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
five separate Portfolios: Equity Portfolio, Bond Portfolio,
Capital Portfolio, S&P 500 Index Portfolio and Micro-Cap
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.
The Micro-Cap Portfolio seeks long-term appreciation of
capital by investing primarily in the common stocks of domestic
companies with smaller market capitalizations.
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 November 15, 1997, which
contains further information about the Fund, has been filed with
the Securities and Exchange Commission and is incorporated by
reference into this Prospectus. A copy of the Statement of
Additional Information may be obtained without charge by calling
the Fund at (513) 595-2600, or by writing the Fund at P.O. Box
40409, Cincinnati, Ohio 45240-0409.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
November 15, 1997
- ------------------------------------------------------------
UCCF 514 11-97
<PAGE>
CARILLON FUND, INC.
TABLE OF CONTENTS
Page
The Fund . . . . . . . . . . . . . . . . . . . . . . 2
Annual Fund Operating Expenses . . . . . . . . . . . 3
Financial Highlights . . . . . . . . . . . . . . . . 4
Investment Objectives and Policies . . . . . . . . . 7
Equity Portfolio. . . . . . . . . . . . . . . . 7
Bond Portfolio. . . . . . . . . . . . . . . . . 7
Capital Portfolio . . . . . . . . . . . . . . . 8
S&P 500 Index Portfolio . . . . . . . . . . . . 9
Micro-Cap Portfolio . . . . . . . . . . . . . . 8
Principal Risk Factors. . . . . . . . . . . . . 10
Investment in Foreign Securities. . . . . . . . 11
Foreign Currency Transactions . . . . . . . . . 12
Repurchase Agreements . . . . . . . . . . . . . 12
Reverse Repurchase Agreements . . . . . . . . . 12
Futures Contracts and
Options on Futures Contracts. . . . . . . . . 12
Options . . . . . . . . . . . . . . . . . . . . 13
Options on Securities Indices . . . . . . . . . 14
Collateralized Mortgage Obligations . . . . . . 14
Lending Portfolio Securities. . . . . . . . . . 14
Other Information . . . . . . . . . . . . . . . 14
The Fund and Its Management. . . . . . . . . . . . . 14
Investment Adviser. . . . . . . . . . . . . . . 15
Advisory Fee. . . . . . . . . . . . . . . . . . 15
Expenses. . . . . . . . . . . . . . . . . . . . 15
Capital Stock . . . . . . . . . . . . . . . . . 16
Purchase and Redemption of Shares. . . . . . . . . . 16
Dividends and Distributions. . . . . . . . . . . . . 16
Taxes. . . . . . . . . . . . . . . . . . . . . . . . 17
Custodian, Transfer and
Dividend Disbursing Agent . . . . . . . . . . . 17
Appendix
Bond and Commercial Paper Ratings . . . . . . . 18
THE FUND
Carillon Fund, Inc. (the "Fund"), a Maryland corporation,
is a no-load, diversified, open-end investment company. The Fund
has five 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 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 Union Central contract 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>
ANNUAL FUND OPERATING EXPENSES
EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
S&P 500
Equity Bond Capital Index Micro-Cap
Portfolio Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Management Fees .57% .48% .68% .29% 1.00%*
Other Expenses .07% .14% .09% .30% 1.00%*
Total Operating Expenses .64% .62% .77% .59%** 2.00%
</TABLE>
EXAMPLE
The table below shows the amount of expenses a Shareholder
would pay on a $1,000 investment assuming a 5% annual
return.+
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity Portfolio $7 $21 $36 $80
Bond Portfolio $6 $20 $35 $78
Capital Portfolio $8 $25 $43 $96
S&P 500 Index Portfolio $6 $19 $33 $74
Micro-Cap Portfolio $21 $63 N/A N/A
</TABLE>
The purpose of this table is to assist the Contract Owner in
understanding the various expenses that the Contract Owner will
bear indirectly by providing information on expenses associated
with the Contract's investment in the Fund. This table does not
include any contract or variable account charges.
This table should not be considered a representation of past or
future expenses and the actual expenses that will be paid may be
greater or lesser than those shown.
- -----------
* "Other Expenses" for the Micro-Cap Portfolio are based on
estimates. Total Operating Expenses in excess of 2.00% for that
Portfolio are paid by the investment adviser.
** Total Operating Expenses in excess of .60% for that
Portfolio are paid by the investment adviser.
The 5% annual return is a standardized rate prescribed for
the purpose of this example and does not represent the past or
future return of the Fund.
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, 1996, have been audited in conjunction with the annual
audit of the financial statements of the Fund . The financial statements
for the year ended December 31, 1996, have been audited by Deloitte &
Touche LLP, whose unqualified report thereon is included in the
Statement of Additional Information. The financial statements for the
year ended December 31, 1995 have been audited by Deloitte & Touche LLP.
The financial statements for the three years ended December 31, 1994
have been audited by another independent accountant, whose reports
expressed unqualified opinions on those statements. These financial
highlights should be read in conjunction with the financial statements
and notes thereto included in the Statement of Additional Information.
Further information about the performance of the Fund is contained in
the Fund's annual report which may be obtained without charge. (See
"Other Information" below.)
<TABLE>
<CAPTION>
Equity Portfolio
Year ended December 31,
1996 1995 1994 1993 1992
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $16.54 $14.30 $14.58 $13.74 $12.60
Investment Activities:
Net investment income .29 .24 .20 .16 .19
Net realized and
unrealized gains
(losses) 3.61 3.36 .31 1.69 1.27
------ ------ ------ ------ ------
Total from Investment
Operations 3.90 3.60 .51 1.85 1.46
Distributions:
Net investment income (.27) (.23) (.19) (.16) (.19)
Net realized gains (.72) (1.13) (.60) (.85) (.13)
------ ------ ------ ------ ------
Total Distributions (.99) (1.36) (.79) (1.01) (.32)
Net Asset Value,
End of year $19.45 $16.54 $14.30 $14.58 $13.74
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return <F2> 24.52% 26.96% 3.42% 14.11% 11.78%
Ratio of Expenses to
Average Net Assets .64% .66% .69% .70% .72%
Ratio of Net Investment
Income to
Average Net Assets 1.66% 1.73% 1.45% 1.18% 1.47%
Portfolio
Turnover Rate 52.53% 34.33% 40.33% 37.93% 46.75%
Average Commission
Rate Paid $.0628<F3>
Net Assets,
End of Period
(in thousands) $288,124 $219,563 $157,696 $138,239 $102,306
<CAPTION>
Year Ended December 31,
1991 1990 1989 1988 1987
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $ 8.81 $10.79 $10.88 $ 8.57 $ 9.62
Investment Activities:
Net investment income .20<F1> .28<F1> .58 .38 .34
Net realized and
unrealized gains (losses) 3.79 (1.91) .69 2.33 (.22)
------ ------ ------ ------ ------
Total from Investment
Operations 3.99 (1.63) 1.27 3.71 .12
Distributions:
Net investment income (.20) (.31) (.59) (.34) (.35)
Net realized gains -- (.04) (.77) (.06) (.82)
------ ------ ------ ------ ------
Total Distributions (.20) (.35) (1.36) (.40) (1.17)
Net Asset Value,
End of year $12.60 $ 8.81 $10.79 $10.88 $ 8.57
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return<F2> 45.55% (15.45%) 11.79% 31.79% .85%
Ratio of Expenses to
Average Net Assets .75% .82%<F1> .95% .95% .97%
Ratio of Net Investment
Income to Average
Net Assets 1.79%<F1> 2.98%<F1> 5.34% 3.74% 3.30%
Portfolio Turnover Rate 55.17% 99.90% 61.49% 57.98% 70.17%
Net Assets, End of Period
(in thousands) $79,352 $52,514 $56,194 $37,723 $28,915
<FN>
<F1>
Net of expenses waived by the Adviser of $.002 per share in 1991 and $.01 per
share in 1990.
<F2>
Total Return does not reflect expenses that apply to the separate account or
the related insurance policies. Inclusion of these charges would reduce the
Total Return figures for all periods shown.
<F3>
Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of shares purchased and sold for which
commissions were charged. Disclosure not required for periods prior to 1996.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(Continued)
Bond Portfolio
Year ended December 31,
1996 1995 1994 1993 1992
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $11.07 $10.04 $11.30 $10.91 $10.96
Investment Activities:
Net investment income .79 .88 .77 .73 .82
Net realized and
unrealized gains
(losses) (.04) .98 (.95) .54 (.01)
------ ------ ------ ------ ------
Total from Investment
Operations .75 1.86 (.18) 1.27 .81
Distributions:
Net investment income (.87) (.83) (.78) (.73) (.82)
In excess of net
investment income (.04) -- -- -- --
Net realized gains -- -- (.30) (.15) (.04)
------ ------ ------ ------ ------
Total Distributions (.91) (.83) (1.08) (.88) (.86)
Net Asset Value,
End of year $10.91 $11.07 $10.04 $11.30 $10.91
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return<F1> 7.19% 19.03% (1.63%) 11.94% 7.65%
Ratio of Expenses to
Average Net Assets .62% .65% .68% .66% .69%
Ratio of Net Investment
Income to Average
Net Assets 7.24% 7.43% 7.21% 6.65% 7.59%
Portfolio Turnover Rate 202.44% 111.01% 70.27% 137.46% 40.91%
Net Assets,
End of Period
(in thousands) $85,634 $73,568 $55,929 $54,128 $38,557
<CAPTION>
Year ended December 31,
1991 1990 1989 1988 1987
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $10.10 $10.02 $ 9.82 $ 9.96 $10.51
Investment Activities: .86 .81 .83 .85 .82
Net investment income
Net realized and
unrealized gains (losses) .87 .03 .20 (.13) (.51)
------ ------ ------ ------ ------
Total from Investment
Operations 1.73 .84 1.03 .72 .31
Distributions:
Net investment income (.87) (.76) (.83) (.86) (.86)
In excess of net
investment income -- -- -- -- --
Net realized gains -- -- -- -- --
------ ------ ------ ------ ------
Total Distributions (.87) (.76) (.83) (.86) (.86)
Net Asset Value,
End of year $10.96 $10.10 $10.02 $ 9.82 $ 9.96
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return<F1> 17.89% 8.66% 10.72% 7.36% 3.15%
Ratio of Expenses to
Average Net Assets .73% .79% .86% .82% .72%
Ratio of Net Investment
Income to Average
Net Assets 8.27% 8.57% 8.38% 8.34% 8.34%
Portfolio Turnover Rate 39.82% 110.90% 17.70% 24.11% 80.35%
Net Assets, End of Period
(in thousands) $31,009 $24,446 $15,941 $12,460 $15,796
<FN>
<F1>
Total Return does not reflect expenses that apply to the separate account or
the related insurance policies. Inclusion of these charges would reduce the
Total Return figures for all periods shown.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<PAGE>
FINANCIAL HIGHLIGHTS
(Continued)
Capital Portfolio
Year ended December 31,
-------------------------------------
1996 1995 1994 1993
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value:
Beginning of period $13.72 $13.19 $13.81 $12.99
Investment Activities:
Net investment income .63 .64 .52 .43
Net realized and
unrealized gains
(losses) 1.36 1.15 (.39) 1.17
------ ------ ------ ------
Total from
Investment Operations 1.99 1.79 .13 1.60
Distributions:
Net investment income (.57) (.64) (.52) (.42)
Net realized gains (.19) (.62) (.23) (.36)
------ ------ ------ ------
Total Distributions (.76) (1.26) (.75) (.78)
Net Asset Value,
End of period $14.95 $13.72 $13.19 $13.81
====== ====== ====== ======
Ratios/Supplemental
Data:
Total Return<F2> 14.94% 14.28% .94% 12.72%
Ratio of Expenses
to Average
Net Assets .77% .77% .80% .82%
Ratio of Net
Investment Income
to Average
Net Assets 4.42% 4.99% 4.25% 3.31%
Portfolio
Turnover Rate 53.11% 43.83% 41.89% 32.42%
Average Commission
Rate Paid $.0615<F4>
Net Assets,
End of Period
(in thousands) $159,294 $145,623 $119,263 $100,016
<CAPTION>
Year ended December 31, Period Ended
---------------------------December 31,
1992 1991 1990<F1>
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value:
Beginning of period $12.82 $10.57 $10.95
Investment Activities:
Net investment income .42 .47 .34
Net realized and
unrealized gains
(losses) .56 2.25 (.40)
------ ------ ------
Total from
Investment Operations .98 2.72 (.06)
Distributions:
Net investment income (.42) (.47) (.32)
Net realized gains (.39) -- --
------ ------ ------
Total Distributions (.81) (.47) (.32)
Net Asset Value,
End of period $12.99 $12.82 $10.57
====== ====== ======
Ratios/Supplemental
Data:
Total Return<F2> 7.93% 26.10% (.54%)
Ratio of Expenses to
Average Net Assets .88% .95% 1.03%<F3>
Ratio of Net
Investment Income
to Average Net Assets 3.49% 4.05% 5.08%3
Portfolio Turnover Rate 39.74% 47.93% 16.02%
Net Assets,
End of Period
(in thousands) $68,674 $41,844 $23,813
<FN>
<F1>
Period from May 1, 1990 (commencement of operations) through December 31,
1990.
<F2>
Total Return does not reflect expenses that apply to the separate account or
the related insurance policies. Inclusion of these charges would reduce the
Total Return figures for all periods shown.
<F3>
Annualized
<F4<
Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of shares purchased and sold for which
commissions were charged. Disclosure not required for periods prior to 1996.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(Continued)
S&P 500 Index Portfolio
Year Ended
December 31, 1996<F1>
---------------------
<S> <C>
Net Asset Value, $10.00
Beginning of Year
Investment Activities:
Net investment income .20
Net realized and unrealized
gains/(losses) 2.12
Total from Investment Operations 2.32
Distributions:
Net investment income (.19)
Net realized gains --
------
Total Distributions (.19)
Net Asset Value,
End of Year $12.13
Total Return, not annualized 22.37%
Ratios/Supplemental Data
Ratio of Net Expenses to
Average Net Assets .59%<F2>
Ratio of Net Investment
Income to Average Net Assets 2.14%
Portfolio Turnover Rate 1.09%
Average Commission Rate Paid $.0601<F3>
Net Assets, End of Year (000's) $29,205
_____________
<FN>
<F1> The portfolio commenced operation on December 29, 1995. The
financial highlights table for the period ending December 31, 1995
is not presented because the activity for the period did not round
to $0.01 in any category of the reconciliation of beginning to
ending net asset value per share. The ratios and total return were
all less than 0.1%. The net assets at December 31, 1995 were
$305,148.
<F2> The ratios of net expenses to average net assets would have
increased and net investment income to average net assets would
have decreased by .25% for the year ended December 31, 1996, had
the Adviser not waived a portion of its fee.
<F3> Represents the dollar amount of commissions paid on
portfolio transactions divided by the total number of shares
purchased and sold for which commissions were charged.
</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 10.) As of
February 25, 1997, 24% of the debt securities held by the Bond
Portfolio were unrated or less than investment-grade bonds. For
a more complete discussion of the risk factors associated with
high-yield bonds, see the discussion below under "Principal Risk
Factors," and "Certain Risk Factors Relating to High-Yield,
High-Risk Bonds" in the Statement of Additional Information.
The Bond Portfolio will not directly purchase common
stocks. However, it may retain up to 10% of the value of its
total assets in common stocks acquired either by conversion of
fixed-income securities or by the exercise of warrants attached
thereto.
The Bond Portfolio may also write covered call options on
U.S. Treasury Securities and options on futures contracts for
such securities. See "Options," page 12.
The Bond Portfolio may invest without limit in money market
instruments pending investment in accordance with its investment
policies or when market conditions dictate a "defensive"
investment strategy. To the extent a portion is invested in
commercial paper rated "A" or "Prime" it will be included in the
75% guideline noted above.
A description of the corporate bond ratings assigned by
Standard & Poor's and Moody's is included in the Appendix.
Capital Portfolio
The Capital Portfolio seeks to obtain the highest total
return through a combination of income and capital appreciation
consistent with the reasonable risks associated with an
investment portfolio of above-average quality. The Capital
Portfolio invests in equity, debt and money market securities.
There are no percentage limitations on the class 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 securities of companies judged to represent
better fundamental value than those of similar
domestic companies.
- A high level of dividend payment providing a yield
that is competitive with debt investments.
Debt Securities. The Capital Portfolio may invest in rated
or unrated debt securities, including obligations of the U.S.
Government and its agencies, and corporate debt obligations
rated BBB or Baa or higher by a nationally recognized rating
service such as Standard & Poor's or Moody's, or, if not rated,
of equivalent quality as determined by the investment adviser.
Only 25% of the value of any bonds held by the Capital Portfolio
may be unrated or less than investment-grade bonds. For a
discussion of the risk factors associated with "high-yield"
bonds, see the "Bond Portfolio" on page 7 and "Certain Risk
Factors Relating to High-Yield, High-Risk Bonds" in the
Statement of Additional Information.
Money Market Instruments. The Capital Portfolio may at any
time be 100% invested in money market instruments although it
likely will invest in these securities only temporarily pending
investment in equity and debt securities, or on a limited basis.
The following securities, which are described in the Statement
of Additional Information, are considered money market
instruments if their remaining maturities are less than 13
months: repurchase agreements, U.S. government obligations,
government agency securities, certificates of deposit, time
deposits, bankers' acceptances, commercial paper and corporate
debt securities.
The Capital Portfolio may also write covered call options
on U.S. Treasury Securities and options on futures contracts for
such securities. See "Options," page 12.
S&P 500 Index Portfolio
The S&P 500 Index Portfolio ("Index Portfolio") seeks
investment results that correspond to the total return
performance of U.S. common stocks, as represented by the
Standard & Poor's 500 Composite Stock Index (the "S&P 500")**.
- -------
**The S&P 500 is 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)", and "500" are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use by
Carillon Fund. The Portfolio is not sponsored, endorsed, sold or
promoted by Standard & Poor's ("S&P"). S&P makes no
representation or warranty, express or implied, to the
beneficial owners of the Portfolio or any member of the public
regarding the advisability of investing in securities generally
or in the Portfolio particularly or the ability of the S&P 500
Index to track general stock market performance. S&P's only
relationship to Carillon Fund is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index which
is determined, composed and calculated by S&P without regard to
Carillon Fund or the Portfolio. S&P has no obligation to take
the needs of Carillon Fund or the beneficial owners of the
Portfolio into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and
has not participated in the determination of the prices and
amount of the Portfolio or the timing of the issuance or sale of
the Portfolio or in the determination or calculation of the
equation by which the Portfolio is to be converted into cash.
S&P has no obligation or liability in connection with the
administration, marketing or trading of the Portfolio.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF
THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL
HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTION
THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY CARILLON FUND, BENEFICIAL OWNERS OF
THE PORTFOLIO, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE
S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS
OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED
OF THE POSSIBILITY OF SUCH DAMAGES.**
- ----------
The S&P 500 is a well-known stock market index that includes
common stocks of companies representing approximately 70% 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)");
provided, however, that the Index Portfolio reserves the right
to increase the percentage of its assets it may invest in
SPDRs to 10% to the extent that such an increase would be
permitted by applicable law. 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.
Micro-Cap Portfolio
The Micro-Cap Portfolio seeks long-term appreciation of
capital by investing primarily in the common stocks of domestic
companies with smaller market capitalizations. The Portfolio
seeks to achieve this objective by investing at least 70% of
its assets in common stocks of companies with market
capitalizations of less than $250 million at the time of
initial purchase and that management believes are undervalued
in the marketplace. Current income from dividends, interest and
other sources is only sought when consistent with the
Portfolio's primary objective. The Portfolio generally invests
the remaining 30% of its total assets in a similar manner, but
may invest those in other equity securities including foreign
securities. A portion of the Portfolio may be invested in money
market instruments pending investment or to utilize cash
reserves.
Management believes that opportunities for excess returns
exist in the micro capitalization sector of the equity markets
due to the lack of institutional ownership, insufficient
analyst coverage, and the relatively lower level of many of
these securities. Individual security selection will focus on
companies which possess above-average levels of profitability,
revenue growth and earnings growth that are selling at
price/earnings ratios below their internal growth rate. A
significant emphasis will be placed on technical analysis in an
effort to identify when a recognition of value occur in the
marketplace. Investments in the securities of companies with
small market capitalization may involve special risks. See
"Principal Risk Factors."
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 1996:
<TABLE>
<CAPTION>
S&P 500 Returns (1926-1996)
Over Various Time Horizons
----------------------------
1 Year 5 Years 10 Years 20 Years
----- ------- -------- --------
<S> <C> <C> <C> <C>
Best 54.0% 23.9% 20.1% 16.9%
Worst -43.3% -12.5% -.9% 3.1%
Average 12.6% -- -- --
</TABLE>
Average return may not be useful for forecasting future returns
in any particular period, as stock returns are quite volatile
from year to year.
The Micro-Cap Portfolio is subject to the risk that small
capitalization companies, while offering the potential for
rapid growth, often involve greater risks. Small companies may
lack the depth of management, diversified product offering,
financial resources, and competitive strengths of larger
companies. Due to these and other factors, small companies may
suffer significant losses as well as realize substantial
growth. In addition, the stocks of small capitalization
companies may be more volatile than the stocks of large
capitalization companies. Among the reasons for greater price
volatility are lower levels of trading volume and wider spreads
between the bid and asked prices of these securities. The
prices of the shares of small capitalization companies may move
independently of the values of larger capitalization companies
such as those which comprise the Dow Jones Industrial Average
and the Standard and Poor's 500 Stock Index.
Investment in Foreign Securities
Each Portfolio may invest in foreign securities that are
suitable for the Portfolio's investment objectives and
policies. Foreign securities investments are limited to 25% of
net assets for the Equity, Bond and Micro-Cap Portfolios and to
35% of net assets for the Capital Portfolio. The S&P 500
Index Portfolio is limited to investing in those foreign
securities included in the Standard & Poor's 500 Composite
Stock Index. The term "foreign securities" refers to equity
and debt securities of corporate issuers whose principal stock
or bond exchange listing is outside of the United States, to
American Depositary Receipts ("ADRs") that hold such
securities, and to debt securities issued by foreign
governments or foreign government agencies.
Investing in foreign securities involves risks which are
not ordinarily associated with investing in domestic
securities. These risks include political or economic
instability in the foreign country, diplomatic developments
that could adversely affect the value of the foreign security,
foreign government taxes, the costs incurred by a Portfolio in
converting among various currencies, fluctuation in currency
exchange rates and the possibility of imposition of currency
controls, expropriation or nationalization measures or
withholding dividends at the source. In the event of a default
on any foreign obligation, it may be difficult legally to
obtain or to enforce a judgment against the issuer.
Currency exchange rates are determined by forces of supply
and demand. These forces are affected by international balance
of payments, other economic and financial conditions,
government intervention and other factors. The ability of a
foreign obligor to make timely payments on its external debt
obligations will be strongly influenced by the country's
balance of payments, including export performance, its access
to international credits and investments, fluctuations in
interest rates and the extent of its foreign reserves.
There may be less publicly available information about a
foreign issuer than about a domestic issuer. Foreign issuers
are subject to accounting and reporting requirements which are
generally less extensive than those applicable to domestic
issuers. Securities of foreign issuers are generally less
liquid and more volatile than those of comparable domestic
issuers. There is frequently less governmental regulation of
exchanges, broker-dealers and issuers and brokerage costs may
be higher than in the United States.
Foreign securities other than ADRs typically will be
traded on the applicable country's principal stock or bond
exchange but may also be traded on regional exchanges or over-
the-counter. Foreign markets, especially emerging markets,
may have different clearance and settlement procedures, and in
certain markets there have been times when settlements have
been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions.
A country whose exports are concentrated in a few
commodities or whose economy depends on certain strategic
imports could be vulnerable to fluctuations in international
prices of these commodities or imports. To the extent that a
country receives payment for its exports in currencies other
than dollars, its ability to make debt payments denominated in
dollars could be adversely affected.
ADRs are receipts, typically issued by a U.S. bank or
trust company, evidencing ownership of the underlying foreign
securities. ADRs are denominated in U.S. dollars and trade in
the U.S. securities markets. ADRs are subject to certain of
the same risks as direct investment in foreign securities,
including the risk that changes in the value of the currency in
which the security underlying an ADR is denominated relative to
the U.S. dollar may adversely affect the value of the ADR.
Foreign securities purchased by the Portfolios may include
securities issued by companies located in countries not
considered to be major industrialized nations. Such countries
are subject to more economic, political and business risk than
major industrialized nations, and the securities they issue are
expected to be more volatile and more uncertain as to payments
of interest and principal. The secondary market for such
securities is expected to be less liquid than for securities of
major industrialized nations.
To limit the risks of investing in any one country, each
Portfolio that invests in foreign securities limits not only
its total purchases of foreign securities, but also its
purchases for any single country. For "major countries," the
applicable limit is 10% of Portfolio net assets for the Equity,
Bond and Micro-Cap Portfolios and 20% for the Capital
Portfolio; for other countries, the applicable limit is 5% for
each Portfolio. "Major countries" currently include: The
United Kingdom, Germany, France, Italy, Switzerland,
Netherlands, Spain, Belgium, Canada, Mexico, Argentina, Chile,
Brazil, Australia, Japan, Singapore, New Zealand, Hong Kong,
Sweden and Norway.
Foreign Currency Transactions
Each Portfolio that purchases foreign securities may also
engage in forward foreign currency contracts ("forward
contracts") in connection with the purchase or sale of a
specific security. A forward contract involves an obligation
to purchase or sell a specific foreign currency at a future
date, which may be any fixed number of days from the date of
the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are traded in the
interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A
forward contract generally has no margin or other deposit
requirement.
Portfolios will not enter into forward contracts for
longer-term hedging purposes. The possibility of changes in
currency exchange rates will be incorporated into the long-term
investment considerations when purchasing the investment and
subsequent considerations for possible sale of the investment
Repurchase Agreements
A repurchase agreement is a transaction where a Portfolio
buys a security at one price and simultaneously agrees to sell
that same security back to the original owner at a higher
price. The Adviser reviews the creditworthiness of the other
party to the agreement and must find it satisfactory before
engaging in a repurchase agreement. A majority of such
agreements will mature in seven days or less. In the event of
the bankruptcy of the other party, the Portfolio could
experience delays in recovering its money, may realize only a
partial recovery or even no recovery, and may also incur
disposition costs. It is not anticipated that any Portfolio
will regularly utilize repurchase agreements extensively, since
they are intended to be used to invest otherwise idle cash.
Reverse Repurchase Agreements
The S&P 500 Index Portfolio may enter into reverse
repurchase agreements. Under reverse repurchase agreements,
the Portfolio transfers possession of portfolio securities to
banks in return for cash in an amount equal to a percentage of
the portfolio securities' market value and agrees to repurchase
the securities at a future date by repaying the cash with
interest. The Portfolio retains the right to receive interest
and principal payments from the securities while they are in
the possession of the financial institutions. Cash or liquid
high quality debt obligations from the Portfolio's portfolio
equal in value to the repurchase price (including any accrued
interest) will be segregated by the Custodian on the
Portfolio's records while a reverse repurchase agreement is in
effect.
Futures Contracts and Options on Futures Contracts
For hedging purposes, including protecting the price or
interest rate of securities that the Portfolio intends to buy,
the S&P 500 Index Portfolio may enter into futures contracts
that relate to securities in which it may directly invest and
indices comprised of such securities and may purchase and write
call and put options on such contracts. As a temporary
investment strategy until the Index Portfolio reaches $25
million in net assets, the Index Portfolio may invest up to
100% of its assets in such futures and/or options contracts.
Thereafter, the Portfolio may invest up to 20% of its assets in
such futures and/or options contracts.
A financial futures contract is a contract to buy or sell
a specified quantity of financial instruments such as U.S.
Treasury bills, notes and bonds, commercial paper and bank
certificates of deposit or the cash value of a financial
instrument index at a specified future date at a price agreed
upon when the contract is made. A stock index futures contract
is a contract to buy or sell specified units of a stock index
at a specified future date at a price agreed upon when the
contract is made. The value of a unit is based on the current
value of the contract index. Under such contracts no delivery
of the actual stocks making up the index takes place. Rather,
upon expiration of the contract, settlement is made by
exchanging cash in an amount equal to the difference between
the contract price and the closing price of the index at
expiration, net of variation margin previously paid.
Substantially all futures contracts are closed out before
settlement date or called for cash settlement. A futures
contract is closed out by buying or selling an identical
offsetting futures contract. Upon entering into a futures
contract, the Portfolio is required to deposit an initial
margin with the Custodian for the benefit of the futures
broker. The initial margin serves as a "good faith" deposit
that the Portfolio will honor their futures commitments.
Subsequent payments (called "variation margin") to and from the
broker are made on a daily basis as the price of the underlying
investment fluctuates. In the event of the bankruptcy of the
futures broker that holds margin on behalf of the Portfolio,
the Portfolio may be entitled to return of margin owed to it
only in proportion to the amount received by the broker's other
customers. The Adviser will attempt to minimize this risk by
monitoring the creditworthiness of the futures brokers with
which the Portfolio does business.
Because the value of index futures depends primarily on
the value of their underlying indexes, the performance of the
broad-based contracts will generally reflect broad changes in
common stock prices. However, because the Portfolio may not be
invested in precisely the same proportion as the S&P 500, it is
likely that the price changes of the Portfolio's index futures
positions will not match the price changes of the Portfolio's
other investments.
Options on futures contracts give the purchaser the right
to assume a position at a specified price in a futures contract
at any time before expiration of the option contract.
Options
The Bond and Capital Portfolios may engage in certain
limited options strategies as hedging techniques. These options
strategies are limited to selling/writing call option contracts
on U.S. Treasury Securities and call option contracts on
futures on such securities held by the Portfolio (covered
calls). The Portfolio may purchase call option contracts to
close out a position acquired through the sale of a call
option. The Portfolio will only write options that are traded
on a domestic exchange or board of trade.
The S&P 500 Index Portfolio may write and purchase covered
put and call options on securities in which it may directly
invest. Option transactions of the Portfolio will be conducted
so that the total amount paid on premiums for all put and call
options outstanding will not exceed 5% of the value of the
Portfolio's total assets. Further, the Portfolio will not
write put or call options or combination thereof if, as a
result, the aggregate value of all securities or collateral
used to cover its outstanding options would exceed 25% of the
value of the Portfolio's total assets.
A call option is a short-term contract (generally nine
months or less) which gives the purchaser of the option the
right to purchase from the seller of the option (the Portfolio)
the underlying security or futures contract at a fixed exercise
price at any time prior to the expiration of the option period
regardless of the market price of the underlying instrument
during the period. A futures contract obligates the buyer to
purchase and the seller to sell a predetermined amount of a
security at a predetermined price at a selected time in the
future. A call option on a futures contract gives the purchaser
the right to assume a "long" position in a futures contract,
which means that if the option is exercised the seller of the
option (the Portfolio) would have the legal right (and
obligation) to sell the underlying security to the purchaser at
the specified price and future time.
As consideration for the call option, the buyer pays the
seller (the Portfolio) a premium, which the seller retains
whether or not the option is exercised. The selling of a call
option will benefit the Portfolio if, over the option period,
the underlying security or futures contract declines in value
or does not appreciate to a price higher than the total of the
exercise price and the premium. The Portfolio risks an
opportunity loss of profit if the underlying instrument
appreciates to a price higher than the exercise price and the
premium. When the Adviser anticipates that interest rates will
increase, the Portfolio may write call options in order to
hedge against an expected decline in value of portfolio
securities.
The Portfolio may close out a position acquired through
selling a call option by buying a call option on the same
security or futures contract with the same exercise price and
expiration date as the option previously sold. A profit or loss
on the transaction will result depending on the premium paid
for buying the closing call option. If a call option on a
futures contract is exercised, the Portfolio intends to close
out the position immediately by entering into an offsetting
transaction or by delivery of the underlying security (or other
related securities).
Options transactions may increase the Portfolio's
portfolio turnover rate and attendant transaction costs, and
may be somewhat more speculative than other investment
strategies. It may not always be possible to close out an
options position, and with respect to options on futures
contracts there is a risk of imperfect correlation between
price movements of a futures contract (or option thereon) and
the underlying security. Options strategies and related risks
and limitations are described in more detail in the Statement
of Additional Information.
Options on Securities Indices
The S&P 500 Index Portfolio may purchase or sell options
on the S&P 500, subject to the limitations set forth above and
provided such options are traded on a national securities
exchange or in the over-the-counter market. Options on
securities indices are similar to options on securities except
there is no transfer of a security and settlement is in cash.
A call option on a securities index grants the purchaser of the
call, for a premium paid to the seller, the right to receive in
cash an amount equal to the difference between the closing
value of the index and the exercise price of the option times a
multiplier established by the exchange upon which the option is
traded.
Collateralized Mortgage Obligations
The Portfolios other than the S&P 500 Index Portfolio may
invest in collateralized mortgage obligations ("CMOs") or
mortgage-backed bonds issued by financial institutions such as
commercial banks, savings and loan associations, mortgage banks
and securities broker-dealers (or affiliates of such
institutions established to issue these securities). To a
limited extent, the Portfolios may also invest in a variety of
more risky CMOs, including interest only ("IOs"), principal
only ("POs"), inverse floaters, or a combination of these
securities. See "Money Market Instruments and Investment
Techniques" in the Statement of Additional Information for a
further discussion.
Lending Portfolio Securities
The S&P 500 Index Portfolio may lend portfolio securities
with a value up to 10% of its total assets. Such loans may be
terminated at any time. The Portfolio will continuously
maintain as collateral cash or obligations issued by the U.S.
government, its agencies or instrumentalities in an amount
equal to not less than 100% of the current market value (on a
daily marked-to-market basis) of the loaned securities plus
declared dividends and accrued interest.
The Portfolio will retain most rights of beneficial
ownership, including the right to receive dividends, interest
or other distributions on loaned securities. The Portfolio
will call loans to vote proxies if a material issue affecting
the investment is to be voted upon. Should the borrower of the
securities fail financially, the Portfolio may experience delay
in recovering the securities or loss of rights in the
collateral. Loans are to be made only to borrowers that are
deemed by the Adviser to be of good financial standing.
Other Information
In addition to the investment policies described above,
each Portfolio's investment program is subject to further
restrictions which are described in the Statement of Additional
Information. Unless otherwise specified, each Portfolio's
investment objectives, policies and restrictions are not
fundamental policies and may be changed without shareholder
approval. Shareholder inquiries and requests for the Fund's
annual report should be directed to the Fund at (513) 595-2600,
or at P.O. Box 40409, Cincinnati, Ohio 45240-0409.
THE FUND AND ITS MANAGEMENT
The Fund is a mutual fund, technically known as an open-
end, diversified, management investment company. The Board of
Directors is responsible for supervising the business affairs
and investments of the Fund, which are managed on a daily basis
by the Fund's investment adviser. The Fund was incorporated
under the laws of the State of Maryland on January 30, 1984.
The Fund is a series fund with five classes of stock, one for
each Portfolio. The Micro-Cap Portfolio was authorized on June
16, 1997 and commenced operations on November 15, 1997. It is
anticipated that Union Central will invest approximately $3
million in this Portfolio, but it reserves the right to redeem
any portion or all of its investment at any time.
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. Gary R. Rodmaker has been
primarily responsible for the day-to-day management of the S&P
500 Index Portfolio since its inception. Mr. Rodmaker is the
Fixed Income Portfolio Manager of the Adviser and has been
affiliated with the Adviser and Union Central as an investment
analyst since 1989. Michelle E. Stevens has been primarily
responsible for the day-to-day management of the Micro-Cap
Portfolio since its inception. Mrs. Stevens is the Senior
Equity Analyst of the Adviser and has been affiliated with the
Adviser and Union Central as an equity analyst since 1993.
Prior to becoming affiliated with the Adviser and Union
Central, Mrs. Stevens attended the University of Cincinnati,
where she earned an MBA in Finance in June, 1993.
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.
(e) for the Micro-Cap Portfolio- 1.00% 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. The Adviser will also pay any
expenses of the Micro-Cap Portfolio, other than the advisory
fee for that Portfolio, to the extent that such expenses exceed
1.00% of that Portfolio's net assets.
Capital Stock
The Fund currently has five classes of stock, one for each
Portfolio. Shares (including fractional shares) of each
Portfolio have equal rights with regard to voting, redemptions,
dividends, distributions, and liquidations with respect to that
Portfolio. When issued, shares are fully paid and nonassessable
and do not have preemptive or conversion rights or cumulative
voting rights. The Fund's sole shareholder, Union Central, will
vote Fund shares allocated to its registered separate accounts
in accordance with instructions received from Contract Owners.
However, by virtue of Fund shares allocated to its other
separate accounts, Union Central currently has voting control
and can make fundamental changes regardless of the voting
instructions received from Contract Owners.
PURCHASE AND REDEMPTION OF SHARES
The Fund offers its shares, without sales charge, only for
purchase by Union Central and its separate accounts to fund
benefits under both variable annuity contracts and variable
universal life insurance policies. The Fund's Board of
Directors will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of
variable annuity contractowners investing in the Fund and
interests of holders of variable universal life insurance
policies investing in the Fund. Union Central will report any
potential or existing conflicts to the Directors of the Fund.
If a material irreconcilable conflict arises, Union Central
will, at its own cost, remedy such conflict up to and including
establishing a new registered management company and
segregating the assets underlying the variable annuity
contracts and variable universal life insurance policies. It is
possible that at some later date the Fund may offer shares to
other investors. The Fund continuously offers shares in each of
its Portfolios at prices equal to the respective net asset
values of the shares of each Portfolio.
The Fund redeems all full and fractional shares of the
Fund for cash. No redemption fee is charged. The redemption
price is the net asset value per share. Payment for shares
redeemed will generally be made within seven days after receipt
of a proper notice of redemption.
The net asset value of the shares of each Portfolio of the
Fund is determined once daily, Monday through Friday, as of
the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern Time), when there are purchases or
redemptions of Fund shares, except (i) when the New York Stock
Exchange is closed (currently New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day); and (ii) 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. Other-
wise, such securities are valued at fair value as determined in
good faith by the Board of Directors, although the actual
calculations may be made by persons acting pursuant to the
direction of the Board.
All money market instruments with a remaining maturity of
60 days or less are valued on an amortized cost basis.
DIVIDENDS AND DISTRIBUTIONS
It is the Fund's intention to distribute substantially all
of the net investment income, if any, of each Portfolio. For
dividend purposes, net investment income of the Equity, Bond,
Capital, S&P 500 Index and Micro-Cap Portfolios consists of all
dividends or interest earned by such Portfolio less estimated
expenses (including the investment advisory fee). All net
realized capital gains, if any, of each Portfolio are
distributed periodically, no less frequently than annually. All
dividends and distributions are reinvested in additional shares
of the respective Portfolio at net asset value.
TAXES
Each Portfolio has qualified and has elected to be taxed
as a "regulated investment company" under the provisions of
Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). If a Portfolio qualifies as a "regulated
investment company" and complies with the appropriate
provisions of the Code, the Portfolio will be relieved of
federal income tax on the amounts distributed.
Since the sole shareholder of the Fund is Union Central,
no discussion is included herein as to the federal income tax
consequences at the shareholder level. For information
concerning the federal tax consequences to purchasers of the
contracts, see the attached Prospectus for such contracts.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
Firstar Trust Company, Mutual Fund Services, P.O. Box 701,
Milwaukee, Wisconsin 53201-0701, acts as Custodian of the
Fund's assets, and is its bookkeeping, transfer and dividend
disbursing agent.
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
November 15, 1997
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 November 15, 1997, which may
be obtained by calling the Fund at (513) 595-2600, or writing
the Fund at P.O. Box 40409, Cincinnati, Ohio 45240-0409.
TABLE OF CONTENTS
Page
Investment Policies (7).................................. 2
Money Market Instruments and Investment Techniques...... 2
Certain Risk Factors Relating to High-Yield,
High-Risk Bonds................................... 6
Investments in Foreign Securities....................... 6
Futures Contracts....................................... 7
Options ................................................ 8
Lending Portfolio Securities............................13
Investment Restrictions..................................13
Portfolio Turnover ......................................16
Management of the Fund (13)..............................17
Directors and Officers.................................17
Investment Adviser ....................................19
Payment of Expenses....................................20
Advisory Fee...........................................21
Investment Advisory Agreement..........................21
Administration.........................................22
Service Agreement......................................23
Securities Activities of Adviser.......................23
Determination of Net Asset Value (14)....................24
Purchase and Redemption of Shares (14)...................24
Taxes (15)...............................................25
Portfolio Transactions and Brokerage.....................25
General Information (2)..................................26
Capital Stock .........................................26
Voting Rights..........................................27
Additional Information ................................28
Independent Auditors ....................................28
( ) indicates page on which the corresponding section appears
in the Prospectus.
UCCF 515 11-97
<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, S&P 500 Index ("Index
Portfolio") and Micro-Cap 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.
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.
Investments in Foreign Securities
AMERICAN DEPOSITARY RECEIPTS. American Depositary Receipts
("ADRs") may be issued in sponsored or unsponsored programs. In
sponsored programs, the issuer makes arrangements to have its
securities traded in the form of ADRs; in unsponsored programs,
the issuer may not be directly involved in the creation of the
program. Although the regulatory requirements with respect to
sponsored and unsponsored programs are generally similar, the
issuers of unsponsored ADRs are not obligated to disclose
material information in the United States and, therefore, such
information may not be reflected in the market value of the
ADRs.
FOREIGN EXCHANGE. If a foreign country cannot generate
sufficient earnings from foreign trade to service its external
debt, it may need to depend on continuing loans and aid from
foreign governments, commercial banks, multilateral
organizations, and inflows of foreign investment. The cost of
servicing external debt will also generally be adversely
affected by rising international interest rates because many
external debt obligations bear interest at rates which are
adjusted based upon international interest rates. The ability
to service external debt will also depend on the level of the
relevant government's international currency reserves and its
access to foreign currencies. Currency devaluations may affect
the ability of an obligor to obtain sufficient foreign
currencies to service its external debt.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Each Portfolio that
engages in foreign currency exchange transactions may do so on
a spot (i.e., cash) basis at the spot rate prevailing in the
foreign exchange currency market, or on a forward basis to
"lock in" the U.S. dollar price of the security. By entering
into a forward contract for the purchase or sale, for a fixed
amount of U.S. dollars, of the amount of foreign currency
involved in the underlying transactions, a Portfolio attempts
to protect itself against possible loss resulting from an
adverse change in the relationship between the U.S. dollar and
the applicable foreign currency during the period between the
date on which the security is purchased or sold and the date on
which related payments are made or received.
Portfolios will not enter into forward contracts for
longer-term hedging purposes. The possibility of changes in
currency exchange rates will be incorporated into the long-term
investment considerations when purchasing the investment and
subsequent considerations for possible sale of the investment.
FOREIGN MARKETS. Delays in settlement which may occur in
connection with transactions involving foreign securities could
result in temporary periods when a portion of the assets of a
portfolio is uninvested and no return is earned thereon. The
inability of a portfolio to make intended security purchases
due to settlement problems could cause the portfolio to miss
attractive investment opportunities. Inability to dispose of
portfolio securities due to settlement problems could result in
losses to a portfolio due to subsequent declines in values of
the portfolio securities or, if the portfolio has entered into
a contract to sell the security, possible liability to the
purchaser. Certain foreign markets, especially emerging
markets, may require governmental approval for the repatriation
of investment income, capital or the proceeds of sales of
securities by foreign investors. A portfolio could be adversely
affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as
by the application to the portfolio of any restrictions on
investments.
FOREIGN DEBT SECURITIES. Investing in foreign debt securities
will expose the Portfolios to the direct or indirect
consequences of political, social or economic changes in the
industrialized developing and emerging countries that issue the
securities. The ability and willingness of obligor or the
governmental authorities that control repayment of their
external debt to pay principal and interest on such debt when
due may depend on general economic and political conditions
within the relevant country. Additional country-related
factors unique to foreign issuers which may influence the
ability or willingness to service debt include, but are not
limited to, a country's cash flow situation, the availability
of sufficient foreign exchange on the date a payment is due,
the relative size of its debt service burden to the economy as
a whole, and its government's relationships with the
International Monetary Fund, the World Bank and other
international agencies.
Futures Contracts
For hedging purposes, including protecting the price or
interest rate of securities that the Portfolio intends to buy,
the S&P 500 Index Portfolio may enter into futures contracts
that relate to securities in which it may directly invest and
indices comprised of such securities and may purchase and write
call and put options on such contracts. As a temporary
investment strategy until the Index Portfolio reaches $25
million in net assets, the Index Portfolio may invest up to
100% of its assets in such futures and/or options contracts.
Thereafter, the Portfolio may invest up to 20% of its assets in
such futures and/or options contracts. The Index Portfolio
does not intend to enter into futures contracts that are not
traded on exchanges or boards of trade.
A financial futures contract is a contract to buy or sell
a specified quantity of financial instruments such as U.S.
Treasury bills, notes and bonds, commercial paper and bank
certificates of deposit or the cash value of a financial
instrument index at a specified future date at a price agreed
upon when the contract is made. A stock index futures contract
is a contract to buy or sell specified units of a stock index
at a specified future date at a price agreed upon when the
contract is made. The value of a unit is based on the current
value of the contract index. Under such contracts no delivery
of the actual stocks making up the index takes place. Rather,
upon expiration of the contract, settlement is made by
exchanging cash in an amount equal to the difference between
the contract price and the closing price of the index at
expiration, net of variation margin previously paid.
Substantially all futures contracts are closed out before
settlement date or called for cash settlement. A futures
contract is closed out by buying or selling an identical
offsetting futures contract. Upon entering into a futures
contract, the Portfolio is required to deposit an initial
margin with the Custodian for the benefit of the futures
broker. The initial margin serves as a "good faith" deposit
that the Portfolio will honor their futures commitments.
Subsequent payments (called "variation margin") to and from the
broker are made on a daily basis as the price of the underlying
investment fluctuates. In the event of the bankruptcy of the
futures broker that holds margin on behalf of the Portfolio,
the Portfolio may be entitled to return of margin owed to it
only in proportion to the amount received by the broker's other
customers. The Adviser will attempt to minimize this risk by
monitoring the creditworthiness of the futures brokers with
which the Portfolio does business.
Because the value of index futures depends primarily on
the value of their underlying indexes, the performance of the
broad-based contracts will generally reflect broad changes in
common stock prices. However, because the Portfolio may not be
invested in precisely the same proportion as the S&P 500, it is
likely that the price changes of the Portfolio's index futures
positions will not match the price changes of the Portfolio's
other investments.
Options on futures contracts give the purchaser the right
to assume a position at a specified price in a futures contract
at any time before expiration of the option contract.
Options
The Bond and Capital Portfolios may sell (write) listed
options on U.S. Treasury Securities and options on contracts
for the future delivery of U.S. Treasury Securities as a means
of hedging the value of such securities owned by the Portfolio.
The S&P 500 Index Portfolio may enter into futures contracts
that relate to securities in which it may directly invest and
indices comprised of such securities and may purchase and write
call and put options on such contracts.
As a writer of a call option, a Portfolio may terminate
its obligation by effecting a closing purchase transaction.
This is accomplished by purchasing an option of the same series
as the option previously written. However, once the Portfolio
has been assigned an exercise notice, the Portfolio will be
unable to effect a closing purchase transaction. There can be
no assurance that a closing purchase transaction can be
effected when the Portfolio so desires.
The Portfolio will realize a profit from a closing
transaction if the price of the transaction is less than the
premium received from writing the option; the Portfolio will
realize a loss from a closing transaction if the price of the
transaction is more than the premium received from writing the
option. Since the market value of call options generally
reflects increases in the value of the underlying security, any
loss resulting from the closing transaction may be wholly or
partially offset by unrealized appreciation of the underlying
security. Conversely, any gain resulting from the closing
transaction may be wholly or partially offset by unrealized
depreciation of the underlying security. The principal factors
affecting the market value of call options include supply and
demand, the current market price and price volatility of the
underlying security, and the time remaining until the
expiration date.
Although the Bond and Capital Portfolios will write only
options on U.S. Treasury Securities and options on futures
contracts with respect to such securities which are traded on a
national exchange or Board of Trade, and the S&P 500 Index
Portfolio will write only options on securities among the
Standard & Poor's 500 Composite Stock Price Index (the "S&P
500")* and options of futures contracts with respect to such
securities, there is no assurance that a liquid secondary
market will exist for any particular option. In the event it
is not possible to effect a closing transaction, the Portfolio
will not be able to sell the underlying security, until the
option expires or the option is exercised by the holder.
______
*The S&P 500 is an unmanaged index of 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)", and "500" are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use by
Carillon Fund. The Portfolio is not sponsored, endorsed, sold
or promoted by Standard & Poor's ("S&P"). S&P makes no
representation or warranty, express or implied, to the
beneficial owners of the Portfolio or any member of the public
regarding the advisability of investing in securities generally
or in the Portfolio particularly or the ability of the S&P 500
Index to track general stock market performance. S&P's only
relationship to Carillon Fund is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index
which is determined, composed and calculated by S&P without
regard to Carillon Fund or the Portfolio. S&P has no obligation
to take the needs of Carillon Fund or the beneficial owners of
the Portfolio into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and
has not participated in the determination of the prices and
amount of the Portfolio or the timing of the issuance or sale
of the Portfolio or in the determination or calculation of the
equation by which the Portfolio is to be converted into cash.
S&P has no obligation or liability in connection with the
administration, marketing or trading of the Portfolio.
_____
The Portfolio will effect a closing transaction to realize
a profit on an outstanding call option, to prevent an
underlying security from being called, to permit the sale of an
underlying security prior to the expiration date of the option,
or to allow for the writing of another call option on the same
underlying security with either a different exercise price or
expiration date or both.
Possible reasons for the absence of a liquid secondary
market on an exchange include the following: (a) insufficient
trading interest in certain options; (b) restrictions on
transactions imposed by an exchange; (c) trading halts,
suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying
securities; (d) inadequacy of the facilities of an exchange or
the Clearing Corporation to handle trading volume; or (e) a
decision by one or more exchanges to discontinue the trading of
options or impose restrictions on types of orders. There can
be no assurance that higher than anticipated trading activity
or order flow or other unforeseen events might not at times
render the trading facilities inadequate and thereby result in
the institution of special trading procedures or restrictions
which could interfere with the Portfolio's ability to effect
closing transactions.
The Bond and Capital Portfolios may write call options on
futures contracts on U.S. Treasury Securities as a hedge
against the adverse effect of expected increases in interest
rates on the value of Portfolio securities, in order to
establish more definitely the effective return on securities
held by the Portfolio. The S&P 500 Index Portfolio will write
call options on futures contracts on the S&P 500 or securities
included therein only for hedging purposes to protect the price
of securities it intends to buy and when such transactions
enable it to correlate its investment performance more closely
to that of the S&P 500 than would a direct purchase of
securities included in the S&P 500. The Portfolios will not
write options on futures contracts for speculative purposes.
A futures contract on a debt security is a binding
contractual commitment which will result in an obligation to
make or accept delivery, during a specified future time, of
securities having standardized face value and rate of return.
Selling a futures contract on debt securities (assuming a short
position) would give the Portfolio a legal obligation and right
as seller to make future delivery of the security against
payment of the agreed price.
Upon the exercise of a call option on a futures contract,
the writer of the option (the Portfolio) is obligated to sell
the futures contract (to deliver a long position to the option
holder) at the option exercise price, which will presumably be
lower than the current market price of the contract in the
futures market. However, as with the trading of futures, most
participants in the options markets do not seek to realize
their gains or losses by exercise of their option rights.
Instead, the holder of an option will usually realize a gain or
loss by buying or selling an offsetting option at a market
price that will reflect an increase or a decrease from the
premium originally paid. Nevertheless, if an option on a
futures contract written by the Portfolio is exercised, the
Portfolio intends to either close out the futures contract by
purchasing an offsetting futures contract, or deliver the
underlying securities immediately, in order to avoid assuming a
short position. There can be no assurance that the Portfolio
will be able to enter into an offsetting transaction with
respect to a particular contract at a particular time, but it
may always deliver the underlying security.
As a writer of options on futures contracts, the Portfolio
will receive a premium but will assume a risk of adverse
movement in the price of the underlying futures contract. If
the option is not exercised, the Portfolio will gain the amount
of the premium, which may partially offset unfavorable changes
in the value of securities held in the Portfolio. If the
option is exercised, the Portfolio might incur a loss in the
option transaction which would be reduced by the amount of the
premium it has received.
While the holder or writer of an option on a futures
contract may normally terminate its position by selling or
purchasing an offsetting option, the Portfolio's ability to
establish and close out options positions at fairly established
prices will be subject to the maintenance of a liquid market.
The Portfolio will not write options on futures contracts
unless, in the Adviser's opinion, the market for such options
has sufficient liquidity that the risks associated with such
options transactions are not at unacceptable levels.
RISKS. While options will be sold in an effort to reduce
certain risks, those transactions themselves entail certain
other risks. Thus, while the Portfolio may benefit from the
use of options, unanticipated changes in interest rates or
security price movements may result in a poorer overall
performance for the Portfolio than if it had not entered into
any options transactions. The price of U.S. Treasury
Securities futures are volatile and are influenced, among other
things, by changes in prevailing interest rates and
anticipation of future interest rate changes. The price of S&P
500 futures are also volatile and are influenced, among other
things, by changes in conditions in the securities markets in
general.
In the event of an imperfect correlation between a futures
position (and a related option) and the Portfolio position
which is intended to be protected, the desired protection may
not be obtained. The correlation between changes in prices of
futures contracts and of the securities being hedged is
generally only approximate. The amount by which such
correlation is imperfect depends upon many different
circumstances, such as variations in speculative market demand
for futures and for debt securities (including technical
influences in futures trading) and differences between the
financial instruments being hedged and the instruments
underlying the standard options on futures contracts available
for trading.
Due to the imperfect correlation between movements in the
prices of futures contracts and movements in the prices of the
underlying debt securities, the price of a futures contract may
move more than or less than the price of the securities being
hedged. If the price of the future moves less than the price
of the securities which are the subject of the hedge, the hedge
will not be fully effective and if the price of the securities
being hedged has moved in an unfavorable direction, the
Portfolio would be in a better position than if it had not
hedged at all. If the price of the futures moves more than the
price of the security, the Portfolio will experience either a
gain or loss on the option on the future which will not be
completely offset by movements in the price of the securities
which are the subject of the hedge.
The market prices of futures contracts and options thereon
may be affected by various factors. If participants in the
futures market elect to close out their contracts through
offsetting transactions rather than meet margin deposit
requirements, distortions in the normal relationship between
the debt securities and futures markets could result. Price
distortions could also result if investors in futures contracts
make or take delivery of underlying securities rather than
engage in closing transactions. This could occur, for example,
if there is a lack of liquidity in the futures market. From
the point of view of speculators, the deposit requirements in
the futures markets are less onerous than margins requirements
in the securities markets; accordingly, increased participation
by speculators in the futures market could cause temporary
price distortions. A correct forecast of interest rate trends
by the adviser may still not result in a successful hedging
transaction because of possible price distortions in the
futures market and because of the imperfect correlation between
movements in the prices of debt securities and movements in the
prices of futures contracts. A well-conceived hedge may be
unsuccessful to some degree because of market behavior or
unexpected interest rate trends.
LIMITATIONS ON THE USE OF OPTIONS ON FUTURES. The Portfolio
will only write options on futures that are traded on exchanges
and are standardized as to maturity date and underlying
financial instrument. The principal exchanges in the United
States for trading options on Treasury Securities are the Board
of Trade of the City of Chicago and the Chicago Mercantile
Exchange. These exchanges and trading options on futures are
regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission ("CFTC").
It is the Fund's opinion that it is not a "commodity pool"
as defined under the Commodity Exchange Act and in accordance
with rules promulgated by the CFTC.
The Portfolio will not write options on futures contracts
for which the aggregate premiums exceed 5% of the fair market
value of the Portfolio's assets, after taking into account
unrealized profits and unrealized losses on any such contracts
it has entered into (except that, in the case of an option that
is in-the-money at the time of purchase, the in-the-money
amount generally may be excluded in computing the 5%).
All of the futures options transactions employed by the
Portfolio will be BONA FIDE hedging transactions, as that term
is used in the Commodity Exchange Act and has been interpreted
and applied by the CFTC. To ensure that its futures options
transactions meet this standard, the Fund will enter into such
transactions only for the purposes and with the intent that
CFTC has recognized to be appropriate.
CUSTODIAL PROCEDURES AND MARGINS. The Fund's Custodian acts as
the Fund's escrow agent as to securities on which the Fund has
written call options and with respect to margin which the Fund
must deposit in connection with the writing of call options on
futures contracts. The Clearing Corporation (CC) will release
the securities or the margin from escrow on the expiration of
the call, or when the Fund enters into a closing purchase
transaction. In this way, assets of the Fund will never be
outside the control of the Fund's custodian, although such
control might be limited by the escrow receipts issued.
At the time the Portfolio sells a call option on a
contract for future delivery of U.S. Treasury Securities
("Treasury futures contract"), it is required to deposit with
its custodian, in an escrow account, a specified amount of cash
or U.S. Government securities ("initial margin"). The account
will be in the name of the CC. The amount of the margin
generally is a small percentage of the contract amount. The
margin required is set by the exchange on which the contract is
traded and may be modified during the term of the contract.
The initial margin is in the nature of a performance bond or
good faith deposit, and it is released from escrow upon
termination of the option assuming all contractual obligations
have been satisfied. The Portfolio will earn interest income
on its initial margin deposits.
In accordance with the rules of the exchange on which the
option is traded, it might be necessary for the Portfolio to
supplement the margin held in escrow. This will be done by
placing additional cash or U.S. Government securities in the
escrow account. If the amount of required margin should
decrease, the CC will release the appropriate amount from the
escrow account.
The assets in the margin account will be released to the
CC only if the Portfolio defaults or fails to honor its
commitment to the CC and the CC represents to the custodian
that all conditions precedent to its right to obtain the assets
have been satisfied.
Lending Portfolio Securities
The S&P 500 Index Portfolio may lend portfolio securities
with a value up to 10% of its total assets. Such loans may be
terminated at any time. The Portfolio will continuously
maintain as collateral cash or obligations issued by the U.S.
government, its agencies or instrumentalities in an amount
equal to not less than 100% of the current market value (on a
daily marked-to-market basis) of the loaned securities plus
declared dividends and accrued interest. While portfolio
securities are on loan, the borrower will pay the Portfolio any
income accruing thereon, and the Portfolio may invest or
reinvest the collateral (depending on whether the collateral is
cash or U.S. Government securities) in portfolio securities,
thereby earning additional income. Loans are typically subject
to termination by the Portfolio in the normal settlement time,
currently five business days after notice, or by the borrower
on one day's notice. Borrowed securities must be returned when
the loan is terminated. Any gain or loss in the market price
of the borrowed securities which occurs during the term of the
loan inures to the Portfolio and its shareholders. The
Portfolio may pay reasonable finders', borrowers',
administrative, and custodial fees in connection with a loan of
its securities. The Adviser will review and monitor the
creditworthiness of such borrowers on an ongoing basis.
The S&P 500 Index Portfolio may invest in Standard &
Poor's Depositary Receipts(R) ("SPDRs(R)"). SPDRs are units of
beneficial interest in a unit investment trust, representing
proportionate undivided interests in a portfolio of securities
in substantially the same weighting as the component common
stocks of the S&P 500. While the investment objective of such
a unit investment trust is to provide investment results that
generally correspond to the price and yield performance of the
component common stocks of the S&P 500, there can be no
assurance that this investment objective will be met fully. As
SPDRs are securities issued by an investment company, non-
fundamental restriction (5) below restricts purchases of SPDRs
to 10% 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) 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).
(2) 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.
(3) 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.
(4) Invest in companies for the purpose of exercising
control (alone or together with the other Portfolios).
(5) 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,
or by purchase of SPDRs 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:
(6) Lend portfolio securities with an aggregate value
of more than 10% of its total assets.
(7) 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.
(8) 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 52.53% and 34.33%, respectively, for 1996 and
1995. The annual Portfolio turnover rates for the Bond
Portfolio were 202.44% and 111.01% respectively, for 1996 and
1995. The annual Portfolio turnover rates for the Capital
Portfolio were 53.11% and 43.83%, respectively, for 1996 and
1995. The annual Portfolio turnover rate for the S&P 500 Index
Portfolio was 1.09% for 1996. The annual Portfolio turnover
rate for the Micro-Cap Portfolio is expected to be
approximately 50%.
MANAGEMENT OF THE FUND
Directors and Officers
The directors and executive officers of the Fund and their
principal occupations during the past five years are set forth
below. Unless otherwise noted, the address of each executive
officer and director is 1876 Waycross Road, Cincinnati, Ohio
45240.
<TABLE>
<CAPTION>
Position(s)
Name, Address with Principal Occupation(s)
and Age the Fund During Past Five Years
- ------------- ----------- ----------------------
<S> <C> <C>
George M. Callard, M.D. Director Professor of Clinical
3021 Erie Avenue Surgery, University of
Cincinnati, Ohio 45208 Cincinnati
(Age 63)
George L. Clucas* Director, Senior Vice President,
(53) President and Union Central; Director,
Chief Executive President and Chief
Officer Executive Officer,
Carillon Advisers, Inc.
("Adviser"); Director,
Carillon Investments,
Inc. ("CII")
Theodore H. Emmerich Director Consultant; former Partner,
1201 Edgecliff Place Ernst & Whinney, Accountants
Cincinnati, Ohio 45206
(70)
James M. Ewell Director Retired Senior Vice
9000 Indian Ridge Road President and Director,
Cincinnati, Ohio 45243 The Procter and Gamble
(81) Company
Richard H. Finan Director Attorney at Law;
11137 Main Street President Pro Tempore
Cincinnati, Ohio 45241 of the Ohio State Senate
(62)
Jean Patrice Director Interim President, Cincinnati
Harrington, S.C. State Technical and Community
3217 Whitfield Avenue College; Former Executive
Cincinnati, Ohio 45220 Director, Cincinnati Youth
(71) Collaborative; President
Emeritus (formerly, President)
College of Mt. St. Joseph
John H. Jacobs* Director Executive Vice President,
(50) Union Central; prior to
June, 1995, Officer and
employee, Union Central
Charles W. McMahon Director Retired Senior Vice
2031 W. Galbraith Road, #E President and Director,
Cincinnati, Ohio 45239 Union Central
(78)
Harry Rossi* Director Director Emeritus, Union
641 Flagstaff Drive Central; Director,
Cincinnati, Ohio 45215 Adviser; former Chairman,
(77) President and Chief
Executive Officer,
Union Central
Stephen R. Hatcher Senior Vice Executive Vice President
(54) President and Chief Financial
Officer, Union Central;
prior to June, 1995, officer
and employee, Union Central
John F. Labmeier Vice President Second Vice President,
(48) and Secretary Associate General
Counsel and Assistant
Secretary, Union Central;
Vice President and Secretary,
CII; Secretary, Adviser
Thomas G. Knipper Controller Assistant Controller,
(39) Union Central; prior to
July, 1995, Treasurer of
The Gateway Trust and Vice
President and Controller
of Gateway Advisers, Inc.
PJ Barker Assistant Investment Accounting Manager,
(27) Controller Union Central; prior to June,
1993, Senior Staff
Accountant, Arther
Andersen LLP
Joseph A. Tucker Treasurer Assistant to the Treasurer,
(62) Union Central; prior to
October 1992, Officer
and employee, Union Central
John M. Lucas Assistant Assistant Counsel and
(46) Secretary Assistant to the Secretary,
Union Central; prior to
October, 1992, Officer
and employee, Union Central
</TABLE>
* Messrs. Clucas, Jacobs and Rossi are considered to be "interested
persons" of the Fund (within the meaning of the Investment Company Act of
1940) because of their affiliation with the Adviser.
Each of the directors also serves as a trustee of Carillon Investment
Trust.
All directors who are not "interested persons" of the Company are
members of the Audit Committee.
As of the date of this Statement of Additional Information, officers and
directors of the Fund do not own any of the outstanding shares of the Fund.
Directors who are not officers or employees of Union Central or Adviser are
paid a fee plus actual out-of-pocket expenses by the Fund for each meeting of
the Board of Directors attended. Total fees and expenses incurred for 1996
were $44,810.
Compensation Table
<TABLE>
<CAPTION>
Compensation Table
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Total
Person, Compensation Retirement Retirement Compensation
Position From Benefits Benefits From Registrant
Registrant Accrued As Upon and Fund
Part of Retirement Complex*
Fund Expenses Paid to
Directors
<S> <C> <C> <C> <C>
George M. Callard, 7,300** -- -- 10,600
M.D.
Director
George L. Clucas N/A N/A N/A N/A
Director
Theodore H. Emmerich 7,500 -- -- 10,800
Director
James M. Ewell 7,300 -- -- 10,600
Director
Richard H. Finan 7,300 -- -- 10,600
Director
Jean Patrice
Harrington, S.C. 7,300 -- -- 10,600
Director
John H. Jacobs N/A N/A N/A N/A
Director
Charles W. McMahon 7,300** -- -- 10,600
Director
Harry Rossi N/A N/A N/A N/A
Director
</TABLE>
* Each of the Directors also serves as a Trustee of
Carillon Investment Trust.
** Messrs. Callard and McMahon have been deferring their
compensation each year. As of December 31, 1996, the total
amount deferred, including interest, was as follows: Dr.
Callard - $62,476; Mr. McMahon - $25,223.
Investment Adviser
The Fund has entered into an Investment Advisory Agreement
("Agreement") with Carillon Advisers, Inc. ("Adviser") whose
principal business address is 1876 Waycross Road, Cincinnati,
Ohio 45240 (P.O. Box 40407, Cincinnati, Ohio 45240). The
Adviser was incorporated under the laws of Ohio on August 18,
1986, and is a wholly-owned subsidiary of Union Central.
Executive officers and directors of the Adviser who are
affiliated with the Fund are George L. Clucas, President and
Chief Executive Officer; Thomas G. Knipper, Treasurer; and John
F. Labmeier, Secretary.
Pursuant to the Agreement, the Fund has retained the
Adviser to manage the investment of the Fund's assets,
including the placing of orders for the purchase and sale of
Portfolio securities. The Adviser is at all times subject to
the direction and supervision of the Board of Directors of the
Fund.
The Adviser continuously furnishes an investment program
for each Portfolio, is responsible for the actual management of
each Portfolio and has responsibility for making decisions to
buy, sell or hold any particular security. The Adviser obtains
and evaluates such information and advice relating to the
economy, securities markets, and specific securities as it
considers necessary or useful to continuously manage the assets
of the Portfolios in a manner consistent with their investment
objectives, policies and restrictions. The Adviser considers
analyses from various sources, makes necessary investment
decisions and effects transactions accordingly. The Adviser
also performs certain administrative functions for the Fund.
The Adviser may utilize the advisory services of subadvisers
for one or more of the Portfolios.
Payment of Expenses
Under the terms of the Agreement, in addition to managing
the Fund's investments, the Adviser, at its expense, maintains
certain of the Fund's books and records (other than those
provided by Firstar Trust Company, by agreement) and furnishes
such office space, facilities, equipment, and clerical help as
the Fund may reasonably require in the conduct of business. In
addition, the Adviser pays for the services of all executive,
administrative, clerical, and other personnel, including
officers of the Fund, who are employees of Union Central. The
Adviser also bears the cost of telephone service, heat, light,
power and other utilities provided to the Fund. Expenses not
expressly assumed by the Adviser under the Agreement will be
paid by the Fund.
Each Portfolio pays all other expenses incurred in its
operation and a portion of the Fund's general administration
expenses allocated on the basis of the asset size of the
respective Portfolios. Expenses other than the Adviser's fee
that are borne directly and paid individually by a Portfolio
include, but are not limited to, brokerage commissions, dealer
markups, expenses incurred in the acquisition of Portfolio
securities, transfer taxes, transaction expenses of the
custodian, pricing services used by only one or more
Portfolios, and other costs properly payable by only one or
more Portfolios. Expenses which are allocated on the basis of
size of the respective Portfolios include custodian (portion
based on asset size), dividend disbursing agent, transfer
agent, bookkeeping services (except annual per Portfolio base
charge), pricing, shareholder's and directors' meetings,
directors' fees, proxy statement and Prospectus preparation,
registration fees and costs, fees and expenses of legal counsel
not including employees of the Adviser, membership dues of
industry associations, postage, insurance premiums including
fidelity bond, and all other costs of the Fund's operation
properly payable by the Fund and allocable on the basis of size
of the respective Portfolios. The Adviser will pay any
expenses of the S&P 500 Index Portfolio, other than the
advisory fee for that Portfolio, to the extent that such
expenses exceed .30% of that Portfolio's net assets. The
Adviser will also pay any expenses of the Micro-Cap Portfolio,
other than the advisory fee for that Portfolio, to the extent
that such expenses exceed 1.00% 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>
S&P 500
Equity Bond Capital Index Micro-Cap
Year Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
1996 $1,436,998 $384,084 $1,032,861 $8,233 N/A
1995 $1,108,596 $314,237 $913,378 -0- N/A
1994 $924,881 $273,068 $766,664 N/A 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, 1997 the Agreement was approved for continuance for
one (1) year by the Board of Directors by unanimous vote of
those present, including a majority of the directors who are
not parties to such contract or interested persons of any such
party.
On March 21, 1990, the Board of Directors took steps to
activate the Capital Portfolio of the Fund by authorizing the
issuance of shares of that Portfolio to a separate account of
Union Central. The Board of Directors also approved an
amendment to the Investment Advisory Agreement so as to make
the Agreement applicable to the Capital Portfolio and to
specify the advisory fee payable by it. The Board determined
that the amendment did not affect the interests of the classes
of Fund shares other than Capital Portfolio shares and that
therefore only the holders of Capital Portfolio shares were
entitled to vote on the amendment. On May 1, 1990, the Union
Central separate account invested $15.2 million in the Capital
Portfolio in exchange for 1,390,516 shares at a price of $10.95
per share. Union Central, as legal owner of the Capital
Portfolio shares purchased by its separate account and as sole
shareholder of the Capital Portfolio, approved the Agreement as
amended.
On September 15, 1995, the Board of Directors took steps
to activate the S&P 500 Index Portfolio of the Fund by
authorizing the issuance of shares of that Portfolio. On
December 13, 1995, the Board of Directors also approved an
amendment to the Investment Advisory Agreement so as to make
the Agreement applicable to the Index Portfolio and to specify
the advisory fee payable by it. The Board determined that the
amendment did not affect the interests of the classes of Fund
shares other than Index Portfolio shares and that therefore
only the holders of Index Portfolio shares were entitled to
vote on the amendment. The sole shareholder of the Index
Portfolio approved the Agreement as amended on January 3, 1996.
On June 16, 1997, the Board of Directors took steps to
activate the Micro-Cap Portfolio of the Fund by authorizing the
issuance of shares of that Portfolio. On September 18, 1997,
the Board of Directors also approved an amendment to the
Investment Advisory Agreement making the Agreement applicable
to the Micro-Cap Portfolio and specifying 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
Micro-Cap Portfolio shares and that therefore only the holders
of Micro-Cap Portfolio shares were entitled to vote on the
amendment. It is anticipated that the sole shareholder of the
Micro-Cap Portfolio will approve the Agreement on or about
December 1, 1997.
The Investment Advisory Agreement provides that the
Adviser shall not be liable to the Fund or to any shareholder
for any error of judgment or mistake of law or for any loss
suffered by the Fund or by any shareholder in connection with
matters to which the Investment Advisory Agreement relates,
except a loss resulting from willful misfeasance, bad faith,
gross negligence, or reckless disregard on the part of the
Adviser in the performance of its duties thereunder. In the
case of administration services, the Adviser will be held to a
normal standard of liability.
The Agreement in no way restricts the Adviser from acting
as investment manager or adviser to others.
If the question of continuance of the Agreement (or
adoption of any new Agreement) is presented to shareholders,
continuance (or adoption) with respect to a Portfolio shall be
effective only if approved by a majority vote of the
outstanding voting securities of that Portfolio. If the
shareholders of any one or more of the Portfolios should fail
to approve the Agreement, the Adviser may nonetheless serve as
an adviser with respect to any Portfolio whose shareholders
approved the Agreement.
Administration
The Adviser is responsible for providing certain
administrative functions to the Fund and has entered into an
Administration Agreement with Carillon Investments, Inc.
("CII") under which CII furnishes substantially all of such
services for an annual fee of .20% of the average net assets of
the Bond, Capital and Equity Portfolios, .10% of the average
net assets of the Micro-Cap Portfolio, and .05% of the average
net assets of the S&P 500 Index Portfolio. The fee is borne by
the Adviser, not the Fund. Under the Administration Agreement,
CII is obligated to provide persons for clerical, accounting,
bookkeeping, administrative and other similar services, to
supply office space, stationery and office supplies, and to
prepare tax returns, reports to stockholders, and filings with
the Securities and Exchange Commission and state securities
authorities.
Service Agreement
Under a Service Agreement between the Adviser and Union
Central, Union Central has agreed to make available to the
Adviser the services of certain employees of Union Central on a
part-time basis for the purpose of better enabling the Adviser
to fulfill its obligations to the Fund under the Agreement.
Pursuant to the Service Agreement, the Adviser shall reimburse
Union Central for all costs allocable to the time spent on the
affairs of the Adviser by the employees provided by Union
Central. In performing their services for the Adviser pursuant
to the Service Agreement, the specified employees shall report
and be solely responsible to the officers and directors of the
Adviser or persons designated by them. Union Central shall
have no responsibility for the investment recommendations or
decisions of the Adviser. The obligation of performance under
the Agreement is solely that of the Adviser and Union Central
undertakes no obligation in respect thereto except as otherwise
expressly provided in the Service Agreement. The Service
Agreement was approved by the shareholders of the Equity, Bond
and Capital Portfolios at a meeting held on March 20, 1992.
The sole shareholder of the S&P 500 Index Portfolio approved
the Service Agreement on January 3, 1996. It is anticipated
that the sole shareholder of the Micro-Cap Portfolio will
approve the Service Agreement on or about December 1, 1997.
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 as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern Time), when
there are purchases or redemptions of Fund shares, except: (i)
when the New York Stock Exchange is closed (currently New
Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas
Day); and (ii) 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 1996, 26% of the Fund's total brokerage was
allocated to brokers who furnish statistical data or research
information. Brokerage commissions paid during 1996, 1995 and
1994 were $475,382, $349,679 and $232,642, respectively.
GENERAL INFORMATION
Capital Stock
The Fund was incorporated in Maryland on January 30, 1984.
The authorized capital stock of the Fund consists of one
hundred and fifty million shares of common stock, par value ten
cents ($0.10) per share. The shares of the authorized capital
stock are currently divided into the following classes: Equity
Portfolio consisting of forty million authorized shares;
Capital Portfolio consisting of thirty million authorized
shares; Bond Portfolio consisting of thirty million authorized
shares; S&P 500 Index Portfolio consisting of thirty million
authorized shares; and Micro-Cap Portfolio consisting of twenty
million shares.
The Board of Directors may change the designation of any
Portfolio and may increase or decrease the number of authorized
shares of any Portfolio, but may not decrease the number of
authorized shares of any Portfolio below the number of shares
then outstanding.
Each issued and outstanding share is entitled to
participate equally in dividends and distributions declared by
the respective Portfolio and, upon liquidation or dissolution,
in net assets of such Portfolio remaining after satisfaction of
outstanding liabilities.
Voting Rights
In accordance with an amendment to the Maryland General
Corporation Law, the Board of Directors of the Fund has adopted
an amendment to its Bylaws providing that unless otherwise
required by the Investment Company Act of 1940, the Fund shall
not be required to hold an annual shareholder meeting unless
the Board of Directors determines to hold an annual meeting.
The Fund intends to hold shareholder meetings only when
required by law and such other times as may be deemed
appropriate by its Board of Directors.
All shares of common stock have equal voting rights
(regardless of the net asset value per share) except that on
matters affecting only one Portfolio, only shares of the
respective Portfolio are entitled to vote. The shares do not
have cumulative voting rights. Accordingly, the holders of
more than 50% of the shares of the Fund voting for the election
of directors can elect all of the directors of the Fund if they
choose to do so and in such event the holders of the remaining
shares would not be able to elect any directors.
Matters in which the interests of all Portfolios are
substantially identical (such as the election of directors or
the approval of independent public accountants) will be voted
on by all shareholders without regard to the separate
Portfolios. Matters that affect all Portfolios but where the
interests of the Portfolios are not substantially identical
(such as approval of the Investment Advisory Agreement) would
be voted on separately by each Portfolio. Matters affecting
only one Portfolio, such as a change in its fundamental
policies, are voted on separately by that Portfolio.
Matters requiring separate shareholder voting by Portfolio
shall have been effectively acted upon with respect to any
Portfolio if a majority of the outstanding voting securities of
that Portfolio votes for approval of the matter,
notwithstanding that: (1) the matter has not been approved by a
majority of the outstanding voting securities of any other
Portfolio; or (2) the matter has not been approved by a
majority of the outstanding voting securities of the Fund.
The phrase "a majority of the outstanding voting
securities" of a Portfolio (or of the Fund) means the vote of
the lesser of: (1) 67% of the shares of the Portfolio (or the
Fund) present at a meeting if the holders of more than 50% of
the outstanding shares are present in person or by proxy; or
(2) more than 50% of the outstanding shares of the Portfolio
(or the Fund).
As noted in the Prospectus, Union Central currently has
voting control of the Fund. With voting control, Union Central
could make fundamental and substantial changes (such as
electing a new Board of Directors, changing the investment
adviser or advisory fee, changing a Portfolio's fundamental
investment objectives and policies, etc.) regardless of the
views of Contract Owners. However, under current
interpretations of presently applicable law, Contract Owners
are entitled to give voting instructions with respect to Fund
shares held in registered separate accounts and therefore all
Contract Owners would receive advance notice before any such
changes could be made.
Additional Information
This Statement of Additional Information and the
Prospectus do not contain all the information set forth in the
registration statement and exhibits relating thereto, which the
Fund has filed with the Securities and Exchange Commission,
Washington, D.C., under the Securities Act of 1933 and the
Investment Company Act of 1940, to which reference is hereby
made.
INDEPENDENT AUDITORS
The financial statements of the Fund have been audited by
Deloitte & Touche LLP, 1700 Courthouse Plaza NE, Dayton, Ohio
45402, independent auditors, whose report follows. The
financial statements are included in this Statement of
Additional Information in reliance upon the report of Deloitte
& Touche LLP, given upon their authority as experts in auditing
and accounting.
<PAGE>
CARILLON FUND, INC.
Financial Statements
June 30, 1997
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
S&P 500
Equity Capital Bond Index
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments in
securities, at value $310,759,196 $159,028,648 $87,712,519 $43,563,274
(cost $250,986,522;
$149,939,900;
$86,017,333; $35,041,087)
Cash 3,401 316 -- --
Receivables:
Shares sold 373,167 224,556 62,889 95,074
Securities sold 97,809 -- -- --
Interest and Dividends 316,416 666,019 1,369,764 50,005
Prepaid expenses and other 29,062 13,625 14,208 16,042
------------ ------------ ----------- -----------
311,579,051 159,933,164 89,159,380 43,724,395
LIABILITIES
Payables:
Investment securities
purchased 1,581,018 -- 998,907 409,314
Shares purchased -- -- -- 3,478
Investment advisory fees 139,620 88,361 34,506 8,181
Custodial and portfolio
accounting fees 19,934 20,166 15,298 10,875
Professional fees 160 2,262 -- 12,206
Bank overdraft -- -- 100 33
Variation margin -- -- -- 33,250
Other accrued expenses 7,985 6,412 3,605 10,964
Deferred compensation
for directors -- -- 92,340 --
------------ ------------ ----------- -----------
1,748,717 117,201 1,144,756 488,302
------------ ------------ ----------- -----------
NET ASSETS
Paid-in capital 227,752,582 147,641,813 85,496,428 33,803,012
Undistributed net
investment income 181,360 354,849 301,209 21,428
Accumulated net realized
gain/(loss) 22,123,718 2,730,552 521,671 604,091
of investments
Net unrealized
appreciation
of investments 59,772,674 9,088,749 1,695,186 8,807,562
------------ ------------ ----------- -----------
$309,830,334 $159,815,963 $88,014,624 $43,236,093
============ ============ =========== ===========
Shares authorized
($.10) par value 40,000,000 30,000,000 30,000,000 30,000,000
Shares outstanding 16,858,010 11,648,419 8,038,070 3,009,235
Net asset value,
offering, and
redemption price
per share $18.38 $13.72 $10.95 $14.37
</TABLE>
The accompanying notes are an integral part
of the financial statement.
<PAGE>
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
S&P 500
Equity Capital Bond Index
Portfolio Portfolio Portfolio Portfolio
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 708,997 $3,334,795 $3,374,684 $ 79,334
Dividends (net of
foreign withholding
taxes of $61,288;
$21,128; $0; $2,219) 2,171,087 599,866 -- 306,578
---------- ---------- ---------- ----------
2,880,084 3,934,661 3,374,684 385,912
---------- ---------- ---------- ----------
EXPENSES
Investment advisory fees 808,766 528,925 204,142 53,162
Custodial fees and expenses 34,498 19,965 12,509 6,865
Portfolio accounting fees 25,103 23,841 19,383 15,257
Professional fees 3,870 4,532 4,114 16,122
Director's fees 6,752 6,752 5,899 7,023
Transfer agent fees 4,023 4,169 4,087 3,544
Registration and
filing fees 5,888 2,085 53 300
Other 18,407 12,420 8,752 426
---------- ---------- ---------- ----------
907,307 602,689 258,939 102,699
Fees waived by the Adviser -- -- -- (3,002)
---------- ---------- ---------- ----------
907,307 602,089 258,939 99,697
NET INVESTMENT INCOME 1,972,777 3,331,972 3,115,745 286,215
REALIZED AND UNREALIZED
GAIN/(LOSS)
Net realized gain
on investments 22,144,959 2,798,788 521,815 203,438
Net realized gain
on futures contracts -- -- -- 452,200
---------- ---------- ---------- ----------
22,144,959 2,798,788 521,815 655,638
---------- ---------- ---------- ----------
Net change in unrealized
appreciation/(depreciation)
of investments (610,487) (2,524,282) (343,006) 5,540,713
Net change in unrealized
appreciation/(depreciation)
of futures contracts -- -- -- 235,975
---------- ---------- ---------- ----------
(610,487) (2,524,282) (343,006) 5,776,688
---------- ---------- ---------- ----------
NET REALIZED AND
UNREALIZED GAIN/(LOSS) 21,534,472 274,506 178,809 6,432,326
---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $23,507,249 $3,606,478 $3,294,554 $6,718,541
=========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Equity Portfolio
For the Six Months For the Year Ended
Ended June 30, December 31,
--------------------------------------
(Unaudited)
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 1,972,777 $ 4,176,431
Net realized gain on investments 22,144,959 34,227,538
and futures
Net change in unrealized
appreciation/(depreciation)
on investments and
futures contracts (610,487) 17,468,047
------------ ------------
23,507,249 55,872,016
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (2,526,115) (3,889,965)
In excess of net investment income -- --
Net realized gain on investments (34,344,113) (9,867,342)
------------ ------------
(36,870,228) (13,757,307)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 14,569,057 41,762,282
Net asset value of shares
issued to shareholders
in reinvestment distributions 36,870,228 13,757,307
Payments for shares redeemed (16,369,695) (29,073,822)
------------ ------------
35,069,590 26,445,767
------------ ------------
NET INCREASE IN NET ASSETS 21,706,611 68,560,476
NET ASSETS
Beginning of year 288,123,723 219,563,247
------------ ------------
End of year $309,830,334 $288,123,723
============ ============
FUND SHARE TRANSACTIONS:
Sold 784,912 2,393,015
Issued in reinvestment
of distributions 2,187,096 809,878
Redeemed (927,682) (1,660,244)
------------ ------------
Net increase from fund
share transactions 2,044,326 1,542,649
------------ ------------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Capital Portfolio
<TABLE>
<CAPTION>
For the Six Months For the Year Ended
Ended June 30, December 31,
--------------------------------------
(Unaudited)
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 3,331,972 $ 6,684,340
Net realized gain on investments
and futures 2,798,788 12,459,745
Net change in unrealized
appreciation/(depreciation) on
investments and future contracts (2,524,282) 1,990,613
------------ ------------
3,606,478 21,134,698
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (3,959,663) (6,050,397)
In excess of net investment income -- --
Net realized gain on investments (12,519,532) (2,002,549)
------------ ------------
(16,479,195) (8,052,946)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 7,564,155 17,130,822
Net asset value of shares
issued to shareholders
in reinvestment of dividends
and distributions 16,479,194 8,052,945
Payments for shares redeemed (10,648,555) (24,594,141)
------------ ------------
13,394,794 589,626
------------ ------------
NET INCREASE IN NET ASSETS 522,077 13,671,378
NET ASSETS
Beginning of year 159,293,886 145,622,508
------------ ------------
End of year 159,815,963 159,293,886
============ ============
FUND SHARE TRANSACTIONS:
Sold 533,306 1,199,385
Issued in reinvestment of
dividends and distributions 1,222,104 570,034
Redeemed (762,361) (1,729,493)
------------ ------------
Net increase from fund
share transactions 993,049 39,926
============ ============
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Bond Portfolio
For the Six Months For the Year Ended
Ended June 30, December 31,
--------------------------------------
(Unaudited)
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 3,115,745 $ 5,766,633
Net realized gain on investments
and futures 521,815 1,210,173
Net change in unrealized
appreciation/(depreciation)
on investments and
futures contracts (343,006) (1,316,722)
------------ ------------
3,294,554 5,660,084
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (2,517,892) (6,340,623)
In excess of net investment income -- (320,260)
Net realized gain on investments (481,253) --
------------ ------------
(2,999,145) (6,660,883)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 5,884,551 17,850,341
Net asset value of shares
issued to shareholders
in reinvestment of dividends
and distributions 2,999,145 6,660,883
Payments for shares redeemed (6,798,740) (11,443,995)
------------ ------------
2,084,956 13,067,229
------------ ------------
NET INCREASE IN NET ASSETS 2,380,365 12,066,430
NET ASSETS
Beginning of year 85,634,259 73,567,699
------------ ------------
End of year 88,014,624 85,634,129
============ ============
FUND SHARE TRANSACTIONS:
Sold 538,925 1,633,803
Issued in reinvestment of
dividends and distributions 276,691 621,662
Redeemed (624,986) (1,054,560)
------------ ------------
Net increase from
fund share transactions 190,630 1,200,905
------------ ------------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
S&P 500 Index Portfolio
<TABLE>
<CAPTION>
For the Six Months For the Year Ended
Ended June 30, December 31,
--------------------------------------
(Unaudited)
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 286,215 $ 349,515
Net realized gain on
investments and futures 655,638 218,750
Net change in unrealized
appreciation/(depreciation) on
investments and futures contracts 5,776,688 3,030,849
------------ ------------
6,718,541 3,599,114
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (307,039) (307,386)
In excess of net investment income -- --
Net realized gain on investments (270,297) --
------------ ------------
(577,336) (307,386)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 13,103,230 30,917,430
Net asset value of shares
issued to shareholders
in reinvestment of dividends
and distributions 577,335 307,386
Payments for shares redeemed (5,790,287) (5,617,082)
------------ ------------
7,890,278 25,607,734
------------ ------------
NET INCREASE IN NET ASSETS 14,031,483 28,899,462
NET ASSETS
Beginning of year 29,204,610 305,148
------------ ------------
End of year 43,236,093 29,204,610
============ ============
FUND SHARE TRANSACTIONS:
Sold 993,940 2,850,416
Issued in reinvestment of
dividends and distributions 44,389 26,989
Redeemed (436,596) (500,402)
------------ ------------
Net increase from
fund share transactions 601,733 2,377,003
============ ============
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1997
(Unaudited)
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 91.10%
BANKING & FINANCIAL SERVICE - 14.92%
Allied Capital Corporation 28,571 457,124
Banco BHIF ADR 75,000 1,584,375
Banco Latinoamericano
De Exportanciones Sponsored ADR 54,700 2,358,938
Bank United Financial Corporation* 140,000 1,382,500
Charter One Financial, Incorporated 52,500 2,828,438
Chile Fund Incorporated* 80,000 2,090,000
Corus Bankshares, Incorporated 12,500 353,125
Czech Republic Fund 109,000 1,498,750
Deutsche Bank AG Sponsored ADR 42,000 2,456,076
Fahnestock Viner Holdings 150,000 2,831,250
First Bell Bancorp, Incorporated 15,000 248,750
FPIC Insurance Group, Incorporated* 172,500 3,881,250
Gainsco, Incorporated 217,762 2,041,519
Hamilton Bancorp, Incorporated* 100,000 2,675,000
Jefferies Group, Incorporated 64,000 2,850,000
Korea Fund, Incorporated 139,517 2,057,876
Penncorp Financial Group Corporation 95,000 3,657,500
Protective Life Corporation 40,000 2,010,000
RLI Corporation 43,625 1,589,586
Raymond James Financial Corporation 99,150 2,714,231
Thai Fund, Incorporated 145,655 2,239,446
Washington Federal, Incorporated 93,610 2,404,607
-----------
46,210,341
-----------
CAPITAL GOOD - 6.44%
AFC Cable Systems, Incorporated* 100,000 2,700,000
AGCO Corporation 59,400 2,134,688
Fibermark, Incorporated 90,000 1,878,750
Greif Brothers Corporation 82,800 2,235,600
Griffon Corporation 209,600 2,868,900
Holophane Corporation* 50,000 1,000,000
Lindsay Manufacturing Company 176,793 5,789,971
LSI Industries 100,000 1,350,000
-----------
19,957,909
CONSUMER CYCLICAL - 17.75%
Breed Technologies 125,000 2,875,000
Cemex SA -- Sponsored ADR* 200,000 1,925,938
Chromcraft Revington, Incorporated* 75,000 2,146,875
Claire's Stores, Incorporated 50,000 875,000
Conso Products Company 146,250 1,791,563
CULP, Incorporated 64,300 1,165,438
D.R. Horton, Incorporated 150,000 1,556,250
Devon Group, Incorporated* 85,000 3,038,750
Fila Holdings 50,000 1,671,875
Footstar, Incorporated* 110,000 2,873,750
Friedman's, Incorporated* 130,000 2,973,750
Helen of Troy, Bermuda* 99,000 2,536,875
Intermet Corporation 125,000 2,007,813
Kevco, Incorporated* 140,000 1,890,000
Medusa Corporation 80,300 3,081,513
NCI Building Systems, Incorporated* 80,700 2,612,663
Roberds, Incorporated* 90,000 472,500
Schult Homes 98,060 1,556,703
Scientific Games
Holdings Corporation* 72,600 1,497,375
Southern Energy Homes 217,000 1,980,125
Stanley Furniture Company* 61,000 1,410,625
Strattec Security Corporation* 145,000 2,990,625
Toll Brothers* 90,000 1,653,750
Tractor Supply Company* 30,000 540,000
Triangle Pacific Corporation* 92,500 2,960,000
Winsleow Furniture, Incorporated* 188,300 2,059,531
York Group, Incorporated 152,500 2,859,375
-----------
55,003,662
-----------
CONSUMER NON-DURABLE -7.94%
Advocat, Incorporated* 100,500 1,143,188
Complete Management, Incorporated* 120,000 1,710,000
Dairy Farm International Holdings
Sponsored ADR 200,000 750,000
Equity Marketing, Incorporated* 105,500 2,479,250
GT Bicycles, Incorporated* 175,000 1,400,000
ICN Pharmeaceuticals, Incorporated 106,600 3,058,088
IHOP Corporation* 87,000 2,697,000
Lone Star Steakhouse* 70,000 1,820,000
Oakley, Incorporated* 123,500 1,732,500
Orthofix International NV* 113,036 1,172,748
Schlotzsky's, Incorporated* 152,900 2,102,375
Standard Commercial Corporation 90,000 1,563,750
VISX, Incorporated* 45,000 1,068,750
VTECH Holdings Limited 100,000 1,884,530
-----------
24,582,179
-----------
ENERGY - 12.00%
Callon Petroleum Company* 110,000 1,760,000
Cross Timbers Oil Company 105,000 2,021,250
Giant Industries, Incorporated 205,000 3,241,563
Global Industries, Incorporated* 50,000 1,167,969
Gulf Island Fabrication, Incorpated* 110,000 2,818,750
Holly Corporation 90,000 2,233,125
KCS Energy, Incoporated 104,000 2,119,000
Maverick Tube Corporation* 83,000 3,112,500
Offshore Logistics, Incorporated* 83,000 2,265,000
Plains Resources, Incorporated* 119,500 1,762,625
Southern Mineral Corporation* 350,000 1,750,000
St. Mary Land & Exploration 60,000 2,107,500
Stone Energy Corporation* 93,900 2,570,513
Vastar Resources Incorporated 50,000 1,753,125
YPF S.A. Sponsored ADR 145,400 4,471,050
Zeigler Coal Holdings Company 87,000 2,033,625
-----------
37,187,595
-----------
MANUFACTURING -7.96%
ABT Building Products Company* 145,000 3,806,250
AEP Industries, Incorporated* 72,550 2,902,000
BWAY Corporation* 110,000 2,557,500
Bayer A G Sponsored ADR 75,000 2,884,589
Buckeye Cellulose Corporation* 51,000 1,721,250
Charoen Pok Feedmill 100,000 1,019,099
Matthews International
Corporation - Class A 77,000 2,810,500
Minorco Sponsored ADR 90,000 2,075,625
Mueller Industries* 35,000 1,531,250
Northwest Pipe Company* 32,000 588,000
Sybron Chemicals, Incorporated* 65,200 1,271,400
Wolverine Tube, Incorporated* 53,000 1,477,375
-----------
24,644,838
-----------
REAL ESTATE - 10.54%
Associated Estates Realty Corporation 65,000 1,527,500
City Developments Limited 150,000 1,468,679
Commercial Net Lease Realty 99,300 1,520,531
Evans Withycombe Residential 92,000 1,909,000
Health Care Property Investments,
Incorporated 42,600 1,501,650
Health and Retirement Property Trust 75,000 1,410,938
Health Care Realty Trust 61,400 1,711,525
Hospitality Properties Trust 64,000 1,960,000
IRT Property Company 172,300 2,024,525
Lexington Corporation Properties 100,000 1,400,000
Merry Land & Investment Company 115,000 2,494,063
Mid-America Apartment Communities 80,000 2,245,000
National Health Investors,
Incorporated 40,000 1,570,000
Oasis Residential, Incorporated 58,000 1,363,000
Pacific Gulf Properties 74,000 1,628,000
Trinet Corporate Realty
Trust Incorporated 58,000 1,917,625
United Dominion Realty
Trust Incorporated 168,000 2,383,500
Winston Hotels, Incorporated 175,000 2,635,938
-----------
32,671,474
-----------
TECHNOLOGY - 7.09%
Applied Voice Technology* 84,500 1,563,250
Carbide Graphite Group Incorporated* 130,000 3,022,500
CPAC, Incorperated* 200,000 2,425,000
Cybex Corporation* 160,000 2,840,000
DH Technology, Incorporated* 200,000 3,250,000
Kemet Corporation* 60,000 1,492,500
Nam Tai Electronics, Incorporated* 187,500 3,117,188
Recoton Corporation* 163,000 2,129,187
Vertex Communications Corporation* 80,000 2,140,000
-----------
21,979,625
-----------
TRANSPORTATION - 4.51%
Atlantic Southeast Airlines
Incorporated 95,000 2,719,375
Comair Holdings, Incorporated 115,000 3,184,063
Illinois Central Corporation - Class A 82,500 2,882,344
Landstar, Incorporated* 90,000 2,531,250
Midwest Express Holdings 97,500 2,669,063
-----------
13,986,095
-----------
UTILITY - 1.95%
CMS Energy Corporation 40,500 1,427,625
IES Industries, Incorporated 48,600 1,434,300
Rochester Gas and Electric 75,000 1,579,688
Tuscon Electric Power Company* 110,000 1,595,000
-----------
6,036,613
-----------
Total Common Stocks (cost $222,487,657) $282,260,331
-----------
SHORT-TERM INVESTMENTS - 9.20%
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COMMERCIAL PAPER - 6.00%
Merrill Lynch and Company
(5.430% due 11/26/97) $2,000,000 $1,955,353
Financial Federal
(5.700% due 10/31/97) 2,000,000 1,961,367
Financial Federal
(5.750% due 12/01/97) 1,000,000 975,563
GMAC (5.730% due 10/06/97) 2,000,000 1,969,122
Greenwich Funding Corporation
(5.640% due 9/22/97) 1,500,000 1,480,495
Hertz Corporation
(5.560% due 01/08/98) 2,000,000 1,941,002
Progress Funding Corporation
(5.730% due 9/18/97) 1,000,000 987,426
Cargill Financial Services
Corporation (5.410% due 11/26/97) 2,000,000 1,955,518
Ford Motor Credit
(5.690% due 01/27/98) 2,000,000 1,933,617
Orix Credit Alliance
(5.650% due 09/19/97) 2,000,000 1,974,889
International Lease Financial
Corporation (5.45% due 11/17/1997) 1,500,000 1,468,435
-----------
18,602,787
-----------
VARIABLE RATE DEMAND NOTES<F1> - 3.20%
Johnson Controls, Inc.
(5.276% due 00/00/00) 2,420,210 2,420,210
Warner Lambert (5.226% due 00/00/00) 3,210,109 3,210,110
General Mills, Inc.
(5.245% due 00/00/00) 2,548,821 2,548,822
American Family Financial Services
(5.256% due 00/00/00) 606,286 606,287
Pitney Bowes Credit Corp
(5.225% due 00/00/00) 567,300 567,300
Wisconsin Electric Power Co.
(5.965 due 00/00/00) 543,349 543,349
-----------
9,896,078
-----------
Total Short-Term Investments
(cost $28,498,865) 28,498,865
-----------
TOTAL INVESTMENTS - 100.30%
(cost $250,986,522)<F2> 310,759,196
-----------
OTHER ASSETS AND LIABILITIES - (.30)% (928,862)
-----------
TOTAL NET ASSETS - 100% $309,830,334
===========
____________
*Non-income producing
(ADR) American Depository Receipt
<FN>
<F1> Interest rates vary periodically based on current market rates. The
maturity shown for each variable rate demand note is the later of the next
scheduled interest rate adjustment date or the date on which principal can be
recovered through demand. Information as of June 30 1997.
<F2> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at June 30,1997 or financial
reporting purposes was $68,112,935 and $8,340,261.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
Carillon Fund, Inc.
Schedule of Investments
JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
CAPITAL PORTFOLIO
COMMON STOCKS - 34.70% SHARES/
PRINCIPAL VALUE
--------- -----------
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 9.88%
Allied Capital Corporation 34,285 $ 548,560
Banco BHIF ADR 50,000 1,056,250
Banco Latinoamericano
de Exportaciones ADR 3,900 168,176
Black Rock Strategic Term Trust 75,000 609,375
Charter One Financial Incorporated 42,000 2,262,750
Chile Fund* 33,000 862,125
Corus Bankshares Incorporated 6,000 169,500
Deutsche Bank AG Sponsored ADR 12,000 701,736
Fahnestock Viner Holdings 70,000 1,321,250
FPIC Insurance Group Incorporated* 65,000 1,462,500
Korea Fund 83,792 1,235,932
New Germany Fund 79,789 1,256,677
Penncorp Financial Group
Incorporated 24,000 924,000
Templeton Global Income Fund 125,000 937,500
Thai Fund Incorporated 55,566 854,327
Washington Federal Incorporated 55,000 1,412,812
-----------
15,783,470
-----------
CAPITAL GOOD - 2.26%
Griffon Corporation 55,000 752,813
Lindsay Manufacturing Incorporated 49,362 1,616,606
Strattec Security Corporation* 60,000 1,237,500
-----------
3,606,919
-----------
CONSUMER CYCLICAL -2.21%
Chromcraft Revington Incorporated* 25,000 715,625
Evans Withycombe Residential 39,000 809,250
NCI Building Systems Incorporated* 35,000 1,133,125
Winsleow Furniture Incorporated* 80,000 875,000
-----------
3,533,000
-----------
CONSUMER NON-DURABLE -1.08%
GT Bicycles Incorporated* 80,000 640,000
IHOP Corporation* 35,000 1,085,000
-----------
1,725,000
-----------
ENERGY - 4.25%
Callon Petroleum Company* 35,000 560,000
Cross Timbers Oil Company 27,450 528,413
Giant Industries Incorporated 87,400 1,382,013
KCS Energy Incorporated 42,000 855,750
Offshore Logistics Incorporated* 47,000 887,125
Stone Energy Corporation* 27,000 739,125
YPF S.A. Sponsored ADR 60,000 1,845,000
-----------
6,797,426
-----------
MANUFACTURING - 7.01%
ABT Building Products Company* 45,000 1,181,250
AEP Industries, Incorporated* 30,831 1,233,240
Bway Corporation* 44,000 1,023,000
Carbide Graphite Group* 60,000 1,395,000
Coeur D Alene Mines 52,000 672,756
Matthews International 2,500 91,250
Newmont Mining Corporation 35,050 1,366,950
Royal Oak Mines Incorporated* 125,000 296,875
TVX Gold Incorporated* 195,000 1,035,938
Vaal Reefs Exploration
& Mining Limited ADR 120,100 577,981
York Group Incorporated 62,000 1,162,500
Zeigler Coal Holding Company 50,000 1,168,750
-----------
11,205,490
-----------
REAL ESTATE - 6.15%
Associated Estates
Realty Corporation 50,000 1,175,000
City Developments 95,000 930,163
Hospitality Properties Trust 33,000 1,010,625
LTC Properties Incorporated 46,000 833,750
Merry Land & Investment Company 60,000 1,301,250
Mid-America Apartment Communities 40,000 1,122,500
Pacific Gulf Properties 43,500 957,000
United Dominion Realty Trust 75,000 1,064,063
Winston Hotels Incorporated 95,000 1,430,938
-----------
9,825,289
-----------
TECHNOLOGY - 1.86%
AFC Cable Systems Incorporated* 19,000 513,000
DH Technology, Incorporated* 94,760 1,539,850
Vertex Communications Corporation* 34,100 912,175
-----------
2,965,025
-----------
Total Common Stocks (cost $46,839,264) 55,441,619
-----------
PREFERRED STOCKS - .39%
MANUFACTURING -.39%
Freeport McMoRan Copper
& Gold Series 20,000 617,500
Total Preferred Stock (cost $709,838) 617,500
-----------
U.S. TREASURY OBLIGATIONS - 16.65%
7.875% due 04/15/98 $ 500,000 508,125
5.750% due 12/31/98 2,000,000 1,993,750
5.500% due 02/28/99 1,000,000 991,563
6.000% due 10/15/99 5,900,000 5,888,938
5.750% due 10/31/00 1,000,000 984,063
7.500% due 11/15/01 500,000 521,094
6.375% due 08/15/02 1,750,000 1,748,906
5.750% due 08/15/03 3,000,000 2,896,875
5.875% due 02/15/04 100,000 96,875
7.250% due 05/15/04 3,500,000 3,647,658
7.875% due 11/15/04 6,800,000 7,335,500
-----------
Total U.S. Treasury Notes
($26,376,144) 26,613,347
-----------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 11.24%
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 3.14%
1662 H (6.250% due 01/15/09) 959,423 945,377
1442 FA (6.480% due 11/15/07)<F1> 1,000,000 981,083
1559 VP (5.500% due 02/15/20) 1,700,000 1,628,396
1399 PAC (7.000% due 09/15/22) 596,484 574,662
1631 SB (5.850% due 12/15/23) 1,450,000 888,680
-----------
5,018,198
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 7.78%
Remic 93-12 ED
(7.500% due 02/25/06) 1,645,000 $ 1,687,145
Remic 1992-163 PN
(7.000% due 07/25/07) 1,500,000 1,501,620
Remic 92-117 J
(7.500% due 07/25/20) 1,000,000 1,011,628
Remic 92-119 E
(8.000% due 07/25/20) 1,000,000 1,024,020
Remic 92-112E
(8.000% due 12/25/20) 1,500,000 1,540,946
Remic 93-127 FA
(5.930% due 10/25/21)<F1> 1,000,000 963,110
Remic 1992-39 FB
(6.530% due 03/25/22)<F1> 2,000,000 1,975,701
Remic 92-66 F
(6.219% due 05/25/22)<F1> 914,116 915,412
Remic 1993-119 SB
(6.808% due 07/25/23)<F1> 2,572,882 1,817,284
-----------
12,436,866
-----------
PRIVATE SECTOR - .32%
Prudential Home Mortgage Securities
(7.500% due 07/25/10) 506,988 504,610
-----------
Total Collateralized Mortgage
Obligations (cost $18,372,000) 17,959,674
-----------
MORTGAGE - BACKED SECURITIES - 8.75%
FEDERAL HOME LOAN
MORTGAGE CORPORATION - .76%
7.500% due 06/01/07 39,450 39,723
9.500% due 10/01/08 202,360 215,806
8.250% due 03/01/12 108,680 112,266
8.500% due 03/01/16 91,603 95,400
7.500% due 07/01/17 47,255 47,453
11.000% due 04/01/19 52,498 58,570
11.000% due 11/01/19 53,211 59,366
11.000% due 05/01/20 201,492 224,710
11.000% due 06/01/20 329,392 367,632
-----------
1,220,926
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 7.67%
10.000% due 02/01/04 4,477 4,782
9.500% due 09/01/05 132,297 138,449
9.000% due 11/01/05 53,926 56,161
7.500% due 03/25/07 1,200,000 1,221,561
8.000% due 05/01/07 132,106 136,137
6.000% due 12/01/08 816,923 793,257
5.500% due 01/01/09 849,387 806,290
6.000% due 03/01/09 925,411 898,602
5.500% due 04/01/09 613,202 579,317
6.500% due 02/01/26 775,991 742,701
6.500% due 03/01/26 200,580 191,976
7.000% due 03/01/26 1,883,824 1,847,523
7.000% due 07/01/26 1,924,489 1,886,005
7.500% due 07/01/26 2,944,095 2,950,543
-----------
12,253,304
-----------
<PAGE>
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - .32%
9.000% due 11/15/16 $ 89,874 $ 96,503
10.500% due 11/20/19 263,085 292,080
9.000% due 12/15/19 115,037 123,188
-----------
511,771
-----------
Total Mortgage Backed Securities
(cost $13,406,326) 13,986,001
-----------
CORPORATE BONDS AND NOTES - 2.85%
COMMUNICATIONS AND MEDIA - .58%
Lowen Group International, Inc.
(8.250% due 04/15/03) 900,000 928,494
-----------
FINANCE COMPANY - .39%
Zions Trust (8.536% due 12/15/26)<F1> 600,000 618,153
-----------
OIL & GAS EXPLORATION SERVICES - .13%
Maxus Debentures
(11.250% due 05/01/13) 208,000 213,200
-----------
REAL ESTATE - .32%
GE Capital Marketing Services, Inc.
(6.000% due 08/25/09) 552,188 518,196
-----------
TELEPHONE & TELECOMMUNICATIONS - .66%
TCI Communications Inc
(8.650% due 09/15/04) 1,000,000 1,058,984
-----------
UTILITIES - ELECTRIC - .77%
New Orleans Public Service Inc.
1st Mtg. (8.670% due 04/01/05)<F1> 1,200,000 1,225,889
-----------
Total Corporate Bonds
(cost $ 4,388,737) 4,562,916
-----------
SHORT-TERM INVESTMENTS - 24.93%
COMMERCIAL PAPER - 16.12%
Cargill Financial Services
Corporation (5.410% due 11/26/97) 2,000,000 1,955,600
Case Credit Corporation
(5.800% due 08/25/97) 1,500,000 1,486,708
Credit Suisse First Boston
(5.730% due 10/17/97) 1,500,000 1,474,215
CSX (5.770% due 07/10/97) 2,000,000 1,997,115
Daimler Benz NA Corporation
(5.670% due 09/09/97) 2,000,000 1,977,950
Electronic Data System
(5.630% due 07/31/97) 2,000,000 1,990,617
Ford Motor Company
(5.320% due 07/07/97) 2,500,000 2,497,675
GMAC (5.660% due 12/31/97) 1,000,000 971,228
Houston Industries
(5.800% due 07/07/97) 1,000,000 999,033
IBM Credit (5.560% due 08/08/97) 2,000,000 1,988,880
Illinois Power Company
(5.800% due 07/29/97) 2,000,000 1,990,978
Madison Funding Corporation
(5.640% due 07/14/97) 2,000,000 1,995,927
Merrill Lynch and Company
(5.430% due 11/26/97) 1,000,000 977,677
Nationwide Building
(5.690% due 08/11/97) 1,500,000 1,490,280
Orix Credit Alliance
(5.650% due 09/19/97) 2,000,000 1,974,889
-----------
25,768,772
-----------
VARIABLE RATE DEMAND NOTES - 8.81%
American Family Financial
Services, Inc. (5.2562% due 07/02/97) 1,484,666 1,484,666
General Mills Incorporated
(5.245% due 07/02/97) 62,752 62,752
Johnson Controls, Inc.
(5.2760% due 07/02/97) 4,983,151 4,983,151
Pitney Bowes Credit Corporation
(5.2551% due 07/02/97) 560,874 560,874
Warner Lambert (5.226% due 07/02/97) 5,450,773 5,450,773
Wisconsin Electric Power Company
(5.549% due 01/01/97) 1,536,603 1,536,603
-----------
14,078,819
-----------
Total Short Term Investments
(cost $39,847,591) 39,847,591
-----------
TOTAL INVESTMENTS - 99.51%
(cost $149,939,900)<F2> 159,028,648
-----------
OTHER ASSETS AND LIABILITIES - .49% 787,315
-----------
TOTAL NET ASSETS - 100% $159,815,963
============
_______________
Non-Income producing
(ADR) American Depository Receipt
<FN>
<F1> Interest rates vary periodically based on current market rates. Rates
shown are as of June 30, 1997. 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, 1997.
<F2> Gross unrealized appreciation and depreciation of securities at June
30, 1997 for financial reporting purposes was $12,433,734 and $3,344,986
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
June 30, 1997
(Unaudited)
BOND PORTFOLIO
<TABLE>
<CAPTION>
U.S. TREASURY OBLIGATIONS - 33.47% SHARES/
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
U.S. TREASURY BOND - 2.03%
6.000% due 02/15/26 $2,000,000 $ 1,789,375
-----------
U.S. TREASURY NOTES - 26.65%
6.000% due 10/15/99 4,000,000 3,992,500
6.700% due 04/30/00 2,000,000 2,026,250
7.750% due 02/15/01 2,500,000 2,615,625
5.625% due 02/28/01 2,000,000 1,956,250
5.875% due 11/15/05 5,000,000 4,784,375
7.000% due 07/15/06 5,000,000 5,143,750
6.250% due 02/15/07 3,000,000 2,934,375
23,453,125
-----------
U.S. TREASURY STRIPS - 4.79%
0.000% due 02/15/00 3,250,000 2,766,692
0.000% due 08/15/02 2,000,000 1,448,220
-----------
4,214,912
Total U.S. Treasury Obligations
(cost $29,412,404) 29,457,412
-----------
MORTGAGE - BACKED SECURITIES - 3.10%
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 1.01%
7.500% due 02/01/02 39,345 39,812
9.500% due 04/01/05 70,650 74,028
7.500% due 06/01/07 86,826 87,426
11.000% due 05/01/10 11,080 12,334
12.500% due 08/01/10 16,401 18,769
8.000% due 11/01/16 46,309 47,365
9.500% due 02/01/18 75,613 80,788
6.500% due 07/01/23 549,494 530,877
-----------
891,399
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 1.91%
12.000% due 04/01/00 60,942 65,284
9.000% due 08/01/01 46,473 48,346
8.500% due 01/01/02 43,959 45,456
10.500% due 06/01/04 12,259 12,998
10.500% due 05/01/05 184,966 196,122
6.500% due 06/01/08 1,055,197 1,040,403
8.000% due 08/01/17 267,939 273,716
-----------
1,682,325
-----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - .18%
11.000% due 03/15/10 60,550 66,491
9.000% due 05/15/20 81,070 85,605
-----------
152,096
-----------
Total Mortgage-Backed Securities
(cost $2,686,975) 2,725,820
-----------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 6.75%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 3.51%
59 E (8.900% due 11/15/20) $1,008,875 $ 1,051,541
106 G (8.250% due 12/15/20) 1,000,000 1,038,248
1770 B (8.250% due 01/15/24) 1,000,000 1,002,701
-----------
3,092,490
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - .23%
Remic (9.500% due 12/25/18) 190,981 202,622
-----------
PRIVATE SECTOR - 3.01%
Securitized Asset Sales, Inc.
(6.500% due 07/25/08) 296,484 282,680
CMC Securities Corp.
(0.000% due 12/25/08) 375,009 279,202
Country Wide Mortgage-Backed
Securities, Inc.(6.000% due 03/01/09) 851,430 795,022
Capstead Mortgage Securities Corp.
(10.950% due 02/01/14) 192,504 193,219
NWA Trust No. 2 Class B
(10.230% due 06/21/14) 938,462 1,099,340
-----------
2,649,463
-----------
Total Collateralized Mortgage
Obligations (cost $5,566,249) 5,944,575
-----------
CORPORATE BONDS AND NOTES - 48.27%
AIR TRANSPORTATION - 1.15%
Continental Airlines
(7.820% due 10/15/23) 980,392 1,008,765
-----------
BANK & BANK HOLDING COMPANIES - 1.17%
NationsBank Corp.
(7.625% due 04/15/05) 1,000,000 1,030,183
-----------
BUILDING PRODUCTS - .57%
Falcon Building Products
(9.5000% due 06/15/07) 500,000 497,500
-----------
COMMUNICATIONS AND MEDIA - 11.73%
Adelphia Communications
(12.500% due 05/15/02) 1,000,000 1,061,250
Call-Net Enterprises
(0.000% due 12/01/04) 1,250,000 1,079,688
CF Cable TV Inc.
(9.125% due 07/15/07) 1,000,000 1,070,000
Continental Cablevision
(8.300% due 05/15/06) 1,000,000 1,060,739
Jones Intercable, Inc.
(9.625% due 03/15/02) 500,000 505,000
Neodata Service
(12.000% due 05/01/03) 1,000,000 1,075,000
Peoples Choice TV
(0.000% due06/01/04) 1,000,000 365,000
Spanish Broadcasting Systems
(11.000% due 03/15/04) 1,000,000 1,050,000
Time Warner Inc.
(8.110% due 08/15/06)<F2> 1,000,000 1,042,947
Talton Holdings Incorporated
(11.000% due 06/30/07) 1,000,000 1,010,000
Viacom Incorporated
(7.750% due 06/01/05) 1,000,000 1,003,667
-----------
10,323,291
-----------
CONSUMER PRODUCTS - 1.05%
Coleman Holdings (0.000% due 05/27/98) 1,000,000 923,750
-----------
FINANCE COMPANIES - 7.48%
Ahmanson Capital Trust
(8.360% due 12/01/26)<F2> 1,500,000 1,491,684
Conseco Finance
(8.796% due 04/01/27)<F2> 1,500,000 1,542,532
Prudential Insurance
(8.100% due 07/15/15) 1,000,000 1,002,775
USF&G (8.470% due 01/10/27)<F2> 1,000,000 1,002,128
Zions Trust (8.536% due 12/15/26)<F2> 1,500,000 1,545,384
-----------
6,584,503
-----------
FOOD, BEVERAGE, & TOBACCO - 2.24%
RJR Nabisco, Inc.
(7.625% due 09/15/03) 500,000 483,870
Great American Cookie, Inc.
(10.875% due 01/15/01) 500,000 505,000
Nabisco Inc. (7.550% due 06/15/15) 1,000,000 985,992
-----------
1,974,862
-----------
GAMING INDUSTRY - 4.47%
Argosy Gaming (13.250% due 06/01/04) $1,000,000 $ 962,500
Boomtown, Inc. 1st Mortgage
(11.500% due 11/01/03) 1,000,000 1,070,000
Casino Magic of Louisiana
(13.000% due 08/15/03) 1,000,000 845,000
Empress River Casino Finance Corp.
(10.750% due 04/01/02) 1,000,000 1,060,000
3,937,500
-----------
GROCERY INDUSTRY - .55%
Pueblo Xtra International
(9.5000% due 08/01/03) 500,000 480,000
-----------
HEALTH CARE - 1.72%
Columbia / HCA Healthcare Corp.
(7.690% due 06/15/25)<F2> 1,000,000 1,004,062
Foundation Health Corp.
(7.750% due 06/01/03) 500,000 514,119
-----------
1,518,181
-----------
INSURANCE - 3.04%
Berkley (W.R.) Corp.
(9.875% due 05/15/08) 500,000 593,441
Farmers Insurance Exhange
(8.500% due 04) 1,000,000 1,052,931
Leucadia National Corp.
(8.250% due 06/15/05) 1,000,000 1,032,965
-----------
2,679,337
-----------
MANUFACTURING - 3.75%
General Instrument Corporation
(5.000% due 06/15/00) 500,000 570,625
International Knife & Saw Corp.
(11.375% due 11/15/06) 1,000,000 1,067,500
International Wire Group Inc.
(11.750% due 06/01/05) 500,000 543,750
Terex Corp. (13.750% due 05/15/02) 1,000,000 1,122,500
-----------
3,304,375
-----------
MISCELLANEOUS - 1.22%
Allied Waste North America
(10.250% due 12/01/06) 1,000,000 1,070,000
-----------
OIL & GAS - DOMESTIC - .60%
Penzoil Company (9.625% due 11/15/99) 500,000 531,552
-----------
OIL & GAS - SERVICES - 2.95%
All Star Gas Corporation
(7.000% due 07/15/04) 1,000,000 870,000
Mitchell Energy Development Corp.
(6.750% due 02/15/04) 750,000 709,714
PDV America, Inc.
(7.750% due 08/01/00) 1,000,000 1,013,210
-----------
2,592,924
-----------
PAPER & FOREST PRODUCTS - 1.17%
Crown Paper (11.000% due 09/01/05) 500,000 500,000
Westvaco Corp. (10.300% due 01/15/19) 500,000 532,418
-----------
1,032,418
-----------
RETAIL - 2.16%
Pamida Incorporated
(11.750% due 03/15/03) 500,000 470,000
Shopko Stores (6.500% due 08/15/03) 1,500,000 1,427,181
-----------
1,897,181
-----------
STEELS AND METALS - 1.25%
Gulf States Steel
(13.500% due 04/15/03) 500,000 497,500
UCAR Global Enterprises Inc.
(12.000% due 01/15/05) 530,000 598,900
-----------
1,096,400
-----------
Total Corporate Bond and Notes
(cost $41,636,488) 42,482,722
-----------
COMMON STOCKS - .04%
ENERGY - .04%
Mesa Incorproated* 6,417 36,898
Total Common Stocks (cost $ 24,365) 36,898
-----------
WARRANTS - 0.00%
RETAIL-FOOD - 0.00%
Great American Cookie 90 $ 2,250
TECHNOLOGY - .00%
Terex Corporation Appreciation Rights 4,000 40
-----------
Total Warrants (cost $ 28,050) 2,290
-----------
PREFERRED STOCKS - 1.02%
BANKING AND FINANCIAL SERVICE - 1.02%
Earthshell Container Corporation
Series A
Cumulative Senior Convertible 8%<F1> 500 900,000
Total Preferred Stocks (cost $500,000) 900,000
-----------
SHORT TERM INVESTMENTS - 7.01%
COMMERCIAL PAPER - 5.68%
ConAgra, Incorporated
(5.770% due 07/03/97) 2,000,000 1,999,359
CSX (5.800% due 07/07/97) 1,000,000 999,033
Ford Motor Company
(5.3200% due 07/07/97) 1,000,000 999,063
Ford Motor Company
(5.6200% due 07/07/97) 1,000,000 998,907
-----------
4,996,362
-----------
VARIABLE RATE DEMAND
NOTES <F2> - 1.33%
American Family Financial
Services, Inc. (5.2562% due 07/02/97) 100 100
General Mills, Inc.
(5.2450% due 07/02/97) 309,612 309,612
Johnson Controls Inc.
(5.2760% due 07/02/97) 662,051 662,051
Pitney Bowes Credit Corp.
(5.2551% due 07/02/97) 144,846 144,846
Wisconsin Electric Power Co.
(5.2962% due 07/02/97) 49,831 49,831
-----------
1,166,440
-----------
Total Short-Term Investments
(cost 6,162,802) 6,162,802
-----------
TOTAL INVESTMENTS - 99.66%
(cost $86,017,333)<F3> 87,712,519
-----------
OTHER ASSETS AND LIABILITIES - .34% 302,105
-----------
TOTAL NET ASSETS - 100% $88,014,624
-----------
* Non-Income Producing
<FN>
<F1> 144A- Privately placed security traded among qualified institutional
buyers.
<F2> Interest rates vary periodically based on current market rates.
Rates shown are as of June 30, 1997. The maturity shown for each
variable rate demand note is the later of the next scheduled interest
adjustment date or the date on which principal can be recovered through
demand. Information shown is as of June 30, 1997.
<F3> Gross unrealized appreciation and depreciation of securities at June
30, 1997 for financial reporting purposes was $2,747,980 and $1,052,794;
tax amounts were substantially the same.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statments.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
JUNE 30, 1997
(Unaudited)
S&P 500 INDEX PORTFOLIO
COMMON STOCKS - 90.10%
SHARES VALUE
------ -----
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 15.88%
Aegon ADR 348 24,313
Aetna Life & Casulaty Company 867 88,759
Allstate Corporation 2,600 189,800
American Express Company 2,800 208,600
American General Corporation 1,300 62,075
American International Group 2,700 403,313
Banc One Corporation 2,490 120,609
Bank of Boston Corporation 900 64,856
Bank of New York, Incorporated 2,300 100,050
BankAmerica Corporation 4,200 271,163
Bankers Trust New York Corporation 500 43,500
Barnett Banks, Incorporated 1,300 68,250
Chase Manhattan Corporation 2,712 263,234
Chubb Group 1,100 73,563
CIGNA Corporation 500 88,750
Citicorp 2,100 253,181
Comerica, Incorporated 700 47,600
CoreStates Financial Corporation 1,400 75,250
Fannie Mae 6,100 266,113
Federal Home Loan Mortgage Corporation 4,000 137,500
First Bank System, Incorporated 900 76,838
First Chicago NBD Corporation 1,800 108,900
First Union Corporation 1,700 157,250
Fleet Financial Group, Incorporated 1,600 101,200
General RE Corporation 500 91,000
Great Western Financial 800 43,000
Green Tree Financial Corporation 800 28,500
Household International, Incorporated 600 70,463
ITT Hartford Group Incorporated 600 49,650
KeyCorp 1,400 78,225
Lincoln National Corporation 600 38,625
Marsh & McLennan Companies, Incorporated 1,000 71,375
MBNA Corporation 1,775 65,009
Mellon Bank Corporation 1,600 72,200
Merrill Lynch & Company, Incorporated 2,000 119,250
Morgan (J. P.) & Company 1,200 125,250
Morgan Stanley Group Incorporated 3,285 141,460
National City Corporation 1,400 73,500
NationsBank Corporation 3,044 196,338
Norwest Corporation 2,300 129,375
PNC Bank Corporation 2,100 87,413
Providian Corp. 800 25,700
Republic New York Corporation 400 43,000
S & P Despository Receipt 15,000 1,326,976
SAFECO Corporation 800 37,350
Salomon, Incorporated 700 38,938
SunTrust Banks, Incorporated 1,500 82,594
Transamerica Corporation 500 46,781
Travelers Group, Incorporated 3,633 229,106
US Bancorp 900 57,713
Wachovia Corporation 1,000 58,313
Wells Fargo & Company 533 143,644
-----------
6,865,415
-----------
CAPITAL GOOD - 5.05%
AMP, Incorporated 1,500 62,625
Caterpillar, Incorporated 1,100 118,113
Cooper Industries, Incorporated 900 44,775
Deere & Company 1,500 82,313
Dover Company 800 49,200
Emerson Electric Company 2,600 143,163
Foster Wheeler Corporation 300 16,200
General Electric Company 18,400 1,202,900
Grainger (WW), Incorporated 500 39,094
Illinois Tool Works, Incorporated 1,600 79,900
Ingersoll-Rand Company 600 37,050
Tenneco, Incorporated 1,200 54,225
Tyco International 1,100 76,519
Waste Management, Incoroporated 2,900 93,163
Westinghouse Electric Corporation 3,600 83,250
-----------
2,182,490
-----------
CONSUMER CYCLICAL - 6.34%
American Greetings Company Class A 600 22,275
American Stores Company 900 44,438
Black & Decker Corp. 500 18,594
Chrysler Corporation 4,100 134,531
CVS Corporation 700 35,875
Dayton Hudson Corporation 1,400 74,463
Eaton Corporation 500 43,656
Federated Department Stores Incorporated* 1,300 45,175
Ford Motor Company 6,800 256,700
Gap (The), Incorporated 1,600 62,200
General Motors Corporation 4,400 245,025
Genuine Parts Company 1,950 66,056
Goodyear Tire & Rubber Company 1,100 69,644
HFS, Incorporated 800 46,400
Home Depot, Incorporated 2,800 193,025
Johnson Controls 800 32,850
K Mart Corporation* 2,900 35,525
Lowe's Companies, Incorporated 1,000 37,125
May Department Stores Company 1,600 75,600
NIKE, Incorporated 1,700 99,238
PACCAR, Incorporated 400 18,575
Penney, (J.C.) Company, Incorporated 1,400 73,063
Reebok International, Incorporated* 400 18,775
Rite Aid Corporation 900 44,888
Sears, Roebuck & Company 2,300 123,625
Tandy Corporation 500 28,000
Limited (The), Incorporated 1,790 36,248
Toys "R" Us, Incorporated* 1,700 59,500
TRW, Incorporated 900 51,131
V.F. Corporation 500 42,375
Wal-Mart Stores, Incorporated 14,100 476,756
Walgreen Company 1,400 75,075
Whirlpool Corporation 600 32,738
Woolworth Corporation* 1,000 24,000
-----------
2,743,144
-----------
CONSUMER NON-DURABLE - 23.65%
Abbott Laboratories 4,400 293,700
Albertson's, Incorporated 1,600 58,400
American Home Products Corporation 3,800 290,700
Andrew Corporation 600 16,875
Anheuser-Busch Companies, Incorporated 2,800 117,425
Archer-Daniels-Midland Company 3,495 82,133
Automatic Data Processing, Incorporated 1,900 89,300
Avon Products, Incorporated 800 56,450
Baxter International, Incorporated 1,700 88,825
Becton, Dickinson Company 900 45,563
Block, H&R Incorporated 700 22,575
Boston Scientific Corporation* 1,000 61,438
Bristol-Meyers Squibb Company 5,800 469,800
Browning Ferris 1,300 43,225
Brunswick Corporation 700 21,875
Campbell Soup Company 2,600 130,000
Clorox Co. 300 39,600
Coca-Cola Company 13,900 938,250
Cognizant Corporation 1,000 40,500
Colgate-Palmolive Company 1,600 104,400
Columbia/HCA Healthcare Corporation 3,950 155,284
Comcast Corporation 1,200 25,650
ConAgra, Incorporate, Class A. Special 1,500 96,188
CPC International, Incorporated 900 83,081
CUC International, Incorporated* 2,550 65,822
Donnelly (RR) & Sons Company 1,200 43,950
Dow Jones, & Company, Incorporated 700 28,131
Dun & Bradstreet Corporation 1,200 31,500
Fortune Brands, Incorporated 1,100 41,044
Gallagher Group* 1,100 20,281
Gannett Company, Incorporated 1,100 108,625
General Mills, Incorporated 1,000 65,125
Gillette Company 3,100 293,725
Heinz (H.J.) Company 2,300 106,088
Harrahs Entertainment, Incorporated* 700 12,600
Hershey Foods Corporation 1,100 60,844
Hilton Hotels Corporation 1,700 45,156
International Flavors & Fragrance,
Incorporated 700 35,350
Interpublic Group Companies, Incorporated 600 36,788
Johnson & Johnson 7,500 482,813
Kellogg Company 1,200 102,750
King World Producation, Incorporated* 500 17,500
Kroger Company* 1,600 46,400
Lilly,(Eli) & Company 3,100 338,869
Loews Corporation 800 80,100
Manor Care 500 16,313
Mattel, Incorporated 1,850 62,669
Marriott International 900 55,238
McDonalds Corporation 4,100 198,081
McGraw Hill Companies, Incorporated 800 47,050
Medtronic, Incorporated 1,400 113,400
Merck & Company, Incorporated 6,600 683,100
PepsiCo, Incorporated 8,700 326,794
Pfizer, Incorporated 3,600 430,200
Pharmacia & Upjohn, Incorporated 2,900 100,775
Philip Morris Companies, Incorporated 14,100 625,688
Procter & Gamble Company 3,800 536,750
Ralston-Ralston Purina Group 600 49,313
Sara Lee Corporation 2,800 116,550
Schering-Plough Corporation 4,200 201,075
Seagrams Company, Limited 2,200 88,550
St. Jude Medical* 500 19,500
Sysco Corporation 1,300 47,450
Tele-Communications, Incorporated* 2,000 29,750
Tenet Healthcare Corporation* 1,900 56,169
Time Warner, Incorporated 3,500 168,875
Tribune Company 1,000 48,063
UST, Incorporated 1,200 33,300
United HealthCare Corporation 1,100 57,200
Viacom, Inc. - Class B* 1,700 51,000
Walt Disney Company, The 3,919 314,500
Warner-Lambert Company 1,700 211,225
Wendy's International 800 20,750
Winn-Dixie Stores, Incorporated 900 33,525
Wrigley, (Wm), Jr. Company 700 46,900
-----------
10,224,451
-----------
ENERGY - 8.07%
Amerada Hess Corporation 600 33,338
Amoco Corporation 3,000 260,813
Atlantic Richfield Company 1,800 126,900
Burlington Resources, Incorporated 900 39,713
Chevron Corporation 3,700 273,569
Columbia Gas System, Incorporated 400 26,100
Dresser Industries, Incorporated 1,400 52,150
Enron Corporation 1,500 61,219
Exxon Corporation 13,400 824,100
Halliburton Company 900 71,325
Kerr-McGee Company 400 25,350
Mobil Corporation 4,200 293,475
Occidental Petroleum 2,000 50,125
Phillips Petroleum Company 1,600 70,000
Royal Dutch Petroleum Company ADR 12,400 674,250
Schlumberger Limited 1,800 225,000
Sun Company, Incorporated 800 24,800
Texaco, Incorporated 1,500 163,125
USX-Marathon 1,800 51,975
Union Pacific Resources Group 1,592 39,601
Unocal Corporation 1,400 54,338
Williams Companies 1,050 45,938
-----------
3,487,204
-----------
MANUFACTURING - 7.61%
Air Products & Chemicals, Incorporated 700 56,875
Alcan Aluminum Limited 1,900 65,906
Allegheny Teledyne, Incorporated 800 21,600
Aluminum Company of America 1,400 105,525
Applied Materials Incorporated* 1,100 77,894
Barrick Gold 2,200 48,400
Bemis Company 400 17,300
Bethlehem Steel Corporation* 800 8,350
Centex Corporation 100 4,063
Champion International Corporation 800 44,200
Corning, Incorporated 1,400 77,875
Crown Cork & Seal Company, Incorporated 800 42,750
Dow Chemical Company 1,600 139,400
DuPont (E.I.) De Nemours & Company 6,400 402,400
Eastman Chemical Company 600 38,100
Eastman Kodak Company 1,900 145,825
Englehard Corporation 800 16,750
Fluor Corporation 700 38,631
Freeport McMoran Copper 800 24,900
Georgia-Pacific Company 800 68,300
Grace, (WR) & Company 500 27,563
Great Lakes Chemical Corporation 600 31,425
Hercules, Incorporated 700 33,513
Inco, Limited 1,300 39,081
International Paper Company 1,800 87,413
ITT Corporation* 700 42,744
Kimberly-Clark Corporation 3,200 159,200
Louisiana-Pacific Corporation 900 19,013
Mallincrokdt Group, Incorporated 700 26,600
Masco Corporation 1,200 50,100
Minnesota Mining & Manufacturing Company 2,400 244,800
Mead Corporation 400 24,900
Monsanto Company 3,500 150,719
Morton International, Incorporated 1,000 30,188
Nalco Chemical Company 600 23,175
Newmont Mining Corporation 1,500 58,500
Nucor Corporation 700 39,550
Owens Corning 400 17,250
Phelps Dodge Corporation 600 51,113
Placer Dome, Incorporated 1,400 22,925
PPG Industries, Incorporated 1,200 69,750
Praxair Incorporated 1,000 56,000
Reynolds Metals Company 500 35,625
Rohm & Haas 400 36,025
Rubbermaid, Incorporated 1,200 35,700
Sherwin- Williams 1,200 37,050
Silicon Graphics Incorporated* 1,200 18,000
Union Camp Corporation 700 35,000
Union Carbide Corporation 800 37,650
Unilever (N.V.) ADR 900 196,200
USX-US Steel Group 600 21,038
Weyerhaeuser Company 1,400 72,800
Worthington Industries, Incorporated 700 12,819
-----------
3,288,473
-----------
SERVICE - 0.16%
Ikon Office Solution 800 19,950
Service Corporation International 1,500 49,313
-----------
69,263
-----------
TECHNOLOGY - 14.08%
3COM Corporation* 1,100 49,500
Advanced Micro Devices, Incorporated* 900 32,400
AirTouch Communications, Incorporated* 2,900 79,388
AlliedSignal Incorporated 1,800 151,200
Amgen, Incorporated 1,600 93,000
Boeing Company 4,084 216,707
Cabletron Systems, Incorporated* 900 25,481
Cisco Systems, Incorporated* 3,800 255,075
COMPAQ Computers Corporation* 1,500 148,875
Computer Associates International,
Incorporated 2,100 116,944
Computer Sciences Corporation* 500 36,063
Digital Equipment Corporation* 1,000 35,438
Dell Computer Corporation* 1,000 117,438
First Data Corporation 2,700 118,631
Hewlett-Packard Company 5,900 330,400
Honeywell, Incorporated 900 68,288
Intel Corporation 4,700 666,519
International Business Machines Corporation 6,000 541,125
Lockheed Martin Corporation 1,200 124,275
LSI Logic Corporation* 800 25,600
Lucent Technologies 3,685 265,550
McDonnell Douglas Corporation 1,200 82,200
Micron Technology Incorporated* 1,300 51,919
Microsoft Corporation* 6,800 859,350
Motorola Incorporated 3,400 258,400
Nothern Telecom, Limited 1,500 136,500
Novell, Incorporated* 2,000 13,875
Oracle Systems Corporation* 4,000 201,500
Perkin-Elmer Corporation 300 23,869
Pitney-Bowes Incorporated 1,000 69,500
Raytheon Company 1,500 76,500
Rockwell International Corporation 1,300 76,700
Scientific Atlanta, Incorporated 700 15,313
Seagate Technology, Incorporated* 1,500 52,781
Sun Microsystems, Incorporated* 2,200 81,881
Tandem Computer Incorporated* 800 16,200
Tektronix, Incorporated 200 12,000
Tellabs, Incorporated* 1,100 61,463
Texas Instruments, Incorporated 1,100 92,469
Textron Incorporated 1,200 79,650
Unisys Corporation* 1,200 9,150
United Technologies Corporation 1,600 132,800
Western Atlas, Incorporated* 400 29,300
Xerox Corporation 2,000 157,750
-----------
6,088,967
-----------
TRANSPORTATION - 1.37%
AMR Corporation* 600 55,500
Burlington Northern Santa Fe Corporation 1,100 98,863
Caliber System, Incorporated 400 14,900
CSX Corporation 1,600 88,800
Delta Air Lines 500 41,000
Federal Express* 700 40,425
Laidlaw Incorporated 1,900 26,244
Norfolk Southern Company 800 80,600
Ryder System 700 23,100
Southwest Airlines Company 1,000 25,875
Union Pacific Corporation 1,400 98,700
-----------
594,007
-----------
UTILITY - 7.89%
ALLTELL Corporation 1,300 43,469
American Electric Power Company, Incorporated 1,600 67,200
AT&T Corporation 9,100 319,069
Ameritech Corporation 3,100 210,606
Baltimore Gas & Electric Company 1,100 29,356
Bell Atlantic Corporation 2,600 197,275
BellSouth Corporation 5,400 250,425
Carolina Power & Light Company 1,200 43,050
Central & Southwest Corporation 1,900 40,375
CinergyCorporation 1,000 34,813
Coastal Corporation 600 31,913
Consolidated Edison Co. of N.Y. Incorporated 1,400 41,213
Consolidated Natural Gas Company 600 32,288
Dominion Resources 1,400 51,275
Duke Power 2,339 112,126
DTE Energy Company 1,100 30,388
Edison International 2,500 62,188
Entergy Corporation 1,300 35,588
FPL Group Incorporated 1,500 69,094
General Public Utilities Corporation 900 32,288
GTE Corporation 4,900 214,988
Houston Industries, Incorporated 1,400 30,013
MCI Communications Corporation 3,200 122,500
Niagara Mohawk Power Corporation* 800 6,850
NYNEX Corporation 2,600 149,825
Pacific Gas & Electric Company 2,600 63,050
PacifiCorp 2,200 48,400
PECO Energy Company 1,200 25,200
Public Service Enterprise Group, Incorporated 1,300 32,500
SBC Communications 5,055 312,778
Southern Company 3,500 76,563
Sprint Corporation* 2,000 105,250
<PAGE>
Sonat, Incorporated 600 30,750
Texas Utilities Company 1,700 58,544
Unicom Corporation 1,400 31,150
Union Electric Company 900 33,919
U.S. West Communications Group 2,700 101,756
US West Media Group* 3,700 74,925
WorldCom, Incorporated 4,900 156,800
-----------
3,409,760
-----------
Total Common Stocks (cost $30,430,987) 38,953,174
-----------
<CAPTION>
SHORT-TERM INVESTMENTS - 10.66%
PRINCIPAL VALUE
<S> <C> <C>
US Treasury Bill (5.220% due 11/13/97) $4,250,000 4,166,366
Portico US Federal Money Market Fund 443,734 443,734
-----------
Total Short-Term Investments (cost $4,610,100) 4,610,100
-----------
TOTAL INVESTMENTS - 100.76%
(cost $35,041,087)<F1> 43,563,274
-----------
OTHER ASSETS AND LIABILITIES - (0.76%) (327,181)
-----------
TOTAL NET ASSETS - 100% $43,236,093
-----------
*Non-income producing
(ADR) American Depository Receipt
<FN>
<F1> Gross unrealized appreciation and depreciation of securities and futures
at June 30, 1997 for financial reporting was $9,235,029 and $427,467
respectively.
</FN>
</TABLE>
(2) Securities with an aggregate market value of
$4,165,875 have been segregated with the custodian to
cover margin requirements for the following open futures
contracts at June 30, 1997:
<TABLE>
<CAPTION>
Unrealized Appreciation /
Type Contracts (Depreciation)
-------------------------------------------------------------------
<S> <C> <C>
Standard & Poor's 500 Index (09/97) 5 316,250
Standard & Poor's 500 Index (09/97) 5 (30,875)
--------
$285,375
========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(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 insurance and retirement
products. The Fund's shares are offered in four different
series - Equity Portfolio, Capital Portfolio, Bond Portfolio,
and S&P 500 Index Portfolio. The Equity Portfolio seeks long-
term appreciation of capital by investing primarily in common
stocks and other equity securities. The Capital Portfolio seeks
the highest total return through a combination of income and
capital appreciation consistent with the reasonable risks
associated with an investment portfolio of above-average quality
by investing in equity securities, debt instruments, and money
market instruments. The Bond Portfolio seeks a high level of
current income as is consistent with reasonable investment risk
by investing primarily in long-term, fixed-income, investment-
grade corporate bonds. The S&P 500 Index Portfolio seeks
investment results that correspond to the total return
performance of U.S. common stocks, as represented in the
Standard & Poor's 500 Index.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Securities valuation - Securities held in each Portfolio, 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 in each Portfolio 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. All amortization of discount is recognized currently
under the effective interest method. Gains and losses on sales
of investments are calculated on the identified cost basis for
financial reporting and tax purposes.
Federal taxes - It is the intent of the Fund to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its net investment
income and any net realized capital gains. Regulated investment
companies owned by the segregated asset accounts of a life
insurance company, held in connection with variable annuity
contracts, are exempt from excise tax on undistributed income.
Therefore, no provision for income or excise taxes has been
recorded.
Distributions -Distributions from net investment income in all
Portfolios are declared and paid quarterly. Net realized
capital gains are distributed periodically, no less frequently
than annually. Distributions are recorded on the ex-dividend
date. All distributions are reinvested in additional shares of
the respective Portfolio at the net asset value per share.
The amount of distributions are determined in accordance with
federal income tax regulations which may differ from generally
accepted accounting principles. These "book/tax" differences
are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their
federal tax-basis treatment; temporary differences do not
require reclassification. Distributions which exceed net
investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as
distributions in excess of net investment income or
distributions in excess of net realized capital gains. To the
extent they exceed net investment income and net realized
capital gains for tax purposes, they are reported as
distributions of paid-in-capital.
Expenses - Allocable expenses of the Fund are charged to each
Portfolio based on the ratio of the net assets of each Portfolio
to the combined net assets of the Fund. Nonallocable expenses
are charged to each Portfolio based on specific identification.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
Investment advisory fees - 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.
(d) for the S & P 500 Index Portfolio - .30% 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 Equity, Capital , or Bond Portfolios, the Adviser will
reimburse the Fund for such excess, up to the amount of the
advisory fee for that year. The Adviser has agreed to waive its
advisory fee and pay any other expenses of the S&P 500 Index
Portfolio to the extent that such expenses exceed 0.60% of its
average annual net assets. As a result, for the six months
ended June 30, 1997, the Adviser waived management fees of
$3,002 for the S&P 500 Index Portfolio.
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 for the Equity, Capital, and Bond Portfolios,
and .05% of the Fund's average net assets for the S & P 500
Index Portfolio. 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 - FUTURES CONTRACTS
S&P 500 Index Portfolio ("Index") may purchase futures contracts
on the Standard & Poor's 500 Stock Index. These contracts
provide for the sale of a specified quantity of a financial
instrument at a fixed price at a future date. When Index enters
into a futures contract, it is required to deposit and maintain
as collateral such initial margin as required by the exchange on
which the contract is traded. Under terms on the contract,
Index agrees to receive from or pay to the broker an amount
equal to the daily fluctuation in the value of the contract
(known as the variation margin). The variation margin is
recorded as unrealized gain or loss until the contract expires
or is otherwise closed, at which time the gain or loss is
realized. Index invests in futures as a substitute to investing
in the 500 common stock positions in the Standard & Poor's 500
Index. The potential risk to Index is that the change in the
value in the underlying securities may not correlate to the
value of the contracts.
NOTE 4 - SUMMARY OF PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities for the six months ended
June 30, 1997 excluding short-term obligations, follow:
<TABLE>
<CAPTION>
Equity Capital Bond S&P 500
Portfolio Portfolio Portfolio Index
--------- --------- --------- -------
<S> <C> <C> <C> <C>
Total Cost
of Purchases of:
Common Stocks $84,309,294 $15,404,296 $ -- $15,091,219
U.S. Government Securities -- 8,851,656 4,579,070 --
Corporate Bonds -- 598,356 55,470,303 --
----------- ----------- ----------- -----------
$84,309,294 $24,854,308 $60,049,373 $15,091,219
----------- ----------- ----------- -----------
Total Proceeds
from Sales of:
Common Stocks $89,850,236 $19,078,087 $ 515,000 $ 5,966,758
U.S. Government Securities -- 2,982,800 6,518,143 --
Corporate Bonds -- 4,050,824 56,265,467 --
----------- ----------- ----------- -----------
$89,850,236 $26,111,711 $63,298,610 $ 5,966,758
=========== =========== =========== ===========
</TABLE>
<PAGE>
Note 5 - 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, Year Ended December 31,
---------- ----------------------------------------
(Unaudited)
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $19.45 $16.54 $14.30 $14.58 $13.74 $12.60
------ ------ ------ ------ ------ ------
Investment
Activities:
Net investment
income .18 .29 .24 .20 .16 .19
Net realized and
unrealized
gains/(losses) 1.21 3.61 3.36 .31 1.69 1.27
------ ------ ------ ------ ------ ------
Total from
Investment
Operations 1.39 3.90 3.60 .51 1.85 1.46
------ ------ ------ ------ ------ ------
Distributions:
Net investment
income (.16) (.27) (.23) (.19) (.16) (.19)
Net realized gains (2.30) (.72) (1.13) (.60) (.85) (.13)
------ ------ ------ ------ ------ ------
Total Distributions (2.46) (.99) (1.36) (.79) (1.01) (.32)
------ ------ ------ ------ ------ ------
Net Asset Value,
End of year $18.38 $19.45 $16.54 $14.30 $14.58 $13.74
====== ====== ====== ====== ====== ======
Total Return 8.30% 24.52% 26.96% 3.42% 14.11% 11.78%
Ratios/
Supplemental Data:
Ratio of Expenses
to Average
Net Assets .63%<F1> .64% .66% .69% .70% .72%
Ratio of Net
Investment
Income to Average
Net Assets 1.37%<F1> 1.66% 1.73% 1.45% 1.18% 1.47%
Portfolio Turnover
Rate 63.25%<F1> 52.53% 34.33% 40.33% 37.93% 46.75%
Average Commission
Rate Paid(2) $ .0595 $ .0628
Net Assets,
End of Year (000's) $309,830 $288,124 $219,563 $157,696 $138,239 $102,306
_________________
<FN>
<F1> The ratios are annualized.
<F2> Represents the dollar amount of commissions paid on Portfolio
transactions divided by the total number of shares purchased and sold for
which commissions were charged. Disclosure not required for periods prior to
fiscal 1996.
</FN>
</TABLE>
<PAGE>
Note 5 - 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, Year Ended December 31,
----------- ----------------------------------------
(Unaudited)
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 14.95 $ 13.72 $ 13.19 $ 13.81 $ 12.99 $ 12.82
------- ------- ------- ------- ------- -------
Investment
Activities:
Net investment
income .35 .63 .64 .52 .43 .42
Net realized and
unrealized
gains/(losses) (.04) 1.36 1.15 (.39) 1.17 .56
------- ------- ------- ------- ------- -------
Total from
Investment
Operations .31 1.99 1.79 .13 1.60 .98
------- ------- ------- ------- ------- -------
Distributions:
Net investment
income (.36) (.57) (.64) (.52) (.42) (.42)
Net realized gains (1.18) (.19) (.62) (.23) (.36) (.39)
------- ------- ------- ------- ------- -------
Total Distributions (1.54) (.76) (1.26) (.75) (.78) (.81)
------- ------- ------- ------- ------- -------
Net Asset Value,
End of year $13.72 $14.95 $13.72 $13.19 $13.81 $12.99
======= ======= ======= ======= ======= =======
Total Return 2.31% 14.94% 14.28% .94% 12.72% 7.93%
Ratios/Supplemental
Data:
Ratio of Expenses
to Average
Net Assets .77%<F1> .77% .77% .80% .82% .88%
Ratio of
Net Investment
Income to Average
Net Assets 4.24%<F1> 4.42% 4.99% 4.25% 3.31% 3.49%
Portfolio Turnover
Rate 40.92%<F1> 53.11% 43.83% 41.89% 32.42% 39.74%
Average Commission
Rate Paid<F2> $ .0603 $.0615
Net Assets,
End of Year (000's) $159,816 $159,294 $145,623 $119,263 $100,016 $68,674
_________________
<FN>
<F1> The ratios are annualized.
<F2> Represents the dollar amount of commissions paid on Portfolio
transactions divided by the total number of shares purchased and sold for
which commissions were charged. Disclosure not required for periods prior to
fiscal 1996.
</FN>
</TABLE>
<PAGE>
Note 5 - 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 Year Ended December 31,
--------------- ------------------------------------
(Unaudited)
1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 10.91 $ 11.07 $ 10.04 $ 11.30 $ 10.91 $ 10.96
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income .34 .79 .88 .77 .73 .82
Net realized and
unrealized
gains/(losses) (.08) (.04) .98 (.95) .54 (.01)
------- ------- ------- ------- ------- -------
Total from
Investment Operations .42 .75 1.86 (.18) 1.27 .81
------- ------- ------- ------- ------- -------
Distributions:
Net investment income (.32) (.87) (.83) (.78) (.73) (.82)
In excess of
net investment income -- (.04) -- -- -- --
Net realized gains (.06) -- -- (.30) (.15) (.04)
------- ------- ------- ------- ------- -------
Total Distributions (.38) (.91) (.83) (1.08) (.88) (.86)
------- ------- ------- ------- ------- -------
Net Asset Value,
End of period $ 10.95 $ 10.91 $ 11.07 $ 10.04 $ 11.30 $ 10.91
======= ======= ======= ======= ======= =======
Total Return 3.55% 7.19% 19.03% (1.63%) 11.94% 7.65%
Ratios/Supplemental
Data:
Ratio of Expenses to
Average Net Assets .61%<F1> .62% .65% .68% .66% .69%
Ratio of Net Investment
Income to Average
Net Assets 7.31%<F1> 7.24% 7.43% 7.21% 6.65% 7.59%
Portfolio Turnover Rate 152.68%<F1> 202.44% 111.01% 70.27% 137.46% 40.91%
Net Assets,
End of Year (000's) 88,015 $85,634 $73,568 $55,929 $54,128 $38,557
________________
<FN>
<F1> The ratios are annualized.
</FN>
</TABLE>
<PAGE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
S & P 500 Index Portfolio
Six Months Ended Year Ended
June 30, 1997 December 31, 1996
------------- -----------------
(Unaudited)
<S> <C> <C>
Net Asset Value,
Beginning of Year $ 12.13 $ 10.00
Investment Activities:
Net investment income .14 .20
Net realized and unrealized
gains/(losses) 2.31 2.12
------- -------
Total from Investment Operations 2.45 2.32
------- -------
Distributions:
Net investment income (.11) (.19)
Net realized gains (.10) --
------- -------
Total Distributions (.21) (.19)
------- -------
Net Asset Value,
End of Period $ 14.37 $ 12.13
======= =======
Total Return 20.39% 23.37%
Ratios/Supplemental Data:
Ratio of Net Expenses to
Average Net Assets 1.23%<F1> .59%<F2>
Ratio of Net Investment
Income to Average Net Assets 3.53%<F1> 2.14%<F2>
Portfolio Turnover Rate 36.77% 1.09%
Average Commission Rate Paid<F3> .0595 $ .0601
Net Assets, End of Year (000's) $ 43,236 $ 29,205
- -------------
<FN>
<F1> The ratios are annualized.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by .25%
for the six months ended December 31, 1996, had the Adviser not waived a
portion of its fee.
<F3> Represents the dollar amount of commissions paid on Portfolio
transactions divided by the total number of shares purchased and sold for
which commissions were charged. Disclosure not required for periods prior to
fiscal 1996.
</FN>
</TABLE>
<PAGE>
CARILLON FUND, INC.
Financial Statements
December 31, 1996
<PAGE>
CARILLON FUND, INC.
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of Carillon Fund, Inc.
We have audited the accompanying statements of assets and
liabilities of Carillon Fund, Inc. (consisting of the Equity
Portfolio, Capital Portfolio, Bond Portfolio and the S&P 500
Index Portfolio), including the schedules of investments, as of
December 31, 1996, and the related statements of operations for
the year then ended, and the statements of changes in net assets
and financial highlights for the periods ended December 31, 1996
and December 31, 1995, respectively. These financial statements
and financial highlights ("financial statements") are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements based on our
audits. The financial highlights presented for periods prior to
December 31, 1995 were audited by other auditors.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosure in the financial statements. Our
procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of each of the
Portfolios of Carillon Fund, Inc. as of December 31, 1996, the
results of their operations for the year then ended, and the
changes in their net assets and the financial highlights for the
periods ended December 31, 1996 and December 31, 1995,
respectively, in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Dayton, Ohio
February 3, 1997
CARILLON FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<CAPTION>
S&P 500
Equity Capital Bond Index
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments in
securities, at value $282,646,476 $156,298,562 $88,078,300 $29,275,723
(cost $222,263,315;
$144,685,532;
$86,040,107;
$26,294,249)
Cash 3,375 -- -- --
Receivables:
Shares sold 1,033,820 348,253 106,559 179,916
Securities sold 5,144,647 1,864,018 -- 17,389
Interest and Dividends 575,981 879,817 1,368,459 43,553
Prepaid expenses
and other 12,911 8,460 5,022 1,195
------------ ------------ ----------- -----------
289,417,210 159,399,110 89,558,340 29,517,776
------------ ------------ ----------- -----------
LIABILITIES
Payables:
Investment securities
purchased 1,145,250 -- 3,567,982 --
Shares purchased -- 45 66 180,224
Investment advisory fees 134,253 90,306 34,737 8,233
Custodial and portfolio
accounting fees 6,794 7,868 5,954 6,022
Professional fees 6,149 5,462 5,618 5,299
Bank overdraft -- -- 218,525 23
Variation margin -- -- -- 102,200
Other accrued expenses 1,041 1,543 4,275 11,165
Deferred compensation
for directors -- -- 87,054 --
------------ ------------ ----------- -----------
1,293,487 105,224 3,924,211 313,166
------------ ------------ ----------- -----------
NET ASSETS
Paid-in capital 192,682,992 134,247,020 83,411,472 25,912,734
Undistributed net
investment income 734,698 982,540 -- 42,252
Distributions in excess
of net investment
income -- -- (296,645) --
Accumulated net realized
gain/(loss) 34,322,872 12,451,296 481,109 218,750
on investments
Net unrealized 60,383,161 11,613,030 2,038,193 3,030,874
appreciation on ------------ ------------ ----------- -----------
investments and
futures contracts
$288,123,723 $159,293,886 $85,634,129 $29,204,610
============ ============ =========== ===========
Shares authorized
($.10) par value 20,000,000 15,000,000 10,000,000 10,000,000
Shares outstanding 14,813,685 10,655,370 7,847,440 2,407,503
Net asset value,
offering, and
redemption price $19.45 $14.95 $10.91 $12.13
per share
</TABLE>
The accompanying notes are an integral part of
the financial statement.
<PAGE>
<TABLE>
<CAPTION>
CARILLON FUND, INC.
STATEMENTS OF OPERATIONS
Year Ended December 31, 1996
S&P 500
Equity Capital Bond Index
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------
<S> <C> >c? <C> <C>
INVESTMENT INCOME
Interest $ 1,041,257 $ 6,227,142 $ 6,257,449 $ 135,283
Dividends (net of
foreign withholding
taxes of $117,559;
$41,233; $0; $2,598) 4,734,994 1,629,448 -- 311,295
----------- ----------- ----------- ----------
5,776,251 7,856,590 6,257,449 446,578
----------- ----------- ----------- ----------
EXPENSES
Investment advisory fees 1,436,998 1,032,861 384,084 48,985
Custodial fees and
expenses 61,313 46,599 22,157 14,140
Portfolio accounting fees 48,645 46,102 39,174 29,713
Professional fees 9,181 8,980 9,448 15,895
Director's fees 11,351 11,351 11,354 10,754
Transfer agent fees 6,010 6,054 6,089 5,853
Registration and
filing fees 8,919 8,590 7,616 2,493
Other 17,403 11,713 10,894 9,982
----------- ----------- ----------- ----------
1,599,820 1,172,250 490,816 137,815
Fees waived by the Adviser -- -- -- (40,752)
----------- ----------- ----------- ----------
1,599,820 1,172,250 490,816 97,063
----------- ----------- ----------- ----------
NET INVESTMENT INCOME 4,176,431 6,684,340 5,766,633 349,515
----------- ----------- ----------- ----------
REALIZED AND UNREALIZED
GAIN/(LOSS) ON
INVESTMENTS AND
FUTURES CONTRACTS
Net realized gain
on investments 34,227,538 12,459,745 1,210,173 32,147
Net realized gain on
futures contracts -- -- -- 186,603
----------- ----------- ----------- ----------
34,227,538 12,459,745 1,210,173 218,750
----------- ----------- ----------- ----------
Net change in unrealized
appreciation/
(depreciation) on
investments 17,468,047 1,990,613 (1,316,722) 2,981,474
Net change in unrealized
appreciation/
(depreciation) on
futures contracts -- -- -- 49,375
----------- ----------- ----------- ----------
17,468,047 1,990,613 (1,316,722) 3,030,849
----------- ----------- ----------- ----------
NET REALIZED AND
UNREALIZED GAIN/
(L0SS) ON INVESTMENTS
AND FUTURES CONTRACTS 51,695,585 14,450,358 (106,549) 3,249,599
----------- ----------- ----------- ----------
NET INCREASE IN NET
ASSETS FROM OPERATIONS $55,872,016 $21,134,698 $5,660,084 $3,599,114
=========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Equity Portfolio
For the Year Ended December 31,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 4,176,431 $ 3,230,075
Net realized gain/(loss)
on investments and futures 34,227,538 9,962,775
Net change in unrealized
appreciation /(depreciation) on
investments and futures contracts 17,468,047 31,418,181
----------- -----------
55,872,016 44,611,031
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (3,889,965) (3,023,061)
In excess of net investment income -- --
Net realized gain on investments (9,867,342) (12,644,665)
----------- -----------
(13,757,307) (15,667,726)
----------- -----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 41,762,282 29,948,214
Net asset value of shares
issued to shareholders
in reinvestment of distributions 13,757,307 15,667,726
Payments for shares redeemed (29,173,822) (12,692,274)
----------- -----------
26,445,767 32,923,666
----------- -----------
NET INCREASE IN NET ASSETS 68,560,476 61,866,971
NET ASSETS
Beginning of year 219,563,247 157,696,276
----------- -----------
End of year 288,123,723 219,563,247
=========== ===========
FUND SHARE TRANSACTIONS:
Sold 2,393,015 1,968,821
Issued in reinvestment
of distributions 809,878 1,111,633
Redeemed (1,660,244) (837,546)
----------- -----------
Net increase from fund
share transactions 1,542,649 2,242,908
----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Capital Portfolio
For the Year Ended December 31,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 6,684,340 $ 6,696,820
Net realized gain on
investments and futures 12,459,745 1,973,190
Net change in unrealized
appreciation/(depreciation) on
investments and futures contracts 1,990,613 8,952,302
----------- -----------
21,134,698 17,622,312
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (6,050,397) (6,389,872)
In excess of net investment income -- --
Net realized gain on investments (2,002,549) (5,716,244)
----------- -----------
(8,052,946) (12,106,116)
----------- -----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 17,130,822 21,179,705
Net asset value of shares
issued to shareholders in
reinvestment of distributions 8,052,945 12,106,115
Payments for shares redeemed (24,594,141) (12,442,444)
----------- -----------
589,626 20,843,376
----------- -----------
NET INCREASE IN NET ASSETS 13,671,378 26,359,572
NET ASSETS
Beginning of year 145,622,508 119,262,936
----------- -----------
End of year 159,293,886 145,622,508
=========== ===========
FUND SHARE TRANSACTIONS:
Sold 1,199,385 1,579,714
Issued in reinvestment of
distributions 570,034 922,915
Redeemed (1,729,493) (928,220)
----------- -----------
Net increase from fund
share transactions 39,926 1,574,409
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Bond Portfolio
For the Year Ended December 31,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 5,766,633 $5,184,573
Net realized gain/(loss)
on investments and futures 1,210,173 (162,632)
Net change in unrealized
appreciation/(depreciation) on
investments and futures contracts (1,316,722) 6,104,034
----------- ----------
5,660,084 11,125,975
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (6,340,623) (5,049,814)
In excess of net investment income (320,260) --
Net realized gain on investments -- --
----------- ----------
(6,660,883) (5,049,814)
----------- ----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 17,850,341 12,251,770
Net asset value of shares issued
to shareholders in reinvestment
of distributions 6,660,883 5,049,814
Payments for shares redeemed (11,443,995) (5,739,318)
----------- ----------
13,067,229 11,562,266
----------- ----------
NET INCREASE IN NET ASSETS 12,066,430 17,638,427
NET ASSETS
Beginning of year 73,567,699 55,927,272
----------- ----------
End of year 85,634,129 73,567,699
=========== ==========
FUND SHARE TRANSACTIONS:
Sold 1,633,803 1,141,491
Issued in reinvestment
of distributions 621,662 469,937
Redeemed (1,054,560) (538,145)
----------- ----------
Net increase from fund
share transactions 1,200,905 1,073,283
=========== ==========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
S&P 500 Index Portfolio
For the
Period from
For the Year December 29,
Ended 1995 to
December 31, December 31,
------------ ------------
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 349,515 $ 123
Net realized gain/(loss) on
investments and futures 218,750 --
Net change in unrealized
appreciation/(depreciation) on
investments and futures contracts 3,030,849 25
----------- --------
3,599,114 148
----------- --------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (307,386) --
In excess of net investment income -- --
Net realized gain on investments -- --
----------- --------
(307,386) --
----------- --------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 30,917,430 305,000
Net asset value of shares
issued to shareholders 307,386 --
in reinvestment of dividends
and distributions
Payments for shares redeemed (5,617,082) --
----------- --------
25,607,734 305,000
----------- --------
NET INCREASE IN NET ASSETS 28,899,462 305,148
NET ASSETS
Beginning of year 305,148 --
----------- --------
End of year 29,204,610 305,148
=========== ========
FUND SHARE TRANSACTIONS:
Sold 2,850,416 30,500
Issued in reinvestment of
distributions 26,989 --
Redeemed (500,402) --
----------- --------
Net increase from fund
share transactions 2,377,003 30,500
=========== ========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996
EQUITY PORTFOLIO
SHARES/
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COMMON STOCKS - 92.28%
BANKING & FINANCIAL SERVICE - 17.48%
ABN Amro Holdings NV Sponsored ADR 32,868 2,135,788
Allied Capital Corporation 28,571 449,993
Banco Bhif ADR* 75,000 1,228,125
Banco Frances Rio Pla Sponsored ADR 28,750 790,625
Banco Latinoamericano
De Exportanciones Sponsored ADR 75,000 3,806,250
Capital American Financial
Corporation 30,000 1,091,250
Charter One Financial, Incorporated 52,500 2,205,000
Chile Fund Incorporated 80,000 1,670,000
Community First Bankshares 91,545 2,517,488
Corus Bankshares, Incorporated 70,000 2,257,500
Czech Republic Fund 109,000 1,444,250
Deutsche Bank AG Sponsored ADR 42,000 1,959,497
FPIC Insurance Group, Incorporated* 150,000 2,025,000
Gainsco, Incorporated 217,762 2,095,959
Jefferies Group, Incorporated 64,000 2,584,000
Mid Ocean Limited Order Shares 40,000 2,100,000
Penncorp Financial Group Corporation 95,000 3,420,000
RLI Corporation 68,625 2,290,359
Raymond James Financial Corporation 66,100 1,991,263
Standard Federal Bancorporation 57,900 3,293,063
Thai Fund, Incorporated 102,500 1,691,250
Union Planters Corporation* 50,000 1,950,000
Washington Federal, Incorporated 85,100 2,255,150
Zions Bancorporation 30,000 3,120,000
------------
50,371,810
------------
CAPITAL GOOD - 11.87%
AGCO Corporation 59,400 1,700,325
Astec Industries, Incorporated* 75,000 712,500
Breed Technologies, Incorporated 90,000 2,340,000
Cemex SA Sponsored ADR 125,000 971,786
Crossman Communitites, Incorporated* 80,000 1,360,000
D.R. Horton, Incorporated 100,000 1,087,500
Deere & Company 68,000 2,762,500
Ford Motor Company 55,000 1,753,125
Griffon Corporation* 209,600 2,567,600
Kysor Industries Corporation* 75,000 2,446,875
Lindsay Manufacturing Company 117,862 5,510,048
Medusa Corporation 80,300 2,760,313
Schult Homes Corporation 50,000 1,175,000
Scotsman Industries, Incorporated 40,000 945,000
Strattec Security Corporation* 145,000 2,646,250
Toll Brothers, Incorporated* 90,000 1,755,000
Woodhead Industries, Incorporated 50,500 694,375
Visx, Incorporated* 45,000 995,625
------------
34,183,822
------------
CONSUMER CYCLICAL - 4.61%
Chromcraft Revington, Incorporated* 75,000 2,081,250
CPAC, Incorporated 125,000 1,875,000
Donnkenny, Incorporated* 100,000 462,500
Galey & Lord, Incorporated* 9,700 144,288
NCI Building Systems, Incorporated* 80,700 2,784,150
Pillowtex Corporation 56,900 1,024,200
Roberds, Incorporated* 90,000 742,500
Southern Energy Home 150,000 1,725,000
Tractor Supply Company* 30,000 618,750
Winsleow Furniture, Incorporated* 188,300 1,835,925
------------
13,293,563
------------
CONSUMER NON-DURABLE -10.87%
Advocat, Incorporated* 100,500 728,625
Allied Healthcare Products,
Incorporated 65,100 480,113
Charoen Pok Feedmill ADR 100,000 1,450,850
Conso Products Company 146,250 1,882,969
Crown Books Corporation* 29,900 351,325
Dart Group Corporation - Class A 7,500 697,500
Dairy Farm International
Holdings Sponsored ADR 200,000 804,998
Footstar, Incorporated* 68,200 1,696,475
GT Bicycles, Incorporated* 134,900 1,736,838
Helen of Troy Ltd, Bermuda* 177,000 3,894,000
IHOP Corporation* 87,000 2,055,375
King World Productions, Incorporated* 50,000 1,843,750
Morningstar Group, Incorporated* 121,000 2,374,625
Nam Tai Electronics, Incorporated* 187,500 1,453,125
Oakley, Incorporated 73,200 796,050
Orthofix International NV* 113,036 932,547
Schlotzsky's, Incorporated* 137,900 1,379,000
Shopko Stores, Incorporated 110,700 1,660,500
Titan Wheel International,
Incorporated 95,000 1,211,250
Toy Biz, Incorporated* 120,000 2,340,000
Utah Medical Products, Incorporated* 115,200 1,540,800
------------
31,310,715
------------
ENERGY - 11.52%
Apache Corporation 58,118 2,055,924
Callon Petroleum Company* 110,000 2,090,000
Cross Timbers Oil Company 70,000 1,758,750
Geoscience Corporation* 50,000 650,000
Giant Industries, Incorporated 165,000 2,310,000
Global Industries, Incorporated 100,000 1,862,500
Holly Corporation 90,000 2,407,500
Nuevo Energy Company* 45,000 2,340,000
Offshore Energy Development* 80,000 1,220,000
Plains Resources, Incorporated* 120,000 1,875,000
St. Mary Land & Exploration 60,000 1,492,500
Southern Mineral Corporation* 350,000 2,056,250
Stone Energy Corporation* 93,900 2,805,263
Total S.A. Sponsored ADR 42,958 1,729,060
Trizec Hahn Corporation 75,000 1,650,000
Vastar Resources Incorporated* 50,000 1,900,000
YPF S.A. Sponsored ADR 55,000 1,388,750
Zeigler Coal Holdings Company 75,000 1,603,125
------------
33,194,622
------------
MANUFACTURING -14.21%
ABT Building Products Company* 145,000 3,625,000
AEP Industries, Incorporated* 107,550 5,915,250
Alltrista Corporation* 86,000 2,214,500
BWAY Corporation* 110,000 2,103,750
Bayer A G Sponsored ADR 110,000 4,482,478
Carbide Graphite Group Incorporated* 130,000 2,551,250
Echo Bay Mines Limited 90,000 596,250
Holophane Corporation 75,000 1,425,000
Falcon Products, Incorporated 147,730 2,105,153
Kevco Incorporated* 140,000 1,960,000
Matthews International Corporation
- Class A 77,000 2,175,250
Minorco Sponsored ADR 90,000 1,873,125
Pohang Iron & Steel Corporation 75,000 1,518,750
Shanghai Petro Chemical Company
Limited Sponsored ADR 40,000 1,175,000
Shelter Components Corporation 100,250 1,228,063
Sybron Chemicals, Incorporated* 65,200 1,043,200
Triangle Pacific Corporation* 92,500 2,225,781
York Group, Incorporated 140,000 2,730,000
------------
40,947,800
------------
REAL ESTATE - 11.78%
Associated Estates Realty Corporation 65,000 1,543,750
Commercial Net Lease Realty* 99,300 1,576,388
Evans Withycombe Residential 92,000 1,932,000
Health Care Property Investments,
Incorporated 47,400 1,659,000
Healthcare Realty Trust, Incorporated 111,400 2,952,100
Highwoods Properties, Incorporated* 40,000 1,350,000
Hospitality Properties Turst,
Incorporated 64,000 1,856,000
IRT Property Company 172,300 1,981,450
LTC Properties, Incorporated 95,000 1,757,500
Merry Land & Investment Company 115,000 2,472,500
Mid-America Apartment Communities 80,000 2,310,000
National Health Investors,
Incorporated 40,000 1,515,000
Public Storage, Incorporated 80,000 2,480,000
Shurgard Storage Centers,
Incorporated 70,000 2,073,750
Trinet Corporate Realty Trust
Incorporated 58,000 2,059,000
United Dominion Realty Trust
Incorporated 132,000 2,046,000
Winston Hotels, Incorporated 175,000 2,384,375
------------
33,948,813
------------
SERVICE - 1.78%
Comcast Corporation 50,000 893,750
Devon Group, Incorporated* 85,000 2,337,500
PCA International, Incorporated 55,200 897,000
Right Management Consultants 44,600 992,350
------------
5,120,600
------------
TECHNOLOGY - 3.46%
Cybex Corporation* 160,000 2,280,000
DH Technology, Incorporated* 135,000 3,240,000
Digi International, Incorporated* 95,000 902,500
Kemet Corporation* 60,000 1,395,000
Recoton Corporation* 143,000 2,136,062
9,953,562
TRANSPORTATION - 2.77%
Atlantic Southeast Airlines
Incorporated 95,000 2,078,125
Illinois Central Corporation
- Class A 82,500 2,640,000
Landstar, Incorporated* 40,000 930,000
Midwest Express Holdings* 65,000 2,340,000
------------
7,988,125
------------
UTILITY - 1.93%
CMS Energy Corporation 50,000 1,681,250
Empresa Nacional
De Electricidad Sponsored ADR 29,400 2,058,000
Tuscon Electric Power Company 110,000 1,828,750
------------
5,568,000
------------
Total Common Stocks
(cost $ 205,498,271) $265,881,432
------------
SHORT-TERM INVESTMENTS - 5.82%
COMMERCIAL PAPER - 5.37%
Army Airforce (5.600% due 01/01/97) 2,000,000 2,000,000
CC USA (5.400% due 02/06/97) 1,000,000 994,600
ConAgra, Incorporated
(5.450% due 01/03/97) 1,000,000 999,697
Circus Circus (5.500% due 01/08/97) 2,000,000 1,997,861
Dana Credit Corporation
(5.480% due 01/16/97) 1,500,000 1,496,575
Telecommunications, Incorporated
(5.700% due 01/24/97) 1,000,000 996,358
Textron Financial Corporation
(5.570% due 02/11/97) 2,000,000 1,987,313
Public Service Electric & Gas
(5.450% due 01/07/97) 1,000,000 999,092
Viacom (5.660% due 01/21/97) 2,000,000 1,993,711
White Consolidated Industries,
Incorporated(5.480% due 01/24/97) 2,000,000 1,992,998
------------
15,458,205
------------
VARIABLE RATE DEMAND NOTES<F1> - .45%
Johnson Controls, Incorporated
(5.529% due 01/01/97) 1,306,839 1,306,839
------------
Total Short-Term Investments
(cost $16,765,044) 16,765,044
------------
TOTAL INVESTMENTS - 98.10%
(cost $222,263,315)<F2> 282,646,476
------------
OTHER ASSETS AND LIABILITIES - 1.9% 5,477,247
------------
TOTAL NET ASSETS - 100% $288,123,723
============
- -----------------
* Non-income producing
(ADR) American Depository Receipt
<FN>
<F1>) Interest rates vary periodically based on current market
rates. The maturity shown for each variable rate demand note is
the later of the next scheduled interest rate adjustment date or
the date on which principal can be recovered through demand.
Information as of December 31, 1996.
<F2> Represents cost for Federal income tax purposes. Gross
unrealized appreciation and depreciation of securities at
December 31, 1996 was $69,683,138 and $9,299,977, respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial
statements
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996
CAPITAL PORTFOLIO
SHARES/
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COMMON STOCKS - 34.38%
BANKING & FINANCIAL SERVICE - 8.42%
Allied Capital Corporation 34,285 539,992
Banco BHIF ADR* 50,000 818,750
Banco Latinoamericano
de Exportaciones ADR 30,000 1,522,500
Black Rock Strategic Term Trust 75,000 600,000
Charter One Financial Incorporated 42,000 1,764,000
Corus Bankshares Incorporated 25,000 806,250
Deutsche Bank AG Sponsored ADR 18,000 839,784
FPIC Insurance Group Incorporated* 60,000 810,000
Gainsco Incorporated 63,000 606,375
New Germany Fund 72,229 966,063
RLI Corporation 30,480 1,017,270
Templeton Global Income Fund 125,000 890,625
Thai Fund Incorporated 55,000 907,500
Washington Federal Incorporated 50,000 1,325,000
------------
13,414,109
------------
CAPITAL GOOD - 2.57%
Astec Industries Incorporated* 50,000 475,000
Griffon Corporation* 55,000 673,750
Lindsay Manufacturing Incorporated 32,908 1,538,449
Lonrho PLC - Sponsored ADR 150,000 319,574
Strattec Security Corporation* 60,000 1,095,000
------------
4,101,773
------------
CONSUMER CYCLICAL - 2.15%
Chromcraft Revington Inc.* 25,000 693,750
NCI Building Systems Incorporated* 35,000 1,207,500
Southern Energy Homes 65,000 747,500
Winsleow Furniture Incorporated* 80,000 780,000
------------
3,428,750
------------
CONSUMER NON-DURABLE - 1.87%
GT Bicycles Incorporated* 80,000 1,030,000
Helen of Troy Limited, Bermuda* 51,000 1,122,000
IHOP Corporation* 35,000 826,875
------------
2,978,875
------------
ENERGY - 2.50%
Callon Petroleum Company* 35,000 665,000
Giant Industries Incorporated 87,400 1,223,600
Offshore Energy Development* 43,000 655,750
Stone Energy Corporation* 27,000 806,625
YPF S.A. Sponsored ADR 25,000 631,250
------------
3,982,225
------------
MANUFACTURING -8.29%
ABT Building Products Company* 45,000 1,125,000
AEP Industries, Incorporated* 45,831 2,520,705
Bayer AG Sponsored ADR 75,000 1,629,992
Bway Corporation* 44,000 841,500
Carbide Graphite Group* 60,000 1,177,500
Holly Corporation 20,000 535,000
Newmont Mining Corporation 20,000 895,000
Pohang Iron & Steel Company 32,000 648,000
Royal Oak Mines Incorporated* 125,000 406,250
Santa Fe Pacific Gold Corporation 35,000 538,125
TVX Gold Incorporated* 120,000 930,000
Vaal Reefs Exploration
& Mining Limited ADR* 120,100 43,119
York Group Incorporated 62,000 1,209,000
------------
13,199,191
------------
REAL ESTATE - 7.03%
Associated Estates Realty
Corporation 50,000 1,187,500
Columbus Realty Trust 46,000 1,046,500
Hospitality Properties Trust 33,000 957,000
IRT Properties Company 85,000 977,500
LTC Properties Incorporated 46,000 851,000
Merry Land & Investment Company 60,000 1,290,000
Mid-America Apartment Communities 40,000 1,155,000
Shurgard Storage Centers Incorporated 43,000 1,273,875
United Dominion Realty Trust 75,000 1,162,500
Winston Hotels Incorporated 95,000 1,294,375
------------
11,195,250
------------
TECHNOLOGY - 1.55%
DH Technology, Incorporated* 59,760 1,434,240
Recoton Corporation* 69,000 1,030,688
------------
2,464,928
------------
Total Common Stocks (cost $43,838,220) 54,765,101
------------
PREFERRED STOCKS - .40%
MANUFACTURING -.40%
Freeport McMoRan Copper & Gold Series 20,000 640,000
------------
Total Preferred Stock (cost $709,838) 640,000
------------
U.S. TREASURY OBLIGATIONS - 13.18%
8.000% due 01/15/97 1,000,000 1,000,313
8.500% due 04/15/97 500,000 503,906
6.750% due 02/28/97 650,000 651,016
6.750% due 05/31/97 1,000,000 1,004,063
7.875% due 04/15/98 500,000 511,719
5.500% due 02/28/99 1,000,000 991,250
6.000% due 10/15/99 5,900,000 5,900,000
5.750% due 10/31/00 1,000,000 986,875
7.500% due 11/15/01 500,000 526,406
6.375% due 08/15/02 1,750,000 1,761,485
5.875% due 02/15/04 100,000 97,375
7.250% due 05/15/04 3,500,000 3,683,750
7.875% due 11/15/04 3,100,000 3,382,875
------------
Total U.S. Treasury Notes
($20,735,403) 21,001,033
------------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 12.51%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 3.16%
1662 H (6.250% due 01/15/09) 1,007,738 989,065
1442 FA (5.970% due 11/15/07) 1,000,000 907,605
77 F (8.500% due 06/15/17) 23,592 23,592
1559 VP (5.500% due 02/15/20) 1,700,000 1,625,744
1399 PAC (7.000% due 09/15/22) 596,484 568,131
1631 SB (6.527% due 12/15/23) 1,450,000 911,855
------------
5,025,992
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 7.82%
Remic 93-12 ED
(7.500% due 02/25/06) 1,645,000 1,692,039
Remic 1992-163 PN
(7.000% due 07/25/07) 1,500,000 1,501,020
Remic 92-117 J
(7.500% due 07/25/20) 1,000,000 1,013,637
Remic 92-119 E
(8.000% due 07/25/20) 1,000,000 1,021,846
Remic 92-112E
(8.000% due 12/25/20) 1,500,000 1,534,255
Remic 93-127 FA
(5.430% due 10/25/21) 1,000,000 951,862
Remic 1992-39 FB
(6.190% due 03/25/22) 2,000,000 1,936,180
Remic 92-66 F
(5.906% due 05/25/22) 1,007,444 1,008,482
Remic 1993-119 SB
(7.595% due 07/25/23) 2,572,882 1,803,790
------------
12,463,111
------------
PRIVATE SECTOR - 1.53%
Prudential Home Mortgage Securities
(7.500% due 07/25/10) 521,233 515,531
Merrill Lynch Mortgage Investors
(6.438% due 09/15/17) 2,000,000 1,920,000
------------
2,435,531
------------
Total Collateralized Mortgage
Obligations (cost $20,294,887) 19,924,634
------------
MORTGAGE - BACKED SECURITIES - 9.25%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - .82%
7.500% due 06/01/07 50,933 51,379
9.500% due 10/01/08 230,479 247,019
8.250% due 03/01/12 119,734 123,764
8.500% due 03/01/16 95,105 98,830
7.500% due 07/01/17 57,995 58,149
11.000% due 04/01/19 55,195 61,646
11.000% due 11/01/19 53,485 59,736
11.000% due 05/01/20 213,091 237,904
11.000% due 06/01/20 332,322 371,297
------------
1,309,724
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 8.08%
10.000% due 02/01/04 6,768 7,235
9.500% due 09/01/05 150,099 158,380
9.000% due 11/01/05 68,885 72,112
7.500% due 03/25/07 1,200,000 1,220,681
8.000% due 05/01/07 145,405 149,688
6.000% due 12/01/08 868,950 842,360
5.500% due 01/01/09 900,305 857,694
6.000% due 03/01/09 984,158 954,043
5.500% due 04/01/09 888,742 843,620
8.500% due 03/01/19 12,085 12,654
6.500% due 02/01/26 806,877 770,124
6.500% due 03/01/26 201,918 192,720
7.000% due 03/01/26 1,944,740 1,903,336
7.000% due 07/01/26 1,961,895 1,919,593
7.500% due 07/01/26 2,959,197 2,959,375
------------
12,863,615
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - .35%
9.000% due 11/15/16 103,445 111,000
10.500% due 11/20/19 291,488 318,313
9.000% due 12/15/19 126,525 134,961
------------
564,274
------------
Total Mortgage Backed Securities
(cost $14,273,212) 14,737,613
------------
CORPORATE BONDS AND NOTES - 5.56%
COMMUNICATIONS AND MEDIA - .57%
Loewen Group International, Inc.
(8.2500% due 04/15/03) 900,000 908,104
------------
FINANCE COMPANY - .32%
Helicon Group
(11.0000% due 11/01/03) 500,000 510,000
------------
FINANCIAL SERVICES - .52%
Pacific Gulf Properties, Inc.
(8.375% due 02/15/01) 750,000 825,000
------------
GAMING INDUSTRY - .16%
Circus Circus Enterprises, Inc.
(10.625% due 06/15/97) 250,000 255,124
------------
INSURANCE - .09%
The Penn Central Corp.
(9.750% due 08/01/99) 130,000 136,857
------------
MISCELLANEOUS - .65%
Toll Corp. (10.500% due 03/15/02) 500,000 517,500
Parisian (9.875% due 07/15/03) 500,000 510,000
------------
1,027,500
------------
OIL & GAS EXPLORATION SERVICES - .97%
Maxus Debentures
(11.250% due 05/01/13) 208,000 213,200
Rowan Companies
(11.875% due 12/10/01) 750,000 795,000
Trans Texas Gas, Corp.
(11.500% due 06/15/02) 500,000 540,625
------------
1,548,825
------------
REAL ESTATE - .33%
GE Capital Marketing Services, Inc.
(6.0000% due 08/25/09) 568,877 531,547
------------
TELEPHONE & TELECOMMUNICATIONS- .75%
United Telecommunications, Inc.
(9.750% due 04/01/00) 156,000 169,674
TCI Communications Inc
(8.6500% due 09/15/04) 1,000,000 1,023,856
------------
1,193,530
UTILITIES - ELECTRIC - 1.20%
Connecticut Light & Power Co.
1st Ref Mtg. (7.625% due 04/01/97) 677,000 677,240
New Orleans Public Service Inc.
1st Mtg. (8.670% due 04/01/05) 1,200,000 1,237,629
------------
1,914,869
------------
Total Corporate Bonds
(cost $ 8,455,147) 8,851,356
------------
SHORT-TERM INVESTMENTS - 22.84%
COMMERCIAL PAPER - 17.71%
Army Airforce (5.600% due 01/10/97) 2,000,000 2,000,000
Case Credit Corporation
(5.530% due 02/03/97) 1,000,000 994,931
Circus Circus Enterprises Inc.
(5.500% due 01/08/97) 2,000,000 1,997,861
Conagra Inc. (5.450% due 01/03/97) 2,000,000 1,999,394
Dana Credit Corporation
(5.480% due 01/21/97) 1,000,000 996,956
Hanson Financial
(5.620% due 03/14/97) 1,500,000 1,483,140
IES Diversified
(5.550% due 01/27/97) 1,000,000 995,992
IES Diversified
(5.670% due 01/31/97) 1,500,000 1,492,913
Illinois Power Fuel Company
(5.450% due 01/14/97) 2,000,000 1,996,064
Nabisco Inc (5.450% due 01/13/97) 1,000,000 998,183
New York State Gas & Electric
(5.950% due 01/24/97) 2,000,000 1,992,397
Penn Power & Light Energy
(5.450% due 01/08/97) 1,000,000 998,940
Penn Power & Light Energy
(5.480% due 01/22/97) 1,000,000 996,803
Public Service Electric & Gas
(5.450% due 01/07/97) 1,000,000 999,092
Public Service Electric & Gas
(5.450% due 01/10/97) 1,000,000 998,638
Telecommunications Inc
(5.700% due 01/24/97) 2,300,000 2,291,624
Textron Financial Group
(5.550% due 02/10/97) 1,000,000 993,833
Textron Inc.
(5.5700% due 02/11/97) 1,000,000 993,656
Viacom (5.700% due 01/24/97) 1,000,000 996,358
White Consolidated Industries, Inc
(5.480% due 01/24/97) 1,000,000 996,499
White Consolidated Industries, Inc
(5.530% due 02/03/97) 1,000,000 994,931
------------
28,208,205
------------
VARIABLE RATE DEMAND NOTES - 5.13%
American Family Financial Services
(5.509% due 01/01/97) 1,485,013 1,485,013
Johnson Controls, Inc.
(5.529% due 01/01/97) 6,157,736 6,157,736
Wisconsin Electric Power Company
(5.549% due 01/01/97) 527,871 527,871
------------
8,170,620
------------
Total Short Term Investments
(cost $36,378,825) 36,378,825
------------
TOTAL INVESTMENTS - 98.12%
(cost $144,685,532)<F2> 156,298,562
------------
OTHER ASSETS AND LIABILITIES - 1.88% 2,995,324
------------
TOTAL NET ASSETS - 100% $159,293,886
------------
- -----------------
* Non-Income producing
(ADR) American Depository Receipt
<FN>
<F1> Interest rates vary periodically based on current market
rates. Rates shown are as of December 31, 1996. 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 as
of December 31, 1996.
<F2> Represents cost for Federal income tax purposes. Gross
unrealized appreciation and depreciation of securities at
December 31, 1996 was $14,144,348 and $2,531,318 respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
December 31, 1996
BOND PORTFOLIO
<TABLE>
<CAPTION>
SHARES/
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 35.51%
U.S. TREASURY BOND - 5.41%
6.250% due 08/15/23 $3,000,000 $ 2,811,570
6.000% due 02/15/26 2,000,000 1,819,376
-----------
4,630,946
-----------
U.S. TREASURY NOTES - 25.30%
6.000% due 10/15/99 4,000,000 4,000,000
6.700% due 04/30/00 2,000,000 2,038,126
7.750% due 02/15/01 2,500,000 2,642,188
5.625% due 02/28/01 2,000,000 1,960,626
5.875% due 11/15/05 5,000,000 4,823,440
6.500% due 08/15/05 1,000,000 1,006,875
7.000% due 07/15/06 5,000,000 5,195,315
-----------
21,666,570
-----------
U.S. TREASURY STRIPS - 4.80%
0.000% due 02/15/00 3,250,000 2,695,290
0.000% due 08/15/02 2,000,000 1,416,780
-----------
4,112,070
-----------
Total U.S. Treasury Notes
(cost $30,002,142) 30,409,583
-----------
MORTGAGE - BACKED SECURITIES - 3.43%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 1.10%
7.500% due 02/01/02 46,747 47,331
9.500% due 04/01/05 77,932 82,169
7.500% due 06/01/07 112,097 113,080
11.000% due 05/01/10 13,069 14,596
12.500% due 08/01/10 18,983 21,794
8.000% due 11/01/16 55,327 56,382
9.500% due 02/01/18 76,207 81,827
6.500% due 07/01/23 553,517 532,356
-----------
949,535
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 2.14%
12.000% due 04/01/00 69,694 75,095
9.000% due 08/01/01 50,968 53,341
8.500% due 01/01/02 47,751 49,676
10.500% due 06/01/04 16,138 17,207
10.500% due 05/01/05 200,712 214,009
6.500% due 06/01/08 1,141,030 1,128,683
8.000% due 08/01/17 289,120 294,360
-----------
1,832,371
-----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - .19%
11.000% due 03/15/10 61,600 68,029
9.000% due 05/15/20 86,210 90,844
-----------
158,873
-----------
Total Mortgage-Backed Securities
(cost $2,892,682) 2,940,779
-----------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 7.97%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 3.56%
59 E (8.900% due 11/15/20) 965,123 1,007,820
106 G (8.250% due 12/15/20) 1,000,000 1,031,890
1770 B (8.250% due 01/15/24) 1,000,000 1,004,836
-----------
3,044,546
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - .26%
Remic (9.500% due 12/25/18) 212,032 225,191
-----------
PRIVATE SECTOR - 4.15%
Securitized Asset Sales, Inc.
(6.500% due 07/25/08) 305,789 291,457
CMC Securities Corp.
(0.000% due 12/25/08) 401,817 301,298
Country Wide Mortgage-Backed
Securities, Inc.(6.000% due 03/01/09) 876,358 807,073
Capstead Mortgage Securities Corp.
(10.950% due 02/01/14) 215,719 215,934
Greenwich Capital Acceptance
(8.238% due 08/25/24) 989,978 858,806
NWA Trust No. 2 Class B
(10.230% due 06/21/14) 950,769 1,083,310
-----------
3,557,878
-----------
Total Collateralized Mortgage
Obligations (cost $6,559,333) 6,827,615
-----------
CORPORATE BONDS AND NOTES - 50.43%
AIR TRANSPORTATION - 1.22%
Continental Airlines
(7.820% due 10/15/23) 1,000,000 1,033,140
-----------
BANK & BANK HOLDING COMPANIES - 4.17%
Comerica Inc. (9.750% due 05/01/99) 500,000 534,041
First Tennessee (8.070% due 01/06/27) 2,000,000 2,002,240
Nationsbank Corp.
(7.625% due 04/15/05) 1,000,000 1,034,698
-----------
3,570,979
-----------
COMMUNICATIONS AND MEDIA - 8.59%
Arch Communication Group
(0.000% due 03/15/08) 1,000,000 571,250
Call-Net Enterprises
(0.000% due 12/01/04) 1,250,000 1,025,000
CF Cable TV Inc.
(9.125% due 07/15/07) 1,000,000 1,070,000
Continental Cablevision
(8.300% due 05/15/06) 1,000,000 1,067,038
CS Wireless Systems
(0.000% due 03/01/06) 500,000 180,000
Jones Intercable, Inc.
(9.625% due 03/15/02) 500,000 525,000
Neodata Service (12.000% due 05/01/03) 1,000,000 1,052,500
Peoples Choice TV (0.000% due06/01/04) 2,000,000 840,000
Time Warner Inc. (8.110% due 08/15/06) 1,000,000 1,024,735
-----------
7,355,523
-----------
CONGLOMERATES - 1.78%
Figgie International Inc.
(9.875% due 10/01/99) 1,000,000 1,040,000
JB Poindexter & Company
(12.500% due 05/15/04) 500,000 487,500
-----------
1,527,500
-----------
CONSUMER PRODUCTS -2.59%
Coleman Holdings
(0.000% due 05/27/98) 1,000,000 833,750
Pillowtex Corporation
(10.000% due 11/15/06) 500,000 520,000
Revlon Consumer Products Corp.
(0.00% due 03/15/98) 1,000,000 867,500
-----------
2,221,250
-----------
ENERGY - 1.34%
Coastal Corp.(9.7500% due 08/01/03) 1,000,000 1,144,986
-----------
FINANCE COMPANIES - 1.79%
Ahmanson Capital Trust
(8.360% due 12/01/26) 1,500,000 1,536,615
-----------
FOOD, BEVERAGE, & TOBACCO -3.45%
Dimon Inc. (8.875% due 06/01/06) 1,000,000 1,037,500
RJR Nabisco, Inc.
(7.625% due 09/15/03) 500,000 482,059
Great American Cookie, Inc.
(10.875% due 01/15/01) 500,000 455,000
Nabisco Inc. (7.550% due 06/15/15) 1,000,000 978,312
-----------
2,952,871
-----------
FOREIGN - 1.12%
Quebec Province CDA
(7.125% due 02/09/24) 1,000,000 955,040
-----------
GAMING INDUSTRY - 5.84%
Argosy Gaming (13.2500% due 06/01/04) 1,000,000 927,500
Boomtown, Inc. 1st Mortgage
(11.500% due 11/01/03) 1,000,000 1,047,500
Casino Magic of Louisiana
(13.000% due 08/15/03) 1,000,000 987,500
Empress River Casino Finance Corp.
(10.750% due 04/01/02) 1,000,000 1,077,500
Hollywood Casino Corp.
(12.750% due 11/01/03) 1,000,000 960,000
-----------
5,000,000
-----------
HEALTH CARE - 1.80%
Columbia / HCA Healthcare Corp.
(7.690% due 06/15/25) 1,000,000 1,026,254
Foundation Health Corp.
(7.750% due 06/01/03) 500,000 516,881
-----------
1,543,135
-----------
INSURANCE - 4.92%
Berkley (W.R.) Corp.
(9.875% due 05/15/08) 500,000 595,056
Farmers Insurance Exhange
(8.500% due 04) 1,000,000 1,046,903
Leucadia National Corp.
(8.250% due 06/15/05) 1,000,000 1,036,976
Penn Central Corp.
(9.750% due 08/01/99) 500,000 526,374
Prudential Insurance
(8.100% due 07/15/15) 1,000,000 1,010,504
-----------
4,215,813
-----------
MANUFACTURING - 4.31%
General Instrument Corporation
(5.000% 06/15/00) 500,000 532,500
International Knife & Saw Corp.
(11.375% due 11/15/06) 1,000,000 1,035,000
International Wire Group Inc.
(11.750% due 06/01/05) 500,000 535,000
Safelite Glass Corporation
(9.875% due 12/15/06) 500,00 515,000
Terex Corp. (13.750% due 05/15/02) 1,000,000 1,075,000
-----------
3,692,500
-----------
MISCELLANEOUS - .60%
Sea Containers (10.500% due 07/01/03) 500,000 512,500
-----------
OIL & GAS - DOMESTIC - .63%
Penzoil Company (9.625% due 11/15/99) 500,000 535,737
-----------
OIL & GAS - SERVICES - 3.17%
Mitchell Energy Development Corp.
(6.750% due 02/15/04) 750,000 707,585
PDV America, Inc.
(7.750% due 08/01/00) 1,000,000 1,005,453
Petro (12.500% due 06/01/02) 1,000,000 1,000,000
-----------
2,713,038
-----------
PAPER & FOREST PRODUCTS - .62%
Westvaco Corp. (10.300% due 01/15/19) 500,000 532,396
-----------
RETAIL - GENERAL - 1.23%
Hook - SuperX Inc.
(10.125% due 06/01/02) 1,000,000 1,057,132
-----------
STEELS AND METALS - 1.26%
Gulf States Steel
(13.500% due 04/15/03) 500,000 472,500
UCAR Global Enterprises Inc.
(12.000% due 01/15/05) 530,000 610,163
-----------
1,082,663
-----------
Total Corporate Bond and Notes
(cost $42,252,009) 43,182,818
-----------
COMMON STOCKS - .04%
ENERGY - .04%
Mesa Incorproated* 6,417 33,689
-----------
Total Common Stocks (cost $ 24,365) 33,689
-----------
WARRANTS - 0.00%
RETAIL-FOOD - 0.00%
Great American Cookie Warrants 90 2,250
TECHNOLOGY - .06%
CS Wireless Systems 138 1
Terex Corporation Appreciation Rights 4,000 40
-----------
Total Warrants (cost $ 28,050) 2,291
-----------
PREFERRED STOCKS - 1.05%
BANKING AND FINANCIAL SERVICE - 1.05%
Earthshell Container Corporation
Series A
Cumulative Senior Convertible 8%<F1> 500 900,000
-----------
Total Preferred Stocks (cost $500,000) 900,000
-----------
SHORT TERM INVESTMENTS - 4.42%
VARIABLE RATE DEMAND NOTES<F2> - 4.42%
American Family (5.509% due 01/01/97) 661,231 661,231
Johnson Controls Inc.
(5.529% due 01/01/97) 2,145,196 2,145,196
Pitney Bowes Credit Corp.
(5.507% due 01/01/97) 42,913 42,913
Sara Lee (5.487% due 01/01/97) 797,184 797,184
Southwestern Bell Telephone Co.
(5.487% due 01/01/97) 135,000 135,000
-----------
Total Short-Term Investments
(cost $3,781,525) 3,781,525
-----------
TOTAL INVESTMENTS - 102.85%
(cost $86,040,107)<F3> 88,078,300
-----------
OTHER ASSETS AND LIABILITIES - (2.85)% (2,444,171)
-----------
TOTAL NET ASSETS - 100% $85,634,129
===========
- -----------------------
* Non-Income Producing
<FN>
<F1> 144A- 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, 1996. The maturity shown for each
variable rate demand note is the later of the next scheduled interest
adjustment date or the date on which principal can be recovered through
demand. Information shown is as of December 31, 1996.
<F3> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at December 31, 1996 was
$3,185,795 and $1,147,602 respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statments.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996
S&P 500 INDEX PORTFOLIO
COMMON STOCKS - 82.48%
SHARES VALUE
------ -----
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 11.85%
Aetna Life & Casulaty Company 667 53,318
Allstate Corporation 2,000 115,750
American Express Company 2,100 118,650
American General Corporation 900 36,788
American International Group 2,000 216,500
Banc One Corporation 1,890 81,270
Bank of Boston Corporation 700 44,975
Bank of New York Incorporated 1,700 57,375
BankAmerica Corporation 1,600 159,600
Bankers Trust New York Corporation 300 25,875
Barnett Banks, Incorporated 1,000 41,125
Boatmen's Bancshares, Incorporated 800 51,600
Chase Manhattan Corporation 2,012 179,571
Chubb Group 800 43,000
CIGNA Corporation 300 40,988
Citicorp 1,600 164,800
Comerica, Incorporated 600 31,425
CoreStates Financial Corporation 1,100 57,063
Dean Witter, Discover & Company 700 46,375
Federal Home Loan Mortgage Corporation 800 88,100
Federal National Mortgage Association 4,800 178,800
First Bank System, Incorporated 700 47,775
First Chicago NBD Corporation 1,400 75,250
First Union Corporation 1,300 96,200
Fleet Financial Group, Incorporated 1,200 59,850
General RE Corporation 400 63,100
Great Western Financial 500 14,500
Green Tree Financial Corporation 600 23,175
Household International, Incorporated 500 46,125
ITT Hartford Group Incorporated 500 33,750
KeyCorp 1,000 50,500
Lincoln National Corporation 500 26,250
Marsh & McLennan Companies, Incorporated 400 41,600
MBNA Corporation 850 35,275
Mellon Bank Corporation 600 42,600
Merrill Lynch & Company, Incorporated 800 65,200
Morgan (J. P.) & Company 900 87,863
Morgan Stanley Group Incorporated 700 39,988
National City Corporation 1,100 49,363
NationsBank Corporation 1,000 97,750
Norwest Corporation 1,600 69,600
PNC Bank Corporation 1,500 56,438
Providian Corp. 500 25,688
Republic New York Corporation 300 24,488
SAFECO Corporation 600 23,663
Salomon, Incorporated 500 23,563
SunTrust Banks, Incorporated 1,200 59,100
Transamerica Corporation 400 31,600
Travelers Group, Incorporated 2,733 124,010
US Bancorp 700 31,456
Wachovia Corporation 800 45,200
Wells Fargo & Company 433 116,802
-----------
3,460,670
-----------
CAPITAL GOOD - 4.56%
AMP, Incorporated 1,100 42,213
Caterpillar, Incorporated 900 67,725
Cooper Industries, Incorporated 600 25,275
Deere & Company 1,200 48,750
Dover Company 600 30,150
Emerson Electric Company 1,100 106,425
Foster Wheeler Corporation 300 11,138
General Electric Company 7,100 702,013
Grainger (WW), Incorporated 300 24,075
Illinois Tool Works, Incorporated 600 47,925
Ingersoll-Rand Company 500 22,250
Scientific-Atlanta, Incorporated 500 7,500
Tenneco, Incorporated 900 40,613
Tyco International Limited 800 42,300
Westinghouse Electric Corporation 1,900 37,763
WMX Technologies, Incorporated 2,300 75,038
-----------
1,331,153
-----------
CONSUMER CYCLICAL - 6.02%
American Greetings Company Class A 500 14,188
American Stores Company 700 28,613
Black & Decker Corp. 500 15,063
Chrysler Corporation 3,200 105,600
CVS Corporation 500 20,688
Dayton Hudson Corporation 1,100 43,175
Eaton Corporation 400 27,900
Federated Department Stores Incorporated* 1,000 34,125
Ford Motor Company 5,300 168,938
Gap (The), Incorporated 1,300 39,163
General Motors Corporation 3,400 189,550
Genuine Parts Company 900 40,050
Goodyear Tire & Rubber Company 800 41,100
HFS, Incorporated 600 35,850
Home Depot, Incorporated 2,100 105,263
Johnson Controls 300 24,863
K Mart Corporation* 2,200 22,825
Lowe's Companies, Incorporated 800 28,400
May Department Stores Company 1,200 56,100
NIKE, Incorporated 1,300 77,675
PACCAR, Incorporated 200 13,600
Penney, (J.C.) Company, Incorporated 1,100 53,625
Reebok International, Incorporated 300 12,600
Rite Aid Corporation 500 19,875
Sears, Roebuck & Company 1,700 78,413
Tandy Corporation 300 13,200
Limited (The), Incorporated 1,290 23,704
Toys "R" Us, Incorporated* 1,200 36,000
TRW, Incorporated 600 29,700
V.F. Corporation 400 27,000
Wal-Mart Stores, Incorporated 11,000 251,625
Walgreen Company 1,000 40,000
Whirlpool Corporation 500 23,313
Woolworth Corporation* 700 15,313
-----------
1,757,097
-----------
CONSUMER NON-DURABLE - 21.53%
Abbott Laboratories 3,400 172,550
Albertson's, Incorporated 1,200 42,750
American Brands, Incorporated 800 39,700
American Home Products Corporation 2,800 164,150
Andrew Corporation 300 15,919
Anheuser-Busch Companies, Incorporated 2,200 88,000
Archer-Daniels-Midland Company 2,495 54,890
Automatic Data Processing, Incorporated 1,400 60,025
Avon Products, Incorporated 600 34,275
Baxter International, Incorporated 1,300 53,300
Becton, Dickinson Company 700 30,363
Block, H&R Incorporated 500 14,500
Boston Scientific Corporation* 800 48,000
Bristol-Meyers Squibb Company 2,300 250,125
Browning-Ferris Industries, Incorporated 1,000 26,250
Brunswick Corporation 500 12,000
Campbell Soup Company 1,000 80,250
Clorox Co. 300 30,113
Coca-Cola Company 10,900 573,613
Cognizant Corporation 800 26,400
Colgate-Palmolive Company 600 55,350
Columbia/HCA Healthcare Corporation 3,050 124,288
Comcast Corporation 900 16,031
ConAgra, Incorporate, Class A. Special 1,100 54,725
CPC International, Incorporated 700 54,250
CUC International, Incorporated 1,850 43,938
Donnelly (RR) & Sons Company 800 25,100
Dow Jones, & Company, Incorporated 600 20,325
Dun & Bradstreet Corporation 1,200 28,500
Gannett Company, Incorporated 800 59,900
General Mills, Incorporated 700 44,363
Gillette Company 1,900 147,725
Heinz (H.J.) Company 1,700 60,775
Harrahs Entertainment, Incorporated* 500 9,938
Hershey Foods Corporation 900 39,375
Hilton Hotels Corporation 900 23,513
International Flavors & Fragrance,
Incorporated 500 22,500
Interpublic Group Companies,
Incorporated 600 28,500
Johnson & Johnson 5,800 288,550
Kellogg Company 1,000 65,625
King World Producation, Incorporated* 300 11,063
Kroger Company* 700 32,550
Lilly,(Eli) & Company 2,400 175,200
Loews Corporation 600 56,550
Manor Care 400 10,800
Mattel, Incorporated 1,250 34,688
Marriott International 600 33,150
McDonalds Corporation 3,100 140,275
McGraw Hill Companies, Incorporated 600 27,675
Medtronic, Incorporated 1,100 74,800
Merck & Company, Incorporated 5,300 420,025
PepsiCo, Incorporated 6,700 195,975
Pfizer, Incorporated 2,800 232,050
Pharmacia & Upjohn, Incorporated 2,200 87,175
Philip Morris Companies, Incorporated 3,600 405,450
Procter & Gamble Company 3,000 322,500
Ralston-Ralston Purina Group 500 36,688
Sara Lee Corporation 2,300 85,675
Schering-Plough Corporation 1,600 103,600
Seagrams Company, Limited 1,700 65,875
St. Jude Medical* 400 17,050
Sysco Corporation 900 29,363
Tele-Communications, Incorporated* 1,600 20,900
Tenet Healthcare Corporation* 1,100 24,063
Time Warner, Incorporated 2,600 97,500
Tribune Company 400 31,550
UST, Incorporated 800 25,900
United HealthCare Corporation 900 40,500
Viacom, Inc. - Class B* 1,300 45,338
Walt Disney Company, The 3,019 210,198
Warner-Lambert Company 1,300 97,500
Wendy's International 700 14,350
Winn-Dixie Stores, Incorporated 700 22,138
Wrigley, (Wm), Jr. Company 500 28,125
-----------
6,286,683
-----------
ENERGY - 7.95%
Amerada Hess Corporation 500 28,938
Amoco Corporation 2,300 185,150
Atlantic Richfield Company 800 106,000
Burlington Resources, Incorporated 600 30,225
Chevron Corporation 2,800 182,000
Columbia Gas System, Incorporated 300 19,088
Dresser Industries, Incorporated 1,200 37,200
Enron Corporation 1,100 47,438
Exxon Corporation 5,300 519,400
Halliburton Company 600 36,150
Kerr-McGee Company 300 21,600
Mobil Corporation 1,700 207,825
Occidental Petroleum 1,600 37,400
Phillips Petroleum Company 1,300 57,525
Royal Dutch Petroleum Company ADR 2,300 392,725
Schlumberger Limited 1,400 139,825
Sun Company, Incorporated 700 17,063
Texaco, Incorporated 1,200 117,750
USX-Marathon 1,400 33,425
Union Pacific Resources Group 1,092 31,941
Unocal Corporation 1,100 44,688
Williams Companies 750 28,125
-----------
2,321,481
-----------
MANUFACTURING - 7.68%
Air Products & Chemicals, Incorporated 600 41,475
Alcan Aluminum Limited 1,500 50,438
Allegheny Teledyne, Incorporated 800 18,400
Aluminum Company of America 1,100 70,125
Applied Materials Incorporated* 900 32,344
Barrick Gold 1,800 51,750
Bemis Company 300 11,063
Bethlehem Steel Corporation* 700 6,300
Centex Corporation 100 3,763
Champion International Corporation 500 21,625
Corning, Incorporated 1,100 50,875
Crown Cork & Seal Company, Incorporated 600 32,625
Dow Chemical Company 1,200 94,050
DuPont (E.I.) De Nemours & Company 2,500 235,938
Eastman Chemical Company 400 22,100
Eastman Kodak Company 1,500 120,375
Englehard Corporation 600 11,475
Fluor Corporation 500 31,375
Freeport McMoran Copper 600 17,925
Fresenius Medical Care* 400 56
Georgia-Pacific Company 500 36,000
Grace, (WR) & Company 400 20,700
Great Lakes Chemical Corporation 400 18,700
Hercules, Incorporated 600 25,950
Inco, Limited 1,100 35,063
International Paper Company 1,300 52,488
ITT Corporation 600 26,025
Kimberly-Clark Corporation 1,300 123,825
Louisiana-Pacific Corporation 600 12,675
Mallincrokdt Group, Incorporated 500 22,063
Masco Corporation 800 28,800
Minnesota Mining & Manufacturing Company 1,900 157,463
Mead Corporation 300 17,438
Monsanto Company 2,700 104,963
Morton International, Incorporated 700 28,525
Nalco Chemical Company 400 14,450
Newmont Mining Corporation 1,200 53,700
Nucor Corporation 500 25,500
Owens Corning 300 12,788
Phelps Dodge Corporation 500 33,750
Placer Dome, Incorporated 1,200 26,100
PPG Industries, Incorporated 900 50,513
Praxair Incorporated 700 32,288
Reynolds Metals Company 400 22,550
Rohm & Haas 300 24,488
Rubbermaid, Incorporated 800 18,200
Sherwin- Williams 500 28,000
Silicon Graphics Incorporated* 900 22,950
Union Camp Corporation 400 19,100
Union Carbide Corporation 700 28,613
Unilever (N.V.) ADR 700 122,675
USX-US Steel Group 500 15,688
Weyerhaeuser Company 1,000 47,375
Worthington Industries, Incorporated 500 9,063
-----------
2,242,546
-----------
SERVICE - 0.21%
Alco Standard Corporation 600 30,975
Service Corporation International 1,100 30,800
-----------
61,775
-----------
TECHNOLOGY - 13.04%
3COM Corporation* 800 58,700
Advanced Micro Devices, Incorporated* 700 18,025
AirTouch Communications, Incorporated* 2,300 58,075
AlliedSignal Incorporated 1,300 87,100
Amgen, Incorporated* 1,200 65,250
Boeing Company 1,542 164,030
Cabletron Systems, Incorporated 800 26,600
Cisco Systems, Incorporated 2,900 184,513
COMPAQ Computers Corporation* 1,100 81,675
Computer Associates International,
Incorporated 1,600 79,600
Computer Sciences Corporation* 400 32,850
Digital Equipment Corporation* 700 25,463
Dell Computer Corporation 800 42,500
First Data Corporation 2,000 73,000
Hewlett-Packard Company 4,700 236,175
Honeywell, Incorporated 600 39,450
Intel Corporation 3,700 484,469
International Business Machines
Corporation 2,300 347,300
Lockheed Martin Corporation 900 82,350
LSI Logic Corporation* 600 16,050
Lucent Technologies 2,785 128,806
McDonnell Douglas Corporation 1,000 64,000
Micron Technology Incorporated 1,000 29,125
Microsoft Corporation* 5,200 429,650
Motorola Incorporated 2,600 159,575
Nothern Telecom, Limited 1,200 74,250
Novell, Incorporated* 1,600 15,150
Oracle Systems Corporation 2,900 121,075
Perkin-Elmer Corporation 300 17,663
Pitney-Bowes Incorporated 800 43,600
Raytheon Company 1,100 52,938
Rockwell International Corporation 1,000 60,875
Seagate Technology, Incorporated 1,000 39,500
Sun Microsystems, Incorporated 1,600 41,100
Tandem Computer Incorporated* 600 8,250
Tektronix, Incorporated 200 10,250
Tellabs, Incorporated 800 30,100
Texas Instruments, Incorporated 900 57,375
Textron Incorporated 400 37,700
Unisys Corporation* 900 6,075
United Technologies Corporation 1,200 79,200
Western Atlas, Incorporated* 300 21,263
Xerox Corporation 1,500 78,938
-----------
3,809,633
-----------
TRANSPORTATION - 1.51%
AMR Corporation* 400 35,250
Burlington Northern Santa Fe Corporation 900 77,738
Caliber System, Incorporated 300 5,775
Conrail Incorporated 400 39,850
CSX Corporation 1,300 54,925
Delta Air Lines 400 28,350
Federal Express 600 26,700
Laidlaw Incorporated 1,400 16,100
Norfolk Southern Company 700 61,250
Ryder System 500 14,063
Southwest Airlines Company 700 15,488
Union Pacific Corporation 1,100 66,138
-----------
441,627
-----------
UTILITY - 8.13%
ALLTELL Corporation 1,000 31,375
American Electric Power Company,
Incorporated 1,000 41,125
AT&T Corporation 6,900 300,150
Ameritech Corporation 2,500 151,563
Baltimore Gas & Electric Company 800 21,400
Bell Atlantic Corporation 2,000 129,500
BellSouth Corporation 4,300 173,613
Carolina Power & Light Company 700 25,550
Central & Southwest Corporation 1,000 25,625
CinergyCorporation 700 23,363
Coastal Corporation 500 24,438
Consolidated Edison Co. of N.Y.,
Incorporated 900 26,325
Consolidated Natural Gas Company 500 27,625
Dominion Resources 900 34,650
Duke Power 1,000 46,250
DTE Energy Company 700 22,663
Edison International 1,900 37,763
Entergy Corporation 1,000 27,750
FPL Group Incorporated 1,000 46,000
General Public Utilities Corporation 600 20,175
GTE Corporation 3,800 172,900
Houston Industries, Incorporated 1,100 24,888
MCI Communications Corporation 3,000 98,063
Niagara Mohawk Power Corporation* 600 5,925
NYNEX Corporation 2,000 96,250
Pacific Gas & Electric Company 1,900 39,900
Pacific Telesis Group 1,800 66,150
PacifiCorp 1,400 28,700
PanEnergy Corporation 700 31,500
PECO Energy Company 900 22,725
Public Service Enterprise Group,
Incorporated 900 24,525
SBC Communications 2,600 134,550
Southern Company 2,900 65,613
Sprint Corporation* 1,600 63,800
Sonat, Incorporated 400 20,600
Texas Utilities Company 1,000 40,750
Unicom Corporation 1,000 27,125
Union Electric Company 600 23,100
U.S. West Communications Group 2,100 67,725
US West Media Group* 2,200 40,700
WorldCom, Incorporated 1,700 44,306
-----------
2,376,698
-----------
Total Common Stocks (cost $21,107,889) 24,089,363
<CAPTION>
SHORT-TERM INVESTMENTS - 17.76%
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
US Treasury Bill<F2>
(5.360% due 05/01/97) $5,200,00 5,112,578
Portico US Federal Money Market Fund 73,782 73,782
-----------
Total Short-Term Investments
(cost $5,186,360) 5,186,360
-----------
TOTAL INVESTMENTS -
100.24% (cost $26,294,249)<F1> 29,275,723
-----------
OTHER ASSETS AND LIABILITIES - (0.24%) (71,113)
-----------
TOTAL NET ASSETS - 100% $29,204,610
- -----------
*Non-income producing
(ADR) American Depository Receipt
<FN>
<F1> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at December 31, 1996
was $3,401,349 and $370,475 respectively.
<F2> Security is held by the custodian in a segregated account for open
futures contracts. At December 31, 1996, the Fund's open futures contracts
were as follows:
</FN>
</TABLE>
<TABLE>
<CAPTION>
Unrealized Appreciation/
Type Contracts (Depreciation)
- ---- ---------- ------------
<S> <C> <C>
Standard & Poor's 500 Index (03/97) 10 $57,750
Standard & Poor's 500 Index (03/97) 2 6,350
Standard & Poor's 500 Index (03/97) 2 (14,700)
-------
$49,400
=======
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Carillon Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a no-load,
diversified, open-end management investment company. The shares
of the Fund are sold only to The Union Central Life Insurance
Company (Union Central) and its separate accounts to fund the
benefits under certain variable insurance and retirement
products. The Fund's shares are offered in four different
series - Equity Portfolio, Capital Portfolio, Bond Portfolio,
and S&P 500 Index Portfolio. The Equity Portfolio seeks long-
term appreciation of capital by investing primarily in common
stocks and other equity securities. The Capital Portfolio seeks
the highest total return through a combination of income and
capital appreciation consistent with the reasonable risks
associated with an investment portfolio of above-average quality
by investing in equity securities, debt instruments, and money
market instruments. The Bond Portfolio seeks a high level of
current income as is consistent with reasonable investment risk
by investing primarily in long-term, fixed-income, investment-
grade corporate bonds. The S&P 500 Index Portfolio seeks
investment results that correspond to the total return
performance of U.S. common stocks, as represented in the
Standard & Poor's 500 Index.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
SECURITIES VALUATION - Securities held in each Portfolio, 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 in each Portfolio 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. All amortization of discount is recognized currently
under the effective interest method. Gains and losses on sales
of investments are calculated on the identified cost basis for
financial reporting and tax purposes.
FEDERAL TAXES - It is the intent of the Fund to comply with the
requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its net
investment income and any net realized capital gains. Regulated
investment companies owned by the segregated asset accounts of a
life insurance company, held in connection with variable annuity
contracts, are exempt from excise tax on undistributed income.
Therefore, no provision for income or excise taxes has been
recorded.
DISTRIBUTIONS -Distributions from net investment income in all
Portfolios are declared and paid quarterly. Net realized
capital gains are distributed periodically, no less frequently
than annually. Distributions are recorded on the ex-dividend
date. All distributions are reinvested in additional shares of
the respective Portfolio at the net asset value per share.
The amount of distributions are determined in accordance with
federal income tax regulations which may differ from generally
accepted accounting principles. These "book/tax" differences
are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their
federal tax-basis treatment; temporary differences do not
require reclassification. Distributions which exceed net
investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as
distributions in excess of net investment income or
distributions in excess of net realized capital gains. To the
extent they exceed net investment income and net realized
capital gains for tax purposes, they are reported as
distributions of paid-in-capital.
EXPENSES - Allocable expenses of the Fund are charged to each
Portfolio based on the ratio of the net assets of each Portfolio
to the combined net assets of the Fund. Nonallocable expenses
are charged to each Portfolio based on specific identification.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEES - 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.
(d) for the S & P 500 Index Portfolio - .30% 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 Equity, Capital , or Bond Portfolios, the Adviser will
reimburse the Fund for such excess, up to the amount of the
advisory fee for that year. The Adviser has agreed to waive its
advisory fee and pay any other expenses of the S&P 500 Index
Portfolio to the extent that such expenses exceed 0.60% of its
average annual net assets. As a result, for the year ended
December 31, 1996, the Adviser waived management fees of $40,752
for the S&P 500 Index Portfolio.
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 for the Equity, Capital, and Bond Portfolios,
and .05% of the Fund's average net assets for the S & P 500
Index Portfolio. 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 - FUTURES CONTRACTS
S&P 500 Index Portfolio ("Index") may purchase futures contracts
on the Standard & Poor's 500 Stock Index. These contracts
provide for the sale of a specified quantity of a financial
instrument at a fixed price at a future date. When Index enters
into a futures contract, it is required to deposit and maintain
as collateral such initial margin as required by the exchange on
which the contract is traded. Under terms on the contract,
Index agrees to receive from or pay to the broker an amount
among equal to the daily fluctuation in the value of the
contract (known as the variation margin). The variation margin
is recorded as unrealized gain or loss until the contract
expires or is otherwise closed, at which time the gain or loss
is realized. Index invests in futures as a substitute to
investing in the 500 common stock positions in the Standard &
Poor's 500 Index. The potential risk to Index is that the
change in the value in the underlying securities may not
correlate to the value of the contracts.
NOTE 4 - SUMMARY OF PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities for the year ended December
31, 1996 excluding short-term obligations, follow:
<TABLE>
<CAPTION>
Equity Capital Bond S&P 500
Portfolio Portfolio Portfolio Index
--------- --------- --------- -------
<S> <C> <C> <C> <C>
Total Cost of
Purchases of:
Common Stocks $134,595,735 $32,689,304 $ 500,000 $21,253,070
U.S. Government
Securities -- 29,758,818 20,072,333 --
Corporate Bonds -- 4,655,726 143,754,858 --
------------ ----------- ------------ -----------
$134,595,735 $67,103,848 $164,327,191 $21,253,070
============ =========== ============ ===========
Total Proceeds
from Sales of:
Common Stocks $121,196,447 $45,862,233 $ 56,998 $ 148,079
U.S. Government
Securities -- 17,316,857 13,542,937 --
Corporate Bonds -- 5,810,391 137,605,856 --
------------ ----------- ------------ -----------
$121,196,447 $68,989,481 $151,205,791 $ 148,079
============ =========== ============ ===========
</TABLE>
<PAGE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock
outstanding throughout the year.
<TABLE>
<CAPTION>
Equity Portfolio
Year Ended December 31,
-----------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $16.54 $14.30 $14.58 $13.74 $12.60
------- ------- ------- ------- -------
Investment Activities:
Net investment income .29 .24 .20 .16 .19
Net realized and unrealized 3.61 3.36 .31 1.69 1.27
gains/(losses)
------- ------- ------- ------- -------
Total from Investment
Operations 3.90 3.60 .51 1.85 1.46
------- ------- ------- ------- -------
Distributions:
Net investment income (.27) (.23) (.19) (.16) (.19)
Net realized gains (.72) (1.13) (.60) (.85) (.13)
------- ------- ------- ------- -------
Total Distributions (.99) (1.36) (.79) (1.01) (.32)
------- ------- ------- ------- -------
Net Asset Value,
End of year $19.45 $16.54 $14.30 $14.58 $13.74
------- ------- ------- ------- -------
Total Return 24.52% 26.96% 3.42% 14.11% 11.78%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .64% .66% .69% .70% .72%
Ratio of Net Investment
Income to Average Net Assets 1.66% 1.73% 1.45% 1.18% 1.47%
Portfolio Turnover Rate 52.53% 34.33% 40.33% 37.93% 46.75%
Average Commission Rate Paid $.0628<F1>
Net Assets, End of Year
(000's) $288,124 $219,563 $157,696 $138,239 $102,306
<FN>
<F1> Represents the dollar amount of commissions paid on Portfolio
transactions divided by the total number of shares purchased and sold for
which commissions were charged. Disclosure not required for periods prior
to fiscal 1996.
</FN>
</TABLE>
<PAGE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
Capital Portfolio
Year Ended December 31
----------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $13.72 $13.19 $13.81 $12.99 $12.82
Investment Activities:
Net investment income .63 .64 .52 .43 .42
Net realized and unrealized 1.36 1.15 (.39) 1.17 .56
gains/(losses)
Total from Investment
Operations 1.99 1.79 .13 1.60 .98
Distributions:
Net investment income (.57) (.64) (.52) (.42) (.42)
Net realized gains (.19) (.62) (.23) (.36) (.39)
Total Distributions (1.76) (1.26) (.75) (.78) (.81)
Net Asset Value,
End of year $14.95 $13.72 $13.19 $13.81 $12.99
Total Return 14.94% 14.28% .94% 12.72% 7.93%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .77% .77% .80% .82% .88%
Ratio of Net Investment
Income to Average Net Assets 4.42% 4.99% 4.25% 3.31% 3.49%
Portfolio Turnover Rate 53.11% 43.83% 41.89% 32.42% 39.74%
Average Commission
Rate Paid .0615<F1>
Net Assets,
End of Year (000's) $159,294 $145,623 $119,263 $100,016 $68,674
<FN>
<F1> Represents the dollar amount of commissions paid on
Portfolio transactions divided by the total number of shares
purchased and sold for which commissions were charged.
Disclosure not required for periods prior to fiscal 1996.
</TABLE>
<PAGE>
Carillon Fund, Inc.
Notes to Financial Statements
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
Bond Portfolio
Year Ended December 31
----------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $11.07 $10.04 $11.30 $10.91 $10.96
------ ------ ------ ------ ------
Investment Activities:
Net investment income .79 .88 .77 .73 .82
Net realized and unrealized (.04) .98 (.95) .54 (.01)
gains/(losses)
------ ------ ------ ------ ------
Total from Investment
Operations .75 1.86 (.18) 1.27 .81
------ ------ ------ ------ ------
Distributions:
Net investment income (.87) (.83) (.78) (.73) (.82)
In excess of net
investment income (.04) -- -- -- --
Net realized gains -- -- (.30) (.15) (.04)
------ ------ ------ ------ ------
Total Distributions (.91) (.83) (1.08) (.88) (.86)
------ ------ ------ ------ ------
Net Asset Value,
End of period $10.91 $11.07 $10.04 $11.30 $10.91
====== ====== ====== ====== ======
Total Return 7.19% 19.03% (1.63%) 11.94% 7.65%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .62% .65% .68% .66% .69%
Ratio of Net Investment
Income to Average Net Assets 7.24% 7.43% 7.21% 6.65% 7.59%
Portfolio Turnover Rate 202.44% 111.01% 70.27% 137.46% 40.91%
Net Assets,
End of Year (000's) $85,634 $73,568 $55,929 $54,128 $38,557
</TABLE>
<PAGE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
S & P 500 Index Portfolio
Year Ended
December 31, 1996<F1>
---------------------
<S> <C>
Net Asset Value,
Beginning of Year $ 10.00
Investment Activities:
Net investment income .20
Net realized and unrealized 2.12
gains/(losses) -------
Total from Investment Operations 2.32
Distributions:
Net investment income (.19)
Net realized gains --
Total Distributions (.19)
Net Asset Value,
End of Year $ 12.13
Total Return, not annualized 23.37%
Ratios/Supplemental Data:
Ratio of Net Expenses to
Average Net Assets .59%<F2>
Ratio of Net Investment
Income to Average Net Assets 2.14%<2>
Portfolio Turnover Rate 1.09%
Average Commission Rate Paid $ .0601<F3>
Net Assets, End of Year (000's) $ 29,205
<FN>
<F1> The portfolio commenced operation on December 29, 1995. The financial
highlights table for the period ending December 31, 1995 is not presented
because the activity for the period did not round to $0.01 in any category
of the reconciliation of beginning to ending net asset value per share. The
ratios and total return were all less than 0.1%. The net assets at December
31, 1995 were $305,148.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by .25%
for the year ended December 31, 1996, had the Adviser not waived a portion
of its fee.
<F3> Represents the dollar amount of commissions paid on Portfolio
transactions divided by the total number of shares purchased and sold for
which commissions were charged. Disclosure not required for periods prior
to fiscal 1996.
</FN>
</TABLE>
<PAGE>
<PAGE>
(The following "sticker" is inserted here)
SUPPLEMENT DATED NOVEMBER 15, 1997
TO THE PROSPECTUS DATED MAY 1, 1997 OF
CARILLON FUND, INC.
Effective November 15, 1997, the prospectus for Carillon Fund,
Inc. (the "Fund") dated May 1, 1997 (the "Prospectus") is
amended by including as a part thereof the following
information.
As of November 15, 1997, a new Micro-Cap Portfolio was added to
the Fund. As the Micro-Cap Portfolio is not yet available
under the contracts being offered pursuant to the variable
contracts prospectus which accompanies the Prospectus, all
information about the Micro-Cap 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, 1997, as supplemented on November 15, 1997.
The first sentence of the second full paragraph on page 10 is
hereby changed to read as follows:
The Index Portfolio may invest up to 5% of its assets in
Standard & Poor's Depositary Receipts(R) ("SPDRs(R)");
provided, however, that the Index Portfolio reserves the right
to increase the percentage of its assets it may invest in
SPDRs(R) to 10% to the extent that such an increase would be
permitted by applicable law.
<PAGE>
CARILLON FUND, INC.
- --------------------------------------------------
Carillon Fund, Inc. (the "Fund"), is a no-load,
diversified, open-end management investment company which is
intended to meet a wide range of investment objectives with its
four separate Portfolios: Equity Portfolio, Bond Portfolio,
Capital Portfolio and S&P 500 Index Portfolio. Each Portfolio
generally operates as a separate fund issuing its own shares.
The Equity Portfolio seeks primarily long-term
appreciation of capital, without incurring unduly high risk, by
investing primarily in common stocks and other equity
securities. Current
income is a secondary objective.
The Bond Portfolio seeks as high a level of current income
as is consistent with reasonable investment risk, by investing
primarily in long-term, fixed-income, investment-grade
corporate
bonds.
The Capital Portfolio seeks to provide the highest total
return through a combination of income and capital appreciation
consistent with the reasonable risks associated with an
investment portfolio of above-average quality by investing in
equity securities, debt instruments and money market
instruments.
The S&P 500 Index Portfolio seeks investment results that
correspond to the total return performance of U.S. common
stocks, as represented by the S&P 500 Index.
There can be no assurance that any Portfolio will achieve
its objectives.
This Prospectus sets forth concisely the information that
a prospective investor should know before investing in the
Fund, and it should be read and kept for future reference. A
Statement of Additional Information dated May 1, 1997, which
contains further information about the Fund, has been filed
with the Securities and Exchange Commission and is incorporated
by reference into this Prospectus. A copy of the Statement of
Additional Information may be obtained without charge by
calling the Fund at (513) 595-2600, or by writing the Fund at
P.O. Box 40409, Cincinnati, Ohio 45240-0409.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
May 1, 1997
UCCF 514 4-97<PAGE>
<PAGE>
CARILLON FUND, INC.
TABLE OF CONTENTS
Page
The Fund . . . . . . . . . . . . . . . . . . . . . . 2
Annual Fund Operating Expenses . . . . . . . . . . . 3
Financial Highlights . . . . . . . . . . . . . . . . 4
Investment Objectives and Policies . . . . . . . . . 7
Equity Portfolio. . . . . . . . . . . . . . . . 7
Bond Portfolio. . . . . . . . . . . . . . . . . 7
Capital Portfolio . . . . . . . . . . . . . . . 8
S&P 500 Index Portfolio . . . . . . . . . . . . 9
Principal Risk Factors. . . . . . . . . . . . . 10
Investment in Foreign Securities. . . . . . . . 11
Foreign Currency Transactions . . . . . . . . . 12
Repurchase Agreements . . . . . . . . . . . . . 12
Reverse Repurchase Agreements . . . . . . . . . 12
Futures Contracts and
Options on Futures Contracts. . . . . . . . . 12
Options . . . . . . . . . . . . . . . . . . . . 13
Options on Securities Indices . . . . . . . . . 14
Collateralized Mortgage Obligations . . . . . . 14
Lending Portfolio Securities. . . . . . . . . . 14
Other Information . . . . . . . . . . . . . . . 14
The Fund and Its Management. . . . . . . . . . . . . 14
Investment Adviser. . . . . . . . . . . . . . . 15
Advisory Fee. . . . . . . . . . . . . . . . . . 15
Expenses. . . . . . . . . . . . . . . . . . . . 15
Capital Stock . . . . . . . . . . . . . . . . . 16
Purchase and Redemption of Shares. . . . . . . . . . 16
Dividends and Distributions. . . . . . . . . . . . . 16
Taxes. . . . . . . . . . . . . . . . . . . . . . . . 17
Custodian, Transfer and
Dividend Disbursing Agent . . . . . . . . . . . 17
Appendix
Bond and Commercial Paper Ratings . . . . . . . 18
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 Union Central contract for
a description of the relationship between increases or
decreases in the net asset value of Fund shares (and any
distributions on such shares) and the benefits provided under a
contract.
<PAGE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
EXPENSES (as a percentage of average net assets)
S&P 500
Equity Bond Capital Index
Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees .57% .48% .68% .29%
Other Expenses .07% .14% .09% .30%*
Total Operating Expenses .64% .62% .77% .59%*
</TABLE>
EXAMPLE
The table below shows the amount of expenses a Shareholder
would pay on a $1,000 investment assuming a 5% annual
return.+
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity Portfolio $7 $21 $36 $80
Bond Portfolio $6 $20 $35 $78
Capital Portfolio $8 $25 $43 $96
S&P 500 Index Portfolio $6 $19 $33 $74
</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.
- ---------------
* Total Operating Expenses in excess of .60% for that Portfolio
are paid by the investment adviser.
+ The 5% annual return is a standardized rate prescribed for
the purpose of this example and does not represent the past or
future return of the Fund. <PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
The financial information in the tables which follow (pages 4-6),
insofar as it pertains to each of the five years in the
period ended December 31, 1996, have been audited in conjunction
with the annual audit of the financial statements of the Fund .
The financial statements for the year ended December 31, 1996,
have been audited by Deloitte & Touche LLP, whose unqualified
report thereon is included in the Statement of Additional
Information. The financial statements for the year ended
December 31, 1995 have been audited by Deloitte & Touche LLP.
The financial statements for the three years ended December 31,
1994 have been audited by another independent accountant, whose
reports expressed unqualified opinions on those statements.
These financial highlights should be read in conjunction with
the financial statements and notes thereto included in the
Statement of Additional Information. Further information about
the performance of the Fund is contained in the Fund's annual
report which may be obtained without charge. (See "Other
Information" below.)
<TABLE>
<CAPTION>
Equity Portfolio
Year ended December 31,
1996 1995 1994 1993 1992
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $16.54 $14.30 $14.58 $13.74 $12.60
Investment Activities:
Net investment income .29 .24 .20 .16 .19
Net realized and
unrealized gains
(losses) 3.61 3.36 .31 1.69 1.27
------ ------ ------ ------ ------
Total from Investment
Operations 3.90 3.60 .51 1.85 1.46
Distributions:
Net investment income (.27) (.23) (.19) (.16) (.19)
Net realized gains (.72) (1.13) (.60) (.85) (.13)
------ ------ ------ ------ ------
Total Distributions (.99) (1.36) (.79) (1.01) (.32)
Net Asset Value,
End of year $19.45 $16.54 $14.30 $14.58 $13.74
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return <F2> 24.52% 26.96% 3.42% 14.11% 11.78%
Ratio of Expenses to
Average Net Assets .64% .66% .69% .70% .72%
Ratio of Net Investment
Income to
Average Net Assets 1.66% 1.73% 1.45% 1.18% 1.47%
Portfolio
Turnover Rate 52.53% 34.33% 40.33% 37.93% 46.75%
Average Commission
Rate Paid $.0628<F3>
Net Assets,
End of Period
(in thousands) $288,124 $219,563 $157,696 $138,239 $102,306
<CAPTION>
Year Ended December 31,
1991 1990 1989 1988 1987
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $ 8.81 $10.79 $10.88 $ 8.57 $ 9.62
Investment Activities:
Net investment income .20<F1> .28<F1> .58 .38 .34
Net realized and
unrealized gains (losses) 3.79 (1.91) .69 2.33 (.22)
------ ------ ------ ------ ------
Total from Investment
Operations 3.99 (1.63) 1.27 3.71 .12
Distributions:
Net investment income (.20) (.31) (.59) (.34) (.35)
Net realized gains -- (.04) (.77) (.06) (.82)
------ ------ ------ ------ ------
Total Distributions (.20) (.35) (1.36) (.40) (1.17)
Net Asset Value,
End of year $12.60 $ 8.81 $10.79 $10.88 $ 8.57
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return<F2> 45.55% (15.45%) 11.79% 31.79% .85%
Ratio of Expenses to
Average Net Assets .75% .82%<F1> .95% .95% .97%
Ratio of Net Investment
Income to Average
Net Assets 1.79%<F1> 2.98%<F1> 5.34% 3.74% 3.30%
Portfolio Turnover Rate 55.17% 99.90% 61.49% 57.98% 70.17%
Net Assets, End of Period
(in thousands) $79,352 $52,514 $56,194 $37,723 $28,915
<FN>
<F1>
Net of expenses waived by the Adviser of $.002 per share in 1991 and $.01 per
share in 1990.
<F2>
Total Return does not reflect expenses that apply to the separate account or
the related insurance policies. Inclusion of these charges would reduce the
Total Return figures for all periods shown.
<F3>
Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of shares purchased and sold for which
commissions were charged. Disclosure not required for periods prior to 1996.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(Continued)
Bond Portfolio
Year ended December 31,
1996 1995 1994 1993 1992
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $11.07 $10.04 $11.30 $10.91 $10.96
Investment Activities:
Net investment income .79 .88 .77 .73 .82
Net realized and
unrealized gains
(losses) (.04) .98 (.95) .54 (.01)
------ ------ ------ ------ ------
Total from Investment
Operations .75 1.86 (.18) 1.27 .81
Distributions:
Net investment income (.87) (.83) (.78) (.73) (.82)
In excess of net
investment income (.04) -- -- -- --
Net realized gains -- -- (.30) (.15) (.04)
------ ------ ------ ------ ------
Total Distributions (.91) (.83) (1.08) (.88) (.86)
Net Asset Value,
End of year $10.91 $11.07 $10.04 $11.30 $10.91
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return<F1> 7.19% 19.03% (1.63%) 11.94% 7.65%
Ratio of Expenses to
Average Net Assets .62% .65% .68% .66% .69%
Ratio of Net Investment
Income to Average
Net Assets 7.24% 7.43% 7.21% 6.65% 7.59%
Portfolio Turnover Rate 202.44% 111.01% 70.27% 137.46% 40.91%
Net Assets,
End of Period
(in thousands) $85,634 $73,568 $55,929 $54,128 $38,557
<CAPTION>
Year ended December 31,
1991 1990 1989 1988 1987
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $10.10 $10.02 $ 9.82 $ 9.96 $10.51
Investment Activities: .86 .81 .83 .85 .82
Net investment income
Net realized and
unrealized gains (losses) .87 .03 .20 (.13) (.51)
------ ------ ------ ------ ------
Total from Investment
Operations 1.73 .84 1.03 .72 .31
Distributions:
Net investment income (.87) (.76) (.83) (.86) (.86)
In excess of net
investment income -- -- -- -- --
Net realized gains -- -- -- -- --
------ ------ ------ ------ ------
Total Distributions (.87) (.76) (.83) (.86) (.86)
Net Asset Value,
End of year $10.96 $10.10 $10.02 $ 9.82 $ 9.96
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return<F1> 17.89% 8.66% 10.72% 7.36% 3.15%
Ratio of Expenses to
Average Net Assets .73% .79% .86% .82% .72%
Ratio of Net Investment
Income to Average
Net Assets 8.27% 8.57% 8.38% 8.34% 8.34%
Portfolio Turnover Rate 39.82% 110.90% 17.70% 24.11% 80.35%
Net Assets, End of Period
(in thousands) $31,009 $24,446 $15,941 $12,460 $15,796
<FN>
<F1>
Total Return does not reflect expenses that apply to the separate account or
the related insurance policies. Inclusion of these charges would reduce the
Total Return figures for all periods shown.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(Continued)
Capital Portfolio
Year ended December 31,
-------------------------------------
1996 1995 1994 1993
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value:
Beginning of period $13.72 $13.19 $13.81 $12.99
Investment Activities:
Net investment income .63 .64 .52 .43
Net realized and
unrealized gains
(losses) 1.36 1.15 (.39) 1.17
------ ------ ------ ------
Total from
Investment Operations 1.99 1.79 .13 1.60
Distributions:
Net investment income (.57) (.64) (.52) (.42)
Net realized gains (.19) (.62) (.23) (.36)
------ ------ ------ ------
Total Distributions (.76) (1.26) (.75) (.78)
Net Asset Value,
End of period $14.95 $13.72 $13.19 $13.81
====== ====== ====== ======
Ratios/Supplemental
Data:
Total Return<F2> 14.94% 14.28% .94% 12.72%
Ratio of Expenses
to Average
Net Assets .77% .77% .80% .82%
Ratio of Net
Investment Income
to Average
Net Assets 4.42% 4.99% 4.25% 3.31%
Portfolio
Turnover Rate 53.11% 43.83% 41.89% 32.42%
Average Commission
Rate Paid $.0615<F4>
Net Assets,
End of Period
(in thousands) $159,294 $145,623 $119,263 $100,016
<CAPTION>
Year ended December 31, Period Ended
---------------------------December 31,
1992 1991 1990<F1>
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value:
Beginning of period $12.82 $10.57 $10.95
Investment Activities:
Net investment income .42 .47 .34
Net realized and
unrealized gains
(losses) .56 2.25 (.40)
------ ------ ------
Total from
Investment Operations .98 2.72 (.06)
Distributions:
Net investment income (.42) (.47) (.32)
Net realized gains (.39) -- --
------ ------ ------
Total Distributions (.81) (.47) (.32)
Net Asset Value,
End of period $12.99 $12.82 $10.57
====== ====== ======
Ratios/Supplemental
Data:
Total Return<F2> 7.93% 26.10% (.54%)
Ratio of Expenses to
Average Net Assets .88% .95% 1.03%<F3>
Ratio of Net
Investment Income
to Average Net Assets 3.49% 4.05% 5.08%3
Portfolio Turnover Rate 39.74% 47.93% 16.02%
Net Assets,
End of Period
(in thousands) $68,674 $41,844 $23,813
<FN>
<F1>
Period from May 1, 1990 (commencement of operations) through December 31,
1990.
<F2>
Total Return does not reflect expenses that apply to the separate account or
the related insurance policies. Inclusion of these charges would reduce the
Total Return figures for all periods shown.
<F3>
Annualized
<F4<
Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of shares purchased and sold for which
commissions were charged. Disclosure not required for periods prior to 1996.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(Continued)
S&P 500 Index Portfolio
Year Ended
December 31, 1996<F1>
---------------------
<S> <C>
Net Asset Value, $10.00
Beginning of Year
Investment Activities:
Net investment income .20
Net realized and unrealized
gains/(losses) 2.12
Total from Investment Operations 2.32
Distributions:
Net investment income (.19)
Net realized gains --
------
Total Distributions (.19)
Net Asset Value,
End of Year $12.13
Total Return, not annualized 22.37%
Ratios/Supplemental Data
Ratio of Net Expenses to
Average Net Assets .59%<F2>
Ratio of Net Investment
Income to Average Net Assets 2.14%
Portfolio Turnover Rate 1.09%
Average Commission Rate Paid $.0601<F3>
Net Assets, End of Year (000's) $29,205
_____________
<FN>
<F1> The portfolio commenced operation on December 29, 1995. The
financial highlights table for the period ending December 31, 1995
is not presented because the activity for the period did not round
to $0.01 in any category of the reconciliation of beginning to
ending net asset value per share. The ratios and total return were
all less than 0.1%. The net assets at December 31, 1995 were
$305,148.
<F2> The ratios of net expenses to average net assets would have
increased and net investment income to average net assets would
have decreased by .25% for the year ended December 31, 1996, had
the Adviser not waived a portion of its fee.
<F3> Represents the dollar amount of commissions paid on
portfolio transactions divided by the total number of shares
purchased and sold for which commissions were charged.
</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
February 25, 1997, 24% 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 class 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 securities 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"**).
The S&P 500 is a well-known stock market index that includes
common stocks of companies representing approximately 70% 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.
- ------
**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)", and "500" are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use by
Carillon Fund. The Portfolio is not sponsored, endorsed, sold or
promoted by Standard & Poor's ("S&P"). S&P makes no
representation or warranty, express or implied, to the
beneficial owners of the Portfolio or any member of the public
regarding the advisability of investing in securities generally
or in the Portfolio particularly or the ability of the S&P 500
Index to track general stock market performance. S&P's only
relationship to Carillon Fund is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index which
is determined, composed and calculated by S&P without regard to
Carillon Fund or the Portfolio. S&P has no obligation to take
the needs of Carillon Fund or the beneficial owners of the
Portfolio into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and
has not participated in the determination of the prices and
amount of the Portfolio or the timing of the issuance or sale of
the Portfolio or in the determination or calculation of the
equation by which the Portfolio is to be converted into cash.
S&P has no obligation or liability in connection with the
administration, marketing or trading of the Portfolio.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF
THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL
HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS
THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY CARILLON FUND, BENEFICIAL OWNERS OF
THE PORTFOLIO, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE
S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS
OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED
OF THE POSSIBILITY OF SUCH DAMAGES.
Index funds, such as the Index Portfolio, seek to create, to
the extent feasible, a portfolio which substantially replicates
the total return of the securities comprising the applicable
index, taking into consideration redemptions, sales of
additional shares, and other adjustments described below. Index
funds are not managed through traditional methods of fund
management, which typically involve frequent changes in a
portfolio of securities on the basis of economic, financial, and
market analyses. Therefore, brokerage costs, transfer taxes,
and certain other transaction costs for index funds may be lower
than those incurred by non-index, traditionally managed funds.
Precise replication of the holdings of the Index Portfolio and
the capitalization weighting of the securities in the S&P 500 is
not feasible, but the Index Portfolio seeks a high correlation
between the total return performance of securities comprising
the S&P 500 and the investment results of the Index Portfolio.
The Index Portfolio will attempt to achieve, in both rising and
falling markets, a correlation of at least 95% between the total
return of its net assets before expenses and the total return of
the S&P 500. A correlation of 100% would represent perfect
correlation between Index Portfolio and index performance. It
is anticipated that the correlation of the Index Portfolio's
performance to that of the S&P 500 will increase as the size of
the Index Portfolio increases. There can be no assurance that
the Index Portfolio will achieve this correlation.
The Index Portfolio may invest up to 5% of its assets in
Standard & Poor's Depositary Receipts(R) ("SPDRs(R)").
SPDRs are units of beneficial interest in a unit investment
trust, representing proportionate undivided interests in a
portfolio of securities in substantially the same weighting as
the component common stocks of the S&P 500.
Although the Adviser will attempt to invest as much of the
Index Portfolio's assets as is practical in stocks comprising
the S&P 500 and futures contracts and options relating thereto,
a portion of the Index Portfolio may be invested in money market
instruments pending investment or to meet redemption requests or
other needs for liquid assets. In addition, for temporary
defensive purposes, the Index Portfolio may invest in Government
securities, money market instruments, or other fixed-income
securities, or retain cash or cash equivalents.
Principal Risk Factors
Because the Portfolios are intended to serve a variety of
investment objectives, they are subject to varying degrees of
financial and market risks and current income volatility.
Financial risk refers to the ability of an issuer of a debt
security to pay principal and interest on that security and to
the earning stability and overall financial soundness of an
issuer of an equity security. Market risk refers to the
volatility of the reaction of the price of the security to
changes in conditions in the securities markets in general and,
with respect to debt securities, changes in the overall level of
interest rates. Current income volatility refers to the degree
and rapidity with which changes in the overall level of interest
rates become reflected in the level of current income of the
portfolio.
The Equity Portfolio should be subject to moderate levels of
both market and financial risk, since it invests in equity
securities chosen primarily for potential long-term
appreciation.
The Bond Portfolio invests most of its assets in investment-
grade corporate bonds, and these should be subject to little
financial risk, to moderately high levels of market risk, and to
moderately low current income volatility.
The Capital Portfolio invests in equity, debt and money market
instruments, and therefore the financial and market risks
to which it is subject will vary from time to time depending on
the extent of its holdings in each of those classes of
securities.
The Portfolio is subject to the further risk that in order to
meet its objectives, the Adviser must determine the proper mix
of equity, debt and money market securities. Moreover, the
timing of movements from one type of security to another could
have a negative effect on the Portfolio's overall objective.
Inherent in the fact that the Adviser has great latitude with
respect to portfolio composition is the risk that it may not
properly ascertain the appropriate mix of securities for any
particular economic cycle.
The market value of fixed-income debt securities is affected
by changes in general market interest rates. If interest rates
fall, the market value of fixed-income securities tends to rise;
but if interest rates rise, the value of fixed-income securities
tends to fall. This market risk affects all fixed-income
securities, but lower-rated and unrated securities may be
subject to a greater market risk than higher-rated (lower-yield)
securities.
Bonds rated below the four highest grades used by Standard &
Poor's or Moody's are frequently referred to as "junk"
bonds, reflecting the greater market and investment risks
associated with such bonds. Such risks relate not only to the
greater financial weakness of the issuers of such securities but
also to other factors including: (i) the sensitivity of such
securities to interest rates and economic changes (high-yield,
high-risk bonds are very sensitive to adverse economic and
corporate developments; their yields will fluctuate over time
and either an economic downturn or rising interest rates could
create
financial stress on the issuers of such bonds, possibly
resulting in their defaulting on their obligations); (ii) the
payment
expectations of holders of such securities (high-yield,
high-risk bonds may contain redemption or call provisions which
if
exercised in a period of lower interest rates would result in
their being replaced by lower yielding securities); (iii) the
liquidity of such securities (there may be little trading in
certain high-yield, high-risk bonds which may make it more
difficult to dispose of the securities and more difficult to
determine their fair value). See "Certain Risk Factors Relating
to High-Yield, High-Risk Bonds" in the Statement of Additional
Information for a further discussion of the risks summarized
above.
The S&P 500 Index Portfolio is subject to equity market risk
(i.e., the possibility that common stock prices will decline
over short or even extended periods). The U.S. stock market
tends to be cyclical, with periods when stock prices generally
rise and periods when stock prices generally decline.
To illustrate the volatility of stock prices, the following
table sets forth the average returns of the S&P 500 for the
period from 1926 to 1996:
<TABLE>
<CAPTION>
S&P 500 Returns (1926-1996)
Over Various Time Horizons
----------------------------
1 Year 5 Years 10 Years 20 Years
----- ------- -------- --------
<S> <C> <C> <C> <C>
Best 54.0% 23.9% 20.1% 16.9%
Worst -43.3% -12.5% -.9% 3.1%
Average 12.6% -- -- --
</TABLE>
Average return may not be useful for forecasting future returns
in any particular period, as stock returns are quite volatile
from year to year.
Investment in Foreign Securities
Each Portfolio may invest in foreign securities that are
suitable for the Portfolio's investment objectives and policies.
Foreign securities investments are limited to 25% of net assets
for the Equity and Bond Portfolios and to 35% of net assets for
the Capital Portfolio. The S&P 500 Index Portfolio is limited to
investing in those foreign securities included in the Standard &
Poor's 500 Composite Stock Index. The term "foreign securities"
refers to equity and debt securities of corporate issuers whose
principal stock or bond exchange listing is outside of the
United States, to American Depositary Receipts ("ADRs") that
hold such securities, and to debt securities issued by foreign
governments or foreign government agencies.
Investing in foreign securities involves risks which are
not ordinarily associated with investing in domestic securities.
These risks include political or economic instability in the
foreign country, diplomatic developments that could adversely
affect the value of the foreign security, foreign government
taxes, the costs incurred by a Portfolio in converting among
various currencies, fluctuation in currency exchange rates and
the possibility of imposition of currency controls,
expropriation or nationalization measures or withholding
dividends at the source. In the event of a default on any
foreign obligation, it may be difficult legally to obtain or to
enforce a judgment against the issuer.
Currency exchange rates are determined by forces of supply
and demand. These forces are affected by international balance
of payments, other economic and financial conditions, government
intervention and other factors. The ability of a foreign
obligor to make timely payments on its external debt obligations
will be strongly influenced by the country's balance of
payments, including export performance, its access to
international credits and investments, fluctuations in interest
rates and the extent of its foreign reserves.
There may be less publicly available information about a
foreign issuer than about a domestic issuer. Foreign issuers
are subject to accounting and reporting requirements which are
generally less extensive than those applicable to domestic
issuers. Securities of foreign issuers are generally less liquid
and more volatile than those of comparable domestic issuers.
There is frequently less governmental regulation of exchanges,
broker-dealers and issuers and brokerage costs may be higher
than in the United States.
Foreign securities other than ADRs typically will be traded
on the applicable country's principal stock or bond exchange but
may also be traded on regional exchanges or over-the-counter.
Foreign markets, especially emerging markets, may have different
clearance and settlement procedures, and in certain markets
there have been times when settlements have been unable to keep
pace with the volume of securities transactions, making it
difficult to conduct such transactions.
A country whose exports are concentrated in a few
commodities or whose economy depends on certain strategic
imports could be vulnerable to fluctuations in international
prices of these commodities or imports. To the extent that a
country receives payment for its exports in currencies other
than dollars, its ability to make debt payments denominated in
dollars could be adversely affected.
ADRs are receipts, typically issued by a U.S. bank or trust
company, evidencing ownership of the underlying foreign
securities. ADRs are denominated in U.S. dollars and trade in
the U.S. securities markets. ADRs are subject to certain of the
same risks as direct investment in foreign securities, including
the risk that changes in the value of the currency in which the
security underlying an ADR is denominated relative to the U.S.
dollar may adversely affect the value of the ADR.
Foreign securities purchased by the Portfolios may include
securities issued by companies located in countries not
considered to be major industrialized nations. Such countries
are subject to more economic, political and business risk than
major industrialized nations, and the securities they issue are
expected to be more volatile and more uncertain as to payments
of interest and principal. The secondary market for such
securities is expected to be less liquid than for securities of
major industrialized nations.
To limit the risks of investing in any one country, each
Portfolio that invests in foreign securities limits not only its
total purchases of foreign securities, but also its purchases
for any single country. For "major countries," the applicable
limit is 10% of Portfolio net assets for the Equity and Bond
Portfolios and 20% for the Capital Portfolio; for other
countries, the applicable limit is 5% for each Portfolio.
"Major countries" currently include: The United Kingdom,
Germany, France, Italy, Switzerland, Netherlands, Spain,
Belgium, Canada, Mexico, Argentina, Chile, Brazil, Australia,
Japan, Singapore, New Zealand, Hong Kong, Sweden and Norway.
Foreign Currency Transactions
Each Portfolio that purchases foreign securities may also
engage in forward foreign currency contracts ("forward
contracts") in connection with the purchase or sale of a
specific security. A forward contract involves an obligation to
purchase or sell a specific foreign currency at a future date,
which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are traded in the interbank
market conducted directly between currency traders (usually
large commercial banks) and their customers. A forward contract
generally has no margin or other deposit requirement.
Portfolios will not enter into forward contracts for
longer-term hedging purposes. The possibility of changes in
currency exchange rates will be incorporated into the long-term
investment considerations when purchasing the investment and
subsequent considerations for possible sale of the investment.
Repurchase Agreements
A repurchase agreement is a transaction where a Portfolio
buys a security at one price and simultaneously agrees to sell
that same security back to the original owner at a higher price.
The Adviser reviews the creditworthiness of the other party to
the agreement and must find it satisfactory before engaging in a
repurchase agreement. A majority of such agreements will mature
in seven days or less. In the event of the bankruptcy of the
other party, the Portfolio could experience delays in recovering
its money, may realize only a partial recovery or even no
recovery, and may also incur disposition costs. It is not
anticipated that any Portfolio will regularly utilize repurchase
agreements extensively, since they are intended to be used to
invest otherwise idle cash.
Reverse Repurchase Agreements
The S&P 500 Index Portfolio may enter into reverse
repurchase agreements. Under reverse repurchase agreements, the
Portfolio transfers possession of portfolio securities to banks
in return for cash in an amount equal to a percentage of the
portfolio securities' market value and agrees to repurchase the
securities at a future date by repaying the cash with interest.
The Portfolio retains the right to receive interest and
principal payments from the securities while they are in the
possession of the financial institutions. Cash or liquid high
quality debt obligations from the Portfolio's portfolio equal in
value to the repurchase price (including any accrued interest)
will be segregated by the Custodian on the Portfolio's records
while a reverse repurchase agreement is in effect.
Futures Contracts and Options on Futures Contracts
For hedging purposes, including protecting the price or
interest rate of securities that the Portfolio intends to buy,
the S&P 500 Index Portfolio may enter into futures contracts
that relate to securities in which it may directly invest and
indices comprised of such securities and may purchase and write
call and put options on such contracts. As a temporary
investment strategy until the Index Portfolio reaches $25
million in net assets, the Index Portfolio may invest up to 100%
of its assets in such futures and/or options contracts.
Thereafter, the Portfolio may invest up to 20% of its assets in
such futures and/or options contracts.
A financial futures contract is a contract to buy or sell a
specified quantity of financial instruments such as U.S.
Treasury bills, notes and bonds, commercial paper and bank
certificates of deposit or the cash value of a financial
instrument index at a specified future date at a price agreed
upon when the contract is made. A stock index futures contract
is a contract to buy or sell specified units of a stock index at
a specified future date at a price agreed upon when the contract
is made. The value of a unit is based on the current value of
the contract index. Under such contracts no delivery of the
actual stocks making up the index takes place. Rather, upon
expiration of the contract, settlement is made by exchanging
cash in an amount equal to the difference between the contract
price and the closing price of the index at expiration, net of
variation margin previously paid.
Substantially all futures contracts are closed out before
settlement date or called for cash settlement. A futures
contract is closed out by buying or selling an identical
offsetting futures contract. Upon entering into a futures
contract, the Portfolio is required to deposit an initial margin
with the Custodian for the benefit of the futures broker. The
initial margin serves as a "good faith" deposit that the
Portfolio will honor their futures commitments. Subsequent
payments (called "variation margin") to and from the broker are
made on a daily basis as the price of the underlying investment
fluctuates. In the event of the bankruptcy of the futures
broker that holds margin on behalf of the Portfolio, the
Portfolio may be entitled to return of margin owed to it only in
proportion to the amount received by the broker's other
customers. The Adviser will attempt to minimize this risk by
monitoring the creditworthiness of the futures brokers with
which the Portfolio does business.
Because the value of index futures depends primarily on the
value of their underlying indexes, the performance of the
broad-based contracts will generally reflect broad changes in
common stock prices. However, because the Portfolio may
not be invested in precisely the same proportion as the S&P 500,
it is likely that the price changes of the Portfolio's index
futures positions will not match the price changes of the
Portfolio's other investments.
Options on futures contracts give the purchaser the right
to assume a position at a specified price in a futures contract
at any time before expiration of the option contract.
Options
The Bond and Capital Portfolios may engage in certain
limited options strategies as hedging techniques. These options
strategies are limited to selling/writing call option contracts
on U.S. Treasury Securities and call option contracts on futures
on such securities held by the Portfolio (covered calls). The
Portfolio may purchase call option contracts to close out a
position acquired through the sale of a call option. The
Portfolio will only write options that are traded on a domestic
exchange or board of trade.
The S&P 500 Index Portfolio may write and purchase covered
put and call options on securities in which it may directly
invest. Option transactions of the Portfolio will be conducted
so that the total amount paid on premiums for all put and call
options outstanding will not exceed 5% of the value of the
Portfolio's total assets. Further, the Portfolio will not
write put or call options or combination thereof if, as a
result, the aggregate value of all securities or collateral used
to cover
its outstanding options would exceed 25% of the value of the
Portfolio's total assets.
A call option is a short-term contract (generally nine
months or less) which gives the purchaser of the option the
right to purchase from the seller of the option (the Portfolio)
the underlying security or futures contract at a fixed exercise
price at any time prior to the expiration of the option period
regardless of the market price of the underlying instrument
during the period. A futures contract obligates the buyer to
purchase and the seller to sell a predetermined amount of a
security at a predetermined price at a selected time in the
future. A call option on a futures contract gives the purchaser
the right to assume a "long" position in a futures contract,
which means that if the option is exercised the seller of the
option (the Portfolio) would have the legal right (and
obligation) to sell the underlying security to the purchaser at
the specified price and future time.
As consideration for the call option, the buyer pays the
seller (the Portfolio) a premium, which the seller retains
whether or not the option is exercised. The selling of a call
option will benefit the Portfolio if, over the option period,
the
underlying security or futures contract declines in value or
does not appreciate to a price higher than the total of the
exercise
price and the premium. The Portfolio risks an opportunity loss
of profit if the underlying instrument appreciates to a price
higher than the exercise price and the premium. When the Adviser
anticipates that interest rates will increase, the Portfolio
may write call options in order to hedge against an expected
decline in value of portfolio securities.
The Portfolio may close out a position acquired through
selling a call option by buying a call option on the same
security or futures contract with the same exercise price and
expiration date as the option previously sold. A profit or loss
on the transaction will result depending on the premium paid for
buying the closing call option. If a call option on a futures
contract is exercised, the Portfolio intends to close out the
position immediately by entering into an offsetting transaction
or by delivery of the underlying security (or other related
securities).
Options transactions may increase the Portfolio's portfolio
turnover rate and attendant transaction costs, and may
be somewhat more speculative than other investment strategies.
It may not always be possible to close out an options position,
and with respect to options on futures contracts there is a risk
of imperfect correlation between price movements of a futures
contract (or option thereon) and the underlying security.
Options strategies and related risks and limitations are
described in more detail in the Statement of Additional
Information.
Options on Securities Indices
The S&P 500 Index Portfolio may purchase or sell options on
the S&P 500, subject to the limitations set forth above
and provided such options are traded on a national securities
exchange or in the over-the-counter market. Options on
securities indices are similar to options on securities except
there is no transfer of a security and settlement is in cash. A
call option on a securities index grants the purchaser of the
call, for a premium paid to the seller, the right to receive in
cash an amount equal to the difference between the closing value
of the index and the exercise price of the option times a
multiplier established by the exchange upon which the option is
traded.
Collateralized Mortgage Obligations
The Portfolios other than the S&P 500 Index Portfolio may
invest in collateralized mortgage obligations ("CMOs")
or mortgage-backed bonds issued by financial institutions such
as commercial banks, savings and loan associations, mortgage
banks and securities broker-dealers (or affiliates of such
institutions established to issue these securities). To a
limited extent, the Portfolios may also invest in a variety of
more risky CMOs, including interest only ("IOs"), principal only
("Pos"), inverse floaters, or a combination of these securities.
See "Money Market Instruments and Investment Techniques" in the
Statement of Additional Information for a further discussion.
Lending Portfolio Securities
The S&P 500 Index Portfolio may lend portfolio securities
with a value up to 10% of its total assets. Such loans
may be terminated at any time. The Portfolio will continuously
maintain as collateral cash or obligations issued by the U.S.
government, its agencies or instrumentalities in an amount equal
to not less than 100% of the current market value (on a daily
marked-to-market basis) of the loaned securities plus declared
dividends and accrued interest.
The Portfolio will retain most rights of beneficial
ownership, including the right to receive dividends, interest or
other distributions on loaned securities. The Portfolio will
call loans to vote proxies if a material issue affecting the
investment is to be voted upon. Should the borrower of the
securities fail financially, the Portfolio may experience delay
in recovering the securities or loss of rights in the
collateral. Loans are to be made only to borrowers that are
deemed by the Adviser to be of good financial standing.
Other Information
In addition to the investment policies described above,
each Portfolio's investment program is subject to further
restrictions which are described in the Statement of Additional
Information. Unless otherwise specified, each Portfolio's
investment objectives, policies and restrictions are not
fundamental policies and may be changed without shareholder
approval. Shareholder inquiries and requests for the Fund's
annual report should be directed to the Fund at (513) 595-2600,
or at P.O. Box 40409, Cincinnati, Ohio 45240-0409.
THE FUND AND ITS MANAGEMENT
The Fund is a mutual fund, technically known as an
open-end, diversified, management investment company. The Board
of Directors is responsible for supervising the business affairs
and investments of the Fund, which are managed on a daily basis
by the Fund's investment adviser. The Fund was incorporated
under the laws of the State of Maryland on January 30, 1984. The
Fund is a series fund with four classes of stock, one for each
Portfolio. The S&P 500 Index Portfolio was authorized on
September 15, 1995 and commenced operations on December 29,
1995. Union Central has invested approximately $10.3 million in
this Portfolio, but reserves the right to redeem any portion or
all of its investment at any time.
Investment Adviser
The Fund's investment adviser is Carillon Advisers, Inc.
(the "Adviser"), P.O. Box 40407, Cincinnati, Ohio 45240. The
Adviser was incorporated under the laws of Ohio on August 18,
1986, as successor to the advisory business of Carillon
Investments, Inc., the investment adviser for the Fund since
1984. The Adviser is a wholly-owned subsidiary of Union Central,
a mutual life insurance company organized in 1867 under the laws
of Ohio. Subject to the direction and authority of the Fund's
Board of Directors, the Adviser manages the investment and
reinvestment of the assets of each Portfolio and provides
administrative services and manages the Fund's business affairs.
George L. Clucas has been primarily responsible for the
day-to-day management of the Equity Portfolio since 1988
and the Capital Portfolio since its inception in 1990. Mr.
Clucas is Director, President and Chief Executive Officer of the
Fund, and President and Chief Executive Officer of the Adviser.
He has been affiliated with the Adviser and Union Central since
1987. Steven R. Sutermeister (since 1990) has been primarily
responsible for the day-to-day management of the Bond Portfolio.
Mr. Sutermeister is Vice President of the Adviser and has been
affiliated with the Adviser and Union Central since 1990.
Previously, he was Senior Vice President of Washington Square
Capital, Inc.
Advisory Fee
The Fund pays the Adviser, as full compensation for all
facilities and services furnished, a monthly fee computed
separately for each Portfolio on a daily basis, at an annual
rate, as follows:
(a) for the Equity Portfolio .65% of the first $50,000,000,
.60% of the next $100,000,000, and .50% of all over
$150,000,000 of the current value of the net assets;
(b) for the Bond Portfolio .50% of the first $50,000,000,
.45% of the next $100,000,000, and .40% of all over
$150,000,000 of the current value of the net assets; and
(c) for the Capital Portfolio .75% of the first $50,000,000,
.65% of the next $100,000,000, and .50% of all over
$150,000,000 of the current value of the net assets.
(d) for the S&P 500 Index Portfolio .30% of the current
value of the net assets.
The fee paid for the Capital Portfolio is somewhat higher than
the average fee paid in the industry. However, breakpoints at
which fees are reduced are set at lower than normal amounts. It
is the desire of the Fund and Adviser to reflect in the fee
arrangement the effort involved in advising the separate
Portfolios.
Expenses
The Fund's expenses are deducted from total income before
dividends are paid. These expenses, which are accrued
daily, include: the fee of the Adviser; taxes; legal, dividend
disbursing, bookkeeping and transfer agent, custodian and
auditing fees; and printing and other expenses relating to the
Fund's operations which are not expressly assumed by the
Adviser under its investment advisory agreement with the Fund.
Certain expenses are paid by the particular Portfolio that
incurs them, while other expenses are allocated among the
Portfolios on the basis of their relative size (i.e., the amount
of their net assets). The Adviser will pay any expenses of the
S&P 500 Index Portfolio, other than the advisory fee for that
Portfolio, to the extent that such expenses exceed .30% of that
Portfolio's net assets.
Capital Stock
The Fund currently has four classes of stock, one for each
Portfolio. Shares (including fractional shares) of each
Portfolio have equal rights with regard to voting, redemptions,
dividends, distributions, and liquidations with respect to that
Portfolio. When issued, shares are fully paid and nonassessable
and do not have preemptive or conversion rights or cumulative
voting rights. The Fund's sole shareholder, Union Central, will
vote Fund shares allocated to its registered separate accounts
in accordance with instructions received from Contract Owners.
However, by virtue of Fund shares allocated to its other
separate accounts, Union Central currently has voting control
and can make fundamental changes regardless of the voting
instructions received from Contract Owners.
PURCHASE AND REDEMPTION OF SHARES
The Fund offers its shares, without sales charge, only for
purchase by Union Central and its separate accounts to fund
benefits under both variable annuity contracts and variable
universal life insurance policies. The Fund's Board of Directors
will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of variable
annuity
contractowners investing in the Fund and interests of holders of
variable universal life insurance policies investing in the
Fund. Union Central will report any potential or existing
conflicts to the Directors of the Fund. If a material
irreconcilable conflict arises, Union Central will, at its own
cost, remedy such conflict up to and including establishing a
new registered management company and segregating the assets
underlying the variable annuity contracts and variable universal
life insurance policies. It is possible that at some later date
the Fund may offer shares to other investors. The Fund
continuously offers shares in each of its Portfolios at prices
equal to the respective net asset values of the shares of each
Portfolio.
The Fund redeems all full and fractional shares of the Fund
for cash. No redemption fee is charged. The redemption
price is the net asset value per share. Payment for shares
redeemed will generally be made within seven days after receipt
of a proper notice of redemption.
The net asset value of the shares of each Portfolio of the
Fund is determined once daily, Monday through Friday, as of the
close of regular trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern Time), when there are purchases or
redemptions of Fund shares, except (i) when the New York Stock
Exchange is closed (currently New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day); and any day on which
changes in the value of the Portfolio securities of the Fund
will not materially affect the current net asset value of the
shares of a Portfolio. Such determination is made by adding the
values of all securities and other assets of the Portfolio,
subtracting liabilities and expenses, and dividing by the number
of shares of the Portfolio outstanding. Expenses, including the
investment advisory fee payable to the Adviser, are accrued
daily.
Securities held by the Portfolios, except for money market
instruments maturing in 60 days or less, are valued at their
market value if market quotations are readily available.
Otherwise, such securities are valued at fair value as
determined in good faith by the Board of Directors, although the
actual calculations may be made by persons acting pursuant to
the direction of the Board.
All money market instruments with a remaining maturity of 60
days or less are valued on an amortized cost basis.
DIVIDENDS AND DISTRIBUTIONS
It is the Fund's intention to distribute substantially all of
the net investment income, if any, of each Portfolio. For
dividend purposes, net investment income of the Equity, Bond,
Capital and S&P 500 Index Portfolios consists of all dividends
or interest earned by such Portfolio less estimated expenses
(including the investment advisory fee). All net realized
capital gains, if any, of each Portfolio are distributed
periodically, no less frequently than annually. All dividends
and distributions are reinvested in additional shares of the
respective Portfolio at net asset value.
TAXES
Each Portfolio has qualified and has elected to be taxed as a
"regulated investment company" under the provisions of
Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). If a Portfolio qualifies as a "regulated
investment company" and complies with the appropriate provisions
of the Code, the Portfolio will be relieved of federal income
tax on the amounts distributed.
Since the sole shareholder of the Fund is Union Central, no
discussion is included herein as to the federal income tax
consequences at the shareholder level. For information
concerning the federal tax consequences to purchasers of the
contracts, see the attached Prospectus for such contracts.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
Firstar Trust Company, Mutual Fund Services, P.O. Box 701,
Milwaukee, Wisconsin 53201-0701, acts as Custodian of the Fund's
assets, and is its bookkeeping, transfer and dividend disbursing
agent.
<PAGE>
APPENDIX
CORPORATE BOND RATINGS
Moody's Investors Services, Inc.
Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt-edge." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they
comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude
or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium-grade
obligations. Factors giving security to principal and interest
are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective elements
may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments
may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements
of danger with respect to principal or interest.
Ca Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in
default or have other marked shortcomings.
Standard & Poor's Corporation
AAA This is the highest rating assigned by Standard & Poor's
to a debt obligation and indicates an extremely strong capacity
to pay principal and interest.
AA Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very
strong, and in the majority of instances they differ from AAA
issues only in a small degree.
A Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible
to the adverse effect of changes in circumstances and economic
conditions.
BBB Bonds rated BBB are regarded as having an adequate
capacity to pay principal and interest. Whereas they
normally exhibit protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB-B-CCC-CC Bonds rated BB, B, CCC, and CC are regarded, on
balance, as predominately speculative with respect
to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
COMMERCIAL PAPER RATINGS
Moody's Investors Services, Inc.
A Prime rating is the highest commercial paper rating assigned
by Moody's Investors Services, Inc. Issuers rated Prime are
further referred to by use of numbers 1, 2 and 3 to denote
relative strength within this highest classification. Among the
factors considered by Moody's in assigning ratings for an issuer
are the following: (1) management; (2) economic evaluation of
the industry and an appraisal of speculative type risks which
may be inherent in certain areas; (3) competition and customer
acceptance of products; (4) liquidity; (5) amount and quality of
long-term debt; (6) ten-year earnings trends; (7) financial
strength of a parent company and the relationships which exist
with the issuer; and (8) recognition by management of
obligations which may be present or may arise as a result of
public interest questions and preparations to meet such
obligations.
Standard & Poor's Corporation
Commercial paper rated A by Standard & Poor's Corporation has
the following characteristics: Liquidity ratios are better than
the industry average. Long-term senior debt rating is "A" or
better. In some cases, BBB credits may be acceptable. The issuer
has access to at least two additional channels of borrowing.
Basic earnings and cash flow have an upward trend with allowance
made for unusual circumstances. Typically, the issuer's industry
is well established, the issuer has a strong position within its
industry and the reliability and quality of management is
unquestioned. Issuers rated A are further referred to by use of
numbers 1, 2 and 3 to denote relative strength within this
classification.
<PAGE>
<PAGE>
CARILLON FUND, INC.
- --------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
November 15, 1997
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 November 15, 1997, which may be obtained by
calling the Fund at (513) 595-2600, or writing the Fund at P.O.
Box 40409, Cincinnati, Ohio 45240-0409.
TABLE OF CONTENTS
Page
Investment Policies (7).................................. 2
Money Market Instruments and Investment Techniques...... 2
Certain Risk Factors Relating to High-Yield,
High-Risk Bonds................................... 6
Investments in Foreign Securities....................... 6
Futures Contracts....................................... 7
Options ................................................ 8
Lending Portfolio Securities............................13
Investment Restrictions..................................13
Portfolio Turnover ......................................16
Management of the Fund (13)..............................17
Directors and Officers.................................17
Investment Adviser ....................................19
Payment of Expenses....................................20
Advisory Fee...........................................21
Investment Advisory Agreement..........................21
Administration.........................................22
Service Agreement......................................23
Securities Activities of Adviser.......................23
Determination of Net Asset Value (14)....................24
Purchase and Redemption of Shares (14)...................24
Taxes (15)...............................................25
Portfolio Transactions and Brokerage.....................25
General Information (2)..................................26
Capital Stock .........................................26
Voting Rights..........................................27
Additional Information ................................28
Independent Auditors ....................................28
( ) indicates page on which the corresponding section appears in
the Prospectus.
UCCF 515 11-97
<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, S&P 500 Index ("Index Portfolio")
and Micro-Cap 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.
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.
Investments in Foreign Securities
AMERICAN DEPOSITARY RECEIPTS. American Depositary Receipts
("ADRs") may be issued in sponsored or unsponsored programs. In
sponsored programs, the issuer makes arrangements to have its
securities traded in the form of ADRs; in unsponsored programs,
the issuer may not be directly involved in the creation of the
program. Although the regulatory requirements with respect to
sponsored and unsponsored programs are generally similar, the
issuers of unsponsored ADRs are not obligated to disclose
material information in the United States and, therefore, such
information may not be reflected in the market value of the
ADRs.
FOREIGN EXCHANGE. If a foreign country cannot generate
sufficient earnings from foreign trade to service its external
debt, it may need to depend on continuing loans and aid from
foreign governments, commercial banks, multilateral
organizations, and inflows of foreign investment. The cost of
servicing external debt will also generally be adversely
affected by rising international interest rates because many
external debt obligations bear interest at rates which are
adjusted based upon international interest rates. The ability to
service external debt will also depend on the level of the
relevant government's international currency reserves and its
access to foreign currencies. Currency devaluations may affect
the ability of an obligor to obtain sufficient foreign
currencies to service its external debt.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Each Portfolio that
engages in foreign currency exchange transactions may do so on
a spot (i.e., cash) basis at the spot rate prevailing in the
foreign exchange currency market, or on a forward basis to "lock
in" the U.S. dollar price of the security. By entering into a
forward contract for the purchase or sale, for a fixed amount of
U.S. dollars, of the amount of foreign currency involved in the
underlying transactions, a Portfolio attempts to protect itself
against possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the applicable foreign
currency during the period between the date on which the
security is purchased or sold and the date on which related
payments are made or received.
Portfolios will not enter into forward contracts for
longer-term hedging purposes. The possibility of changes in
currency exchange rates will be incorporated into the long-term
investment considerations when purchasing the investment and
subsequent considerations for possible sale of the investment.
FOREIGN MARKETS. Delays in settlement which may occur in
connection with transactions involving foreign securities could
result in temporary periods when a portion of the assets of a
portfolio is uninvested and no return is earned thereon. The
inability of a portfolio to make intended security purchases due
to settlement problems could cause the portfolio to miss
attractive investment opportunities. Inability to dispose of
portfolio securities due to settlement problems could result in
losses to a portfolio due to subsequent declines in values of
the portfolio securities or, if the portfolio has entered into a
contract to sell the security, possible liability to the
purchaser. Certain foreign markets, especially emerging markets,
may require governmental approval for the repatriation of
investment income, capital or the proceeds of sales of
securities by foreign investors. A portfolio could be adversely
affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by
the application to the portfolio of any restrictions on
investments.
FOREIGN DEBT SECURITIES. Investing in foreign debt securities
will expose the Portfolios to the direct or indirect
consequences of political, social or economic changes in the
industrialized developing and emerging countries that issue the
securities. The ability and willingness of obligor or the
governmental authorities that control repayment of their
external debt to pay principal and interest on such debt when
due may depend on general economic and political conditions
within the relevant country. Additional country-related
factors unique to foreign issuers which may influence the
ability or willingness to service debt include, but are not
limited to, a country's cash flow situation, the availability of
sufficient foreign exchange on the date a payment is due, the
relative size of its debt service burden to the economy as a
whole, and its government's relationships with the International
Monetary Fund, the World Bank and other international agencies.
Futures Contracts
For hedging purposes, including protecting the price or
interest rate of securities that the Portfolio intends to buy,
the S&P 500 Index Portfolio may enter into futures contracts
that relate to securities in which it may directly invest and
indices comprised of such securities and may purchase and write
call and put options on such contracts. As a temporary
investment strategy until the Index Portfolio reaches $25
million in net assets, the Index Portfolio may invest up to 100%
of its assets in such futures and/or options contracts.
Thereafter, the Portfolio may invest up to 20% of its assets in
such futures and/or options contracts. The Index Portfolio does
not intend to enter into futures contracts that are not traded
on exchanges or boards of trade.
A financial futures contract is a contract to buy or sell a
specified quantity of financial instruments such as U.S.
Treasury bills, notes and bonds, commercial paper and bank
certificates of deposit or the cash value of a financial
instrument index at a specified future date at a price agreed
upon when the contract is made. A stock index futures contract
is a contract to buy or sell specified units of a stock index at
a specified future date at a price agreed upon when the contract
is made. The value of a unit is based on the current value of
the contract index. Under such contracts no delivery of the
actual stocks making up the index takes place. Rather, upon
expiration of the contract, settlement is made by exchanging
cash in an amount equal to the difference between the contract
price and the closing price of the index at expiration, net of
variation margin previously paid.
Substantially all futures contracts are closed out before
settlement date or called for cash settlement. A futures
contract is closed out by buying or selling an identical
offsetting futures contract. Upon entering into a futures
contract, the Portfolio is required to deposit an initial margin
with the Custodian for the benefit of the futures broker. The
initial margin serves as a "good faith" deposit that the
Portfolio will honor their futures commitments. Subsequent
payments (called "variation margin") to and from the broker are
made on a daily basis as the price of the underlying investment
fluctuates. In the event of the bankruptcy of the futures
broker that holds margin on behalf of the Portfolio, the
Portfolio may be entitled to return of margin owed to it only in
proportion to the amount received by the broker's other
customers. The Adviser will attempt to minimize this risk by
monitoring the creditworthiness of the futures brokers with
which the Portfolio does business.
Because the value of index futures depends primarily on the
value of their underlying indexes, the performance of the broad-
based contracts will generally reflect broad changes in common
stock prices. However, because the Portfolio may not be
invested in precisely the same proportion as the S&P 500, it is
likely that the price changes of the Portfolio's index futures
positions will not match the price changes of the Portfolio's
other investments.
Options on futures contracts give the purchaser the right
to assume a position at a specified price in a futures contract
at any time before expiration of the option contract.
Options
The Bond and Capital Portfolios may sell (write) listed
options on U.S. Treasury Securities and options on contracts for
the future delivery of U.S. Treasury Securities as a means of
hedging the value of such securities owned by the Portfolio.
The S&P 500 Index Portfolio may enter into futures contracts
that relate to securities in which it may directly invest and
indices comprised of such securities and may purchase and write
call and put options on such contracts.
As a writer of a call option, a Portfolio may terminate its
obligation by effecting a closing purchase transaction. This is
accomplished by purchasing an option of the same series as the
option previously written. However, once the Portfolio has been
assigned an exercise notice, the Portfolio will be unable to
effect a closing purchase transaction. There can be no
assurance that a closing purchase transaction can be effected
when the Portfolio so desires.
The Portfolio will realize a profit from a closing
transaction if the price of the transaction is less than the
premium received from writing the option; the Portfolio will
realize a loss from a closing transaction if the price of the
transaction is more than the premium received from writing the
option. Since the market value of call options generally
reflects increases in the value of the underlying security, any
loss resulting from the closing transaction may be wholly or
partially offset by unrealized appreciation of the underlying
security. Conversely, any gain resulting from the closing
transaction may be wholly or partially offset by unrealized
depreciation of the underlying security. The principal factors
affecting the market value of call options include supply and
demand, the current market price and price volatility of the
underlying security, and the time remaining until the expiration
date.
Although the Bond and Capital Portfolios will write only
options on U.S. Treasury Securities and options on futures
contracts with respect to such securities which are traded on a
national exchange or Board of Trade, and the S&P 500 Index
Portfolio will write only options on securities among the
Standard & Poor's 500 Composite Stock Price Index (the "S&P
500")* and options of futures contracts with respect to such
securities, there is no assurance that a liquid secondary market
will exist for any particular option. In the event it is not
possible to effect a closing transaction, the Portfolio will not
be able to sell the underlying security, until the option
expires or the option is exercised by the holder.
______
*The S&P 500 is an unmanaged index of 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)", and "500" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by Carillon Fund.
The Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's ("S&P"). S&P makes no representation or
warranty, express or implied, to the beneficial owners of the
Portfolio or any member of the public regarding the advisability
of investing in securities generally or in the Portfolio
particularly or the ability of the S&P 500 Index to track
general stock market performance. S&P's only relationship to
Carillon Fund is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined,
composed and calculated by S&P without regard to Carillon Fund
or the Portfolio. S&P has no obligation to take the needs of
Carillon Fund or the beneficial owners of the Portfolio into
consideration in determining, composing or calculating the S&P
500 Index. S&P is not responsible for and has not participated
in the determination of the prices and amount of the Portfolio
or the timing of the issuance or sale of the Portfolio or in the
determination or calculation of the equation by which the
Portfolio is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or
trading of the Portfolio.
_____
The Portfolio will effect a closing transaction to realize
a profit on an outstanding call option, to prevent an underlying
security from being called, to permit the sale of an underlying
security prior to the expiration date of the option, or to allow
for the writing of another call option on the same underlying
security with either a different exercise price or expiration
date or both.
Possible reasons for the absence of a liquid secondary
market on an exchange include the following: (a) insufficient
trading interest in certain options; (b) restrictions on
transactions imposed by an exchange; (c) trading halts,
suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying
securities; (d) inadequacy of the facilities of an exchange or
the Clearing Corporation to handle trading volume; or (e) a
decision by one or more exchanges to discontinue the trading of
options or impose restrictions on types of orders. There can be
no assurance that higher than anticipated trading activity or
order flow or other unforeseen events might not at times render
the trading facilities inadequate and thereby result in the
institution of special trading procedures or restrictions which
could interfere with the Portfolio's ability to effect closing
transactions.
The Bond and Capital Portfolios may write call options on
futures contracts on U.S. Treasury Securities as a hedge against
the adverse effect of expected increases in interest rates on
the value of Portfolio securities, in order to establish more
definitely the effective return on securities held by the
Portfolio. The S&P 500 Index Portfolio will write call options
on futures contracts on the S&P 500 or securities included
therein only for hedging purposes to protect the price of
securities it intends to buy and when such transactions enable
it to correlate its investment performance more closely to that
of the S&P 500 than would a direct purchase of securities
included in the S&P 500. The Portfolios will not write options
on futures contracts for speculative purposes.
A futures contract on a debt security is a binding
contractual commitment which will result in an obligation to
make or accept delivery, during a specified future time, of
securities having standardized face value and rate of return.
Selling a futures contract on debt securities (assuming a short
position) would give the Portfolio a legal obligation and right
as seller to make future delivery of the security against
payment of the agreed price.
Upon the exercise of a call option on a futures contract,
the writer of the option (the Portfolio) is obligated to sell
the futures contract (to deliver a long position to the option
holder) at the option exercise price, which will presumably be
lower than the current market price of the contract in the
futures market. However, as with the trading of futures, most
participants in the options markets do not seek to realize their
gains or losses by exercise of their option rights. Instead,
the holder of an option will usually realize a gain or loss by
buying or selling an offsetting option at a market price that
will reflect an increase or a decrease from the premium
originally paid. Nevertheless, if an option on a futures
contract written by the Portfolio is exercised, the Portfolio
intends to either close out the futures contract by purchasing
an offsetting futures contract, or deliver the underlying
securities immediately, in order to avoid assuming a short
position. There can be no assurance that the Portfolio will be
able to enter into an offsetting transaction with respect to a
particular contract at a particular time, but it may always
deliver the underlying security.
As a writer of options on futures contracts, the Portfolio
will receive a premium but will assume a risk of adverse
movement in the price of the underlying futures contract. If
the option is not exercised, the Portfolio will gain the amount
of the premium, which may partially offset unfavorable changes
in the value of securities held in the Portfolio. If the option
is exercised, the Portfolio might incur a loss in the option
transaction which would be reduced by the amount of the premium
it has received.
While the holder or writer of an option on a futures
contract may normally terminate its position by selling or
purchasing an offsetting option, the Portfolio's ability to
establish and close out options positions at fairly established
prices will be subject to the maintenance of a liquid market.
The Portfolio will not write options on futures contracts
unless, in the Adviser's opinion, the market for such options
has sufficient liquidity that the risks associated with such
options transactions are not at unacceptable levels.
RISKS. While options will be sold in an effort to reduce
certain risks, those transactions themselves entail certain
other risks. Thus, while the Portfolio may benefit from the use
of options, unanticipated changes in interest rates or security
price movements may result in a poorer overall performance for
the Portfolio than if it had not entered into any options
transactions. The price of U.S. Treasury Securities futures are
volatile and are influenced, among other things, by changes in
prevailing interest rates and anticipation of future interest
rate changes. The price of S&P 500 futures are also volatile
and are influenced, among other things, by changes in conditions
in the securities markets in general.
In the event of an imperfect correlation between a futures
position (and a related option) and the Portfolio position which
is intended to be protected, the desired protection may not be
obtained. The correlation between changes in prices of futures
contracts and of the securities being hedged is generally only
approximate. The amount by which such correlation is imperfect
depends upon many different circumstances, such as variations in
speculative market demand for futures and for debt securities
(including technical influences in futures trading) and
differences between the financial instruments being hedged and
the instruments underlying the standard options on futures
contracts available for trading.
Due to the imperfect correlation between movements in the
prices of futures contracts and movements in the prices of the
underlying debt securities, the price of a futures contract may
move more than or less than the price of the securities being
hedged. If the price of the future moves less than the price of
the securities which are the subject of the hedge, the hedge
will not be fully effective and if the price of the securities
being hedged has moved in an unfavorable direction, the
Portfolio would be in a better position than if it had not
hedged at all. If the price of the futures moves more than the
price of the security, the Portfolio will experience either a
gain or loss on the option on the future which will not be
completely offset by movements in the price of the securities
which are the subject of the hedge.
The market prices of futures contracts and options thereon
may be affected by various factors. If participants in the
futures market elect to close out their contracts through
offsetting transactions rather than meet margin deposit
requirements, distortions in the normal relationship between the
debt securities and futures markets could result. Price
distortions could also result if investors in futures contracts
make or take delivery of underlying securities rather than
engage in closing transactions. This could occur, for example,
if there is a lack of liquidity in the futures market. From the
point of view of speculators, the deposit requirements in the
futures markets are less onerous than margins requirements in
the securities markets; accordingly, increased participation by
speculators in the futures market could cause temporary price
distortions. A correct forecast of interest rate trends by the
adviser may still not result in a successful hedging transaction
because of possible price distortions in the futures market and
because of the imperfect correlation between movements in the
prices of debt securities and movements in the prices of futures
contracts. A well-conceived hedge may be unsuccessful to some
degree because of market behavior or unexpected interest rate
trends.
LIMITATIONS ON THE USE OF OPTIONS ON FUTURES. The Portfolio
will only write options on futures that are traded on exchanges
and are standardized as to maturity date and underlying
financial instrument. The principal exchanges in the United
States for trading options on Treasury Securities are the Board
of Trade of the City of Chicago and the Chicago Mercantile
Exchange. These exchanges and trading options on futures are
regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission ("CFTC").
It is the Fund's opinion that it is not a "commodity pool"
as defined under the Commodity Exchange Act and in accordance
with rules promulgated by the CFTC.
The Portfolio will not write options on futures contracts
for which the aggregate premiums exceed 5% of the fair market
value of the Portfolio's assets, after taking into account
unrealized profits and unrealized losses on any such contracts
it has entered into (except that, in the case of an option that
is in-the-money at the time of purchase, the in-the-money amount
generally may be excluded in computing the 5%).
All of the futures options transactions employed by the
Portfolio will be BONA FIDE hedging transactions, as that term
is used in the Commodity Exchange Act and has been interpreted
and applied by the CFTC. To ensure that its futures options
transactions meet this standard, the Fund will enter into such
transactions only for the purposes and with the intent that CFTC
has recognized to be appropriate.
CUSTODIAL PROCEDURES AND MARGINS. The Fund's Custodian acts as
the Fund's escrow agent as to securities on which the Fund has
written call options and with respect to margin which the Fund
must deposit in connection with the writing of call options on
futures contracts. The Clearing Corporation (CC) will release
the securities or the margin from escrow on the expiration of
the call, or when the Fund enters into a closing purchase
transaction. In this way, assets of the Fund will never be
outside the control of the Fund's custodian, although such
control might be limited by the escrow receipts issued.
At the time the Portfolio sells a call option on a contract
for future delivery of U.S. Treasury Securities ("Treasury
futures contract"), it is required to deposit with its
custodian, in an escrow account, a specified amount of cash or
U.S. Government securities ("initial margin"). The account will
be in the name of the CC. The amount of the margin generally is
a small percentage of the contract amount. The margin required
is set by the exchange on which the contract is traded and may
be modified during the term of the contract. The initial margin
is in the nature of a performance bond or good faith deposit,
and it is released from escrow upon termination of the option
assuming all contractual obligations have been satisfied. The
Portfolio will earn interest income on its initial margin
deposits.
In accordance with the rules of the exchange on which the
option is traded, it might be necessary for the Portfolio to
supplement the margin held in escrow. This will be done by
placing additional cash or U.S. Government securities in the
escrow account. If the amount of required margin should
decrease, the CC will release the appropriate amount from the
escrow account.
The assets in the margin account will be released to the CC
only if the Portfolio defaults or fails to honor its commitment
to the CC and the CC represents to the custodian that all
conditions precedent to its right to obtain the assets have been
satisfied.
Lending Portfolio Securities
The S&P 500 Index Portfolio may lend portfolio securities
with a value up to 10% of its total assets. Such loans may be
terminated at any time. The Portfolio will continuously
maintain as collateral cash or obligations issued by the U.S.
government, its agencies or instrumentalities in an amount equal
to not less than 100% of the current market value (on a daily
marked-to-market basis) of the loaned securities plus declared
dividends and accrued interest. While portfolio securities are
on loan, the borrower will pay the Portfolio any income accruing
thereon, and the Portfolio may invest or reinvest the collateral
(depending on whether the collateral is cash or U.S. Government
securities) in portfolio securities, thereby earning additional
income. Loans are typically subject to termination by the
Portfolio in the normal settlement time, currently five business
days after notice, or by the borrower on one day's notice.
Borrowed securities must be returned when the loan is
terminated. Any gain or loss in the market price of the
borrowed securities which occurs during the term of the loan
inures to the Portfolio and its shareholders. The Portfolio may
pay reasonable finders', borrowers', administrative, and
custodial fees in connection with a loan of its securities. The
Adviser will review and monitor the creditworthiness of such
borrowers on an ongoing basis.
The S&P 500 Index Portfolio may invest in Standard & Poor's
Depositary Receipts(R) ("SPDRs(R)"). SPDRs are units of
beneficial interest in a unit investment trust, representing
proportionate undivided interests in a portfolio of securities
in substantially the same weighting as the component common
stocks of the S&P 500. While the investment objective of such a
unit investment trust is to provide investment results that
generally correspond to the price and yield performance of the
component common stocks of the S&P 500, there can be no
assurance that this investment objective will be met fully. As
SPDRs are securities issued by an investment company, non-
fundamental restriction (5) below restricts purchases of SPDRs
to 10% 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) 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).
(2) 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.
(3) 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.
(4) Invest in companies for the purpose of exercising
control (alone or together with the other Portfolios).
(5) 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, or by purchase of
SPDRs 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:
(6) Lend portfolio securities with an aggregate value
of more than 10% of its total assets.
(7) 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.
(8) 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 52.53% and 34.33%, respectively, for 1996 and
1995. The annual Portfolio turnover rates for the Bond
Portfolio were 202.44% and 111.01% respectively, for 1996 and
1995. The annual Portfolio turnover rates for the Capital
Portfolio were 53.11% and 43.83%, respectively, for 1996 and
1995. The annual Portfolio turnover rate for the S&P 500 Index
Portfolio was 1.09% for 1996. The annual Portfolio turnover
rate for the Micro-Cap Portfolio is expected to be approximately
50%.
MANAGEMENT OF THE FUND
Directors and Officers
The directors and executive officers of the Fund and their
principal occupations during the past five years are set forth
below. Unless otherwise noted, the address of each executive
officer and director is 1876 Waycross Road, Cincinnati, Ohio
45240.
<TABLE>
<CAPTION>
Position(s)
Name, Address with Principal Occupation(s)
and Age the Fund During Past Five Years
- ------------- ----------- ----------------------
<S> <C> <C>
George M. Callard, M.D. Director Professor of Clinical
3021 Erie Avenue Surgery, University of
Cincinnati, Ohio 45208 Cincinnati
(Age 63)
George L. Clucas* Director, Senior Vice President,
(53) President and Union Central; Director,
Chief Executive President and Chief
Officer Executive Officer,
Carillon Advisers, Inc.
("Adviser"); Director,
Carillon Investments,
Inc. ("CII")
Theodore H. Emmerich Director Consultant; former Partner,
1201 Edgecliff Place Ernst & Whinney, Accountants
Cincinnati, Ohio 45206
(70)
James M. Ewell Director Retired Senior Vice
9000 Indian Ridge Road President and Director,
Cincinnati, Ohio 45243 The Procter and Gamble
(81) Company
Richard H. Finan Director Attorney at Law;
11137 Main Street President Pro Tempore
Cincinnati, Ohio 45241 of the Ohio State Senate
(62)
Jean Patrice Director Interim President, Cincinnati
Harrington, S.C. State Technical and Community
3217 Whitfield Avenue College; Former Executive
Cincinnati, Ohio 45220 Director, Cincinnati Youth
(71) Collaborative; President
Emeritus (formerly, President)
College of Mt. St. Joseph
John H. Jacobs* Director Executive Vice President,
(50) Union Central; prior to
June, 1995, Officer and
employee, Union Central
Charles W. McMahon Director Retired Senior Vice
2031 W. Galbraith Road, #E President and Director,
Cincinnati, Ohio 45239 Union Central
(78)
Harry Rossi* Director Director Emeritus, Union
641 Flagstaff Drive Central; Director,
Cincinnati, Ohio 45215 Adviser; former Chairman,
(77) President and Chief
Executive Officer,
Union Central
Stephen R. Hatcher Senior Vice Executive Vice President
(54) President and Chief Financial
Officer, Union Central;
prior to June, 1995, officer
and employee, Union Central
John F. Labmeier Vice President Second Vice President,
(48) and Secretary Associate General
Counsel and Assistant
Secretary, Union Central;
Vice President and Secretary,
CII; Secretary, Adviser
Thomas G. Knipper Controller Assistant Controller,
(39) Union Central; prior to
July, 1995, Treasurer of
The Gateway Trust and Vice
President and Controller
of Gateway Advisers, Inc.
PJ Barker Assistant Investment Accounting Manager,
(27) Controller Union Central; prior to June,
1993, Senior Staff
Accountant, Arther
Andersen LLP
Joseph A. Tucker Treasurer Assistant to the Treasurer,
(62) Union Central; prior to
October 1992, Officer
and employee, Union Central
John M. Lucas Assistant Assistant Counsel and
(46) Secretary Assistant to the Secretary,
Union Central; prior to
October, 1992, Officer
and employee, Union Central
</TABLE>
* Messrs. Clucas, Jacobs and Rossi are considered to be "interested
persons" of the Fund (within the meaning of the Investment Company Act of
1940) because of their affiliation with the Adviser.
Each of the directors also serves as a trustee of Carillon Investment
Trust.
All directors who are not "interested persons" of the Company are
members of the Audit Committee.
As of the date of this Statement of Additional Information, officers and
directors of the Fund do not own any of the outstanding shares of the Fund.
Directors who are not officers or employees of Union Central or Adviser are
paid a fee plus actual out-of-pocket expenses by the Fund for each meeting of
the Board of Directors attended. Total fees and expenses incurred for 1996
were $44,810.
Compensation Table
<TABLE>
<CAPTION>
Compensation Table
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Total
Person, Compensation Retirement Retirement Compensation
Position From Benefits Benefits From Registrant
Registrant Accrued As Upon and Fund
Part of Retirement Complex*
Fund Expenses Paid to
Directors
<S> <C> <C> <C> <C>
George M. Callard, 7,300** -- -- 10,600
M.D.
Director
George L. Clucas N/A N/A N/A N/A
Director
Theodore H. Emmerich 7,500 -- -- 10,800
Director
James M. Ewell 7,300 -- -- 10,600
Director
Richard H. Finan 7,300 -- -- 10,600
Director
Jean Patrice
Harrington, S.C. 7,300 -- -- 10,600
Director
John H. Jacobs N/A N/A N/A N/A
Director
Charles W. McMahon 7,300** -- -- 10,600
Director
Harry Rossi N/A N/A N/A N/A
Director
</TABLE>
* Each of the Directors also serves as a Trustee of
Carillon Investment Trust.
** Messrs. Callard and McMahon have been deferring their
compensation each year. As of December 31, 1996, the total
amount deferred, including interest, was as follows: Dr.
Callard - $62,476; Mr. McMahon - $25,223.
Investment Adviser
The Fund has entered into an Investment Advisory Agreement
("Agreement") with Carillon Advisers, Inc. ("Adviser") whose
principal business address is 1876 Waycross Road, Cincinnati,
Ohio 45240 (P.O. Box 40407, Cincinnati, Ohio 45240). The
Adviser was incorporated under the laws of Ohio on August 18,
1986, and is a wholly-owned subsidiary of Union Central.
Executive officers and directors of the Adviser who are
affiliated with the Fund are George L. Clucas, President and
Chief Executive Officer; Thomas G. Knipper, Treasurer; and John
F. Labmeier, Secretary.
Pursuant to the Agreement, the Fund has retained the
Adviser to manage the investment of the Fund's assets,
including the placing of orders for the purchase and sale of
Portfolio securities. The Adviser is at all times subject to
the direction and supervision of the Board of Directors of the
Fund.
The Adviser continuously furnishes an investment program
for each Portfolio, is responsible for the actual management of
each Portfolio and has responsibility for making decisions to
buy, sell or hold any particular security. The Adviser obtains
and evaluates such information and advice relating to the
economy, securities markets, and specific securities as it
considers necessary or useful to continuously manage the assets
of the Portfolios in a manner consistent with their investment
objectives, policies and restrictions. The Adviser considers
analyses from various sources, makes necessary investment
decisions and effects transactions accordingly. The Adviser
also performs certain administrative functions for the Fund.
The Adviser may utilize the advisory services of subadvisers
for one or more of the Portfolios.
Payment of Expenses
Under the terms of the Agreement, in addition to managing
the Fund's investments, the Adviser, at its expense, maintains
certain of the Fund's books and records (other than those
provided by Firstar Trust Company, by agreement) and furnishes
such office space, facilities, equipment, and clerical help as
the Fund may reasonably require in the conduct of business. In
addition, the Adviser pays for the services of all executive,
administrative, clerical, and other personnel, including
officers of the Fund, who are employees of Union Central. The
Adviser also bears the cost of telephone service, heat, light,
power and other utilities provided to the Fund. Expenses not
expressly assumed by the Adviser under the Agreement will be
paid by the Fund.
Each Portfolio pays all other expenses incurred in its
operation and a portion of the Fund's general administration
expenses allocated on the basis of the asset size of the
respective Portfolios. Expenses other than the Adviser's fee
that are borne directly and paid individually by a Portfolio
include, but are not limited to, brokerage commissions, dealer
markups, expenses incurred in the acquisition of Portfolio
securities, transfer taxes, transaction expenses of the
custodian, pricing services used by only one or more
Portfolios, and other costs properly payable by only one or
more Portfolios. Expenses which are allocated on the basis of
size of the respective Portfolios include custodian (portion
based on asset size), dividend disbursing agent, transfer
agent, bookkeeping services (except annual per Portfolio base
charge), pricing, shareholder's and directors' meetings,
directors' fees, proxy statement and Prospectus preparation,
registration fees and costs, fees and expenses of legal counsel
not including employees of the Adviser, membership dues of
industry associations, postage, insurance premiums including
fidelity bond, and all other costs of the Fund's operation
properly payable by the Fund and allocable on the basis of size
of the respective Portfolios. The Adviser will pay any
expenses of the S&P 500 Index Portfolio, other than the
advisory fee for that Portfolio, to the extent that such
expenses exceed .30% of that Portfolio's net assets. The
Adviser will also pay any expenses of the Micro-Cap Portfolio,
other than the advisory fee for that Portfolio, to the extent
that such expenses exceed 1.00% 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>
S&P 500
Equity Bond Capital Index Micro-Cap
Year Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
1996 $1,436,998 $384,084 $1,032,861 $8,233 N/A
1995 $1,108,596 $314,237 $913,378 -0- N/A
1994 $924,881 $273,068 $766,664 N/A 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, 1997 the Agreement was approved for continuance for
one (1) year by the Board of Directors by unanimous vote of
those present, including a majority of the directors who are
not parties to such contract or interested persons of any such
party.
On March 21, 1990, the Board of Directors took steps to
activate the Capital Portfolio of the Fund by authorizing the
issuance of shares of that Portfolio to a separate account of
Union Central. The Board of Directors also approved an
amendment to the Investment Advisory Agreement so as to make
the Agreement applicable to the Capital Portfolio and to
specify the advisory fee payable by it. The Board determined
that the amendment did not affect the interests of the classes
of Fund shares other than Capital Portfolio shares and that
therefore only the holders of Capital Portfolio shares were
entitled to vote on the amendment. On May 1, 1990, the Union
Central separate account invested $15.2 million in the Capital
Portfolio in exchange for 1,390,516 shares at a price of $10.95
per share. Union Central, as legal owner of the Capital
Portfolio shares purchased by its separate account and as sole
shareholder of the Capital Portfolio, approved the Agreement as
amended.
On September 15, 1995, the Board of Directors took steps
to activate the S&P 500 Index Portfolio of the Fund by
authorizing the issuance of shares of that Portfolio. On
December 13, 1995, the Board of Directors also approved an
amendment to the Investment Advisory Agreement so as to make
the Agreement applicable to the Index Portfolio and to specify
the advisory fee payable by it. The Board determined that the
amendment did not affect the interests of the classes of Fund
shares other than Index Portfolio shares and that therefore
only the holders of Index Portfolio shares were entitled to
vote on the amendment. The sole shareholder of the Index
Portfolio approved the Agreement as amended on January 3, 1996.
On June 16, 1997, the Board of Directors took steps to
activate the Micro-Cap Portfolio of the Fund by authorizing the
issuance of shares of that Portfolio. On September 18, 1997,
the Board of Directors also approved an amendment to the
Investment Advisory Agreement making the Agreement applicable
to the Micro-Cap Portfolio and specifying 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
Micro-Cap Portfolio shares and that therefore only the holders
of Micro-Cap Portfolio shares were entitled to vote on the
amendment. It is anticipated that the sole shareholder of the
Micro-Cap Portfolio will approve the Agreement on or about
December 1, 1997.
The Investment Advisory Agreement provides that the
Adviser shall not be liable to the Fund or to any shareholder
for any error of judgment or mistake of law or for any loss
suffered by the Fund or by any shareholder in connection with
matters to which the Investment Advisory Agreement relates,
except a loss resulting from willful misfeasance, bad faith,
gross negligence, or reckless disregard on the part of the
Adviser in the performance of its duties thereunder. In the
case of administration services, the Adviser will be held to a
normal standard of liability.
The Agreement in no way restricts the Adviser from acting
as investment manager or adviser to others.
If the question of continuance of the Agreement (or
adoption of any new Agreement) is presented to shareholders,
continuance (or adoption) with respect to a Portfolio shall be
effective only if approved by a majority vote of the
outstanding voting securities of that Portfolio. If the
shareholders of any one or more of the Portfolios should fail
to approve the Agreement, the Adviser may nonetheless serve as
an adviser with respect to any Portfolio whose shareholders
approved the Agreement.
Administration
The Adviser is responsible for providing certain
administrative functions to the Fund and has entered into an
Administration Agreement with Carillon Investments, Inc.
("CII") under which CII furnishes substantially all of such
services for an annual fee of .20% of the average net assets of
the Bond, Capital and Equity Portfolios, .10% of the average
net assets of the Micro-Cap Portfolio, and .05% of the average
net assets of the S&P 500 Index Portfolio. The fee is borne by
the Adviser, not the Fund. Under the Administration Agreement,
CII is obligated to provide persons for clerical, accounting,
bookkeeping, administrative and other similar services, to
supply office space, stationery and office supplies, and to
prepare tax returns, reports to stockholders, and filings with
the Securities and Exchange Commission and state securities
authorities.
Service Agreement
Under a Service Agreement between the Adviser and Union
Central, Union Central has agreed to make available to the
Adviser the services of certain employees of Union Central on a
part-time basis for the purpose of better enabling the Adviser
to fulfill its obligations to the Fund under the Agreement.
Pursuant to the Service Agreement, the Adviser shall reimburse
Union Central for all costs allocable to the time spent on the
affairs of the Adviser by the employees provided by Union
Central. In performing their services for the Adviser pursuant
to the Service Agreement, the specified employees shall report
and be solely responsible to the officers and directors of the
Adviser or persons designated by them. Union Central shall
have no responsibility for the investment recommendations or
decisions of the Adviser. The obligation of performance under
the Agreement is solely that of the Adviser and Union Central
undertakes no obligation in respect thereto except as otherwise
expressly provided in the Service Agreement. The Service
Agreement was approved by the shareholders of the Equity, Bond
and Capital Portfolios at a meeting held on March 20, 1992.
The sole shareholder of the S&P 500 Index Portfolio approved
the Service Agreement on January 3, 1996. It is anticipated
that the sole shareholder of the Micro-Cap Portfolio will
approve the Service Agreement on or about December 1, 1997.
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 as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m., Eastern Time), when
there are purchases or redemptions of Fund shares, except: (i)
when the New York Stock Exchange is closed (currently New
Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas
Day); and (ii) 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 1996, 26% of the Fund's total brokerage was
allocated to brokers who furnish statistical data or research
information. Brokerage commissions paid during 1996, 1995 and
1994 were $475,382, $349,679 and $232,642, respectively.
GENERAL INFORMATION
Capital Stock
The Fund was incorporated in Maryland on January 30, 1984.
The authorized capital stock of the Fund consists of one
hundred and fifty million shares of common stock, par value ten
cents ($0.10) per share. The shares of the authorized capital
stock are currently divided into the following classes: Equity
Portfolio consisting of forty million authorized shares;
Capital Portfolio consisting of thirty million authorized
shares; Bond Portfolio consisting of thirty million authorized
shares; S&P 500 Index Portfolio consisting of thirty million
authorized shares; and Micro-Cap Portfolio consisting of twenty
million shares.
The Board of Directors may change the designation of any
Portfolio and may increase or decrease the number of authorized
shares of any Portfolio, but may not decrease the number of
authorized shares of any Portfolio below the number of shares
then outstanding.
Each issued and outstanding share is entitled to
participate equally in dividends and distributions declared by
the respective Portfolio and, upon liquidation or dissolution,
in net assets of such Portfolio remaining after satisfaction of
outstanding liabilities.
Voting Rights
In accordance with an amendment to the Maryland General
Corporation Law, the Board of Directors of the Fund has adopted
an amendment to its Bylaws providing that unless otherwise
required by the Investment Company Act of 1940, the Fund shall
not be required to hold an annual shareholder meeting unless
the Board of Directors determines to hold an annual meeting.
The Fund intends to hold shareholder meetings only when
required by law and such other times as may be deemed
appropriate by its Board of Directors.
All shares of common stock have equal voting rights
(regardless of the net asset value per share) except that on
matters affecting only one Portfolio, only shares of the
respective Portfolio are entitled to vote. The shares do not
have cumulative voting rights. Accordingly, the holders of
more than 50% of the shares of the Fund voting for the election
of directors can elect all of the directors of the Fund if they
choose to do so and in such event the holders of the remaining
shares would not be able to elect any directors.
Matters in which the interests of all Portfolios are
substantially identical (such as the election of directors or
the approval of independent public accountants) will be voted
on by all shareholders without regard to the separate
Portfolios. Matters that affect all Portfolios but where the
interests of the Portfolios are not substantially identical
(such as approval of the Investment Advisory Agreement) would
be voted on separately by each Portfolio. Matters affecting
only one Portfolio, such as a change in its fundamental
policies, are voted on separately by that Portfolio.
Matters requiring separate shareholder voting by Portfolio
shall have been effectively acted upon with respect to any
Portfolio if a majority of the outstanding voting securities of
that Portfolio votes for approval of the matter,
notwithstanding that: (1) the matter has not been approved by a
majority of the outstanding voting securities of any other
Portfolio; or (2) the matter has not been approved by a
majority of the outstanding voting securities of the Fund.
The phrase "a majority of the outstanding voting
securities" of a Portfolio (or of the Fund) means the vote of
the lesser of: (1) 67% of the shares of the Portfolio (or the
Fund) present at a meeting if the holders of more than 50% of
the outstanding shares are present in person or by proxy; or
(2) more than 50% of the outstanding shares of the Portfolio
(or the Fund).
As noted in the Prospectus, Union Central currently has
voting control of the Fund. With voting control, Union Central
could make fundamental and substantial changes (such as
electing a new Board of Directors, changing the investment
adviser or advisory fee, changing a Portfolio's fundamental
investment objectives and policies, etc.) regardless of the
views of Contract Owners. However, under current
interpretations of presently applicable law, Contract Owners
are entitled to give voting instructions with respect to Fund
shares held in registered separate accounts and therefore all
Contract Owners would receive advance notice before any such
changes could be made.
Additional Information
This Statement of Additional Information and the
Prospectus do not contain all the information set forth in the
registration statement and exhibits relating thereto, which the
Fund has filed with the Securities and Exchange Commission,
Washington, D.C., under the Securities Act of 1933 and the
Investment Company Act of 1940, to which reference is hereby
made.
INDEPENDENT AUDITORS
The financial statements of the Fund have been audited by
Deloitte & Touche LLP, 1700 Courthouse Plaza NE, Dayton, Ohio
45402, independent auditors, whose report follows. The
financial statements are included in this Statement of
Additional Information in reliance upon the report of Deloitte
& Touche LLP, given upon their authority as experts in auditing
and accounting.
<PAGE>
CARILLON FUND, INC.
Financial Statements
June 30, 1997
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
S&P 500
Equity Capital Bond Index
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments in
securities, at value $310,759,196 $159,028,648 $87,712,519 $43,563,274
(cost $250,986,522;
$149,939,900;
$86,017,333; $35,041,087)
Cash 3,401 316 -- --
Receivables:
Shares sold 373,167 224,556 62,889 95,074
Securities sold 97,809 -- -- --
Interest and Dividends 316,416 666,019 1,369,764 50,005
Prepaid expenses and other 29,062 13,625 14,208 16,042
------------ ------------ ----------- -----------
311,579,051 159,933,164 89,159,380 43,724,395
LIABILITIES
Payables:
Investment securities
purchased 1,581,018 -- 998,907 409,314
Shares purchased -- -- -- 3,478
Investment advisory fees 139,620 88,361 34,506 8,181
Custodial and portfolio
accounting fees 19,934 20,166 15,298 10,875
Professional fees 160 2,262 -- 12,206
Bank overdraft -- -- 100 33
Variation margin -- -- -- 33,250
Other accrued expenses 7,985 6,412 3,605 10,964
Deferred compensation
for directors -- -- 92,340 --
------------ ------------ ----------- -----------
1,748,717 117,201 1,144,756 488,302
------------ ------------ ----------- -----------
NET ASSETS
Paid-in capital 227,752,582 147,641,813 85,496,428 33,803,012
Undistributed net
investment income 181,360 354,849 301,209 21,428
Accumulated net realized
gain/(loss) 22,123,718 2,730,552 521,671 604,091
of investments
Net unrealized
appreciation
of investments 59,772,674 9,088,749 1,695,186 8,807,562
------------ ------------ ----------- -----------
$309,830,334 $159,815,963 $88,014,624 $43,236,093
============ ============ =========== ===========
Shares authorized
($.10) par value 40,000,000 30,000,000 30,000,000 30,000,000
Shares outstanding 16,858,010 11,648,419 8,038,070 3,009,235
Net asset value,
offering, and
redemption price
per share $18.38 $13.72 $10.95 $14.37
</TABLE>
The accompanying notes are an integral part
of the financial statement.
<PAGE>
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
S&P 500
Equity Capital Bond Index
Portfolio Portfolio Portfolio Portfolio
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 708,997 $3,334,795 $3,374,684 $ 79,334
Dividends (net of
foreign withholding
taxes of $61,288;
$21,128; $0; $2,219) 2,171,087 599,866 -- 306,578
---------- ---------- ---------- ----------
2,880,084 3,934,661 3,374,684 385,912
---------- ---------- ---------- ----------
EXPENSES
Investment advisory fees 808,766 528,925 204,142 53,162
Custodial fees and expenses 34,498 19,965 12,509 6,865
Portfolio accounting fees 25,103 23,841 19,383 15,257
Professional fees 3,870 4,532 4,114 16,122
Director's fees 6,752 6,752 5,899 7,023
Transfer agent fees 4,023 4,169 4,087 3,544
Registration and
filing fees 5,888 2,085 53 300
Other 18,407 12,420 8,752 426
---------- ---------- ---------- ----------
907,307 602,689 258,939 102,699
Fees waived by the Adviser -- -- -- (3,002)
---------- ---------- ---------- ----------
907,307 602,089 258,939 99,697
NET INVESTMENT INCOME 1,972,777 3,331,972 3,115,745 286,215
REALIZED AND UNREALIZED
GAIN/(LOSS)
Net realized gain
on investments 22,144,959 2,798,788 521,815 203,438
Net realized gain
on futures contracts -- -- -- 452,200
---------- ---------- ---------- ----------
22,144,959 2,798,788 521,815 655,638
---------- ---------- ---------- ----------
Net change in unrealized
appreciation/(depreciation)
of investments (610,487) (2,524,282) (343,006) 5,540,713
Net change in unrealized
appreciation/(depreciation)
of futures contracts -- -- -- 235,975
---------- ---------- ---------- ----------
(610,487) (2,524,282) (343,006) 5,776,688
---------- ---------- ---------- ----------
NET REALIZED AND
UNREALIZED GAIN/(LOSS) 21,534,472 274,506 178,809 6,432,326
---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $23,507,249 $3,606,478 $3,294,554 $6,718,541
=========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Equity Portfolio
For the Six Months For the Year Ended
Ended June 30, December 31,
--------------------------------------
(Unaudited)
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 1,972,777 $ 4,176,431
Net realized gain on investments 22,144,959 34,227,538
and futures
Net change in unrealized
appreciation/(depreciation)
on investments and
futures contracts (610,487) 17,468,047
------------ ------------
23,507,249 55,872,016
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (2,526,115) (3,889,965)
In excess of net investment income -- --
Net realized gain on investments (34,344,113) (9,867,342)
------------ ------------
(36,870,228) (13,757,307)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 14,569,057 41,762,282
Net asset value of shares
issued to shareholders
in reinvestment distributions 36,870,228 13,757,307
Payments for shares redeemed (16,369,695) (29,073,822)
------------ ------------
35,069,590 26,445,767
------------ ------------
NET INCREASE IN NET ASSETS 21,706,611 68,560,476
NET ASSETS
Beginning of year 288,123,723 219,563,247
------------ ------------
End of year $309,830,334 $288,123,723
============ ============
FUND SHARE TRANSACTIONS:
Sold 784,912 2,393,015
Issued in reinvestment
of distributions 2,187,096 809,878
Redeemed (927,682) (1,660,244)
------------ ------------
Net increase from fund
share transactions 2,044,326 1,542,649
------------ ------------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Capital Portfolio
<TABLE>
<CAPTION>
For the Six Months For the Year Ended
Ended June 30, December 31,
--------------------------------------
(Unaudited)
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 3,331,972 $ 6,684,340
Net realized gain on investments
and futures 2,798,788 12,459,745
Net change in unrealized
appreciation/(depreciation) on
investments and future contracts (2,524,282) 1,990,613
------------ ------------
3,606,478 21,134,698
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (3,959,663) (6,050,397)
In excess of net investment income -- --
Net realized gain on investments (12,519,532) (2,002,549)
------------ ------------
(16,479,195) (8,052,946)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 7,564,155 17,130,822
Net asset value of shares
issued to shareholders
in reinvestment of dividends
and distributions 16,479,194 8,052,945
Payments for shares redeemed (10,648,555) (24,594,141)
------------ ------------
13,394,794 589,626
------------ ------------
NET INCREASE IN NET ASSETS 522,077 13,671,378
NET ASSETS
Beginning of year 159,293,886 145,622,508
------------ ------------
End of year 159,815,963 159,293,886
============ ============
FUND SHARE TRANSACTIONS:
Sold 533,306 1,199,385
Issued in reinvestment of
dividends and distributions 1,222,104 570,034
Redeemed (762,361) (1,729,493)
------------ ------------
Net increase from fund
share transactions 993,049 39,926
============ ============
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Bond Portfolio
For the Six Months For the Year Ended
Ended June 30, December 31,
--------------------------------------
(Unaudited)
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 3,115,745 $ 5,766,633
Net realized gain on investments
and futures 521,815 1,210,173
Net change in unrealized
appreciation/(depreciation)
on investments and
futures contracts (343,006) (1,316,722)
------------ ------------
3,294,554 5,660,084
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (2,517,892) (6,340,623)
In excess of net investment income -- (320,260)
Net realized gain on investments (481,253) --
------------ ------------
(2,999,145) (6,660,883)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 5,884,551 17,850,341
Net asset value of shares
issued to shareholders
in reinvestment of dividends
and distributions 2,999,145 6,660,883
Payments for shares redeemed (6,798,740) (11,443,995)
------------ ------------
2,084,956 13,067,229
------------ ------------
NET INCREASE IN NET ASSETS 2,380,365 12,066,430
NET ASSETS
Beginning of year 85,634,259 73,567,699
------------ ------------
End of year 88,014,624 85,634,129
============ ============
FUND SHARE TRANSACTIONS:
Sold 538,925 1,633,803
Issued in reinvestment of
dividends and distributions 276,691 621,662
Redeemed (624,986) (1,054,560)
------------ ------------
Net increase from
fund share transactions 190,630 1,200,905
------------ ------------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
S&P 500 Index Portfolio
<TABLE>
<CAPTION>
For the Six Months For the Year Ended
Ended June 30, December 31,
--------------------------------------
(Unaudited)
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 286,215 $ 349,515
Net realized gain on
investments and futures 655,638 218,750
Net change in unrealized
appreciation/(depreciation) on
investments and futures contracts 5,776,688 3,030,849
------------ ------------
6,718,541 3,599,114
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (307,039) (307,386)
In excess of net investment income -- --
Net realized gain on investments (270,297) --
------------ ------------
(577,336) (307,386)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 13,103,230 30,917,430
Net asset value of shares
issued to shareholders
in reinvestment of dividends
and distributions 577,335 307,386
Payments for shares redeemed (5,790,287) (5,617,082)
------------ ------------
7,890,278 25,607,734
------------ ------------
NET INCREASE IN NET ASSETS 14,031,483 28,899,462
NET ASSETS
Beginning of year 29,204,610 305,148
------------ ------------
End of year 43,236,093 29,204,610
============ ============
FUND SHARE TRANSACTIONS:
Sold 993,940 2,850,416
Issued in reinvestment of
dividends and distributions 44,389 26,989
Redeemed (436,596) (500,402)
------------ ------------
Net increase from
fund share transactions 601,733 2,377,003
============ ============
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1997
(Unaudited)
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 91.10%
BANKING & FINANCIAL SERVICE - 14.92%
Allied Capital Corporation 28,571 457,124
Banco BHIF ADR 75,000 1,584,375
Banco Latinoamericano
De Exportanciones Sponsored ADR 54,700 2,358,938
Bank United Financial Corporation* 140,000 1,382,500
Charter One Financial, Incorporated 52,500 2,828,438
Chile Fund Incorporated* 80,000 2,090,000
Corus Bankshares, Incorporated 12,500 353,125
Czech Republic Fund 109,000 1,498,750
Deutsche Bank AG Sponsored ADR 42,000 2,456,076
Fahnestock Viner Holdings 150,000 2,831,250
First Bell Bancorp, Incorporated 15,000 248,750
FPIC Insurance Group, Incorporated* 172,500 3,881,250
Gainsco, Incorporated 217,762 2,041,519
Hamilton Bancorp, Incorporated* 100,000 2,675,000
Jefferies Group, Incorporated 64,000 2,850,000
Korea Fund, Incorporated 139,517 2,057,876
Penncorp Financial Group Corporation 95,000 3,657,500
Protective Life Corporation 40,000 2,010,000
RLI Corporation 43,625 1,589,586
Raymond James Financial Corporation 99,150 2,714,231
Thai Fund, Incorporated 145,655 2,239,446
Washington Federal, Incorporated 93,610 2,404,607
-----------
46,210,341
-----------
CAPITAL GOOD - 6.44%
AFC Cable Systems, Incorporated* 100,000 2,700,000
AGCO Corporation 59,400 2,134,688
Fibermark, Incorporated 90,000 1,878,750
Greif Brothers Corporation 82,800 2,235,600
Griffon Corporation 209,600 2,868,900
Holophane Corporation* 50,000 1,000,000
Lindsay Manufacturing Company 176,793 5,789,971
LSI Industries 100,000 1,350,000
-----------
19,957,909
CONSUMER CYCLICAL - 17.75%
Breed Technologies 125,000 2,875,000
Cemex SA -- Sponsored ADR* 200,000 1,925,938
Chromcraft Revington, Incorporated* 75,000 2,146,875
Claire's Stores, Incorporated 50,000 875,000
Conso Products Company 146,250 1,791,563
CULP, Incorporated 64,300 1,165,438
D.R. Horton, Incorporated 150,000 1,556,250
Devon Group, Incorporated* 85,000 3,038,750
Fila Holdings 50,000 1,671,875
Footstar, Incorporated* 110,000 2,873,750
Friedman's, Incorporated* 130,000 2,973,750
Helen of Troy, Bermuda* 99,000 2,536,875
Intermet Corporation 125,000 2,007,813
Kevco, Incorporated* 140,000 1,890,000
Medusa Corporation 80,300 3,081,513
NCI Building Systems, Incorporated* 80,700 2,612,663
Roberds, Incorporated* 90,000 472,500
Schult Homes 98,060 1,556,703
Scientific Games
Holdings Corporation* 72,600 1,497,375
Southern Energy Homes 217,000 1,980,125
Stanley Furniture Company* 61,000 1,410,625
Strattec Security Corporation* 145,000 2,990,625
Toll Brothers* 90,000 1,653,750
Tractor Supply Company* 30,000 540,000
Triangle Pacific Corporation* 92,500 2,960,000
Winsleow Furniture, Incorporated* 188,300 2,059,531
York Group, Incorporated 152,500 2,859,375
-----------
55,003,662
-----------
CONSUMER NON-DURABLE -7.94%
Advocat, Incorporated* 100,500 1,143,188
Complete Management, Incorporated* 120,000 1,710,000
Dairy Farm International Holdings
Sponsored ADR 200,000 750,000
Equity Marketing, Incorporated* 105,500 2,479,250
GT Bicycles, Incorporated* 175,000 1,400,000
ICN Pharmeaceuticals, Incorporated 106,600 3,058,088
IHOP Corporation* 87,000 2,697,000
Lone Star Steakhouse* 70,000 1,820,000
Oakley, Incorporated* 123,500 1,732,500
Orthofix International NV* 113,036 1,172,748
Schlotzsky's, Incorporated* 152,900 2,102,375
Standard Commercial Corporation 90,000 1,563,750
VISX, Incorporated* 45,000 1,068,750
VTECH Holdings Limited 100,000 1,884,530
-----------
24,582,179
-----------
ENERGY - 12.00%
Callon Petroleum Company* 110,000 1,760,000
Cross Timbers Oil Company 105,000 2,021,250
Giant Industries, Incorporated 205,000 3,241,563
Global Industries, Incorporated* 50,000 1,167,969
Gulf Island Fabrication, Incorpated* 110,000 2,818,750
Holly Corporation 90,000 2,233,125
KCS Energy, Incoporated 104,000 2,119,000
Maverick Tube Corporation* 83,000 3,112,500
Offshore Logistics, Incorporated* 83,000 2,265,000
Plains Resources, Incorporated* 119,500 1,762,625
Southern Mineral Corporation* 350,000 1,750,000
St. Mary Land & Exploration 60,000 2,107,500
Stone Energy Corporation* 93,900 2,570,513
Vastar Resources Incorporated 50,000 1,753,125
YPF S.A. Sponsored ADR 145,400 4,471,050
Zeigler Coal Holdings Company 87,000 2,033,625
-----------
37,187,595
-----------
MANUFACTURING -7.96%
ABT Building Products Company* 145,000 3,806,250
AEP Industries, Incorporated* 72,550 2,902,000
BWAY Corporation* 110,000 2,557,500
Bayer A G Sponsored ADR 75,000 2,884,589
Buckeye Cellulose Corporation* 51,000 1,721,250
Charoen Pok Feedmill 100,000 1,019,099
Matthews International
Corporation - Class A 77,000 2,810,500
Minorco Sponsored ADR 90,000 2,075,625
Mueller Industries* 35,000 1,531,250
Northwest Pipe Company* 32,000 588,000
Sybron Chemicals, Incorporated* 65,200 1,271,400
Wolverine Tube, Incorporated* 53,000 1,477,375
-----------
24,644,838
-----------
REAL ESTATE - 10.54%
Associated Estates Realty Corporation 65,000 1,527,500
City Developments Limited 150,000 1,468,679
Commercial Net Lease Realty 99,300 1,520,531
Evans Withycombe Residential 92,000 1,909,000
Health Care Property Investments,
Incorporated 42,600 1,501,650
Health and Retirement Property Trust 75,000 1,410,938
Health Care Realty Trust 61,400 1,711,525
Hospitality Properties Trust 64,000 1,960,000
IRT Property Company 172,300 2,024,525
Lexington Corporation Properties 100,000 1,400,000
Merry Land & Investment Company 115,000 2,494,063
Mid-America Apartment Communities 80,000 2,245,000
National Health Investors,
Incorporated 40,000 1,570,000
Oasis Residential, Incorporated 58,000 1,363,000
Pacific Gulf Properties 74,000 1,628,000
Trinet Corporate Realty
Trust Incorporated 58,000 1,917,625
United Dominion Realty
Trust Incorporated 168,000 2,383,500
Winston Hotels, Incorporated 175,000 2,635,938
-----------
32,671,474
-----------
TECHNOLOGY - 7.09%
Applied Voice Technology* 84,500 1,563,250
Carbide Graphite Group Incorporated* 130,000 3,022,500
CPAC, Incorperated* 200,000 2,425,000
Cybex Corporation* 160,000 2,840,000
DH Technology, Incorporated* 200,000 3,250,000
Kemet Corporation* 60,000 1,492,500
Nam Tai Electronics, Incorporated* 187,500 3,117,188
Recoton Corporation* 163,000 2,129,187
Vertex Communications Corporation* 80,000 2,140,000
-----------
21,979,625
-----------
TRANSPORTATION - 4.51%
Atlantic Southeast Airlines
Incorporated 95,000 2,719,375
Comair Holdings, Incorporated 115,000 3,184,063
Illinois Central Corporation - Class A 82,500 2,882,344
Landstar, Incorporated* 90,000 2,531,250
Midwest Express Holdings 97,500 2,669,063
-----------
13,986,095
-----------
UTILITY - 1.95%
CMS Energy Corporation 40,500 1,427,625
IES Industries, Incorporated 48,600 1,434,300
Rochester Gas and Electric 75,000 1,579,688
Tuscon Electric Power Company* 110,000 1,595,000
-----------
6,036,613
-----------
Total Common Stocks (cost $222,487,657) $282,260,331
-----------
SHORT-TERM INVESTMENTS - 9.20%
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COMMERCIAL PAPER - 6.00%
Merrill Lynch and Company
(5.430% due 11/26/97) $2,000,000 $1,955,353
Financial Federal
(5.700% due 10/31/97) 2,000,000 1,961,367
Financial Federal
(5.750% due 12/01/97) 1,000,000 975,563
GMAC (5.730% due 10/06/97) 2,000,000 1,969,122
Greenwich Funding Corporation
(5.640% due 9/22/97) 1,500,000 1,480,495
Hertz Corporation
(5.560% due 01/08/98) 2,000,000 1,941,002
Progress Funding Corporation
(5.730% due 9/18/97) 1,000,000 987,426
Cargill Financial Services
Corporation (5.410% due 11/26/97) 2,000,000 1,955,518
Ford Motor Credit
(5.690% due 01/27/98) 2,000,000 1,933,617
Orix Credit Alliance
(5.650% due 09/19/97) 2,000,000 1,974,889
International Lease Financial
Corporation (5.45% due 11/17/1997) 1,500,000 1,468,435
-----------
18,602,787
-----------
VARIABLE RATE DEMAND NOTES<F1> - 3.20%
Johnson Controls, Inc.
(5.276% due 00/00/00) 2,420,210 2,420,210
Warner Lambert (5.226% due 00/00/00) 3,210,109 3,210,110
General Mills, Inc.
(5.245% due 00/00/00) 2,548,821 2,548,822
American Family Financial Services
(5.256% due 00/00/00) 606,286 606,287
Pitney Bowes Credit Corp
(5.225% due 00/00/00) 567,300 567,300
Wisconsin Electric Power Co.
(5.965 due 00/00/00) 543,349 543,349
-----------
9,896,078
-----------
Total Short-Term Investments
(cost $28,498,865) 28,498,865
-----------
TOTAL INVESTMENTS - 100.30%
(cost $250,986,522)<F2> 310,759,196
-----------
OTHER ASSETS AND LIABILITIES - (.30)% (928,862)
-----------
TOTAL NET ASSETS - 100% $309,830,334
===========
____________
*Non-income producing
(ADR) American Depository Receipt
<FN>
<F1> Interest rates vary periodically based on current market rates. The
maturity shown for each variable rate demand note is the later of the next
scheduled interest rate adjustment date or the date on which principal can be
recovered through demand. Information as of June 30 1997.
<F2> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at June 30,1997 or financial
reporting purposes was $68,112,935 and $8,340,261.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
Carillon Fund, Inc.
Schedule of Investments
JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
CAPITAL PORTFOLIO
COMMON STOCKS - 34.70% SHARES/
PRINCIPAL VALUE
--------- -----------
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 9.88%
Allied Capital Corporation 34,285 $ 548,560
Banco BHIF ADR 50,000 1,056,250
Banco Latinoamericano
de Exportaciones ADR 3,900 168,176
Black Rock Strategic Term Trust 75,000 609,375
Charter One Financial Incorporated 42,000 2,262,750
Chile Fund* 33,000 862,125
Corus Bankshares Incorporated 6,000 169,500
Deutsche Bank AG Sponsored ADR 12,000 701,736
Fahnestock Viner Holdings 70,000 1,321,250
FPIC Insurance Group Incorporated* 65,000 1,462,500
Korea Fund 83,792 1,235,932
New Germany Fund 79,789 1,256,677
Penncorp Financial Group
Incorporated 24,000 924,000
Templeton Global Income Fund 125,000 937,500
Thai Fund Incorporated 55,566 854,327
Washington Federal Incorporated 55,000 1,412,812
-----------
15,783,470
-----------
CAPITAL GOOD - 2.26%
Griffon Corporation 55,000 752,813
Lindsay Manufacturing Incorporated 49,362 1,616,606
Strattec Security Corporation* 60,000 1,237,500
-----------
3,606,919
-----------
CONSUMER CYCLICAL -2.21%
Chromcraft Revington Incorporated* 25,000 715,625
Evans Withycombe Residential 39,000 809,250
NCI Building Systems Incorporated* 35,000 1,133,125
Winsleow Furniture Incorporated* 80,000 875,000
-----------
3,533,000
-----------
CONSUMER NON-DURABLE -1.08%
GT Bicycles Incorporated* 80,000 640,000
IHOP Corporation* 35,000 1,085,000
-----------
1,725,000
-----------
ENERGY - 4.25%
Callon Petroleum Company* 35,000 560,000
Cross Timbers Oil Company 27,450 528,413
Giant Industries Incorporated 87,400 1,382,013
KCS Energy Incorporated 42,000 855,750
Offshore Logistics Incorporated* 47,000 887,125
Stone Energy Corporation* 27,000 739,125
YPF S.A. Sponsored ADR 60,000 1,845,000
-----------
6,797,426
-----------
MANUFACTURING - 7.01%
ABT Building Products Company* 45,000 1,181,250
AEP Industries, Incorporated* 30,831 1,233,240
Bway Corporation* 44,000 1,023,000
Carbide Graphite Group* 60,000 1,395,000
Coeur D Alene Mines 52,000 672,756
Matthews International 2,500 91,250
Newmont Mining Corporation 35,050 1,366,950
Royal Oak Mines Incorporated* 125,000 296,875
TVX Gold Incorporated* 195,000 1,035,938
Vaal Reefs Exploration
& Mining Limited ADR 120,100 577,981
York Group Incorporated 62,000 1,162,500
Zeigler Coal Holding Company 50,000 1,168,750
-----------
11,205,490
-----------
REAL ESTATE - 6.15%
Associated Estates
Realty Corporation 50,000 1,175,000
City Developments 95,000 930,163
Hospitality Properties Trust 33,000 1,010,625
LTC Properties Incorporated 46,000 833,750
Merry Land & Investment Company 60,000 1,301,250
Mid-America Apartment Communities 40,000 1,122,500
Pacific Gulf Properties 43,500 957,000
United Dominion Realty Trust 75,000 1,064,063
Winston Hotels Incorporated 95,000 1,430,938
-----------
9,825,289
-----------
TECHNOLOGY - 1.86%
AFC Cable Systems Incorporated* 19,000 513,000
DH Technology, Incorporated* 94,760 1,539,850
Vertex Communications Corporation* 34,100 912,175
-----------
2,965,025
-----------
Total Common Stocks (cost $46,839,264) 55,441,619
-----------
PREFERRED STOCKS - .39%
MANUFACTURING -.39%
Freeport McMoRan Copper
& Gold Series 20,000 617,500
Total Preferred Stock (cost $709,838) 617,500
-----------
U.S. TREASURY OBLIGATIONS - 16.65%
7.875% due 04/15/98 $ 500,000 508,125
5.750% due 12/31/98 2,000,000 1,993,750
5.500% due 02/28/99 1,000,000 991,563
6.000% due 10/15/99 5,900,000 5,888,938
5.750% due 10/31/00 1,000,000 984,063
7.500% due 11/15/01 500,000 521,094
6.375% due 08/15/02 1,750,000 1,748,906
5.750% due 08/15/03 3,000,000 2,896,875
5.875% due 02/15/04 100,000 96,875
7.250% due 05/15/04 3,500,000 3,647,658
7.875% due 11/15/04 6,800,000 7,335,500
-----------
Total U.S. Treasury Notes
($26,376,144) 26,613,347
-----------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 11.24%
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 3.14%
1662 H (6.250% due 01/15/09) 959,423 945,377
1442 FA (6.480% due 11/15/07)<F1> 1,000,000 981,083
1559 VP (5.500% due 02/15/20) 1,700,000 1,628,396
1399 PAC (7.000% due 09/15/22) 596,484 574,662
1631 SB (5.850% due 12/15/23) 1,450,000 888,680
-----------
5,018,198
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 7.78%
Remic 93-12 ED
(7.500% due 02/25/06) 1,645,000 $ 1,687,145
Remic 1992-163 PN
(7.000% due 07/25/07) 1,500,000 1,501,620
Remic 92-117 J
(7.500% due 07/25/20) 1,000,000 1,011,628
Remic 92-119 E
(8.000% due 07/25/20) 1,000,000 1,024,020
Remic 92-112E
(8.000% due 12/25/20) 1,500,000 1,540,946
Remic 93-127 FA
(5.930% due 10/25/21)<F1> 1,000,000 963,110
Remic 1992-39 FB
(6.530% due 03/25/22)<F1> 2,000,000 1,975,701
Remic 92-66 F
(6.219% due 05/25/22)<F1> 914,116 915,412
Remic 1993-119 SB
(6.808% due 07/25/23)<F1> 2,572,882 1,817,284
-----------
12,436,866
-----------
PRIVATE SECTOR - .32%
Prudential Home Mortgage Securities
(7.500% due 07/25/10) 506,988 504,610
-----------
Total Collateralized Mortgage
Obligations (cost $18,372,000) 17,959,674
-----------
MORTGAGE - BACKED SECURITIES - 8.75%
FEDERAL HOME LOAN
MORTGAGE CORPORATION - .76%
7.500% due 06/01/07 39,450 39,723
9.500% due 10/01/08 202,360 215,806
8.250% due 03/01/12 108,680 112,266
8.500% due 03/01/16 91,603 95,400
7.500% due 07/01/17 47,255 47,453
11.000% due 04/01/19 52,498 58,570
11.000% due 11/01/19 53,211 59,366
11.000% due 05/01/20 201,492 224,710
11.000% due 06/01/20 329,392 367,632
-----------
1,220,926
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 7.67%
10.000% due 02/01/04 4,477 4,782
9.500% due 09/01/05 132,297 138,449
9.000% due 11/01/05 53,926 56,161
7.500% due 03/25/07 1,200,000 1,221,561
8.000% due 05/01/07 132,106 136,137
6.000% due 12/01/08 816,923 793,257
5.500% due 01/01/09 849,387 806,290
6.000% due 03/01/09 925,411 898,602
5.500% due 04/01/09 613,202 579,317
6.500% due 02/01/26 775,991 742,701
6.500% due 03/01/26 200,580 191,976
7.000% due 03/01/26 1,883,824 1,847,523
7.000% due 07/01/26 1,924,489 1,886,005
7.500% due 07/01/26 2,944,095 2,950,543
-----------
12,253,304
-----------
<PAGE>
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - .32%
9.000% due 11/15/16 $ 89,874 $ 96,503
10.500% due 11/20/19 263,085 292,080
9.000% due 12/15/19 115,037 123,188
-----------
511,771
-----------
Total Mortgage Backed Securities
(cost $13,406,326) 13,986,001
-----------
CORPORATE BONDS AND NOTES - 2.85%
COMMUNICATIONS AND MEDIA - .58%
Lowen Group International, Inc.
(8.250% due 04/15/03) 900,000 928,494
-----------
FINANCE COMPANY - .39%
Zions Trust (8.536% due 12/15/26)<F1> 600,000 618,153
-----------
OIL & GAS EXPLORATION SERVICES - .13%
Maxus Debentures
(11.250% due 05/01/13) 208,000 213,200
-----------
REAL ESTATE - .32%
GE Capital Marketing Services, Inc.
(6.000% due 08/25/09) 552,188 518,196
-----------
TELEPHONE & TELECOMMUNICATIONS - .66%
TCI Communications Inc
(8.650% due 09/15/04) 1,000,000 1,058,984
-----------
UTILITIES - ELECTRIC - .77%
New Orleans Public Service Inc.
1st Mtg. (8.670% due 04/01/05)<F1> 1,200,000 1,225,889
-----------
Total Corporate Bonds
(cost $ 4,388,737) 4,562,916
-----------
SHORT-TERM INVESTMENTS - 24.93%
COMMERCIAL PAPER - 16.12%
Cargill Financial Services
Corporation (5.410% due 11/26/97) 2,000,000 1,955,600
Case Credit Corporation
(5.800% due 08/25/97) 1,500,000 1,486,708
Credit Suisse First Boston
(5.730% due 10/17/97) 1,500,000 1,474,215
CSX (5.770% due 07/10/97) 2,000,000 1,997,115
Daimler Benz NA Corporation
(5.670% due 09/09/97) 2,000,000 1,977,950
Electronic Data System
(5.630% due 07/31/97) 2,000,000 1,990,617
Ford Motor Company
(5.320% due 07/07/97) 2,500,000 2,497,675
GMAC (5.660% due 12/31/97) 1,000,000 971,228
Houston Industries
(5.800% due 07/07/97) 1,000,000 999,033
IBM Credit (5.560% due 08/08/97) 2,000,000 1,988,880
Illinois Power Company
(5.800% due 07/29/97) 2,000,000 1,990,978
Madison Funding Corporation
(5.640% due 07/14/97) 2,000,000 1,995,927
Merrill Lynch and Company
(5.430% due 11/26/97) 1,000,000 977,677
Nationwide Building
(5.690% due 08/11/97) 1,500,000 1,490,280
Orix Credit Alliance
(5.650% due 09/19/97) 2,000,000 1,974,889
-----------
25,768,772
-----------
VARIABLE RATE DEMAND NOTES - 8.81%
American Family Financial
Services, Inc. (5.2562% due 07/02/97) 1,484,666 1,484,666
General Mills Incorporated
(5.245% due 07/02/97) 62,752 62,752
Johnson Controls, Inc.
(5.2760% due 07/02/97) 4,983,151 4,983,151
Pitney Bowes Credit Corporation
(5.2551% due 07/02/97) 560,874 560,874
Warner Lambert (5.226% due 07/02/97) 5,450,773 5,450,773
Wisconsin Electric Power Company
(5.549% due 01/01/97) 1,536,603 1,536,603
-----------
14,078,819
-----------
Total Short Term Investments
(cost $39,847,591) 39,847,591
-----------
TOTAL INVESTMENTS - 99.51%
(cost $149,939,900)<F2> 159,028,648
-----------
OTHER ASSETS AND LIABILITIES - .49% 787,315
-----------
TOTAL NET ASSETS - 100% $159,815,963
============
_______________
Non-Income producing
(ADR) American Depository Receipt
<FN>
<F1> Interest rates vary periodically based on current market rates. Rates
shown are as of June 30, 1997. 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, 1997.
<F2> Gross unrealized appreciation and depreciation of securities at June
30, 1997 for financial reporting purposes was $12,433,734 and $3,344,986
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
June 30, 1997
(Unaudited)
BOND PORTFOLIO
<TABLE>
<CAPTION>
U.S. TREASURY OBLIGATIONS - 33.47% SHARES/
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
U.S. TREASURY BOND - 2.03%
6.000% due 02/15/26 $2,000,000 $ 1,789,375
-----------
U.S. TREASURY NOTES - 26.65%
6.000% due 10/15/99 4,000,000 3,992,500
6.700% due 04/30/00 2,000,000 2,026,250
7.750% due 02/15/01 2,500,000 2,615,625
5.625% due 02/28/01 2,000,000 1,956,250
5.875% due 11/15/05 5,000,000 4,784,375
7.000% due 07/15/06 5,000,000 5,143,750
6.250% due 02/15/07 3,000,000 2,934,375
23,453,125
-----------
U.S. TREASURY STRIPS - 4.79%
0.000% due 02/15/00 3,250,000 2,766,692
0.000% due 08/15/02 2,000,000 1,448,220
-----------
4,214,912
Total U.S. Treasury Obligations
(cost $29,412,404) 29,457,412
-----------
MORTGAGE - BACKED SECURITIES - 3.10%
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 1.01%
7.500% due 02/01/02 39,345 39,812
9.500% due 04/01/05 70,650 74,028
7.500% due 06/01/07 86,826 87,426
11.000% due 05/01/10 11,080 12,334
12.500% due 08/01/10 16,401 18,769
8.000% due 11/01/16 46,309 47,365
9.500% due 02/01/18 75,613 80,788
6.500% due 07/01/23 549,494 530,877
-----------
891,399
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 1.91%
12.000% due 04/01/00 60,942 65,284
9.000% due 08/01/01 46,473 48,346
8.500% due 01/01/02 43,959 45,456
10.500% due 06/01/04 12,259 12,998
10.500% due 05/01/05 184,966 196,122
6.500% due 06/01/08 1,055,197 1,040,403
8.000% due 08/01/17 267,939 273,716
-----------
1,682,325
-----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - .18%
11.000% due 03/15/10 60,550 66,491
9.000% due 05/15/20 81,070 85,605
-----------
152,096
-----------
Total Mortgage-Backed Securities
(cost $2,686,975) 2,725,820
-----------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 6.75%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 3.51%
59 E (8.900% due 11/15/20) $1,008,875 $ 1,051,541
106 G (8.250% due 12/15/20) 1,000,000 1,038,248
1770 B (8.250% due 01/15/24) 1,000,000 1,002,701
-----------
3,092,490
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - .23%
Remic (9.500% due 12/25/18) 190,981 202,622
-----------
PRIVATE SECTOR - 3.01%
Securitized Asset Sales, Inc.
(6.500% due 07/25/08) 296,484 282,680
CMC Securities Corp.
(0.000% due 12/25/08) 375,009 279,202
Country Wide Mortgage-Backed
Securities, Inc.(6.000% due 03/01/09) 851,430 795,022
Capstead Mortgage Securities Corp.
(10.950% due 02/01/14) 192,504 193,219
NWA Trust No. 2 Class B
(10.230% due 06/21/14) 938,462 1,099,340
-----------
2,649,463
-----------
Total Collateralized Mortgage
Obligations (cost $5,566,249) 5,944,575
-----------
CORPORATE BONDS AND NOTES - 48.27%
AIR TRANSPORTATION - 1.15%
Continental Airlines
(7.820% due 10/15/23) 980,392 1,008,765
-----------
BANK & BANK HOLDING COMPANIES - 1.17%
NationsBank Corp.
(7.625% due 04/15/05) 1,000,000 1,030,183
-----------
BUILDING PRODUCTS - .57%
Falcon Building Products
(9.5000% due 06/15/07) 500,000 497,500
-----------
COMMUNICATIONS AND MEDIA - 11.73%
Adelphia Communications
(12.500% due 05/15/02) 1,000,000 1,061,250
Call-Net Enterprises
(0.000% due 12/01/04) 1,250,000 1,079,688
CF Cable TV Inc.
(9.125% due 07/15/07) 1,000,000 1,070,000
Continental Cablevision
(8.300% due 05/15/06) 1,000,000 1,060,739
Jones Intercable, Inc.
(9.625% due 03/15/02) 500,000 505,000
Neodata Service
(12.000% due 05/01/03) 1,000,000 1,075,000
Peoples Choice TV
(0.000% due06/01/04) 1,000,000 365,000
Spanish Broadcasting Systems
(11.000% due 03/15/04) 1,000,000 1,050,000
Time Warner Inc.
(8.110% due 08/15/06)<F2> 1,000,000 1,042,947
Talton Holdings Incorporated
(11.000% due 06/30/07) 1,000,000 1,010,000
Viacom Incorporated
(7.750% due 06/01/05) 1,000,000 1,003,667
-----------
10,323,291
-----------
CONSUMER PRODUCTS - 1.05%
Coleman Holdings (0.000% due 05/27/98) 1,000,000 923,750
-----------
FINANCE COMPANIES - 7.48%
Ahmanson Capital Trust
(8.360% due 12/01/26)<F2> 1,500,000 1,491,684
Conseco Finance
(8.796% due 04/01/27)<F2> 1,500,000 1,542,532
Prudential Insurance
(8.100% due 07/15/15) 1,000,000 1,002,775
USF&G (8.470% due 01/10/27)<F2> 1,000,000 1,002,128
Zions Trust (8.536% due 12/15/26)<F2> 1,500,000 1,545,384
-----------
6,584,503
-----------
FOOD, BEVERAGE, & TOBACCO - 2.24%
RJR Nabisco, Inc.
(7.625% due 09/15/03) 500,000 483,870
Great American Cookie, Inc.
(10.875% due 01/15/01) 500,000 505,000
Nabisco Inc. (7.550% due 06/15/15) 1,000,000 985,992
-----------
1,974,862
-----------
GAMING INDUSTRY - 4.47%
Argosy Gaming (13.250% due 06/01/04) $1,000,000 $ 962,500
Boomtown, Inc. 1st Mortgage
(11.500% due 11/01/03) 1,000,000 1,070,000
Casino Magic of Louisiana
(13.000% due 08/15/03) 1,000,000 845,000
Empress River Casino Finance Corp.
(10.750% due 04/01/02) 1,000,000 1,060,000
3,937,500
-----------
GROCERY INDUSTRY - .55%
Pueblo Xtra International
(9.5000% due 08/01/03) 500,000 480,000
-----------
HEALTH CARE - 1.72%
Columbia / HCA Healthcare Corp.
(7.690% due 06/15/25)<F2> 1,000,000 1,004,062
Foundation Health Corp.
(7.750% due 06/01/03) 500,000 514,119
-----------
1,518,181
-----------
INSURANCE - 3.04%
Berkley (W.R.) Corp.
(9.875% due 05/15/08) 500,000 593,441
Farmers Insurance Exhange
(8.500% due 04) 1,000,000 1,052,931
Leucadia National Corp.
(8.250% due 06/15/05) 1,000,000 1,032,965
-----------
2,679,337
-----------
MANUFACTURING - 3.75%
General Instrument Corporation
(5.000% due 06/15/00) 500,000 570,625
International Knife & Saw Corp.
(11.375% due 11/15/06) 1,000,000 1,067,500
International Wire Group Inc.
(11.750% due 06/01/05) 500,000 543,750
Terex Corp. (13.750% due 05/15/02) 1,000,000 1,122,500
-----------
3,304,375
-----------
MISCELLANEOUS - 1.22%
Allied Waste North America
(10.250% due 12/01/06) 1,000,000 1,070,000
-----------
OIL & GAS - DOMESTIC - .60%
Penzoil Company (9.625% due 11/15/99) 500,000 531,552
-----------
OIL & GAS - SERVICES - 2.95%
All Star Gas Corporation
(7.000% due 07/15/04) 1,000,000 870,000
Mitchell Energy Development Corp.
(6.750% due 02/15/04) 750,000 709,714
PDV America, Inc.
(7.750% due 08/01/00) 1,000,000 1,013,210
-----------
2,592,924
-----------
PAPER & FOREST PRODUCTS - 1.17%
Crown Paper (11.000% due 09/01/05) 500,000 500,000
Westvaco Corp. (10.300% due 01/15/19) 500,000 532,418
-----------
1,032,418
-----------
RETAIL - 2.16%
Pamida Incorporated
(11.750% due 03/15/03) 500,000 470,000
Shopko Stores (6.500% due 08/15/03) 1,500,000 1,427,181
-----------
1,897,181
-----------
STEELS AND METALS - 1.25%
Gulf States Steel
(13.500% due 04/15/03) 500,000 497,500
UCAR Global Enterprises Inc.
(12.000% due 01/15/05) 530,000 598,900
-----------
1,096,400
-----------
Total Corporate Bond and Notes
(cost $41,636,488) 42,482,722
-----------
COMMON STOCKS - .04%
ENERGY - .04%
Mesa Incorproated* 6,417 36,898
Total Common Stocks (cost $ 24,365) 36,898
-----------
WARRANTS - 0.00%
RETAIL-FOOD - 0.00%
Great American Cookie 90 $ 2,250
TECHNOLOGY - .00%
Terex Corporation Appreciation Rights 4,000 40
-----------
Total Warrants (cost $ 28,050) 2,290
-----------
PREFERRED STOCKS - 1.02%
BANKING AND FINANCIAL SERVICE - 1.02%
Earthshell Container Corporation
Series A
Cumulative Senior Convertible 8%<F1> 500 900,000
Total Preferred Stocks (cost $500,000) 900,000
-----------
SHORT TERM INVESTMENTS - 7.01%
COMMERCIAL PAPER - 5.68%
ConAgra, Incorporated
(5.770% due 07/03/97) 2,000,000 1,999,359
CSX (5.800% due 07/07/97) 1,000,000 999,033
Ford Motor Company
(5.3200% due 07/07/97) 1,000,000 999,063
Ford Motor Company
(5.6200% due 07/07/97) 1,000,000 998,907
-----------
4,996,362
-----------
VARIABLE RATE DEMAND
NOTES <F2> - 1.33%
American Family Financial
Services, Inc. (5.2562% due 07/02/97) 100 100
General Mills, Inc.
(5.2450% due 07/02/97) 309,612 309,612
Johnson Controls Inc.
(5.2760% due 07/02/97) 662,051 662,051
Pitney Bowes Credit Corp.
(5.2551% due 07/02/97) 144,846 144,846
Wisconsin Electric Power Co.
(5.2962% due 07/02/97) 49,831 49,831
-----------
1,166,440
-----------
Total Short-Term Investments
(cost 6,162,802) 6,162,802
-----------
TOTAL INVESTMENTS - 99.66%
(cost $86,017,333)<F3> 87,712,519
-----------
OTHER ASSETS AND LIABILITIES - .34% 302,105
-----------
TOTAL NET ASSETS - 100% $88,014,624
-----------
* Non-Income Producing
<FN>
<F1> 144A- Privately placed security traded among qualified institutional
buyers.
<F2> Interest rates vary periodically based on current market rates.
Rates shown are as of June 30, 1997. The maturity shown for each
variable rate demand note is the later of the next scheduled interest
adjustment date or the date on which principal can be recovered through
demand. Information shown is as of June 30, 1997.
<F3> Gross unrealized appreciation and depreciation of securities at June
30, 1997 for financial reporting purposes was $2,747,980 and $1,052,794;
tax amounts were substantially the same.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statments.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
JUNE 30, 1997
(Unaudited)
S&P 500 INDEX PORTFOLIO
COMMON STOCKS - 90.10%
SHARES VALUE
------ -----
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 15.88%
Aegon ADR 348 24,313
Aetna Life & Casulaty Company 867 88,759
Allstate Corporation 2,600 189,800
American Express Company 2,800 208,600
American General Corporation 1,300 62,075
American International Group 2,700 403,313
Banc One Corporation 2,490 120,609
Bank of Boston Corporation 900 64,856
Bank of New York, Incorporated 2,300 100,050
BankAmerica Corporation 4,200 271,163
Bankers Trust New York Corporation 500 43,500
Barnett Banks, Incorporated 1,300 68,250
Chase Manhattan Corporation 2,712 263,234
Chubb Group 1,100 73,563
CIGNA Corporation 500 88,750
Citicorp 2,100 253,181
Comerica, Incorporated 700 47,600
CoreStates Financial Corporation 1,400 75,250
Fannie Mae 6,100 266,113
Federal Home Loan Mortgage Corporation 4,000 137,500
First Bank System, Incorporated 900 76,838
First Chicago NBD Corporation 1,800 108,900
First Union Corporation 1,700 157,250
Fleet Financial Group, Incorporated 1,600 101,200
General RE Corporation 500 91,000
Great Western Financial 800 43,000
Green Tree Financial Corporation 800 28,500
Household International, Incorporated 600 70,463
ITT Hartford Group Incorporated 600 49,650
KeyCorp 1,400 78,225
Lincoln National Corporation 600 38,625
Marsh & McLennan Companies, Incorporated 1,000 71,375
MBNA Corporation 1,775 65,009
Mellon Bank Corporation 1,600 72,200
Merrill Lynch & Company, Incorporated 2,000 119,250
Morgan (J. P.) & Company 1,200 125,250
Morgan Stanley Group Incorporated 3,285 141,460
National City Corporation 1,400 73,500
NationsBank Corporation 3,044 196,338
Norwest Corporation 2,300 129,375
PNC Bank Corporation 2,100 87,413
Providian Corp. 800 25,700
Republic New York Corporation 400 43,000
S & P Despository Receipt 15,000 1,326,976
SAFECO Corporation 800 37,350
Salomon, Incorporated 700 38,938
SunTrust Banks, Incorporated 1,500 82,594
Transamerica Corporation 500 46,781
Travelers Group, Incorporated 3,633 229,106
US Bancorp 900 57,713
Wachovia Corporation 1,000 58,313
Wells Fargo & Company 533 143,644
-----------
6,865,415
-----------
CAPITAL GOOD - 5.05%
AMP, Incorporated 1,500 62,625
Caterpillar, Incorporated 1,100 118,113
Cooper Industries, Incorporated 900 44,775
Deere & Company 1,500 82,313
Dover Company 800 49,200
Emerson Electric Company 2,600 143,163
Foster Wheeler Corporation 300 16,200
General Electric Company 18,400 1,202,900
Grainger (WW), Incorporated 500 39,094
Illinois Tool Works, Incorporated 1,600 79,900
Ingersoll-Rand Company 600 37,050
Tenneco, Incorporated 1,200 54,225
Tyco International 1,100 76,519
Waste Management, Incoroporated 2,900 93,163
Westinghouse Electric Corporation 3,600 83,250
-----------
2,182,490
-----------
CONSUMER CYCLICAL - 6.34%
American Greetings Company Class A 600 22,275
American Stores Company 900 44,438
Black & Decker Corp. 500 18,594
Chrysler Corporation 4,100 134,531
CVS Corporation 700 35,875
Dayton Hudson Corporation 1,400 74,463
Eaton Corporation 500 43,656
Federated Department Stores Incorporated* 1,300 45,175
Ford Motor Company 6,800 256,700
Gap (The), Incorporated 1,600 62,200
General Motors Corporation 4,400 245,025
Genuine Parts Company 1,950 66,056
Goodyear Tire & Rubber Company 1,100 69,644
HFS, Incorporated 800 46,400
Home Depot, Incorporated 2,800 193,025
Johnson Controls 800 32,850
K Mart Corporation* 2,900 35,525
Lowe's Companies, Incorporated 1,000 37,125
May Department Stores Company 1,600 75,600
NIKE, Incorporated 1,700 99,238
PACCAR, Incorporated 400 18,575
Penney, (J.C.) Company, Incorporated 1,400 73,063
Reebok International, Incorporated* 400 18,775
Rite Aid Corporation 900 44,888
Sears, Roebuck & Company 2,300 123,625
Tandy Corporation 500 28,000
Limited (The), Incorporated 1,790 36,248
Toys "R" Us, Incorporated* 1,700 59,500
TRW, Incorporated 900 51,131
V.F. Corporation 500 42,375
Wal-Mart Stores, Incorporated 14,100 476,756
Walgreen Company 1,400 75,075
Whirlpool Corporation 600 32,738
Woolworth Corporation* 1,000 24,000
-----------
2,743,144
-----------
CONSUMER NON-DURABLE - 23.65%
Abbott Laboratories 4,400 293,700
Albertson's, Incorporated 1,600 58,400
American Home Products Corporation 3,800 290,700
Andrew Corporation 600 16,875
Anheuser-Busch Companies, Incorporated 2,800 117,425
Archer-Daniels-Midland Company 3,495 82,133
Automatic Data Processing, Incorporated 1,900 89,300
Avon Products, Incorporated 800 56,450
Baxter International, Incorporated 1,700 88,825
Becton, Dickinson Company 900 45,563
Block, H&R Incorporated 700 22,575
Boston Scientific Corporation* 1,000 61,438
Bristol-Meyers Squibb Company 5,800 469,800
Browning Ferris 1,300 43,225
Brunswick Corporation 700 21,875
Campbell Soup Company 2,600 130,000
Clorox Co. 300 39,600
Coca-Cola Company 13,900 938,250
Cognizant Corporation 1,000 40,500
Colgate-Palmolive Company 1,600 104,400
Columbia/HCA Healthcare Corporation 3,950 155,284
Comcast Corporation 1,200 25,650
ConAgra, Incorporate, Class A. Special 1,500 96,188
CPC International, Incorporated 900 83,081
CUC International, Incorporated* 2,550 65,822
Donnelly (RR) & Sons Company 1,200 43,950
Dow Jones, & Company, Incorporated 700 28,131
Dun & Bradstreet Corporation 1,200 31,500
Fortune Brands, Incorporated 1,100 41,044
Gallagher Group* 1,100 20,281
Gannett Company, Incorporated 1,100 108,625
General Mills, Incorporated 1,000 65,125
Gillette Company 3,100 293,725
Heinz (H.J.) Company 2,300 106,088
Harrahs Entertainment, Incorporated* 700 12,600
Hershey Foods Corporation 1,100 60,844
Hilton Hotels Corporation 1,700 45,156
International Flavors & Fragrance,
Incorporated 700 35,350
Interpublic Group Companies, Incorporated 600 36,788
Johnson & Johnson 7,500 482,813
Kellogg Company 1,200 102,750
King World Producation, Incorporated* 500 17,500
Kroger Company* 1,600 46,400
Lilly,(Eli) & Company 3,100 338,869
Loews Corporation 800 80,100
Manor Care 500 16,313
Mattel, Incorporated 1,850 62,669
Marriott International 900 55,238
McDonalds Corporation 4,100 198,081
McGraw Hill Companies, Incorporated 800 47,050
Medtronic, Incorporated 1,400 113,400
Merck & Company, Incorporated 6,600 683,100
PepsiCo, Incorporated 8,700 326,794
Pfizer, Incorporated 3,600 430,200
Pharmacia & Upjohn, Incorporated 2,900 100,775
Philip Morris Companies, Incorporated 14,100 625,688
Procter & Gamble Company 3,800 536,750
Ralston-Ralston Purina Group 600 49,313
Sara Lee Corporation 2,800 116,550
Schering-Plough Corporation 4,200 201,075
Seagrams Company, Limited 2,200 88,550
St. Jude Medical* 500 19,500
Sysco Corporation 1,300 47,450
Tele-Communications, Incorporated* 2,000 29,750
Tenet Healthcare Corporation* 1,900 56,169
Time Warner, Incorporated 3,500 168,875
Tribune Company 1,000 48,063
UST, Incorporated 1,200 33,300
United HealthCare Corporation 1,100 57,200
Viacom, Inc. - Class B* 1,700 51,000
Walt Disney Company, The 3,919 314,500
Warner-Lambert Company 1,700 211,225
Wendy's International 800 20,750
Winn-Dixie Stores, Incorporated 900 33,525
Wrigley, (Wm), Jr. Company 700 46,900
-----------
10,224,451
-----------
ENERGY - 8.07%
Amerada Hess Corporation 600 33,338
Amoco Corporation 3,000 260,813
Atlantic Richfield Company 1,800 126,900
Burlington Resources, Incorporated 900 39,713
Chevron Corporation 3,700 273,569
Columbia Gas System, Incorporated 400 26,100
Dresser Industries, Incorporated 1,400 52,150
Enron Corporation 1,500 61,219
Exxon Corporation 13,400 824,100
Halliburton Company 900 71,325
Kerr-McGee Company 400 25,350
Mobil Corporation 4,200 293,475
Occidental Petroleum 2,000 50,125
Phillips Petroleum Company 1,600 70,000
Royal Dutch Petroleum Company ADR 12,400 674,250
Schlumberger Limited 1,800 225,000
Sun Company, Incorporated 800 24,800
Texaco, Incorporated 1,500 163,125
USX-Marathon 1,800 51,975
Union Pacific Resources Group 1,592 39,601
Unocal Corporation 1,400 54,338
Williams Companies 1,050 45,938
-----------
3,487,204
-----------
MANUFACTURING - 7.61%
Air Products & Chemicals, Incorporated 700 56,875
Alcan Aluminum Limited 1,900 65,906
Allegheny Teledyne, Incorporated 800 21,600
Aluminum Company of America 1,400 105,525
Applied Materials Incorporated* 1,100 77,894
Barrick Gold 2,200 48,400
Bemis Company 400 17,300
Bethlehem Steel Corporation* 800 8,350
Centex Corporation 100 4,063
Champion International Corporation 800 44,200
Corning, Incorporated 1,400 77,875
Crown Cork & Seal Company, Incorporated 800 42,750
Dow Chemical Company 1,600 139,400
DuPont (E.I.) De Nemours & Company 6,400 402,400
Eastman Chemical Company 600 38,100
Eastman Kodak Company 1,900 145,825
Englehard Corporation 800 16,750
Fluor Corporation 700 38,631
Freeport McMoran Copper 800 24,900
Georgia-Pacific Company 800 68,300
Grace, (WR) & Company 500 27,563
Great Lakes Chemical Corporation 600 31,425
Hercules, Incorporated 700 33,513
Inco, Limited 1,300 39,081
International Paper Company 1,800 87,413
ITT Corporation* 700 42,744
Kimberly-Clark Corporation 3,200 159,200
Louisiana-Pacific Corporation 900 19,013
Mallincrokdt Group, Incorporated 700 26,600
Masco Corporation 1,200 50,100
Minnesota Mining & Manufacturing Company 2,400 244,800
Mead Corporation 400 24,900
Monsanto Company 3,500 150,719
Morton International, Incorporated 1,000 30,188
Nalco Chemical Company 600 23,175
Newmont Mining Corporation 1,500 58,500
Nucor Corporation 700 39,550
Owens Corning 400 17,250
Phelps Dodge Corporation 600 51,113
Placer Dome, Incorporated 1,400 22,925
PPG Industries, Incorporated 1,200 69,750
Praxair Incorporated 1,000 56,000
Reynolds Metals Company 500 35,625
Rohm & Haas 400 36,025
Rubbermaid, Incorporated 1,200 35,700
Sherwin- Williams 1,200 37,050
Silicon Graphics Incorporated* 1,200 18,000
Union Camp Corporation 700 35,000
Union Carbide Corporation 800 37,650
Unilever (N.V.) ADR 900 196,200
USX-US Steel Group 600 21,038
Weyerhaeuser Company 1,400 72,800
Worthington Industries, Incorporated 700 12,819
-----------
3,288,473
-----------
SERVICE - 0.16%
Ikon Office Solution 800 19,950
Service Corporation International 1,500 49,313
-----------
69,263
-----------
TECHNOLOGY - 14.08%
3COM Corporation* 1,100 49,500
Advanced Micro Devices, Incorporated* 900 32,400
AirTouch Communications, Incorporated* 2,900 79,388
AlliedSignal Incorporated 1,800 151,200
Amgen, Incorporated 1,600 93,000
Boeing Company 4,084 216,707
Cabletron Systems, Incorporated* 900 25,481
Cisco Systems, Incorporated* 3,800 255,075
COMPAQ Computers Corporation* 1,500 148,875
Computer Associates International,
Incorporated 2,100 116,944
Computer Sciences Corporation* 500 36,063
Digital Equipment Corporation* 1,000 35,438
Dell Computer Corporation* 1,000 117,438
First Data Corporation 2,700 118,631
Hewlett-Packard Company 5,900 330,400
Honeywell, Incorporated 900 68,288
Intel Corporation 4,700 666,519
International Business Machines Corporation 6,000 541,125
Lockheed Martin Corporation 1,200 124,275
LSI Logic Corporation* 800 25,600
Lucent Technologies 3,685 265,550
McDonnell Douglas Corporation 1,200 82,200
Micron Technology Incorporated* 1,300 51,919
Microsoft Corporation* 6,800 859,350
Motorola Incorporated 3,400 258,400
Nothern Telecom, Limited 1,500 136,500
Novell, Incorporated* 2,000 13,875
Oracle Systems Corporation* 4,000 201,500
Perkin-Elmer Corporation 300 23,869
Pitney-Bowes Incorporated 1,000 69,500
Raytheon Company 1,500 76,500
Rockwell International Corporation 1,300 76,700
Scientific Atlanta, Incorporated 700 15,313
Seagate Technology, Incorporated* 1,500 52,781
Sun Microsystems, Incorporated* 2,200 81,881
Tandem Computer Incorporated* 800 16,200
Tektronix, Incorporated 200 12,000
Tellabs, Incorporated* 1,100 61,463
Texas Instruments, Incorporated 1,100 92,469
Textron Incorporated 1,200 79,650
Unisys Corporation* 1,200 9,150
United Technologies Corporation 1,600 132,800
Western Atlas, Incorporated* 400 29,300
Xerox Corporation 2,000 157,750
-----------
6,088,967
-----------
TRANSPORTATION - 1.37%
AMR Corporation* 600 55,500
Burlington Northern Santa Fe Corporation 1,100 98,863
Caliber System, Incorporated 400 14,900
CSX Corporation 1,600 88,800
Delta Air Lines 500 41,000
Federal Express* 700 40,425
Laidlaw Incorporated 1,900 26,244
Norfolk Southern Company 800 80,600
Ryder System 700 23,100
Southwest Airlines Company 1,000 25,875
Union Pacific Corporation 1,400 98,700
-----------
594,007
-----------
UTILITY - 7.89%
ALLTELL Corporation 1,300 43,469
American Electric Power Company, Incorporated 1,600 67,200
AT&T Corporation 9,100 319,069
Ameritech Corporation 3,100 210,606
Baltimore Gas & Electric Company 1,100 29,356
Bell Atlantic Corporation 2,600 197,275
BellSouth Corporation 5,400 250,425
Carolina Power & Light Company 1,200 43,050
Central & Southwest Corporation 1,900 40,375
CinergyCorporation 1,000 34,813
Coastal Corporation 600 31,913
Consolidated Edison Co. of N.Y. Incorporated 1,400 41,213
Consolidated Natural Gas Company 600 32,288
Dominion Resources 1,400 51,275
Duke Power 2,339 112,126
DTE Energy Company 1,100 30,388
Edison International 2,500 62,188
Entergy Corporation 1,300 35,588
FPL Group Incorporated 1,500 69,094
General Public Utilities Corporation 900 32,288
GTE Corporation 4,900 214,988
Houston Industries, Incorporated 1,400 30,013
MCI Communications Corporation 3,200 122,500
Niagara Mohawk Power Corporation* 800 6,850
NYNEX Corporation 2,600 149,825
Pacific Gas & Electric Company 2,600 63,050
PacifiCorp 2,200 48,400
PECO Energy Company 1,200 25,200
Public Service Enterprise Group, Incorporated 1,300 32,500
SBC Communications 5,055 312,778
Southern Company 3,500 76,563
Sprint Corporation* 2,000 105,250
<PAGE>
Sonat, Incorporated 600 30,750
Texas Utilities Company 1,700 58,544
Unicom Corporation 1,400 31,150
Union Electric Company 900 33,919
U.S. West Communications Group 2,700 101,756
US West Media Group* 3,700 74,925
WorldCom, Incorporated 4,900 156,800
-----------
3,409,760
-----------
Total Common Stocks (cost $30,430,987) 38,953,174
-----------
<CAPTION>
SHORT-TERM INVESTMENTS - 10.66%
PRINCIPAL VALUE
<S> <C> <C>
US Treasury Bill (5.220% due 11/13/97) $4,250,000 4,166,366
Portico US Federal Money Market Fund 443,734 443,734
-----------
Total Short-Term Investments (cost $4,610,100) 4,610,100
-----------
TOTAL INVESTMENTS - 100.76%
(cost $35,041,087)<F1> 43,563,274
-----------
OTHER ASSETS AND LIABILITIES - (0.76%) (327,181)
-----------
TOTAL NET ASSETS - 100% $43,236,093
-----------
*Non-income producing
(ADR) American Depository Receipt
<FN>
<F1> Gross unrealized appreciation and depreciation of securities and futures
at June 30, 1997 for financial reporting was $9,235,029 and $427,467
respectively.
</FN>
</TABLE>
(2) Securities with an aggregate market value of
$4,165,875 have been segregated with the custodian to
cover margin requirements for the following open futures
contracts at June 30, 1997:
<TABLE>
<CAPTION>
Unrealized Appreciation /
Type Contracts (Depreciation)
-------------------------------------------------------------------
<S> <C> <C>
Standard & Poor's 500 Index (09/97) 5 316,250
Standard & Poor's 500 Index (09/97) 5 (30,875)
--------
$285,375
========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(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 insurance and retirement
products. The Fund's shares are offered in four different
series - Equity Portfolio, Capital Portfolio, Bond Portfolio,
and S&P 500 Index Portfolio. The Equity Portfolio seeks long-
term appreciation of capital by investing primarily in common
stocks and other equity securities. The Capital Portfolio seeks
the highest total return through a combination of income and
capital appreciation consistent with the reasonable risks
associated with an investment portfolio of above-average quality
by investing in equity securities, debt instruments, and money
market instruments. The Bond Portfolio seeks a high level of
current income as is consistent with reasonable investment risk
by investing primarily in long-term, fixed-income, investment-
grade corporate bonds. The S&P 500 Index Portfolio seeks
investment results that correspond to the total return
performance of U.S. common stocks, as represented in the
Standard & Poor's 500 Index.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Securities valuation - Securities held in each Portfolio, 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 in each Portfolio 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. All amortization of discount is recognized currently
under the effective interest method. Gains and losses on sales
of investments are calculated on the identified cost basis for
financial reporting and tax purposes.
Federal taxes - It is the intent of the Fund to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its net investment
income and any net realized capital gains. Regulated investment
companies owned by the segregated asset accounts of a life
insurance company, held in connection with variable annuity
contracts, are exempt from excise tax on undistributed income.
Therefore, no provision for income or excise taxes has been
recorded.
Distributions -Distributions from net investment income in all
Portfolios are declared and paid quarterly. Net realized
capital gains are distributed periodically, no less frequently
than annually. Distributions are recorded on the ex-dividend
date. All distributions are reinvested in additional shares of
the respective Portfolio at the net asset value per share.
The amount of distributions are determined in accordance with
federal income tax regulations which may differ from generally
accepted accounting principles. These "book/tax" differences
are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their
federal tax-basis treatment; temporary differences do not
require reclassification. Distributions which exceed net
investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as
distributions in excess of net investment income or
distributions in excess of net realized capital gains. To the
extent they exceed net investment income and net realized
capital gains for tax purposes, they are reported as
distributions of paid-in-capital.
Expenses - Allocable expenses of the Fund are charged to each
Portfolio based on the ratio of the net assets of each Portfolio
to the combined net assets of the Fund. Nonallocable expenses
are charged to each Portfolio based on specific identification.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
Investment advisory fees - 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.
(d) for the S & P 500 Index Portfolio - .30% 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 Equity, Capital , or Bond Portfolios, the Adviser will
reimburse the Fund for such excess, up to the amount of the
advisory fee for that year. The Adviser has agreed to waive its
advisory fee and pay any other expenses of the S&P 500 Index
Portfolio to the extent that such expenses exceed 0.60% of its
average annual net assets. As a result, for the six months
ended June 30, 1997, the Adviser waived management fees of
$3,002 for the S&P 500 Index Portfolio.
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 for the Equity, Capital, and Bond Portfolios,
and .05% of the Fund's average net assets for the S & P 500
Index Portfolio. 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 - FUTURES CONTRACTS
S&P 500 Index Portfolio ("Index") may purchase futures contracts
on the Standard & Poor's 500 Stock Index. These contracts
provide for the sale of a specified quantity of a financial
instrument at a fixed price at a future date. When Index enters
into a futures contract, it is required to deposit and maintain
as collateral such initial margin as required by the exchange on
which the contract is traded. Under terms on the contract,
Index agrees to receive from or pay to the broker an amount
equal to the daily fluctuation in the value of the contract
(known as the variation margin). The variation margin is
recorded as unrealized gain or loss until the contract expires
or is otherwise closed, at which time the gain or loss is
realized. Index invests in futures as a substitute to investing
in the 500 common stock positions in the Standard & Poor's 500
Index. The potential risk to Index is that the change in the
value in the underlying securities may not correlate to the
value of the contracts.
NOTE 4 - SUMMARY OF PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities for the six months ended
June 30, 1997 excluding short-term obligations, follow:
<TABLE>
<CAPTION>
Equity Capital Bond S&P 500
Portfolio Portfolio Portfolio Index
--------- --------- --------- -------
<S> <C> <C> <C> <C>
Total Cost
of Purchases of:
Common Stocks $84,309,294 $15,404,296 $ -- $15,091,219
U.S. Government Securities -- 8,851,656 4,579,070 --
Corporate Bonds -- 598,356 55,470,303 --
----------- ----------- ----------- -----------
$84,309,294 $24,854,308 $60,049,373 $15,091,219
----------- ----------- ----------- -----------
Total Proceeds
from Sales of:
Common Stocks $89,850,236 $19,078,087 $ 515,000 $ 5,966,758
U.S. Government Securities -- 2,982,800 6,518,143 --
Corporate Bonds -- 4,050,824 56,265,467 --
----------- ----------- ----------- -----------
$89,850,236 $26,111,711 $63,298,610 $ 5,966,758
=========== =========== =========== ===========
</TABLE>
<PAGE>
Note 5 - 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, Year Ended December 31,
---------- ----------------------------------------
(Unaudited)
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $19.45 $16.54 $14.30 $14.58 $13.74 $12.60
------ ------ ------ ------ ------ ------
Investment
Activities:
Net investment
income .18 .29 .24 .20 .16 .19
Net realized and
unrealized
gains/(losses) 1.21 3.61 3.36 .31 1.69 1.27
------ ------ ------ ------ ------ ------
Total from
Investment
Operations 1.39 3.90 3.60 .51 1.85 1.46
------ ------ ------ ------ ------ ------
Distributions:
Net investment
income (.16) (.27) (.23) (.19) (.16) (.19)
Net realized gains (2.30) (.72) (1.13) (.60) (.85) (.13)
------ ------ ------ ------ ------ ------
Total Distributions (2.46) (.99) (1.36) (.79) (1.01) (.32)
------ ------ ------ ------ ------ ------
Net Asset Value,
End of year $18.38 $19.45 $16.54 $14.30 $14.58 $13.74
====== ====== ====== ====== ====== ======
Total Return 8.30% 24.52% 26.96% 3.42% 14.11% 11.78%
Ratios/
Supplemental Data:
Ratio of Expenses
to Average
Net Assets .63%<F1> .64% .66% .69% .70% .72%
Ratio of Net
Investment
Income to Average
Net Assets 1.37%<F1> 1.66% 1.73% 1.45% 1.18% 1.47%
Portfolio Turnover
Rate 63.25%<F1> 52.53% 34.33% 40.33% 37.93% 46.75%
Average Commission
Rate Paid(2) $ .0595 $ .0628
Net Assets,
End of Year (000's) $309,830 $288,124 $219,563 $157,696 $138,239 $102,306
_________________
<FN>
<F1> The ratios are annualized.
<F2> Represents the dollar amount of commissions paid on Portfolio
transactions divided by the total number of shares purchased and sold for
which commissions were charged. Disclosure not required for periods prior to
fiscal 1996.
</FN>
</TABLE>
<PAGE>
Note 5 - 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, Year Ended December 31,
----------- ----------------------------------------
(Unaudited)
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 14.95 $ 13.72 $ 13.19 $ 13.81 $ 12.99 $ 12.82
------- ------- ------- ------- ------- -------
Investment
Activities:
Net investment
income .35 .63 .64 .52 .43 .42
Net realized and
unrealized
gains/(losses) (.04) 1.36 1.15 (.39) 1.17 .56
------- ------- ------- ------- ------- -------
Total from
Investment
Operations .31 1.99 1.79 .13 1.60 .98
------- ------- ------- ------- ------- -------
Distributions:
Net investment
income (.36) (.57) (.64) (.52) (.42) (.42)
Net realized gains (1.18) (.19) (.62) (.23) (.36) (.39)
------- ------- ------- ------- ------- -------
Total Distributions (1.54) (.76) (1.26) (.75) (.78) (.81)
------- ------- ------- ------- ------- -------
Net Asset Value,
End of year $13.72 $14.95 $13.72 $13.19 $13.81 $12.99
======= ======= ======= ======= ======= =======
Total Return 2.31% 14.94% 14.28% .94% 12.72% 7.93%
Ratios/Supplemental
Data:
Ratio of Expenses
to Average
Net Assets .77%<F1> .77% .77% .80% .82% .88%
Ratio of
Net Investment
Income to Average
Net Assets 4.24%<F1> 4.42% 4.99% 4.25% 3.31% 3.49%
Portfolio Turnover
Rate 40.92%<F1> 53.11% 43.83% 41.89% 32.42% 39.74%
Average Commission
Rate Paid<F2> $ .0603 $.0615
Net Assets,
End of Year (000's) $159,816 $159,294 $145,623 $119,263 $100,016 $68,674
_________________
<FN>
<F1> The ratios are annualized.
<F2> Represents the dollar amount of commissions paid on Portfolio
transactions divided by the total number of shares purchased and sold for
which commissions were charged. Disclosure not required for periods prior to
fiscal 1996.
</FN>
</TABLE>
<PAGE>
Note 5 - 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 Year Ended December 31,
--------------- ------------------------------------
(Unaudited)
1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 10.91 $ 11.07 $ 10.04 $ 11.30 $ 10.91 $ 10.96
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income .34 .79 .88 .77 .73 .82
Net realized and
unrealized
gains/(losses) (.08) (.04) .98 (.95) .54 (.01)
------- ------- ------- ------- ------- -------
Total from
Investment Operations .42 .75 1.86 (.18) 1.27 .81
------- ------- ------- ------- ------- -------
Distributions:
Net investment income (.32) (.87) (.83) (.78) (.73) (.82)
In excess of
net investment income -- (.04) -- -- -- --
Net realized gains (.06) -- -- (.30) (.15) (.04)
------- ------- ------- ------- ------- -------
Total Distributions (.38) (.91) (.83) (1.08) (.88) (.86)
------- ------- ------- ------- ------- -------
Net Asset Value,
End of period $ 10.95 $ 10.91 $ 11.07 $ 10.04 $ 11.30 $ 10.91
======= ======= ======= ======= ======= =======
Total Return 3.55% 7.19% 19.03% (1.63%) 11.94% 7.65%
Ratios/Supplemental
Data:
Ratio of Expenses to
Average Net Assets .61%<F1> .62% .65% .68% .66% .69%
Ratio of Net Investment
Income to Average
Net Assets 7.31%<F1> 7.24% 7.43% 7.21% 6.65% 7.59%
Portfolio Turnover Rate 152.68%<F1> 202.44% 111.01% 70.27% 137.46% 40.91%
Net Assets,
End of Year (000's) 88,015 $85,634 $73,568 $55,929 $54,128 $38,557
________________
<FN>
<F1> The ratios are annualized.
</FN>
</TABLE>
<PAGE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
S & P 500 Index Portfolio
Six Months Ended Year Ended
June 30, 1997 December 31, 1996
------------- -----------------
(Unaudited)
<S> <C> <C>
Net Asset Value,
Beginning of Year $ 12.13 $ 10.00
Investment Activities:
Net investment income .14 .20
Net realized and unrealized
gains/(losses) 2.31 2.12
------- -------
Total from Investment Operations 2.45 2.32
------- -------
Distributions:
Net investment income (.11) (.19)
Net realized gains (.10) --
------- -------
Total Distributions (.21) (.19)
------- -------
Net Asset Value,
End of Period $ 14.37 $ 12.13
======= =======
Total Return 20.39% 23.37%
Ratios/Supplemental Data:
Ratio of Net Expenses to
Average Net Assets 1.23%<F1> .59%<F2>
Ratio of Net Investment
Income to Average Net Assets 3.53%<F1> 2.14%<F2>
Portfolio Turnover Rate 36.77% 1.09%
Average Commission Rate Paid<F3> .0595 $ .0601
Net Assets, End of Year (000's) $ 43,236 $ 29,205
- -------------
<FN>
<F1> The ratios are annualized.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by .25%
for the six months ended December 31, 1996, had the Adviser not waived a
portion of its fee.
<F3> Represents the dollar amount of commissions paid on Portfolio
transactions divided by the total number of shares purchased and sold for
which commissions were charged. Disclosure not required for periods prior to
fiscal 1996.
</FN>
</TABLE>
<PAGE>
CARILLON FUND, INC.
Financial Statements
December 31, 1996
<PAGE>
CARILLON FUND, INC.
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of Carillon Fund, Inc.
We have audited the accompanying statements of assets and
liabilities of Carillon Fund, Inc. (consisting of the Equity
Portfolio, Capital Portfolio, Bond Portfolio and the S&P 500
Index Portfolio), including the schedules of investments, as of
December 31, 1996, and the related statements of operations for
the year then ended, and the statements of changes in net assets
and financial highlights for the periods ended December 31, 1996
and December 31, 1995, respectively. These financial statements
and financial highlights ("financial statements") are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements based on our
audits. The financial highlights presented for periods prior to
December 31, 1995 were audited by other auditors.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosure in the financial statements. Our
procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of each of the
Portfolios of Carillon Fund, Inc. as of December 31, 1996, the
results of their operations for the year then ended, and the
changes in their net assets and the financial highlights for the
periods ended December 31, 1996 and December 31, 1995,
respectively, in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Dayton, Ohio
February 3, 1997
CARILLON FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<CAPTION>
S&P 500
Equity Capital Bond Index
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments in
securities, at value $282,646,476 $156,298,562 $88,078,300 $29,275,723
(cost $222,263,315;
$144,685,532;
$86,040,107;
$26,294,249)
Cash 3,375 -- -- --
Receivables:
Shares sold 1,033,820 348,253 106,559 179,916
Securities sold 5,144,647 1,864,018 -- 17,389
Interest and Dividends 575,981 879,817 1,368,459 43,553
Prepaid expenses
and other 12,911 8,460 5,022 1,195
------------ ------------ ----------- -----------
289,417,210 159,399,110 89,558,340 29,517,776
------------ ------------ ----------- -----------
LIABILITIES
Payables:
Investment securities
purchased 1,145,250 -- 3,567,982 --
Shares purchased -- 45 66 180,224
Investment advisory fees 134,253 90,306 34,737 8,233
Custodial and portfolio
accounting fees 6,794 7,868 5,954 6,022
Professional fees 6,149 5,462 5,618 5,299
Bank overdraft -- -- 218,525 23
Variation margin -- -- -- 102,200
Other accrued expenses 1,041 1,543 4,275 11,165
Deferred compensation
for directors -- -- 87,054 --
------------ ------------ ----------- -----------
1,293,487 105,224 3,924,211 313,166
------------ ------------ ----------- -----------
NET ASSETS
Paid-in capital 192,682,992 134,247,020 83,411,472 25,912,734
Undistributed net
investment income 734,698 982,540 -- 42,252
Distributions in excess
of net investment
income -- -- (296,645) --
Accumulated net realized
gain/(loss) 34,322,872 12,451,296 481,109 218,750
on investments
Net unrealized 60,383,161 11,613,030 2,038,193 3,030,874
appreciation on ------------ ------------ ----------- -----------
investments and
futures contracts
$288,123,723 $159,293,886 $85,634,129 $29,204,610
============ ============ =========== ===========
Shares authorized
($.10) par value 20,000,000 15,000,000 10,000,000 10,000,000
Shares outstanding 14,813,685 10,655,370 7,847,440 2,407,503
Net asset value,
offering, and
redemption price $19.45 $14.95 $10.91 $12.13
per share
</TABLE>
The accompanying notes are an integral part of
the financial statement.
<PAGE>
<TABLE>
<CAPTION>
CARILLON FUND, INC.
STATEMENTS OF OPERATIONS
Year Ended December 31, 1996
S&P 500
Equity Capital Bond Index
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------
<S> <C> >c? <C> <C>
INVESTMENT INCOME
Interest $ 1,041,257 $ 6,227,142 $ 6,257,449 $ 135,283
Dividends (net of
foreign withholding
taxes of $117,559;
$41,233; $0; $2,598) 4,734,994 1,629,448 -- 311,295
----------- ----------- ----------- ----------
5,776,251 7,856,590 6,257,449 446,578
----------- ----------- ----------- ----------
EXPENSES
Investment advisory fees 1,436,998 1,032,861 384,084 48,985
Custodial fees and
expenses 61,313 46,599 22,157 14,140
Portfolio accounting fees 48,645 46,102 39,174 29,713
Professional fees 9,181 8,980 9,448 15,895
Director's fees 11,351 11,351 11,354 10,754
Transfer agent fees 6,010 6,054 6,089 5,853
Registration and
filing fees 8,919 8,590 7,616 2,493
Other 17,403 11,713 10,894 9,982
----------- ----------- ----------- ----------
1,599,820 1,172,250 490,816 137,815
Fees waived by the Adviser -- -- -- (40,752)
----------- ----------- ----------- ----------
1,599,820 1,172,250 490,816 97,063
----------- ----------- ----------- ----------
NET INVESTMENT INCOME 4,176,431 6,684,340 5,766,633 349,515
----------- ----------- ----------- ----------
REALIZED AND UNREALIZED
GAIN/(LOSS) ON
INVESTMENTS AND
FUTURES CONTRACTS
Net realized gain
on investments 34,227,538 12,459,745 1,210,173 32,147
Net realized gain on
futures contracts -- -- -- 186,603
----------- ----------- ----------- ----------
34,227,538 12,459,745 1,210,173 218,750
----------- ----------- ----------- ----------
Net change in unrealized
appreciation/
(depreciation) on
investments 17,468,047 1,990,613 (1,316,722) 2,981,474
Net change in unrealized
appreciation/
(depreciation) on
futures contracts -- -- -- 49,375
----------- ----------- ----------- ----------
17,468,047 1,990,613 (1,316,722) 3,030,849
----------- ----------- ----------- ----------
NET REALIZED AND
UNREALIZED GAIN/
(L0SS) ON INVESTMENTS
AND FUTURES CONTRACTS 51,695,585 14,450,358 (106,549) 3,249,599
----------- ----------- ----------- ----------
NET INCREASE IN NET
ASSETS FROM OPERATIONS $55,872,016 $21,134,698 $5,660,084 $3,599,114
=========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Equity Portfolio
For the Year Ended December 31,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 4,176,431 $ 3,230,075
Net realized gain/(loss)
on investments and futures 34,227,538 9,962,775
Net change in unrealized
appreciation /(depreciation) on
investments and futures contracts 17,468,047 31,418,181
----------- -----------
55,872,016 44,611,031
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (3,889,965) (3,023,061)
In excess of net investment income -- --
Net realized gain on investments (9,867,342) (12,644,665)
----------- -----------
(13,757,307) (15,667,726)
----------- -----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 41,762,282 29,948,214
Net asset value of shares
issued to shareholders
in reinvestment of distributions 13,757,307 15,667,726
Payments for shares redeemed (29,173,822) (12,692,274)
----------- -----------
26,445,767 32,923,666
----------- -----------
NET INCREASE IN NET ASSETS 68,560,476 61,866,971
NET ASSETS
Beginning of year 219,563,247 157,696,276
----------- -----------
End of year 288,123,723 219,563,247
=========== ===========
FUND SHARE TRANSACTIONS:
Sold 2,393,015 1,968,821
Issued in reinvestment
of distributions 809,878 1,111,633
Redeemed (1,660,244) (837,546)
----------- -----------
Net increase from fund
share transactions 1,542,649 2,242,908
----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Capital Portfolio
For the Year Ended December 31,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 6,684,340 $ 6,696,820
Net realized gain on
investments and futures 12,459,745 1,973,190
Net change in unrealized
appreciation/(depreciation) on
investments and futures contracts 1,990,613 8,952,302
----------- -----------
21,134,698 17,622,312
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (6,050,397) (6,389,872)
In excess of net investment income -- --
Net realized gain on investments (2,002,549) (5,716,244)
----------- -----------
(8,052,946) (12,106,116)
----------- -----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 17,130,822 21,179,705
Net asset value of shares
issued to shareholders in
reinvestment of distributions 8,052,945 12,106,115
Payments for shares redeemed (24,594,141) (12,442,444)
----------- -----------
589,626 20,843,376
----------- -----------
NET INCREASE IN NET ASSETS 13,671,378 26,359,572
NET ASSETS
Beginning of year 145,622,508 119,262,936
----------- -----------
End of year 159,293,886 145,622,508
=========== ===========
FUND SHARE TRANSACTIONS:
Sold 1,199,385 1,579,714
Issued in reinvestment of
distributions 570,034 922,915
Redeemed (1,729,493) (928,220)
----------- -----------
Net increase from fund
share transactions 39,926 1,574,409
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Bond Portfolio
For the Year Ended December 31,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 5,766,633 $5,184,573
Net realized gain/(loss)
on investments and futures 1,210,173 (162,632)
Net change in unrealized
appreciation/(depreciation) on
investments and futures contracts (1,316,722) 6,104,034
----------- ----------
5,660,084 11,125,975
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (6,340,623) (5,049,814)
In excess of net investment income (320,260) --
Net realized gain on investments -- --
----------- ----------
(6,660,883) (5,049,814)
----------- ----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 17,850,341 12,251,770
Net asset value of shares issued
to shareholders in reinvestment
of distributions 6,660,883 5,049,814
Payments for shares redeemed (11,443,995) (5,739,318)
----------- ----------
13,067,229 11,562,266
----------- ----------
NET INCREASE IN NET ASSETS 12,066,430 17,638,427
NET ASSETS
Beginning of year 73,567,699 55,927,272
----------- ----------
End of year 85,634,129 73,567,699
=========== ==========
FUND SHARE TRANSACTIONS:
Sold 1,633,803 1,141,491
Issued in reinvestment
of distributions 621,662 469,937
Redeemed (1,054,560) (538,145)
----------- ----------
Net increase from fund
share transactions 1,200,905 1,073,283
=========== ==========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
S&P 500 Index Portfolio
For the
Period from
For the Year December 29,
Ended 1995 to
December 31, December 31,
------------ ------------
1996 1995
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 349,515 $ 123
Net realized gain/(loss) on
investments and futures 218,750 --
Net change in unrealized
appreciation/(depreciation) on
investments and futures contracts 3,030,849 25
----------- --------
3,599,114 148
----------- --------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (307,386) --
In excess of net investment income -- --
Net realized gain on investments -- --
----------- --------
(307,386) --
----------- --------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 30,917,430 305,000
Net asset value of shares
issued to shareholders 307,386 --
in reinvestment of dividends
and distributions
Payments for shares redeemed (5,617,082) --
----------- --------
25,607,734 305,000
----------- --------
NET INCREASE IN NET ASSETS 28,899,462 305,148
NET ASSETS
Beginning of year 305,148 --
----------- --------
End of year 29,204,610 305,148
=========== ========
FUND SHARE TRANSACTIONS:
Sold 2,850,416 30,500
Issued in reinvestment of
distributions 26,989 --
Redeemed (500,402) --
----------- --------
Net increase from fund
share transactions 2,377,003 30,500
=========== ========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996
EQUITY PORTFOLIO
SHARES/
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COMMON STOCKS - 92.28%
BANKING & FINANCIAL SERVICE - 17.48%
ABN Amro Holdings NV Sponsored ADR 32,868 2,135,788
Allied Capital Corporation 28,571 449,993
Banco Bhif ADR* 75,000 1,228,125
Banco Frances Rio Pla Sponsored ADR 28,750 790,625
Banco Latinoamericano
De Exportanciones Sponsored ADR 75,000 3,806,250
Capital American Financial
Corporation 30,000 1,091,250
Charter One Financial, Incorporated 52,500 2,205,000
Chile Fund Incorporated 80,000 1,670,000
Community First Bankshares 91,545 2,517,488
Corus Bankshares, Incorporated 70,000 2,257,500
Czech Republic Fund 109,000 1,444,250
Deutsche Bank AG Sponsored ADR 42,000 1,959,497
FPIC Insurance Group, Incorporated* 150,000 2,025,000
Gainsco, Incorporated 217,762 2,095,959
Jefferies Group, Incorporated 64,000 2,584,000
Mid Ocean Limited Order Shares 40,000 2,100,000
Penncorp Financial Group Corporation 95,000 3,420,000
RLI Corporation 68,625 2,290,359
Raymond James Financial Corporation 66,100 1,991,263
Standard Federal Bancorporation 57,900 3,293,063
Thai Fund, Incorporated 102,500 1,691,250
Union Planters Corporation* 50,000 1,950,000
Washington Federal, Incorporated 85,100 2,255,150
Zions Bancorporation 30,000 3,120,000
------------
50,371,810
------------
CAPITAL GOOD - 11.87%
AGCO Corporation 59,400 1,700,325
Astec Industries, Incorporated* 75,000 712,500
Breed Technologies, Incorporated 90,000 2,340,000
Cemex SA Sponsored ADR 125,000 971,786
Crossman Communitites, Incorporated* 80,000 1,360,000
D.R. Horton, Incorporated 100,000 1,087,500
Deere & Company 68,000 2,762,500
Ford Motor Company 55,000 1,753,125
Griffon Corporation* 209,600 2,567,600
Kysor Industries Corporation* 75,000 2,446,875
Lindsay Manufacturing Company 117,862 5,510,048
Medusa Corporation 80,300 2,760,313
Schult Homes Corporation 50,000 1,175,000
Scotsman Industries, Incorporated 40,000 945,000
Strattec Security Corporation* 145,000 2,646,250
Toll Brothers, Incorporated* 90,000 1,755,000
Woodhead Industries, Incorporated 50,500 694,375
Visx, Incorporated* 45,000 995,625
------------
34,183,822
------------
CONSUMER CYCLICAL - 4.61%
Chromcraft Revington, Incorporated* 75,000 2,081,250
CPAC, Incorporated 125,000 1,875,000
Donnkenny, Incorporated* 100,000 462,500
Galey & Lord, Incorporated* 9,700 144,288
NCI Building Systems, Incorporated* 80,700 2,784,150
Pillowtex Corporation 56,900 1,024,200
Roberds, Incorporated* 90,000 742,500
Southern Energy Home 150,000 1,725,000
Tractor Supply Company* 30,000 618,750
Winsleow Furniture, Incorporated* 188,300 1,835,925
------------
13,293,563
------------
CONSUMER NON-DURABLE -10.87%
Advocat, Incorporated* 100,500 728,625
Allied Healthcare Products,
Incorporated 65,100 480,113
Charoen Pok Feedmill ADR 100,000 1,450,850
Conso Products Company 146,250 1,882,969
Crown Books Corporation* 29,900 351,325
Dart Group Corporation - Class A 7,500 697,500
Dairy Farm International
Holdings Sponsored ADR 200,000 804,998
Footstar, Incorporated* 68,200 1,696,475
GT Bicycles, Incorporated* 134,900 1,736,838
Helen of Troy Ltd, Bermuda* 177,000 3,894,000
IHOP Corporation* 87,000 2,055,375
King World Productions, Incorporated* 50,000 1,843,750
Morningstar Group, Incorporated* 121,000 2,374,625
Nam Tai Electronics, Incorporated* 187,500 1,453,125
Oakley, Incorporated 73,200 796,050
Orthofix International NV* 113,036 932,547
Schlotzsky's, Incorporated* 137,900 1,379,000
Shopko Stores, Incorporated 110,700 1,660,500
Titan Wheel International,
Incorporated 95,000 1,211,250
Toy Biz, Incorporated* 120,000 2,340,000
Utah Medical Products, Incorporated* 115,200 1,540,800
------------
31,310,715
------------
ENERGY - 11.52%
Apache Corporation 58,118 2,055,924
Callon Petroleum Company* 110,000 2,090,000
Cross Timbers Oil Company 70,000 1,758,750
Geoscience Corporation* 50,000 650,000
Giant Industries, Incorporated 165,000 2,310,000
Global Industries, Incorporated 100,000 1,862,500
Holly Corporation 90,000 2,407,500
Nuevo Energy Company* 45,000 2,340,000
Offshore Energy Development* 80,000 1,220,000
Plains Resources, Incorporated* 120,000 1,875,000
St. Mary Land & Exploration 60,000 1,492,500
Southern Mineral Corporation* 350,000 2,056,250
Stone Energy Corporation* 93,900 2,805,263
Total S.A. Sponsored ADR 42,958 1,729,060
Trizec Hahn Corporation 75,000 1,650,000
Vastar Resources Incorporated* 50,000 1,900,000
YPF S.A. Sponsored ADR 55,000 1,388,750
Zeigler Coal Holdings Company 75,000 1,603,125
------------
33,194,622
------------
MANUFACTURING -14.21%
ABT Building Products Company* 145,000 3,625,000
AEP Industries, Incorporated* 107,550 5,915,250
Alltrista Corporation* 86,000 2,214,500
BWAY Corporation* 110,000 2,103,750
Bayer A G Sponsored ADR 110,000 4,482,478
Carbide Graphite Group Incorporated* 130,000 2,551,250
Echo Bay Mines Limited 90,000 596,250
Holophane Corporation 75,000 1,425,000
Falcon Products, Incorporated 147,730 2,105,153
Kevco Incorporated* 140,000 1,960,000
Matthews International Corporation
- Class A 77,000 2,175,250
Minorco Sponsored ADR 90,000 1,873,125
Pohang Iron & Steel Corporation 75,000 1,518,750
Shanghai Petro Chemical Company
Limited Sponsored ADR 40,000 1,175,000
Shelter Components Corporation 100,250 1,228,063
Sybron Chemicals, Incorporated* 65,200 1,043,200
Triangle Pacific Corporation* 92,500 2,225,781
York Group, Incorporated 140,000 2,730,000
------------
40,947,800
------------
REAL ESTATE - 11.78%
Associated Estates Realty Corporation 65,000 1,543,750
Commercial Net Lease Realty* 99,300 1,576,388
Evans Withycombe Residential 92,000 1,932,000
Health Care Property Investments,
Incorporated 47,400 1,659,000
Healthcare Realty Trust, Incorporated 111,400 2,952,100
Highwoods Properties, Incorporated* 40,000 1,350,000
Hospitality Properties Turst,
Incorporated 64,000 1,856,000
IRT Property Company 172,300 1,981,450
LTC Properties, Incorporated 95,000 1,757,500
Merry Land & Investment Company 115,000 2,472,500
Mid-America Apartment Communities 80,000 2,310,000
National Health Investors,
Incorporated 40,000 1,515,000
Public Storage, Incorporated 80,000 2,480,000
Shurgard Storage Centers,
Incorporated 70,000 2,073,750
Trinet Corporate Realty Trust
Incorporated 58,000 2,059,000
United Dominion Realty Trust
Incorporated 132,000 2,046,000
Winston Hotels, Incorporated 175,000 2,384,375
------------
33,948,813
------------
SERVICE - 1.78%
Comcast Corporation 50,000 893,750
Devon Group, Incorporated* 85,000 2,337,500
PCA International, Incorporated 55,200 897,000
Right Management Consultants 44,600 992,350
------------
5,120,600
------------
TECHNOLOGY - 3.46%
Cybex Corporation* 160,000 2,280,000
DH Technology, Incorporated* 135,000 3,240,000
Digi International, Incorporated* 95,000 902,500
Kemet Corporation* 60,000 1,395,000
Recoton Corporation* 143,000 2,136,062
9,953,562
TRANSPORTATION - 2.77%
Atlantic Southeast Airlines
Incorporated 95,000 2,078,125
Illinois Central Corporation
- Class A 82,500 2,640,000
Landstar, Incorporated* 40,000 930,000
Midwest Express Holdings* 65,000 2,340,000
------------
7,988,125
------------
UTILITY - 1.93%
CMS Energy Corporation 50,000 1,681,250
Empresa Nacional
De Electricidad Sponsored ADR 29,400 2,058,000
Tuscon Electric Power Company 110,000 1,828,750
------------
5,568,000
------------
Total Common Stocks
(cost $ 205,498,271) $265,881,432
------------
SHORT-TERM INVESTMENTS - 5.82%
COMMERCIAL PAPER - 5.37%
Army Airforce (5.600% due 01/01/97) 2,000,000 2,000,000
CC USA (5.400% due 02/06/97) 1,000,000 994,600
ConAgra, Incorporated
(5.450% due 01/03/97) 1,000,000 999,697
Circus Circus (5.500% due 01/08/97) 2,000,000 1,997,861
Dana Credit Corporation
(5.480% due 01/16/97) 1,500,000 1,496,575
Telecommunications, Incorporated
(5.700% due 01/24/97) 1,000,000 996,358
Textron Financial Corporation
(5.570% due 02/11/97) 2,000,000 1,987,313
Public Service Electric & Gas
(5.450% due 01/07/97) 1,000,000 999,092
Viacom (5.660% due 01/21/97) 2,000,000 1,993,711
White Consolidated Industries,
Incorporated(5.480% due 01/24/97) 2,000,000 1,992,998
------------
15,458,205
------------
VARIABLE RATE DEMAND NOTES<F1> - .45%
Johnson Controls, Incorporated
(5.529% due 01/01/97) 1,306,839 1,306,839
------------
Total Short-Term Investments
(cost $16,765,044) 16,765,044
------------
TOTAL INVESTMENTS - 98.10%
(cost $222,263,315)<F2> 282,646,476
------------
OTHER ASSETS AND LIABILITIES - 1.9% 5,477,247
------------
TOTAL NET ASSETS - 100% $288,123,723
============
- -----------------
* Non-income producing
(ADR) American Depository Receipt
<FN>
<F1>) Interest rates vary periodically based on current market
rates. The maturity shown for each variable rate demand note is
the later of the next scheduled interest rate adjustment date or
the date on which principal can be recovered through demand.
Information as of December 31, 1996.
<F2> Represents cost for Federal income tax purposes. Gross
unrealized appreciation and depreciation of securities at
December 31, 1996 was $69,683,138 and $9,299,977, respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial
statements
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996
CAPITAL PORTFOLIO
SHARES/
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COMMON STOCKS - 34.38%
BANKING & FINANCIAL SERVICE - 8.42%
Allied Capital Corporation 34,285 539,992
Banco BHIF ADR* 50,000 818,750
Banco Latinoamericano
de Exportaciones ADR 30,000 1,522,500
Black Rock Strategic Term Trust 75,000 600,000
Charter One Financial Incorporated 42,000 1,764,000
Corus Bankshares Incorporated 25,000 806,250
Deutsche Bank AG Sponsored ADR 18,000 839,784
FPIC Insurance Group Incorporated* 60,000 810,000
Gainsco Incorporated 63,000 606,375
New Germany Fund 72,229 966,063
RLI Corporation 30,480 1,017,270
Templeton Global Income Fund 125,000 890,625
Thai Fund Incorporated 55,000 907,500
Washington Federal Incorporated 50,000 1,325,000
------------
13,414,109
------------
CAPITAL GOOD - 2.57%
Astec Industries Incorporated* 50,000 475,000
Griffon Corporation* 55,000 673,750
Lindsay Manufacturing Incorporated 32,908 1,538,449
Lonrho PLC - Sponsored ADR 150,000 319,574
Strattec Security Corporation* 60,000 1,095,000
------------
4,101,773
------------
CONSUMER CYCLICAL - 2.15%
Chromcraft Revington Inc.* 25,000 693,750
NCI Building Systems Incorporated* 35,000 1,207,500
Southern Energy Homes 65,000 747,500
Winsleow Furniture Incorporated* 80,000 780,000
------------
3,428,750
------------
CONSUMER NON-DURABLE - 1.87%
GT Bicycles Incorporated* 80,000 1,030,000
Helen of Troy Limited, Bermuda* 51,000 1,122,000
IHOP Corporation* 35,000 826,875
------------
2,978,875
------------
ENERGY - 2.50%
Callon Petroleum Company* 35,000 665,000
Giant Industries Incorporated 87,400 1,223,600
Offshore Energy Development* 43,000 655,750
Stone Energy Corporation* 27,000 806,625
YPF S.A. Sponsored ADR 25,000 631,250
------------
3,982,225
------------
MANUFACTURING -8.29%
ABT Building Products Company* 45,000 1,125,000
AEP Industries, Incorporated* 45,831 2,520,705
Bayer AG Sponsored ADR 75,000 1,629,992
Bway Corporation* 44,000 841,500
Carbide Graphite Group* 60,000 1,177,500
Holly Corporation 20,000 535,000
Newmont Mining Corporation 20,000 895,000
Pohang Iron & Steel Company 32,000 648,000
Royal Oak Mines Incorporated* 125,000 406,250
Santa Fe Pacific Gold Corporation 35,000 538,125
TVX Gold Incorporated* 120,000 930,000
Vaal Reefs Exploration
& Mining Limited ADR* 120,100 43,119
York Group Incorporated 62,000 1,209,000
------------
13,199,191
------------
REAL ESTATE - 7.03%
Associated Estates Realty
Corporation 50,000 1,187,500
Columbus Realty Trust 46,000 1,046,500
Hospitality Properties Trust 33,000 957,000
IRT Properties Company 85,000 977,500
LTC Properties Incorporated 46,000 851,000
Merry Land & Investment Company 60,000 1,290,000
Mid-America Apartment Communities 40,000 1,155,000
Shurgard Storage Centers Incorporated 43,000 1,273,875
United Dominion Realty Trust 75,000 1,162,500
Winston Hotels Incorporated 95,000 1,294,375
------------
11,195,250
------------
TECHNOLOGY - 1.55%
DH Technology, Incorporated* 59,760 1,434,240
Recoton Corporation* 69,000 1,030,688
------------
2,464,928
------------
Total Common Stocks (cost $43,838,220) 54,765,101
------------
PREFERRED STOCKS - .40%
MANUFACTURING -.40%
Freeport McMoRan Copper & Gold Series 20,000 640,000
------------
Total Preferred Stock (cost $709,838) 640,000
------------
U.S. TREASURY OBLIGATIONS - 13.18%
8.000% due 01/15/97 1,000,000 1,000,313
8.500% due 04/15/97 500,000 503,906
6.750% due 02/28/97 650,000 651,016
6.750% due 05/31/97 1,000,000 1,004,063
7.875% due 04/15/98 500,000 511,719
5.500% due 02/28/99 1,000,000 991,250
6.000% due 10/15/99 5,900,000 5,900,000
5.750% due 10/31/00 1,000,000 986,875
7.500% due 11/15/01 500,000 526,406
6.375% due 08/15/02 1,750,000 1,761,485
5.875% due 02/15/04 100,000 97,375
7.250% due 05/15/04 3,500,000 3,683,750
7.875% due 11/15/04 3,100,000 3,382,875
------------
Total U.S. Treasury Notes
($20,735,403) 21,001,033
------------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 12.51%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 3.16%
1662 H (6.250% due 01/15/09) 1,007,738 989,065
1442 FA (5.970% due 11/15/07) 1,000,000 907,605
77 F (8.500% due 06/15/17) 23,592 23,592
1559 VP (5.500% due 02/15/20) 1,700,000 1,625,744
1399 PAC (7.000% due 09/15/22) 596,484 568,131
1631 SB (6.527% due 12/15/23) 1,450,000 911,855
------------
5,025,992
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 7.82%
Remic 93-12 ED
(7.500% due 02/25/06) 1,645,000 1,692,039
Remic 1992-163 PN
(7.000% due 07/25/07) 1,500,000 1,501,020
Remic 92-117 J
(7.500% due 07/25/20) 1,000,000 1,013,637
Remic 92-119 E
(8.000% due 07/25/20) 1,000,000 1,021,846
Remic 92-112E
(8.000% due 12/25/20) 1,500,000 1,534,255
Remic 93-127 FA
(5.430% due 10/25/21) 1,000,000 951,862
Remic 1992-39 FB
(6.190% due 03/25/22) 2,000,000 1,936,180
Remic 92-66 F
(5.906% due 05/25/22) 1,007,444 1,008,482
Remic 1993-119 SB
(7.595% due 07/25/23) 2,572,882 1,803,790
------------
12,463,111
------------
PRIVATE SECTOR - 1.53%
Prudential Home Mortgage Securities
(7.500% due 07/25/10) 521,233 515,531
Merrill Lynch Mortgage Investors
(6.438% due 09/15/17) 2,000,000 1,920,000
------------
2,435,531
------------
Total Collateralized Mortgage
Obligations (cost $20,294,887) 19,924,634
------------
MORTGAGE - BACKED SECURITIES - 9.25%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - .82%
7.500% due 06/01/07 50,933 51,379
9.500% due 10/01/08 230,479 247,019
8.250% due 03/01/12 119,734 123,764
8.500% due 03/01/16 95,105 98,830
7.500% due 07/01/17 57,995 58,149
11.000% due 04/01/19 55,195 61,646
11.000% due 11/01/19 53,485 59,736
11.000% due 05/01/20 213,091 237,904
11.000% due 06/01/20 332,322 371,297
------------
1,309,724
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 8.08%
10.000% due 02/01/04 6,768 7,235
9.500% due 09/01/05 150,099 158,380
9.000% due 11/01/05 68,885 72,112
7.500% due 03/25/07 1,200,000 1,220,681
8.000% due 05/01/07 145,405 149,688
6.000% due 12/01/08 868,950 842,360
5.500% due 01/01/09 900,305 857,694
6.000% due 03/01/09 984,158 954,043
5.500% due 04/01/09 888,742 843,620
8.500% due 03/01/19 12,085 12,654
6.500% due 02/01/26 806,877 770,124
6.500% due 03/01/26 201,918 192,720
7.000% due 03/01/26 1,944,740 1,903,336
7.000% due 07/01/26 1,961,895 1,919,593
7.500% due 07/01/26 2,959,197 2,959,375
------------
12,863,615
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - .35%
9.000% due 11/15/16 103,445 111,000
10.500% due 11/20/19 291,488 318,313
9.000% due 12/15/19 126,525 134,961
------------
564,274
------------
Total Mortgage Backed Securities
(cost $14,273,212) 14,737,613
------------
CORPORATE BONDS AND NOTES - 5.56%
COMMUNICATIONS AND MEDIA - .57%
Loewen Group International, Inc.
(8.2500% due 04/15/03) 900,000 908,104
------------
FINANCE COMPANY - .32%
Helicon Group
(11.0000% due 11/01/03) 500,000 510,000
------------
FINANCIAL SERVICES - .52%
Pacific Gulf Properties, Inc.
(8.375% due 02/15/01) 750,000 825,000
------------
GAMING INDUSTRY - .16%
Circus Circus Enterprises, Inc.
(10.625% due 06/15/97) 250,000 255,124
------------
INSURANCE - .09%
The Penn Central Corp.
(9.750% due 08/01/99) 130,000 136,857
------------
MISCELLANEOUS - .65%
Toll Corp. (10.500% due 03/15/02) 500,000 517,500
Parisian (9.875% due 07/15/03) 500,000 510,000
------------
1,027,500
------------
OIL & GAS EXPLORATION SERVICES - .97%
Maxus Debentures
(11.250% due 05/01/13) 208,000 213,200
Rowan Companies
(11.875% due 12/10/01) 750,000 795,000
Trans Texas Gas, Corp.
(11.500% due 06/15/02) 500,000 540,625
------------
1,548,825
------------
REAL ESTATE - .33%
GE Capital Marketing Services, Inc.
(6.0000% due 08/25/09) 568,877 531,547
------------
TELEPHONE & TELECOMMUNICATIONS- .75%
United Telecommunications, Inc.
(9.750% due 04/01/00) 156,000 169,674
TCI Communications Inc
(8.6500% due 09/15/04) 1,000,000 1,023,856
------------
1,193,530
UTILITIES - ELECTRIC - 1.20%
Connecticut Light & Power Co.
1st Ref Mtg. (7.625% due 04/01/97) 677,000 677,240
New Orleans Public Service Inc.
1st Mtg. (8.670% due 04/01/05) 1,200,000 1,237,629
------------
1,914,869
------------
Total Corporate Bonds
(cost $ 8,455,147) 8,851,356
------------
SHORT-TERM INVESTMENTS - 22.84%
COMMERCIAL PAPER - 17.71%
Army Airforce (5.600% due 01/10/97) 2,000,000 2,000,000
Case Credit Corporation
(5.530% due 02/03/97) 1,000,000 994,931
Circus Circus Enterprises Inc.
(5.500% due 01/08/97) 2,000,000 1,997,861
Conagra Inc. (5.450% due 01/03/97) 2,000,000 1,999,394
Dana Credit Corporation
(5.480% due 01/21/97) 1,000,000 996,956
Hanson Financial
(5.620% due 03/14/97) 1,500,000 1,483,140
IES Diversified
(5.550% due 01/27/97) 1,000,000 995,992
IES Diversified
(5.670% due 01/31/97) 1,500,000 1,492,913
Illinois Power Fuel Company
(5.450% due 01/14/97) 2,000,000 1,996,064
Nabisco Inc (5.450% due 01/13/97) 1,000,000 998,183
New York State Gas & Electric
(5.950% due 01/24/97) 2,000,000 1,992,397
Penn Power & Light Energy
(5.450% due 01/08/97) 1,000,000 998,940
Penn Power & Light Energy
(5.480% due 01/22/97) 1,000,000 996,803
Public Service Electric & Gas
(5.450% due 01/07/97) 1,000,000 999,092
Public Service Electric & Gas
(5.450% due 01/10/97) 1,000,000 998,638
Telecommunications Inc
(5.700% due 01/24/97) 2,300,000 2,291,624
Textron Financial Group
(5.550% due 02/10/97) 1,000,000 993,833
Textron Inc.
(5.5700% due 02/11/97) 1,000,000 993,656
Viacom (5.700% due 01/24/97) 1,000,000 996,358
White Consolidated Industries, Inc
(5.480% due 01/24/97) 1,000,000 996,499
White Consolidated Industries, Inc
(5.530% due 02/03/97) 1,000,000 994,931
------------
28,208,205
------------
VARIABLE RATE DEMAND NOTES - 5.13%
American Family Financial Services
(5.509% due 01/01/97) 1,485,013 1,485,013
Johnson Controls, Inc.
(5.529% due 01/01/97) 6,157,736 6,157,736
Wisconsin Electric Power Company
(5.549% due 01/01/97) 527,871 527,871
------------
8,170,620
------------
Total Short Term Investments
(cost $36,378,825) 36,378,825
------------
TOTAL INVESTMENTS - 98.12%
(cost $144,685,532)<F2> 156,298,562
------------
OTHER ASSETS AND LIABILITIES - 1.88% 2,995,324
------------
TOTAL NET ASSETS - 100% $159,293,886
------------
- -----------------
* Non-Income producing
(ADR) American Depository Receipt
<FN>
<F1> Interest rates vary periodically based on current market
rates. Rates shown are as of December 31, 1996. 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 as
of December 31, 1996.
<F2> Represents cost for Federal income tax purposes. Gross
unrealized appreciation and depreciation of securities at
December 31, 1996 was $14,144,348 and $2,531,318 respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
December 31, 1996
BOND PORTFOLIO
<TABLE>
<CAPTION>
SHARES/
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 35.51%
U.S. TREASURY BOND - 5.41%
6.250% due 08/15/23 $3,000,000 $ 2,811,570
6.000% due 02/15/26 2,000,000 1,819,376
-----------
4,630,946
-----------
U.S. TREASURY NOTES - 25.30%
6.000% due 10/15/99 4,000,000 4,000,000
6.700% due 04/30/00 2,000,000 2,038,126
7.750% due 02/15/01 2,500,000 2,642,188
5.625% due 02/28/01 2,000,000 1,960,626
5.875% due 11/15/05 5,000,000 4,823,440
6.500% due 08/15/05 1,000,000 1,006,875
7.000% due 07/15/06 5,000,000 5,195,315
-----------
21,666,570
-----------
U.S. TREASURY STRIPS - 4.80%
0.000% due 02/15/00 3,250,000 2,695,290
0.000% due 08/15/02 2,000,000 1,416,780
-----------
4,112,070
-----------
Total U.S. Treasury Notes
(cost $30,002,142) 30,409,583
-----------
MORTGAGE - BACKED SECURITIES - 3.43%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 1.10%
7.500% due 02/01/02 46,747 47,331
9.500% due 04/01/05 77,932 82,169
7.500% due 06/01/07 112,097 113,080
11.000% due 05/01/10 13,069 14,596
12.500% due 08/01/10 18,983 21,794
8.000% due 11/01/16 55,327 56,382
9.500% due 02/01/18 76,207 81,827
6.500% due 07/01/23 553,517 532,356
-----------
949,535
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 2.14%
12.000% due 04/01/00 69,694 75,095
9.000% due 08/01/01 50,968 53,341
8.500% due 01/01/02 47,751 49,676
10.500% due 06/01/04 16,138 17,207
10.500% due 05/01/05 200,712 214,009
6.500% due 06/01/08 1,141,030 1,128,683
8.000% due 08/01/17 289,120 294,360
-----------
1,832,371
-----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - .19%
11.000% due 03/15/10 61,600 68,029
9.000% due 05/15/20 86,210 90,844
-----------
158,873
-----------
Total Mortgage-Backed Securities
(cost $2,892,682) 2,940,779
-----------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 7.97%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 3.56%
59 E (8.900% due 11/15/20) 965,123 1,007,820
106 G (8.250% due 12/15/20) 1,000,000 1,031,890
1770 B (8.250% due 01/15/24) 1,000,000 1,004,836
-----------
3,044,546
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - .26%
Remic (9.500% due 12/25/18) 212,032 225,191
-----------
PRIVATE SECTOR - 4.15%
Securitized Asset Sales, Inc.
(6.500% due 07/25/08) 305,789 291,457
CMC Securities Corp.
(0.000% due 12/25/08) 401,817 301,298
Country Wide Mortgage-Backed
Securities, Inc.(6.000% due 03/01/09) 876,358 807,073
Capstead Mortgage Securities Corp.
(10.950% due 02/01/14) 215,719 215,934
Greenwich Capital Acceptance
(8.238% due 08/25/24) 989,978 858,806
NWA Trust No. 2 Class B
(10.230% due 06/21/14) 950,769 1,083,310
-----------
3,557,878
-----------
Total Collateralized Mortgage
Obligations (cost $6,559,333) 6,827,615
-----------
CORPORATE BONDS AND NOTES - 50.43%
AIR TRANSPORTATION - 1.22%
Continental Airlines
(7.820% due 10/15/23) 1,000,000 1,033,140
-----------
BANK & BANK HOLDING COMPANIES - 4.17%
Comerica Inc. (9.750% due 05/01/99) 500,000 534,041
First Tennessee (8.070% due 01/06/27) 2,000,000 2,002,240
Nationsbank Corp.
(7.625% due 04/15/05) 1,000,000 1,034,698
-----------
3,570,979
-----------
COMMUNICATIONS AND MEDIA - 8.59%
Arch Communication Group
(0.000% due 03/15/08) 1,000,000 571,250
Call-Net Enterprises
(0.000% due 12/01/04) 1,250,000 1,025,000
CF Cable TV Inc.
(9.125% due 07/15/07) 1,000,000 1,070,000
Continental Cablevision
(8.300% due 05/15/06) 1,000,000 1,067,038
CS Wireless Systems
(0.000% due 03/01/06) 500,000 180,000
Jones Intercable, Inc.
(9.625% due 03/15/02) 500,000 525,000
Neodata Service (12.000% due 05/01/03) 1,000,000 1,052,500
Peoples Choice TV (0.000% due06/01/04) 2,000,000 840,000
Time Warner Inc. (8.110% due 08/15/06) 1,000,000 1,024,735
-----------
7,355,523
-----------
CONGLOMERATES - 1.78%
Figgie International Inc.
(9.875% due 10/01/99) 1,000,000 1,040,000
JB Poindexter & Company
(12.500% due 05/15/04) 500,000 487,500
-----------
1,527,500
-----------
CONSUMER PRODUCTS -2.59%
Coleman Holdings
(0.000% due 05/27/98) 1,000,000 833,750
Pillowtex Corporation
(10.000% due 11/15/06) 500,000 520,000
Revlon Consumer Products Corp.
(0.00% due 03/15/98) 1,000,000 867,500
-----------
2,221,250
-----------
ENERGY - 1.34%
Coastal Corp.(9.7500% due 08/01/03) 1,000,000 1,144,986
-----------
FINANCE COMPANIES - 1.79%
Ahmanson Capital Trust
(8.360% due 12/01/26) 1,500,000 1,536,615
-----------
FOOD, BEVERAGE, & TOBACCO -3.45%
Dimon Inc. (8.875% due 06/01/06) 1,000,000 1,037,500
RJR Nabisco, Inc.
(7.625% due 09/15/03) 500,000 482,059
Great American Cookie, Inc.
(10.875% due 01/15/01) 500,000 455,000
Nabisco Inc. (7.550% due 06/15/15) 1,000,000 978,312
-----------
2,952,871
-----------
FOREIGN - 1.12%
Quebec Province CDA
(7.125% due 02/09/24) 1,000,000 955,040
-----------
GAMING INDUSTRY - 5.84%
Argosy Gaming (13.2500% due 06/01/04) 1,000,000 927,500
Boomtown, Inc. 1st Mortgage
(11.500% due 11/01/03) 1,000,000 1,047,500
Casino Magic of Louisiana
(13.000% due 08/15/03) 1,000,000 987,500
Empress River Casino Finance Corp.
(10.750% due 04/01/02) 1,000,000 1,077,500
Hollywood Casino Corp.
(12.750% due 11/01/03) 1,000,000 960,000
-----------
5,000,000
-----------
HEALTH CARE - 1.80%
Columbia / HCA Healthcare Corp.
(7.690% due 06/15/25) 1,000,000 1,026,254
Foundation Health Corp.
(7.750% due 06/01/03) 500,000 516,881
-----------
1,543,135
-----------
INSURANCE - 4.92%
Berkley (W.R.) Corp.
(9.875% due 05/15/08) 500,000 595,056
Farmers Insurance Exhange
(8.500% due 04) 1,000,000 1,046,903
Leucadia National Corp.
(8.250% due 06/15/05) 1,000,000 1,036,976
Penn Central Corp.
(9.750% due 08/01/99) 500,000 526,374
Prudential Insurance
(8.100% due 07/15/15) 1,000,000 1,010,504
-----------
4,215,813
-----------
MANUFACTURING - 4.31%
General Instrument Corporation
(5.000% 06/15/00) 500,000 532,500
International Knife & Saw Corp.
(11.375% due 11/15/06) 1,000,000 1,035,000
International Wire Group Inc.
(11.750% due 06/01/05) 500,000 535,000
Safelite Glass Corporation
(9.875% due 12/15/06) 500,00 515,000
Terex Corp. (13.750% due 05/15/02) 1,000,000 1,075,000
-----------
3,692,500
-----------
MISCELLANEOUS - .60%
Sea Containers (10.500% due 07/01/03) 500,000 512,500
-----------
OIL & GAS - DOMESTIC - .63%
Penzoil Company (9.625% due 11/15/99) 500,000 535,737
-----------
OIL & GAS - SERVICES - 3.17%
Mitchell Energy Development Corp.
(6.750% due 02/15/04) 750,000 707,585
PDV America, Inc.
(7.750% due 08/01/00) 1,000,000 1,005,453
Petro (12.500% due 06/01/02) 1,000,000 1,000,000
-----------
2,713,038
-----------
PAPER & FOREST PRODUCTS - .62%
Westvaco Corp. (10.300% due 01/15/19) 500,000 532,396
-----------
RETAIL - GENERAL - 1.23%
Hook - SuperX Inc.
(10.125% due 06/01/02) 1,000,000 1,057,132
-----------
STEELS AND METALS - 1.26%
Gulf States Steel
(13.500% due 04/15/03) 500,000 472,500
UCAR Global Enterprises Inc.
(12.000% due 01/15/05) 530,000 610,163
-----------
1,082,663
-----------
Total Corporate Bond and Notes
(cost $42,252,009) 43,182,818
-----------
COMMON STOCKS - .04%
ENERGY - .04%
Mesa Incorproated* 6,417 33,689
-----------
Total Common Stocks (cost $ 24,365) 33,689
-----------
WARRANTS - 0.00%
RETAIL-FOOD - 0.00%
Great American Cookie Warrants 90 2,250
TECHNOLOGY - .06%
CS Wireless Systems 138 1
Terex Corporation Appreciation Rights 4,000 40
-----------
Total Warrants (cost $ 28,050) 2,291
-----------
PREFERRED STOCKS - 1.05%
BANKING AND FINANCIAL SERVICE - 1.05%
Earthshell Container Corporation
Series A
Cumulative Senior Convertible 8%<F1> 500 900,000
-----------
Total Preferred Stocks (cost $500,000) 900,000
-----------
SHORT TERM INVESTMENTS - 4.42%
VARIABLE RATE DEMAND NOTES<F2> - 4.42%
American Family (5.509% due 01/01/97) 661,231 661,231
Johnson Controls Inc.
(5.529% due 01/01/97) 2,145,196 2,145,196
Pitney Bowes Credit Corp.
(5.507% due 01/01/97) 42,913 42,913
Sara Lee (5.487% due 01/01/97) 797,184 797,184
Southwestern Bell Telephone Co.
(5.487% due 01/01/97) 135,000 135,000
-----------
Total Short-Term Investments
(cost $3,781,525) 3,781,525
-----------
TOTAL INVESTMENTS - 102.85%
(cost $86,040,107)<F3> 88,078,300
-----------
OTHER ASSETS AND LIABILITIES - (2.85)% (2,444,171)
-----------
TOTAL NET ASSETS - 100% $85,634,129
===========
- -----------------------
* Non-Income Producing
<FN>
<F1> 144A- 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, 1996. The maturity shown for each
variable rate demand note is the later of the next scheduled interest
adjustment date or the date on which principal can be recovered through
demand. Information shown is as of December 31, 1996.
<F3> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at December 31, 1996 was
$3,185,795 and $1,147,602 respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statments.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996
S&P 500 INDEX PORTFOLIO
COMMON STOCKS - 82.48%
SHARES VALUE
------ -----
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 11.85%
Aetna Life & Casulaty Company 667 53,318
Allstate Corporation 2,000 115,750
American Express Company 2,100 118,650
American General Corporation 900 36,788
American International Group 2,000 216,500
Banc One Corporation 1,890 81,270
Bank of Boston Corporation 700 44,975
Bank of New York Incorporated 1,700 57,375
BankAmerica Corporation 1,600 159,600
Bankers Trust New York Corporation 300 25,875
Barnett Banks, Incorporated 1,000 41,125
Boatmen's Bancshares, Incorporated 800 51,600
Chase Manhattan Corporation 2,012 179,571
Chubb Group 800 43,000
CIGNA Corporation 300 40,988
Citicorp 1,600 164,800
Comerica, Incorporated 600 31,425
CoreStates Financial Corporation 1,100 57,063
Dean Witter, Discover & Company 700 46,375
Federal Home Loan Mortgage Corporation 800 88,100
Federal National Mortgage Association 4,800 178,800
First Bank System, Incorporated 700 47,775
First Chicago NBD Corporation 1,400 75,250
First Union Corporation 1,300 96,200
Fleet Financial Group, Incorporated 1,200 59,850
General RE Corporation 400 63,100
Great Western Financial 500 14,500
Green Tree Financial Corporation 600 23,175
Household International, Incorporated 500 46,125
ITT Hartford Group Incorporated 500 33,750
KeyCorp 1,000 50,500
Lincoln National Corporation 500 26,250
Marsh & McLennan Companies, Incorporated 400 41,600
MBNA Corporation 850 35,275
Mellon Bank Corporation 600 42,600
Merrill Lynch & Company, Incorporated 800 65,200
Morgan (J. P.) & Company 900 87,863
Morgan Stanley Group Incorporated 700 39,988
National City Corporation 1,100 49,363
NationsBank Corporation 1,000 97,750
Norwest Corporation 1,600 69,600
PNC Bank Corporation 1,500 56,438
Providian Corp. 500 25,688
Republic New York Corporation 300 24,488
SAFECO Corporation 600 23,663
Salomon, Incorporated 500 23,563
SunTrust Banks, Incorporated 1,200 59,100
Transamerica Corporation 400 31,600
Travelers Group, Incorporated 2,733 124,010
US Bancorp 700 31,456
Wachovia Corporation 800 45,200
Wells Fargo & Company 433 116,802
-----------
3,460,670
-----------
CAPITAL GOOD - 4.56%
AMP, Incorporated 1,100 42,213
Caterpillar, Incorporated 900 67,725
Cooper Industries, Incorporated 600 25,275
Deere & Company 1,200 48,750
Dover Company 600 30,150
Emerson Electric Company 1,100 106,425
Foster Wheeler Corporation 300 11,138
General Electric Company 7,100 702,013
Grainger (WW), Incorporated 300 24,075
Illinois Tool Works, Incorporated 600 47,925
Ingersoll-Rand Company 500 22,250
Scientific-Atlanta, Incorporated 500 7,500
Tenneco, Incorporated 900 40,613
Tyco International Limited 800 42,300
Westinghouse Electric Corporation 1,900 37,763
WMX Technologies, Incorporated 2,300 75,038
-----------
1,331,153
-----------
CONSUMER CYCLICAL - 6.02%
American Greetings Company Class A 500 14,188
American Stores Company 700 28,613
Black & Decker Corp. 500 15,063
Chrysler Corporation 3,200 105,600
CVS Corporation 500 20,688
Dayton Hudson Corporation 1,100 43,175
Eaton Corporation 400 27,900
Federated Department Stores Incorporated* 1,000 34,125
Ford Motor Company 5,300 168,938
Gap (The), Incorporated 1,300 39,163
General Motors Corporation 3,400 189,550
Genuine Parts Company 900 40,050
Goodyear Tire & Rubber Company 800 41,100
HFS, Incorporated 600 35,850
Home Depot, Incorporated 2,100 105,263
Johnson Controls 300 24,863
K Mart Corporation* 2,200 22,825
Lowe's Companies, Incorporated 800 28,400
May Department Stores Company 1,200 56,100
NIKE, Incorporated 1,300 77,675
PACCAR, Incorporated 200 13,600
Penney, (J.C.) Company, Incorporated 1,100 53,625
Reebok International, Incorporated 300 12,600
Rite Aid Corporation 500 19,875
Sears, Roebuck & Company 1,700 78,413
Tandy Corporation 300 13,200
Limited (The), Incorporated 1,290 23,704
Toys "R" Us, Incorporated* 1,200 36,000
TRW, Incorporated 600 29,700
V.F. Corporation 400 27,000
Wal-Mart Stores, Incorporated 11,000 251,625
Walgreen Company 1,000 40,000
Whirlpool Corporation 500 23,313
Woolworth Corporation* 700 15,313
-----------
1,757,097
-----------
CONSUMER NON-DURABLE - 21.53%
Abbott Laboratories 3,400 172,550
Albertson's, Incorporated 1,200 42,750
American Brands, Incorporated 800 39,700
American Home Products Corporation 2,800 164,150
Andrew Corporation 300 15,919
Anheuser-Busch Companies, Incorporated 2,200 88,000
Archer-Daniels-Midland Company 2,495 54,890
Automatic Data Processing, Incorporated 1,400 60,025
Avon Products, Incorporated 600 34,275
Baxter International, Incorporated 1,300 53,300
Becton, Dickinson Company 700 30,363
Block, H&R Incorporated 500 14,500
Boston Scientific Corporation* 800 48,000
Bristol-Meyers Squibb Company 2,300 250,125
Browning-Ferris Industries, Incorporated 1,000 26,250
Brunswick Corporation 500 12,000
Campbell Soup Company 1,000 80,250
Clorox Co. 300 30,113
Coca-Cola Company 10,900 573,613
Cognizant Corporation 800 26,400
Colgate-Palmolive Company 600 55,350
Columbia/HCA Healthcare Corporation 3,050 124,288
Comcast Corporation 900 16,031
ConAgra, Incorporate, Class A. Special 1,100 54,725
CPC International, Incorporated 700 54,250
CUC International, Incorporated 1,850 43,938
Donnelly (RR) & Sons Company 800 25,100
Dow Jones, & Company, Incorporated 600 20,325
Dun & Bradstreet Corporation 1,200 28,500
Gannett Company, Incorporated 800 59,900
General Mills, Incorporated 700 44,363
Gillette Company 1,900 147,725
Heinz (H.J.) Company 1,700 60,775
Harrahs Entertainment, Incorporated* 500 9,938
Hershey Foods Corporation 900 39,375
Hilton Hotels Corporation 900 23,513
International Flavors & Fragrance,
Incorporated 500 22,500
Interpublic Group Companies,
Incorporated 600 28,500
Johnson & Johnson 5,800 288,550
Kellogg Company 1,000 65,625
King World Producation, Incorporated* 300 11,063
Kroger Company* 700 32,550
Lilly,(Eli) & Company 2,400 175,200
Loews Corporation 600 56,550
Manor Care 400 10,800
Mattel, Incorporated 1,250 34,688
Marriott International 600 33,150
McDonalds Corporation 3,100 140,275
McGraw Hill Companies, Incorporated 600 27,675
Medtronic, Incorporated 1,100 74,800
Merck & Company, Incorporated 5,300 420,025
PepsiCo, Incorporated 6,700 195,975
Pfizer, Incorporated 2,800 232,050
Pharmacia & Upjohn, Incorporated 2,200 87,175
Philip Morris Companies, Incorporated 3,600 405,450
Procter & Gamble Company 3,000 322,500
Ralston-Ralston Purina Group 500 36,688
Sara Lee Corporation 2,300 85,675
Schering-Plough Corporation 1,600 103,600
Seagrams Company, Limited 1,700 65,875
St. Jude Medical* 400 17,050
Sysco Corporation 900 29,363
Tele-Communications, Incorporated* 1,600 20,900
Tenet Healthcare Corporation* 1,100 24,063
Time Warner, Incorporated 2,600 97,500
Tribune Company 400 31,550
UST, Incorporated 800 25,900
United HealthCare Corporation 900 40,500
Viacom, Inc. - Class B* 1,300 45,338
Walt Disney Company, The 3,019 210,198
Warner-Lambert Company 1,300 97,500
Wendy's International 700 14,350
Winn-Dixie Stores, Incorporated 700 22,138
Wrigley, (Wm), Jr. Company 500 28,125
-----------
6,286,683
-----------
ENERGY - 7.95%
Amerada Hess Corporation 500 28,938
Amoco Corporation 2,300 185,150
Atlantic Richfield Company 800 106,000
Burlington Resources, Incorporated 600 30,225
Chevron Corporation 2,800 182,000
Columbia Gas System, Incorporated 300 19,088
Dresser Industries, Incorporated 1,200 37,200
Enron Corporation 1,100 47,438
Exxon Corporation 5,300 519,400
Halliburton Company 600 36,150
Kerr-McGee Company 300 21,600
Mobil Corporation 1,700 207,825
Occidental Petroleum 1,600 37,400
Phillips Petroleum Company 1,300 57,525
Royal Dutch Petroleum Company ADR 2,300 392,725
Schlumberger Limited 1,400 139,825
Sun Company, Incorporated 700 17,063
Texaco, Incorporated 1,200 117,750
USX-Marathon 1,400 33,425
Union Pacific Resources Group 1,092 31,941
Unocal Corporation 1,100 44,688
Williams Companies 750 28,125
-----------
2,321,481
-----------
MANUFACTURING - 7.68%
Air Products & Chemicals, Incorporated 600 41,475
Alcan Aluminum Limited 1,500 50,438
Allegheny Teledyne, Incorporated 800 18,400
Aluminum Company of America 1,100 70,125
Applied Materials Incorporated* 900 32,344
Barrick Gold 1,800 51,750
Bemis Company 300 11,063
Bethlehem Steel Corporation* 700 6,300
Centex Corporation 100 3,763
Champion International Corporation 500 21,625
Corning, Incorporated 1,100 50,875
Crown Cork & Seal Company, Incorporated 600 32,625
Dow Chemical Company 1,200 94,050
DuPont (E.I.) De Nemours & Company 2,500 235,938
Eastman Chemical Company 400 22,100
Eastman Kodak Company 1,500 120,375
Englehard Corporation 600 11,475
Fluor Corporation 500 31,375
Freeport McMoran Copper 600 17,925
Fresenius Medical Care* 400 56
Georgia-Pacific Company 500 36,000
Grace, (WR) & Company 400 20,700
Great Lakes Chemical Corporation 400 18,700
Hercules, Incorporated 600 25,950
Inco, Limited 1,100 35,063
International Paper Company 1,300 52,488
ITT Corporation 600 26,025
Kimberly-Clark Corporation 1,300 123,825
Louisiana-Pacific Corporation 600 12,675
Mallincrokdt Group, Incorporated 500 22,063
Masco Corporation 800 28,800
Minnesota Mining & Manufacturing Company 1,900 157,463
Mead Corporation 300 17,438
Monsanto Company 2,700 104,963
Morton International, Incorporated 700 28,525
Nalco Chemical Company 400 14,450
Newmont Mining Corporation 1,200 53,700
Nucor Corporation 500 25,500
Owens Corning 300 12,788
Phelps Dodge Corporation 500 33,750
Placer Dome, Incorporated 1,200 26,100
PPG Industries, Incorporated 900 50,513
Praxair Incorporated 700 32,288
Reynolds Metals Company 400 22,550
Rohm & Haas 300 24,488
Rubbermaid, Incorporated 800 18,200
Sherwin- Williams 500 28,000
Silicon Graphics Incorporated* 900 22,950
Union Camp Corporation 400 19,100
Union Carbide Corporation 700 28,613
Unilever (N.V.) ADR 700 122,675
USX-US Steel Group 500 15,688
Weyerhaeuser Company 1,000 47,375
Worthington Industries, Incorporated 500 9,063
-----------
2,242,546
-----------
SERVICE - 0.21%
Alco Standard Corporation 600 30,975
Service Corporation International 1,100 30,800
-----------
61,775
-----------
TECHNOLOGY - 13.04%
3COM Corporation* 800 58,700
Advanced Micro Devices, Incorporated* 700 18,025
AirTouch Communications, Incorporated* 2,300 58,075
AlliedSignal Incorporated 1,300 87,100
Amgen, Incorporated* 1,200 65,250
Boeing Company 1,542 164,030
Cabletron Systems, Incorporated 800 26,600
Cisco Systems, Incorporated 2,900 184,513
COMPAQ Computers Corporation* 1,100 81,675
Computer Associates International,
Incorporated 1,600 79,600
Computer Sciences Corporation* 400 32,850
Digital Equipment Corporation* 700 25,463
Dell Computer Corporation 800 42,500
First Data Corporation 2,000 73,000
Hewlett-Packard Company 4,700 236,175
Honeywell, Incorporated 600 39,450
Intel Corporation 3,700 484,469
International Business Machines
Corporation 2,300 347,300
Lockheed Martin Corporation 900 82,350
LSI Logic Corporation* 600 16,050
Lucent Technologies 2,785 128,806
McDonnell Douglas Corporation 1,000 64,000
Micron Technology Incorporated 1,000 29,125
Microsoft Corporation* 5,200 429,650
Motorola Incorporated 2,600 159,575
Nothern Telecom, Limited 1,200 74,250
Novell, Incorporated* 1,600 15,150
Oracle Systems Corporation 2,900 121,075
Perkin-Elmer Corporation 300 17,663
Pitney-Bowes Incorporated 800 43,600
Raytheon Company 1,100 52,938
Rockwell International Corporation 1,000 60,875
Seagate Technology, Incorporated 1,000 39,500
Sun Microsystems, Incorporated 1,600 41,100
Tandem Computer Incorporated* 600 8,250
Tektronix, Incorporated 200 10,250
Tellabs, Incorporated 800 30,100
Texas Instruments, Incorporated 900 57,375
Textron Incorporated 400 37,700
Unisys Corporation* 900 6,075
United Technologies Corporation 1,200 79,200
Western Atlas, Incorporated* 300 21,263
Xerox Corporation 1,500 78,938
-----------
3,809,633
-----------
TRANSPORTATION - 1.51%
AMR Corporation* 400 35,250
Burlington Northern Santa Fe Corporation 900 77,738
Caliber System, Incorporated 300 5,775
Conrail Incorporated 400 39,850
CSX Corporation 1,300 54,925
Delta Air Lines 400 28,350
Federal Express 600 26,700
Laidlaw Incorporated 1,400 16,100
Norfolk Southern Company 700 61,250
Ryder System 500 14,063
Southwest Airlines Company 700 15,488
Union Pacific Corporation 1,100 66,138
-----------
441,627
-----------
UTILITY - 8.13%
ALLTELL Corporation 1,000 31,375
American Electric Power Company,
Incorporated 1,000 41,125
AT&T Corporation 6,900 300,150
Ameritech Corporation 2,500 151,563
Baltimore Gas & Electric Company 800 21,400
Bell Atlantic Corporation 2,000 129,500
BellSouth Corporation 4,300 173,613
Carolina Power & Light Company 700 25,550
Central & Southwest Corporation 1,000 25,625
CinergyCorporation 700 23,363
Coastal Corporation 500 24,438
Consolidated Edison Co. of N.Y.,
Incorporated 900 26,325
Consolidated Natural Gas Company 500 27,625
Dominion Resources 900 34,650
Duke Power 1,000 46,250
DTE Energy Company 700 22,663
Edison International 1,900 37,763
Entergy Corporation 1,000 27,750
FPL Group Incorporated 1,000 46,000
General Public Utilities Corporation 600 20,175
GTE Corporation 3,800 172,900
Houston Industries, Incorporated 1,100 24,888
MCI Communications Corporation 3,000 98,063
Niagara Mohawk Power Corporation* 600 5,925
NYNEX Corporation 2,000 96,250
Pacific Gas & Electric Company 1,900 39,900
Pacific Telesis Group 1,800 66,150
PacifiCorp 1,400 28,700
PanEnergy Corporation 700 31,500
PECO Energy Company 900 22,725
Public Service Enterprise Group,
Incorporated 900 24,525
SBC Communications 2,600 134,550
Southern Company 2,900 65,613
Sprint Corporation* 1,600 63,800
Sonat, Incorporated 400 20,600
Texas Utilities Company 1,000 40,750
Unicom Corporation 1,000 27,125
Union Electric Company 600 23,100
U.S. West Communications Group 2,100 67,725
US West Media Group* 2,200 40,700
WorldCom, Incorporated 1,700 44,306
-----------
2,376,698
-----------
Total Common Stocks (cost $21,107,889) 24,089,363
<CAPTION>
SHORT-TERM INVESTMENTS - 17.76%
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
US Treasury Bill<F2>
(5.360% due 05/01/97) $5,200,00 5,112,578
Portico US Federal Money Market Fund 73,782 73,782
-----------
Total Short-Term Investments
(cost $5,186,360) 5,186,360
-----------
TOTAL INVESTMENTS -
100.24% (cost $26,294,249)<F1> 29,275,723
-----------
OTHER ASSETS AND LIABILITIES - (0.24%) (71,113)
-----------
TOTAL NET ASSETS - 100% $29,204,610
- -----------
*Non-income producing
(ADR) American Depository Receipt
<FN>
<F1> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at December 31, 1996
was $3,401,349 and $370,475 respectively.
<F2> Security is held by the custodian in a segregated account for open
futures contracts. At December 31, 1996, the Fund's open futures contracts
were as follows:
</FN>
</TABLE>
<TABLE>
<CAPTION>
Unrealized Appreciation/
Type Contracts (Depreciation)
- ---- ---------- ------------
<S> <C> <C>
Standard & Poor's 500 Index (03/97) 10 $57,750
Standard & Poor's 500 Index (03/97) 2 6,350
Standard & Poor's 500 Index (03/97) 2 (14,700)
-------
$49,400
=======
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
CARILLON FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Carillon Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a no-load,
diversified, open-end management investment company. The shares
of the Fund are sold only to The Union Central Life Insurance
Company (Union Central) and its separate accounts to fund the
benefits under certain variable insurance and retirement
products. The Fund's shares are offered in four different
series - Equity Portfolio, Capital Portfolio, Bond Portfolio,
and S&P 500 Index Portfolio. The Equity Portfolio seeks long-
term appreciation of capital by investing primarily in common
stocks and other equity securities. The Capital Portfolio seeks
the highest total return through a combination of income and
capital appreciation consistent with the reasonable risks
associated with an investment portfolio of above-average quality
by investing in equity securities, debt instruments, and money
market instruments. The Bond Portfolio seeks a high level of
current income as is consistent with reasonable investment risk
by investing primarily in long-term, fixed-income, investment-
grade corporate bonds. The S&P 500 Index Portfolio seeks
investment results that correspond to the total return
performance of U.S. common stocks, as represented in the
Standard & Poor's 500 Index.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
SECURITIES VALUATION - Securities held in each Portfolio, 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 in each Portfolio 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. All amortization of discount is recognized currently
under the effective interest method. Gains and losses on sales
of investments are calculated on the identified cost basis for
financial reporting and tax purposes.
FEDERAL TAXES - It is the intent of the Fund to comply with the
requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its net
investment income and any net realized capital gains. Regulated
investment companies owned by the segregated asset accounts of a
life insurance company, held in connection with variable annuity
contracts, are exempt from excise tax on undistributed income.
Therefore, no provision for income or excise taxes has been
recorded.
DISTRIBUTIONS -Distributions from net investment income in all
Portfolios are declared and paid quarterly. Net realized
capital gains are distributed periodically, no less frequently
than annually. Distributions are recorded on the ex-dividend
date. All distributions are reinvested in additional shares of
the respective Portfolio at the net asset value per share.
The amount of distributions are determined in accordance with
federal income tax regulations which may differ from generally
accepted accounting principles. These "book/tax" differences
are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their
federal tax-basis treatment; temporary differences do not
require reclassification. Distributions which exceed net
investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as
distributions in excess of net investment income or
distributions in excess of net realized capital gains. To the
extent they exceed net investment income and net realized
capital gains for tax purposes, they are reported as
distributions of paid-in-capital.
EXPENSES - Allocable expenses of the Fund are charged to each
Portfolio based on the ratio of the net assets of each Portfolio
to the combined net assets of the Fund. Nonallocable expenses
are charged to each Portfolio based on specific identification.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEES - 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.
(d) for the S & P 500 Index Portfolio - .30% 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 Equity, Capital , or Bond Portfolios, the Adviser will
reimburse the Fund for such excess, up to the amount of the
advisory fee for that year. The Adviser has agreed to waive its
advisory fee and pay any other expenses of the S&P 500 Index
Portfolio to the extent that such expenses exceed 0.60% of its
average annual net assets. As a result, for the year ended
December 31, 1996, the Adviser waived management fees of $40,752
for the S&P 500 Index Portfolio.
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 for the Equity, Capital, and Bond Portfolios,
and .05% of the Fund's average net assets for the S & P 500
Index Portfolio. 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 - FUTURES CONTRACTS
S&P 500 Index Portfolio ("Index") may purchase futures contracts
on the Standard & Poor's 500 Stock Index. These contracts
provide for the sale of a specified quantity of a financial
instrument at a fixed price at a future date. When Index enters
into a futures contract, it is required to deposit and maintain
as collateral such initial margin as required by the exchange on
which the contract is traded. Under terms on the contract,
Index agrees to receive from or pay to the broker an amount
among equal to the daily fluctuation in the value of the
contract (known as the variation margin). The variation margin
is recorded as unrealized gain or loss until the contract
expires or is otherwise closed, at which time the gain or loss
is realized. Index invests in futures as a substitute to
investing in the 500 common stock positions in the Standard &
Poor's 500 Index. The potential risk to Index is that the
change in the value in the underlying securities may not
correlate to the value of the contracts.
NOTE 4 - SUMMARY OF PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities for the year ended December
31, 1996 excluding short-term obligations, follow:
<TABLE>
<CAPTION>
Equity Capital Bond S&P 500
Portfolio Portfolio Portfolio Index
--------- --------- --------- -------
<S> <C> <C> <C> <C>
Total Cost of
Purchases of:
Common Stocks $134,595,735 $32,689,304 $ 500,000 $21,253,070
U.S. Government
Securities -- 29,758,818 20,072,333 --
Corporate Bonds -- 4,655,726 143,754,858 --
------------ ----------- ------------ -----------
$134,595,735 $67,103,848 $164,327,191 $21,253,070
============ =========== ============ ===========
Total Proceeds
from Sales of:
Common Stocks $121,196,447 $45,862,233 $ 56,998 $ 148,079
U.S. Government
Securities -- 17,316,857 13,542,937 --
Corporate Bonds -- 5,810,391 137,605,856 --
------------ ----------- ------------ -----------
$121,196,447 $68,989,481 $151,205,791 $ 148,079
============ =========== ============ ===========
</TABLE>
<PAGE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock
outstanding throughout the year.
<TABLE>
<CAPTION>
Equity Portfolio
Year Ended December 31,
-----------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $16.54 $14.30 $14.58 $13.74 $12.60
------- ------- ------- ------- -------
Investment Activities:
Net investment income .29 .24 .20 .16 .19
Net realized and unrealized 3.61 3.36 .31 1.69 1.27
gains/(losses)
------- ------- ------- ------- -------
Total from Investment
Operations 3.90 3.60 .51 1.85 1.46
------- ------- ------- ------- -------
Distributions:
Net investment income (.27) (.23) (.19) (.16) (.19)
Net realized gains (.72) (1.13) (.60) (.85) (.13)
------- ------- ------- ------- -------
Total Distributions (.99) (1.36) (.79) (1.01) (.32)
------- ------- ------- ------- -------
Net Asset Value,
End of year $19.45 $16.54 $14.30 $14.58 $13.74
------- ------- ------- ------- -------
Total Return 24.52% 26.96% 3.42% 14.11% 11.78%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .64% .66% .69% .70% .72%
Ratio of Net Investment
Income to Average Net Assets 1.66% 1.73% 1.45% 1.18% 1.47%
Portfolio Turnover Rate 52.53% 34.33% 40.33% 37.93% 46.75%
Average Commission Rate Paid $.0628<F1>
Net Assets, End of Year
(000's) $288,124 $219,563 $157,696 $138,239 $102,306
<FN>
<F1> Represents the dollar amount of commissions paid on Portfolio
transactions divided by the total number of shares purchased and sold for
which commissions were charged. Disclosure not required for periods prior
to fiscal 1996.
</FN>
</TABLE>
<PAGE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
Capital Portfolio
Year Ended December 31
----------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $13.72 $13.19 $13.81 $12.99 $12.82
Investment Activities:
Net investment income .63 .64 .52 .43 .42
Net realized and unrealized 1.36 1.15 (.39) 1.17 .56
gains/(losses)
Total from Investment
Operations 1.99 1.79 .13 1.60 .98
Distributions:
Net investment income (.57) (.64) (.52) (.42) (.42)
Net realized gains (.19) (.62) (.23) (.36) (.39)
Total Distributions (1.76) (1.26) (.75) (.78) (.81)
Net Asset Value,
End of year $14.95 $13.72 $13.19 $13.81 $12.99
Total Return 14.94% 14.28% .94% 12.72% 7.93%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .77% .77% .80% .82% .88%
Ratio of Net Investment
Income to Average Net Assets 4.42% 4.99% 4.25% 3.31% 3.49%
Portfolio Turnover Rate 53.11% 43.83% 41.89% 32.42% 39.74%
Average Commission
Rate Paid .0615<F1>
Net Assets,
End of Year (000's) $159,294 $145,623 $119,263 $100,016 $68,674
<FN>
<F1> Represents the dollar amount of commissions paid on
Portfolio transactions divided by the total number of shares
purchased and sold for which commissions were charged.
Disclosure not required for periods prior to fiscal 1996.
</TABLE>
<PAGE>
Carillon Fund, Inc.
Notes to Financial Statements
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
Bond Portfolio
Year Ended December 31
----------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $11.07 $10.04 $11.30 $10.91 $10.96
------ ------ ------ ------ ------
Investment Activities:
Net investment income .79 .88 .77 .73 .82
Net realized and unrealized (.04) .98 (.95) .54 (.01)
gains/(losses)
------ ------ ------ ------ ------
Total from Investment
Operations .75 1.86 (.18) 1.27 .81
------ ------ ------ ------ ------
Distributions:
Net investment income (.87) (.83) (.78) (.73) (.82)
In excess of net
investment income (.04) -- -- -- --
Net realized gains -- -- (.30) (.15) (.04)
------ ------ ------ ------ ------
Total Distributions (.91) (.83) (1.08) (.88) (.86)
------ ------ ------ ------ ------
Net Asset Value,
End of period $10.91 $11.07 $10.04 $11.30 $10.91
====== ====== ====== ====== ======
Total Return 7.19% 19.03% (1.63%) 11.94% 7.65%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .62% .65% .68% .66% .69%
Ratio of Net Investment
Income to Average Net Assets 7.24% 7.43% 7.21% 6.65% 7.59%
Portfolio Turnover Rate 202.44% 111.01% 70.27% 137.46% 40.91%
Net Assets,
End of Year (000's) $85,634 $73,568 $55,929 $54,128 $38,557
</TABLE>
<PAGE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
S & P 500 Index Portfolio
Year Ended
December 31, 1996<F1>
---------------------
<S> <C>
Net Asset Value,
Beginning of Year $ 10.00
Investment Activities:
Net investment income .20
Net realized and unrealized 2.12
gains/(losses) -------
Total from Investment Operations 2.32
Distributions:
Net investment income (.19)
Net realized gains --
Total Distributions (.19)
Net Asset Value,
End of Year $ 12.13
Total Return, not annualized 23.37%
Ratios/Supplemental Data:
Ratio of Net Expenses to
Average Net Assets .59%<F2>
Ratio of Net Investment
Income to Average Net Assets 2.14%<2>
Portfolio Turnover Rate 1.09%
Average Commission Rate Paid $ .0601<F3>
Net Assets, End of Year (000's) $ 29,205
<FN>
<F1> The portfolio commenced operation on December 29, 1995. The financial
highlights table for the period ending December 31, 1995 is not presented
because the activity for the period did not round to $0.01 in any category
of the reconciliation of beginning to ending net asset value per share. The
ratios and total return were all less than 0.1%. The net assets at December
31, 1995 were $305,148.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by .25%
for the year ended December 31, 1996, had the Adviser not waived a portion
of its fee.
<F3> Represents the dollar amount of commissions paid on Portfolio
transactions divided by the total number of shares purchased and sold for
which commissions were charged. Disclosure not required for periods prior
to fiscal 1996.
</FN>
</TABLE>
