Registration No. 2-90309
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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. 21 X
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and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 22 X
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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
_________________
It is proposed that this filing will become effective (check
appropriate box)
( ) immediately upon filing pursuant to paragraph (b) of Rule 485
( ) on (date) 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
(X) on June 30, 1999 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>
This amendment No. 21 under the Securities Act of 1933, and
Amendment No. 22 under the Investment Company Act of 1940, to
the Registration Statement on Form N-1A of Carillon Fund, Inc.
is filed solely to add a prospectus and statement of additional
information for the newly-created Bond Index Portfolio and does
not otherwise delete, amend, or supersede any prospectus,
statement of additional information, exhibit, undertaking, or
other information contained in the Registration Statement.
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
June 30, 1999
CARILLON FUND, INC.
The Lehman Aggregate Bond Index Portfolio (the
"Portfolio") is one of eight investment portfolios comprising
series of Carillon Fund, Inc., an open-end, series, management
investment company.
The Portfolio's investment objective is to seek investment
results that correspond to the total return performance of the
bond market, as represented by the Lehman Brothers Aggregate
Bond Index.
We cannot assure you that the Portfolio will meet its
objective.
THIS PROSPECTUS CONTAINS INFORMATION YOU SHOULD KNOW BEFORE
ALLOCATING YOUR CONTRACT VALUES TO THE PORTFOLIO. WE SUGGEST
THAT YOU READ IT AND KEEP IT FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE.
NEITHER THE SEC NOR ANY STATE HAS DETERMINED WHETHER THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
INTRODUCTION TO THE FUND.....................................1
PORTFOLIO PROFILE............................................1
PORTFOLIO OPERATING EXPENSES.................................3
OTHER INVESTMENT POLICIES, STRATEGIES AND RISKS..............4
FOREIGN SECURITIES......................................4
FOREIGN CURRENCY TRANSACTIONS...........................4
JUNK BONDS..............................................5
REPURCHASE AGREEMENTS...................................5
REVERSE REPURCHASE AGREEMENTS...........................5
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS......5
COLLATERALIZED MORTGAGE OBLIGATIONS.....................7
LENDING PORTFOLIO SECURITIES............................7
MIXED FUNDING...........................................7
OTHER INFORMATION.......................................7
FUND MANAGEMENT..............................................8
INVESTMENT ADVISER......................................8
ADVISORY FEE............................................8
EXPENSES................................................8
CAPITAL STOCK...........................................8
VALUATION OF PORTFOLIO SHARES...........................8
DIVIDENDS AND DISTRIBUTIONS..................................9
TAXES........................................................9
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT...........10
PREPARING FOR YEAR 2000.....................................10
APPENDIX A: RATINGS........................................11
CORPORATE BOND RATINGS.................................11
COMMERCIAL PAPER RATINGS...............................12
APPENDIX B: PERFORMANCE TABLE...............................13
<PAGE>
INTRODUCTION TO THE FUND
This prospectus explains the objectives, risks and strategies of
the Lehman Aggregate Bond Index Portfolio (the "Portfolio"),
which is one of eight Portfolios of Carillon Fund, Inc. (the
"Fund"). The Portfolio is a mutual fund used solely as an
investment option for variable annuity or variable life
insurance contracts offered by The Union Central Life Insurance
Company ("Union Central"). Although you cannot purchase shares
of the Portfolio directly, you can instruct Union Central how
to allocate your contract's values to the Portfolio. The
Portfolio Profile below summarizes important facts about the
Portfolio, including its investment objective, strategy, risks
and past investment performance. More detailed information
about some of the Portfolio's investment policies and strategies
is provided after the Profile, along with information about
Portfolio expenses, share pricing and Financial Highlights for
the Portfolio.
PORTFOLIO PROFILE
Investment Objective
The Lehman Aggregate Bond Index Portfolio (the "Portfolio")
seeks investment results that correspond to the total return
performance of the bond market, as represented by the Lehman
Brothers Aggregate Bond Index (the "Lehman Bond Index").
The Lehman Bond Index is a market-weighted, intermediate-term
bond index which encompasses U.S. Treasury and agency securities
and investment grade corporate and international (dollar
denominated) bonds.
Investment Strategies
The Lehman Brothers Aggregate Bond Index Portfolio normally will
invest at least 80% of the value of its assets in:
- Obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities; or
- Publicly-traded or 144a debt securities rated BBB- or BAA3
or higher by a nationally recognized rating service such as
Standard & Poors or Moody's; or
- Cash and cash equivalents.
Up to 20% of the Portfolio's total assets may be invested in
financial futures or options contracts in an attempt to
replicate the total return performance of the Lehman Bond Index.
The Portfolio will NOT purchase bonds rated below investment
grade, commonly known as junk bonds. However, if a bond held in
the Portfolio is downgraded to a rating below investment grade,
the Portfolio may continue to hold the security until such time
as the Adviser deems it most advantageous to dispose of the
security.
The Portfolio will NOT directly purchase common stocks. However,
it may retain up to 5% 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
Portfolio may also write covered call options on U.S. Treasury
Securities and options on futures contracts for such securities.
A description of the corporate bond ratings assigned by Standard
& Poor's and Moody's is included in the Appendix.
The Portfolio will be unable to hold all of the individual
securities which comprise the Lehman Bond Index because of the
large number of securities involved. Therefore, the Portfolio
will hold a representative sample of the securities designed to
replicate the total return performance of the Lehman Bond Index.
The 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 Lehman Bond Index. A correlation of 100% would represent
perfect correlation between the Portfolio and index performance.
The correlation of the Portfolio's performance to that of the
Lehman Bond Index should increase as the Portfolio grows. There
can be no assurance that the Portfolio will achieve a 95%
correlation.
Although the Adviser will attempt to invest as much of the
Portfolio's assets as is practical in bonds included in the
Lehman Bond Index, futures contracts and options relating
thereto, a portion of the Portfolio may be retained in cash or
cash equivalents, or invested in money market instruments
pending investment or to meet redemption requests or other needs
for liquid assets.
Primary Risks
Interest rate risk: Interest rate risk is the potential for
fluctuation in bond prices due to changing interest rates. Bond
prices generally rise when interest rates fall. Likewise, bond
prices generally fall when interest rates rise. Furthermore,
the price of bonds with a longer maturity generally fluctuates
more than bonds with a shorter maturity. To compensate
investors for larger fluctuations, longer maturity bonds usually
offer higher yields than shorter maturity bonds. Interest rate
risk is a risk inherent in all bonds, regardless of credit
quality. Since the Portfolio is an intermediate term bond
portfolio, the interest rate risk is expected to be moderate.
Credit risk: Credit risk is the risk that an issuer of a
security will be unable to make payments of principal and/or
interest on a security held in the Portfolio. When an issuer
fails to make a scheduled payment of principal or interest on a
security, or violates other terms and agreements of a security,
the issuer and the security are in default. A default by the
issuer of a security generally has severe negative affect on the
market value of that security. The credit risk of the Portfolio
is a function of the credit quality of its underlying
securities. The average credit quality of the Portfolio is
expected to be very high. Therefore, the credit risk of the
Portfolio is expected to be low.
- - Income risk: Income risk is the risk of a decline in the
Portfolio's income due to falling market interest rates.
Income risk is generally higher for portfolios with short
term average maturities and lower for portfolios with long
term average maturities. Income risk is also generally
higher for portfolios that are actively traded and lower for
portfolios that are less actively traded. The Portfolio
maintains an intermediate average maturity and is expected to
be less actively traded. Therefore, its income risk is
expected to be moderate-to-low.
- Prepayment risk: Prepayment risk is the risk that, during
periods of declining interest rates, the principal of
mortgage-backed securities and callable bonds will be repaid
earlier than scheduled, and the portfolio manager will be
forced to reinvest the unanticipated repayments at generally
lower interest rates. The Portfolio's exposure to mortgage-
backed securities and callable bonds is expected to be
moderate. Therefore, the prepayment risk of the Portfolio is
expected to be moderate.
- - Correlation risk: Because the Portfolio has expenses, and
the Lehman Bond Index does not, the Portfolio may be unable
to replicate precisely the performance of the Index. While
the Portfolio remains small, it may have a greater risk that
its performance will not match that of the Index.
PORTFOLIO OPERATING EXPENSES
EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
Bond Index
Portfolio
----------
<S> <C>
Management Fees .30%
Other Expenses .30%
-----
Total Operating Expenses .60%*
</TABLE>
* Total Operating Expenses in excess of .60% are paid by the
Adviser.
EXAMPLE
The table below shows the amount of expenses a Shareholder would
pay on a $10,000 investment assuming a 5% annual return.+
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Bond Index Portfolio $62 $193 N/A N/A
</TABLE>
The purpose of this table is to help you understand the
Portfolio expenses that you may bear indirectly through your
purchase of a Union Central contract. THIS TABLE DOES NOT
INCLUDE ANY CONTRACT OR VARIABLE ACCOUNT CHARGES. Those
charges, along with the Portfolio's expenses, are contained in
the prospectus for your contract.
This table should not be considered a representation of past or
future expenses. Actual expenses may be more or less than those
shown.
- -----------
+ 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 Portfolio.
OTHER INVESTMENT POLICIES, STRATEGIES AND RISKS
FOREIGN SECURITIES
The Portfolio may invest in foreign securities that are suitable
for its investment objectives and policies. However, each
security must be dollar-denominated and be rated investment
grade (BBB- or BAA3 or higher) at the time of purchase. The
Portfolio may not invest more than 35% of its total assets in
foreign securities in aggregate. Furthermore, the Portfolio may
not invest more than 10% of its total assets in any one foreign
countries securities.
Investing in foreign securities involves risks which are not
ordinarily associated with investing in domestic securities,
including:
- political or economic instability in the foreign country;
- diplomatic developments that could adversely affect the
value of the foreign security;
- foreign government taxes;
- costs incurred by the Portfolio in converting among various
currencies;
- fluctuation in currency exchange rates;
- the possibility of imposition of currency controls,
expropriation or nationalization measures or withholding
dividends at the source;
- in the event of a default on a foreign debt security,
possible difficulty in obtaining or enforcing a judgment
against the issuer;
- less publicly available information about foreign issuers
than domestic issuers;
- foreign accounting and financial reporting requirements are
generally less extensive than those in the U.S.;
- securities of foreign issuers are generally less liquid and
more volatile than those of comparable domestic issuers;
- there is often less governmental regulation of exchanges,
broker-dealers and issuers and brokerage costs may be
higher than in the United States.
Foreign securities purchased by the Portfolio 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.
FOREIGN CURRENCY TRANSACTIONS
The Portfolio will NOT engage in forward foreign currency
contracts ("forward contracts") in connection with the purchase
or sale of any 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.
JUNK BONDS
The Portfolio may not purchase any bond rated below the four
highest grades used by Standard & Poor's or Moody's (frequently
referred to as "junk" bonds). However, if a bond held in the
Portfolio is downgraded to a rating below investment grade, the
Portfolio may continue to hold the security until such time as
the Adviser deems it most advantageous to dispose of the
security.
Junk bonds present greater credit and market risks than higher
rated bonds. Such risks relate not only to the greater financial
weakness of the issuers of such securities but also to other
factors including:
- greater likelihood that 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 than is the case with higher-rated bonds;
- greater likelihood that redemption or call provisions, if
exercised in a period of lower interest rates, would result
in the bonds being replaced by lower yielding securities;
- limited trading markets that may make it more difficult to
dispose of the bonds and more difficult to determine their
fair value.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction where the 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
Portfolio is not expected to engage extensively in repurchase
agreements, but may engage in them from time to time. 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 these 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.
REVERSE REPURCHASE AGREEMENTS
The 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. While a reverse repurchase agreement is in
effect, the Custodian will segregate from other Portfolio assets
an amount of cash or liquid high quality debt obligations equal
in value to the repurchase price (including any accrued
interest).
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
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 financial futures contract is
closed out by buying or selling an identical offsetting futures
contract or by delivering the agreed upon security at the
expiration of the 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 its 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.
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. The
Portfolio 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). These
Portfolios may purchase call option contracts to close out a
position acquired through the sale of a call option.
The Portfolio may write and purchase covered call and put
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.
COLLATERALIZED MORTGAGE OBLIGATIONS
The 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 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.
LENDING PORTFOLIO SECURITIES
The 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. 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 will be made only to borrowers that the
Adviser deems to be of good financial standing.
MIXED FUNDING
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 contract owners 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 the Portfolio at prices equal to
the net asset value of the shares of the Portfolio.
OTHER INFORMATION
In addition to the investment policies described above, the
Portfolio's investment program is subject to further
restrictions which are described in the Statement of Additional
Information. Unless otherwise specified, the 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.
FUND MANAGEMENT
INVESTMENT ADVISER
The Adviser is Carillon Advisers, Inc., 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
the Portfolio and provides administrative services and manages
the Fund's business affairs.
Gary R. Rodmaker, CFA is primarily responsible for the day-to-
day management of the Portfolio. 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.
ADVISORY FEE
The Fund pays the Adviser, as full compensation for all facilities
and services furnished, a monthly fee equal to .30% of the current
value of the net assets of the Portfolio.
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 Lehman Bond
Index Portfolio, other than the advisory fee for that Portfolio,
to the extent that such expenses exceed .30% of the Portfolio's
net assets.
CAPITAL STOCK
The Fund currently has eight 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 its 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 its contract owners.
VALUATION OF PORTFOLIO SHARES
The net asset value of the shares of the 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:
- when the New York Stock Exchange is closed and
- any day on which changes in the value of the Portfolio
securities of the Fund will not materially affect the
current net asset value of the shares of a Portfolio.
Portfolio shares are valued 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 Portfolio, 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 Fund's 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
The Fund intends to distribute substantially all of the net
investment income, if any, of the Portfolio. For dividend
purposes, net investment income of the Portfolio consists of all
dividends or interest earned by the Portfolio, minus estimated
expenses (including the investment advisory fee). All net
realized capital gains, if any, of the Portfolio are distributed
periodically, no less frequently than annually. All dividends
and distributions of the Portfolio are reinvested in additional
shares of the Portfolio at net asset value.
TAXES
The 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 the Portfolio qualifies as a "regulated
investment company" and complies with the appropriate provisions
of the Code, the Portfolio will pay no federal income taxes on
the amounts distributed.
Because the sole shareholder of the Fund is Union Central, no
discussion is included herein as to the federal income tax
consequences to shareholders. For information about the federal
tax consequences of purchasing the contracts, see the prospectus
for your contract.
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, Fund management does not
anticipate 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 Fund management that it currently
anticipates that its systems will be Year 2000 compliant on or
about June 30, 1999, but there can be no assurance that it will
be successful, or that interaction with other service providers
will not impair the Adviser's services at that time.
<PAGE>
APPENDIX A: RATINGS
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 Rating Services
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:
- management;
- economic evaluation of the industry and an appraisal of
speculative type risks which may be inherent in certain
areas;
- competition and customer acceptance of products;
- liquidity;
- amount and quality of long-term debt;
- ten-year earnings trends;
- financial strength of a parent company and the
relationships which exist with the issuer; and
- 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 Rating Services
Commercial paper rated A by Standard & Poor's Rating Services
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>
APPENDIX B: PERFORMANCE TABLE
The table below provide an indication of the risk of investing
in the Portfolio. The table shows the Lehman Bond Index average
annual returns for one year, five years, and ten years. The
Lehman Bond Index returns are not adjusted for the expected
expenses of the Portfolio and do NOT reflect the additional fees
and expenses of your variable annuity or variable life insurance
contract. If those contract fees and expenses were included,
the returns would be lower. Keep in mind that the past
performance of the Lehman Bond Index does not indicate how it
will perform in the future.
<TABLE>
<CAPTION>
Average Annual Total Returns for Years Ended December 31, 1998
1 Year 5 Years 10 Years
<S> <C> <C> <C>
Lehman Bond Index 8.67% 7.27% 9.26%
</TABLE>
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
CARILLON FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
June 30, 1999
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 June 30, 1999, 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 (4).......................................2
Money Market Instruments and Investment Techniques...........2
Certain Risk Factors Relating to High-Yield, High-Risk Bonds.5
Investments in Foreign Securities............................6
Futures Contracts............................................7
Options......................................................7
Lending Portfolio Securities................................11
Investment Restrictions......................................11
Portfolio Turnover...........................................14
Management of the Fund (8)...................................15
Directors and Officers......................................15
Investment Adviser..........................................17
Payment of Expenses.........................................18
Advisory Fee................................................19
Investment Advisory Agreement...............................19
Administration..............................................20
Service Agreement...........................................20
Securities Activities of Adviser............................20
Determination of Net Asset Value (8).........................21
Purchase and Redemption of Shares (8)........................21
Taxes (9)....................................................22
Portfolio Transactions and Brokerage.........................22
General Information (1)......................................23
Capital Stock..............................................23
Voting Rights..............................................24
Additional Information.....................................25
Independent Auditors.........................................25
- -----
( ) indicates page on which the corresponding section appears in
the Prospectus.
UCCF 515B 6-99
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. The Lehman Aggregate Bond Index Portfolio
(the "Portfolio") may purchase money market instruments.
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., the Portfolio) 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 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 the
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, the Portfolio 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 the 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 the Portfolio. At the time
of delivery of the securities, the value may be more or less
than the purchase price. The Portfolio will also establish a
segregated account with the Fund's custodian bank in which it
will maintain cash or cash equivalents or other Portfolio
securities equal in value to commitments for such when-issued or
delayed-delivery securities.
GNMA Certificates GNMA certificates are mortgage-backed
securities representing part ownership of a pool of mortgage
loans on which timely payment of interest and principal is
guaranteed by the full faith and credit of the U.S. government.
GNMA certificates differ from typical bonds because principal is
repaid monthly over the term of the loan rather than returned in
a lump sum at maturity. Because both interest and principal
payments (including prepayments) on the underlying mortgage
loans are passed through to the holder of the certificate, GNMA
certificates are called "pass-through" securities.
Although the mortgage loans in the pool have maturities of
up to 30 years, the actual average life of the GNMA certificates
typically will be substantially less because the mortgages are
subject to normal principal amortization and may be prepaid
prior to maturity. Prepayment rates vary widely and may be
affected by changes in market interest rates. In periods of
falling interest rates, the rate of prepayment tends to
increase, thereby shortening the actual average life of the GNMA
certificates. Conversely, when interest rates are rising, the
rate of prepayment tends to decrease, thereby lengthening the
actual average life of the GNMA certificates. Accordingly, it is
not possible to predict accurately the average life of a
particular pool. Reinvestment of prepayments may occur at higher
or lower rates that the original yield on the certificates. Due
to the prepayment feature and the need to reinvest prepayments
of principal at current rates, GNMA certificates can be less
effective than typical bonds of similar maturities at "locking-
in" yields during periods of declining interest rates, although
they may have comparable risks of decline in value during
periods of rising interest rates.
FNMA and FHLMC Mortgage-Backed Obligations The Federal
National Mortgage Association ("FNMA"), a federally chartered
and privately owned corporation, issues pass-through securities
representing an interest in a pool of conventional mortgage
loans. FNMA guarantees the timely payment of principal and
interest but this guarantee is not backed by the full faith and
credit of the U.S. government. The Federal Home Loan Mortgage
Corporation ("FHLMC"), a corporate instrumentality of the United
States, issues participation certificates that represent an
interest in a pool of conventional mortgage loans. FHLMC
guarantees the timely payment of interest and the ultimate
collection of principal and maintains reserves to protect
holders against losses due to default, but the certificates are
not backed by the full faith and credit of the U.S. government.
As is the case with GNMA certificates, the actual maturity of
and realized yield on particular FNMA and FHLMC pass-through
securities will vary based on the prepayment experience of the
underlying pool of mortgages.
Mortgage-Related Securities The 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).
The 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.
The 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
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 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 the
Portfolio is uninvested and no return is earned thereon. The
inability of the 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 the 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. The 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 Portfolio 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 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 Portfolio reaches $25 million in net assets, the
Portfolio may invest up to 100% of its assets in such futures
and/or options contracts. Thereafter, the Portfolio may invest
up to 20% of its assets in such futures and/or options
contracts.
A financial futures contract is a contract to buy or sell a
specified quantity of financial instruments such as U.S.
Treasury bills, notes and bonds, commercial paper and bank
certificates of deposit or the cash value of a financial
instrument index at a specified future date at a price agreed
upon when the contract is made.
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 or delivering the security agreed
upon in the 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.
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 Portfolio 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 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, the Portfolio may terminate
its obligation by effecting a closing purchase transaction.
This is accomplished by purchasing an option of the same series
as the option previously written. However, once the Portfolio
has been assigned an exercise notice, the Portfolio will be
unable to effect a closing purchase transaction. There can be
no assurance that a closing purchase transaction can be effected
when the Portfolio so desires.
The Portfolio will realize a profit from a closing
transaction if the price of the transaction is less than the
premium received from writing the option; the Portfolio will
realize a loss from a closing transaction if the price of the
transaction is more than the premium received from writing the
option. Since the market value of call options generally
reflects increases in the value of the underlying security, any
loss resulting from the closing transaction may be wholly or
partially offset by unrealized appreciation of the underlying
security. Conversely, any gain resulting from the closing
transaction may be wholly or partially offset by unrealized
depreciation of the underlying security. The principal factors
affecting the market value of call options include supply and
demand, the current market price and price volatility of the
underlying security, and the time remaining until the expiration
date.
There is no assurance that a liquid secondary market will
exist for any particular option. In the event it is not
possible to effect a closing transaction, the Portfolio will not
be able to sell the underlying security, until the option
expires or the option is exercised by the holder.
The Portfolio will effect a closing transaction to realize
a profit on an outstanding call option, to prevent an underlying
security from being called, to permit the sale of an underlying
security prior to the expiration date of the option, or to allow
for the writing of another call option on the same underlying
security with either a different exercise price or expiration
date or both.
Possible reasons for the absence of a liquid secondary
market on an exchange include the following: (a) insufficient
trading interest in certain options; (b) restrictions on
transactions imposed by an exchange; (c) trading halts,
suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying
securities; (d) inadequacy of the facilities of an exchange or
the Clearing Corporation to handle trading volume; or (e) a
decision by one or more exchanges to discontinue the trading of
options or impose restrictions on types of orders. There can be
no assurance that higher than anticipated trading activity or
order flow or other unforeseen events might not at times render
the trading facilities inadequate and thereby result in the
institution of special trading procedures or restrictions which
could interfere with the Portfolio's ability to effect closing
transactions.
The Portfolio 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
Portfolio 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.
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.
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 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.
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental restrictions
relating to the investment of assets of the Portfolio 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 the 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 the Portfolio may purchase securities
of issuers which invest or deal in any of the above, and except
that the 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 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 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 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
the 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 the 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 the Portfolio may purchase securities of
issuers which invest or deal in any of the above, and except
that the 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.
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 Portfolio 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 Portfolio reaches $25 million in
net assets, the 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
The Portfolio's annual rate of Portfolio turnover 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 the 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 Portfolio and
its 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 rate for the Portfolio
is expected to be 20%.
MANAGEMENT OF THE FUND
Directors and Officers
The directors and executive officers of the Fund and their
principal occupations during the past five years are set forth below.
Unless otherwise noted, the address of each executive officer and
director is 1876 Waycross Road, Cincinnati, Ohio 45240.
<TABLE>
<CAPTION>
Name, Address Position(s) with Principal Occupation(s)
and Age the Fund During Past Five Years
- ------------- ---------------- ----------------------
<S> <C> <C>
George M. Callard, M.D. Director Professor of Clinical Surgery,
2345 Bedford Avenue University of Cincinnati
Cincinnati, Ohio 45208
(Age 65)
Theodore H. Emmerich Director Consultant; former Partner,
1201 Edgecliff Place Ernst & Whinney, Accountants
Cincinnati, Ohio 45206
(72)
James M. Ewell Director Retired Senior Vice President
9000 Indian Ridge Road and Director, The Procter and
Cincinnati, Ohio 45243 Gamble Company
(83)
Richard H. Finan Director Attorney at Law; President of
11137 Main Street the Ohio State Senate
Cincinnati, Ohio 45241
(64)
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
(76) Youth Collaborative; President
Emeritus (formerly, President)
College of Mount St. Joseph
John H. Jacobs* Director, President and Chief Operating
(52) President Officer, Union Central;
and Chief Director, President and Chief
Executive Executive Officer, Carillon
Officer Advisers, Inc. ("Adviser");
Director, Carillon Investments,
Inc.; prior to July, 1998,
Officer and employee, Union
Central
Charles W. McMahon Director Retired Senior Vice President
19 Iron Woods Drive and Director, Union Central
Cincinnati, Ohio 45239
(79)
Harry Rossi* Director Director Emeritus, Union
8548 Wyoming Club Drive Central; Director, Adviser;
Cincinnati, Ohio 45215 former Chairman, President and
(79) Chief Executive Officer, Union
Central
Stephen R. Hatcher Senior Vice Executive Vice President and
(56) President Chief Financial Officer, Union
Central; prior to June, 1995,
Officer and employee, Union
Central
John F. Labmeier Vice President Vice President, Associate
(50) and Secretary General Counsel and Assistant
Secretary, Union Central; Vice
President and Secretary,
Carillon Investments, Inc.;
Secretary, Adviser
Thomas G. Knipper Controller Treasurer, Adviser; prior to
(41) July, 1995, Treasurer of The
Gateway Trust and Vice
President and Controller of
Gateway Advisers, Inc.
John M. Lucas Assistant Counsel and Assistant to
(48) Secretary Secretary, Union Central
</TABLE>
* Messrs. 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 1998 were $63,657.
<TABLE>
<CAPTION>
Compensation Table
(1) (2) (3) (4) (5)
Name of Person, Aggregate Pension or Estimated Total
Position Compensation Retirement Annual Compensation
From Benefits Benefits From
Registrant Accrued As Upon Registrant
Part of Fund Retirement and Fund
Expenses Complex*
Paid to
Directors
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
George M. Callard, $14,800 -- -- $14,800
M.D.
Director
Theodore H. Emmerich $15,900 -- -- $15,900
Director
James M. Ewell $15,300 -- -- $15,300
Director
Richard H. Finan $15,300 -- -- $15,300
Director
Jean Patrice
Harrington, S.C. $15,500 -- -- $15,500
Director
John H. Jacobs N/A N/A N/A N/A
Director
Charles W. McMahon $14,800 -- -- $14,800
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, 1998, the total
amount deferred, including interest, was as follows: Dr.
Callard - $88,337; Mr. McMahon - $116,300.
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 John H. Jacobs, President and Chief
Executive Officer; Harry Rossi, Director; 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 the Portfolio, is responsible for the actual management of
the 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 Portfolio in a manner consistent with its 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
the Portfolio.
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.
The 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
Portfolio other than the advisory fee for the Portfolio, to the
extent that such expenses exceed .30% of the 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.
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 19, 1999 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 26, 1999, the Board of Directors took steps to
activate the Portfolio by authorizing the issuance of shares of
the Portfolio. On June 18, 1999, the Board of Directors also
approved an amendment to the Investment Advisory Agreement
making the Agreement applicable to the 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 Portfolio shares and that therefore only the
holders of Portfolio shares were entitled to vote on the
amendment. It is anticipated that the sole shareholder of the
Portfolio will approve the Agreement as amended on or about July
1, 1999.
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 .05% of the average net assets of the
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. It
is anticipated that the sole shareholder of the Portfolio will
approve the Service Agreement on or about July 1, 1999.
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 Portfolio, 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
The Portfolio will be treated as a separate entity for
federal income tax purposes. The 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 the 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 the 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 the 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 Portfolio will not necessarily be paying the lowest spread
or commission available.
If the securities in which the Portfolio 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 the 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.
GENERAL INFORMATION
Capital Stock
The Fund is a mutual fund. Its board of directors is
responsible for supervising its business affairs and
investments, which are managed on a daily basis by the Adviser.
The Fund was incorporated under the laws of the State of
Maryland on January 30, 1984. The Fund is a series fund with
eight classes of stock, one for each Portfolio. The authorized
capital stock of the Fund consists of one hundred and ninety
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; Micro-Cap
Portfolio consisting of twenty million shares; S&P MidCap 400
Index Portfolio, consisting of twenty million shares; Balanced
Index Portfolio, consisting of twenty million shares; and Bond
Index 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.
<PAGE>
PART C
OTHER INFORMATION
CARILLON FUND, INC.
PART C - OTHER INFORMATION
Item 23. Exhibits
All references are to Registrant's Registration Statement on
Form N-1A (Registration No. 2-90309)
(a) Articles of Incorporation of Carillon Fund, Inc. -
previously filed (initial filing on April 3, 1984)
(b) By-laws of Carillon Fund, Inc. - previously filed
(initial filing on April 3 1984)
(c) Not Applicable
(d) (1) Investment Advisory Agreement - previously filed
(initial filing on April 3, 1984)
(2) Amendment to Investment Advisory Agreement -
previously filed (Post-Effective Amendment No. 3 -
May 1, 1987)
(3) Amendment to Investment Advisory Agreement -
previously filed (Post-Effective Amendment No. 15 -
May 1, 1996)
(e) Not Applicable
(f) Not Applicable
(g) (1) Custodian Agreement - previously filed
(Post-Effective Amendment No. 6 - May 1, 1990)
(2) Portfolio Accounting Agreement - previously filed
(Post-Effective Amendment No. 6 - May 1, 1990)
(h) (1) Transfer Agency Agreement - previously filed
(Post-Effective Amendment No. 6 - May 1, 1990)
(2) Service Agreement - previously filed (Post-Effective
Amendment No. 9 - May 1, 1992)
(i) Opinion and consent of counsel - previously filed
(Pre-Effective Amendment No. 1 - July 2 , 1984)
(j) Not applicable
(k) Not Applicable
(l) Letter regarding initial capital - previously filed
(Pre-Effective Amendment No. 1 - July 2, 1984)
(m) Not Applicable
(n) Not applicable
(o) Not Applicable
Item 24. 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
<PAGE>
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
H. Summit Investment Partners, LLC (Ohio) - 100% owned
a. First Summit Capital Management (Ohio) - 51% owned
II. Mutual Funds of the Carillon Group
A. Carillon Fund, Inc.* (Maryland)
B. Carillon Investment Trust** (Massachusetts)
* At December 1, 1998, The Union Central Life Insurance
Company owned 100% of the outstanding shares of Carillon Fund,
Inc.
** At December 1, 1998, The Union Central Life Insurance
Company owned 92% 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 25. Indemnification
See Exhibits (a) and (b).
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.
Item 26. Business and other Connections of Investment Adviser
Information regarding the officers and directors of Carillon
Advisers, Inc. ("CAI") and their business, profession or
employment of a substantial nature during the last two years is
set forth below. The address of all the persons listed below is
1876 Waycross Road, Cincinnati, Ohio 45240.
<TABLE>
<CAPTION>
Name and Position with Principal Occupation(s)
Address the Adviser During Past Two Years
- ------- ------------ ----------------------
<S> <C> <C>
Harry Rossi Director Director Emeritus, The Union Central
Life Insurance Company ("Union
Central"); Director, Carillon Group
of Mutual Funds
John H. Jacobs Director, President and Chief Operating
President and Officer, Union Central; Director,
Chief President and Chief Executive
Executive Officer,Carillon Group of Mutual
Officer Funds; prior thereto, Executive Vice
President, Union Central
D. Stephen Cole Vice President Vice President, Union Central
Thomas G. Knipper Treasurer Treasurer, CAI; Controller and
Treasurer, Carillon Group of Mutual
Funds
John F. Labmeier Secretary 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 27. Principal Underwriters
None.
Item 28. 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 Mutual Fund Services, LLC, P.O. Box 701, Milwaukee, WI
53201-0701.
Item 29. Management Services
All management-related service contracts are discussed in Part A
or B of this Registration Statement.
Item 30. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of its latest annual report
to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant, Carillon
Fund, Inc., has duly caused this Post-effective Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Cincinnati,
State of Ohio on the 15th day of April, 1999.
CARILLON FUND, INC.
(SEAL)
Attest: /s/ John F. Labmeier By: /s/ John H. Jacobs
John H. Jacobs, 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/ John H. Jacobs President 4/15/99
John H. Jacobs and Director
(Principal
Executive
Officer)
/s/ Thomas G. Knipper Controller 4/15/99
Thomas G. Knipper and Treasurer
(Principal
Financial
and Accounting
Officer)
* /s/ George M. Callard, M.D. Director 4/15/99
George M. Callard, M.D.
* /s/ Theodore H Emmerich Director 4/15/99
Theodore H. Emmerich
* /s/ James M. Ewell Director 4/15/99
James M. Ewell
* /s/ Richard H. Finan Director 4/15/99
Richard H. Finan
* /s/ Jean Patrice Harrington, S.C. Director 4/15/99
Jean Patrice Harrington, S.C.
* /s/ Charles W. McMahon Director 4/15/99
Charles W. McMahon
* /s/ Harry Rossi Director 4/15/99
Harry Rossi
</TABLE>
*By John F. Labmeier, pursuant to Power of Attorney previously
filed.
