Registration No. 2-90309
- ------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ ___
Post-Effective Amendment No. 19 X
--- ---
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20 X
--- ---
CARILLON FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1876 Waycross Road, Cincinnati, Ohio 45240
(Address of Principal Executive Offices)
(513) 595-2600
(Registrant's Telephone Number)
John F. Labmeier, Esq.
The Union Central Life Insurance Company
P.O. Box 40888
Cincinnati, Ohio 45240
(Name and Address of Agent for Service)
Copy to:
Jones and Blouch L.L.P.
Suite 405 West
1025 Thomas Jefferson St., N.W.
Washington, D.C. 20007
_________________
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
the Registrant has registered an indefinite amount of securities
under the Securities Act of 1933. A Rule 24f-2 Notice for
Registrant's 1997 fiscal year was filed on March 27, 1998.
_________________
It is proposed that this filing will become effective (check
appropriate box)
( ) immediately upon filing pursuant to paragraph (b) of Rule 485
(X) on May 1, 1998 pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a)(1) of Rule 485
( ) on (date) pursuant to paragraph (a)(1) of Rule 485
( ) 75 days after filing pursuant to paragraph (a)(2) of Rule 485
( ) on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following bos:
( ) This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
_________________
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
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 Port
folios: 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 May 1, 1998, 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, 1998
UCCF 514m 5-98 <PAGE>
CARILLON FUND, INC.
TABLE OF CONTENTS
Page
The Fund ..................................... 2
Annual Fund Operating Expenses ............... 3
Financial Highlights ......................... 4
Investment Objectives and Policies ........... 9
Equity Portfolio ........................ 9
Bond Portfolio .......................... 9
Capital Portfolio ...................... 10
S&P 500 Index Portfolio ................. 11
Micro-Cap Portfolio .................... 12
Principal Risk Factors ................. 12
Investment in Foreign Securities ....... 13
Foreign Currency Transactions .......... 14
Repurchase Agreements .................. 14
Reverse Repurchase Agreements .......... 15
Futures Contracts and
Options on Futures Contracts ......... 15
Options ................................ 16
Options on Securities Indices .......... 17
Collateralized Mortgage Obligations .... 17
Lending Portfolio Securities ........... 17
Other Information ...................... 17
The Fund and Its Management ................. 17
Investment Adviser ..................... 18
Advisory Fee ........................... 18
Expenses .............................. 18
Capital Stock ......................... 19
Purchase and Redemption of Shares ........... 19
Dividends and Distributions ................. 19
Taxes ....................................... 20
Custodian, Transfer and
Dividend Disbursing Agent .............. 20
Preparing for Year 2000 ..................... 20
Appendix
Bond and Commercial Paper Ratings ...... 21
<PAGE>
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>
<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 .56% .48% .68% .30% 1.00%*
Other Expenses .06% .12% .09% .20% 1.00%*
---- ---- ---- ---- ----
Total Operating
Expenses .62% .60% .77% .50% 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 $6 $20 $35 $78
Bond Portfolio $6 $19 $34 $75
Capital Portfolio $8 $25 $43 $96
S&P 500 Index Portfolio $5 $16 $28 $63
Micro-Cap Portfolio $21 $63 $109 $234
</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.
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>
FINANCIAL HIGHLIGHTS
The financial information in the tables which follow (pages 4-
8), insofar as it pertains to each of the five years in the
period ended December 31, 1997, has been audited in conjunction
with the annual audit of the financial statements of the Fund.
The financial statements for the year ended December 31, 1997,
have been audited by Deloitte & Touche LLP, whose unqualified
report thereon is included in the Statement of Additional
Information. The financial statements for the years ended
December 31, 1996 and December 31, 1995 have been audited by
Deloitte & Touche LLP. The financial statements for the years
ended December 31, 1994 and December 31, 1993 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,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $19.45 $16.54 $14.30 $14.58 $13.74
Investment Activities:
Net investment income .23 .29 .24 .20 .16
Net realized and
unrealized gains (losses) 3.23 3.61 3.36 .31 1.69
------ ------ ------ ------ ------
Total from Investment
Operations 3.46 3.90 3.60 .51 1.85
Distributions:
Net investment income (.27) (.27) (.23) (.19) (.16)
Net realized gains (2.29) (.72) (1.13) (.60) (.85)
------ ------ ------ ------ ------
Total Distributions (2.56) (.99) (1.36) (.79) (1.01)
Net Asset Value,
End of year $20.35 $19.45 $16.54 $14.30 $14.58
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return<F2> 20.56% 24.52% 26.96% 3.42% 14.11%
Ratio of Expenses to
Average Net Assets .62% .64% .66% .69% .70%
Ratio of Net Investment
Income to Average
Net Assets 1.23% 1.66% 1.73% 1.45% 1.18%
Portfolio Turnover Rate 57.03% 52.53% 34.33% 40.33% 37.93%
Average Commission
Rate Paid <F3> $.0600 $.0628
Net Assets, End of Period
(in thousands) $335,627 $288,124 $219,563 $157,696 $138,239
<CAPTION>
1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $12.60 $ 8.81 $10.79 $10.88 $ 8.57
Investment Activities:
Net investment income .19 .20<F1> .28<F1> .58 .38
Net realized and
unrealized gains (losses) 1.27 3.79 (1.91) .69 2.33
------ ------ ------ ------ ------
Total from Investment
Operations 1.46 3.99 (1.63) 1.27 3.71
Distributions:
Net investment income (.19) (.20) (.31) (.59) (.34)
Net realized gains (.13) -- (.04) (.77) (.06)
------ ------ ------ ------ ------
Total Distributions (.32) (.20) (.35) (1.36) (.40)
Net Asset Value,
End of year $13.74 $12.60 $ 8.81 $10.79 $10.88
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return<F2> 11.78% 45.55% (15.45%) 11.79% 31.79%
Ratio of Expenses to
Average Net Assets .72% .75%<F1> .82%<F1> .95% .95%
Ratio of Net Investment
Income to Average
Net Assets 1.47% 1.79%<F1> 2.98%<F1> 5.34% 3.74%
Portfolio Turnover Rate 46.75% 55.17% 99.90% 61.49% 57.98%
Average Commission
Rate Paid <F3>
Net Assets, End of Period
(in thousands) $102,306 $79,352 $52,514 $56,194 $37,723
<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>
FINANCIAL HIGHLIGHTS
(Continued)
Bond Portfolio
Year ended December 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
[S] [C] [C] [C] [C] [C]
Net Asset Value,
Beginning of year $10.91 $11.07 $10.04 $11.30 $10.91
Investment Activities:
Net investment income .79 .79 .88 .77 .73
Net realized and
unrealized gains (losses) .37 (.04) .98 (.95) .54
------ ------ ------ ------ ------
Total from Investment
Operations 1.16 .75 1.86 (.18) 1.27
Distributions:
Net investment income (.72) (.87) (.83) (.78) (.73)
In excess of net
investment income -- (.04) -- -- --
Net realized gains (.06) -- -- (.30) (.15)
------ ------ ------ ------ ------
Total Distributions (.78) (.91) (.83) (1.08) (.88)
Net Asset Value,
End of year $11.29 $10.91 $11.07 $10.04 $11.30
------ ------ ------ ------ ------
Ratios/Supplemental Data:
Total Return<F1> 11.02% 7.19% 19.03% (1.63%) 11.94%
Ratio of Expenses to
Average Net Assets .60% .62% .65% .68% .66%
Ratio of Net Investment
Income to Average
Net Assets 7.15% 7.24% 7.43% 7.21% 6.65%
Portfolio Turnover Rate 113.41% 202.44% 111.01% 70.27% 137.46%
Net Assets, End of Period
(in thousands) $99,892 $85,634 $73,568 $55,929 $54,128
[CAPTION]
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
[S] [C] [C] [C] [C] [C]
Net Asset Value,
Beginning of year $10.96 $10.10 $10.02 $ 9.82 $ 9.96
Investment Activities:
Net investment income .82 .86 .81 .83 .85
Net realized and
unrealized gains (losses) (.01) .87 .03 .20 (.13)
------ ------ ------ ------ ------
Total from Investment
Operations .81 1.73 .84 1.03 .72
Distributions:
Net investment income (.82) (.87) (.76) (.83) (.86)
In excess of net
investment income -- -- -- -- --
Net realized gains (.04) -- -- -- --
------ ------ ------ ------ ------
Total Distributions (.86) (.87) (.76) (.83) (.86)
Net Asset Value,
End of year $10.91 $10.96 $10.10 $10.02 $ 9.82
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return<F1> 7.65% 17.89% 8.66% 10.72% 7.36%
Ratio of Expenses to
Average Net Assets .69% .73% .79% .86% .82%
Ratio of Net Investment
Income to Average
Net Assets 7.59% 8.27% 8.57% 8.38% 8.34%
Portfolio Turnover Rate 40.91% 39.82% 110.90% 17.70% 24.11%
Net Assets, End of Period
(in thousands) $38,557 $31,009 $24,446 $15,941 $12,460
[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.
<PAGE>
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
Capital Portfolio
Year ended December 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value:
Beginning of period $14.95 $13.72 $13.19 $13.81 $12.99
Investment Activities:
Net investment income .62 .63 .64 .52 .43
Net realized and
unrealized gains
(losses) .37 1.36 1.15 (.39) 1.17
------ ------ ------ ------ ------
Total from Investment
Operations .99 1.99 1.79 .13 1.60
Distributions:
Net investment income (.66) (.57) (.64) (.52) (.42)
Net realized gains (1.18) (.19) (.62) (.23) (.36)
------ ------ ------ ------ ------
Total Distributions (1.84) (.76) (1.26) (.75) (.78)
Net Asset Value,
End of period $14.10 $14.95 $13.72 $13.19 $13.81
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return<F2> 7.40% 14.94% 14.28% .94% 12.72%
Ratio of Expenses
to Average Net Assets .77% .77% .77% .80% .82%
Ratio of Net Investment
Income to Average
Net Assets 4.22% 4.42% 4.99% 4.25% 3.31%
Portfolio Turnover Rate 60.84% 53.11% 43.83% 41.89% 32.42%
Average Commission
Rate Paid<F4> $.0531 $.0615
Net Assets, End of Period
(in thousands) $148,830 $159,294 $145,623 $119,263 $100,016
<CAPTION>
Year ended Period ended
December 31, 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%<F3>
Portfolio Turnover Rate 39.74% 47.93% 16.02%
Average Commission
Rate Paid<F4>
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>
<PAGE>
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
S&P 500 Index Portfolio
Year Ended December 31,
1997 1996<F1>
---- ----
<S> <C> <C>
Net Asset Value,
Beginning of Year $12.13 $10.00
Investment Activities:
Net investment income .20 .20
Net realized and unrealized
gains/(losses) 3.72 2.12
------ ------
Total from Investment Operations 3.92 2.32
Distributions:
Net investment income (.21) (.19)
Net realized gains (.10) --
------ ------
Total Distributions (.31) (.19)
Net Asset Value,
End of Year $15.74 $12.13
------ ------
Total Return, not annualized 32.72% 23.37%
Ratios/Supplemental Data
Ratio of Net Expenses to
Average Net Assets .50% .59%<F2>
Ratio of Net Investment
Income to Average Net Assets 1.48% 2.14%<F2>
Portfolio Turnover Rate 9.06% 1.09%
Average Commission Rate Paid<F3> $.0453 $.0601
Net Assets, End of Year (000's) $55,595 $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>
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
Micro-Cap Portfolio
For the Period From November 24, 1997
to December 31, 1997<F1>
<S> <C>
Net Asset Value,
Beginning of Year $10.00
Investment Activities:
Net investment income (loss) (.01)
Net realized and unrealized
gains/(losses) (.06)
------
Total from Investment Operations (.07)
Distributions:
Net investment income --
Net realized gains --
------
Total Distributions --
Net Asset Value,
End of Year $9.93
======
Total Return ( 0.7%)
Ratios/Supplemental Data
Ratio of Net Expenses to
Average Net Assets 2.00%<F1>
Ratio of Net Investment loss
to Average Net Assets (1.16%)<F1>
Portfolio Turnover Rate --
Average Commission Rate Paid<F2> $.0600
Net Assets, End of Year (000's) $2,980
<FN>
<F1> The ratios of net expenses to average net assets would have increased and
net investment income to average net assets would have decreased by 3.00% for
the period ended December 31, 1997, had the Adviser not reimbursed expenses.
These 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.
</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 12.) As of
February 27, 1998, 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 16.
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 9 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 16.
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.
- --------
1The 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.
- ----------
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 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 1997:
<TABLE>
<CAPTION>
S&P 500 Returns (1926-1997)
Over Various Time Horizons
1 Year 5 Years 10 Years 20 Years
------ ------- -------- --------
<S> <C> <C> <C> <C>
Best 54.0% 23.9% 20.1% 16.9%
Worst -43.3% -12.5% -0.9% 3.1%
Average 13.0% -- -- --
</tab;e>
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 may
be subject to abrupt or erratic price fluctuations, and are
expected to be more volatile and more uncertain as to payments
of interest and principal. Developing countries may have
relatively unstable governments, economies based only on a few
industries, and securities markets that trade only a small
number of securities. 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. 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 Mico-Cap Portfolio was authorized on June 16, 1997 and commenced
operations on November 24, 1997. Union Central invested approximately $3 million in this
Portfolio, but it reserves the right to redeem any portion or all of its investment at any time.
<PAGE>
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 until May, 1998.
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. Effective May 1, 1998, Mr. Rodmaker
and Mrs. Stevens will be primarily responsible for the day-to-day management of the Capital Portfolio.
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.
PREPARING FOR YEAR 2000
Like all financial services providers, the Adviser utilizes
systems that may be affected by Year 2000 transition issues. In
addition to the Adviser, the Fund relies on service providers,
including the Fund's custodian, transfer agent, and dividend
disbursing agent, that also may be affected. The Adviser has
advised the Fund that it has developed, and is in the process of
implementing, a Year 2000 transition plan. Management of the
Fund is in the process of confirming that the service providers
to the Fund are also engaged in similar transition plans. While
the Adviser has made representations to Management that each
party is implementing a Year 2000 transition plan, the resources
that are being devoted to this effort are substantial and it is
difficult to predict with precision whether the amount of
resources ultimately devoted, or the outcome of these efforts,
will have any negative impact on their operations. However, as
of the date of this Prospectus, it is not anticipated that
shareholders will experience negative effects on their
investment, or on the services provided in connection therewith,
as a result of Year 2000 transition implementation. The Adviser
has advised Management that it currently anticipates that its
systems will be Year 2000 compliant on or about January 2, 1999,
but there can be no assurance that they will be successful, or
that interaction with other service providers will not impair
the Adviser's services at that time.
APPENDIX
CORPORATE BOND RATINGS
Moody's Investors Services, Inc.
Aaa--Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or
by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa--Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca--Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
Standard & Poor's Corporation
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal
and interest.
AA--Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from AAA issues only in a small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effect of
changes in circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay principal and interest
for bonds in this category than for bonds in the A category.
BB--B--CCC--CC--Bonds rated BB, B, CCC, and CC are regarded, on
balance, as predominately speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms
of the obligation. BB indicates the lowest degree of speculation and CC
the highest degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
COMMERCIAL PAPER RATINGS
Moody's Investors Services, Inc.
A Prime rating is the highest commercial paper rating assigned by
Moody's Investors Services, Inc. Issuers rated Prime are further referred
to by use of numbers 1, 2 and 3 to denote relative strength within this
highest classification. Among the factors considered by Moody's in
assigning ratings for an issuer are the following: (1) management; (2)
economic evaluation of the industry and an appraisal of speculative type
risks which may be inherent in certain areas; (3) competition and
customer acceptance of products; (4) liquidity; (5) amount and quality of
long-term debt; (6) ten-year earnings trends; (7) financial strength of a
parent company and the relationships which exist with the issuer; and (8)
recognition by management of obligations which may be present or may
arise as a result of public interest questions and preparations to meet
such obligations.
Standard & Poor's Corporation
Commercial paper rated A by Standard & Poor's Corporation has the
following characteristics: Liquidity ratios are better than the industry
average. Long-term senior debt rating is "A" or better. In some cases,
BBB credits may be acceptable. The issuer has access to at least two
additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically,
the issuer's industry is well established, the issuer has a strong
position within its industry and the reliability and quality of
management is unquestioned. Issuers rated A are further referred to by
use of numbers 1, 2 and 3 to denote relative strength within this
classification.
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
CARILLON FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
This Statement of Additional Information is not a
prospectus. Much of the information contained in this Statement
of Additional Information expands upon subjects discussed in the
Prospectus. Accordingly, this Statement should be read in
conjunction with Carillon Fund, Inc.'s ("Fund") current
Prospectus, dated May 1, 1998, 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 .................................................. 9
Lending Portfolio Securities ............................. 13
Investment Restrictions .................................. 13
Portfolio Turnover ....................................... 16
Management of the Fund (14)............................... 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 (16)..................... 24
Purchase and Redemption of Shares (16) ................... 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 5-98<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.
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.
- -------------
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 57.03% and 52.53%, respectively, for 1997 and 1996. The
annual Portfolio turnover rates for the Bond Portfolio were
113.41% and 202.44%, respectively, for 1997 and 1996. The
annual Portfolio turnover rates for the Capital Portfolio were
60.84% and 53.11%, respectively, for 1997 and 1996. The annual
Portfolio turnover rates for the S&P 500 Index Portfolio were
9.06% and 1.09%, respectively for 1997 and 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>
<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 Surgery,
3021 Erie Avenue University of Cincinnati
Cincinnati, Ohio 45208
(Age 64)
George L. Clucas* Director, Senior Vice President, Union
(54) President and Central; Director, President
Chief Executive and Chief Executive Officer,
Officer Carillon Advisers, Inc.
("Adviser"); Director, Carillon
Investments, Inc. ("CII")
Theodore H. Emmerich Director Consultant; former Partner,
1201 Edgecliff Place Ernst & Whinney, Accountants
Cincinnati, Ohio 45206
(71)
James M. Ewell Director Retired Senior Vice President
9000 Indian Ridge Road and Director, The Procter and
Cincinnati, Ohio 45243 Gamble Company
(82)
Richard H. Finan Director Attorney at Law; President
11137 Main Street of the Ohio State Senate
Cincinnati, Ohio 45241
(63)
Jean Patrice Director Former Interim President,
Harrington, S.C. Cincinnati State Technical and
3217 Whitfield Avenue Community College; Former
Cincinnati, Ohio 45220 Executive Director, Cincinnati
(75) Youth Collaborative; President
Emeritus (formerly, President)
College of Mount St. Joseph
John H. Jacobs* Director Executive Vice President,
(51) Union Central; prior to June,
1995, Officer and employee,
Union Central
Charles W. McMahon Director Retired Senior Vice President
2031 W. Galbraith Rd #E and Director, Union Central
Cincinnati, Ohio 45239
(78)
Harry Rossi* Director Director Emeritus, Union
8548 Wyoming Club Drive Central; Director, Adviser;
Cincinnati, Ohio 45215 former Chairman, President and
(78) Chief Executive Officer, Union
Central
Stephen R. Hatcher Senior Vice Executive Vice President and
(55) President Chief Financial Officer, Union
Central; prior to June, 1995,
Officer and employee, Union
Central
John F. Labmeier Vice President Second Vice President,
(49) and Secretary Associate General Counsel and
Assistant Secretary, Union
Central; Vice President and
Secretary, CII; Secretary,
Adviser
Thomas G. Knipper Controller Assistant Controller, Union
(40) Central; prior to July, 1995,
Treasurer of The Gateway Trust
and Vice President and
Controller of Gateway Advisers,
Inc.
Michael C. Peppers Treasurer Assistant Controller, Union
(46) Central
John M. Lucas Assistant Counsel and Assistant to
(47) Secretary 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 1997 were $49,876.
<PAGE>
<TABLE>
<CAPTION>
Compensation Table
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Total
Person, Compensation Retirement Retirement Compensation
Position From Benefits Benefits From Registrant
Registrant Accrued As Upon and Fund
Part of Retirement Complex*
Fund Expenses Paid to
Directors
<S> <C> <C> <C> <C>
George M. Callard, 7,300** -- -- 10,600
M.D.
Director
George L. Clucas N/A N/A N/A N/A
Director
Theodore H. Emmerich 7,500 -- -- 10,800
Director
James M. Ewell 7,300 -- -- 10,600
Director
Richard H. Finan 7,300 -- -- 10,600
Director
Jean Patrice
Harrington, S.C. 7,300 -- -- 10,600
Director
John H. Jacobs N/A N/A N/A N/A
Director
Charles W. McMahon 7,300** -- -- 10,600
Director
Harry Rossi N/A N/A N/A N/A
Director
</TABLE>
* Each of the Directors also serves as a Trustee of Carillon
Investment Trust.
** Messrs. Callard and McMahon have been deferring their
compensation each year. As of December 31, 1997, the total
amount deferred, including interest, was as follows: Dr. Callard
- - $73,236; Mr. McMahon - $26,555.
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>
Equity Bond Capital S&P 500 Index Micro-Cap
Year Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
1997 $1,731,351 $427,729 $1,058,086 $129,253 -0-
1996 $1,436,998 $384,084 $1,032,861 $ 8,233 N/A
1995 $1,108,596 $314,237 $ 913,378 -0- 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 20, 1998 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.
The sole shareholder of the Micro-Cap Portfolio approved the
Agreement on December 10, 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. The sole shareholder of
the Micro-Cap Portfolio approved the Service Agreement on
December 10, 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 1997, 29% of the Fund's total brokerage was allocated
to brokers who furnish statistical data or research
information. Brokerage commissions paid during 1997, 1996 and
1995 were $587,069, $475,382 and $349,679, 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.
CARILLON FUND, INC.
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
<PAGE>
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, including the schedules of investments, of Carillon
Fund, Inc., consisting of the Equity Portfolio, Capital
Portfolio, Bond Portfolio and the S&P 500 Index Portfolio, as of
December 31, 1997, and the related statements of operations for
the year then ended, the statements of changes in net assets for
the years ended December 31, 1997 and December 31, 1996,
respectively, and financial highlights for the periods ended
December 31, 1997, 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, 1997, by correspondence with the Funds' 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 Funds
as of December 31, 1997, the results of their operations for the
year then ended, and the changes in their net assets and the
financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Dayton, Ohio
February 12, 1998
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
S&P 500
Equity Capital Bond
Index
Portfolio Portfolio Portfolio
Portfolio
--------- --------- ---------
- ---------
<S> <C> <C> <C>
<C>
ASSETS
Investments in securities,
at value $330,299,046 $150,965,858 $98,239,839
$ 55,687,719
(cost $259,127,836;
$142,221,876; $94,380,244;
$43,705,163)
Cash ---- ---- ----
37
Receivables:
Shares sold 277,598 58,316 93,459
214,644
Securities sold 6,147,350 1,005,213 ----
----
Interest and Dividends 867,946 1,227,520 1,711,336
71,300
Prepaid expenses and other 25,213 14,032 7,211
3,151
------------ ------------ -----------
- ------------
337,617,153 153,270,939 100,051,845
55,976,851
------------ ------------ -----------
- ------------
LIABILITIES
Payables:
Investment securities
purchased 1,796,837 4,320,618 ----
338,866
Open forward currency
contracts ---- 1,256 ----
----
Shares redeemed ---- 2,921 58
1,808
Investment advisory fees 155,869 86,691 39,744
11,686
Custodial and portfolio
accounting fees 20,513 16,066 10,354
7,541
Professional fees 10,223 10,404 9,784
10,888
Bank overdraft 2,500 ---- ----
----
Variation margin ---- ---- ----
350
Other accrued expenses 3,751 3,113 2,156
11,043
Deferred compensation
for directors ---- ---- 97,653
----
------------ ------------ -----------
- ------------
1,989,638 4,441,069 159,749
382,182
------------ ------------ -----------
- ------------
NET ASSETS
<PAGE>
Paid-in capital 220,719,673 132,294,897 94,656,867
41,736,548
Undistributed net
investment income 231,700 541,406 264,047
39,665
Accumulated net realized
gain/(loss) of 43,504,877 7,249,585 1,111,587
1,788,399
investments and
futures contracts
Net unrealized
appreciation on 71,171,210 8,743,982 3,859,595
12,030,057
investments and ------------ ------------ -----------
- ------------
futures contracts
$335,627,460 $148,829,870 $99,892,096
$55,594,669
------------ ------------ -----------
- ------------
Shares authorized
($.10) par value 40,000,000 30,000,000 30,000,000
30,000,000
Shares outstanding 16,490,901 10,558,921 8,851,441
3,530,958
Net asset value,
offering and
redemption price $20.35 $14.10 $11.29
$15.74
per share
</TABLE>
The accompanying notes are an integral part of the
financial statement.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF OPERATIONS
Year Ended December 31, 1997
<TABLE>
<CAPTION>
S&P 500
Equity Capital Bond
Index
Portfolio Portfolio Portfolio
Portfolio
----------- ----------- ----------- -----------
<S> <C> <C> <C>
<C>
INVESTMENT INCOME
Interest $ 1,523,662 $ 6,383,812 $ 6,944,771 $
148,819
Dividends (net of
foreign withholding
taxes of $69,671;
$25,812; $0; $4,344) 4,247,554 1,428,148 ---
705,234
----------- ----------- ----------- -----------
5,771,216 7,811,960 6,944,771
854,053
----------- ----------- ----------- -----------
EXPENSES
Investment advisory fees 1,731,351 1,058,086 427,729
129,253
Custodial fees and
expenses 78,173 42,679 24,972
14,854
Portfolio accounting fees 52,484 46,068 38,753
29,379
Professional fees 12,941 12,858 13,739
16,352
Director's fees 12,361 12,361 11,938
12,676
Transfer agent fees 8,151 8,330 8,214
7,071
Registration and
filing fees 1,744 --- ---
2,189
Other 33,627 21,658 14,115
2,210
----------- ----------- ----------- -----------
1,930,832 1,202,040 539,460
213,984
----------- ----------- ----------- -----------
NET INVESTMENT INCOME 3,840,384 6,609,920 6,405,311
640,069
----------- ----------- ----------- -----------
REALIZED AND
UNREALIZED GAIN/(LOSS)
Net realized gain
on investments 43,526,118 7,443,577 1,127,264
1,063,996
Net realized gain
on futures contracts --- --- ---
775,950
----------- ----------- ----------- -----------
43,526,118 7,443,577 1,127,264
1,839,946
Net change in unrealized
appreciation/(depreciation)
of investments and
translation of assets and
liabilities in foreign
currencies 10,788,049 (2,869,048) 1,821,402
9,001,133
Net change in unrealized
appreciation/
(depreciation) of
investments and
futures contracts
and translation on
assets and liabilities
in foreign currencies --- --- ---
(1,950)
----------- ----------- ----------- -----------
10,788,049 (2,869,048) 1,821,402
8,999,183
----------- ----------- ----------- -----------
NET REALIZED AND
UNREALIZED GAIN/(LOSS) 54,314,167 4,574,529 2,948,666
10,839,129
NET INCREASE IN
NET ASSETS
FROM OPERATIONS $58,154,551 $11,184,449 $ 9,353,977
$11,479,198
=========== =========== ===========
===========
</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
Year Ended December 31,
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 3,840,384 $ 4,176,431
Net realized gain on
investments and futures 43,526,118 34,227,538
Net change in unrealized
appreciation/(depreciation)
on investments 10,788,049 17,468,047
------------ ------------
58,154,551 55,872,016
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (4,343,382) (3,889,965)
In excess of net investment income ----
Net realized gain on investments (34,344,113) (9,867,342)
------------ ------------
(38,687,495) (13,757,307)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 27,675,023 41,762,282
Reinvestment of distributions 38,687,495 13,757,307
Payments for shares redeemed (38,325,837) (29,073,822)
------------ ------------
28,036,681 26,445,767
------------ ------------
NET INCREASE IN NET ASSETS 47,503,737 68,560,476
NET ASSETS
Beginning of year 288,123,723 219,563,247
------------ ------------
End of year $335,627,460 $288,123,723
============ ============
FUND SHARE TRANSACTIONS
Sold 1,441,326 2,393,015
Reinvestment of distributions 2,276,903 809,878
Redeemed (2,041,013) (1,660,244)
------------ ------------
Net increase from fund
share transactions 1,677,216 1,542,649
============ ============
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
TATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Capital Portfolio
Year Ended December 31,
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 6,609,920 $ 6,684,340
Net realized gain on
investments and futures 7,443,577 12,459,745
Net change in unrealized
appreciation/(depreciation) on
investments and futures contracts,
and translation of assets and
liabilities in foreign currencies (2,869,048) 1,990,613
------------ ------------
11,184,449 21,134,698
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (7,176,810) (6,050,397)
In excess of net investment income ----
Net realized gain on investments (12,519,532) (2,002,549)
------------ ------------
(19,696,342) (8,052,946)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 12,291,701 17,130,822
Reinvestment of distributions 19,696,342 8,052,945
Payments for shares redeemed (33,940,166) (24,594,141)
------------ ------------
(1,952,123) 589,626
------------ ------------
NET INCREASE/(DECREASE)IN NET ASSETS (10,464,016) 13,671,378
NET ASSETS
Beginning of year 159,293,886 145,622,508
------------ ------------
End of year $148,829,870 $159,293,886
============ ============
FUND SHARE TRANSACTIONS
Sold 867,273 1,199,385
Reinvestment of distributions 1,450,496 570,034
Redeemed (2,414,218) (1,729,493)
Net increase/(decrease) from fund
share transactions (96,449) 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
Year Ended December 31,
1997 1996
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income $ 6,405,311 $ 5,766,633
Net realized gain/(loss)
on investments and futures 1,127,264 1,210,173
Net change in unrealized
appreciation/(depreciation) on
investments and futures contracts 1,821,402 (1,316,722)
----------- -----------
9,353,977 5,660,084
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (5,860,151) (6,340,623)
In excess of net investment income (320,260)
Net realized gain on investments (481,254) ---
----------- -----------
(6,341,405) (6,660,883)
----------- -----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 19,937,289 17,850,341
Reinvestment of distributions 6,341,405 6,660,883
Payments for shares redeemed (15,033,299) (11,443,995)
----------- -----------
11,245,395 13,067,229
----------- -----------
NET INCREASE IN NET ASSETS 14,257,967 12,066,430
NET ASSETS
Beginning of year 85,634,129 73,567,699
----------- -----------
End of year $99,892,096 $85,634,129
=========== ===========
FUND SHARE TRANSACTIONS
Sold 1,786,820 1,633,803
Reinvestment of distributions 575,269 621,662
Redeemed (1,358,088) (1,054,560)
----------- -----------
Net increase from fund
share transactions 1,004,001 1,200,905
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
S&P 500 Index Portfolio
Year Ended December 31,
1997 1996
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income $ 640,069 $ 349,515
Net realized gain on
investments and futures 1,839,946 218,750
Net change in unrealized
appreciation/(depreciation) on
investments and futures contracts 8,999,183 3,030,849
----------- -----------
11,479,198 3,599,114
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (642,656) (307,386)
Net realized gain on investments (270,297) ----
----------- -----------
(912,953) (307,386)
----------- -----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 35,592,857 30,917,430
Reinvestment of distributions 912,953 307,386
Payments for shares redeemed (20,681,996) (5,617,082)
----------- -----------
15,823,814 25,607,734
----------- -----------
NET INCREASE IN NET ASSETS 26,390,059 28,899,462
NET ASSETS
Beginning of year 29,204,610 305,148
----------- -----------
End of year $55,594,669 $29,204,610
=========== ===========
FUND SHARE TRANSACTIONS
Sold 2,463,755 2,850,416
Reinvestment of distributions 66,017 26,989
Redeemed (1,406,317) (500,402)
----------- -----------
Net increase from fund
share transactions 1,123,455 2 ,377,003
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
COMMON STOCKS - 90.63% SHARES/
PRINCIPAL VALUE
--------- ------------
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 12.20%
Allied Capital Corporation $ 30,571 $ 680,204
Banco BHIF ADR 123,000 1,968,000
Banco Frances del Rio de la Plata S.A. ADR 86,000 2,354,250
Banco Latinoamericano
De Exportaciones Sponsored ADR 27,000 1,117,125
BankUnited Financial Corporation* 140,000 2,156,875
Charter One Financial, Incorporated 55,125 3,479,766
Chile Fund Incorporated 100,000 1,781,250
Czech Republic Fund 109,000 1,308,000
Deutsche Bank AG Sponsored ADR 42,000 2,966,556
Duff & Phelps Credit Rating Company 65,000 2,640,625
FPIC Insurance Group Incorporated* 172,500 5,024,063
Fahnestock Viner Holdings CL-A 150,000 2,615,625
First Bell Bancorp Incorporated 100,000 1,900,000
Hamilton Bancorp Incorporated 100,000 2,912,500
Jefferies Group, Incorporated 100,000 4,093,750
Raymond James Financial Corporation 99,150 3,935,016
------------
40,933,605
------------
CAPITAL GOODS - 4.38%
AGCO Corporation 59,400 1,737,450
DT Industries, Incorporated 50,000 1,700,000
Lindsay Manufacturing Company 151,793 6,584,021
LSI Industries 100,000 1,825,000
Omniquip International, Incorporated 143,000 2,851,063
------------
14,697,534
------------
CONSUMER CYCLICAL - 12.98%
Breed Technologies, Incorporated 63,000 1,149,750
CPAC, Incorporated 200,000 2,050,000
Cemex SA - Spons ADR "B" 200,000 2,123,578
Claire's Stores Incorporated 50,000 971,875
D.R. Horton Incorporated 150,000 2,606,250
Footstar Incorporated* 85,000 2,284,375
Griffon Corporation* 209,600 3,065,400
Kevco Incorporated* 140,000 2,310,000
Maxwell Shoe Company Incorporated - A* 167,500 1,800,625
NCI Building Systems, Incorporated* 80,700 2,864,850
Quaker Fabric Corporation* 100,000 1,962,500
Schult Homes 98,060 2,034,745
Southern Energy Home* 217,000 1,736,000
Stanley Furniture Company 91,900 2,561,713
Strattec Security Corporation* 145,000 3,697,500
Supreme International Corporation* 162,500 2,031,250
Tarrant Apparel Group* 140,000 2,187,500
Toll Brothers* 90,000 2,407,500
Winsloew Furniture, Incorporated* 188,300 2,730,350
VISX, Incorporated* 45,000 995,625
------------
43,571,386
------------
CONSUMER NON-DURABLE - 8.95%
Charoen Pok Feedmill ADR 100,000 706,140
Complete Management Incorporated* 175,000 2,450,000
Dairy Farm International
Holdings Sponsored ADR 200,000 1,079,995
Equity Marketing Incorporated* 105,500 2,637,500
GT Bicycles, Incorporated* 175,000 1,039,061
Gymboree Corporation* 75,000 2,053,125
ICN Pharmaceuticals, Incorporated 106,600 5,203,413
IHOP Corporation* 55,000 1,787,500
Lone Star Steakhouse* 95,000 1,662,500
Lunar Corporation* 100,000 2,050,000
National Health Investors, Incorporated 40,000 1,675,000
Orthofix International N.V. 125,536 1,475,048
Schlotzsky's, Incorporated* 156,900 2,294,663
Scientific Games Holdings Corporation* 72,600 1,470,150
Young Innovations, Incorporated* 136,000 2,448,000
------------
30,032,095
------------
ENERGY - 14.40%
Basin Exploration Incorporated* 60,000 1,065,000
Bayard Drilling Technologies* 125,000 2,031,250
Callon Petroleum Company* 140,000 2,279,375
Cross Timbers Oil Company 105,000 2,618,437
Domain Energy Corporation* 175,000 2,756,250
Giant Industries, Incorporated 205,000 3,895,000
Global Industries, Incorporated* 100,000 1,700,000
Gulf Island Fabrication, Incorporated 103,000 2,060,000
KCS Energy Incorporated 104,000 2,158,000
Marine Drilling Company, Incorporated* 110,000 2,282,500
Maverick Tube Corporation 45,000 1,111,563
Offshore Logistics Incorporated* 120,000 2,565,000
OYO Geospace Corporation* 20,000 377,500
Parker Drilling Company* 120,000 1,462,500
Plains Resources, Incorporated* 119,500 2,053,906
Pride International Incorporated 80,000 2,020,000
Southern Mineral Corporation* 350,000 1,925,000
St. Mary Land & Exploration 20,000 700,000
Stone Energy Corporation* 63,000 2,110,500
Unifab International Incorporated* 155,000 2,983,750
Vastar Resources Incorporated* 50,000 1,787,500
YPF S.A. Sponsored ADR 145,400 4,970,863
Zeigler Coal Holding Company 87,000 1,419,188
------------
48,333,082
------------
MANUFACTURING - 14.17%
AEP Industries, Incorporated* 3,950 121,956
BWAY Corporation* 165,000 3,774,375
Bayer A G Sponsored ADR* 75,000 2,803,043
Buckeye Technologies Incorporated* 51,000 2,358,750
Carbide Graphite Group Incorporated* 130,000 4,387,500
Elamex SA De CV 100,600 754,500
Fibermark, Incorporated* 115,000 2,472,500
Giant Cement Holding Incorporated* 58,500 1,352,813
Greif Brothers Corporation 82,800 2,773,800
Intermet Corporation 125,000 2,187,500
Matthews International Corporation 77,000 3,388,000
Medusa Corporation 80,300 3,357,544
Minorco Sponsored ADR 90,000 1,507,500
Mueller Industries* 50,000 2,950,000
Northwest Pipe Company* 125,800 3,019,200
Sybron Chemicals, Incorporated* 65,200 2,184,200
Tubos De Acero De Mex SA* 50,000 1,081,250
Triangle Pacific Corporation* 92,500 3,133,438
York Group, Incorporated 162,000 3,948,750
------------
47,556,619
------------
REAL ESTATE - 10.95%
Associated Estates Realty Corporation 105,000 2,487,188
City Developments Limited ADR 250,000 1,157,298
Commercial Net Lease Realty 99,300 1,774,988
Equity Residential Properties Trust 46,000 2,325,875
Healthcare Realty Trust 96,400 2,789,575
Health & Retirement Property Trust 75,000 1,500,000
Hospitality Properties Trust 64,000 2,104,000
IRT Property Company 82,000 968,625
Lexington Corporation Property 100,000 1,543,750
Merry Land & Investment Company 115,000 2,630,625
Mid-America Apartment Communities 80,000 2,285,000
Oasis Residential Incorporated 58,000 1,294,125
Omega Healthcare Investors, Incorporated 30,000 1,158,750
Pacific Gulf Properties 74,000 1,757,500
Parkway Properties Incorporated 42,000 1,441,125
RFS Hotel Investors Incorporated 90,000 1,794,375
Trinet Corporate Realty Trust Incorporated 80,000 3,095,000
United Dominion Realty Trust Incorporated 168,000 2,341,500
Winston Hotels, Incorporated 175,000 2,296,875
------------
36,746,174
------------
SERVICE - 1.00%
Devon Group, Incorporated* 73,000 3,358,000
TECHNOLOGY - 6.43%
AFC Cable Systems Incorporated* 125,000 3,718,750
Axiohm Technology* 11,438 194,446
Cybex Corporation* 160,000 3,920,000
Nam Tai Electronics, Incorporated 250,000 3,734,375
Performance Technologies Incorporated* 115,500 1,674,750
Recoton Corporation* 163,000 2,200,500
Vertex Communications Corporation* 80,000 1,930,000
Vtech Holdings Limited 142,900 4,214,178
------------
21,586,999
------------
TRANSPORTATION - 5.17%
ASA Holdings Incorporated 48,000 1,365,000
Comair Holdings Incorporated 187,500 4,523,438
Illinois Central Corporation CL A 82,500 2,810,156
Landstar, Incorporated* 90,000 2,373,750
Midwest Express Holdings* 97,500 3,784,219
Trico Marine Services* 85,000 2,496,875
------------
17,353,438
------------
Total Common Stocks (cost $ 232,995,606) 304,168,932
------------
SHORT-TERM INVESTMENTS - 7.78%
<CAPTION>
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
VARIABLE RATE DEMAND NOTES<FN1> - 1.07%
American Family (5.639% due 01/01/98) 502,036 $ 502,036
General Mills (5.327% due 01/01/98) 353,000 353,000
Johnson Controls (5.327% due 01/01/98) 608,058 608,058
Pitney Bowes (5.327% due 01/01/98) 408,068 408,068
Sara Lee (5.322% due 01/01/98) 985,783 985,783
Warner Lambert (5.489 due 01/01/98) 581,180 581,180
Wisconsin Electric (5.487% due 01/01/98) 161,892 161,892
------------
3,600,017
------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 1.56%
(5.800% due 06/12/98) 1,500,000 $ 1,500,676
(5.760% due 07/08/98) 3,740,000 3,740,710
------------
5,241,386
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION- .89%
(5.710% due 06/23/98) 3,000,000 3,000,339
------------
FEDERAL HOME LOAN BANK - 1.14%
(6.200% due 06/10/98) 1,100,000 1,102,363
(5.390% due 02/11/98) 1,500,000 1,490,792
5.135% due 03/02/98) 1,250,000 1,247,977
------------
3,841,132
------------
FEDERAL FARM CREDIT BANK - .60%
(5.750% due 07/01/98) 2,000,000 2,000,302
COMMERCIAL PAPER - 2.52%
CSX Corporation (5.950% due 02/06/98) 2,500,000 2,485,125
Du Pont E I De Nemours (5.500% due 04/02/98) 2,000,000 1,972,194
Ford Motor Credit (5.690% due 01/27/98) 2,000,000 1,991,781
Hertz Corporation (5.560% due 01/08/98) 2,000,000 1,997,838
------------
8,446,938
------------
Total Short-Term Investments
(cost $26,132,230) 26,130,114
------------
TOTAL INVESTMENTS - 98.41%
(cost $259,127,836) <FN2> 330,299,046
OTHER ASSETS AND LIABILITIES - 1.59% 5,328,414
------------
TOTAL NET ASSETS - 100% $335,627,460
============
____________
Non-income producing
(ADR) American Depository Receipt
<FN>
<FN1> 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, 1997.
<FN2> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at December 31, 1997 for
financial reporting purposes was $84,920,427 and $13,749,217.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
Carillon Fund, Inc.
Schedule of Investments
DECEMBER 31, 1997
<TABLE>
<CAPTION>
CAPITAL PORTFOLIO
COMMON STOCKS - 37.14% SHARES/
PRINCIPAL VALUE
--------- ------------
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 9.27%
AFP Provida S.A.* $ 48,400 $ 825,825
Allied Capital Corporation 36,685 816,240
Banco BHIF ADR 73,000 1,168,000
Banco Frances del Rio de la Plata S.A. ADR 35,000 958,125
Chile Fund 55,000 979,688
Fahnestock Viner Holdings Class-A 70,000 1,220,625
FPIC Insurance Group Incorporated* 65,000 1,893,125
Hyperion 1999 Term Trust 300,000 2,081,250
Income Opportunity Fund 1999 100,000 956,250
Income Opportunity Fund 2000 88,500 851,813
New Germany Fund 81,597 1,101,560
Templeton Global Income Fund 125,000 937,500
------------
13,790,001
------------
CAPITAL GOOD - 2.17%
AGCO Corporation 37,000 1,082,250
Lindsay Manufacturing, Company 49,362 2,141,077
------------
3,223,327
------------
CONSUMER CYCLICAL - 1.86%
Griffon Corporation* 55,000 804,375
NCI Building Systems Incorporated* 35,000 1,242,500
Winsloew Furniture Incorporated* 49,800 722,100
------------
2,768,975
------------
CONSUMER NON-DURABLE - 2.38%
GT Bicycles Incorporated* 80,000 475,000
Complete Management, Incorporated* 57,000 798,000
ICN Pharmaceuticals, Incorporated 27,000 1,317,938
Gymboree Corporateion* 33,000 903,375
Orthofix International N.V.* 4,000 47,000
------------
3,541,313
------------
ENERGY - 6.33%
Basin Exploration Incorporated* 44,000 781,000
Callon Petroleum Company* 35,000 569,844
Cross Timbers Oil Company 27,450 684,534
Domain Energy Corporation* 48,000 756,000
Giant Industries Incorporated 87,400 1,660,600
Gulf Island Fabrication, Incorporated 40,000 800,000
Pride International Incorporated* 46,000 1,161,500
Unifab International Incorporated* 50,000 962,500
YPF S.A. Sponsored ADR 60,000 2,051,250
------------
9,427,228
------------
MANUFACTURING - 4.78%
AEP Industries, Incorporated* 6,331 195,470
Bway Corporation 61,800 1,413,675
Carbide Graphite Group* 40,000 1,350,000
De Beers Centenary AG ADR 32,000 654,000
Northwest Pipe Company* 74,600 1,790,400
Royal Oak Mines Incorporated* 125,000 195,313
York Group Incorporated 62,000 1,511,250
------------
7,110,108
------------
REAL ESTATE - 6.51%
Associated Estates Realty Corporation 50,000 1,184,375
City Developments Limited ADR 95,000 439,770
Equity Residential Properties Trust 19,500 985,964
Merry Land & Investment Company 60,000 1,372,500
Mid-America Apartment Communities 40,000 1,142,500
Pacific Gulf Properties 43,500 1,033,125
Trinet Corporate Realty Trust 32,000 1,238,000
United Dominion Realty Trust 75,000 1,045,313
Winston Hotels Incorporated 95,000 1,246,875
------------
9,688,422
------------
TECHNOLOGY - 2.82%
AFC Cable Systems, Incorporated 23,750 706,563
Axiohm Technology* 5,420 92,140
Cybex Corporation* 20,000 490,000
Nam Tai Electronics 57,333 856,412
Vertex Communications Corporation* 34,100 822,663
Vtech Holdings Limited 42,000 1,238,597
------------
4,206,375
------------
TRANSPORTATION - 1.01%
Trico Marine Services* 51,000 1,498,125
Total Common Stocks (cost $47,441,092) 55,253,874
------------
FOREIGN COMMON STOCK - 1.23%
NORWAY - .69%
Petrolia Drilling ASA* 200,000 1,025,476
------------
MALAYSIA - .54%
Bumi Armada Berhad* 500,000 319,857
Road Builder Holdings BHD* 748,000 480,500
------------
800,357
------------
Total Foreign Common Stock (cost $2,216,981) 1,825,833
------------
PREFERRED STOCK - .32%
MANUFACTURING - .32%
Freeport McMoRan Copper & Gold Series 20,000 480,000
------------
Total Preferred Stock (cost $ 709,838) 480,000
------------
U.S. TREASURY OBLIGATIONS - 15.42%
7.875% due 04/15/98 500,000 503,438
5.750% due 12/31/98 2,000,000 2,002,500
5.500% due 02/28/99 1,000,000 998,125
6.000% due 10/15/99 5,900,000 5,933,188
7.500% due 11/15/01 500,000 530,313
6.375% due 08/15/02 1,750,000 1,795,391
5.750% due 08/15/03 3,000,000 3,002,814
5.875% due 02/15/04 100,000 100,906
7.250% due 05/15/04 2,000,000 2,158,750
7.875% due 11/15/04 5,300,000 5,924,408
------------
Total U.S. Treasury Obligations ($22,139,588) 22,949,833
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 11.30%
FEDERAL HOME LOAN MORTGAGE CORPORATION- 3.43%
1662 H (6.250% due 01/15/09) 760,362 752,895
1442 FA (5.730% due 11/15/07) 1,000,000 994,474
1559 VP (5.500% due 02/15/20) 1,700,000 1,662,940
1399 PAC (7.000% due 09/15/22) 596,484 591,105
1631 SB (5.850% due 12/15/23) 1,450,000 1,102,520
------------
5,103,934
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION- 6.52%
Remic 93-12 ED
(7.500% due 02/25/06) 1,645,000 1,714,048
Remic 92-117 J
(7.500% due 07/25/20) 1,000,000 1,014,325
Remic 93-127 FA
(5.130% due 10/25/21) 1,000,000 962,832
Remic 92-66 F
(6.218% due 05/25/22) 804,241 808,434
Remic 1993-163 PN
(7.000% due 07/25/07) 1,500,000 1,548,003
Remic 92-112 E
(8.000% due 12/25/20) 1,500,000 1,551,392
Remic 93-119 SB
(6.807% due 07/25/23) 2,572,882 2,103,962
------------
9,702,996
------------
PRIVATE SECTOR - 1.35%
Prudential Home Mortgage Securities
(7.500% due 07/25/10) 493,830 501,702
SLMA Med Term Note (5.850% due 06/10/98) 1,500,000 1,502,277
------------
2,003,979
------------
Total Collateralized Mortgage Obligations
(cost $16,455,259) 16,810,909
------------
MORTGAGE-BACKED SECURITIES - 2.95%
FEDERAL HOME LOAN MORTGAGE CORPORATION - .75%
7.500% due 06/01/07 36,785 37,203
9.500% due 10/01/08 182,147 193,299
8.250% due 03/01/12 93,943 96,931
8.500% due 03/01/16 88,054 92,128
7.500% due 07/01/17 32,324 33,028
11.000% due 04/01/19 41,157 46,374
11.000% due 11/01/19 52,944 59,656
11.000% due 05/01/20 173,444 195,336
11.000% due 06/01/20 326,695 368,287
------------
1,122,242
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -1.91%
10.00% due 02/01/04 2,064 2,197
9.500% due 09/01/05 116,671 122,113
9.000% due 11/01/05 36,130 37,706
7.500% due 03/25/07 1,200,000 1,241,510
8.000% due 05/01/07 116,876 120,950
5.500% due 01/01/09 799,034 776,302
5.500% due 04/01/09 554,612 537,769
------------
2,838,547
------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - .29%
9.000% due 11/15/16 88,798 97,055
10.500% due 11/20/19 200,083 218,882
9.000% due 12/15/19 100,639 109,626
------------
425,563
------------
Total Mortgage-Backed Securities
(cost $4,227,599) 4,386,352
------------
CORPORATE BONDS AND NOTES - 9.83%
COMMUNICATIONS AND MEDIA - 1.70%
Lowen Group International, Inc.
(8.2500% due 04/15/03) 900,000 953,221
MCI Communications Corp. Sr. Notes
(7.500% due 08/20/04) 1,500,000 1,573,770
------------
2,526,991
------------
FINANCE COMPANY - .95%
Hutchison Whampoa (6.950% due 08/01/07) 1,500,000 1,413,390
REAL ESTATE - .35%
GE Capital Mortgage Services, Inc.
(6.000% due 08/25/09) 534,970 515,188
FINANCIAL SERVICES - .85%
Indah Kiat Sr. Notes (10.000% due 07/01/07) 1,500,000 1,260,000
ELECTRIC - .81%
New Orleans Public Service Notes
(8.670% due 04/01/05) 1,200,000 1,211,940
MISCELLANEOUS - 3.31%
Enersis (6.600% due 12/01/26) 1,500,000 1,521,043
Gulf Canada Res (8.350% due 08/01/06) 1,500,000 1,658,242
News American Holdings (8.500% due 02/15/05) 1,600,000 1,753,409
------------
4,932,694
------------
STEELS AND METALS - 1.12%
Pohang Iron & Steel Notes
(7.125% due 11/01/06) 2,250,000 1,662,435
TELECOMMUNICATION - .74%
TCI Communications Incorporated
(8.650% due 09/15/04) 1,000,000 1,098,802
------------
Total Corporate Bonds and Notes
(cost $ 14,464,404) 14,621,440
------------
SHORT-TERM INVESTMENTS - 23.26%
COMMERCIAL PAPER - 7.43%
Ford Motor Credit Corporation
(5.510% due 01/30/98) 1,000,000 995,561
Du Pont E I De Nemours
(5.500% due 03/03/98) 2,000,000 1,981,361
Du Pont E I De Nemours
(5.470% due 06/04/98) 1,500,000 1,464,901
General Electric Capital
( 5.510% due 04/03/98) 2,000,000 1,971,838
Lockheed Martin Corporation
(5.810% due 02/23/98) 2,000,000 1,982,893
Tryon Mortgage Funding (6.350% due 05/20/01) 699,146 697,713
Walt Disney Company (5.430% due 04/13/98) 2,000,000 1,969,230
------------
11,063,497
------------
VARIABLE RATE DEMAND NOTES <FN1> - 3.47%
American Family Financial Services
(5.639% due 01/01/98) 2,593,144 2,593,144
General Mills (5.327% due 01/01/98) 150,238 150,238
Johnson Controls (5.327% due 01/01/98) 546,000 546,000
Pitney-Bowes (5.327% due 01/01/98) 70,159 70,159
Warner Lambert (5.489% due 01/01/98) 1,584,684 1,584,684
Wisconsin Electric Power Company
(5.487% due 01/01/98) 226,000 226,000
------------
5,170,225
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.02
(5.840% due 06/18/98) 1,500,000 1,501,015
(5.710% due 06/23/98) 3,000,000 3,000,339
------------
4,501,354
------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 1.54%
(5.885% due 05/29/98) 2,285,000 2,286,661
------------
FEDERAL HOME LOAN BANK - 7.80%
(5.720% due 06/23/98) 2,000,000 2,000,278
(5.390% due 02/11/98) 2,000,000 1,987,723
(5.135% due 03/02/98) 1,500,000 1,497,573
(6.015% due 06/05/98) 2,000,000 2,002,610
(6.010% due 05/15/98) 2,000,000 2,002,162
(5.580% due 03/18/98) 2,150,000 2,125,534
------------
11,615,880
------------
Total Short-Term Investments
(cost $34,638,561) 34,637,617
------------
TOTAL INVESTMENTS - 101.45%
(cost $142,221,878)<FN2> 150,965,858
------------
OTHER ASSETS AND LIABILITIES - (1.45%) (2,135,988)
TOTAL NET ASSETS - 100% $148,829,870
___________________
*Non-Income producing
(ADR) American Depository Receipt
<CAPTION>
Open Foward Currency Contracts
U.S.
Dollar Unrealized
<S> Contract Contract Appreciation Delivery
Price Value (Depreciation) Date
-------- -------- -------------- --------
<S> <C> <C> <C> <C>
Liabilities
Malaysian Ringgit (buy) 3.7023 $34,344 $ (1,531) 01/02/98
Malaysian Ringgit (buy) 3.9500 $14,202 275 01/08/98
------- --------
$48,546 $ (1,256)
======= ========
<FN>
<FN1> Interest rates vary periodically based on current market rates.
Rates shown are as of December 31, 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 December 31, 1997.
<FN2> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at December 31, 1997 for
financial reporting purposes was $12,576,088 and $3,832,106 respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
December 31, 1997
BOND PORTFOLIO
<TABLE>
<CAPTION>
U.S. TREASURY OBLIGATIONS - 30.69% SHARES/
PRINCIPAL VALUE
---------- -----------
<S> <C> <C>
U.S. TREASURY BOND - 2.00%
6.000% due 02/15/26 $2,000,000 $ 1,997,500
-----------
U.S. TREASURY NOTES - 24.26%
6.000% due 10/15/99 4,000,000 4,022,500
6.750% due 04/30/00 2,000,000 2,045,626
7.750% due 02/15/01 2,500,000 2,645,312
5.625% due 02/28/01 2,000,000 1,996,250
5.875% due 11/15/05 5,000,000 5,026,564
7.000% due 07/15/06 5,000,000 5,398,439
6.250% due 02/15/07 3,000,000 3,096,564
-----------
24,231,255
-----------
U.S. TREASURY STRIPS - 4.43%
0.000% due 02/15/00 3,250,000 2,885,610
0.000% due 08/15/02 2,000,000 1,539,900
-----------
4,425,510
-----------
Total U.S. Treasury Obligations
(cost $29,576,632) 30,654,265
-----------
MORTGAGE-BACKED SECURITIES - 2.53%
FEDERAL HOME LOAN MORTGAGE CORPORATION - .80%
7.500% due 02/01/02 32,205 32,960
9.500% due 04/01/05 62,862 66,162
7.500% due 06/01/07 80,959 81,879
11.000% due 05/01/10 8,956 9,921
12.500% due 08/01/10 15,184 17,300
8.000% due 11/01/16 45,606 47,130
9.500% due 02/01/18 75,034 79,957
6.500% due 07/01/23 463,769 460,644
-----------
795,953
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 1.59%
12.000% due 04/01/00 24,642 26,507
9.000% due 08/01/01 41,749 43,615
8.500% due 01/01/02 39,992 41,530
10.500% due 06/01/04 10,259 10,923
10.500% due 05/01/05 175,883 187,261
6.500% due 06/01/08 1,015,731 1,019,693
8.000% due 08/01/17 247,904 256,581
-----------
1,586,110
-----------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - .14%
11.000% due 03/15/10 59,437 65,177
9.000% due 05/15/20 75,023 80,229
-----------
145,406
-----------
Total Mortgage-Backed Securities
(cost $2,454,904) 2,527,469
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 4.89%
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 3.19%
59-E (8.900% due 11/15/20) 1,054,610 1,104,963
106-G (8.250% due 12/15/20) 1,000,000 1,055,437
1770-B (8.250% due 01/15/24) 1,000,000 1,022,232
-----------
3,182,632
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - .18%
Remic 1988-30-D (9.500% due 12/25/18) 170,221 182,797
-----------
PRIVATE SECTOR - 1.52%
Securitized Asset Sales, Inc.1993-2 B2
(6.500% due 07/25/08) 286,716 283,044
CMC Securities Corp. 1993-E1E
(0.000% due 12/25/08) 355,703 274,617
Country Wide Mortgage-Backed Securities, Inc.
1994-8 B1 (6.000% due 03/01/09) 825,588 796,949
Capstead Mortgage Securities Corp. C-4
(10.950% due 02/01/14) 168,896 168,153
-----------
1,522,763
-----------
Total Collateralized Mortgage Obligations
(cost $5,516,151) 4,888,192
-----------
OTHER STRUCTURED SECURITIES - 6.25%
OTHER STRUCTURED - 6.25%
Chase Commercial Mortgage Sec.
(6.600% due 12/19/07) 2,609,885 2,488,369
Life Financial Home Loan Trust
(9.090% due 04/25/24) 2,000,000 2,017,500
NSCOR 1996-5 B1
(8.00% due 11/25/26) 1,648,468 1,735,013
-----------
Total Other Structured Securities
(cost $ 6,221,882) 6,240,882
-----------
CORPORATE BONDS AND NOTES - 49.70%
AIR TRANSPORTATION - 2.18%
Continental Airlines
(7.820% due 10/15/13) 980,392 1,047,245
NWA Trust No. 2 Class B
(10.230% due 06/21/14) 926,153 1,133,696
-----------
2,180,941
-----------
BANK & BANK HOLDING COMPANIES - 5.35%
Ahmanson Capital Trust
(8.360% due 12/01/26) 1,500,000 1,590,316
Nationsbank Corp. Notes
(7.625% due 04/15/05) 1,000,000 1,066,138
Svenska Handelsbanken
(7.125% due 03/07/07) 1,000,000 1,032,091
Zions Trust (8.536% due 12/15/26) 1,500,000 1,655,704
-----------
5,344,249
-----------
ENVIRONMENTAL SERVICES - 1.10%
Allied Waste North America
(10.250% due 12/01/06) 1,000,000 1,097,500
-----------
FINANCE COMPANIES - .80%
Arcadia Financial
(11.500% due 03/15/07) 800,000 808,000
-----------
FOOD, BEVERAGE, & TOBACCO - 2.60%
Great American Cookie Company
(10.875% due 01/15/01) 500,000 511,250
Nabisco Inc. (7.550% due 06/15/15) 1,000,000 1,062,078
RJR Nabisco, Inc. (7.625% due 09/15/03) 1,000,000 1,020,490
-----------
2,593,818
-----------
FOREIGN SOVEREIGN - 1.01%
Republic Of South Africa Notes
(8.375% due 10/17/06) 1,000,000 1,005,000
-----------
GAMING INDUSTRY - 4.08%
Alliance Gaming (10.000% due 08/01/07) 1,000,000 1,001,250
Argosy Gaming (13.2500% due 06/01/04) 1,000,000 1,045,000
Casino Magic of Louisiana
(13.000% due 08/15/03) 1,000,000 960,000
Empress River Casino Finance Corp.
(10.750% due 04/01/02) 1,000,000 1,075,000
-----------
4,081,250
-----------
GAS DISTRIBUTION - .90%
All Star Gas Corp. (7.000% due 07/15/04) 1,000,000 900,000
-----------
INSURANCE - 6.62%
Berkley (W.R.) Corp.
(9.875% due 05/15/08) 500,000 621,608
Conseco Finance (8.796% due 04/01/27) 1,500,000 1,684,019
Farmers Insurance Exhange
(8.500% due 08/01/04) 1,000,000 1,097,659
Leucadia National Corp.
(8.250% due 06/15/05) 1,000,000 1,071,378
Prudential Ins. Surplus Notes
(8.100% due 07/15/15) 1,000,000 1,070,129
USF&G Capital (8.470% due 01/10/27) 1,000,000 1,064,514
-----------
6,609,307
-----------
MANUFACTURING - 2.01%
International Knife & Saw Corp.
(11.375% due 11/15/06) 1,000,000 1,080,000
International Wire Group Inc.
(11.750% due 06/01/05) 500,000 547,500
Terex Corp. Sr. Sec. Notes
(13.250% due 05/15/02) 332,000 378,480
-----------
2,005,980
-----------
MEDIA & CABLE - 5.54%
Adelphia Communications
(12.500% due 05/15/02) 260,000 275,600
CF Cable TV Inc. (9.125% due 07/15/07) 1,000,000 1,080,000
Continental Cablevision
(8.300% due 05/15/06) 1,000,000 1,092,690
Jones Intercable, Inc. (8.875% due 04/01/07) 500,000 522,500
Peoples Choice TV (0.000% due06/01/04) 1,000,000 330,000
Spanish Broadcasting Systems
(11.000% due 03/15/04) 1,000,000 1,100,000
Turner Broadcasting Sr Notes
(8.110% due 8/15/06) 1,000,000 1,133,791
-----------
5,534,581
-----------
MEDIA CONGLOMERATE - 3.85%
News American Holdings
(9.250% due 02/01/13) 1,000,000 1,197,531
Time Warner Inc.
(8.110% due 08/15/06) 1,000,000 1,627,900
Viacom Inc Senior Notes
(7.750% due 06/01/05) 1,000,000 1,020,183
-----------
3,845,614
-----------
MISCELLANEOUS CORPORATE SERVICES - 1.08%
Neodata Services Misc. Corp. Ser.
(12.000% due 05/01/03) 1,000,000 1,075,000
-----------
OIL & GAS - DOMESTIC - .53%
Penzoil Company (9.625% due 11/15/99) 500,000 528,250
-----------
OIL & GAS - SERVICES - 2.78%
Mitchell Energy Development Corp.
(6.750% due 02/15/04) 1,750,000 1,760,244
PDV America, Inc. (7.750% due 08/01/00) 1,000,000 1,019,924
-----------
2,780,168
-----------
PAPER & FOREST PRODUCT - 1.37%
Indah Kiat Sr. Notes (10.000% due 07/01/07) 1,000,000 840,000
Westvaco Corp. (10.300% due 01/15/19) 500,000 529,600
-----------
1,369,600
-----------
RETAIL - .51%
Pamida Inc. Senior Notes
(11.750% due 03/15/03) 500,000 510,000
-----------
STEELS & METALS - .50%
Gulf States Steel 1st Mortgage
(13.500% due 04/15/03) 500,000 495,000
-----------
SUPERMARKET - .48%
Pueblo Xtra International
(9.500% due 08/01/03) 500,000 475,000
-----------
TELECOMMUNICATIONS - 6.41%
360 Communications Sr. Notes
(7.500% due 03/01/06) 1,500,000 1,557,390
Call-Net Enterprises
(0.000% due 12/01/04) 1,250,000 1,139,061
Crown Castle Sr. Notes
(0.000% due 11/15/07) 1,000,000 622,500
Dobson Communications Sr. Notes
(11.750% due 04/15/07) 1,000,000 1,056,250
Nextel Communications, Inc.
(0.000% due 09/15/07) 1,500,000 945,000
Talton Holdings Inc. Sr. Notes
(11.000% due 06/30/07) 1,000,000 1,085,000
-----------
6,405,201
-----------
Total Corporate Bonds and Notes
(cost $46,701,161) 49,644,459
-----------
COMMON STOCKS - .03%
ENERGY - .03%
Pioneer Natural Resources 916 26,507
-----------
Total Common Stocks (cost $ 24,339) 26,507
-----------
WARRANTS AND RIGHTS - 0.00%
RETAIL-FOOD - 0.00%
Great American Cookie Warrants 90 900
-----------
TECHNOLOGY - .00%
Terex Corporation Appreciation Rights 4,000 40
-----------
Total Warrants and rights(cost $ 28,050) 940
-----------
PREFERRED STOCKS - .90%
PACKAGING - .90%
Earthshell Container Corporation Series A
Cumulative Senior Convertible 8% <FN1> 500 900,000
-----------
Total Preferred Stocks (cost $500,000) 900,000
-----------
SHORT-TERM INVESTMENTS - 3.36%
VARIABLE RATE DEMAND NOTES <FN2> - 3.36%
American Family (5.639% due 01/01/98) 716,797 716,797
General Mills (5.327 due 01/01/98) 714,307 714,307
Johnson Controls Inc.
(5.327% due 01/01/98) 706,000 706,000
Pitney Bowes Credit Corp.
(5.327% due 01/01/98) 186,000 186,000
Sara Lee (5.322% due 01/01/98) 407,506 407,506
Warner Lambert (5.489% due 01/01/98) 440,230 440,230
Wisconsin Electric (5.487 due 01/01/98) 186,285 186,285
-----------
Total Short-Term Investments
(cost $3,357,125) 3,357,125
-----------
TOTAL INVESTMENTS - 98.35%
(cost $94,380,244)<3>
. 98,239,839
OTHER ASSETS AND LIABILITIES - 1.65% 1,652,257
------------
TOTAL NET ASSETS - 100% $99,892,096
============
* Non-Income Producing
<FN>
<FN1> 144A- Privately placed security traded among qualified institutional
buyers.
<FN2> Interest rates vary periodically based on current market rates.
Rates shown are as of December 31, 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 December 31, 1997.
<FN3> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at December 31, 1997, for
financial reporting purposes was $4,636,466 and $776,871.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
S&P 500 INDEX PORTFOLIO
<TABLE>
<CAPTION>
COMMON STOCKS - 91.40%
SHARES VALUE
------ -----
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 15.35%
Aetna Life & Casualty Company $ 867 $ 61,178
Ahmanson (H. F.) & Company 700 46,856
Allstate Corporation 3,100 281,713
American Express Company 3,300 294,525
American General Corporation 1,300 70,281
American International Group 4,850 527,438
Aon Corporation 1,500 87,938
Banc One Corporation 4,290 233,001
Bank of New York Incorporated 2,300 132,969
BankAmerica Corporation 4,800 350,400
Bank of Boston Corporation 900 84,544
Bankers Trust New York Corporation 500 56,219
Barnett Banks, Incorporated 1,300 93,438
Beneficial Corporation 500 41,563
Charles Schwab Corporation 2,250 94,359
Chase Manhattan Corporation 2,712 296,964
Chubb Group 1,100 83,188
CIGNA Corporation 500 86,531
Citicorp 2,300 290,806
Comerica, Incorporated 700 63,175
Conseco, Inc. 1,700 77,244
CoreStates Financial Corporation 1,400 112,088
Equifax, Incorporated 1,300 46,069
Fannie Mae 7,400 422,263
Federal Home Loan Mortgage Corporation 4,800 201,300
Fifth Third Bancorp 1,300 106,275
First Chicago NBD Corporation 2,200 183,700
First Union Corporation 3,400 174,250
Fleet Financial Group, Incorporated 1,600 119,900
General Re Corporation 500 106,000
Golden West Financial 500 48,906
Green Tree Financial Corporation 800 20,950
Hartford Financial Services Group 600 56,138
Household International, Incorporated 600 76,538
Huntington Bancshares 1,600 57,600
Jefferson-Pilot Corporation 700 54,513
Keycorp 1,400 99,138
Lincoln National Corporation 600 46,875
Loews Corporation 800 84,900
Marsh & McLennan Companies, Incorporated 1,000 74,563
MBIA Incorporated 1,000 66,813
MBNA Corporation 3,562 97,287
Mellon Bank Corporation 1,600 97,000
Merrill Lynch & Company, Incorporated 2,000 145,875
MGIC Investment 1,000 66,500
Morgan (J. P.) & Company 1,200 135,450
Morgan Stanley Group Incorporated 4,185 247,438
National City Corporation 1,400 92,050
NationsBank Corporation 3,044 185,113
Norwest Corporation 4,600 177,675
PNC Bank Corp. 2,100 119,831
Progressive Corporation 600 71,925
Providian Financial Corporation 800 36,150
Republic New York Corporation 400 45,675
SAFECO Corporation 800 39,000
State Street Corporation 1,300 75,644
St. Paul Companies 700 57,444
SunAmerica 1,500 64,125
SunTrust Banks, Incorporated 1,500 107,063
Torchmark Corp 1,200 50,475
Transamerica Corporation 500 53,250
Travelers Group, Incorporated 7,985 430,192
UNUM Corporation 1,200 65,250
U.S. Bancorp 1,579 176,749
Wachovia Corporation 1,000 81,125
Washington Mutual, Incorporated 1,920 122,520
Wells Fargo & Company 533 80,920
-----------
8,534,835
-----------
CAPITAL GOODS - 5.64%
AMP, Incorporated 1,500 63,000
Avery Dennision Company 1,100 49,225
Browning-Ferris Industries 1,300 48,100
Case Corporation 600 36,263
Caterpillar, Incorporated 2,700 131,119
Cooper Industries, Incorporated 900 44,100
Corning Inc. 1,400 51,975
Deere & Company 1,500 87,469
Dover Corporation 1,600 57,800
Eaton Corporation 500 44,625
Emerson Electric Company 3,300 186,244
Foster Wheeler Corporation 400 10,825
General Electric Company 23,200 1,702,300
Illinois Tool Works, Incorporated 1,600 96,200
Ingersoll-Rand Company 900 36,450
Johnson Controls 800 38,200
PACCAR, Incorporated 400 21,000
Parker-Hannifin Corporation 1,050 48,169
Raychem Corporation 800 34,450
Tenneco, Incorporated 1,200 47,400
Thermo Electron Corporated* 1,300 57,850
Tyco International Limited 3,600 162,225
Waste Management Incorporated 2,900 79,750
-----------
3,134,739
-----------
CONSUMER CYCLICAL - 8.38%
American Greetings Company Class A 600 23,475
AutoZone Incorporated* 1,300 37,700
Black & Decker Corporation 500 19,531
Block, H&R Inc. 700 31,369
Brunswick Corporation 700 21,215
Chrysler Corporation 4,800 168,900
Cognizant Corporation 1,000 44,563
Costco Companies Incorporated* 1,800 80,325
Dana Corporation 1,000 47,500
Dayton Hudson Corporation 1,400 94,500
Dillard's Incorporated Class A 1,100 38,775
Dow Jones, & Company, Incorporated 700 37,581
Dun & Bradstreet Corporation 1,200 37,125
Eastman Kodak Company 2,400 145,950
Federated Department Stores Incorporated* 1,300 55,981
Ford Motor Company 8,000 389,500
Gannett Company, Incorporated 2,200 135,988
Gap (The), Incorporated 2,400 85,050
General Motors Corporation 5,200 315,250
Genuine Parts Company 1,950 66,178
Goodyear Tire & Rubber Company 1,100 69,988
Harrah's Enterainment Incorporated* 700 13,213
Hilton Hotels Corporation 1,700 50,575
Home Depot, Incorporated 5,200 306,150
International Flavors
& Fragrance, Incorporated 700 36,050
ITT Corporation 700 58,013
ITT Industries Incorporated 1,100 34,513
Kmart Corporation* 2,900 33,531
Knight-Ridder Incorporated 800 41,600
Lowe's Companies 1,000 47,688
Liz Claiborne, Incorporated 700 29,269
Marriott International, Inc. 900 62,325
Masco Corporation 1,200 61,050
Mattel, Incorporated 1,850 68,913
May Department Stores Company 1,600 84,300
McGraw-Hill Companies, Incorporated 800 59,200
Mirage Resorts Incorporated 1,600 36,400
New York Times, Company Class A 800 52,900
NIKE, Incorporated Class B 1,700 66,725
Nordstrom Incorporated 700 42,263
Owens Corning Fiberglass Corporation 400 13,650
Penney, (J.C.) Company, Incorporated 1,900 114,594
Reebok International Limited* 400 11,525
Sears, Roebuck & Company 2,800 126,700
Sherwin-Williams Company 1,200 33,300
Tandy Corporation 1,000 38,563
Limited (The), Incorporated 1,790 45,645
TJX Companies Incorporated 1,500 51,563
Toys "R" Us, Incorporated* 1,700 53,444
Tribune Company 1,000 62,250
TRW, Incorporated 900 48,038
V.F. Corporation 1,000 45,938
Wal-Mart Stores, Incorporated 16,500 650,719
Whirlpool Corporation 600 33,000
Woolworth Corporation* 1,000 20,375
Xerox Corporation 2,400 177,150
-----------
4,657,576
-----------
CONSUMER NON-DURABLE - 24.22%
Abbott Laboratories 5,500 360,594
Albertson's Incorporated 1,600 75,800
American Home Products Corporation 4,500 344,250
American Stores Company 1,800 37,013
Amgen, Inc. 1,600 86,600
Anheuser-Busch Companies, Incorporated 3,500 154,000
Archer-Daniels-Midland Company 3,669 79,571
Automatic Data Processing, Incorporated 1,900 116,613
Avon Products, Incorporated 800 49,100
Baxter International Incorporated 1,700 85,742
Becton, Dickinson Company 900 45,000
Bristol-Myers Squibb Company 7,000 662,370
Boston Scientific Corporation* 1,400 64,222
Campbell Soup Company 3,300 191,800
Cardinal Health, Incorporated 1,000 75,120
CBS Incorporated 4,700 138,354
Cendant Corporation* 4,472 153,740
Clorox Company 600 47,438
Coca-Cola Company 17,700 1,179,261
Colgate-Palmolive Company 1,600 117,600
Columbia/HCA Healthcare Corporation 3,950 117,019
Comcast Corporation Class A Special 2,300 72,594
ConAgra, Incorporated 3,000 98,438
CPC International, Incorporated 900 97,200
CVS Corporation 1,400 89,688
Donnelly (R.R.) & Sons Company 1,200 44,700
Fortune Brands, Inc. 1,100 40,769
General Mills, Incorporated 1,000 71,625
Gillette Company 3,900 391,706
Guidant Corporation 1,200 74,700
Heinz (H.J.) Company 2,300 116,869
Hershey Foods Corporation 1,100 68,131
Humana Incorporated* 1,500 31,125
Interpublic Group Companies, Incorporated 900 44,831
Johnson & Johnson 9,400 619,225
Kellogg Company 2,400 119,100
King World Productions, Incorporated* 500 28,875
Kroger Company* 1,600 59,100
Lilly (Eli) & Company 7,800 543,075
Mallincrokdt Group, Incorporated 700 26,600
Manor Care, Inc. 500 17,500
McDonald's Corporation 4,900 233,975
Medtronic, Incorporated 2,800 146,475
Merck & Company, Incorporated 8,700 924,375
Newell Company 1,300 55,250
PepsiCo, Inc. 10,900 397,169
Pfizer, Incorporated 9,300 693,431
Pharmacia & Upjohn, Incorporated 3,600 131,850
Philip Morris Companies, Inc. 17,100 774,844
Pioneer Hi-Bred International 700 75,075
Procter & Gamble Company 9,600 766,200
Quaker Oats Company 1,300 68,575
Ralston-Ralston Purina Group 600 55,763
Rite Aid Corporation 900 52,819
Rubbermaid, Incorporated 1,200 30,000
Sara Lee Corporation 3,400 191,463
Schering-Plough Corporation 5,200 323,050
Seagram Company, Limited 2,200 71,088
St. Jude Medical* 500 15,250
Sysco Corporation 1,300 59,231
Tele-Communications, Incorporated* 2,000 55,875
Tenet Healthcare Corporation* 1,900 62,938
Time Warner, Incorporated 3,500 217,000
Tricon Global Restaurants* 1,090 31,678
United HealthCare Corporation 1,100 54,654
UST, Incorporated 1,200 44,325
U.S. West Media Group* 3,700 106,838
Viacom, Incorporated - Class B* 1,700 70,442
Walgreen Company 2,800 87,850
Walt Disney Company, The 4,819 477,381
Warner-Lambert Company 1,900 235,600
Wendy's International 800 19,250
Winn-Dixie Stores Incorporated 900 39,319
Wrigley, (Wm.) Jr. Company 700 55,694
-----------
13,461,785
-----------
ENERGY - 8.29%
Amerada Hess Corporation 600 32,925
Amoco Corporation 3,600 306,450
Anadarko Petroleum Corporation 600 36,413
Ashland Inc. 800 42,950
Atlantic Richfield 2,400 192,300
Baker-Hughes Incorporated 1,500 65,438
Burlington Resources, Incorporated 900 40,331
Chevron Corporation 4,700 361,900
Columbia Gas System, Incorporated 400 31,425
Dresser Industries, Incorporated 1,400 58,713
Enron Corporation 2,200 91,438
Exxon Corporation 17,900 1,095,256
Halliburton Company 1,800 93,488
Kerr-McGee Corporation 400 25,325
Mobil Corporation 5,800 418,688
Occidental Petroleum 2,000 58,625
Pennzoil Company 400 26,725
Phillips Petroleum Company 1,600 77,800
Royal Dutch Petroleum Company ADR 15,300 829,069
Schlumberger Limited 3,600 289,800
Sun Company, Incorporated 800 33,650
Texaco, Incorporated 4,000 217,500
Union Pacific Resources Group 1,592 38,606
Unocal Corporation 1,400 54,338
USX-Marathon Group 1,800 60,750
Western Atlas Incorporated* 400 29,600
-----------
4,609,503
-----------
MANUFACTURING - 7.88%
Air Products & Chemicals, Incorporated 700 57,575
Alcan Aluminum Limited 1,900 52,488
Allegheny Teledyne, Incorporated 800 20,700
Allied Signal Incorporated 3,600 140,175
Aluminum Company of America 1,400 98,525
Applied Materials Incorporated* 2,600 78,325
Barrick Gold Corporation 2,200 40,975
Bemis Company 400 17,625
Bethlehem Steel Corporation* 800 6,900
Boeing Company 7,144 349,609
Centex Corporation 100 6,294
Champion International Corporation 800 36,250
Crown Cork & Seal Company, Incorporated 800 40,100
Dow Chemical Company 2,000 203,000
DuPont (E.I.) De Nemours & Company 8,000 480,500
Eastman Chemical Company 600 35,738
Englehard Corporation 800 13,900
Fluor Corporation 700 26,163
Fort James Corporation 1,600 61,200
Freeport-McMoRan Copper 800 12,600
General Dynamics Corporation 600 51,863
Georgia-Pacific Corp. 800 48,600
Grace, (W.R.) & Company 500 40,219
Great Lakes Chemical Corporation 600 26,925
Hercules, Incorporated 700 35,044
Honeywell, Incorporated 900 61,650
Inco, Limited 1,300 22,100
International Paper Company 1,800 77,625
Kimberly-Clark Corporation 3,900 192,319
Laidlaw Incorporated 1,900 25,888
Lockheed Martin Corporation 1,400 137,900
Louisiana-Pacific Corporation 900 17,100
Mead Corporation 800 22,400
Minnesota Mining & Manufacturing Company 3,000 246,188
Monsanto Company 4,200 176,400
Morton International, Incorporated 1,000 34,375
Nalco Chemical Company 600 23,738
Newmont Mining Corporation 2,100 61,688
Northrop Grumman Corporation 600 69,000
Nucor Corporation 700 33,819
Owens-Illinois, Incorporated* 1,200 45,525
Phelps Dodge Corporation 600 37,350
Pitney-Bowes Incorporated 1,000 89,938
Placer Dome, Incorporated 1,400 17,763
PPG Industries, Incorporated 1,200 68,550
Praxair Incorporated 1,000 45,000
Reynolds Metals Company 500 30,000
Rockwell International Corporation 1,300 67,925
Rohm & Haas Company 400 38,300
Solutia Incorporated 840 22,418
Temple-Inland Inc. 500 26,156
Textron Incorporated 1,200 75,000
The Stanley Works 800 37,750
Unilever (N.V.) ADR 4,400 274,725
Union Camp Corporation 700 37,581
Union Carbide Corporation 800 34,350
United Technologies Corporation 1,600 116,500
USX-U.S. Steel Group 600 18,750
Weyerhaeuser Company 1,400 68,688
Willamette Industries 1,000 32,188
Worthington Industries, Incorporated 700 11,550
-----------
4,379,490
-----------
SERVICE - .14%
Ikon Office Solution 800 22,500
Service Corporation International 1,500 55,406
-----------
77,906
-----------
TECHNOLOGY - 11.30%
3COM Corporation* 2,600 90,838
Advanced Micro Devices, Incorporated* 900 16,144
Andrew Corporation 600 14,400
Bay Networks Inc.* 1,700 43,456
Cabletron Systems, Incorporated* 900 13,500
Cisco Systems Incorporated 7,200 401,400
COMPAQ Computers Corporation 4,970 280,494
Computer Associates International 3,900 206,213
Computer Sciences Corporation* 500 41,750
Dell Computer Corporation* 2,400 201,600
Digital Equipment Corporation* 1,000 37,000
EMC Corporation Massachusetts* 4,200 115,238
First Data Corporation 2,700 78,975
Grainger (W.W.), Incorporated 500 48,594
Hewlett-Packard Company 7,500 468,750
Intel Corporation 11,700 821,925
International Business Machines Corporation 7,100 742,394
LSI Logic Corporation* 800 15,800
Lucent Technologies 4,585 366,227
Micron Technology Incorporated* 1,300 33,800
Microsoft Corporation* 8,500 1,098,625
Motorola Incorporated 4,200 239,663
National Semiconductor* 1,200 31,125
Northern Telecom, Limited 1,900 169,100
Novell, Incorporated* 2,000 15,000
Oracle Systems Corporation* 7,000 156,187
Parametric Tech Company* 1,100 52,113
Perkin-Elmer Corporation 300 21,319
Raytheon Company - Class B 1,500 75,750
Scientfic-Atlanta Incorporated 700 11,725
Seagate Technology, Incorporated* 1,500 28,875
Silicon Graphics Incorporated* 1,200 14,925
Sun Microsystems, Incorporated* 2,700 107,663
Tektronix, Incorporated 300 11,906
Tellabs, Incorporated* 1,100 58,163
Texas Instruments, Incorporated 3,000 135,000
Unisys Corporation* 1,200 16,650
-----------
6,282,287
-----------
TRANSPORTATION - 1.17%
AMR Corporation* 600 77,100
Burlington Northern Santa Fe Corporation 1,100 102,231
Caliber System, Incorporated 400 19,475
CSX Corporation 1,600 86,400
Delta Air Lines 500 59,500
Federal Express Corp.* 700 42,744
Norfolk Southern Corp. 3,000 92,438
Ryder System Inc. 700 22,925
Southwest Airlines Company 1,500 36,938
Union Pacific Corporation 1,800 112,388
-----------
652,139
-----------
UTILITY - 9.03%
AirTouch Communications, Incorporated 3,600 149,625
ALLTELL Corporation 1,300 53,381
American Electric Power Company, Incorporated 1,600 82,600
Ameritech Corporation 3,800 305,900
AT&T Corporation 11,500 704,375
Baltimore Gas & Electric Company 1,100 37,469
Bell Atlantic Corporation 5,496 500,136
BellSouth Corporation 7,000 394,188
Carolina Power & Light Company 1,200 50,925
Central & Southwest Corporation 1,900 51,419
CINergy Corporation 1,000 38,313
Coastal Corporation 600 37,163
Consolidated Edison Co. of N.Y., Incorporated 1,400 57,400
Consolidated Natural Gas Company 600 36,300
Dominion Resources 1,400 59,588
Duke Power Company 2,339 129,522
DTE Energy Company 1,100 38,156
Edison International 2,500 67,969
Entergy Corporation 1,300 38,919
FPL Group Incorporated 2,200 130,213
General Public Utilities Corporation 900 37,913
GTE Corporation 6,100 318,725
Houston Industries, Incorporated 1,400 37,363
MCI Communications Corporation 3,200 137,000
Niagara Mohawk Power Corporation* 800 8,400
Pacific Gas & Electric Company 2,600 79,138
PacifiCorp 2,200 60,088
PECO Energy Company 1,200 29,100
Public Service Enterprises Group,
Incorporated 1,300 41,194
SBC Communications 6,455 472,829
Sonat, Incorporated 600 27,450
Southern Company 5,100 131,963
Sprint Corporation* 2,000 117,250
Texas Utilities Company 1,700 70,656
Unicom Corporation 1,400 43,050
Union Electric Company 900 38,925
U.S. West Communications Group 3,400 153,425
Williams Cos. 2,100 59,588
WorldCom, Incorporated 6,400 193,600
-----------
5,021,218
-----------
Total Common Stocks (cost $38,920,329) 50,811,478
-----------
UNIT INVESTMENT TRUST - 4.90%
S & P 500 Depository Receipts 28,100 2,727,138
-----------
Total Unit Investment Trust
(cost $2,635,730) 2,727,138
-----------
<CAPTION>
SHORT-TERM INVESTMENTS - 3.87%
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
U.S. Treasury Bill (5.010% due 03/19/98) $1,780,000 1,760,507
Portico U.S. Federal Money Market Fund 388,596 388,596
-----------
Total Short-Term Investments
(cost $2,149,103) 2,149,103
-----------
TOTAL INVESTMENTS - 100.17%
(cost $43,705,162)<FN1> 55,687,719
OTHER ASSETS AND LIABILITIES - (.17%) (93,050)
-----------
TOTAL NET ASSETS - 100% $55,594,669
===========
*Non-income producing
(ADR) American Depository Receipt
<FN>
<FN1> Represents cost for Rederal income tax purposes. Gross unrealized
appreciation and depreciation of securities at December 31, 1997, was
$13,078,212 and $1,095,605 respectively.
<FN2> Securities with an aggregate market value of $1,713,425 have been
segregated with the custodian to cover margin requirements for the following
open futures contracts at December 31, 1997:
</FN>
<CAPTION>
Unrealized
Unrealized Appreciation/
Type Contracts (Depreciation)
<S> <C> <C>
Standard & Poor's 500 Index (03/98) 4 $31,100
Standard & Poor's 500 Index (03/98) 1 5,650
Standard & Poor's 500 Index (03/98) 1 3,900
Standard & Poor's 500 Index (03/98) 1 6,800
$47,450
=======
</TABLE>
The accompanying notes are an integral part of
the financial statement.
<PAGE>
CARILLON FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
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 five different
series - Equity Portfolio, Capital Portfolio, Bond Portfolio,
S&P 500 Index Portfolio and Micro-Cap 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 financial statements of
the Micro-Cap Portfolio are presented separately.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Securities valuation - Securities held in each Portfolio, except
for short-term fixed income securities 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. Short-term fixed income securities with
a remaining maturity of 60 days or less held in each Portfolio
are valued at amortized cost which approximates market. Non-U.S.
dollar securities are translated into U.S. dollars using the
spot exchange rate provided at the close of the London 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.
Foreign Currency - The Funds' accounting records are maintained
in U.S. dollars. All Portfolios may purchase foreign securities
within certain limitations set forth in the Prospectus. Amounts
dominated in or expected to settle in foreign currencies are
translated into U.S. dollars at the spot rate at the close of
the London Market. The fund does not isolate that portions of
the results of operations resulting from changes in foreign
exchange rates on investments from the underlying fluctuation in
the securities resulting from market prices. All are included in
net realized and unrealized gain or loss for investments.
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.
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 AND FOREIGN CURRENCY 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.
All portfolios may enter into forward foreign currency exchange
contacts for the purchase or sale of a specific foreign currency
at a fixed price on a future date. Risks may arise upon entering
these contracts from the potential inability of counter-parties
to meet the terms of their contracts and from unanticipated
movements in their value of a foreign currency relative to the
U.S. dollar. The funds typically utilize the contracts as a
hedge against fluctuation in currency values between the trade
and settlement dates of security transactions.
NOTE 4 - SUMMARY OF PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities for the year ended
December 31, 1997 excluding short-term obligations, follow:
<TABLE>
<CAPTION>
S&P 500
Equity Capital Bond Index
Portfolio Portfolio Portfolio Portfolio
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total Cost
of Purchases of:
Common Stocks $162,918,331 $42,264,597 $ 0 $18,676,744
U.S. Government Securities ---- 18,655,608 7,189,738 ----
Corporate Bonds ---- 12,634,953 95,814,662 ----
------------ ----------- ------------ -----------
$165,918,331 $73,555,158 $103,004,400 $18,676,744
============ =========== ============ ===========
Total Proceeds
from Sales of:
Common Stocks $178,560,062 $48,660,638 $ 515,027 $ 3,555,261
U.S. Government Securities ---- 20,622,525 9,513,172 ----
Corporate Bonds ---- 4,910,848 85,986,934 ----
------------ ----------- ------------ -----------
$178,560,062 $74,194,011 $ 96,015,133 $ 3,555,261
============ =========== ============ ===========
</TABLE>
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
--------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 19.45 $ 16.54 $ 14.30 $ 14.58 $ 13.74
-------- -------- -------- -------- --------
Investment Activities:
Net investment income .23 .29 .24 .20 .16
Net realized and unrealized 3.23 3.61 3.36 .31 1.69
gains/(losses) -------- -------- -------- -------- --------
Total from
Investment Operations 3.46 3.90 3.60 .51 1.85
-------- -------- -------- -------- --------
Distributions:
Net investment income (.27) (.27) (.23) (.19) (.16)
Net realized gains (2.29) (.72) (1.13) (.60) (.85)
-------- -------- -------- -------- --------
Total Distributions (2.56) (.99) (1.36) (.79) (1.01)
-------- -------- -------- -------- --------
Net Asset Value,
End of year $20.35 $19.45 $16.54 $14.30 $14.58
======== ======== ======== ======== ========
Total Return 20.56% 24.52% 26.96% 3.42% 14.11%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .62% .64% .66% .69% .70%
Ratio of Net Investment
Income to Average Net Assets 1.23% 1.66% 1.73% 1.45% 1.18%
Portfolio Turnover Rate 57.03% 52.53% 34.33% 40.33% 37.93%
Average Commission
Rate Paid <FN1> $.0600 $.0628
Net Assets,
End of Year (000's) $335,627 $288,124 $219,563 $157,696 $138,239
<FN>
<FN1> 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>
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,
--------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $ 14.95 $ 13.72 $ 13.19 $ 13.81 $ 12.99
-------- -------- -------- -------- --------
Investment Activities:
Net investment income .62 .63 .64 .52 .43
Net realized and unrealized .37 1.36 1.15 (.39) 1.17
gains/(losses) -------- -------- -------- -------- --------
Total from
Investment Activities .99 1.99 1.79 .13 1.60
-------- -------- -------- -------- --------
Distributions:
Net investment income (.66) (.57) (.64) (.52) (.42)
Net realized gains (1.18) (.19) (.62) (.23) (.36)
-------- -------- -------- -------- --------
Total Distributions (1.84) (.76) (1.26) (.75) (.78)
-------- -------- -------- -------- --------
Net Asset Value,
End of year $14.10 $14.95 $13.72 $13.19 $13.81
======== ======== ======== ======== ========
Total Return 7.40% 14.94% 14.28% .94% 12.72%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .77% .77% .77% .80% .82%
Ratio of Net Investment
Income to Average Net Assets 4.22% 4.42% 4.99% 4.25% 3.31%
Portfolio Turnover Rate 60.84% 53.11% 43.83% 41.89% 32.42%
Average Commission
Rate Paid <FN1> $.0531 $.0615
Net Assets,
End of Year (000's) $148,833 $159,294 $145,623 $119,263 $100,016
<FN>
<FN1> 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
Year Ended December 31,
--------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 10.91 $ 11.07 $ 10.04 $ 11.30 $ 10.91
-------- -------- -------- -------- --------
Investment Activities:
Net investment income .78 .79 .88 .77 .73
Net realized and unrealized .38 (.04) .98 (.95) .54
gains/(losses) -------- -------- -------- -------- --------
Total from
Investment Operations 1.16 .75 1.86 (.18) 1.27
-------- -------- -------- -------- --------
Distributions:
Net investment income (.72) (.87) (.83) (.78) (.73)
In excess of
net investment income ---- (.04) ---- ---- ----
Net realized gains (.06) ---- ---- (.30) (.15)
-------- -------- -------- -------- --------
Total Distributions (.78) (.91) (.83) (1.08) (.88)
-------- -------- -------- -------- --------
Net Asset Value,
End of period $ 11.29 $ 10.91 $ 11.07 $ 10.04 $ 11.30
-------- -------- -------- -------- --------
Total Return 11.02% 7.19% 19.03% (1.63%) 11.94%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .60% .62% .65% .68% .66%
Ratio of Net Investment
Income to Average Net Assets 7.15% 7.24% 7.43% 7.21% 6.65%
Portfolio Turnover Rate 113.41% 202.44% 111.01% 70.27% 137.46%
Net Assets,
End of Year (000's) $ 99,892 $ 85,634 $ 73,568 $ 55,929$ 54,128
</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,
1997 1996<FN1>
------- -------
<S> <C> <C>
Net Asset Value,
Beginning of year $ 12.13 $ 10.00
------- -------
Investment Activities:
Net investment income .20 .20
Net realized and unrealized 3.72 2.12
gains/(losses) ------- -------
Total from Investment Activities 3.92 2.32
------- -------
Distributions:
Net investment income (.21) (.19)
Net realized gains (.10) ---
------- -------
Total Distributions (.31) (.19)
Net Asset Value,
End of year $ 15.74 $ 12.13
======= =======
Total Return 32.72% 23.37%
Ratios/Supplemental Data:
Ratio of Net Expenses to
Average Net Assets .50% .59%<FN2>
Ratio of Net Investment
Income to Average Net Assets 1.48% 2.14%<FN2>
Portfolio Turnover Rate 9.06% 1.09%
Average Commission Rate Paid <FN3> $ .0453 $ .0601
Net Assets, End of Year (000's) $55,595 $29,205
<FN>
<FN1> 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.
<FN2> 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.
<FN3> 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>
Independent Auditors' Report
To the Board of Trustees and Shareholders of
Micro-Cap Portfolio
We have audited the accompanying statement of assets and
liabilities of the Micro-Cap Portfolio of Carillon Fund, Inc.
(the "Fund"), as of December 31, 1997, the related statement of
operations, and the statement of changes in net assets for the
period from November 24, 1997 (date of inception) to December
31, 1997. These financial statements are the responsibility of
the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the Fund's custodian
and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of the Micro-Cap
Portfolio, as of December 31, 1997, and the results of its
operations, the changes in its net assets, and the financial
highlights for the period presented, in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Dayton, Ohio
February 12, 1998
<PAGE>
CARILLON FUND, INC.
MICRO-CAP PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
December 31, 1997
<S> <C>
ASSETS
Investment in securities, at value -
(Amortized cost $3,038,504) $ 3,022,648
Receivables:
Interest & dividends 1,022
Expense reimbursement
from Carillon Advisers, Inc. 6,489
-----------
3,030,159
-----------
LIABILITIES
Payables:
Investment Securities purchased 36,750
Accrued expenses and other 13,019
-----------
49,769
-----------
NET ASSETS
Paid-in capital 2,996,246
Net unrealized depreciation on investments (15,856)
-----------
$ 2,980,390
===========
Shares authorized ($.10 par value) 20,000,000
Shares outstanding 300,000
Net asset value, offering
and redemption price per share $ 9.93
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
MIRCO-CAP PORTFOLIO
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Period
From November 24, 1997
to December 31, 1997
----------------------
<S> <C>
INVESTMENT INCOME:
Interest $ 2,417
Dividends 304
--------
2,721
--------
EXPENSES:
Investment advisory fee 3,237
Professional fees 8,216
Portfolio accounting fees 2,505
Director's fees 540
Custodial fees and expenses 573
Other 1,130
--------
16,201
Less expenses reimbursed by the advisor (9,726)
--------
6,475
--------
NET INVESTMENT LOSS (3,754)
--------
NET CHANGE IN UNREALIZED
DEPRECIATION ON INVESTMENTS (15,856)
--------
NET DECREASE IN NET ASSETS FROM OPERATIONS $(19,610)
========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
MICRO-CAP PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Period
From November 24, 1997
to December 31, 1997
<S> <C>
OPERATIONS:
Net investment loss $ (3,754)
Net change in unrealized depreciation
on investments (15,856)
----------
(19,610)
----------
FUND SHARE TRANSACTIONS-
Proceeds from shares sold 3,000,000
----------
NET INCREASE IN NET ASSETS 2,980,390
----------
NET ASSETS:
Beginning of period ----
----------
End of period $2,980,390
==========
FUND SHARE TRANSACTIONS-
Sold 300,000
==========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
MICRO-CAP PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
COMMON STOCKS - 97.78%
SHARES VALUE
------ -----
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 14.81%
Duff & Phelps Credit Rating Company 2,300 $ 93,437
Fahnestock Viner Holdings Class-A 4,300 74,981
Jefferies Group, Incorporated 2,200 90,062
Mid-Iowa Financial* 7,700 88,550
Warren Bancorp, Incorporated* 4,100 94,300
----------
441,330
----------
CAPITAL GOODS - 8.11%
Franklin Electric Company Incorporated* 1,400 89,950
Mitcham Industries ,Incorporated* 6,000 73,000
Petroleum Helicopters (non-voting)* 3,500 78,750
----------
241,700
----------
CONSUMER CYCLICAL - 20.67%
CPAC, Incorporated 7,600 77,900
Maxwell Shoe Company Incorporated - A* 6,000 64,500
NCI Building Systems, Incorporated* 2,100 74,550
Quaker Fabric Corporation* 4,000 78,500
Strattec Security Corporation* 3,200 81,600
Supreme International Corporation* 6,900 86,250
Winsloew Furniture, Incorporated* 5,400 78,300
World of Science, Incorporated* 17,000 74,375
----------
615,975
----------
CONSUMER NON-DURABLE - 17.94%
Complete Management Incorporated* 4,800 67,200
Mesa Laboratories, Incorporated* 11,000 74,250
Nam Tai Electronics, Incorporated* 4,700 70,206
Norland Medical Systems, Incorporated* 10,500 78,750
Orthofix International N.V. 6,300 74,025
Schlotzsky's, Incorporated* 4,500 65,813
Young Innovations, Incorporated* 5,800 104,400
----------
534,644
----------
ENERGY - 8.14%
Callon Petroleum Company* 4,300 70,009
Domain Energy Corporation* 4,600 72,450
OYO Geospace Corporation* 5,300 100,038
----------
242,497
----------
MANUFACTURING - 16.23%
Cannondale Corporation* 3,800 $ 82,650
Fibermark, Incorporated* 4,100 88,150
Northwest Pipe Company* 3,600 86,400
NS Group, Incorporated* 3,400 58,225
Omniquip International, Incorporated 4,400 87,725
York Group, Incorporated 3,300 80,438
----------
483,588
----------
TECHNOLOGY - 9.34%
DRS Technologies, Incorporated* 6,700 98,825
Vertex Communications Corporation* 3,300 79,613
Vtech Holdings Limited Sponsored ADR 3,400 100,267
----------
278,705
----------
TRANSPORTATION - 2.54%
MTL Incorporated* 3,000 75,750
----------
Total Common Stocks (cost $ 2,930,045) 2,914,189
----------
SHORT-TERM INVESTMENTS - 3.64%
<CAPTION>
PRINCIPAL VALUE
--------- ----------
<S> <C> <C>
VARIABLE RATE DEMAND NOTES <F1>- 3.64%
Johnson Controls (5.327% due 01/01/98) $ 37,511 $ 37,511
Pitney Bowes (5.327% due 01/01/98) 26,926 26,926
Sara Lee (5.322% due 01/01/98) 30,000 30,000
Warner Lambert (5.489 due 01/01/98) 14,022 14,022
----------
Total Short-Term Investments
(cost $108,459) 108,459
----------
TOTAL INVESTMENTS - 101.42%
(cost $3,038,504) <F2> 3,022,648
OTHER ASSETS AND LIABILITIES - (1.42%) (42,258)
----------
TOTAL NET ASSETS - 100% $2,980,390
==========
_________
*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, 1997.
<F2> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at December 31, 1997 was
$134,760 and $(150,616), respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
MICRO-CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The Micro-Cap Portfolio (Micro-Cap) of 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 five different series - Equity Portfolio, Capital
Portfolio, Bond Portfolio, S&P 500 Index Portfolio and Micro-Cap
Portfolio. Micro-Cap seeks long-term appreciation by investing
primarily in the common stocks of domestic companies with
smaller market capitalization. The financial statements of the
Equity, Bond, Capital and S&P 500 Index Portfolios are presented
separately.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Securities valuation - Securities except for short-term fixed
income securities 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. Short-term
fixed income securities with a remaining maturity of 60 days or
less held in each Portfolio are valued at amortized cost which
approximates market. Non-U.S. dollar securities are translated
into U.S. dollars using the spot exchange rate at the close of
the London 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 Micro-Cap's intent 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 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 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.
Foreign Currency - The Fund's accounting records are maintained
in U.S. dollars. All Portfolios may purchase foreign securities
within certain limitations set forth in the Prospectus. Amounts
dominated in or expected to settle in foreign currencies are
translated into U.S. dollars at the spot rate reported at the
close of the London market. The Fund does not isolate that
portion of the results of operations resulting from changes in
foreign exchange rates on investments from the underlying
fluctuation in the securities resulting from market prices. All
are included in net realized and unrealized gain or loss for
investments.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
Investment advisory fees - Micro-Cap 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 on a daily basis,
at an annual rate of 1.0% of net assets.
The Adviser has agreed to limit expenses of the Fund to 2% of
the average annual net assets.
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 .10% of the Fund's
average net assets. The fee is borne by the Adviser not the
Fund.
Carillon Advisers, Inc. and Carillon Investments, Inc. are
wholly-owned subsidiaries of Union Central.
Directors' fees - Each director who is not affiliated with the
Adviser receives fees from the Fund for service as a director.
Members of the Board of Directors who are not affiliated with
the Adviser are eligible to participate in a deferred
compensation plan. The value of each director's deferred
compensation account will increase or decrease at the same rate
as if it were invested in shares of the Scudder Money Market
Fund.
NOTE 3 - FORWARD CURRENCY CONTRACTS
All portfolios may enter into forward foreign currency exchange
contacts for the purchase or sale of a specific foreign currency
at a fixed price on a future date. Risks may arise upon entering
these contracts from the potential inability of counter-parties
to meet the terms of their contracts and from unanticipated
movements in their value of a foreign currency relative to the
U.S. dollar. The funds typically utilize the contracts as a
hedge against fluctuation in currency values between the trade
and settlement dates of security transactions.
NOTE 4 - SUMMARY OF PURCHASES AND SALES OF INVESTMENTS
Micro-Cap has purchased $2,930,045 and had no sales of
securities for the period ended December 31, 1997, excluding
short-term obligations.
<PAGE>
CARILLON FUND, INC.
MICRO-CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the period.
<TABLE>
<CAPTION>
For the Period
From November 24, 1997
to December 31, 1997
----------------------
1997
----
<S> <C>
Net Asset Value,
Beginning of Year $ 10.00
Investment Activities:
Net investment income (loss) (.01)
Net realized and unrealized (.06)
gains / (losses) ---------
Total from Investment Operations (.07)
---------
Distributions:
Net investment income ----
Net realized gains ----
Total Distributions ----
----------
Net Asset Value,
End of Year $ 9.93
----------
Total Return (0.7%)
Ratios/Supplemental Data:
Ratio of Net Expenses to
Average Net Assets 2.00% <F1>
Ratio of Net Investment loss
to Average Net Assets (1.16%) <F1>
Portfolio Turnover Rate ----
Average Commission Rate Paid <F2> $ .0600
Net Assets, End of Year (000's)
$ 2,980
<FN>
<F1> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by 3.00%
for the period ended December 31, 1997, had the Adviser not reimbursed
expenses. These 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.
</FN>
</TABLE>
<PAGE>
PART C
OTHER INFORMATION
CARILLON FUND, INC.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements of Carillon Fund, Inc. are
included in Part B.
(b) Exhibits
(1) Articles of Incorporation of Carillon Fund, Inc. -
previously filed (initial filing on April 3, 1984)
(2) By-laws of Carillon Fund, Inc. - previously filed
(initial filing on April 3 1984)
(3) Not Applicable
(4) None
(5) (a) Investment Advisory Agreement - previously filed
(initial filing on April 3, 1984)
(b) Amendment to Investment Advisory Agreement -
previously filed (Post-Effective Amendment No. 3
- May 1, 1987)
(c) Amendment to Investment Advisory Agreement -
previously filed (Post-Effective Amendment No. 15
- May 1, 1996)
(6) None
(7) None
(8)(a) Custodian Agreement - previously filed (Post-
Effective Amendment No. 6 - May 1, 1990)
(b) Portfolio Accounting Agreement - previously filed
(Post-Effective Amendment No. 6 - May 1, 1990)
(9)(a) Transfer Agency Agreement - previously filed
(Post-Effective Amendment No. 6 - May 1, 1990)
(b) Service Agreement - previously filed (Post-
Effective Amendment No. 9 - May 1, 1992)
(10) Opinion and consent of counsel - previously filed
(Pre-Effective Amendment No. 1 - July 2 , 1984)
(11) Consent of Deloitte & Touche LLP - filed herewith
(12) None
(13) Letter regarding initial capital - previously
filed
(Pre-Effective Amendment No. 1 - July 2, 1984)
(14) Not Applicable
(15) Not Applicable
(16) None
Item 25. Persons Controlled by or Under Common Control with
Registrant
The Union Central Life Insurance Company ("Union Central")
provided the initial investment in Carillon Fund, Inc. Union
Central votes the shares of the Fund held with respect to
registered variable contracts in accordance with instructions
received from such variable contract owners. Shares of the Fund
held in unregistered separate accounts and in its general assets
are voted by Union Central in its discretion.
Set forth below is a chart showing the entities controlled by
Union Central, the jurisdictions in which such entities are
organized, and the percentage of voting securities owned by the
person immediately controlling each such entity.
THE UNION CENTRAL LIFE INSURANCE COMPANY,
its Subsidiaries and Affiliates
I. The Union Central Life Insurance Company (Ohio)
A. Carillon Investments, Inc. (Ohio) -100% owned
B. Carillon Marketing Agency, Inc. (Delaware) -100% owned
a. Carillon Marketing Agency of Alabama, Inc. (Alabama)
- 100% owned
b. Carillon Marketing Agency of Idaho, Inc. (Idaho)
-100% owned
c. Carillon Marketing Agency of Kentucky, Inc.
(Kentucky) - 100 owned
d. Carillon Marketing Agency of Maine, Inc. (Maine) -
100% owned
e. Carillon Insurance Agency of Massachusetts, Inc.
(Massachusetts) 100% owned
f. Carillon Marketing Agency of New Mexico, Inc.
(New Mexico) - 100% owned
g. Carillon Marketing Agency of Ohio, Inc. (Ohio)
-100% owned
h. Carillon Marketing Agency of Pennsylvania, Inc.
(Pennsylvania) 100% owned
i. Carillon Marketing Agency of Texas, Inc. (Texas)
- 100% owned
C. Carillon Advisers, Inc. (Ohio) -100% owned
a. First Summit Capital Management (Ohio) - 51% owned
D. The Manhattan Life Insurance Company (New York)
- 100% owned
E. Family Enterprise Institute, Inc. (Delaware)
- 100% owned
F. PRBA, Inc. (California) - 100% owned
a. Price, Raffel & Browne Administrators, Inc.
(Delaware) - 100% owned
G. B&B Benefits Administration, Inc. (California)
- 100% owned
II. Mutual Funds of the Carillon Group
A. Carillon Fund, Inc.* (Maryland)
B. Carillon Investment Trust** (Massachusetts)
* At January 31, 1998, The Union Central Life Insurance
Company owned 100% of the outstanding shares of Carillon Fund,
Inc.
** At January 31, 1998, The Union Central Life Insurance
Company owned 81% of the outstanding shares of Carillon
Investment Trust.
III. Summit Investment Trust (Massachusetts) - a mutual fund
whose investment adviser is First Summit Capital Management.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of January 31, 1998
<S> <C>
Equity Portfolio 1 (See Item 25)
Bond Portfolio 1 (See Item 25)
Capital Portfolio 1 (See Item 25)
S&P 500 Index Portfolio 1 (See Item 25)
Micro-Cap Portfolio 1 (See Item 25)
</TABLE>
***
Item 28. Business and other Connections of Investment Adviser
Information regarding the officers and directors of Carillon
Advisers, Inc. ("CAI") and their business, profession or
employment of a substantial nature during the last two years is
set forth below. The address of all the persons listed below is
1876 Waycross Road, Cincinnati, Ohio 45240.
<TABLE>
<CAPTION>
Name and Position with Principal Occupation(s)
Address the Adviser During Past Two Years
<S> <C> <S>
Harry Rossi Director Director Emeritus, The Union Central
Life Insurance Company ("Union Central");
Director, Carillon Group of Mutual Funds
John H. Jacobs Director Executive Vice President, Union Central;
Director, Carillon Group of Mutual Funds
George L. Clucas Director, Senior Vice President, Union Central;
President Director,President and Chief Executive
and Chief Officer, Carillon Group of Mutual Funds
Executive
Officer
Steven R. Vice President Vice President, Union Central
Sutermeister
D. Stephen Cole Vice President Vice President, Union Central
Thomas G. Knipper Treasurer Assistant Controller, Union Central;
Controller, Carillon Group of Mutual Funds
John F. Labmeier Secretary Second Vice President, Associate General
Counsel and Assistant Secretary, Union
Central; Vice President and Secretary,
Carillon Group of Mutual Funds and Carillon
Investments, Inc.
</TABLE>
Item 29. Principal Underwriters
None.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the Rules
thereunder will be maintained at the offices of the Fund or at
Firstar Trust Company (formerly known as First Wisconsin Trust
Company), Mutual Fund Services, P.O. Box 701, Milwaukee, WI
53201-0701.
Item 31. Management Services
All management-related service contracts are discussed in
Part A or B of this Registration Statement.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any such action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(d) Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of its latest annual
report to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant, Carillon
Fund, Inc., certifies that it meets all of the requirements for
effectiveness of this Post-effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Post-effective
Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the
City of Cincinnati, State of Ohio on the 30th day of April,
1998.
CARILLON FUND, INC.
(SEAL)
Attest: /s/ John F. Labmeier By: /s/ George L. Clucas
George L. Clucas, President
Pursuant to the requirements of the Securities Act of 1933,
this Post-effective Amendment to the Registration Statement has
been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ George L. Clucas President 4-30-98
George L. Clucas and Director
(Principal
Executive
Officer)
/s/ Thomas G. Knipper Controller 4-30-98
Thomas G. Knipper (Principal
Financial
and Accounting
Officer)
* /s/ George M. Callard, M.D. Director 4-30-98
George M. Callard, M.D.
* /s/ Theodore H Emmerich Director 4-30-98
Theodore H. Emmerich
* /s/ James M. Ewell Director 4-30-98
James M. Ewell
* /s/ Richard H. Finan Director 4-30-98
Richard H. Finan
* /s/ Jean Patrice Harrington, S.C. Director 4-30-98
Jean Patrice Harrington, S.C.
* /s/ John H. Jacobs Director 4-30-98
John H. Jacobs
* /s/ Charles W. McMahon Director 4-30-98
Charles W. McMahon
* /s/ Harry Rossi Director 4-30-98
Harry Rossi
</TABLE>
*By /s/ John F. Labmeier, pursuant to Power of Attorney
previously filed.
<PAGE>
TABLE OF EXHIBITS
(11) Consent of Deloitte & Touche LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 19 to
Registration Statement under the Securities Act of 1933, filed
under Registration Statement No. 2-90309, of our report dated
February 12, 1998, on the financial statements of Carillon Fund,
Inc., and to the reference to us under the captions "Financial
Highlights" and "Independent Auditors" appearing in the Statement
of Additional Information, which is part of such Registration
Statement.
/s/Deloitte & Touch LLP
DELOITTE & TOUCH LLP
Dayton, Ohio
April 27, 1998
