
Western Atlas Inc. Notes
(7.875% due 6/15/04) 1,000,000 951,360
---------
3,438,541
---------
(PIK) Payment in Kind
<FN>
<F1>
Interest rates vary periodically based on current market rates.
Rates shown are as of December 31, 1994.
<F2>
Zero coupon bonds, rates shown are the effective yields at date of
purchase.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO (continued) Principal Amount Value
- -------------- ---------------- -----
<S> <C> <C>
BONDS (continued)
PAPER AND FOREST PRODUCTS - .96%
Westvaco Corporation Debenture
(10.300% due 1/15/19) 500,000 536,791
PETROLEUM REFINING - .93%
Pennzoil Company Note
(9.625% due 11/15/99) 500,000 519,853
---------
RETAIL - FOOD - .80%
Great American Cookie Inc.
Senior Secured Notes Series B
(10.875% due 1/15/01)<F1> 500,000 447,500
---------
RETAIL - GENERAL - .1.81%
Hook-SuperX, Inc. Notes
(10.125% due 6/1/02) 1,000,000 1,015,000
---------
SAVINGS AND LOANS - .93%
Golden West Financial Corporation
Debentures (10.250% due 5/15/97) 500,000 519,924
---------
TRANSPORTATION - 1.80%
NWA Trust Senior Notes Class B
(10.230% due 6/21/14) 1,000,000 1,005,000
---------
TRAVEL & RECREATION - .55%
Host Marriott Hospitality Inc.
Senior Note Series B
(10.500% due 5/1/06) 311,000 308,279
---------
Total Bonds and Notes
(cost $53,230,533) 50,084,191
---------
<CAPTION>
Number of Shares Value
---------------- -----
<S> <C> <C>
COMMON STOCKS - .16%
GAMING INDUSTRIES - .04%
Boomtown Inc. Warrants # 1,000 4,000
Hemmeter Enterprises Inc. Warrants # 6,000 21,000
---------
25,000
---------
OIL & GAS - DOMESTIC - .06%
Mesa Inc. # 6,417 31,283
---------
RETAIL - FOOD - .01%
Cookies USA, Inc. Warrants # 90 3,600
---------
TRAVEL & RECREATION - .05%
Host Marriott Corporation # 752 7,238
Marriott International Inc. 752 21,150
---------
28,388
---------
Total Common Stocks (cost $91,048) 88,271
---------
PREFERRED STOCK - 1.61%
PACKAGING - 1.61%
Earthshell Container Corporation
Series A Cumulative
Senior Convertible 8% <F1> 500 900,000
---------
Total Preferred Stock (cost $500,000) 900,000
---------
# Nonincome producing
<FN>
<F1>
I44A - Privately placed security traded among qualified institutional
buyers.
<F2>
Interest rates vary periodically based on current market rates.
Rates shown are as of December 31, 1994.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
BOND PORTFOLIO (continued) Principal Amount Value
- -------------------------- ---------------- -----
<S> <C> <C>
SHORT-TERM INVESTMENTS - 7.27%
COMMERCIAL PAPER - 6.24%
Columbia Healthcare Corporation
(6.150% due 2/7/95) 1,500,000 1,490,519
Illinois Power Fuel Company
(6.170% due 1/4/95) 1,000,000 999,486
LCI Funding (6.230% due 1/3/95) 1,000,000 999,654
---------
Total Commercial Paper 3,489,659
---------
VARIABLE RATE DEMAND NOTES<F1>-1.03%
General Mills, Inc.
(5.730% due 1/4/95) 346,445 346,445
Southwestern Bell Telephone
Company (5.709% due 1/4/95) 231,179 231,179
---------
Total Variable Rate Demand Notes 577,624
---------
Total Short-Term Inestments
(cost $4,067,283) 4,067,283
---------
TOTAL INVESTMENTS - 98.59%
(cost $57,888,864) 55,139,745<F2>
---------
OTHER ASSETS & LIABILITIES - 1.41% 789,527
---------
TOTAL NET ASSETS - 100.00% 55,929,272
---------
* Restricted security - 4 (2) issue.
<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,
1994.
<F2>
Gross unrealized appreciation and depreciation of securities at December
31, 1994 for financial reporting purposes were $735,205 and $3,484,324,
respectively; for tax purposes, $735,205 and $3,614,137 respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Carillon Fund, Inc., Statements of Assets and Liabilities,
December 31, 1994
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Capital Bond
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investments in securities,
at value (cost $146,976,417;
$117,195,857; $57,888,864) $158,473,350 $117,865,972 $55,139,745
Cash 37,401 20,781 -
Receivables:
Shares sold 93,361 506,014 91,944
Interest and dividends 250,024 954,561 807,643
Prepaid expenses 2,084 1,945 1,457
------------ ------------ -----------
158,856,220 119,349,273 56,040,789
------------ ------------ -----------
LIABILITIES
Investment securities
purchased 1,061,550 - -
Payable for shares redeemed - - 7,108
Investment advisory fees 80,255 69,121 23,285
Custodial and portfolio
accounting fees 5,883 7,407 6,546
Professional fees 6,550 4,804 5,081
Deferred compensation for
directors - - 63,233
Other accrued expenses 5,706 5,005 6,264
------------ ------------ ----------
1,159,944 86,337 111,517
------------ ------------ ----------
NET ASSETS
Paid-in capital 133,313,560 112,814,018 58,781,977
Accumulated undistributed
net investment income 241,218 278,793 201,471
Accumulated undistributed
net realized gains/(loss) 12,644,565 5,500,010 (305,057)
Unrealized appreciation/
(depreciation) net 11,496,933 670,115 (2,749,119)
------------ ------------ -----------
$157,696,276 $119,262,936 $55,929,272
============ ============ ===========
Shares authorized
($.10 par value) 20,000,000 15,000,000 10,000,000
============ ============ ===========
Shares outstanding 11,028,128 9,041,035 5,573,252
============ ============ ===========
Net asset value, offering
and redemption price
per share (Net assets/
shares outstanding) $ 14.30 $ 13.19 $ 10.04
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Carillon Fund, Inc., Statements of Operations,
December 31, 1994
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Capital Bond
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 805,586 $ 4,704,227 $ 4,343,530
Dividends (net of
foreign withholding
taxes of $110,633,
$45,113, $0) 2,413,847 846,934 212
Other 4,060 851
---------- ------------ ------------
3,219,433 5,555,221 4,344,593
---------- ------------ ------------
EXPENSES
Investment advisory fees 924,881 766,664 273,068
Custodial fees and expenses 34,920 28,005 16,156
Portfolio accounting fees 33,094 40,210 37,434
Professional fees 12,657 13,877 14,072
Directors' fees 14,498 14,519 14,498
Transfer agent fees 5,529 5,573 5,597
Registration and
filing fees 5,618 6,132 6,541
Other 8,801 6,104 5,559
---------- ------------ ------------
1,039,998 881,084 372,925
---------- ------------ ------------
NET INVESTMENT INCOME 2,179,435 4,674,137 3,971,668
---------- ------------ ------------
REALIZED AND UNREALIZED
GAIN/(LOSS)
ON INVESTMENTS
Net realized gain/(loss)
on investments 12,644,565 5,412,005 (305,057)
Realized gains received
from investment companies - 88,005 -
Net unrealized depreciation
of investments (10,119,382) (9,024,428) (4,551,099)
---------- ------------ ------------
NET REALIZED AND
UNREALIZED GAIN/(LOSS)
ON INVESTMENTS 2,525,183 (3,524,418) (4,856,156)
---------- ------------ ------------
NET INCREASE/(DECREASE)
IN NET ASSETS
FROM OPERATIONS $4,704,618 $ 1,149,719 $ (884,488)
========== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Carillon Fund, Inc., Statement of Changes in Net Assets
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Equity Portfolio
----------------
Year ended December 31,
-----------------------
1994 1993
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 2,179,435 $ 1,431,589
Net realized gain on investments 12,644,565 5,829,342
Net unrealized appreciation/
(depreciation) of investments (10,119,382) 8,936,958
------------ ------------
Net increase in net assets
resulting from operations 4,704,618 16,197,889
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (2,008,382) (1,420,116)
Net realized gain on investments (5,834,819) (6,658,509)
------------ ------------
(3,138,582) 8,119,264
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from sales of shares
(1,706,967 shares for 1994 and
2,218,460 shares for 1993) 24,726,975 30,617,937
Net asset value of shares issued
to shareholders in
reinvestment of dividends and
distributions (535,871 shares
for 1994 and
596,125 shares for 1993) 7,843,201 8,078,625
Payments for shares redeemed
(693,517 shares
for 1994 and 780,328
shares for 1993) (9,973,908) (10,883,263)
------------ ------------
22,596,268 27,813,299
------------ ------------
NET INCREASE IN NET ASSETS 19,457,686 35,932,563
NET ASSETS
Beginning of year 138,238,591 102,306,028
------------ ------------
End of year (including
undistributed net
investment income of
$241,218 for 1994
and $68,016 for 1993) $157,696,276 $138,238,591
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Carillon Fund, Inc., Statement of Changes in Net Assets
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Portfolio
------------------
Year ended December 31,
-----------------------
1994 1993
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 4,674,137 $ 2,785,731
Net realized gain on investments 5,500,010 1,485,953
Net unrealized appreciation/
(depreciation) of investments (9,024,428) 5,882,206
------------ ------------
Net increase in net assets
resulting from operations 1,149,719 10,153,890
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (4,389,579) (2,686,406)
Net realized gain on investments (1,768,494) (2,008,839)
------------ ------------
(5,008,354) 5,458,645
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from sales of shares
(1,885,321 shares for 1994 and
2,058,453 shares for 1993) 25,455,114 27,268,539
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions
(458,326 shares for 1994 and
357,989 shares for 1993) 6,158,073 4,695,246
Payments for shares redeemed
(547,407 shares for 1994 and
457,613 shares for 1993) (7,358,153) (6,079,996)
------------ ------------
24,255,034 25,883,789
------------ ------------
NET INCREASE IN NET ASSETS 19,246,680 31,342,434
NET ASSETS
Beginning of year 100,016,256 68,673,822
------------ ------------
End of year (including
undistributed net
investment income of
$278,793 for 1994
and $285,794 for 1993) $119,262,936 $100,016,256
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Carillon Fund, Inc., Statement of Changes in Net Assets
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Bond Portfolio
----------------
Year ended December 31,
-----------------------
1994 1993
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 3,971,668 $ 3,117,389
Net realized gain/(loss)
on investments (305,057) 1,530,493
Net unrealized appreciation/
(depreciation) of investments (4,551,099) 374,516
------------ ------------
Net increase/(decrease) in net
assets resulting from operations (884,488) 5,022,398
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (4,072,051) (3,061,134)
Net realized gain on investments (1,473,887) (552,712)
------------ ------------
(6,430,426) 1,408,552
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from sales of shares
(1,136,443 shares for 1994 and
1,568,184 shares for 1993) 12,029,310 17,724,179
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions
(532,039 shares for 1994 and
322,598 shares for 1993) 5,545,938 3,613,847
Payments for shares redeemed
(886,187 shares for 1994 and
635,295 shares for 1993) (9,343,895) (7,174,737)
------------ ------------
8,231,353 14,163,289
------------ ------------
NET INCREASE IN NET ASSETS 1,800,927 15,571,841
NET ASSETS
Beginning of year 54,128,345 38,556,504
------------ ------------
End of year (including
undistributed net
investment income of
$201,470 for 1994
and $245,246 for 1993) $ 55,929,272 $ 54,128,345
============ ============
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC., NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------
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 (UCL) and its separate accounts to fund the benefits
under certain variable annuity contracts. The Fund's shares are
offered in three different series - Equity Portfolio, Capital
Portfolio, and Bond Portfolio.
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 which are 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.
Change in Accounting for Distributions to Shareholders
Effective January 1, 1993, the fund adopted Statement of
Position 93-2: DETERMINATION, DISCLOSURE AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES. Accordingly, permanent
book and tax basis differences relating to shareholder
distributions have been reclassified. During the year ended
December 31, 1994, the cumulative effect of such differences was
reclassified from undistributed net realized gains/(losses) to
undistributed net investment income. Amounts reclassified were
$2,148, $(291,738) and $56,606 for the Equity, Capital and Bond
Portfolios, respectively. These reclassifications are primarily
due to differing book and tax treatment for mortgage-backed
securities and market discount. Net investment income, net
realized gains/(losses), and net assets were not affected by this
change.
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,
except for the Bond Portfolio, where tax cost exceeds cost for
financial statement purposes by $129,813.
Income 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 taxable 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 $446,614 at
December 31, 1994. The carryforward, if unused expires in 2002.
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.
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
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 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 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; and
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 UCL.
Directors' fees
Each director who is not affiliated with the Adviser receives
fees from the Fund for services 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,
1994, excluding short-term obligations, follow:
<TABLE>
<CAPTION>
Equity Capital Bond
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
Total cost of purchases of:
Common stocks $61,327,056 $ 9,100,409 $ 20,850
U.S. Government securities - 31,833,599 15,366,086
Corporate bonds - 5,449,025 23,495,679
----------- ----------- -----------
$61,327,056 $46,383,033 $38,882,615
=========== =========== ===========
Total proceeds from sales of:
Common stocks $53,385,397 $27,036,411 -
U.S. Government securities - 3,027,304 $9,904,946
Corporate bonds - 3,639,312 25,789,693
----------- ----------- -----------
$53,385,397 $33,703,027 $35,694,639
=========== =========== ===========
</TABLE>
<PAGE>
NOTE 4 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
Equity Portfolio
- -----------------------------------------------------------------------------
Year ended December 31,
- -----------------------------------------------------------------------------
1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $14.58 $13.74 12.60 8.81 10.79
Investment Activities:
Net investment income .20 .16 .19 .20<F1> .28<F1>
Net realized and
unrealized gains
(losses) .31 1.69 1.27 3.79 (1.91)
------ ------ ----- ----- -----
Total from Investment
Operations .51 1.85 1.46 3.99 (1.63)
Distributions:
Net investment income (.19) (.16) (.19) (.20) (.31)
Net realized gains (.60) (.85) (.13) - (.04)
Total Distributions (.79) (1.01) (.32) (.20) (.35)
------ ------ ----- ----- -----
Net Asset Value,
End of period $14.30 $14.58 $13.74 $12.60 $8.81
====== ====== ====== ====== =====
Ratios/Supplemental
Data:
Total Return 3.42% 14.11% 11.78% 45.55% (15.45%)
Ratio of Expenses to
Average Net Assets .69% .70% .72% .75%<F1> .82%<F1>
Ratio of Net
Investment Income
to Average
Net Assets 1.45% 1.18% 1.47% 1.79%<F1> 2.98%<F1>
Portfolio Turnover
Rate 40.33% 37.93% 46.75% 55.17% 99.90%
Net Assets,
End of Period 157,696,276 138,238,591 102,306,028 79,352,448 52,513,701
<FN>
<F1>
Net of expenses waived by the Adviser of $.002 per share in 1991 and $.01 per
share in 1990.
</FN>
</TABLE>
<PAGE>
NOTE 4 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
Capital Portfolio
- -------------------------------------------------------------------------------
- ----
Year ended December 31,
--------------------------------------------------------
1994 1993 1992 1991 1990<F1>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $13.81 $12.99 $12.82 $10.57 $10.95
Investment Activities:
Net investment income .52 .43 .42 .47 .34
Net realized and
unrealized gains
(losses) (.39) 1.17 .56 2.25 (.40)
------ ------ ------ ------ ------
Total from Investment
Operations .13 1.60 .98 2.72 (.06)
Distributions:
Net investment income (.52) (.42) (.42) (.47) (.32)
Net realized gains (.23) (.36) (.39) .00 .00
------ ------ ------ ------ ------
Total Distributions (.75) (.78) (.81) (.47) (.32)
Net Asset Value,
End of period $13.19 $13.81 $12.99 $12.82 $10.57
====== ====== ====== ====== ======
Ratios/Supplemental
Data:
Total Return .94% 12.72% 7.93% 26.10% (.54%)
Ratio of Expenses
to Average Net Assets .80% .82% .88% .95%
1.03%<F2>
Ratio of Net Investment
Income to Average
Net Assets 4.25% 3.31% 3.49% 4.05%
5.08%<F2>
Portfolio Turnover
Rate 41.89% 32.42% 39.74% 47.93% 16.02%
Net Assets,
End of Period $119,262,936 $100,016,256 $68,673,822 $41,843,772
$23,813,342
<FN>
<F1>
Period from May 1, 1990 (commencement of operations) through December 31, 1990.
<F2>
Annualized
</FN>
</TABLE>
<PAGE>
NOTE 4 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
Bond Portfolio
- ---------------------------------------------------------------------------------
Year ended December 31,
- ---------------------------------------------------------------------------------
1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.30 $10.91 $10.96 $10.10 $10.02
Investment Activities:
Net investment income .77 .73 .82 .86 .81
Net realized and
unrealized gains
(losses) (.95) .54 (.01) .87 .03
------ ------ ------ ------ ------
Total from Investment
Operations (.18) 1.27 .81 1.73 .84
Distributions:
Net investment income (.78) (.73) (.82) (.87) (.76)
Net realized gains (.30) (.15) (.04) - -
------ ------ ------ ------ ------
Total Distributions (1.08) (.88) (.86) (.87) (.76)
Net Asset Value,
End of period $10.04 $11.30 $10.91 $10.96 $10.10
Ratios/Supplemental
Data:
Total Return (1.63%) 11.94% 7.65% 17.89% 8.66%
Ratio of Expenses to
Average Net Assets .68% .66% .69% .73% .79%
Ratio of Net
Investment
Income to Average
Net Assets 7.21% 6.65% 7.59% 8.27% 8.57%
Portfolio Turnover
Rate 70.27% 137.46% 40.91% 39.82% 110.90%
Net Assets,
End of Period $55,929,272 $54,128,345 $38,556,504 $31,008,756 $24,445,631
</TABLE>
<PAGE>
SUPPLEMENT DATED December 28, 1995
TO THE STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1995 OF
CARILLON FUND, INC.
Effective December 28, 1995, the statement of additional informa-
tion for Carillon Fund, Inc. (the "Fund") dated May 1, 1995 (the
"SAI") is amended by including as a part thereof the following
information.
As of December 28, 1995, a new S&P 500 Index Portfolio (the "Index
Portfolio") was added to the Fund. As the Index Portfolio is not
yet available under the contracts being offered pursuant to the
variable annuity prospectus which accompanies the Fund's prospec-
tus, all information about the Index Portfolio and its investment
objective, policies, restrictions and risks has been omitted from
this supplement and the SAI.
The date of the prospectus referenced on the cover of the SAI is
replaced by
May 1, 1995, as supplemented on December 28, 1995.
The following sentence is added to page 27 of the SAI:
Deloitte & Touche LLP has been retained by the Fund to examine its
1995 financial statements.
