May 1, 2000
SUMMIT MUTUAL FUNDS, INC.
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Summit Mutual Funds, Inc., formerly known as Carillon Fund,
Inc., is a mutual fund with twenty-two separate Portfolios,
each with its own investment objective. We cannot assure you
that any Portfolio will meet its objective. This Prospectus
offers seven of the Portfolios within the Summit Pinnacle
Series. Their investment objectives are:
The S&P 500 Index Portfolio seeks investment results
that correspond to the total return performance of U.S.
common stocks, as represented by the S&P 500 Index.
The S&P MidCap 400 Index Portfolio seeks investment
results that correspond to the total return performance
of U.S. common stocks, as represented by the S&P MidCap
400 Index.
The Russell 2000 Small Cap Index Portfolio seeks
investment results that correspond to the investment
performance of U.S. common stocks, as represented
by the Russell 2000 Index.
The Nasdaq-100 Index Portfolio seeks investment results
that correspond to the investment performance of U.S.
common stocks, as represented by the Nasdaq-100 Index.
The Balanced Index Portfolio seeks investment results, with
respect to 60% of its assets, that correspond to the total
return performance of U.S. common stocks, as represented by the
S&P 500 Index and, with respect to 40% of its assets, that
correspond to the total return performance of investment grade
bonds, as represented by the Lehman Brothers Aggregate Bond
Index.
The Zenith Portfolio, formerly known as the Equity
Portfolio, seeks primarily long-term appreciation of capital,
without incurring unduly high risk, by investing primarily in
common stocks and other equity securities. Current income is a
secondary objective.
The Bond Portfolio seeks as high a level of current income
as is consistent with reasonable investment risk, by investing
primarily in long-term, fixed-income, investment-grade corporate
bonds.
This prospectus contains information you should know before
allocating your contract values to any of the Portfolios. 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.
SMFI 514 PINNACLE 4-00
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TABLE OF CONTENTS
INTRODUCTION TO THE FUND......................................3
PORTFOLIO PROFILES............................................3
S&P 500 INDEX PORTFOLIO PROFILE..........................3
S&P MIDCAP 400 INDEX PORTFOLIO................................5
RUSSELL 2000 SMALL CAP INDEX PORTFOLIO........................6
NASDAQ-100 INDEX PORTFOLIO....................................7
BALANCED INDEX PORTFOLIO......................................8
ZENITH PORTFOLIO PROFILE.....................................10
BOND PORTFOLIO PROFILE.......................................12
PORTFOLIO OPERATING EXPENSES.................................14
0THER INVESTMENT POLICIES, STRATEGIES AND RISKS..............15
FOREIGN SECURITIES...........................................15
FOREIGN CURRENCY ............................................16
REPURCHASE AGREEMENTS........................................16
REVERSE REPURCHASE AGREEMENTS................................17
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS...........17
OPTIONS ON SECURITIES INDICES................................18
COLLATERALIZED MORTGAGE OBLIGATIONS..........................19
ENDING PORTFOLIO SECURITIES..................................19
FIXED FUNDING................................................19
OTHER INFORMATION............................................19
FUND MANAGEMENT..............................................20
INVESTMENT ADVISER...........................................20
ADVISORY FEE.................................................20
EXPENSES.....................................................21
CAPITAL STOCK................................................21
VALUATION OF PORTFOLIO SHARES................................21
DIVIDENDS AND DISTRIBUTIONS..................................22
S&P, FRANK RUSSELL AND NASDAQ DISCLAIMER.....................23
FINANCIAL HIGHLIGHTS.........................................24
APPENDIX A: RATINGS.........................................29
CORPORATE BOND RATINGS.......................................29
COMMERCIAL PAPER RATINGS.....................................30
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INTRODUCTION TO THE FUND
This prospectus explains the objectives, risks and strategies of
seven of the Portfolios within the Summit Pinnacle Series of
Summit Mutual Funds, Inc. (the "Fund"). The Portfolios are
mutual funds used solely as investment options 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 Portfolios directly,
you can instruct Union Central how to allocate your contract's
values among the Portfolios. Each 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
Portfolios' investment policies and strategies is provided after
the Profiles, along with information about Portfolio expenses,
share pricing and Financial Highlights for each Portfolio.
PORTFOLIO PROFILES
S&P 500 INDEX PORTFOLIO PROFILE
Investment Objective
The S&P 500 Index Portfolio seeks investment results that
correspond to the total return performance of U.S. common
stocks, as represented by the S&P 500 Index.
Investment Strategies
The S&P 500 Index Portfolio seeks to substantially replicate the
total return of the securities comprising the S&P 500 Index,
taking into consideration redemptions, sales of additional
shares, and other adjustments described below. Precise
replication of the capitalization weighting of the securities in
the S&P 500 is not feasible. The Index Portfolio will attempt
to achieve, in both rising and falling markets, a correlation of
at least 95% between the total return of its net assets before
expenses and the total return of the S&P 500. A correlation of
100% would represent perfect correlation between the Portfolio
and index performance. The correlation of the Portfolio's
performance to that of the S&P 500 should increase as the
Portfolio grows. There can be no assurance that the Portfolio
will achieve a 95% correlation.
The S&P 500 Index Portfolio may invest up to 5% of its assets in
Standard & Poor's Depositary Receipts(R) ("SPDRs(R)"). SPDRs are
units of beneficial interest in a unit investment trust,
representing proportionate undivided interests in a portfolio of
securities in substantially the same weighting as the common
stocks that comprise the S&P 500.
Although the Adviser will attempt to invest as much of the S&P
500 Index Portfolio's assets as is practical in stocks included
among the S&P 500 and futures contracts and related options, a
portion of the Portfolio may be invested in money market
instruments pending investment or to meet redemption requests or
other needs for liquid assets. In addition, for temporary
defensive purposes, the Portfolio may invest in government
securities, money market instruments, or other fixed-income
securities, or retain cash or cash equivalents.
Primary Risks
- - Market risk: The S&P 500 Index Portfolio's total return,
like stock prices generally, will fluctuate within a wide range
in response to stock market trends, so a share of the Portfolio
could drop in value over short or even long periods. Stock
markets tend to move in cycles, with periods of rising prices
and periods of falling prices.
- - Investment style risk: Stocks of large companies, such as
those listed among the S&P 500 Index, occasionally go through
cycles of doing worse (or better) than the stock markets in
general or other types of investments.
- - Correlation risk: Because the S&P Index Portfolio has
expenses, and the S&P 500 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.
Bar Chart and Performance Table
The bar chart and table below provide an indication of the risk
of investing in the S&P 500 Index Portfolio. The bar chart
shows the Portfolio's performance in each calendar year since
its inception. The table shows how the Portfolio's average
annual returns for one year and since inception compare with
those of the S&P 500 Index whose performance it seeks to
replicate. The Portfolio's returns are net of its expenses, but
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 Portfolio's past performance does not
indicate how it will perform in the future.
[The BAR CHART displayed here shows the Total Returns for the
calendar years as follows:
1996 23.37%
1997 32.72%
1998 28.54%
1999 20.52% ]
The S&P 500 Index Portfolio's return for the most recent
calendar quarter ended March 31, 2000, was 2.2 %. During the
period shown in the bar chart, the highest return for a calendar
quarter was 21.2% (quarter ending 12/31/98) and the lowest
return for a quarter was -9.9% (quarter ending 9/30/98).
Average Annual Total Returns for Years Ended December 31, 1999
1 Year Since Inception*
S&P 500 Index Portfolio 20.5% 26.2%
S&P 500 Index 21.0% 26.3%
*December 29, 1995
S&P MIDCAP 400 INDEX PORTFOLIO PROFILE
Investment Objective
The S&P MidCap 400 Index Portfolio seeks investment results that
correspond to the total return performance of U.S. common
stocks, as represented by the S&P MidCap 400 Index.
Investment Strategies
The S&P MidCap 400 Index Portfolio seeks to substantially
replicate the total return of the securities comprising the S&P
MidCap 400 Index, taking into consideration redemptions, sales
of additional shares, and other adjustments described below.
Precise replication of the capitalization weighting of the
securities in the S&P MidCap 400 Index is not feasible. The
Carillon S&P MidCap 400 Index Portfolio will attempt to
achieve, in both rising and falling markets, a correlation of at
least 95% between the total return of its net assets before
expenses and the total return of the S&P MidCap 400 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 S&P MidCap 400 Index
should increase as the Portfolio grows. There can be no
assurance that the Portfolio will achieve a 95% correlation.
The S&P MidCap 400 Index Portfolio may invest up to 5% of its
assets in Standard & Poor's MidCap Depositary Receipts ("MidCap
SPDR's "). MidCap SPDR's are units of beneficial interest in a
unit investment trust, representing proportionate undivided
interests in a portfolio of securities in substantially the same
weighting as the common stocks that comprise the S&P MidCap 400
Index.
Although the Adviser will attempt to invest as much of the S&P
MidCap 400 Index Portfolio's assets as is practical in stocks
included among the S&P MidCap 400 Index and futures contracts
and options relating thereto, a portion of the Portfolio may be
invested in money market instruments pending investment or to
meet redemption requests or other needs for liquid assets. In
addition, for temporary defensive purposes, the Portfolio may
invest in government securities, money market instruments, or
other fixed-income securities, or retain cash or cash
equivalents.
Since this Portfolio has not been in effect for at least one
calendar year, there is no bar chart or performance table.
Primary Risks
- - Market risk: The S&P MidCap 400 Index Portfolio's total
return, like stock prices generally, will fluctuate within a
wide range in response to stock market trends, so a share of the
Portfolio could drop in value over short or even long periods.
Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices.
Investment style risk: Stocks of medium sized (MidCap)
companies, such as those listed among the S&P MidCap 400 Index
occasionally go through cycles of doing worse (or better) than
the stock markets in general or other types of investments.
- - Correlation risk: Because the S&P MidCap 400 Index Portfolio
has expenses, and the S&P MidCap 400 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.
RUSSELL 2000 SMALL CAP INDEX PORTFOLIO PROFILE
Investment Objective
The Russell 2000 Small Cap Index Portfolio seeks investment
results that correspond to the investment performance of U.S.
commons stocks, as represented by the Russell 2000 Index.
Investment Strategies
The Russell 2000 Small Cap Index Portfolio seeks to
substantially replicate the total return of the securities
comprising the Russell 2000 Index, taking into consideration
redemptions, sales of additional shares, and other adjustments
described below. Precise replication of the capitalization
weighting of the securities in the Russell 2000 Index is not
feasible. The Russell 2000 Index Portfolio will attempt to
achieve, in both rising and falling markets, a correlation of at
least 95% between the total return of its net assets before
expenses and the total return of the Russell 2000 Small Cap
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
Russell 2000 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
Russell 2000 Small Cap Index Portfolio's assets as is practical
in stocks included among the Russell 2000 Index and futures
contracts and options relating thereto, a portion of the
Portfolio may be invested in money market instruments pending
investment or to meet redemption requests or other needs for
liquid assets. The Portfolio may also temporarily invest in S&P
500 Index futures and/or S&P MidCap 400 Index futures if, in the
opinion of the Adviser, it is not practical to invest in Russell
2000 Index futures at a particular time due to liquidity or
price considerations. In addition, for temporary defensive
purposes, the Portfolio may invest in government securities,
money market instruments, or other fixed-income securities, or
retain cash or cash equivalents.
The Portfolio may invest up to 20% of its assets in Russell 2000
futures contracts or options (or S&P MidCap 400 or S&P 500
futures contracts and options if, in the opinion of the Adviser,
it is not practical to invest in Russell 2000 Index futures at a
particular time due to liquidity or price considerations) in
order to invest uncommitted cash balances, to maintain liquidity
to meet shareholder redemptions, or minimize trading costs. The
Portfolio may also sell covered calls on futures contracts or
individual securities held in the Portfolio. As a temporary
investment strategy, until the Portfolio reaches $50 million in
net assets, the Portfolio may invest up to 100% of its assets in
such futures and/or options contracts.
Primary Risks
- - Market risk: The Russell 2000 Small Cap Index Portfolio's
total return, like stock prices generally, will fluctuate within
a wide range in response to stock market trends, so a share of
the Portfolio could drop in value over short or even long
periods. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices.
- - Investment style risk: Stocks of small sized (small-cap)
companies, such as those listed among the Russell 2000 Index
occasionally go through cycles of doing worse (or better) than
the stock markets in general or other types of investments.
- - Correlation risk: Because the Russell 2000 Small Cap Index
Portfolio has expenses, and the Russell 2000 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.
Since this is a new Portfolio, there is no bar chart or
performance table.
NASDAQ-100 INDEX PORTFOLIO PROFILE
Investment Objective
The Nasdaq-100 Index Portfolio seeks investment results that
correspond to the investment performance of U.S. common stocks,
as represented by the Nasdaq-100 Index.
Investment Strategies
The Nasdaq-100 Index Portfolio seeks to substantially replicate
the total return of the securities comprising the Nasdaq-100
Index, taking into consideration redemptions, sales of
additional shares, and other adjustments described below.
Precise replication of the capitalization weighting of the
securities in the Nasdaq-100 Index is not feasible. The Nasdaq-
100 Index Portfolio will attempt to achieve, in both rising and
falling markets, a correlation of at least 95% between the total
return of its net assets before expenses and the total return of
the Nasdaq-100 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
Nasdaq-100 Index should increase as the Portfolio grows. There
can be no assurance that the Portfolio will achieve a 95%
correlation.
The Nasdaq-100 Index Portfolio may invest up to 5% of its assets
in Nasdaq-100 Shares . Nasdaq-100 Shares are units of
beneficial interest in a unit investment trust, representing
proportionate undivided interests in a portfolio of securities
in substantially the same weighting as the common stocks that
comprise the Nasdaq-100 Index.
The Portfolio may invest up to 20% of its assets in Nasdaq-100
futures contracts and options in order to invest uncommitted
cash balances, to maintain liquidity to meet shareholder
redemptions, or minimize trading costs. The Portfolio may also
sell covered calls on futures contracts or individual securities
held in the Portfolio. As a temporary investment strategy,
until the Portfolio reaches $50 million in net assets, the
Portfolio may invest up to 100% of its assets in such futures
and/or options contracts.
Although the Adviser will attempt to invest as much of the
Nasdaq-100 Index Portfolio's assets as is practical in stocks
included among the Nasdaq-100 Index and futures contracts and
options relating thereto, a portion of the Portfolio may be
invested in money market instruments pending investment or to
meet redemption requests or other needs for liquid assets. In
addition, for temporary defensive purposes, the Portfolio may
invest in government securities, money market instruments, or
other fixed-income securities, or retain cash or cash
equivalents.
Primary Risks
- - Market risk: The Nasdaq-100 Index Portfolio's total return,
like stock prices generally, will fluctuate within a wide range
in response to stock market trends, so a share of the Portfolio
could drop in value over short or even long periods. Stock
markets tend to move in cycles, with periods of rising prices
and periods of falling prices.
- - Investment style risk: Stocks of companies or industries that
are heavily weighted in the Nasdaq-100 Index, such as
technology, telecommunications, internet and biotechnology
companies, occasionally go through cycles of doing worse (or
better) than the stock markets in general, as measured by other
more broad-based stock indexes, or other types of investments.
- - Concentration risk: The Nasdaq-100 Index Portfolio is
subject to the risk of an investment portfolio that may be
highly concentrated in a particular industry (e.g., Technology)
and, due to concentration in sectors characterized by relatively
higher volatility in price performance, may be more volatile
when compared to other broad-based stock indexes. The Nasdaq-
100 Index Portfolio is also subject to the risks specific to the
performance of a few individual component securities that
currently represent a highly concentrated weighting in the Index
(e.g. Microsoft Corporation, Intel Corporation, Cisco Systems
Inc., etc.).
- - Correlation risk: Because the Nasdaq-100 Index Portfolio has
expenses, and the Nasdaq-100 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.
- - Nondiversification risk: Under securities laws, the Portfolio
is considered a "nondiversified investment company." The
Portfolio is, however, subject to diversification limits under
federal tax law that permit it to invest more than 5%, but not
more than 25%, of its assets in a single issuer with respect to
up to 50% of its total assets as of the end of each of the
Portfolio's tax quarters.
In an effort to closely replicate the performance of the
Nasdaq-100-Index, the Portfolio will invest its assets in the
individual stocks comprised in the Nasdaq-100 Index.
Furthermore, the investment in the individual stocks in the
Portfolio will be weighted so that their percentage weighting in
the Portfolio is approximately the same as their percentage
weighting in the underlying Nasdaq-100 Index. As a result of
this investment strategy, the Nasdaq-100 Index Portfolio is a
nondiversified Portfolio.
Notwithstanding the above, the Nasdaq-100 Index Portfolio
intends to qualify as a Registered Investment Company ("RIC")
under federal tax law. At any point in time, if following the
investment strategy outlined above, of properly weighting the
Portfolios investments in individual securities to substantially
replicate the performance of the Nasdaq-100 Index, would put the
Portfolio in jeopardy of failing the RIC rule on
diversification, the Portfolio intends to immediately alter its
investment strategy to comply with the RIC rules. Such
alteration would include reducing investment exposure, pro-rata,
to those investments causing the Portfolio to be in jeopardy of
violating the RIC rules.
Since this is a new Portfolio, there is no bar chart or
performance table.
BALANCED INDEX PORTFOLIO PROFILE
Investment Objective
The Balanced Index Portfolio seeks investment results, with
respect to 60% of its assets, that correspond to the total
return performance of U.S. common stocks, as represented by the
S&P 500 Index and, with respect to 40% of its assets, that
correspond to the total return performance of investment grade
bonds, as represented by the Lehman Brothers Aggregate Bond
Index.
Investment Strategies
The Portfolio will invest approximately 60% of its net assets in
a portfolio of common stocks, futures (in combination with the
appropriate amount of U.S. Treasury securities as collateral),
and Standard & Poor's Depositary Receipts ("SPDR's") to track
the S&P 500 Index and approximately 40% of its net assets in a
portfolio of investment grade bonds designed to track the Lehman
Brothers Aggregate Bond Index (the "Lehman Brothers Index").
The Portfolio may also hold cash or cash equivalent securities,
although the amount of cash and cash equivalent securities is
expected to represent a small percentage of the funds assets.
The Portfolio's common stock portfolio seeks to substantially
replicate the total return of the securities comprising the S&P
500 Index, taking into consideration redemptions, sales of
additional shares, and other adjustments described below.
Precise replication of the S&P 500 is not feasible. The
Portfolio will attempt to achieve, in both rising and falling
markets, a correlation of at least 95% between the total return
of its common stock portfolio before expenses and the total
return of the S&P 500. A correlation of 100% would represent
perfect correlation between the Portfolio and index performance.
There can be no assurance that the Portfolio will achieve a 95%
correlation.
The Portfolio may invest up to 5% of its assets in Standard &
Poor's Depositary Receipts(R) ("SPDRs(R)"). SPDR's are units of
beneficial interest in a unit investment trust, representing
proportionate undivided interests in a portfolio of securities
in substantially the same weighting as the common stocks that
comprise the S&P 500.
The Portfolio's bond portfolio seeks to substantially replicate
the total return of the securities comprising the Lehman
Brothers Aggregate Bond Index taking into consideration
redemptions, sales of additional shares, and other adjustments
described below. Precise replication of the Lehman Aggregate
Bond Index is not feasible due to the large number of securities
in the index (over 7,000). The Portfolio will invest in a
representative sample of fixed income securities, which, taken
together, are expected to perform similarly to the Lehman
Brothers Aggregate 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 bond portfolio before
expenses and the total return of the Lehman Brothers Aggregate
Bond Index. A correlation of 100% would represent perfect
correlation between the Portfolio and index performance. There
can be no assurance that the Portfolio will achieve a 95%
correlation.
The Portfolio may invest up to 20% of its assets in stock or
bond futures contracts and options in order to invest
uncommitted cash balances, to maintain liquidity to meet
shareholder redemptions, or minimize trading costs.
Primary Risks
- - Stock Market risk: The Portfolio's common stock portfolio,
like stock prices generally, will fluctuate within a wide range
in response to stock market trends, so a share of the Portfolio
could drop in value over short or even long periods. Stock
markets tend to move in cycles, with periods of rising prices
and periods of falling prices.
- - Interest Rate risk: The Portfolio's bond portfolio is subject
to 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 fluctuate
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. The Portfolio's bond portfolio has an intermediate-
term average maturity (5 to 15 years), and is therefore expected
to have moderate to high level of interest rate risk.
- - Credit Risk: The Portfolio's bond portfolio is subject to
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 by 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 security are in default. A default by the issuer
of a security generally has a 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. The average quality of the Lehman Brothers Aggregate Bond
Index, which the Portfolio attempts to replicate, was AA2 using
Moody's Investors Service (See Appendix A: Ratings - Corporate
Bond Ratings). Other factors, including interest rate risk and
prepayment risk cause fluctuation in bond prices.
- - Income Risk: The Portfolio's bond portfolio is subject to
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's bond portfolio is expected to
maintain an intermediate average maturity and have moderate
trading activity. Therefore, income risk is expected to be
moderate.
- - 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
currently callable bonds is generally low to moderate.
Therefore, the prepayment risk of the Portfolio is expected to
be low to moderate.
- - Correlation risk: Because the Balanced Index Portfolio has
expenses, and the S&P 500 Index and Lehman Brothers Aggregate
Bond Index do not, the Portfolio may be unable to replicate
precisely the performance of the Index. In addition, the
Portfolio intends to hold a sampling of both the stocks in the
S&P 500 Index and the bonds in the Lehman Brothers Aggregate
Bond Index, rather than exactly matching the market weighting of
each security in its respective index. While the Portfolio
remains small, it may have a greater risk that its performance
will not match that of the Index.
Since this Portfolio has not been in effect for at least one
calendar year, there is no bar chart or performance table.
ZENITH PORTFOLIO PROFILE
Investment Objective
The Zenith Portfolio, formerly known as the Equity Portfolio,
seeks primarily long-term appreciation of capital, without
incurring unduly high risk, by investing primarily in common
stocks and other equity securities. Current income is a
secondary objective.
Investment Strategies
A major portion of the Zenith Portfolio will be invested in
common stocks. The Portfolio seeks special opportunities in
securities that are selling at a discount from theoretical
price/earnings ratios and that seem capable of recovering from
their temporary out-of-favor status (a "value" investment
style). The Portfolio may invest all or a portion of its assets
in preferred stocks, bonds, convertible preferred stocks,
convertible bonds, and convertible debentures. When market
conditions for equity securities are adverse, and for temporary
defensive purposes, the Portfolio may invest in Government
securities, money market instruments, or other fixed-income
securities, or retain cash or cash equivalents. However, the
Portfolio normally will remain primarily invested in common
stocks.
The Zenith Portfolio's investment strategy is based upon the
belief of the Fund's investment adviser (the "Adviser") that the
pricing mechanism of the securities market lacks total
efficiency and has a tendency to inflate prices of some
securities and depress prices of other securities in different
market climates. The Adviser believes that favorable changes in
market prices are more likely to begin when:
- securities are out-of-favor,
- price/earnings ratios are relatively low,
- investment expectations are limited, and
- there is little interest in a particular security or
industry.
The Adviser believes that securities with relatively low
price/earnings ratios in relation to their profitability are
better positioned to benefit from favorable but generally
unanticipated events than are securities with relatively high
price/earnings ratios which are more susceptible to unexpected
adverse developments. The current institutionally-dominated
market tends to ignore the numerous second tier issues whose
market capitalizations are below those of a limited number of
established large companies. Although this segment of the market
may be more volatile and speculative, the Adviser expects that a
well-diversified Portfolio represented in this segment of the
market has potential long-term rewards greater than the
potential rewards from investments in more highly capitalized
equities.
Primary Risks
- - Market risk: The Zenith Portfolio's total return, like stock
prices generally, will fluctuate within a wide range in response
to stock market trends. As a result, shares of the Portfolio
could drop in value over short or even long periods. Stock
markets tend to move in cycles, with periods of rising prices
and periods of falling prices.
- - Financial risk: The Zenith Portfolio's total return will
fluctuate with fluctuations in the earnings stability or overall
financial soundness of the companies whose stock the Portfolio
purchases.
- - Investment style risk: The Zenith Portfolio's investment
style risks that returns from "value" stocks it purchases will
trail returns from other asset classes or the overall stock
market.
Bar Chart and Performance Table
The bar chart and table below provide an indication of the risk
of investing in the Zenith Portfolio. The bar chart shows the
Portfolio's performance in each of the past 10 calendar years.
The table shows how the Portfolio's average annual returns for
one, five and 10 calendar years compare with those of a broad-
based stock market index. The Portfolio's returns are net of
its expenses, but 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 Portfolio's
past performance does not indicate how it will perform in the
future.
[The BAR CHART displayed here shows the Total Returns for the
calendar years as follows:
1990 -15.45%
1991 45.55%
1992 11.78%
1993 14.11%
1994 3.42%
1995 26.96%
1996 24.52%
1997 20.56%
1998 -15.31%
1999 2.05% ]
The Zenith Portfolio's return for the most recent calendar
quarter ended March 31, 2000, was 6.5%. During the period shown
in the bar chart, the highest return for a calendar quarter was
26.7% (quarter ending 3/31/91) and the lowest return for a
quarter was -23.9% (quarter ending 9/30/90).
Average Annual Total Returns for Years Ended December 31, 1999
1 Year 5 Years 10 Years
Zenith Portfolio 2.1% 10.5% 10.3%
Russell 2000 21.4% 15.0% 11.8%
BOND PORTFOLIO PROFILE
Investment Objective
The Bond Portfolio seeks as high a level of current income as is
consistent with reasonable investment risk, by investing
primarily in long-term, fixed-income, investment-grade corporate
bonds.
Investment Strategies
The Bond Portfolio normally will invest at least 75% of the
value of its assets in:
- publicly-traded or 144a debt securities rated BBB
or BAA3 or higher by a nationally recognized rating
service such as Standard & Poor's or Moody's,
- obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities, or
- cash and cash equivalents.
Up to 25% of the Bond Portfolio's total assets may be invested
in:
- debt securities that are unrated or below investment-
grade bonds ("high yield" or "junk" bonds),
- convertible debt securities,
- convertible preferred and preferred stocks, or
- other securities.
The Bond Portfolio will not directly purchase common stocks.
However, it may retain up to 10% of the value of its total
assets in common stocks acquired either by conversion of fixed-
income securities or by the exercise of warrants attached
thereto. The 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
Appendix A: Ratings - Corporate Bond Ratings.
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.
The Portfolio maintains an intermediate-term average
maturity (5 to 15 years), and is therefore subject to a moderate
to high level of interest rate risk.
- - 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 by 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 security are in default. A default by the issuer
of a security generally has a 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. As of December 31, 1998, the average quality of the
Portfolio, as rated by Moody's Investors Service, was AA2 (See
Appendix A: Ratings - Corporate Bond Ratings). However,
certain individual securities held in the Portfolio may have
substantial credit risk. The Portfolio may contain up to 25% of
securities rated below investment grade. Securities rated below
investment grade generally have substantially more credit risk
than securities rated investment grade. Securities rated below
investment grade are defined as having a rating below Baa by
Moody's Investors Services and below BBB by Standard & Poor's
Corporation (See Appendix A: Ratings - Corporate Bond Ratings).
As of December 31, 1999, 13% of the debt securities held by the
Bond Portfolio were of less than investment grade.
- - 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 actively traded. Therefore, income risk
is expected to be moderate to high.
- - 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
currently callable bonds is generally low to moderate.
Therefore, the prepayment risk of the Portfolio is expected to
be low to moderate. Other factors, including interest rate risk
and credit risk can cause fluctuation in bond prices.
Bar Chart and Performance Table
The bar chart and table below provide an indication of the risk
of investing in the Bond Portfolio. The bar chart shows the
Portfolio's performance in each of the past 10 calendar years.
The table shows how the Portfolio's average annual returns for
one, five and 10 calendar years compare with those of a broad-
based bond index. The Portfolio's returns are net of its
expenses, but 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 Portfolio's past
performance does not indicate how it will perform in the future.
[The BAR CHART displayed here shows the Total Returns for the
calendar years as follows:
1990 8.66%
1991 17.89%
1992 7.65%
1993 11.94%
1994 -1.63%
1995 19.03%
1996 7.19%
1997 11.02%
1998 6.52%
1999 -1.11% ]
The Bond Portfolio's return for the most recent calendar quarter
ended March 31, 2000, was 1.6%.During the period shown in the
bar chart, the highest return for a calendar quarter was 6.1%
(quarter ending 6/30/95) and the lowest return for a quarter was
- -1.6% (quarter ending 3/31/94).
Average Annual Total Returns for Years Ended December 31, 1999
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
------ ------- --------
<S> <C> <C> <C>
Bond Portfolio -1.1% 8.3% 8.5%
Lehman Aggregate Bond Index -0.8% 7.7% 7.7%
</TABLE>
PORTFOLIO OPERATING EXPENSES
This table describes fees and expenses of the Portfolios:
EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
Russell
S&P 2000
MidCap Small Nasdaq-
S&P 500 400 Cap 100 Balanced
Index Index Index Index Index Zenith Bond
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Management
Fees .30% .30% .35% .35% .30% .60% .47%
Other
Expenses .09% .30% .40%** .30%** .17% .09% .13%
---- ---- ---- ---- ---- ---- ----
Total
Operating
Expenses* .39%*** .60% .75% .65% .47% .69%*** .60%***
</TABLE>
* Total Operating Expenses in excess of .75% for the Russell
2000 Small Cap Portfolio, in excess of .65% for the Nasdaq-
100 Index Portfolio, and in excess of .60% for the S&P 500
Index, S&P MidCap 400 Index and Balanced Index Portfolios
are paid by the investment adviser.
** "Other Expenses" for the Russell 2000 Small Cap Index and
Nasdaq-100 Index Portfolios are based on estimates.
*** The Adviser has agreed to reduce its fee from those show
in the table for a period of one year from May 1, 2000 by
.03, .08 and .20 percentage points for the S&P 500 Index
Portfolio, the Zenith Portfolio, and the Bond Portfolio,
respectively. The Adviser may not revise or cancel these
waivers during the one year period.
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>
S&P 500 Index Portfolio $40 $126 $219 $494
S&P MidCap 400 Index Portfolio $62 $193 $336 $752
Russell 2000 Small Cap Index Portfolio $77 $241 N/A N/A
Nasdaq-100 Index Portfolio $67 $209 N/A N/A
Balanced Index Portfolio $48 $151 $264 $592
Zenith Portfolio $71 $221 $385 $861
Bond Portfolio $62 $193 $336 $752
</TABLE>
The purpose of this table is to help you understand the Fund
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
Fund'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 Fund.
OTHER INVESTMENT POLICIES, STRATEGIES AND RISKS
FOREIGN SECURITIES
Each Portfolio may invest in foreign securities that are
suitable for the Portfolio's investment objectives and policies.
Foreign securities investments are limited to 25% of net assets
for the Zenith, Bond, and Balanced Index Portfolios The S&P 500
Index Portfolio, S&P MidCap 400 Index Portfolio, Russell 2000
Small Cap Index Portfolio and Nasdaq-100 Index Portfolio are
limited to investing in those foreign securities included in the
respective Indexes. Each Portfolio that invests in foreign
securities limits not only its total purchases of foreign
securities, but also its purchases for any single country. For
"major countries," the applicable limit is 10% of Portfolio net
assets for the Zenith, Bond, and Balanced Index Portfolios; for
other countries, the applicable limit is 5% for each Portfolio.
"Major countries" currently include: The United Kingdom,
Germany, France, Italy, Switzerland, Netherlands, Spain,
Belgium, Canada, Mexico, Argentina, Chile, Brazil, Australia,
Japan, Singapore, New Zealand, Hong Kong, Sweden and Norway.
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 a 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 Portfolios may include
securities issued by companies located in countries not
considered to be major industrialized nations. Such countries
are subject to more economic, political and business risk than
major industrialized nations, and the securities they issue may
be subject to abrupt or erratic price fluctuations, and are
expected to be more volatile and more uncertain as to payments
of interest and principal. Developing countries may have
relatively unstable governments, economies based only on a few
industries, and securities markets that trade only a small
number of securities. The secondary market for such securities
is expected to be less liquid than for securities of major
industrialized nations.
FOREIGN CURRENCY TRANSACTIONS
The Zenith Portfolio and Bond Portfolio may engage in forward
foreign currency contracts ("forward contracts") in connection
with the purchase or sale of a specific security. A forward
contract involves an obligation to purchase or sell a specific
foreign currency at a future date, which may be any fixed number
of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract.
Portfolios will not enter into forward contracts for longer-term
hedging purposes. The possibility of changes in currency
exchange rates will be incorporated into the long-term
investment considerations when purchasing the investment and
subsequent considerations for possible sale of the investment.
JUNK BONDS
The Bond Portfolio may invest up to 25% of its assets in bonds
rated below the four highest grades used by Standard & Poor's or
Moody's (frequently referred to as "junk" bonds). These 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 a Portfolio buys a
security at one price and simultaneously agrees to sell that
same security back to the original owner at a higher price.
None of the Portfolios engage extensively in repurchase
agreements, but each 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, a 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 S&P 500 Index Portfolio, S&P MidCap 400 Index Portfolio,
Balanced Index Portfolio, Russell 2000 Small Cap Index Portfolio
and Nasdaq-100 Index Portfolio may enter into reverse repurchase
agreements. Under reverse repurchase agreements, the Portfolio
transfers possession of portfolio securities to banks in return
for cash in an amount equal to a percentage of the portfolio
securities' market value and agrees to repurchase the securities
at a future date by repaying the cash with interest. The
Portfolio retains the right to receive interest and principal
payments from the securities while they are in the possession of
the financial institutions. 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 S&P
500 Index Portfolio, S&P MidCap 400 Index Portfolio, Balanced
Index Portfolio, Russell 2000 Small Cap Index Portfolio and
Nasdaq-100 Index Portfolio may enter into futures contracts that
relate to securities in which it may directly invest and indices
comprised of such securities and may purchase and write call and
put options on such contracts. The Portfolio may invest up to
20% of its assets in such futures and/or options contracts.
A financial futures contract is a contract to buy or sell a
specified quantity of financial instruments (such as U.S.
Treasury bills, notes and bonds, commercial paper and bank
certificates of deposit or the cash value of a financial
instrument index at a specified future date at a price agreed
upon when the contract is made). A stock index futures contract
is a contract to buy or sell specified units of a stock index at
a specified future date at a price agreed upon when the contract
is made. The value of a unit is based on the current value of
the contract index. Under such contracts no delivery of the
actual stocks making up the index takes place. Rather, upon
expiration of the contract, settlement is made by exchanging
cash in an amount equal to the difference between the contract
price and the closing price of the index at expiration, net of
variation margin previously paid.
Substantially all futures contracts are closed out before
settlement date or called for cash settlement. A futures
contract is closed out by buying or selling an identical
offsetting futures contract. Upon entering into a futures
contract, the Portfolio is required to deposit an initial margin
with the Custodian for the benefit of the futures broker. The
initial margin serves as a "good faith" deposit that the
Portfolio will honor their futures commitments. Subsequent
payments (called "variation margin") to and from the broker are
made on a daily basis as the price of the underlying investment
fluctuates. In the event of the bankruptcy of the futures
broker that holds margin on behalf of the Portfolio, the
Portfolio may be entitled to return of margin owed to it only in
proportion to the amount received by the broker's other
customers. The Adviser will attempt to minimize this risk by
monitoring the creditworthiness of the futures brokers with
which the Portfolio does business.
Because the value of index futures depends primarily on the
value of their underlying indexes, the performance of the broad-
based contracts will generally reflect broad changes in common
stock prices. However, because a particular Portfolio may not
be invested in precisely the same proportion as the particular
Index, it is likely that the price changes of the Portfolio's
index futures positions will not match the price changes of the
Portfolio's other investments.
Options on futures contracts give the purchaser the right to
assume a position at a specified price in a futures contract at
any time before expiration of the option contract.
The Bond 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). The Portfolio
may purchase call option contracts to close out a position
acquired through the sale of a call option. The Portfolio will
only write options that are traded on a domestic exchange or
board of trade.
The S&P 500 Index, S&P MidCap 400 Index, Balanced Index,
Russell 2000 Small Cap Index and Nasdaq-100 Index Portfolios may
write and purchase covered put and call options on securities in
which it may directly invest. Option transactions of the
Portfolio will be conducted so that the total amount paid on
premiums for all put and call options outstanding will not
exceed 5% of the value of the Portfolio's total assets.
Further, the Portfolio will not write put or call options or
combination thereof if, as a result, the aggregate value of all
securities or collateral used to cover its outstanding options
would exceed 25% of the value of the Portfolio's total assets.
A call option is a short-term contract (generally nine months or
less) which gives the purchaser of the option the right to
purchase from the seller of the option (the Portfolio) the
underlying security or futures contract at a fixed exercise
price at any time prior to the expiration of the option period
regardless of the market price of the underlying instrument
during the period. A futures contract obligates the buyer to
purchase and the seller to sell a predetermined amount of a
security at a predetermined price at a selected time in the
future. A call option on a futures contract gives the purchaser
the right to assume a "long" position in a futures contract,
which means that if the option is exercised the seller of the
option (the Portfolio) would have the legal right (and
obligation) to sell the underlying security to the purchaser at
the specified price and future time.
As consideration for the call option, the buyer pays the seller
(the Portfolio) a premium, which the seller retains whether or
not the option is exercised. The selling of a call option will
benefit the Portfolio if, over the option period, the underlying
security or futures contract declines in value or does not
appreciate to a price higher than the total of the exercise
price and the premium. The Portfolio risks an opportunity loss
of profit if the underlying instrument appreciates to a price
higher than the exercise price and the premium. When the Adviser
anticipates that interest rates will increase, the Portfolio may
write call options in order to hedge against an expected decline
in value of portfolio securities.
The Portfolio may close out a position acquired through selling
a call option by buying a call option on the same security or
futures contract with the same exercise price and expiration
date as the option previously sold. A profit or loss on the
transaction will result depending on the premium paid for buying
the closing call option. If a call option on a futures contract
is exercised, the Portfolio intends to close out the position
immediately by entering into an offsetting transaction or by
delivery of the underlying security (or other related
securities).
Options transactions may increase the Portfolio's portfolio
turnover rate and attendant transaction costs, and may be
somewhat more speculative than other investment strategies. It
may not always be possible to close out an options position, and
with respect to options on futures contracts there is a risk of
imperfect correlation between price movements of a futures
contract (or option thereon) and the underlying security.
OPTIONS ON SECURITIES INDICES
The S&P 500 Index, S&P MidCap 400 Index, Balanced Index, Russell
2000 Small Cap Index and Nasdaq-100 Index Portfolios may
purchase or sell options on their respective Indexes, subject to
the limitations set forth above and provided such options are
traded on a national securities exchange or in the over-the-
counter market. Options on securities indices are similar to
options on securities except there is no transfer of a security
and settlement is in cash. A call option on a securities index
grants the purchaser of the call, for a premium paid to the
seller, the right to receive in cash an amount equal to the
difference between the closing value of the index and the
exercise price of the option times a multiplier established by
the exchange upon which the option is traded.
COLLATERALIZED MORTGAGE OBLIGATIONS
The Portfolios other than the S&P 500 Index, S&P MidCap 400
Index, Russell 2000 Small Cap Index and Nasdaq-100 Index
Portfolios may invest in collateralized mortgage obligations
("CMOs") or mortgage-backed bonds issued by financial
institutions such as commercial banks, savings and loan
associations, mortgage banks and securities broker-dealers (or
affiliates of such institutions established to issue these
securities). To a limited extent, the Portfolios may also
invest in a variety of more risky CMOs, including interest only
("IOs"), principal only ("POs"), inverse floaters, or a
combination of these securities.
LENDING PORTFOLIO SECURITIES
The S&P 500 Index, S&P MidCap 400 Index, Balanced Index, Russell
2000 Small Cap Index and Nasdaq-100 Index Portfolios 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 Pinnacle Series shares, without sales
charge, only for purchase by Union Central and its separate
accounts to fund benefits under both variable annuity contracts
and variable universal life insurance policies. The Fund's Board
of Directors will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of
variable annuity contractowners investing in the Fund and
interests of holders of variable universal life insurance
policies investing in the Fund. Union Central will report any
potential or existing conflicts to the Directors of the Fund.
If a material irreconcilable conflict arises, Union Central
will, at its own cost, remedy such conflict up to and including
establishing a new registered management company and segregating
the assets underlying the variable annuity contracts and
variable universal life insurance policies. It is possible that
at some later date the Fund may offer shares to other investors.
The Fund continuously offers shares in each of its Portfolios at
prices equal to the respective net asset values of the shares of
each Portfolio.
OTHER INFORMATION
In addition to the investment policies described above, each
Portfolio's investment program is subject to further
restrictions which are described in the Statement of Additional
Information. Unless otherwise specified, each Portfolio's
investment objectives, policies and restrictions are not
fundamental policies and may be changed without shareholder
approval. Shareholder inquiries and requests for the Fund's
annual report should be directed to the Fund at (513) 595-2600,
or at P.O. Box 40409, Cincinnati, Ohio 45240-0409.
FUND MANAGEMENT
INVESTMENT ADVISER
The Adviser is Summit Investment Partners, Inc. (formerly known
as Carillon Advisers, Inc.), 312 Elm Street, Suite 2525,
Cincinnati, Ohio 45202. The Adviser was incorporated under the
laws of Ohio on August 18, 1986, as successor to the advisory
business of Carillon Investments, Inc., the investment adviser
for the Fund since 1984. The Adviser is a wholly-owned
subsidiary of Union Central, a mutual life insurance company
organized in 1867 under the laws of Ohio. Subject to the
direction and authority of the Fund's board of directors, the
Adviser manages the investment and reinvestment of the assets of
each Portfolio and provides administrative services and manages
the Fund's business affairs.
Gary R. Rodmaker, CFA and David M. Weisenburger, CFA lead the
team primarily responsible for the day-to-day management of the
S&P 500 Index Portfolio, S&P MidCap 400 Index Portfolio,
Balanced Index Portfolio, Russell 2000 Small Cap Index Portfolio
and Nasdaq-100 Index Portfolio.
Mr. Rodmaker is Managing Director - Fixed Income of the Adviser
and has been affiliated with the Adviser and Union Central since
1989. Mr. Weisenburger is the Assistant Fund Manager of the
Adviser and has been affiliated with the Adviser and Union
Central since July, 1996. Prior thereto, Mr. Weisenburger was a
general securities trader for Ohio National Equity Sales Corp.
and a registered representative for Fidelity Investments.
James R. McGlynn leads the team primarily responsible for the
day-to-day management of the Zenith Portfolio. Mr. McGlynn,
prior to joining the Adviser and Union Central on December 1,
1999, was employed by Tom Johnson Investment Management in
Oklahoma, where he served since May, 1991, as Vice President and
Co-Portfolio Manager for the UAM TJ Core Equity Fund.
Mr. Rodmaker and Michael J. Schultz lead the team primarily
responsible for the day-to-day management of the Bond Portfolio.
Mr. Schultz is Managing Director - Fixed Income of the Adviser
and has been affiliated with the Adviser and Union Central since
1992.
ADVISORY FEE
The Fund pays the Adviser, as full compensation for all
facilities and services furnished, a monthly fee computed
separately for each Portfolio on a daily basis, at an annual
rate, as follows:
<TABLE>
<CAPTION>
Portfolio Advisory Fee
- --------- ------------
<S> <C>
S&P 500 Index Portfolio .30% of the current value of the net assets.
S&P MidCap 400 Portfolio .30% of the current value of the net assets.
Russell 2000 Small Cap
Index Portfolio .35% of the current value of the net assets
Nasdaq-100 Index Portfolio .35% of the current value of the net assets
Balanced Index Portfolio .30% of the current value of the net assets.
Zenith Portfolio .65% of the first $50,000,000, .60% of the next
$100,000,000, and .50% of all over $150,000,000
of the current value of the net assets.
Bond Portfolio .50% of the first $50,000,000, .45% of the next
$100,000,000, and .40% of all over $150,000,000
of the current value of the net assets.
</TABLE>
The effective rates paid by each Portfolio are set forth in the
"Portfolio Operating Expenses" section on page 14.
EXPENSES
The Fund's expenses are deducted from total income before
dividends are paid. These expenses, which are accrued daily,
include: the fee of the Adviser; taxes; legal, dividend
disbursing, bookkeeping and transfer agent, custodian and
auditing fees; and printing and other expenses relating to the
Fund's operations which are not expressly assumed by the Adviser
under its investment advisory agreement with the Fund. Certain
expenses are paid by the particular Portfolio that incurs them,
while other expenses are allocated among the Portfolios on the
basis of their relative size (i.e., the amount of their net
assets). The Adviser will pay any expenses of the S&P 500 Index
Portfolio, S&P MidCap 400 Index Portfolio, Balanced Index
Portfolio, and Nasdaq-100 Index Portfolio, other than the
advisory fee for that Portfolio, to the extent that such
expenses exceed .30% of that Portfolio's net assets. The
Adviser will pay any expenses of the Russell 2000 Small Cap
Index Portfolio, other than the advisory fee for that Portfolio,
to the extent that such expenses exceed .40% of that Portfolio's
net assets.
CAPITAL STOCK
The Fund currently has twenty-two classes of stock, one for each
Portfolio, seven of which are offered pursuant to this
prospectus. 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. Union Central, the sole shareholder of the Summit
Pinnacle Series of Funds, will vote Fund shares allocated to its
registered separate accounts in accordance with instructions
received from its contract owners. It is anticipated that Union
Central will have voting control of the Fund by virtue of the
shares of the Summit Apex Series of Funds allocated to its
exempt separate accounts. With voting control, Union Central
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 each Portfolio of the Fund
is determined once daily, Monday through Friday, as of the
close of regular trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern Time), when there are purchases or
redemptions of Fund shares, except:
- 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 Portfolios, except for money market
instruments maturing in 60 days or less, are valued at their
market value if market quotations are readily available. Other-
wise, such securities are valued at fair value as determined in
good faith by the 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 each Portfolio. For dividend
purposes, net investment income of each Portfolio consists of
all dividends or interest earned by that Portfolio, minus
estimated expenses (including the investment advisory fee). All
net realized capital gains, if any, of each Portfolio are
distributed periodically, no less frequently than annually. All
dividends and distributions of a Portfolio are reinvested in
additional shares of the Portfolio at net asset value.
TAXES
Each Portfolio has qualified and has elected to be taxed as a
"regulated investment company" under the provisions of
Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). If a Portfolio qualifies as a "regulated
investment company" and complies with the appropriate provisions
of the Code, the Portfolio will 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 Mutual Fund Services, LLC, 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.
S&P, FRANK RUSSELL AND NASDAQ DISCLAIMER
The S&P 500 is an unmanaged index of common stocks comprised of
500 industrial, financial, utility and transportation companies.
"Standard & Poor's ", "S&P ", "S&P 500 ", "Standard & Poor's
500", "500", "S&P MidCap 400 Index", and "Standard & Poor's
MidCap 400 Index" are trademarks of The McGraw-Hill Companies,
Inc. and have been licensed for use by Summit Mutual Funds.
Summit Mutual Funds is not sponsored, endorsed, sold or promoted
by Standard & Poor's ("S&P"). S&P makes no representation or
warranty, express or implied, to the beneficial owners of Summit
Mutual Funds or any member of the public regarding the
advisability of investing in securities generally or in Summit
Mutual Funds particularly or the ability of the S&P 500 Index or
the S&P MidCap 400 Index to track general stock market
performance. S&P's only relationship to Summit Mutual Funds is
the licensing of certain trademarks and trade names of S&P and
of the S&P 500 Index and the S&P MidCap 400 Index which is
determined, composed and calculated by S&P without regard to
Summit Mutual Funds or the Funds. S&P has no obligation to take
the needs of Summit Mutual Funds or the beneficial owners of the
Funds into consideration in determining, composing or
calculating the S&P 500 Index and the S&P MidCap 400 Index. S&P
is not responsible for and has not participated in the
determination of the prices and amount of the Funds or the
timing of the issuance or sale of the Funds or in the
determination or calculation of the equation by which the Funds
are to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or
trading of Summit Mutual Funds.
The Russell 2000 Index is a trademark/service mark of the Frank
Russell Company. Russell is a trademark of the Frank Russell
Company. Summit Mutual Funds and the Russell 2000 Small Cap
Index Portfolio are not promoted, sponsored or endorsed by, nor
in any way affiliated with Frank Russell Company. Frank Russell
is not responsible for and has not reviewed the Prospectus, and
Frank Russell makes no representation or warranty, express or
implied, as to its accuracy, or completeness, or otherwise.
Frank Russell Company reserves the right, at any time and
without notice, to alter, amend, terminate or in any way change
its Index. Frank Russell has no obligation to take the needs of
any particular fund or its participants or any other product or
person into consideration in determining, composing or
calculating the Index.
Frank Russell Company's publication of the Index in no way
suggests or implies an opinion by Frank Russell Company as to
the attractiveness or appropriateness of the investment in any
or all securities upon which the Index is based. FRANK RUSSELL
COMPANY MAKES NO REPRESENTATION, WARRANTY, OR GUARANTEE AS TO
THE ACCURACY, COMPLETENESS, RELIABILITY, OR OTHERWISE OF THE
INDEX OR DATA INCLUDED IN THE INDEX. FRANK RUSSELL COMPANY
MAKES NO REPRESENTATION OR WARRANTY REGARDING THE USE, OR THE
RESULTS OF USE, OF THE INDEX OR ANY DATA INCLUDED THEREIN, OR
ANY SECURITY (OR COMBINATION THEREOF) COMPRISING THE INDEX.
FRANK RUSSELL COMPANY MAKES NO OTHER EXPRESS OR IMPLIED
WARRANTY, AND EXPRESSLY DISCLAIMS ANY WARRANTY OF ANY KIND,
INCLUDING, WITHOUT MEANS OF LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
TO THE INDEX OR ANY DATA OR ANY SECURITY (OR COMBINATION
THEREOF) INCLUDED THEREIN.
"Nasdaq" and related marks are trademarks or service marks of
The Nasdaq Stock Market, Inc. "Nasdaq" and have been licensed
for use for certain purposes by Summit Mutual Funds, Inc. and
the Nasdaq-100 Index Portfolio. The Nasdaq-100 Index is
composed and calculated by Nasdaq without regard to Summit
Mutual Funds. Nasdaq makes no warranty, express or implied, and
bears no liability with respect to the Nasdaq-100 Index Fund.
Nasdaq makes no warranty, express or implied, and bears no
liability with respect to Summit Mutual Funds, its use, or any
data included therein.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you
understand the Fund's financial performance for the past 5 years
(or, if shorter, the period of the Portfolio's operations).
Certain information reflects financial results for a single Fund
share. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the
Fund (assuming reinvestment of all dividends and distributions).
This information has been audited by Deloitte & Touche LLP,
whose report, along with the Fund's financial statements are
included in the annual report which is available upon request.
The Russell 2000 Small Cap Index Portfolio and Nasdaq-100 Index
Portfolio were not in effect during the period.
<TABLE>
<CAPTION>
Zenith Portfolio
Year ended December 31,
--------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $14.89 $20.35 $19.45 $16.54 $14.30
Investment Activities:
Net investment income .10 .25 .23 .29 .24
Net realized and
unrealized gains (losses) (.05) (2.80) 3.23 3.61 3.36
------ ------ ------ ------ ------
Total from
Investment Activities .05 (2.55) 3.46 3.90 3.60
------ ------ ------ ------ ------
Distributions:
Net investment income (.12) (.23) (.27) (.27) (.23)
Net realized gains (2.20) (2.68) (2.29) (.72) (1.13)
------ ------ ------ ------ ------
Total Distributions (2.32) (2.91) (2.56) (.99) (1.36)
------ ------ ------ ------ ------
Net Asset Value,
End of year $12.62 $14.89 $20.35 $19.45 $16.54
====== ====== ====== ====== ======
Total Return<F1> 2.05% (15.31%) 20.56% 24.52% 26.96%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .69% .62% .62% .64% .66%
Ratio of Net Investment
Income to Average Net Assets .67% 1.41% 1.23% 1.66% 1.73%
Portfolio Turnover Rate 86.47% 62.50% 57.03% 52.53% 34.33%
Net Assets,
End of Period (000's) $124,444 $248,783 $335,627 $288,124 $219,563
<FN>
<F1> Total Return does not reflect expenses that apply to the separate account
or the related insurance policies. Inclusion of these charges would reduce the
Total Return figures for all periods shown.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
Bond Portfolio
Year ended December 31,
--------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Net Asset Value,
Beginning of year $11.13 $11.29 $10.91 $11.07 $10.04
Investment Activities:
Net investment income .72 .77 .79 .79 .88
Net realized and
unrealized gains (losses) (.84) (.05) .37 (.04) .98
------ ------ ------ ------ ------
Total from
Investment Activities (.12) .72 1.16 .75 1.86
------ ------ ------ ------ ------
Distributions:
Net investment income (.65) (.76) (.72) (.87) (.83)
In excess of
net investment income -- -- -- (.04) --
Net realized gains -- (.12) (.06) -- --
------ ------ ------ ------ ------
Total Distributions (.65) (.88) (.78) (.91) (.83)
------ ------ ------ ------ ------
Net Asset Value,
End of year $10.36 $11.13 $11.29 $10.91 $11.07
====== ====== ====== ====== ======
Total Return<F1> (1.11%) 6.52% 11.02% 7.19% 19.03%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .60% .58% .60% .62% .65%
Ratio of Net Investment
Income to Average Net Assets 6.62% 6.84% 7.15% 7.24% 7.43%
Portfolio Turnover Rate 56.07% 67.57% 113.41% 202.44% 111.01%
Net Assets,
End of Period (000's) $98,428 $113,762 $99,892 $85,634 $73,568
<FN>
<F1> Total Return does not reflect expenses that apply to the separate account
or the related insurance policies. Inclusion of these charges would reduce the
Total Return figures for all periods shown.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
S&P 500 Index Portfolio
Year ended December 31,
--------------------------------------
1999 1998 1997 1996<F1>
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $19.49 $15.74 $12.13 $10.00
Investment Activities:
Net investment income .21 .20 .20 .20
Net realized and unrealized
gains/(losses) 3.75 4.21 3.72 2.12
------ ------ ------ ------
Total from
Investment Activities 3.96 4.41 3.92 2.32
------ ------ ------ ------
Distributions:
Net investment income (.19) (.20) (.21) (.19)
Net realized gains (.14) (.46) (.10) --
------ ------ ------ ------
Total Distributions (.33) (.66) (.31) (.19)
------ ------ ------ ------
Net Asset Value,
End of Year $23.12 $19.49 $15.74 $12.13
------ ------ ------ ------
Total Return,
not annualized<F3> 20.52% 28.54% 32.72% 23.37%
Ratios/Supplemental Data:
Ratio of Net Expenses to
Average Net Assets .39% .43% .50% .59%<F2>
Ratio of Net Investment
Income to Average Net Assets 1.10% 1.25% 1.48% 2.14%<F2>
Portfolio Turnover Rate 3.45% 2.64% 9.06% 1.09%
Net Assets,
End of Year (000's) $284,132 $131,345 $55,595 $29,205
<FN>
<F1> The portfolio commenced operation on December 29, 1995. The financial
highlights table for the period ending December 31, 1995 is not presented
because the activity for the period did not round to $0.01 in any category of
the reconciliation of beginning to ending net asset value per share. The ratios
and total return were all less than 0.1%. The net assets at December 31, 1995
were $305,148.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by .25%
for the year ended December 31, 1996, had the Adviser not waived a portion of
its fee.
<F3> Total Return does not reflect expenses that apply to the separate
account or the related insurance policies. Inclusion of these charges would
reduce the Total Return figures for all periods shown.
</FN>
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
S&P MidCap 400 Index Portfolio
Period from May 3, 1999
to December 31,
1999<F1>
------------------------
<S> <C>
Net Asset Value,
Beginning of Period $10.00
Investment Activities: .10
Net investment income 1.01
------
Net realized and unrealized
gains/(losses) 1.11
Total from Investment Activities
------
Distributions:
Net investment income (.07)
Net realized gains --
------
Total Distributions (.07)
------
Net Asset Value,
End of Year $11.04
======
Total Return, not annualized<F4> 11.14%
Ratios/Supplemental Data
Ratio of Net Expenses to
Average Net Assets<F2> .60%<F3>
Ratio of Net Investment
Income to Average Net Assets<F2> 1.69%<F3>
Portfolio Turnover Rate 47.55%<F3>
Net Assets, End of Year (000's) $23,963
<FN>
<F1> The portfolio commenced operation on May 3, 1999.
<F2> The ratios of net expenses to average net assets would have increased and
net investment income to average net assets would have decreased by .09% for
the year ended December 31, 1999, had the Adviser not reimbursed expenses.
<F3> The ratios are annualized.
<F4> Total Return does not reflect expenses that apply to the separate account
or the related insurance policies. Inclusion of these charges would reduce the
Total Return figures for all periods shown.
</FN>
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
<CAPTION>
Balanced Index Portfolio
Period from May 3, 1999
to December 31,
1999<F1>
----------------------
<S> <C>
Net Asset Value,
Beginning of Period $10.00
Investment Activities: .18
Net investment income .34
------
Net realized and unrealized
gains/(losses) .52
------
Total from Investment Activities
Distributions:
Net investment income (.11)
Net realized gains --
------
Total Distributions (.11)
------
Net Asset Value,
End of Year $10.41
======
Total Return, not annualized<F4> 5.31%
Ratios/Supplemental Data
Ratio of Net Expenses to
Average Net Assets<F2> .47%<F3>
Ratio of Net Investment
Income to Average Net Assets<F2> 2.94%<F3>
Portfolio Turnover Rate 141.58%<F3>
Net Assets, End of Year (000's) $55,708
<FN>
<F1> The portfolio commenced operation on May 3, 1999.
<F2> The ratios of net expenses to average net assets would have increased and
net investment income to average net assets would have decreased by .03% for
the year ended December 31, 1999, had the Adviser not reimbursed expenses.
<F3> The ratios are annualized.
<F4> Total Return does not reflect expenses that apply to the separate account
or the related insurance policies. Inclusion of these charges would reduce the
Total Return figures for all periods shown.
</FN>
</TABLE>
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>
A Statement of Additional Information dated May 1, 2000, which
contains further information about the Fund, has been filed with the
Securities and Exchange Commission and is incorporated by reference
into this Prospectus. Additional information about the Fund's
investments is available in the Fund's annual and semi-annual reports
to shareholders. In the Fund's annual report, you will find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal
year. A copy of the Statement of Additional Information or its
annual and semi-annual reports may be obtained without charge by
calling the Fund at (513) 595-2600, or by writing the Fund at P.O.
Box 40409, Cincinnati, Ohio 45240-0409.
The Fund's Statement of Additional Information, annual and semi-
annual reports and certain other information about the Fund can be
reviewed and copied at the SEC's public reference room (which will
send copies of these documents upon request and for a fee).
Information about the operation of the SEC's public reference room
may be obtained by calling the SEC at 1-800-SEC-0330. Copies of Fund
documents may be requested by writing to the Public reference Section
of the SEC, Washington, D.C. 20549-6009.
These fund Documents and other information about the Fund are also
available without charge at the SEC's web site: http://www.sec.gov.
File 811-04000
<PAGE>
May 1, 2000
SUMMIT MUTUAL FUNDS, INC.
- ----------------------------------------------------------------
The Lehman Aggregate Bond Index Portfolio (the "Portfolio") is
one of eight investment portfolios comprising the Pinnacle Series of
Summit Mutual Funds, Inc. (formerly known as 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.
SMFI 514Bond 5/00
<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.............................5
JUNK BONDS................................................5
REPURCHASE AGREEMENTS.....................................6
REVERSE REPURCHASE AGREEMENTS.............................6
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS........6
COLLATERALIZED MORTGAGE OBLIGATIONS.......................8
LENDING PORTFOLIO SECURITIES..............................8
MIXED FUNDING.............................................8
OTHER INFORMATION.........................................8
FUND MANAGEMENT................................................9
INVESTMENT ADVISER........................................9
ADVISORY FEE..............................................9
EXPENSES..................................................9
CAPITAL STOCK.............................................9
VALUATION OF PORTFOLIO SHARES............................10
DIVIDENDS AND DISTRIBUTIONS...................................10
TAXES.........................................................10
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT.............11
APPENDIX A: RATINGS..........................................12
CORPORATE BOND RATINGS...................................12
COMMERCIAL PAPER RATINGS.................................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 the Pinnacle Series of
Summit Mutual Funds, 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 Centra"). 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.
Since this Portfolio has not been in effect for at least one
calendar year, there is no bar chart or performance table.
PORTFOLIO OPERATING EXPENSES
EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
Bond Index Portfolio
<S> <C>
Management Fees .30%
Other Expenses .26%*
-------
Total Operating Expenses .56%
</TABLE>
* The Adviser will pay any expenses of the Portfolio, other
than the advisory fee for that Portfolio, to the extent that
such expenses exceed .30% of the Portfolio's net assets.
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
------ -------
<S> <C> <C>
Bond Index Portfolio $62 $193
</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 of the Pinnacle Series, 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 Summit Investment Partners, Inc. (formerly known
as Carillon lAdvisers, Inc.), 312 Elm Street, Suite 2525,
Cincinnati, Ohio 45202. 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 and David M. Weisenburger, CFA, lead the
team primarily responsible for the day-to-day management of the
Portfolio. Mr. Rodmaker is the Managing Director-Fixed Income
of the Adviser and has been affiliated with the Adviser and
Union Central as an investment analyst since 1989. Mr.
Weisenburger is the Assistant Fund Manager of the Adviser and
has been affiliated with the Adviser and Union Central since
July, 1996. Prior thereto, Mr. Weisenburger was a general
securities trader for Ohio National Equity Sales Corp. and a
registered representative for Fidelity Investments.
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 for the Pinncale
Series, 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.
VALUATION OF PORTFOLIO SHARES
Portfolio shares are sold at the price next computed after
receipt of a purchase or redemption order. 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.
<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>
A Statement of Additional Information dated May 1, 2000, which
contains further information about the Fund, has been filed with
the Securities and Exchange Commission and is incorporated by
reference into this Prospectus. Additional information about
the Fund's investments is available in the Fund's annual and
semi-annual reports to shareholders. In the Fund's annual
report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund's
performance during its last fiscal year. A copy of the
Statement of Additional Information or its annual and semi-
annual reports may be obtained without charge by calling the
Fund at (513) 595-2600, or by writing the Fund at P.O. Box
40409, Cincinnati, Ohio 45240-0409.
The Fund's Statement of Additional Information, annual and semi-
annual reports and certain other information about the Fund can
be reviewed and copied at the SEC's public reference room (which
will send copies of these documents upon request and for a fee).
Information about the operation of the SEC's public reference
room may be obtained by calling the SEC at 1-800-SEC-0330.
Copies of Fund documents may be requested by writing to the
Public reference Section of the SEC, Washington, D.C. 20549-
6009.
These fund Documents and other information about the Fund are
also available without charge at the SEC's web site:
http://www.sec.gov.
File 811-04000
<PAGE>
SUMMIT MUTUAL FUNDS, INC.
- ------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2000
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 Summit
Mutual Funds, Inc.'s ("Fund") current Prospectus, dated May 1, 2000,
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.
Summit Mutual Funds, Inc., formerly known as Carillon Fund, Inc.
is a diversified, open-end management investment company.
TABLE OF CONTENTS
Page
Investment Policies (3)........................................2
Money Market Instruments and Investment Techniques...........2
Certain Risk Factors Relating to High-Yield, High-Risk Bonds.5
Investments in Foreign Securities............................5
Futures Contracts............................................6
Options.....................................................10
Lending Portfolio Securities................................13
Investment Restrictions.......................................13
Portfolio Turnover............................................16
Management of the Fund (14)...................................17
Directors and Officers......................................17
Investment Adviser..........................................19
Payment of Expenses.........................................19
Advisory Fee................................................20
Investment Advisory Agreement...............................21
Administration..............................................22
Service Agreement...........................................22
Securities Activities of Adviser............................22
Code of Ethics..............................................23
Determination of Net Asset Value (16).........................23
Purchase and Redemption of Shares (16)........................24
Taxes (15)....................................................24
Portfolio Transactions and Brokerage..........................25
General Information (2).......................................25
Capital Stock...............................................25
Voting Rights...............................................26
Additional Information......................................27
Independent Auditors..........................................27
Appendix A: S&P, Frank Russell and Nasdaq Disclaimer..........28
( ) indicates page on which the corresponding section appears in the
Prospectus.
- --------------------------------------------------------------
SMFI 515 5-00
CARILLON FUND, INC.
- ---------------------------------------------------------------
INVESTMENT POLICIES
The following specific policies supplement the Portfolios'
investment strategies, policies and risks set forth in the
Prospectus.
Money Market Instruments and Investment Techniques
Each Portfolio may invest in money market instruments whose
characteristics are consistent with the Portfolio's investment
program and are described below unless explicitly excluded in the
text.
Small Bank Certificates of Deposit. Each Portfolio may invest in
certificates of deposit issued by commercial banks, savings banks,
and savings and loan associations having assets of less than $1
billion, provided that the principal amount of such certificates is
insured in full by the Federal Deposit Insurance Corporation
("FDIC"). The FDIC presently insures accounts up to $100,000, but
interest earned above such amount is not insured by the FDIC.
Repurchase Agreements. A repurchase agreement is an instrument under
which the purchaser (i.e., one of the Portfolios) acquires ownership
of the obligation (the underlying security) and the seller (the
"issuer" of the repurchase agreement) agrees, at the time of sale, to
repurchase the obligation at a mutually agreed upon time and price,
thereby determining the yield during the purchaser's holding period.
This results in a fixed rate of return insulated from market
fluctuations during such period. The underlying securities will only
consist of securities in which the respective Portfolio may otherwise
invest. Repurchase agreements usually are for short periods,
normally under one week, and are considered to be loans under the
Investment Company Act of 1940. Repurchase agreements will be fully
collateralized at all times and interest on the underlying security
will not be taken into account for valuation purposes. The
investments by a Portfolio in repurchase agreements may at times be
substantial when, in the view of the Adviser, unusual market,
liquidity, or other conditions warrant.
If the issuer of the repurchase agreement defaults and does not
repurchase the underlying security, the Portfolio might incur a loss
if the value of the underlying security declines, and the Fund might
incur disposition costs in liquidating the underlying security. In
addition, if the issuer becomes involved in bankruptcy proceedings,
the Portfolio may be delayed or prevented from obtaining the
underlying security for its own purposes. In order to minimize any
such risk, the Portfolio will only engage in repurchase agreements
with recognized securities dealers and banks determined to present
minimal credit risk by the Adviser, under the direction and
supervision of the Board of Directors.
U.S. Government Obligations. Securities issued and guaranteed as to
principal and interest by the United States Government include a
variety of Treasury securities, which differ only in their interest
rates, maturities and times of issuance. Treasury bills have a
maturity of one year or less. Treasury notes have maturities of one
to seven years and Treasury bonds generally have a maturity of
greater than five years.
Government Agency Securities. Government agency securities that are
permissible investments consist of securities either issued or
guaranteed by agencies or instrumentalities of the United States
Government. Agencies of the United States Government which issue or
guarantee obligations include, among others, Export-Import Banks of
the United States, Farmers Home Administration, Federal Housing
Administration, Government National Mortgage Association ("GNMA"),
Maritime Administration, Small Business Administration and The
Tennessee Valley Authority. Obligations of instrumentalities of the
United States Government include securities issued or guaranteed by,
among others, the Federal National Mortgage Association ("FNMA"),
Federal Home Loan Banks, Federal Home Loan Mortgage Corporation
("FHLMC"), Federal Intermediate Credit Banks, Banks for Cooperatives,
and the U.S. Postal Service. Some of these securities, such as those
guaranteed by GNMA, are supported by the full faith and credit of the
U.S. Treasury; others, such as those issued by The Tennessee Valley
Authority, are supported by the right of the issuer to borrow from
the Treasury; while still others, such as those issued by the Federal
Land Banks, are supported only by the credit of the instrumentality.
The Fund's primary usage of these types of securities will be GNMA
certificates and FNMA and FHLMC mortgage-backed obligations which are
discussed in more detail below.
Certificates of Deposit. Certificates of deposit are generally
short-term, interest-bearing negotiable certificates issued by banks
or savings and loan associations against funds deposited in the
issuing institution.
Time Deposits. Time Deposits are deposits in a bank or other
financial institution for a specified period of time at a fixed
interest rate for which a negotiable certificate is not received.
Bankers' Acceptance. A bankers' acceptance is a time draft drawn on
a commercial bank by a borrower usually in connection with an
international commercial transaction (to finance the import, export,
transfer or storage of goods). The borrower is liable for payment as
well as the bank, which unconditionally guarantees to pay the draft
at its face amount on the maturity date. Most acceptances have
maturities of six months or less and are traded in secondary markets
prior to maturity.
Commercial Paper. Commercial paper refers to short-term, unsecured
promissory notes issued by corporations to finance short-term credit
needs. Commercial paper is usually sold on a discount basis and has
a maturity at the time of issuance not exceeding nine months.
Corporate Debt Securities. Corporate debt securities with a
remaining maturity of less than one year tend to become extremely
liquid and are traded as money market securities. Such issues with
between one and two years remaining to maturity tend to have greater
liquidity and considerably less market value fluctuations than
longer-term issues.
When-issued and Delayed-delivery Securities. From time to time, in
the ordinary course of business, each Portfolio of the Fund may
purchase securities on a when-issued or delayed-delivery basis -
i.e., delivery and payment can take place a month or more after the
date of the transactions. The securities so purchased are subject to
market fluctuation and no interest accrues to the purchaser during
this period. At the time a Portfolio makes the commitment to
purchase securities on a when-issued or delayed-delivery basis, the
Fund will record the transaction and thereafter reflect the value,
each day, of such security in determining the net asset value of such
Portfolio. At the time of delivery of the securities, the value may
be more or less than the purchase price. Each Portfolio will also
establish a segregated account with the Fund's custodian bank in
which it will maintain cash or cash equivalents or other Portfolio
securities equal in value to commitments for such when-issued or
delayed-delivery securities.
GNMA Certificates GNMA certificates are mortgage-backed securities
representing part ownership of a pool of mortgage loans on which
timely payment of interest and principal is guaranteed by the full
faith and credit of the U.S. government. GNMA certificates differ
from typical bonds because principal is repaid monthly over the term
of the loan rather than returned in a lump sum at maturity. Because
both interest and principal payments (including prepayments) on the
underlying mortgage loans are passed through to the holder of the
certificate, GNMA certificates are called "pass-through" securities.
Although the mortgage loans in the pool have maturities of up to
30 years, the actual average life of the GNMA certificates typically
will be substantially less because the mortgages are subject to
normal principal amortization and may be prepaid prior to maturity.
Prepayment rates vary widely and may be affected by changes in market
interest rates. In periods of falling interest rates, the rate of
prepayment tends to increase, thereby shortening the actual average
life of the GNMA certificates. Conversely, when interest rates are
rising, the rate of prepayment tends to decrease, thereby lengthening
the actual average life of the GNMA certificates. Accordingly, it is
not possible to predict accurately the average life of a particular
pool. Reinvestment of prepayments may occur at higher or lower rates
that the original yield on the certificates. Due to the prepayment
feature and the need to reinvest prepayments of principal at current
rates, GNMA certificates can be less effective than typical bonds of
similar maturities at "locking-in" yields during periods of declining
interest rates, although they may have comparable risks of decline in
value during periods of rising interest rates.
FNMA and FHLMC Mortgage-Backed Obligations The Federal National
Mortgage Association ("FNMA"), a federally chartered and privately
owned corporation, issues pass-through securities representing an
interest in a pool of conventional mortgage loans. FNMA guarantees
the timely payment of principal and interest but this guarantee is
not backed by the full faith and credit of the U.S. government. The
Federal Home Loan Mortgage Corporation ("FHLMC"), a corporate
instrumentality of the United States, issues participation
certificates that represent an interest in a pool of conventional
mortgage loans. FHLMC guarantees the timely payment of interest and
the ultimate collection of principal and maintains reserves to
protect holders against losses due to default, but the certificates
are not backed by the full faith and credit of the U.S. government.
As is the case with GNMA certificates, the actual maturity of and
realized yield on particular FNMA and FHLMC pass-through securities
will vary based on the prepayment experience of the underlying pool
of mortgages.
Mortgage-Related Securities Each Portfolio of the Fund other than
the S&P 500 Index Portfolio, S&P MidCap 400 Index Portfolio, Russell
2000 Small Cap Index Portfolio and Nasdaq-100 Index Portfolio may
invest in collateralized mortgage obligations ("CMOs") or mortgage-
backed bonds issued by financial institutions such as commercial
banks, savings and loan associations, mortgage banks and securities
broker-dealers (or affiliates of such institutions established to
issue these securities). CMOs are obligations fully collateralized
directly or indirectly by a pool of mortgages on which payments of
principal and interest are dedicated to payment of principal and
interest on the CMOs. Payments on the underlying mortgages (both
interest and principal) are passed through to the holders, although
not necessarily on a pro rata basis, on the same schedule as they are
received. Mortgage-backed bonds are general obligations of the issuer
fully collateralized directly or indirectly by a pool of mortgages.
The mortgages serve as collateral for the issuer's payment
obligations on the bonds, but interest and principal payments on the
mortgages are not passed through either directly (as with GNMA
certificates and FNMA and FHLMC pass-through securities) or on a
modified basis (as with CMOs). Accordingly, a change in the rate of
prepayments on the pool of mortgages could change the effective
maturity of a CMO but not that of a mortgage-backed bond (although,
like many bonds, mortgage-backed bonds may be callable by the issuer
prior to maturity).
Each Portfolio of the Fund other than the S&P 500 Index
Portfolio, S&P MidCap 400 Index Portfolio, Russell 2000 Small Cap
Index Portfolio and Nasdaq-100 Index Portfolio may also invest in a
variety of more risky CMOs, including interest only ("IOs"),
principal only ("POs"), inverse floaters, or a combination of these
securities. Stripped mortgage-backed securities ("SMBS") are usually
structured with several classes that receive different proportions of
the interest and principal distributions from a pool of mortgage
assets. A common type of SMBS will have one class receiving all of
the interest from the mortgage assets (an IO), while the other class
will receive all of the principal (a PO). However, in some instances,
one class will receive some of the interest and most of the principal
while the other class will receive most of the interest and the
remainder of the principal. If the underlying mortgage assets
experience greater-than-anticipated or less-than-anticipated
prepayments of principal, the Fund may fail to fully recoup its
initial investment or obtain its initially assumed yield on some of
these securities. The market value of the class consisting entirely
of principal payments generally is unusually volatile in response to
changes in interest rates. The yields on classes of SMBS that have
more uncertain timing of cash flows are generally higher than
prevailing market yields on other mortgage-backed securities because
there is a greater risk that the initial investment will not be fully
recouped or received as planned over time.
Each Portfolio of the Fund other than the S&P 500 Index
Portfolio, S&P MidCap 400 Index Portfolio, Russell 2000 Small Cap
Index Portfolio and Nasdaq-100 Index Portfolio may invest in another
CMO class known as leveraged inverse floating rate debt instruments
("inverse floaters"). The interest rate on an inverse floater resets
in the opposite direction from the market rate of interest to which
the inverse floater is indexed. An inverse floater may be considered
to be leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index rate
of interest. The higher degree of leverage inherent in inverse
floaters is associated with greater volatility in their market
values. Accordingly, the duration of an inverse floater may exceed
its stated final maturity.
Certain CMOs may be deemed to be illiquid securities for purposes
of the Fund's 10% limitation on investments in such securities. The
investment adviser limits investments in more risky CMOs (IOs, POs,
inverse floaters) to no more than 5% of its total assets.
Certain Risk Factors Relating to High-Yield, High-Risk Bonds
The descriptions below are intended to supplement the material in
the Prospectus regarding high-yield, high-risk bonds.
Sensitivity to Interest Rates and Economic Changes. High-yield bonds
are very sensitive to adverse economic changes and corporate
developments and their yields will fluctuate over time. During an
economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would
adversely affect their ability to service their principal and
interest payment obligations, to meet projected business goals, and
to obtain additional financing. If the issuer of a bond defaulted on
its obligations to pay interest or principal or entered into
bankruptcy proceedings, the Portfolio may incur losses or expenses in
seeking recovery of amounts owed to it. In addition, periods of
economic uncertainty and changes can be expected to result in
increased volatility of market prices of high-yield bonds and the
Portfolio's net asset value.
Payment Expectations. High-yield bonds may contain redemption or
call provisions. If an issuer exercised these provisions in a
declining interest rate market, the Portfolio would have to replace
the security with a lower-yielding security, resulting in a decreased
return for investors. Conversely, a high-yield bond's value will
decrease in a rising interest rate market, as will the value of the
Portfolio's assets. If the Portfolio experiences unexpected net
redemptions, this may force it to sell high-yield bonds without
regard to their investment merits, thereby decreasing the asset base
upon which expenses can be spread and possibly reducing the
Portfolio's rate of return.
Liquidity and Valuation. There may be little trading in the
secondary market for particular bonds, which may affect adversely the
Portfolio's ability to value accurately or dispose of such bonds.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of high-
yield bonds, especially in a thin market.
Investments in Foreign Securities
American Depositary Receipts. American Depositary Receipts ("ADRs")
may be issued in sponsored or unsponsored programs. In sponsored
programs, the issuer makes arrangements to have its securities traded
in the form of ADRs; in unsponsored programs, the issuer may not be
directly involved in the creation of the program. Although the
regulatory requirements with respect to sponsored and unsponsored
programs are generally similar, the issuers of unsponsored ADRs are
not obligated to disclose material information in the United States
and, therefore, such information may not be reflected in the market
value of the ADRs.
Foreign Exchange. If a foreign country cannot generate sufficient
earnings from foreign trade to service its external debt, it may need
to depend on continuing loans and aid from foreign governments,
commercial banks, multilateral organizations, and inflows of foreign
investment. The cost of servicing external debt will also generally
be adversely affected by rising international interest rates because
many external debt obligations bear interest at rates which are
adjusted based upon international interest rates. The ability to
service external debt will also depend on the level of the relevant
government's international currency reserves and its access to
foreign currencies. Currency devaluations may affect the ability of
an obligor to obtain sufficient foreign currencies to service its
external debt.
Foreign Currency Exchange Transactions. Each Portfolio that engages
in foreign currency exchange transactions may do so on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign exchange
currency market, or on a forward basis to "lock in" the U.S. dollar
price of the security. By entering into a forward contract for the
purchase or sale, for a fixed amount of U.S. dollars, of the amount
of foreign currency involved in the underlying transactions, a
Portfolio attempts to protect itself against possible loss resulting
from an adverse change in the relationship between the U.S. dollar
and the applicable foreign currency during the period between the
date on which the security is purchased or sold and the date on which
related payments are made or received.
Portfolios will not enter into forward contracts for longer-term
hedging purposes. The possibility of changes in currency exchange
rates will be incorporated into the long-term investment
considerations when purchasing the investment and subsequent
considerations for possible sale of the investment.
Foreign Markets. Delays in settlement which may occur in connection
with transactions involving foreign securities could result in
temporary periods when a portion of the assets of a portfolio is
uninvested and no return is earned thereon. The inability of a
portfolio to make intended security purchases due to settlement
problems could cause the portfolio to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to
settlement problems could result in losses to a portfolio due to
subsequent declines in values of the portfolio securities or, if the
portfolio has entered into a contract to sell the security, possible
liability to the purchaser. Certain foreign markets, especially
emerging markets, may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales
of securities by foreign investors. A portfolio could be adversely
affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by the
application to the portfolio of any restrictions on investments.
Foreign Debt Securities. Investing in foreign debt securities will
expose the Portfolios to the direct or indirect consequences of
political, social or economic changes in the industrialized
developing and emerging countries that issue the securities. The
ability and willingness of obligor or the governmental authorities
that control repayment of their external debt to pay principal and
interest on such debt when due may depend on general economic and
political conditions within the relevant country. Additional
country-related factors unique to foreign issuers which may influence
the ability or willingness to service debt include, but are not
limited to, a country's cash flow situation, the availability of
sufficient foreign exchange on the date a payment is due, the
relative size of its debt service burden to the economy as a whole,
and its government's relationships with the International Monetary
Fund, the World Bank and other international agencies.
Futures Contracts
For hedging purposes, including protecting the price or interest
rate of securities that the Portfolio intends to buy, the S&P 500
Index Portfolio, S&P MidCap 400 Index Portfolio, Balanced Index
Portfolio, Russell 2000 Small Cap Index Portfolio and Nasdaq-100
Index Portfolio may enter into futures contracts that relate to
securities in which it may directly invest and indices comprised of
such securities and may purchase and write call and put options on
such contracts. As a temporary investment strategy, until a
Portfolio reaches $25 million ($50 million in the case of the Russell
2000 Small Cap Index Portfolio and Nasdaq-100 Index Portfolio) 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. The Portfolios do not intend to enter into futures
contracts that are not traded on exchanges or boards of trade.
A financial futures contract is a contract to buy or sell a
specified quantity of financial instruments such as U.S. Treasury
bills, notes and bonds, commercial paper and bank certificates of
deposit or the cash value of a financial instrument index at a
specified future date at a price agreed upon when the contract is
made. A stock index futures contract is a contract to buy or sell
specified units of a stock index at a specified future date at a
price agreed upon when the contract is made. The value of a unit is
based on the current value of the contract index. Under such
contracts no delivery of the actual stocks making up the index takes
place. Rather, upon expiration of the contract, settlement is made
by exchanging cash in an amount equal to the difference between the
contract price and the closing price of the index at expiration, net
of variation margin previously paid.
Substantially all futures contracts are closed out before
settlement date or called for cash settlement. A futures contract is
closed out by buying or selling an identical offsetting futures
contract. Upon entering into a futures contract, the Portfolio is
required to deposit an initial margin with the Custodian for the
benefit of the futures broker. The initial margin serves as a "good
faith" deposit that the Portfolio will honor their futures
commitments. Subsequent payments (called "variation margin") to and
from the broker are made on a daily basis as the price of the
underlying investment fluctuates. In the event of the bankruptcy of
the futures broker that holds margin on behalf of the Portfolio, the
Portfolio may be entitled to return of margin owed to it only in
proportion to the amount received by the broker's other customers.
The Adviser will attempt to minimize this risk by monitoring the
creditworthiness of the futures brokers with which the Portfolio does
business.
Because the value of index futures depends primarily on the value
of their underlying indexes, the performance of the broad-based
contracts will generally reflect broad changes in common stock
prices. However, because the Portfolio may not be invested in
precisely the same proportion as the S&P 500 or S&P 400, it is likely
that the price changes of the Portfolio's index futures positions
will not match the price changes of the Portfolio's other
investments.
Options on futures contracts give the purchaser the right to
assume a position at a specified price in a futures contract at any
time before expiration of the option contract.
The Portfolios will enter into futures contracts which are traded
on national futures exchanges and are standardized as to maturity
date and underlying financial instrument. The principal financial
futures exchanges in the United States are the Board of Trade of the
City of Chicago, the Chicago Mercantile Exchange, the New York
Futures Exchange and the Kansas City Board of Trade. Futures
exchanges and trading in the United States are regulated under the
Commodity Exchange Act by the Commodity Futures Trading Commission
("CFTC"). Although techniques other than the sale and purchase of
futures contracts could be used for the above-referenced purposes,
futures contracts offer an effective and relatively low cost means of
implementing the Portfolios' objectives in these areas.
Regulatory Limitations. The Portfolios will engage in transactions
in futures contracts and options thereon only for bona fide hedging,
risk management and other permissible purposes, in each case in
accordance with the rules and regulations of the CFTC, and not for
speculation.
In instances involving the purchase of futures contracts or call
options thereon or the writing of put options thereon by the
Portfolios, an amount of cash, U.S. Government securities or other
liquid securities, equal to the market value of the futures contracts
and options thereon (less any related margin deposits), will be
deposited in a segregated account with the Portfolios' custodian to
cover the position, or alternative cover will be employed thereby
insuring that the use of such futures contracts and options is
unleveraged.
In addition, CFTC regulations may impose limitations on the
Portfolios' ability to engage in certain yield enhancement and risk
management strategies. If the CFTC or other regulatory authorities
adopt different (including less stringent) or additional
restrictions, the Portfolios would comply with such new restrictions.
SPECIAL RISKS OF FUTURES CONTRACTS
Volatility And Leverage. The prices of futures contracts are
volatile and are influenced, among other things, by actual and
anticipated changes in the market and interest rates, which in turn
are affected by fiscal and monetary policies and national and
international policies and economic events.
Most United States futures exchanges limit the amount of
fluctuation permitted in futures contract prices during a single
trading day. The daily limit establishes the minimum amount that the
price of a futures contract may vary either up or down from the
previous day's settlement price at the end of a trading session.
Once the daily limit has been reached in a particular type of futures
contract, no trades may be made on that day at a price beyond that
limit. The daily limit governs only price movement during a
particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions
and subjecting some futures traders to substantial losses.
Because of the low margin deposits required, futures trading
involves an extremely high degree of leverage. As a result, a
relatively small price movement in a futures contract may result in
immediate and substantial loss, as well as gain, to the investor.
For example, if at the time of purchase, 10% of the value of the
futures contract is deposited as margin, a subsequent 10% decrease in
the value of the futures contract would result in a total loss of the
margin deposit, before any deduction for the transaction costs, if
the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit, if the contract
were closed out. Thus, a purchase or sale of a futures contract may
result in losses in excess of the amount invested in the futures
contract. However, a Portfolio would presumably have sustained
comparable losses if, instead of the futures contract, it had
invested in the underlying instrument and sold it after the decline.
Furthermore, in the case of a futures contract purchase, in order to
be certain that a Portfolio has sufficient assets to satisfy its
obligations under a futures contract, the Portfolio earmarks to the
futures contract money market instruments equal in value to the
current value of the underlying instrument less the margin deposit.
Liquidity. Each Portfolio may elect to close some or all of its
futures positions at any time prior to their expiration. A Portfolio
would do so to reduce exposure represented by long futures positions
or increase exposure represented by short futures positions. A
Portfolio may close its positions by taking opposite positions which
would operate to terminate the Portfolio's position in the futures
contracts. Final determinations of variation margin would then be
made, additional cash would be required to be paid by or released to
the Portfolio, and the Portfolio would realize a loss or a gain.
Futures contracts may be closed out only on the exchange or board of
trade where the contracts were initially traded. Although each
Portfolio intends to purchase or sell futures contracts only on
exchanges or boards of trade where there appears to be an active
market, there is no assurance that a liquid market on an exchange or
board of trade will exist for any particular contract at any
particular time. In such event, it might not be possible to close a
futures contract, and in the event of adverse price movements, each
Portfolio would continue to be required to make daily cash payments
of variation margin. However, in the event futures contracts have
been used to hedge the underlying instruments, the Portfolios would
continue to hold the underlying instruments subject to the hedge
until the futures contracts could be terminated. In such
circumstances, an increase in the price of the underlying
instruments, if any, might partially or completely offset losses on
the futures contract. However, as described below, there is no
guarantee that the price of the underlying instruments will in fact
correlate with the price movements in the futures contract and thus
provide an offset to losses on a futures contract.
Hedging Risk. A decision of whether, when, and how to hedge involves
skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market behavior, or
market or interest rate trends. There are several risks in
connection with the use by the Portfolios of futures contract as a
hedging device. One risk arises because of the imperfect correlation
between movements in the prices of the futures contracts and
movements in the prices of the underlying instruments which are the
subject of the hedge. The Adviser will, however, attempt to reduce
this risk by entering into futures contracts whose movements, in its
judgment, will have a significant correlation with movements in the
prices of each Portfolio's underlying instruments sought to be
hedged.
Successful use of futures contracts by the Portfolios for hedging
purposes is also subject to the Adviser's ability to correctly
predict movements in the direction of the market. It is possible
that, when a Portfolio has sold futures to hedge its portfolio
against a decline in the market, the index, indices, or underlying
instruments on which the futures are written might advance and the
value of the underlying instruments held in the Portfolio might
decline. If this were to occur, the Portfolio would lose money on
the futures and also would experience a decline in value in its
underlying instruments. However, while this might occur to a certain
degree, the Adviser believes that over time the value of a
Portfolio's will tend to move in the same direction as the market
indices which are intended to correlate to the price movements of the
underlying instruments sought to be hedged. It is also possible that
if a Portfolio were to hedge against the possibility of a decline in
the market (adversely affecting the underlying instruments held in
its portfolio) and prices instead increased, the Portfolio would lose
part or all of the benefit of increased value of those underlying
instruments that it has hedged, because it would have offsetting
losses in its futures positions. In addition, in such situations, if
a Portfolio had insufficient cash, it might have to sell underlying
instruments to meet daily variation margin requirements. Such sales
of underlying instruments might be, but would not necessarily be, at
increased prices (which would reflect the rising market). The
Portfolios might have to sell underlying instruments at a time when
it would be disadvantageous to do so.
In addition to the possibility that there might be an imperfect
correlation, or no correlation at all, between price movements in the
futures contracts and the portion of the portfolio being hedged, the
price movements of futures contracts might not correlate perfectly
with price movements in the underlying instruments due to certain
market distortions. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather
than meeting additional margin deposit requirements, investors might
close futures contracts through offsetting transactions which could
distort the normal relationship between the underlying instruments
and futures markets. Second, the margin requirements in the futures
market are less onerous than margin requirements in the securities
markets, and as a result the futures market might attract more
speculators than the securities markets do. Increased participation
by speculators in the futures market might also cause temporary price
distortions. Due to the possibility of price distortion in the
futures market and also because of the imperfect correlation between
price movements in the underlying instruments and movements in the
prices of futures contracts, even a correct forecast of general
market trends by the Adviser might not result in a successful hedging
transaction over a very short time period
Options on futures contracts give the purchaser the right to
assume a position at a specified price in a futures contract at any
time before expiration of the option contract.
Options
The Bond, Balanced Index, Russell 2000 Small Cap Index and
Nasdaq-100 Index Portfolios may sell (write) listed options on U.S.
Treasury Securities and options on contracts for the future delivery
of U.S. Treasury Securities as a means of hedging the value of such
securities owned by the Portfolio. The S&P 500 Index Portfolio, S&P
MidCap 400 Index Portfolio, Russell 2000 Small Cap Index and Nasdaq-
100 Index 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. In addition, each of the aforementioned Portfolios may
write covered call options on any security in which it is eligible to
invest.
As a writer of a call option, a Portfolio may terminate its
obligation by effecting a closing purchase transaction. This is
accomplished by purchasing an option of the same series as the option
previously written. However, once the Portfolio has been assigned an
exercise notice, the Portfolio will be unable to effect a closing
purchase transaction. There can be no assurance that a closing
purchase transaction can be effected when the Portfolio so desires.
The Portfolio will realize a profit from a closing transaction if
the price of the transaction is less than the premium received from
writing the option; the Portfolio will realize a loss from a closing
transaction if the price of the transaction is more than the premium
received from writing the option. Since the market value of call
options generally reflects increases in the value of the underlying
security, any loss resulting from the closing transaction may be
wholly or partially offset by unrealized appreciation of the
underlying security. Conversely, any gain resulting from the closing
transaction may be wholly or partially offset by unrealized
depreciation of the underlying security. The principal factors
affecting the market value of call options include supply and demand,
the current market price and price volatility of the underlying
security, and the time remaining until the expiration date.
There is no assurance that a liquid secondary market will exist
for any particular option. In the event it is not possible to effect
a closing transaction, the Portfolio will not be able to sell the
underlying security, until the option expires or the option is
exercised by the holder.
The Portfolio will effect a closing transaction to realize a
profit on an outstanding call option, to prevent an underlying
security from being called, to permit the sale of an underlying
security prior to the expiration date of the option, or to allow for
the writing of another call option on the same underlying security
with either a different exercise price or expiration date or both.
Possible reasons for the absence of a liquid secondary market on
an exchange include the following: (a) insufficient trading interest
in certain options; (b) restrictions on transactions imposed by an
exchange; (c) trading halts, suspensions or other restrictions
imposed with respect to particular classes or series of options or
underlying securities; (d) inadequacy of the facilities of an
exchange or the Clearing Corporation to handle trading volume; or (e)
a decision by one or more exchanges to discontinue the trading of
options or impose restrictions on types of orders. There can be no
assurance that higher than anticipated trading activity or order flow
or other unforeseen events might not at times render the trading
facilities inadequate and thereby result in the institution of
special trading procedures or restrictions which could interfere with
the Portfolio's ability to effect closing transactions.
The Bond, Balanced Index, Russell 2000 Small Cap Index and
Nasdaq-100 Index Portfolios may write call options on futures
contracts on U.S. Treasury Securities as a hedge against the adverse
effect of expected increases in interest rates on the value of
Portfolio securities, in order to establish more definitely the
effective return on securities held by the Portfolio. The S&P 500
Index Portfolio, S&P MidCap 400 Index Portfolio, Balanced Index
Portfolio, Russell 2000 Small Cap Index Portfolio and Nasdaq-100
Index Portfolio may write call options on futures contracts on their
respective indexes or securities included therein only for hedging
purposes to protect the price of securities it intends to buy and
when such transactions enable it to correlate its investment
performance more closely to that of their respective indexes than
would a direct purchase of securities included in their respective
indexes. The Portfolios will not write options on futures contracts
for speculative purposes.
A futures contract on a debt security is a binding contractual
commitment which will result in an obligation to make or accept
delivery, during a specified future time, of securities having
standardized face value and rate of return. Selling a futures
contract on debt securities (assuming a short position) would give
the Portfolio a legal obligation and right as seller to make future
delivery of the security against payment of the agreed price.
Upon the exercise of a call option on a futures contract, the
writer of the option (the Portfolio) is obligated to sell the futures
contract (to deliver a long position to the option holder) at the
option exercise price, which will presumably be lower than the
current market price of the contract in the futures market. However,
as with the trading of futures, most participants in the options
markets do not seek to realize their gains or losses by exercise of
their option rights. Instead, the holder of an option will usually
realize a gain or loss by buying or selling an offsetting option at a
market price that will reflect an increase or a decrease from the
premium originally paid. Nevertheless, if an option on a futures
contract written by the Portfolio is exercised, the Portfolio intends
to either close out the futures contract by purchasing an offsetting
futures contract, or deliver the underlying securities immediately,
in order to avoid assuming a short position. There can be no
assurance that the Portfolio will be able to enter into an offsetting
transaction with respect to a particular contract at a particular
time, but it may always deliver the underlying security.
As a writer of options on futures contracts, the Portfolio will
receive a premium but will assume a risk of adverse movement in the
price of the underlying futures contract. If the option is not
exercised, the Portfolio will gain the amount of the premium, which
may partially offset unfavorable changes in the value of securities
held in the Portfolio. If the option is exercised, the Portfolio
might incur a loss in the option transaction which would be reduced
by the amount of the premium it has received.
While the holder or writer of an option on a futures contract may
normally terminate its position by selling or purchasing an
offsetting option, the Portfolio's ability to establish and close out
options positions at fairly established prices will be subject to the
maintenance of a liquid market. The Portfolio will not write options
on futures contracts unless, in the Adviser's opinion, the market for
such options has sufficient liquidity that the risks associated with
such options transactions are not at unacceptable levels.
Risks. While options will be sold in an effort to reduce certain
risks, those transactions themselves entail certain other risks.
Thus, while the Portfolio may benefit from the use of options,
unanticipated changes in interest rates or security price movements
may result in a poorer overall performance for the Portfolio than if
it had not entered into any options transactions. The price of U.S.
Treasury Securities futures are volatile and are influenced, among
other things, by changes in prevailing interest rates and
anticipation of future interest rate changes. The price of S&P 500,
S&P 400 Index, Russell 2000 Index and Nasdaq-100 Index futures are
also volatile and are influenced, among other things, by changes in
conditions in the securities markets in general.
In the event of an imperfect correlation between a futures
position (and a related option) and the Portfolio position which is
intended to be protected, the desired protection may not be obtained.
The correlation between changes in prices of futures contracts and of
the securities being hedged is generally only approximate. The
amount by which such correlation is imperfect depends upon many
different circumstances, such as variations in speculative market
demand for futures and for debt securities (including technical
influences in futures trading) and differences between the financial
instruments being hedged and the instruments underlying the standard
options on futures contracts available for trading.
Due to the imperfect correlation between movements in the prices
of futures contracts and movements in the prices of the underlying
debt securities, the price of a futures contract may move more than
or less than the price of the securities being hedged. If the price
of the future moves less than the price of the securities which are
the subject of the hedge, the hedge will not be fully effective and
if the price of the securities being hedged has moved in an
unfavorable direction, the Portfolio would be in a better position
than if it had not hedged at all. If the price of the futures moves
more than the price of the security, the Portfolio will experience
either a gain or loss on the option on the future which will not be
completely offset by movements in the price of the securities which
are the subject of the hedge.
The market prices of futures contracts and options thereon may be
affected by various factors. If participants in the futures market
elect to close out their contracts through offsetting transactions
rather than meet margin deposit requirements, distortions in the
normal relationship between the debt securities and futures markets
could result. Price distortions could also result if investors in
futures contracts make or take delivery of underlying securities
rather than engage in closing transactions. This could occur, for
example, if there is a lack of liquidity in the futures market. From
the point of view of speculators, the deposit requirements in the
futures markets are less onerous than margins requirements in the
securities markets; accordingly, increased participation by
speculators in the futures market could cause temporary price
distortions. A correct forecast of interest rate trends by the
adviser may still not result in a successful hedging transaction
because of possible price distortions in the futures market and
because of the imperfect correlation between movements in the prices
of debt securities and movements in the prices of futures contracts.
A well-conceived hedge may be unsuccessful to some degree because of
market behavior or unexpected interest rate trends.
Limitations on the Use of Options on Futures. The Portfolio will
only write options on futures that are traded on exchanges and are
standardized as to maturity date and underlying financial instrument.
The principal exchanges in the United States for trading options on
Treasury Securities are the Board of Trade of the City of Chicago and
the Chicago Mercantile Exchange. These exchanges and trading options
on futures are regulated under the Commodity Exchange Act by the
Commodity Futures Trading Commission ("CFTC").
It is the Fund's opinion that it is not a "commodity pool" as
defined under the Commodity Exchange Act and in accordance with rules
promulgated by the CFTC.
The Portfolio will not write options on futures contracts for
which the aggregate premiums exceed 5% of the fair market value of
the Portfolio's assets, after taking into account unrealized profits
and unrealized losses on any such contracts it has entered into
(except that, in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount generally may be excluded
in computing the 5%).
All of the futures options transactions employed by the Portfolio
will be bona fide hedging transactions, as that term is used in the
Commodity Exchange Act and has been interpreted and applied by the
CFTC. To ensure that its futures options transactions meet this
standard, the Fund will enter into such transactions only for the
purposes and with the intent that CFTC has recognized to be
appropriate.
Custodial Procedures and Margins. The Fund's Custodian acts as the
Fund's escrow agent as to securities on which the Fund has written
call options and with respect to margin which the Fund must deposit
in connection with the writing of call options on futures contracts.
The Clearing Corporation (CC) will release the securities or the
margin from escrow on the expiration of the call, or when the Fund
enters into a closing purchase transaction. In this way, assets of
the Fund will never be outside the control of the Fund's custodian,
although such control might be limited by the escrow receipts issued.
At the time the Portfolio sells a call option on a contract for
future delivery of U.S. Treasury Securities ("Treasury futures
contract"), it is required to deposit with its custodian, in an
escrow account, a specified amount of cash or U.S. Government
securities ("initial margin"). The account will be in the name of
the CC. The amount of the margin generally is a small percentage of
the contract amount. The margin required is set by the exchange on
which the contract is traded and may be modified during the term of
the contract. The initial margin is in the nature of a performance
bond or good faith deposit, and it is released from escrow upon
termination of the option assuming all contractual obligations have
been satisfied. The Portfolio will earn interest income on its
initial margin deposits.
In accordance with the rules of the exchange on which the option
is traded, it might be necessary for the Portfolio to supplement the
margin held in escrow. This will be done by placing additional cash
or U.S. Government securities in the escrow account. If the amount
of required margin should decrease, the CC will release the
appropriate amount from the escrow account.
The assets in the margin account will be released to the CC only
if the Portfolio defaults or fails to honor its commitment to the CC
and the CC represents to the custodian that all conditions precedent
to its right to obtain the assets have been satisfied.
Lending Portfolio Securities
The S&P 500 Index Portfolio, S&P MidCap 400 Index Portfolio,
Balanced Index Portfolio, Russell 2000 Small Cap Index Portfolio and
Nasdaq-100 Index Portfolio may lend portfolio securities with a value
up to 10% of its total assets. Such loans may be terminated at any
time. The Portfolio will continuously maintain as collateral cash or
obligations issued by the U.S. government, its agencies or
instrumentalities in an amount equal to not less than 100% of the
current market value (on a daily marked-to-market basis) of the
loaned securities plus declared dividends and accrued interest.
While portfolio securities are on loan, the borrower will pay the
Portfolio any income accruing thereon, and the Portfolio may invest
or reinvest the collateral (depending on whether the collateral is
cash or U.S. Government securities) in portfolio securities, thereby
earning additional income. Loans are typically subject to
termination by the Portfolio in the normal settlement time, currently
five business days after notice, or by the borrower on one day's
notice. Borrowed securities must be returned when the loan is
terminated. Any gain or loss in the market price of the borrowed
securities which occurs during the term of the loan inures to the
Portfolio and its shareholders. The Portfolio may pay reasonable
finders', borrowers', administrative, and custodial fees in
connection with a loan of its securities. The Adviser will review
and monitor the creditworthiness of such borrowers on an ongoing
basis.
The S&P 500 Index Portfolio may invest in Standard & Poor's
Depositary Receipts ("SPDRs "), the S&P MidCap 400 Index Portfolio
may invest in Standard & Poor's MidCap Depositary Receipts ("MIDCAP
SPDRs "), and the Nasdaq-100 Index Portfolio may invest in shares of
the Nasdaq-100 Trust ("Nasdaq-1000 Trust "). SPDRs, MIDCAP SPDRs and
Nasdaq-100 Trust Shares are units of beneficial interest in a unit
investment trust ("UIT"), representing proportionate undivided
interests in a portfolio of securities in substantially the same
weighting as the component common stocks of the S&P 500, S&P MidCap
400 Index and Nasdaq-100 Index, respectively. In addition, each
Portfolio may invest in a UIT, which is currently in existence or is
created in the future, that is designed to trace the performance of
the Portfolio's underlying Index. While the investment objective of
such a UIT is to provide investment results that generally correspond
to the price and yield performance of the component common stocks of
the respective indexes, there can be no assurance that this
investment objective will be met fully. As UIT's are securities
issued by an investment company, non-fundamental restriction (5)
below restricts their purchases to 10% of the Portfolio's assets.
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental restrictions
relating to the investment of assets of the Portfolios and other
investment activities. These are fundamental policies and may not be
changed without the approval of holders of the majority of the
outstanding voting shares of each Portfolio affected (which for this
purpose means the lesser of: [i] 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are
represented, or [ii] more than 50% of the outstanding shares). A
change in policy affecting only one Portfolio may be effected with
the approval of the majority of the outstanding voting shares of that
Portfolio only. The Fund's fundamental investment restrictions
provide that no Portfolio of the Fund is allowed to:
(1) Issue senior securities (except that each Portfolio may
borrow money as described in restriction [9] below).
(2) With respect to 75% of the value of its total assets (or
with respect to 50% of the value of its total assets for the Nasdaq-
100 Index Portfolio), 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. This
restriction does not apply to the Nasdaq-100 Index Portfolio.
(5) Purchase or sell commodities, commodity contracts, or real
estate, except that each Portfolio may purchase securities of issuers
which invest or deal in any of the above, and except that each
Portfolio may invest in securities that are secured by real estate.
This restriction does not apply to obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities or
to futures contracts or options purchased by the S&P 500 Index
Portfolio, S&P MidCap 400 Index Portfolio, Balanced Index Portfolio,
Russell 2000 Small Cap Index Portfolio and Nasdaq-100 Index Portfolio
in compliance with non-fundamental restrictions [8 and 9] below.
(6) Purchase any securities on margin (except that the Fund
may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities) or make
short sales of securities or maintain a short position.
(7) Make loans, except through the purchase of obligations in
private placements or by entering into repurchase agreements (the
purchase of publicly traded obligations not being considered the
making of a loan).
(8) Lend its securities, except that the S&P 500 Index
Portfolio, S&P 400 Index Portfolio, Balanced Index Portfolio,
Russell 2000 Small Cap Index Portfolio and Nasdaq-100 Index Portfolio
may lend securities in compliance with non-fundamental restriction
[7] below.
(9) Borrow amounts in excess of 10% of its total assets, taken
at market value at the time of the borrowing, and then only from
banks (and, in the case of the S&P 500 Index Portfolio, S&P MidCap
400 Index Portfolio, Balanced Index Portfolio, Russell 2000 Small Cap
Index Portfolio and Nasdaq-100 Index Portfolio by entering into
reverse repurchase agreements) as a temporary measure for
extraordinary or emergency purposes, or to meet redemption requests
that might otherwise require the untimely disposition of securities,
and not for investment or leveraging.
(10) Mortgage, pledge, hypothecate or in any manner transfer,
as security for indebtedness, any securities owned or held by such
Portfolio. This restriction does not apply to the Russell 2000 Small
Cap Index Portfolio and the Nasdaq-100 Index Portfolio.
(11) Underwrite securities of other issuers except insofar as
the Fund may be deemed an underwriter under the Securities Act of
1933 in selling shares of each Portfolio and except as it may be
deemed such in a sale of restricted securities.
(12) Invest more than 10% of its total assets in repurchase
agreements maturing in more than seven days, "small bank"
certificates of deposit that are not readily marketable, and other
illiquid investments.
(13) As to the Russell 2000 Small Cap Index Portfolio and the
Nasdaq-100 Index Portfolio, enter into reverse repurchase agreements
if the total of such investments would exceed 5% of the total assets
of the Portfolio.
The Fund has also adopted the following additional investment
restrictions that are not fundamental and may be changed by the Board
of Directors without shareholder approval. Under these restrictions,
no Portfolio of the Fund may:
(1) Participate on a joint (or a joint and several) basis in
any trading account in securities (but this does not prohibit the
"bunching" of orders for the sale or purchase of Portfolio securities
with the other Portfolios or with other accounts advised or sponsored
by the Adviser or any of its affiliates to reduce brokerage
commissions or otherwise to achieve best overall execution).
(2) Purchase or retain the securities of any issuer, if, to
the knowledge of the Fund, officers and directors of the Fund, the
Adviser or any affiliate thereof each owning beneficially more than
1/2% of one of the securities of such issuer, own in the aggregate
more than 5% of the securities of such issuer.
(3) Purchase or sell interests in oil, gas, or other mineral
exploration or development programs, or real estate mortgage loans,
except that each Portfolio may purchase securities of issuers which
invest or deal in any of the above, and except that each Portfolio
may invest in securities that are secured by real estate mortgages.
This restriction does not apply to obligations or other securities
issued or guaranteed by the United States Government, its agencies or
instrumentalities.
(4) Invest in companies for the purpose of exercising control
(alone or together with the other Portfolios).
(5) Purchase securities of other investment companies with an
aggregate value in excess of 5% of the Portfolio's total assets,
except in connection with a merger, consolidation, acquisition or
reorganization, or by purchase in the open market of securities of
closed-end investment companies where no underwriter or dealer's
commission or profit, other than customary broker's commission, is
involved, or by purchase of UIT's designed to track an Index and only
if immediately thereafter not more than 10% of such Portfolio's total
assets, taken at market value, would be invested in such securities.
The Fund has also adopted the following additional investment
restrictions that are not fundamental and may be changed by the Board
of Directors without shareholder approval. Under these restrictions:
The S&P 500 Index Portfolio, S&P MidCap 400 Index Portfolio,
Balanced Index Portfolio, Russell 2000 Small Cap Index Portfolio and
Nasdaq-100 Index Portfolio of the Fund may not:
(6) Lend portfolio securities with an aggregate value of more
than 10% of its total assets.
(7) Invest more than 20% of its assets in futures contracts
and/or options on futures contracts, except as a temporary investment
strategy until the Portfolio reaches $25 million ($50 million in the
case of the Russell 2000 Small Cap Index Portfolio and Nasdaq-100
Index Portfolio) 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
Each Portfolio has a different expected annual rate of Portfolio
turnover, which is calculated by dividing the lesser of purchases or
sales of Portfolio securities during the fiscal year by the monthly
average of the value of the Portfolio's securities (excluding from
the computation all securities, including options, with maturities at
the time of acquisition of one year or less). A high rate of
Portfolio turnover generally involves correspondingly greater
brokerage commission expenses, which must be borne directly by the
Portfolio. Turnover rates may vary greatly from year to year as well
as within a particular year and may also be affected by cash
requirements for redemptions of each Portfolio's shares and by
requirements which enable the Fund to receive certain favorable tax
treatments. The Portfolio turnover rates will, of course, depend in
large part on the level of purchases and redemptions of shares of
each Portfolio. Higher Portfolio turnover can result in
corresponding increases in brokerage costs to the Portfolios of the
Fund and their shareholders. However, because rate of Portfolio
turnover is not a limiting factor, particular holdings may be sold at
any time, if investment judgment or Portfolio operations make a sale
advisable.
The annual Portfolio turnover rates for the Zenith Portfolio were
86.47% and 62.50%, respectively, for 1999 and 1998. The annual
Portfolio turnover rates for the Bond Portfolio were 56.07% and
67.57%, respectively, for 1999 and 1998. The annual Portfolio
turnover rates for the S&P 500 Index Portfolio were 3.45% and 2.64%,
respectively for 1999 and 1998. The annual Portfolio turnover rate
for the S&P 400 MidCap Index Portfolio was 47.55% for 1999. The
annual Portfolio turnover rate for the Balanced Index Portfolio was
141.58% for 1999. The annual Portfolio turnover rate for the Russell
2000 Small Cap Index Portfolio and Nasdaq-100 Index Portfolio is
expected to be 20% and 20% respectively.
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.
45240.
<TABLE>
<CAPTION>
Position(s)
Name, Address with Principal Occupation(s)
and Age the Fund During Past Five Years
- ------------- ----------- -----------------------
<S> <C> <C>
George M. Callard, M.D. Director Professor of Clinical Surgery,
3021 Erie Avenue University of Cincinnati
Cincinnati, Ohio 45208
(Age 66)
Theodore H. Emmerich Director Consultant; former Partner, Ernst &
1201 Edgecliff Place Whinney, Accountants
Cincinnati, Ohio 45206
(73)
Richard H. Finan Director Attorney at Law; President of the
11137 Main Street Ohio State Senate
Cincinnati, Ohio 45241
(65)
Yvonne L. Gray Director Chief Operating Officer, United Way
2400 Reading Road and Community Chest; prior thereto,
Cincinnati, Ohio 45202 Vice President/Trust Operations
(49) Officer, Fifth Third Bank
Jean Patrice Director Former Interim President, Cincinnati
Harrington, S.C. State Technical and Community College;
3217 Whitfield Avenue Former Executive Director, Cincinnati
Cincinnati, Ohio 45220 Youth Collaborative; President
(77) Emeritus (formerly, President) College
of Mount St. Joseph
John H. Jacobs* Director President and Chief Operating Officer,
(53) Union Central; Director, Summit
Investment Partners, Inc. ("Adviser")
Director, Carillon Investments, Inc.;
Prior to July, 1998, Officer and
employee, Union Central
Charles W. McMahon Director Retired Senior Vice President and
19 Iron Woods Drive Director, Union Central
Cincinnati, Ohio 45239
(79)
Harry Rossi* Director Director Emeritus, Union Central;
8548 Wyoming Club Drive Director, Adviser and Carillon
Cincinnati, Ohio 45215 Investments, Inc.; former Chairman,
(80) President and Chief Executive Officer,
Union Central
Steven R. Sutermeister Director, Senior Vice President, Union Central;
(47) President President, Director and Chief
and Chief Executive Officer, Adviser;
Executive Director, Carillon Investments, Inc.
Officer
John F. Labmeier Vice President Vice President, Associate General
(51) and Secretary Counsel and Assistant Secretary, Union
Central; Vice President and Secretary,
Carillon Investments, Inc.; Secretary,
Adviser
Thomas G. Knipper Controller Treasurer, Adviser; prior to July,
(43) 1995, Treasurer of The Gateway Trust
and Vice President and Controller of
Gateway Advisers, Inc.
John M. Lucas Assistant Counsel and Assistant to Secretary,
(49) Secretary Union Central
</TABLE>
- ---------------
* Messrs. Jacobs, Rossi and Sutermeister 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.
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, no
officers and directors of Carillon Fund owned 5% or more of the
outstanding shares of any Fund. Directors who are not officers or
employees of Union Central or Adviser are paid a fee plus actual out-
of-pocket expenses by Carillon Fund for each meeting of the Board of
Directors attended. Total fees and expenses incurred for 1999 were
$68,200.
<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
(retired 11/15/99)
Richard H. Finan $15,300 -- -- $15,300
Director
Yvonne L. Gray $2,900 -- -- $2,900
Director
(beginning 11/15/99)
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
Steven R. Sutermeister N/A N/A N/A N/A
</TABLE>
** Messrs. Callard and McMahon have been deferring their
compensation each year. As of December 31, 1999, the total
amount deferred, including interest, was as follows:
Dr. Callard - $9100,978; Mr. McMahon - $29,371.
Investment Adviser
The Fund has entered into an Investment Advisory Agreement
("Agreement") with Summit Investment Partners, Inc. ("Adviser"),
formery known as Carillon Advisers, Inc., 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 Steven R. Sutermeister,
Director, President and Chief Executive Officer; John H. Jacobs,
Director; 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 each
Portfolio, is responsible for the actual management of each Portfolio
and has responsibility for making decisions to buy, sell or hold any
particular security. The Adviser obtains and evaluates such
information and advice relating to the economy, securities markets,
and specific securities as it considers necessary or useful to
continuously manage the assets of the Portfolios in a manner
consistent with their investment objectives, policies and
restrictions. The Adviser considers analyses from various sources,
makes necessary investment decisions and effects transactions
accordingly. The Adviser also performs certain administrative
functions for the Fund. The Adviser may utilize the advisory
services of subadvisers for one or more of the Portfolios.
Payment of Expenses
Under the terms of the Agreement, in addition to managing the
Fund's investments, the Adviser, at its expense, maintains certain of
the Fund's books and records (other than those provided by Firstar
Trust Company, by agreement) and furnishes such office space,
facilities, equipment, and clerical help as the Fund may reasonably
require in the conduct of business. In addition, the Adviser pays
for the services of all executive, administrative, clerical, and
other personnel, including officers of the Fund, who are employees of
Union Central. The Adviser also bears the cost of telephone service,
heat, light, power and other utilities provided to the Fund.
Expenses not expressly assumed by the Adviser under the Agreement
will be paid by the Fund.
Each Portfolio pays all other expenses incurred in its operation
and a portion of the Fund's general administration expenses allocated
on the basis of the asset size of the respective Portfolios.
Expenses other than the Adviser's fee that are borne directly and
paid individually by a Portfolio include, but are not limited to,
brokerage commissions, dealer markups, expenses incurred in the
acquisition of Portfolio securities, transfer taxes, transaction
expenses of the custodian, pricing services used by only one or more
Portfolios, and other costs properly payable by only one or more
Portfolios. Expenses which are allocated on the basis of size of the
respective Portfolios include custodian (portion based on asset
size), dividend disbursing agent, transfer agent, bookkeeping
services (except annual per Portfolio base charge), pricing,
shareholder's and directors' meetings, directors' fees, proxy
statement and Prospectus preparation, registration fees and costs,
fees and expenses of legal counsel not including employees of the
Adviser, membership dues of industry associations, postage, insurance
premiums including fidelity bond, and all other costs of the Fund's
operation properly payable by the Fund and allocable on the basis of
size of the respective Portfolios. The Adviser will pay any expenses
of the S&P 500 Index Portfolio, S&P MidCap 400 Index Portfolio,
Balanced Index Portfolio and Nasdaq-100 Index Portfolio, other than
the advisory fee for those Portfolios, to the extent that such
expenses exceed .30% of that Portfolio's net assets. The Adviser
will also pay any expenses of the Russell 2000 Small Cap Index
Portfolio, other than the advisory fee for those Portfolios, to the
extent that such expenses exceed .40% of that Portfolio's net assets.
Depending on the nature of a legal claim, liability or lawsuit,
litigation costs, payment of legal claims or liabilities and any
indemnification relating thereto may be directly applicable to a
Portfolio or allocated on the basis of the size of the respective
Portfolios. The directors have determined that this is an
appropriate method of allocation of expenses.
The Agreement also provides that if the total operating expenses
of the Fund, exclusive of the advisory fee, taxes, interest,
brokerage fees and certain legal claims and liabilities and
litigation and indemnification expenses, as described in the
Agreement, for any fiscal year exceed 1.0% of the average daily net
assets of the Fund, the Adviser will reimburse the Fund for such
excess, up to the amount of the advisory fee for that year. Such
amount, if any, will be calculated daily and credited on a monthly
basis.
Advisory Fee
As full compensation for the services and facilities furnished to
the Fund and expenses of the Fund assumed by the Adviser, the Fund
pays the Adviser monthly compensation calculated daily as described
on page 20 of the Prospectus. The compensation after all waivers for
each Portfolio was as follows:
<TABLE>
<CAPTION>
S&P Russell
MidCap 2000
S&P 500 400 Balanced Small Cap Nasdaq-100
Zenith Bond Index Index Index Index Index
Year Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $1,025,375 $514,217 $632,729 $41,235 $106,499 N/A N/A
1998 $1,704,750 $551,146 $274,418 N/A N/A N/A N/A
1997 $1,731,351 $427,729 $129,253 N/A N/A N/A N/A
</TABLE>
There is no assurance that the Portfolios will reach a net asset
level high enough to realize a reduction in the rate of the advisory
fee. Any reductions in the rate of advisory fee will be applicable
to each Portfolio separately in accordance with the schedule of fees
applicable to each Portfolio.
Investment Advisory Agreement
The Investment Advisory Agreement was initially approved by the
Fund's Board of Directors, including a majority of the directors who
are not interested persons of the Adviser, on March 22, 1984. Unless
earlier terminated as described below, the Agreement will continue in
effect from year to year if approved annually: (a) by the Board of
Directors of the Fund or by a majority of the outstanding shares of
the Fund, including a majority of the outstanding shares of each
Portfolio; and (b) by a majority of the directors who are not parties
to such contract or interested persons (as defined by the Investment
Company Act of 1940) of any such party. The Agreement is not
assignable and may be terminated without penalty by the Fund on 60
days notice, and by the Adviser on 90 days notice. On February 25,
2000 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 December 16, 1998, the Board of Directors took steps to
activate the S&P MidCap 400 Index Portfolio and the Balanced Index
Portfolio of the Fund by authorizing the issuance of shares of those
Portfolios. On March 19, 1999, the Board of Directors also approved
an amendment to the Investment Advisory Agreement making the
Agreement applicable to the S&P MidCap 400 Index Portfolio and the
Balanced Index 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 S&P MidCap 400
Index Portfolio and Balanced Index Portfolio shares and that
therefore only the holders of S&P MidCap 400 Index Portfolio and
Balanced Index Portfolio shares were entitled to vote on the
amendment. The sole shareholder of the S&P MidCap 400 Index Portfolio
and the Balanced Index Portfolio approved the Agreement as amended on
May 3, 1999.
On August 30, 1999, the Board of Directors took steps to activate the
Russell 2000 Small Cap Index Portfolio and the Nasdaq-100 Index
Portfolio of the Fund by authorizing the issuance of shares of those
Portfolios. On November 15, 1999, the Board of Directors approved an
amendment to the Investment Advisory Agreement making the Agreement
applicable to the Russell 2000 Small Cap Index Portfolio and the
Nasdaq-100 Index Portfolio, and specifying the fee payable by it. The
board determined that the amendment did not affect the interests of
the classes of Fund shares other than the Russell 2000 Small Cap
Index Portfolio and the Nasdaq-100 Index Portfolio and that therefore
only the holders of Russell 2000 Small Cap Index Portfolio and
Nasdaq-100 Index Portfolio shares were entitled to vote on the
amendment. The sole shareholder of the Russell 2000 Small Cap Index
Portfolio and the Nasdaq-100 Index Portfolio approved the Agreement
as amended on April 28, 2000.
The Investment Advisory Agreement provides that the Adviser shall
not be liable to the Fund or to any shareholder for any error of
judgment or mistake of law or for any loss suffered by the Fund or by
any shareholder in connection with matters to which the Investment
Advisory Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence, or reckless disregard on
the part of the Adviser in the performance of its duties thereunder.
In the case of administration services, the Adviser will be held to a
normal standard of liability.
The Agreement in no way restricts the Adviser from acting as
investment manager or adviser to others.
If the question of continuance of the Agreement (or adoption of
any new Agreement) is presented to shareholders, continuance (or
adoption) with respect to a Portfolio shall be effective only if
approved by a majority vote of the outstanding voting securities of
that Portfolio. If the shareholders of any one or more of the
Portfolios should fail to approve the Agreement, the Adviser may
nonetheless serve as an adviser with respect to any Portfolio whose
shareholders approved the Agreement.
Administration
The Adviser is responsible for providing certain administrative
functions to the Fund and has entered into an Administration
Agreement with Carillon Investments, Inc. ("CII") under which CII
furnishes substantially all of such services for an annual fee of
.20% of the average net assets of the Bond and Zenith Portfolios, and
.05% of the average net assets of the Index Portfolios 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 Zenith and Bond
Portfolios at a meeting held on March 20, 1992. The sole shareholder
of the S&P 500 Index Portfolio approved the Service Agreement on
January 3, 1996. The sole shareholder of the S&P MidCap 400 Index
Portfolio and the Balanced Index Portfolio approved the Service
Agreement on May 3, 1999. The sole shareholder of the Russell 2000
Small Cap Index Portfolio and the Nasdaq-100 Index Portfolio approved
the Service Agreement on April 28, 2000.
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.
Code of Ethics
The Adviser, as well as the Fund, has adopted a code of ethics under
Rule 17j-1 of the Investment Company Act of 1940. Employees of the
Adviser are permitted to make personal securities transactions,
subject to the requirements and restrictions set forth in the
Adviser's code of ethics. The code of ethics contains provisions and
requirements designed to identify and address certain conflicts of
interest between personal investment activities and the interests of
investment advisory clients such as the Funds. Among other things,
the code of ethics, which generally complies with standards
recommended by the Investment Company Institute's Advisory Group on
Personal Investing, prohibits certain types of transactions absent
prior approval, imposes time periods during which personal
transactions may not be made in certain securities, and requires the
submission of duplicate broker confirmations and monthly reporting of
securities transactions. Additional restrictions apply to portfolio
managers, traders, research analysts and others involved in the
investment advisory process. Exceptions to these and other
provisions of the code of ethics may be granted in particular
circumstances after review by appropriate personnel.
DETERMINATION OF NET ASSET VALUE
As described on page 21 of the Prospectus, the net asset value of
shares of the Fund is determined once daily, Monday through Friday as
of the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern Time), when there are purchases or
redemptions of Fund shares, except: (i) when the New York Stock
Exchange is closed (currently New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day); and (ii) any day on which changes in the value of
the Portfolio securities of the Fund will not materially affect the
current net asset value of the shares of a Portfolio.
Securities held by the Portfolios, except for money market
instruments maturing in 60 days or less, will be valued as follows:
Securities which are traded on stock exchanges (including securities
traded in both the over-the-counter market and on exchange), or
listed on the NASDAQ National Market System, are valued at the last
sales price as of the close of the New York Stock Exchange on the day
the securities are being valued, or, lacking any sales, at the
closing bid prices. Securities traded only in the over-the-counter
market are valued at the last bid prices quoted by brokers that make
markets in the securities at the close of trading on the New York
Stock Exchange. Securities and assets for which market quotations
are not readily available are valued at fair value as determined in
good faith by or under the direction of the Board of Directors.
Money market instruments with a remaining maturity of 60 days or
less are valued on an amortized cost basis. Under this method of
valuation, the instrument is initially valued at cost (or in the case
of instruments initially valued at market value, at the market value
on the day before its remaining maturity is such that it qualifies
for amortized cost valuation); thereafter, the Fund assumes a
constant proportionate amortization in value until maturity of any
discount or premium, regardless of the impact of fluctuating interest
rates on the market value of the instrument. While this method
provides certainty in valuation, it may result in periods during
which value, as determined by amortized cost, is higher or lower than
the price that would be received upon sale of the instrument.
PURCHASE AND REDEMPTION OF SHARES
The Fund offers shares of the Summit Pinnacle Series of
Portfolios, without sales charge, only to Union Central and its
separate accounts. It is possible that at some later date the Fund
may offer shares to other investors.
The Fund is required to redeem all full and fractional shares of
the Fund for cash at the net asset value per share. Payment for
shares redeemed will generally be made within seven days after
receipt of a proper notice of redemption. The right to redeem shares
or to receive payment with respect to any redemption may only be
suspended for any period during which: (a) trading on the New York
Stock Exchange is restricted as determined by the Securities and
Exchange Commission or such exchange is closed for other than
weekends and holidays; (b) an emergency exists, as determined by the
Securities and Exchange Commission, as a result of which disposal of
Portfolio securities or determination of the net asset value of a
Portfolio is not reasonably practicable; and (c) the Securities and
Exchange Commission by order permits postponement for the protection
of shareholders.
TAXES
Each Portfolio of the Fund will be treated as a separate entity
for federal income tax purposes. Each Portfolio has qualified and
has elected to be taxed as a "regulated investment company" under the
provisions of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). If a Portfolio qualifies as a "regulated
investment company" and complies with the provisions of the Code by
distributing substantially all of its net income (both ordinary
income and capital gain), the Portfolio will be relieved from federal
income tax on the amounts distributed.
In order to qualify as a regulated investment company, in each
taxable year each Portfolio must, among other things: (a) derive at
least 90 percent of its gross income from dividends, interest,
payments with respect to loans of securities, and gains from the sale
or other disposition of stocks or securities or foreign currencies
(subject to the authority of the Secretary of the Treasury to exclude
certain foreign currency gains) or other income (including, but not
limited to, gains from options, futures, or forward contracts which
are ancillary to the Portfolio's principal business of investing in
stocks or securities or options and futures with respect to stocks or
securities) derived with regard to its investing in such stocks,
securities or currencies; and (b) derive less than 30 percent of its
gross income from gains (without deduction for losses) realized on
the sale or other disposition of any of the following held for less
than three months: securities, options, futures or forward contracts
(other than options, futures or forward contracts on foreign
currencies) or certain foreign currencies. In order to meet the
requirements noted above, the Fund may be required to defer disposing
of certain options, futures contracts and securities beyond the time
when it might otherwise be advantageous to do so. These requirements
may also affect the Fund's investments in various ways, such as by
limiting the Fund's ability to:(a) sell investments held for less
than three months; (b) effect closing transactions on options written
less than three months previously; (c) write options for a period of
less than three months; and (d) write options on securities held for
less than the long-term capital gains holding period. For a
discussion of tax consequences to owners of annuity contracts, see
the Prospectus for those contracts.
The discussion of "Taxes" in the Prospectus, in conjunction with
the foregoing, is a general and abbreviated summary of the applicable
provisions of the Code and Treasury Regulations currently in effect
as interpreted by the Courts and the Internal Revenue Service.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is primarily responsible for the investment decisions
of each Portfolio, including decisions to buy and sell securities,
the selection of brokers and dealers to effect the transactions, the
placing of investment transactions, and the negotiation of brokerage
commissions, if any. No Portfolio has any obligation to deal with
any dealer or group of dealers in the execution of transactions in
Portfolio securities. In placing orders, it is the policy of the
Fund to obtain the most favorable net results, taking into account
various factors, including price, dealer spread or commission, if
any, size of the transaction, and difficulty of execution. While the
Adviser generally seeks reasonably competitive spreads or
commissions, the Portfolios will not necessarily be paying the lowest
spread or commission available.
If the securities in which a particular Portfolio of the Fund
invests are traded primarily in the over-the-counter market, where
possible the Portfolio will deal directly with the dealers who make a
market in the securities involved unless better prices and execution
are available elsewhere. Such dealers usually act as principals for
their own account. On occasion, securities may be purchased directly
from the issuer. Bonds and money market instruments are generally
traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes. The cost of Portfolio securities
transactions of each Portfolio will consist primarily of brokerage
commission or dealer or underwriter spreads.
While the Adviser seeks to obtain the most favorable net results
in effecting transactions in the Portfolio securities, brokers who
provide supplemental investment research to the Adviser may receive
orders for transactions by the Fund. Such supplemental research
service ordinarily consists of assessments and analyses of the
business or prospects of a company, industry, or economic sector.
If, in the judgment of the Adviser, the Fund will be benefited by
such supplemental research services, the Adviser is authorized to pay
commissions to brokers furnishing such services which are in excess
of commissions which another broker may charge for the same
transaction. Information so received will be in addition to and not
in lieu of the services required to be performed by the Adviser under
its Investment Advisory Agreement. The expenses of the Adviser will
not necessarily be reduced as a result of the receipt of such
supplemental information. In some cases, the Adviser may use such
supplemental research in providing investment advice to its other
advisory accounts.
During 1999, 30% of the Fund's total brokerage was allocated to
brokers who furnish statistical data or research information.
Brokerage commissions paid during 1999, 1998 and 1997 were $801,294,
$740,176 and 587,069, respectively.
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 twenty-two classes of stock, one for each
Portfolio. The authorized capital stock of the Fund consists of
490,000,000 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:
<TABLE>
<CAPTION>
Fund Authorized Capital Stock
<S> <C>
Summit Pinnacle Series
Zenith Portfolio 40,000,000 shares
Bond Portfolio 30,000,000 shares
Capital Portfolio 30,000,000 shares
S&P 500 Index Portfolio 30,000,000 shares
Micro-Cap Portfolio 20,000,000 shares
S&P MidCap 400 Index Portfolio 20,000,000 shares
Balanced Index Portfolio 20,000,000 shares
Lehman Aggregate Bond Index Portfolio 20,000,000 shares
Russell 2000 Small Cap Index Portfolio 20,000,000 shares
Nasdaq-100 Index Portfolio 20,000,000 shares
Summit Apex Series
S&P 500 Index Fund 20,000,000 shares
S&P MidCap 400 Index Fund 20,000,000 shares
Russell 2000 Small Cap Index Fund 20,000,000 shares
Balanced Index Fund 20,000,000 shares
Nasdaq 100 Index Fund 20,000,000 shares
Lehman Aggregate Bond Index Fund 20,000,000 shares
Bond Fund 20,000,000 shares
Everest Fund 20,000,000 shares
Micro-Cap Fund 20,000,000 shares
Short-term Government Fund 20,000,000 shares
High Yield Bond Fund 20,000,000 shares
Emerging Markets Bond Fund 20,000,000 shares
</TABLE>
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, as stated in their report appearing
herein. The financial statements are included in this Statement
of Additional Information in reliance upon the report of
Deloitte & Touche LLP, given upon their authority as experts in
auditing and accounting.
<PAGE>
APPENDIX A
S&P, FRANK RUSSELL AND NASDAQ DISCLAIMER
S&P
The S&P 500 is an unmanaged index of common stocks comprised of
500 industrial, financial, utility and transportation companies.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard &
Poor's 500(R)", "500", "S&P MidCap 400 Index", and "Standard &
Poor's MidCap 400 Index" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by the Fund. The
Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's ("S&P"), a division of The McGraw-Hill
Companies, Inc. S&P makes no representation or warranty, express
or implied, to the beneficial owners of the Portfolio or any
member of the public regarding the advisability of investing in
securities generally or in the Portfolio particularly or the
ability of the S&P 500 Index or the S&P MidCap 400 Index to
track general stock market performance. S&P's only relationship
to the Fund is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined,
composed and calculated by S&P without regard to the Fund or the
Portfolio. S&P has no obligation to take the needs of the Fund
or the beneficial owners of the Portfolio into consideration in
determining, composing or calculating the S&P 500 Index and the
S&P MidCap 400 Index. S&P is not responsible for and has not
participated in the determination of the prices and amount of
the Portfolio or the timing of the issuance or sale of the
Portfolio or in the determination or calculation of the equation
by which the Portfolio is to be converted into cash. S&P has no
obligation or liability in connection with the administration,
marketing or trading of the Portfolio.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF
THE S&P 500 INDEX OR S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED
THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS,
OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND, BENEFICIAL
OWNERS OF THE PORTFOLIO, OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES
NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR S&P MIDCAP 400
INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING
LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
RUSSELL 2000
The Russell 2000 Index is a trademark/service mark of the Frank
Russell Company. Russell is a trademark of the Frank Russell
Company. Summit Mutual Funds and the Russell 2000 Small Cap
Index Portfolio are not promoted, sponsored or endorsed by, nor
in any way affiliated with Frank Russell Company. Frank Russell
is not responsible for and has not reviewed the Prospectus, and
Frank Russell makes no representation or warranty, express or
implied, as to its accuracy, or completeness, or otherwise.
Frank Russell Company reserves the right, at any time and
without notice, to alter, amend, terminate or in any way change
its Index. Frank Russell has no obligation to take the needs of
any particular fund or its participants or any other product or
person into consideration in determining, composing or
calculating the Index.
Frank Russell Company's publication of the Index in no way
suggests or implies an opinion by Frank Russell Company as to
the attractiveness or appropriateness of the investment in any
or all securities upon which the Index is based. FRANK RUSSELL
COMPANY MAKES NO REPRESENTATION, WARRANTY, OR GUARANTEE AS TO
THE ACCURACY, COMPLETENESS, RELIABILITY, OR OTHERWISE OF THE
INDEX OR DATA INCLUDED IN THE INDEX. FRANK RUSSELL COMPANY
MAKES NO REPRESENTATION OR WARRANTY REGARDING THE USE, OR THE
RESULTS OF USE, OF THE INDEX OR ANY DATA INCLUDED THEREIN, OR
ANY SECURITY (OR COMBINATION THEREOF) COMPRISING THE INDEX.
FRANK RUSSELL COMPANY MAKES NO OTHER EXPRESS OR IMPLIED
WARRANTY, AND EXPRESSLY DISCLAIMS ANY WARRANTY OF ANY KIND,
INCLUDING, WITHOUT MEANS OF LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
TO THE INDEX OR ANY DATA OR ANY SECURITY (OR COMBINATION
THEREOF) INCLUDED THEREIN.
Nasdaq
The Product is not sponsored, endorsed, sold or promoted by The
Nasdaq Stock Market, Inc.(including its affiliates) (Nasdaq,
with its affiliates, are referred to as the Corporations). The
Corporations have not passed on the legality or suitability of,
or the accuracy or adequacy of descriptions and disclosures
relating to, the Product. The Corporations make no
representation or warranty, express or implied to the owners of
the Product or any member of the public regarding the
advisability of investing in securities generally or in the
Product particularly, or the ability of the Nasdaq-100
Index(R)to track general stock market performance. The
Corporations' only relationship to the Fund (Licensee) is in the
licensing of the Nasdaq-100(R), Nasdaq-100 Index(R), and
Nasdaq(R) trademarks or service marks, and certain trade names
of the Corporations and the use of the Nasdaq-100 Index which
is determined, composed and calculated by Nasdaq without regard
to Licensee or the Product. Nasdaq has no obligation to take
the needs of the Licensee or the owners of the Product into
consideration in determining, composing or calculating the
Nasdaq-100 Index(R). The Corporations are not responsible for
and has not participated in the determination of the timing of,
prices at, or quantities of the Product to be issued or in the
determination or calculation of the equation by which the
Product is to be converted into cash. The Corporations have no
liability in connection with the administration, marketing or
trading of the Product.
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR
UNINTERRUPTED CALCULATION OF THE NASDAQ-100 INDEX(R) OR ANY DATA
INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE
PRODUCT, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE
NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. THE
CORPORATIONS MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ-100
INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF
THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE ANY
LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
<PAGE>
CARILLON FUND, INC.
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
S&P MidCap
Equity Bond S&P 500 Index 400 Index
Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C>
ASSETS
Investments in securities,
at value $121,761,182 $96,867,215 $283,095,748 $23,884,387
(cost $117,983,514;
$102,150,381;$212,828,461;
$22,858,671)
Cash 1,028,346 ---- 245,948 30,586
Receivables:
Shares sold 21,904 423 362,891 141,278
Securities sold 1,941,766 ---- 158,191 ----
Interest and dividends 144,881 1,886,486 326,280 21,523
Variation margin ---- ---- 46,750 50,400
Prepaid expenses and other 21,192 9,335 9,450 707
------------ ----------- ------------ -----------
124,919,271 98,763,459 284,245,258 24,128,881
------------ ----------- ------------ -----------
LIABILITIES
Payables:
Investment securities
purchased 350,600 ---- ---- ----
Shares redeemed 31,779 132,201 348 146,945
Investment advisory fees 66,945 40,550 68,045 2,539
Custodian and portfolio
accounting fees 11,351 7,289 8,602 2,752
Professional fees 12,320 12,519 13,609 12,397
Other accrued expenses 1,920 1,803 22,569 876
Deferred directors'
compensation ---- 141,361 ---- ----
------------ ----------- ------------ -----------
474,915 335,723 113,173 165,509
------------ ----------- ------------ -----------
NET ASSETS
Paid-in capital 136,005,906 103,016,838 211,762,698 21,744,598
Undistributed net
investment income 152,655 1,076,167 422,075 73,642
Accumulated net realized
gain/(loss) on
investments and
futures contracts (15,491,873) (382,103) 1,153,950 54,716
Net unrealized
appreciation/
(depreciation) on
investments and futures
contracts 3,777,668 (5,283,166) 70,793,362 2,090,416
------------ ----------- ------------ -----------
$124,444,356 $98,427,736 $284,132,085 $23,963,372
============ =========== ============ ===========
Shares authorized
($.10) par value 40,000,000 30,000,000 30,000,000 20,000,000
Shares outstanding 9,864,734 9,497,171 12,290,004 2,171,259
Net asset value,
offering and
redemption price
per share $12.62 $10.36 $23.12 $11.04
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
Balanced Index Lehman Aggregate Bond
Portfolio Index Portfolio
<S> <C> <C>
ASSETS
Investments in securities, at value $ 55,072,783 $ 15,109,051
(cost $52,932,437; $15,461,461)
Cash 286,322 ----
Receivables:
Shares sold ---- 1,533
Securities sold 21,572 ----
Interest and dividends 362,508 239,912
Variation margin 4,250 ----
Prepaid expenses and other 1,092 206
----------- -----------
55,748,527 15,350,702
----------- -----------
LIABILITIES
Payables:
Investment securities purchased ---- ----
Shares redeemed 11,194 564
Investment advisory fees 9,982 3,920
Custodian and portfolio
accounting fees 4,234 2,001
Professional fees 12,395 13,488
Other accrued expenses 2,806 810
Deferred directors' compensation ----- ----
----------- -----------
40,611 20,783
----------- -----------
NET ASSETS
Paid-in capital 54,133,169 15,595,910
Undistributed net
investment income 386,128 126,945
Accumulated net realized gain/
(loss) on investments and
futures contracts (1,003,027) (40,526)
Net unrealized appreciation/
(depreciation) on investments
and futures contracts 2,191,646 (352,410)
----------- -----------
$ 55,707,916 $ 15,329,919
=========== ===========
Shares authorized ($.10) par value 20,000,000 20,000,000
Shares outstanding 5,351,487 1,561,278
Net asset value, offering
and redemption price
per share $10.41 $9.82
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF OPERATIONS
Year Ended December 31, 1999
<TABLE>
<CAPTION>
S&P MidCap
Equity Bond S&P 500 Index 400 Index
Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 273,980 $ 7,844,702 $ 551,258 $ 204,182
Dividends (net of
foreign withholding
taxes of $66,850; $0;
$38,219; $0) 2,037,883 ---- 2,588,328 112,906
----------- ----------- ----------- ----------
2,311,863 7,844,702 3,139,586 317,088
----------- ----------- ----------- ----------
EXPENSES
Investment advisory fees 1,025,375 514,217 632,729 41,235
Custodian fees
and expenses 42,087 26,969 65,041 9,948
Portfolio accounting fees 37,005 53,137 54,348 20,149
Professional fees 15,606 13,833 15,956 15,649
Director's fees 12,092 11,770 13,795 7,122
Transfer agent fees 6,994 6,815 6,663 2,158
Other 33,320 27,252 27,831 849
----------- ----------- ----------- ----------
1,172,479 653,993 816,363 97,110
----------- ----------- ----------- ----------
Expense reimbursement ---- ---- ---- (12,912)
1,172,479 653,993 816,363 84,198
----------- ----------- ----------- ----------
NET INVESTMENT INCOME 1,139,384 7,190,709 2,323,223 232,890
----------- ----------- ----------- ----------
REALIZED AND UNREALIZED
GAIN/(LOSS)
Net realized gain/(loss)
on investments (15,155,238) 69,654 58,334 520,589
Net realized gain/(loss)
on futures contracts ----- ----- 1,260,613 (465,873)
(15,155,238) 69,654 1,318,947 54,716
----------- ----------- ----------- ----------
Net change in unrealized
appreciation/
(depreciation) on
investments, futures
contracts, and
translation of assets
and liabilities in
foreign currencies 15,500,859 (8,498,194) 37,850,127 2,090,416
----------- ----------- ----------- ----------
NET REALIZED AND
UNREALIZED GAIN/ LOSS) 345,621 (8,428,540) 39,169,074 2,145,132
----------- ----------- ----------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS $ 1,485,005 $(1,237,831) $41,492,297 $2,378,022
=========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
STATEMENTS OF OPERATIONS
Year Ended December 31, 1999
<TABLE>
<CAPTION>
Balanced Index Lehman Aggregate Bond
Portfolio Index Portfolio
<S> <C> <C>
INVESTMENT INCOME
Interest $ 942,872 $525,582
Dividends (net of foreign withholding
taxes of $2,929; $0) 265,876 ----
---------- --------
1,208,748 525,582
---------- --------
EXPENSES
Investment advisory fees 106,499 25,344
Custodian fees and expenses 20,699 2,428
Portfolio accounting fees 23,946 10,510
Professional fees 15,665 15,648
Director's fees 7,124 4,895
Transfer agent fees 1,834 945
Other 3,417 480
---------- --------
179,184 60,250
Expense reimbursement (13,736) (12,692)
---------- --------
165,448 47,558
---------- --------
NET INVESTMENT INCOME 1,043,300 478,024
---------- --------
REALIZED AND UNREALIZED GAIN/(LOSS)
Net realized gain/(loss)
on investments (1,230,497) (40,526)
Net realized gain/(loss) on
futures contracts 227,470 ----
---------- --------
(1,003,027) (40,526)
---------- --------
Net change in unrealized
appreciation/(depreciation) on
investments, futures contracts,
and translation of assets and
liabilities in foreign currencies 2,191,646 (352,410)
---------- --------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) 1,188,619 (392,936)
---------- --------
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $2,231,919 $ 85,088
---------- --------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Equity Portfolio
Year Ended December 31,
1999 1998
<S> <C> <C>
OPERATIONS
Net investment income $ 1,139,384 $ 4,315,972
Net realized gain/(loss)
on investments and futures (15,155,238) 29,356,244
Net change of unrealized appreciation/
(depreciation) on investments, futures
contracts, and translation of assets
and liabilities in foreign currencies 15,500,859 (82,894,401)
------------ ------------
1,485,005 (49,222,185)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (1,534,834) (3,999,567)
Net realized gain (29,666,177) (43,531,579)
------------ ------------
(31,201,011) (47,531,146)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 4,114,679 27,909,508
Reinvestment of distributions 31,201,011 47,531,146
Payments for shares redeemed (129,938,136) (65,531,975)
------------ ------------
(94,622,446) 9,908,679
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (124,338,452) (86,844,652)
NET ASSETS
Beginning of year 248,782,808 335,627,460
------------ ------------
End of year $124,444,356 $248,782,808
------------ ------------
UNDISTRIBUTED NET INVESTMENT INCOME $ 152,655 $ 548,105
------------ ------------
FUND SHARE TRANSACTIONS
Sold 305,666 1,482,774
Reinvestment of distributions 2,727,392 2,544,159
Redeemed (9,872,069) (3,814,089)
------------ ------------
Net increase (decrease) from
fund share transactions (6,839,011) 212,844
------------ ------------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Bond Portfolio
Year Ended December 31,
1999 1998
<S> <C> <C>
OPERATIONS
Net investment income $ 7,190,709 $ 8,002,882
Net realized gain/(loss) on
investments and futures 69,654 (382,978)
Net change of unrealized appreciation/
(depreciation) on investments, futures
contracts, and translation of assets
and liabilities in foreign currencies (8,498,194) (644,567)
------------ ------------
(1,237,831) 6,975,337
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (6,544,239) (7,895,961)
Net realized gain on investments ----- (1,121,637)
------------ ------------
(6,544,239) 9,017,598)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 23,415,382 50,015,086
Reinvestment of distributions 6,544,239 9,017,598
Payments for shares redeemed (37,512,126) (43,120,208)
------------ ------------
(7,552,505) 15,912,476
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (15,334,575) 13,870,215
NET ASSETS
Beginning of year 113,762,311 99,892,096
------------ ------------
End of year $ 98,427,736 $113,762,311
------------ ------------
UNDISTRIBUTED NET INVESTMENT INCOME $ 1,076,167 $ 382,160
------------ ------------
FUND SHARE TRANSACTIONS
Sold 2,160,763 4,379,828
Reinvestment of distributions 615,367 799,240
Redeemed (3,498,330) (3,811,138)
------------ ------------
Net increase (decrease) from
fund share transactions (722,200) 1,367,930
------------ ------------
</TABLE>
The accompanying notes are an integral part of
the financial statements
.
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
S&P 500 Index Portfolio
Year Ended December 31,
1999 1998
<S> <C> <C>
OPERATIONS
Net investment income $ 2,323,223 $ 1,144,225
Net realized gain/(loss) on
investments and futures 1,318,947 1,188,196
Net change in unrealized appreciation/
(depreciation) on investments, futures
contracts, and translation of assets
and liabilities in foreign currencies 37,850,127 20,913,178
------------ ------------
41,492,297 23,245,599
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (1,983,080) (1,101,958)
Net realized gain (1,193,873) (1,947,719)
------------ ------------
(3,176,953) (3,049,677)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 128,095,131 58,542,452
Reinvestment of distributions 3,176,953 3,049,677
Payments for shares redeemed (16,800,128) (6,037,935)
------------ ------------
114,471,956 55,554,194
------------ ------------
NET INCREASE IN NET ASSETS 152,787,300 75,750,116
NET ASSETS
Beginning of year 131,344,785 55,594,669
------------ ------------
End of year $284,132,085 $131,344,785
------------ ------------
UNDISTRIBUTED NET INVESTMENT INCOME $ 442,075 $ 81,932
FUND SHARE TRANSACTIONS
Sold 6,182,960 3,377,397
Reinvestment of distributions 152,279 175,601
Redeemed (783,304) (345,887)
------------ ------------
Net increase from fund share transactions 5,551,935 3,207,111
------------ ------------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
S & P MidCap 400 Index Portfolio
Period from May 3, 1999 to
December 31, 1999
<S> <C>
OPERATIONS
Net investment income $ 232,890
Net realized gain/(loss) on investments and futures 54,716
Net change of unrealized appreciation/(depreciation)
on investments, futures contracts, and translation
of assets and liabilities in foreign currencies 2,090,416
-----------
2,378,022
-----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (159,248)
Net realized gain on investments ----
-----------
(159,248)
-----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 33,292,532
Reinvestment of distributions 159,248
Payments for shares redeemed (11,707,182)
-----------
21,744,598
-----------
NET INCREASE (DECREASE) IN NET ASSETS 23,963,372
NET ASSETS
Beginning of year ----
-----------
End of year $23,963,372
-----------
UNDISTRIBUTED NET INVESTMENT INCOME $ 73,642
-----------
FUND SHARE TRANSACTIONS
Sold 3,297,454
Reinvestment of distributions 15,195
Redeemed (1,141,390)
-----------
Net increase (decrease) from fund share transactions 2,171,259
-----------
</TABLE>
The accompanying notes are an integral part of
the financial statements
.
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Balanced Index Portfolio
Period from May 3, 1999
to December 31, 1999
<S> <C>
OPERATIONS
Net investment income $ 1,043,300
Net realized gain/(loss) on investments and futures (1,003,027)
Net change of unrealized appreciation/(depreciation)
on investments, futures contracts, and translation
of assets and liabilities in foreign currencies 2,191,646
----------
2,231,919
----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (657,172)
Net realized gain on investments ----
----------
(657,172)
----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 98,304,751
Reinvestment of distributions 657,172
Payments for shares redeemed (44,828,754)
----------
54,133,169
----------
NET INCREASE (DECREASE) IN NET ASSETS 55,707,916
NET ASSETS
Beginning of year ----
----------
End of year $55,707,916
----------
UNDISTRIBUTED NET INVESTMENT INCOME $ 386,128
----------
FUND SHARE TRANSACTIONS
Sold 9,807,128
Reinvestment of distributions 69,542
Redeemed (4,525,183)
----------
Net increase (decrease) from fund share transactions 5,351,487
----------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Lehman Aggregate Bond Index Portfolio
Period from June 30, 1999
to December 31,1999
<S> <C>
OPERATIONS
Net investment income $ 478,024
Net realized gain/(loss) on investments and futures (40,526)
Net change of unrealized appreciation/(depreciation)
on investments, futures contracts, and translation
of assets and liabilities in foreign currencies (352,410)
----------
85,088
----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (351,079)
Net realized gain on investments ----
----------
(351,079)
----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 18,759,494
Reinvestment of distributions 351,079
Payments for shares redeemed (3,514,663)
----------
15,595,910
----------
NET INCREASE (DECREASE) IN NET ASSETS 15,329,919
NET ASSETS
Beginning of year ----
----------
End of year $15,329,919
----------
UNDISTRIBUTED NET INVESTMENT INCOME $ 126,945
----------
FUND SHARE TRANSACTIONS
Sold 1,876,067
Reinvestment of distributions 35,284
Redeemed (350,073)
----------
Net increase (decrease) from fund share transactions 1,561,278
----------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
COMMON STOCKS - 89.28%
SHARES VALUE
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 16.00%
Banc One Corporation 65,000 $ 2,084,062
Banco Latinoamericano De Exportanciones Sponsored ADR 75,000 1,762,500
Bank of America Corporation 60,000 3,011,250
Charter One Financial, Incorporated 110,085 2,105,375
Chase Manhattan, N.A. 15,000 1,165,312
Fannie Mae 30,000 1,873,125
Federal Home Loan Mortgage Corporation 30,000 1,411,875
First Union Corporation 70,000 2,296,875
Golden State Bancorp* 100,000 1,725,000
Jefferies Group, Incorporated 27,800 611,600
Raymond James Financial Corporation 100,000 1,868,750
-----------
19,915,724
-----------
CAPITAL GOODS - .47%
LSI Industries, Incorporated 26,900 581,712
CONSUMER CYCLICAL - 11.68%
Ford Motor Company 50,000 2,671,875
Dayton Hudson Corporation 20,000 1,468,750
General Motors Corporation 23,000 1,671,812
Media General, Incorporated Class A 40,000 2,080,000
National RV Holdings, Incorporated* 29,100 560,175
Stanley Furniture Company* 130,700 2,401,612
Strattec Security Corporation* 56,000 1,813,000
Toll Brothers, Incorporated* 100,000 1,862,500
-----------
14,529,724
-----------
CONSUMER NON-DURABLE - 14.20%
General Mills, Incorporated 60,000 2,145,000
H. J. Heinz Company 35,000 1,393,438
Invacare Corporation 117,000 2,347,313
PepsiCo, Incorporated 50,000 1,762,500
Pharmacia & Upjohn, Incorporated 30,000 1,350,000
Sara Lee Corporation 65,000 1,434,063
SPX Corporation* 30,000 2,424,375
TRICON Global Restaurants* 55,000 2,124,375
Watson Pharmaceuticals, Incorporated* 75,000 2,685,938
-----------
17,667,002
-----------
ENERGY - 7.75%
Coastal Corporation 30,000 1,063,125
Conoco, Incorporated Class B 110,000 2,736,250
Houston Exploration Company* 86,500 1,713,781
Newfield Exploration Company* 40,000 1,070,000
Pride International, Incorporated 100,000 1,462,500
Union Pacific Resources Group 125,000 1,593,750
-----------
9,639,406
-----------
MANUFACTURING - 5.66%
Cytec, Incorporated* 90,000 2,081,250
D.R. Horton, Incorporated 190,000 2,624,375
ITT Industries, Incorporated 70,000 2,340,625
-----------
7,046,250
-----------
REAL ESTATE - 3.54%
Chicago Title Corporation 32,800 1,517,000
FelCor Lodging Trust, Incorporated 100,000 1,750,000
Hospitality Properties Trust 60,000 1,143,750
-----------
4,410,750
-----------
SERVICE - 2.22%
Convergys Corporation* 90,000 2,767,500
-----------
TECHNOLOGY - 8.95%
Intel Corporation 30,000 2,469,375
Cisco Systems, Incorporated* 20,000 2,142,500
International Business Machines Corporation 28,000 3,024,000
Microsoft Corporation* 30,000 3,502,500
-----------
11,138,375
-----------
TRANSPORTATION - 5.18%
America West Holdings Corporation Class B* 90,000 1,867,500
AMR Corporation* 20,000 1,340,000
Delta Air Lines, Incorporated 30,000 1,494,375
Whitman Corporation 130,000 1,746,875
-----------
6,448,750
-----------
UTILITIES - 13.63%
Alliant Energy Corporation 25,000 687,500
Avista Corporation 79,000 1,219,563
Bell Atlantic Corporation 40,000 2,462,500
Bell South Corporation 53,200 2,490,425
GTE Corporation 35,000 2,469,688
Niagara Mohawk Holdings, Incorporated* 145,000 2,020,938
SBC Communications, Incorporated 60,000 2,925,000
Scana Corporation 100,000 2,687,500
-----------
16,963,114
-----------
Total Common Stocks (cost $108,315,886) 111,108,307
UNIT INVESTMENT TRUST - 8.56%
MidCap SPDR Trust Unit Series I 77,000 6,246,625
S&P 500 Depositary Receipt 30,000 4,406,250
Total Unit Investment Trust (cost $9,667,628) 10,652,875
-----------
TOTAL INVESTMENTS - 97.84% (cost $117,983,514)<F1> 121,761,182
-----------
OTHER ASSETS AND LIABILITIES - 2.16% 2,683,174
-----------
TOTAL NET ASSETS - 100% $124,444,356
-----------
____________
*Non-income producing
(ADR) American Depository Receipt
<FN>
<F1> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at December 31,1999 for financial
reporting purposes was $11,755,811 and ($8,188,293).
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
BOND PORTFOLIO
<TABLE>
<CAPTION>
U.S. TREASURY OBLIGATIONS - 32.87%
PRINCIPAL VALUE
<S> <C> <C>
U.S. TREASURY NOTES & BONDS - 32.87%
7.750% due 02/15/01 $5,000,000 $ 5,085,940
0.000% due 08/15/02 2,000,000 1,700,338
5.875% due 11/15/05 6,000,000 5,825,628
5.625% due 02/15/06 5,000,000 4,784,375
7.000% due 07/15/06 2,000,000 2,048,750
6.500% due 10/15/06 6,000,000 5,983,128
6.625% due 05/15/07 5,000,000 5,020,315
6.125% due 08/15/29 2,000,000 1,906,876
-----------
32,355,350
-----------
Total U.S. Treasury Obligations (cost $33,552,586) 32,355,350
-----------
MORTGAGE-BACKED SECURITIES - 1.26%
FEDERAL HOME LOAN MORTGAGE CORPORATION - .34%
7.500% due 02/01/02 11,544 11,586
9.500% due 04/01/05 21,799 22,566
7.500% due 06/01/07 54,783 54,743
11.000% due 05/01/10 979 1,026
12.500% due 08/01/10 7,648 8,353
8.000% due 11/01/16 22,971 23,193
9.500% due 02/01/18 31,040 32,690
6.500% due 07/01/23 192,554 183,671
-----------
337,828
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - .86%
12.000% due 04/01/00 886 901
9.000% due 08/01/01 11,088 11,292
8.500% due 01/01/02 9,918 10,177
10.500% due 06/01/04 5,539 5,759
10.500% due 05/01/05 133,418 138,694
6.500% due 06/01/08 592,511 580,424
8.000% due 08/01/17 97,821 99,069
-----------
846,316
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - .06%
9.000% due 05/15/20 56,689 59,471
-----------
Total Mortgage-backed Securities (cost $1,245,367) 1,243,615
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 5.07%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.29%
59 E (8.900% due 11/15/20) $ 487,165 $ 499,399
106 G (8.250% due 12/15/20) 758,778 771,462
-----------
1,270,861
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - .08%
1988-30 D (9.500% due 12/25/18) 73,313 76,338
-----------
PRIVATE SECTOR - 3.70%
Securitized Asset Sales, Inc. 1993-2 B2
(6.500% due 07/25/08) 221,947 213,484
CMC2 Securities Corp. 1993 E 1 E 1CP
(0.000% due 12/25/08) 230,974 182,239
Country Wide Mortgage-Backed Securities, Inc.
1994 - 8B1
(6.000% due 03/01/09) 689,032 649,558
Capstead Mortgage Securities Corp. C - 4
(10.950% due 02/01/14) 90,454 90,455
Boams 99-3 B3 (6.250% due 05/25/14) 942,744 827,164
NSCOR 1996 - 5 B1 (8.000% due 11/25/26) 1,617,510 1,600,332
MSC (1998 - 1) PO (0.000% due 03/25/28) 112,724 77,824
-----------
3,641,056
-----------
Total Collateralized Mortgage Obligations
(cost $5,012,535) 4,988,255
-----------
ASSET-BACKED SECURITIES - 7.14%
COMMERCIAL MORTGAGE-BACKED SECURITIES- 5.26%
Chase Commercial Mortgage Sec.(6.600% due 12/19/07) 2,609,885 2,208,615
NMFC 98-4 B3 (6.250% due 10/25/2028) 1,356,843 1,123,969
Paine Webber Mortgage Acceptance 96 M1 E
(7.655% due 01/02/12) 2,000,000 1,840,000
-----------
5,172,584
-----------
HOME EQUITY - 1.88%
Ditech Home Loan Owner Trust (7.250% due 06/15/21) 2,000,000 1,855,620
-----------
Total Asset-backed Securities (cost $7,768,030) 7,028,204
-----------
CORPORATE BONDS AND NOTES - 50.42%
AIR TRANSPORTATION - 1.84%
Continental Airlines (7.820% due 10/15/13) 911,413 903,439
NWA Trust No. 2 Class B (10.230% due 06/21/14) 876,923 912,763
-----------
1,816,202
-----------
BANK, BANK HOLDING COMPANIES, & OTHER BANK
SERVICES- 10.71%
Ahmanson Capital Trust (8.360% due 12/01/26) 1,500,000 1,418,686
Banc Tec Inc. (7.500% due 06/01/08) 1,500,000 1,348,568
Erac USA Finance (7.950% due 12/15/09) 1,000,000 990,873
Fairfax Financial Holdings (7.375% due 03/15/06) 1,000,000 900,678
GS Escrow Corp. (6.750% due 08/01/01) 300,000 289,151
GS Escrow Corp. (7.000% due 08/01/03) 1,000,000 925,226
Household Finance Corp. (7.200% due 07/15/06) 1,500,000 1,474,046
Lodgian Finance Corp. (12.250% due 07/15/09) 1,000,000 990,000
NationsBank Corp. (7.625% due 04/15/05) 1,000,000 1,014,290
Sovereign Bancorp (10.500% due 11/15/06) 250,000 255,000
Svenska Handelsbanken (7.125% due 03/07/07) 1,000,000 932,710
-----------
10,539,228
-----------
CONSUMER NON-DURABLE - 3.00%
LTV Corp. Sr. Nts. (11.750% due 11/15/09) 1,000,000 1,040,000
Sequa Corp. Sr. Nts. (9.000% due 08/01/09) 1,000,000 967,500
World Color Press Inc. Sr. Nts.(7.750% due 02/15/09) 1,000,000 950,000
-----------
2,957,500
-----------
ELECTRIC - 3.21%
Carolina Power & Light Sr. Nts.
(5.950% due 03/01/09) 1,000,000 903,392
Edison Mission Nts. (7.730% due 06/15/09) 1,000,000 992,254
-----------
3,161,155
-----------
ENERGY - 4.88%
Eagle Geophysical Inc.* (10.750% due 07/15/08)<F1> 1,000,000 80,000
Federal-Mogul Co. (7.375% due 01/15/06) 1,000,000 916,258
Louis Dreyfus Nts. (6.875% due 12/01/07) 1,500,000 1,353,510
Mitchell Energy Development Corp.
(6.750% due 02/15/04) 1,750,000 1,663,613
Rural/Metro Corp. Sr. Nts. (7.875% due 03/15/08) 1,000,000 787,500
-----------
4,800,881
-----------
ENTERTAINMENT & LEISURE - 2.39%
Imax Corp. Sr. Nts. (7.875% due 12/01/05) 1,000,000 945,000
Royal Caribbean (7.000% due 10/15/07) 1,500,000 1,405,804
-----------
2,350,804
-----------
FOOD, BEVERAGE, & TOBACCO - .96%
RJR Nabisco Inc. (7.550% due 06/15/15) 1,000,000 945,311
-----------
GAMING INDUSTRY - 1.15%
Casino Magic of Louisiana (13.000% due 08/15/03) 1,000,000 1,128,750
-----------
HEALTH CARE - 2.48%
Tenet Healthcare Corp. (7.875% due 01/15/03) 1,000,000 968,750
Universal Health Services Sr. Notes
(8.750% due 08/15/05) 1,500,000 1,475,372
-----------
2,444,122
-----------
INSURANCE - 3.07%
Farmers Insurance Exchange (8.500% due 08/01/04) 1,000,000 1,025,546
Prudential Ins. Surplus Notes (8.100% due 07/15/15) 1,000,000 1,000,658
USF&G Capital (8.470% due 01/10/27) 1,000,000 992,427
-----------
3,018,631
-----------
MEDIA & CABLE - 2.13%
CF Cable TV Inc. (9.125% due 07/15/07) 1,000,000 1,064,039
Continental Cablevision (8.300% due 05/15/06) 1,000,000 1,028,658
-----------
2,092,697
-----------
MEDIA CONGLOMERATE - 4.00%
News American Holdings (6.625% due 01/09/08) 1,500,000 1,396,831
Time Warner Inc. (8.110% due 08/15/06) 1,500,000 1,533,786
Viacom Inc. Sr. Notes (7.750% due 06/01/05) 1,000,000 1,010,867
-----------
3,941,484
-----------
PAPER & FOREST PRODUCT - .54%
Westvaco Corp. (10.300% due 01/15/19) 500,000 526,850
-----------
REAL ESTATE - 2.80%
Colonial Properties Sr. Nts. (8.050% due 07/15/06) 1,500,000 1,434,543
Healthcare Properties Nts. (6.875% due 06/08/05) 1,500,000 1,319,023
-----------
2,753,566
-----------
TELECOMMUNICATIONS - 6.36%
360 Communications Sr. Nts. (7.500% due 03/01/06) 1,500,000 1,509,892
Arch Communications Group Sub. Deb.
(6.750% due 12/01/03) 1,000,000 560,000
Call-Net Enterprises (10.800% due 05/15/09) 1,000,000 492,500
IMC Global Nts. (7.625% due 11/01/05) 1,250,000 1,218,161
Talton Holdings Inc. Sr. Nts. (11.000% due 06/30/07) 1,000,000 950,000
Worldcom Inc. (7.750% due 04/01/07) 1,500,000 1,529,078
-----------
6,259,631
-----------
TRANSPORTATION - .90%
Midway Air Lines (8.140% due 01/02/13) 1,000,000 889,560
-----------
Total Corporate Bond and Notes (cost $52,946,444) 49,626,372
-----------
SHORT TERM INVESTMENTS - 1.65%
VARIABLE RATE DEMAND NOTES<F2> - 1.65%
Firstar Bank (6.240% due 12/31/31) 1,625,419 1,625,419
-----------
Total Short-Term Investments (cost $1,625,419) 1,625,419
-----------
TOTAL INVESTMENTS - 98.41% (cost $102,150,381)<F3> 96,867,215
-----------
OTHER ASSETS AND LIABILITIES - 1.59% 1,560,521
-----------
TOTAL NET ASSETS - 100.00% $98,427,736
===========
* Non-Income Producing
<FN>
<F1> Bond is in default.
<F2> Interest rates vary periodically based on current market rates. Rates
shown are as of December 31, 1999. The maturity shown for each
variable rate demand note is the later of the next scheduled interest
adjustment date or the date on which principal can be
recovered through demand. Information shown is as of December 31, 1999.
<F3> Represents cost for income tax purposes which is substantially the same
for financial reporting purposes. Gross unrealized appreciation and
depreciation of securities at December 31, 1999 was $512,914 and ($5,796,080)
respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
S&P 500 INDEX PORTFOLIO
<TABLE>
<CAPTION>
COMMON STOCKS - 92.60%
SHARES VALUE
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 12.21%
Aetna Life and Casualty Company 3,200 $ 178,600
AFLAC, Incorporated 5,700 268,969
Allstate (The) Corporation 17,200 412,800
American Express Company 9,600 1,596,000
American General Corporation 5,300 402,137
American International Group, Incorporated 33,122 3,581,315
AmSouth Bancorp, Incorporated 8,400 162,225
Aon Corporation 5,500 220,000
Associates First Capital Corporation 15,600 428,025
BB&T Corporation 7,100 194,362
Banc One Corporation 24,546 787,005
BankAmerica Corporation 36,452 1,829,435
Bank of New York Company, Incorporated 15,700 628,000
Bear Stearns Companies, Incorporated 2,504 107,045
Capital One Financial Corporation 4,200 202,387
Charles Schwab Corporation 17,500 671,562
Chase Manhattan Corporation 17,600 1,367,300
Chubb Corporation 3,800 213,987
CIGNA Corporation 4,000 322,250
Cincinnati Financial Corporation 3,500 109,155
Citigroup, Incorporated 72,050 4,003,277
Comerica, Incorporated 3,300 154,068
Conseco, Incorporated 7,000 125,125
Countrywide Credit Industries, Incorporated 2,400 60,600
Fannie Mae 21,900 1,367,380
Federal Home Loan Mortgage Corporation 14,900 701,230
Fifth Third Bancorp 6,600 484,275
First Union Corporation 21,100 692,343
Firstar Corporation 20,914 441,807
Fleet Financial Group, Incorporated 19,580 681,628
Franklin Resources, Incorporated 5,400 173,137
Golden West Financial 3,500 117,250
Hartford Financial Services Group 4,700 222,662
Household International, Incorporated 10,000 372,500
Huntington Bancshares 4,932 117,751
Jefferson-Pilot Corporation 2,200 150,150
KeyCorp 9,600 212,400
Lehman Brothers Holdings 2,600 220,187
Lincoln National Corporation 4,200 168,000
Loews Corporation 2,300 139,580
Marsh & McLennan Companies, Incorporated 5,700 545,418
MBIA, Incorporated 2,100 110,905
MBNA Corporation 17,100 465,975
Mellon Bank Corporation 10,900 371,280
Merrill Lynch & Company 7,900 659,650
MGIC Investment Corporation 2,300 138,430
Morgan (J. P.) & Company 3,700 468,512
Morgan Stanley, Dean Witter & Company 11,900 1,698,725
National City Corporation 13,200 312,675
Northern Trust Corporation 4,800 254,400
Old Kent Financial Corporation 2,550 90,205
PaineWebber, Incorporated 3,000 116,437
Pinnacle West, Incorporated 1,850 56,540
PNC Bank Corporation 6,300 280,350
Progressive Corporation 1,600 117,000
Providian Financial Corporation 3,000 273,187
Regions Financial Corporation 4,700 118,087
SAFECO Corporation 2,800 69,650
SLM Holding Corporation 3,400 143,650
SouthTrust Corporation 3,600 136,124
State Street Corporation 3,400 248,412
St. Paul Companies 4,900 165,068
Summit Bancorp 3,700 113,312
SunTrust Banks, Incorporated 6,800 467,925
Synovus Financial Corporation 6,000 119,250
T. Rowe Price Associates, Incorporated 2,600 96,037
Torchmark Corporation 2,800 81,375
Union Planters Corporation 3,000 118,312
UNUMprovident Corporation 5,098 163,455
U.S. Bancorp 15,500 369,093
Wachovia Corporation 4,300 292,400
Washingon Mutual, Incorporated 12,384 321,983
Wells Fargo & Company 35,100 1,419,355
-----------
34,691,086
-----------
CAPITAL GOODS - 7.87%
Allied Waste Industries, Incorporated* 4,000 35,250
Armstrong World Industries, Incorporated 900 30,037
Briggs & Stratton 500 26,812
Boeing Company 20,000 831,250
Caterpillar, Incorporated 7,600 357,675
Cooper Industries, Incorporated 2,000 80,875
Corning, Incorporated 5,200 670,475
Crane Company 1,400 27,825
Cummins Engine Company, Incorporated 900 43,480
Danaher Corporation 3,000 144,750
Deere & Company 5,000 216,875
Dover Corporation 4,400 199,650
Emerson Electric Company 9,300 533,587
Fluor Corporation 1,600 73,400
Foster Wheeler Corporation 900 7,987
General Dynamics Corporation 4,300 226,825
General Electric Company 70,100 10,847,975
Grainger (W.W.), Incorporated 2,000 95,625
Honeywell, Incorporated 16,962 978,495
Illinois Tool Works, Incorporated 6,450 435,777
Ingersoll-Rand Company 3,500 192,718
ITT Industries, Incorporated 1,900 63,531
Johnson Controls, Incorporated 1,800 102,375
Lockheed Martin Corporation 8,500 185,937
Masco Company 9,600 243,600
Milacron, Incorporated 800 12,300
Minnesota Mining & Manufacturing Company 8,600 841,725
NACCO Industries, Incorporated 200 11,112
Navistar International* 1,400 66,325
Northrop Grumman Corporation 1,500 81,093
Owens Corning Fiberglass Corporation 1,200 23,175
Pall Corporation 2,700 58,218
PACCAR, Incorporated 1,700 75,330
Parker-Hannifin Corporation 2,400 123,150
Perkinelmer, Incorporated 1,000 41,688
Pitney Bowes, Incorporated 5,700 275,381
Raytheon Company - Class B 7,200 191,250
Rockwell International Corporation 4,100 196,288
Solectron Corporation* 6,300 599,288
Textron, Incorporated 3,200 245,400
Thermo Electron Corporation* 3,400 51,000
Thomas & Betts Company 1,200 38,250
Timken Company 1,300 26,568
TRW, Incorporated 2,600 135,038
Tyco International Limited 36,104 1,403,542
United Technologies Corporation 10,200 663,000
Waste Management, Incorporated 13,270 228,078
Xerox Corporation 14,200 322,163
-----------
22,362,148
-----------
CONSUMER CYCLICAL - 11.97%
American Greetings Company Class A 1,400 33,075
American Online, Incorporated* 47,800 3,605,913
Amgen, Incorporated* 21,800 1,309,363
AutoZone, Incorporated* 3,100 100,168
Bed Bath & Beyond, Incorporated* 3,000 104,250
Best Buy Company, Incorporated* 4,400 220,825
Black & Decker Corporation 1,900 99,275
Brunswick Corporation 2,000 44,500
Carnival Corporation 13,200 631,125
Centex Corporation 1,300 32,094
Circuit City Stores, Incorporated 4,300 193,768
Clear Channel Communications* 7,200 642,600
Comcast Corporation Class A Special 16,100 814,056
Cooper Tire & Rubber Company 1,600 24,900
Consolidated Stores Corporation* 2,400 39,000
Costco Companies, Incorporated* 4,700 428,875
Dana Corporation 3,549 106,247
Dayton Hudson Corporation 9,400 690,312
Delphi Automotive Systems 12,058 189,913
Deluxe Corporation 1,600 43,900
Dillard's, Incorporated Class A 2,300 46,430
Dollar General Corporation 5,650 128,537
Donnelley (R.R.) & Sons Company 2,700 66,994
Dow Jones & Company, Incorporated 1,900 129,200
Eaton Corporation 1,600 116,200
Ecolab, Incorporated 2,800 109,550
Federated Department Stores* 4,500 227,531
Fleetwood Enterprises, Incorporated 700 14,438
Ford Motor Company 25,800 1,378,688
Gannett Company, Incorporated 6,000 489,375
Gap, Incorporated 18,275 840,650
General Motors Corporation 13,700 995,819
Genuine Parts Company 3,800 94,288
Goodyear Tire & Rubber 3,300 93,019
Harcourt General, Incorporated 1,500 60,375
Harrah's Entertainment, Incorporated* 2,700 71,381
Hilton Hotels Corporation 7,900 76,038
Home Depot, Incorporated 49,200 3,373,275
Jostens, Incorporated 700 17,019
Kaufman & Broad Home Corporation 1,000 24,188
K Mart Corporation* 10,500 105,656
Knight-Ridder, Incorporated 1,800 107,100
Kohl's Department Stores Corporation* 3,500 252,656
Leggett & Platt, Incorporated 4,200 90,038
Limited (The), Incorporated 4,600 199,238
Lowe's Companies, Incorporated 8,200 489,950
Marriott International Class A 5,300 167,281
May Department Stores Company 7,150 230,588
Maytag Corporation 1,800 86,400
McGraw-Hill Companies, Incorporated 4,200 258,825
Meredith Corporation 1,100 45,856
Mirage Resorts, Incorporated* 4,100 62,781
New York Times Class A 3,700 181,763
Nordstrom, Incorporated 3,000 78,563
Office Depot, Incorporated* 7,000 76,563
Penney (J.C.) Company, Incorporated 5,600 111,650
Pep Boys - Manny, Moe & Jack 1,100 10,038
Pulte Corporation 900 20,250
Sears Roebuck & Company 8,100 246,544
Snap-On Tools, Incorporated 1,200 31,875
Stanley (The) Works 1,900 57,238
Staples, Incorporated* 9,950 206,463
Tandy Corporation 4,100 201,669
Times Mirror Company Class A 1,300 87,100
Time Warner, Incorporated 27,500 1,992,031
TJX Companies, Incorporated 6,600 134,888
Toys "R" Us, Incorporated* 5,200 74,425
Tribune Company 5,100 280,819
Wal-Mart Stores, Incorporated 95,100 6,573,788
Walt Disney Company, The 44,100 1,289,925
Whirlpool Corporation 1,600 104,100
Yahoo!, Incorporated* 5,675 2,455,502
-----------
34,018,717
-----------
CONSUMER NON-DURABLE - 16.78%
Abbott Laboratories 32,900 1,194,681
Alberto-Culver Company Class B 1,200 30,975
Albertson's, Incorporated 9,076 292,701
Allergan, Incorporated 2,800 139,300
ALZA Corporation Class A* 2,200 76,175
American Home Products Corporation 27,900 1,100,306
Anheuser-Busch Companies, Incorporated 9,900 701,663
Archer-Daniels-Midland Company 12,956 157,901
Avon Products, Incorporated 5,200 171,600
Bausch & Lomb, Incorporated 1,200 82,125
Baxter International, Incorporated 6,200 389,438
Becton, Dickinson Company 5,300 141,775
BestFoods, Incorporated 6,000 315,375
Biomet, Incorporated 2,400 96,000
Boston Scientific Corporation* 8,900 194,688
Bristol-Meyers Squibb Company 42,400 2,721,550
Brown-Forman Corporation 1,500 85,875
Campbell Soup Company 9,100 352,056
Cardinal Health, Incorporated 6,000 287,250
CBS, Corporation* 16,315 1,043,140
Clorox Company 5,100 256,913
Coca-Cola Company 52,800 3,075,600
Coca-Cola Enterprises 9,100 183,138
Colgate-Palmolive Company 12,400 806,000
Columbia/HCA Healthcare Corporation 12,000 351,750
ConAgra, Incorporated 10,500 236,906
Coors (Adolph) Class B 800 42,000
C.R. Bard, Incorporated 1,100 58,300
CVS Corporation 8,400 335,475
Darden Resturants, Incorporated 2,800 50,750
Eastman Kodak Company 6,700 443,875
Fortune Brands, Incorporated 3,500 115,719
General Mills, Incorporated 6,500 232,375
Gillette Company 22,900 943,194
Great Atlantic & Pacific Tea Company, Incorporated 800 22,300
Guidant Corporation 6,600 310,200
Hasbro, Incorporated 4,150 79,109
Heinz (H.J.) Company 7,700 306,556
HEALTHSOUTH Corporation* 8,300 44,613
Hershey Foods Corporation 3,000 142,500
Humana, Incorporated* 3,600 29,475
International Flavors & Fragrance, Incorporated 2,200 83,050
Johnson & Johnson Company 29,700 2,765,813
Kellogg Company 8,700 268,069
Kimberly-Clark Corporation 11,600 756,900
Kroger Company* 17,800 335,975
Lilly (Eli) & Company 23,300 1,549,450
Liz Claiborne, Incorporated 1,300 48,913
Longs Drug Stores Corporation 800 20,650
Mallincrokdt, Incorporated 1,500 47,719
Manor Care, Incorporated* 2,200 35,200
Mattel, Incorporated 9,000 118,125
Mediaone Group* 13,100 1,006,244
McDonald's Corporation 28,900 1,165,031
McKesson HBOC, Incorporated 5,972 134,743
Medtronic, Incorporated 25,500 929,156
Merck & Company, Incorporated 49,900 3,346,419
NIKE, Incorporated Class B 6,000 297,375
Newell Rubbermaid, Incorporated 5,991 173,739
PepsiCo, Incorporated 31,100 1,096,275
Pfizer, Incorporated 82,700 2,682,581
Pharmacia & Upjohn, Incorporated 11,100 499,500
Philip Morris Companies, Incorporated 50,600 1,173,288
Polaroid Corporation 1,000 18,813
Procter & Gamble Company 28,100 3,078,706
Quaker Oats Company 2,900 190,313
Quintiles Transnational Corporation* 2,450 45,784
RJR Nabisco Holdings Corporation 6,950 73,844
Ralston-Ralston Purina Group 6,900 192,338
Reebok International Limited* 1,200 9,825
Rite Aid Corporation 5,500 61,531
Russell Company 700 11,725
Safeway, Incorporated* 10,900 387,631
Sara Lee Corporation 19,400 428,013
Schering-Plough Corporation 31,400 1,324,688
Seagram Company, Limited 9,300 417,919
Supervalu, Incorporated 3,000 60,000
St. Jude Medical* 1,800 55,238
Sysco Corporation 7,000 276,938
Tenet Healthcare Corporation* 6,700 157,450
TRICON Global Restaurants* 3,300 127,463
Tupperware Corporation 1,200 20,325
Unilever N.V. ADR 12,242 666,424
United HealthCare Corporation 3,600 191,250
UST, Incorporated 3,700 93,194
V.F. Corporation 2,500 75,000
Viacom, Incorporated - Class B* 14,900 900,519
Walgreen Company 21,400 625,950
Warner-Lambert Company 18,300 1,499,456
Watson Pharmaceuticals, Incorporated* 2,100 75,206
Wellpoint Health Networks* 1,400 92,313
Wendy's International, Incorporated 2,600 53,625
Winn-Dixie Stores, Incorporated 3,200 76,600
Wrigley (Wm) Jr. Company 2,500 207,344
-----------
47,670,962
-----------
ENERGY - 5.07%
Amerada Hess Corporation 1,900 107,825
Anadarko Petroleum Corporation 2,700 92,138
Apache Corporation 2,400 88,650
Ashland, Incorporated 1,500 49,406
Atlantic Richfield Company 6,900 596,850
Baker Hughes, Incorporated 6,990 147,227
Burlington Resources, Incorporated 4,650 153,741
Chevron Corporation 14,000 1,212,750
Conoco, Incorporated Class B 13,427 334,014
Exxon Corporation 73,778 5,943,740
Halliburton Company 9,400 378,350
Helmerich & Payne, Incorporated 1,100 23,994
Kerr-McGee Company 1,890 117,180
McDermott International, Incorporated 1,300 11,780
Occidental Petroleum 7,900 170,838
Phillips Petroleum Company 5,400 253,800
Rowan Companies, Incorporated* 1,800 39,038
Royal Dutch Petroleum Company ADR 45,800 2,768,038
Schlumberger Limited 11,800 663,750
Sunoco, Incorporated 1,900 44,650
Texaco, Incorporated 11,800 640,888
Tosco Corporation 3,100 84,281
Transocean Sedco Forex, Incorporated 2,284 76,958
Union Pacific Resources Group 5,400 68,850
Unocal Corporation 5,200 174,525
USX-Marathon Group, Incorporated 6,600 162,938
-----------
14,406,199
-----------
MANUFACTURING - 2.93%
Air Products & Chemicals, Incorporated 4,900 164,456
Alcan Aluminum Limited 4,700 193,581
Alcoa, Incorporated 7,800 647,400
Allegheny Teledyne, Incorporated 1,950 43,753
Avery Dennison Corporation 2,400 174,900
Ball Corporation 600 23,625
Barrick Gold Corporation 8,400 148,575
Bemis Company 1,100 38,363
Bethlehem Steel Corporation* 2,800 23,450
B.F. (The) Goodrich Company 2,400 66,000
Boise Cascade Corporation 1,200 48,600
Champion International Corporation 2,100 130,069
Crown Cork & Seal Company, Incorporated 2,600 58,175
Dow Chemical Company 4,700 628,038
DuPont (E.I.) De Nemours & Company 22,300 1,469,000
Eastman Chemical Company 1,700 81,069
Englehard Corporation 2,700 50,963
FMC Corporation* 700 40,119
Fort James Corporation 4,600 125,925
Freeport-McMoRan Copper & Gold* 3,500 73,938
Georgia-Pacific Company 3,700 187,775
Great Lakes Chemical Corporation 1,200 45,825
Hercules, Incorporated 2,300 64,113
Homestake Mining Company 5,600 43,750
Inco, Limited* 4,100 96,350
International Paper Company 8,800 496,650
Louisiana Pacific Corporation 2,300 32,775
Mead Corporation 2,200 95,563
Millipore Corporation 1,000 38,625
Monsanto Company 13,600 484,500
National Service Industries, Incorporated 900 26,550
Newmont Mining Corporation 3,600 88,200
Nucor Corporation 1,900 104,144
Owens-Illinois, Incorporated* 3,200 80,200
Pactiv Corporation* 3,700 39,313
Phelps Dodge Corporation 1,765 118,476
Placer Dome, Incorporated 7,000 75,250
Potlatch Corporation 600 26,775
PPG Industries, Incorporated 3,700 231,481
Praxair, Incorporated 3,400 171,063
Reynolds Metals Company 1,400 107,275
Rohm & Haas Company 4,648 189,116
Sealed Air Corporation* 1,800 93,262
Sherwin-Williams Company 3,500 73,500
Sigma-Aldrich Corporation 2,200 66,138
Spring Industries, Incorporated 400 15,975
Temple-Inland, Incorporated 1,200 79,125
Union Carbide Corporation 2,900 193,575
USX-U.S. Steel Group, Incorporated 1,900 62,700
Vulcan Materials Company 2,100 83,869
Westvaco Corporation 2,100 68,513
Weyerhaeuser Company 5,000 359,063
Willamette Industries 2,400 111,450
Worthington Industries, Incorporated 1,900 31,469
W.R. Grace & Company* 1,500 20,813
-----------
8,333,220
-----------
SERVICE - 1.42%
Automatic Data Processing, Incorporated 13,400 721,925
Block (H&R), Incorporated 2,100 91,875
Cendant Corporation* 15,200 403,750
Computer Sciences Corporation* 3,600 340,650
Dun & Bradstreet Corporation 3,400 100,300
Electronic Data Systems Corporation 10,054 672,990
Equifax, Incorporated 3,000 70,688
First Data Corporation 9,000 443,813
IMS Health, Incorporated 6,600 179,438
Interpublic (The) Group of Companies, Incorporated 6,000 346,125
Omnicom Group, Incorporated 3,800 380,000
Paychex, Incorporated 5,300 212,000
Service Corporation International 5,800 40,238
Shared Medical System Corporation 600 30,563
-----------
4,034,355
-----------
TECHNOLOGY - 24.25%
3COM Corporation 7,400 347,800
Adaptec, Incorporated* 2,200 109,725
Adobe Systems, Incorporated 2,600 174,850
ADC Telecommunications, Incorporated* 3,200 232,200
Advanced Micro Devices, Incorporated* 3,100 89,706
Analog Devices, Incorporated* 3,700 344,100
Andrew Corporation* 1,800 34,088
Apple Computer, Incorporated* 3,400 349,563
Applied Materials, Incorporated* 8,100 1,026,169
Autodesk, Incorporated 1,300 43,875
BMC Software, Incorporated* 5,200 415,675
Cabletron Systems, Incorporated* 3,900 101,400
Ceridian Corporation* 3,100 66,844
Cisco Systems, Incorporated* 69,900 7,488,038
Citrix Systems, Incorporated* 1,900 233,700
COMPAQ Computers Corporation 36,300 982,369
Computer Associates International, Incorporated 11,500 804,281
Compuware, Incorporated* 7,600 283,100
Comverse Technology, Incorporated* 1,500 217,125
Dell Computer Corporation* 54,300 2,769,300
EMC Corporation Massachusetts* 21,743 2,375,423
Gateway 2000, Incorporated* 6,800 490,025
General Instrument Corporation* 3,700 314,500
Hewlett-Packard Company 21,800 2,483,838
IKON Office Solution, Incorporated 3,200 21,800
Intel Corporation 71,400 5,877,113
International Business Machines Corporation 38,500 4,158,000
KLA-Tencor Corporation* 1,900 211,613
Lexmark International Group, Incorporated Class A* 2,700 244,350
LSI Logic Corporation* 3,200 216,000
Lucent Technologies, Incorporated 67,000 5,012,438
Micron Technology, Incorporated* 5,800 450,950
Microsoft Corporation* 110,300 12,877,525
Molex, Incorporated 3,400 192,737
Motorola, Incorporated 13,000 1,914,250
National Semiconductor* 3,700 158,406
Network Appliance, Incorporated* 3,200 265,800
Nortel Networks Corporation 28,540 2,882,540
Novell, Incorporated* 7,100 283,556
Oracle Systems Corporation* 30,400 3,406,700
Parametric Technology Company* 5,800 156,963
PE Corporation PE Biosystems Group, Incorporated 2,200 264,688
PeopleSoft, Incorporated* 5,200 110,825
Qualcom, Incorporated* 14,000 2,465,750
Seagate Technology, Incorporated* 4,500 209,531
Scientific-Atlanta, Incorporated 1,700 94,563
Silicon Graphics, Incorporated* 3,900 38,269
Sun Microsystems, Incorporated* 33,400 2,586,413
Tektronix, Incorporated 1,000 38,875
Tellabs, Incorporated* 8,600 552,013
Teradyne, Incorporated* 3,700 244,200
Texas Instruments, Incorporated 17,100 1,656,563
Unisys Corporation* 6,600 210,788
Xilinx, Incorporated* 6,900 313,734
-----------
68,894,647
-----------
TRANSPORTATION - .65%
AMR Corporation* 3,200 214,400
Burlington Northern Santa Fe Corporation 9,800 237,650
CSX Corporation 4,700 147,463
Delta Air Lines, Incorporated 2,800 139,475
FDX Corporation* 6,400 262,000
Kansas City Southern Industries 2,400 179,100
Norfolk Southern Company 8,100 166,050
Ryder System 1,400 34,213
Southwest Airlines Company 10,750 174,016
Union Pacific Corporation 5,300 231,213
US Airways Group, Incorporated* 1,500 48,094
-----------
1,833,674
-----------
UTILITIES - 9.45%
AES Corporation* 4,400 328,900
ALLTELL Corporation 6,700 554,006
Ameren Corporation 2,900 94,975
AT & T Corporation 68,289 3,465,667
American Electric Power Company 4,100 131,713
Bell Atlantic Corporation 33,200 2,043,875
BellSouth Corporation 40,200 1,881,863
Carolina Power & Light Company 3,400 103,488
Central & SouthWest Corporation 4,500 90,000
Centurytel, Incorporated 3,000 142,125
CINergy Corporation 3,400 82,025
CMS Energy Corporation 2,500 77,969
Coastal Corporation 4,600 163,013
Columbia Energy Group 1,700 107,525
Consolidated Edison, Incorporated 4,700 162,150
Consolidated Natural Gas Company 2,000 129,875
Constellation Energy Group, Incorporated 3,200 92,800
Dominion Resources 4,100 160,925
DTE Energy Company 3,100 97,263
Duke Energy 7,800 390,975
Eastern Enterprises 600 34,463
Edison International 7,400 193,788
El Paso Energy Corporation 4,900 190,181
Enron Corporation 15,300 678,938
Entergy Corporation 5,300 136,475
FirstEnergy Corporation 5,000 113,438
Florida Progress Corporation 2,100 88,856
FPL Group, Incorporated 3,800 162,688
General Public Utilities Corporation 2,600 77,838
Global Crossing Limited* 16,185 809,250
GTE Corporation 20,800 1,467,700
MCI WorldCom, Incorporated* 60,709 3,221,398
New Century Energies, Incorporated 2,500 75,938
NEXTEL Communications, Incorporated Class A* 7,800 804,375
Niagara Mohawk Holdings, Incorporated* 4,000 55,750
Nicor, Incorporated 1,000 32,500
Northern States Power Company 3,300 64,350
Oneok, Incorporated 700 17,588
PECO Energy Company 4,000 139,000
People's Energy Corporation 800 26,800
PG & E Corporation 8,200 168,100
PP & L Resources, Incorporated 3,100 70,913
Public Service Enterprises Group, Incorporated 4,700 163,619
Reliant Energy, Incorporated 6,300 144,113
SBC Communications, Incorporated 72,857 3,551,779
Sempra Energy 5,100 88,613
Southern Company 14,400 338,400
Sprint Corporation FON Group 18,600 1,252,013
Sprint PCS Group, Incorporated* 9,250 948,125
Texas Utilities Holdings Company 5,900 209,819
Unicom Corporation 4,600 154,100
US West Communications Group 10,800 777,600
Williams Companies, Incorporated 9,300 284,232
-----------
26,843,872
-----------
Total Common Stocks (cost $192,821,593) 263,088,880
-----------
<CAPTION>
SHORT-TERM INVESTMENTS<F3> - 7.04%
PRINCIPAL VALUE
<S> <C> <C>
VARIABLE RATE DEMAND NOTES (1) - 6.54%
Firstar Bank (6.240% due 12/31/31) $10,708,146 $ 10,708,146
General Mills (6.095% due 12/31/31) 3,590,940 3,590,940
Sara Lee (6.090% due 12/31/31) 942,527 942,527
Warner Lambert (6.044% due 12/31/31) 3,193,948 3,193,948
Wisconsin Corporation (6.160% due 12/31/31) 150,128 150,128
-----------
18,585,689
-----------
U.S. Treasury Bill - .50%
U.S. Treasury Bill (4.960% due 01/20/00) 1,425,000 1,421,179
-----------
Total Short-Term Investments (cost $20,006,868) 20,006,868
-----------
TOTAL INVESTMENTS - 99.64% (cost $212,828,461)<F2> 283,095,748
-----------
OTHER ASSETS AND LIABILITIES - .36% 1,036,337
-----------
TOTAL NET ASSETS - 100% $284,132,085
============
- -----------------
*Non-income producing
<FN>
<F1> Interest rates vary periodically based on current market rates. Rates
shown are as of December 31, 1999. The maturity shown for each variable rate
demand note is the later of the next scheduled interest adjustment date or the
date on which principal can be recovered through demand. Information shown is
as of December 31, 1999.
<F2> Represents cost for income tax purposes which is substantially the same
for financial reporting purposes. Gross unrealized appreciation and
depreciation of securities as of December 31, 1999 was $85,263,024
and ($15,035,097) respectively.
<F3> Securities and other current assets with an aggregate value of $20,407,750
have been segregated with the custodian to cover margin requirements for the
following open futures contracts at December 31, 1999:
<CAPTION>
Unrealized
Type Contracts Appreciation/(Depreciation)
<S> <C> <C>
Standard & Poor's 500 Index (03/00) 47 $ 459,425
Standard & Poor's 500 Index (03/00) 2 28,100
Standard & Poor's 500 Index (03/00) 1 12,300
Standard & Poor's 500 Index (03/00) 1 12,325
Standard & Poor's 500 Index (03/00) 1 12,925
Standard & Poor's 500 Index (03/00) 1 1,000
Standard & Poor's 500 Index (03/00) 2 0
-------
$526,075
========
</TABLE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
S&P MIDCAP 400 INDEX PORTFOLIO
<TABLE>
<CAPTION>
COMMON STOCKS - 63.14%
SHARES VALUE
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 7.51%
Allmerica Financial Corporation 900 $ 50,062
AMBAC Financial Group, Incorporated 1,100 57,405
American Financial Group, Incorporated 1,000 26,375
Associated Banc-Corp 1,000 34,250
Astoria Financial Corporation 900 27,393
CCB Financial Corporation 700 30,493
Charter One Financial, Incorporated 3,440 65,790
Checkfree Holding Corporation* 900 94,050
City National Corporation 700 23,055
Compass Bancshares, Incorporated 1,900 42,393
Dime Bancorp, Incorporated 1,800 27,225
E*Trade Group, Incorporated* 4,000 104,500
Edwards (A.G.), Incorporated 1,500 48,093
Everest Reinsurance Holdings 800 17,850
FINOVA (The) Group, Incorporated 1,000 35,500
Firstmerit Corporation 1,500 34,500
First Security Corporation 3,200 81,700
First Tennessee National Corporation 2,100 59,850
First Virginia Banks, Incorporated 800 34,400
Gartner Group, Incorporated Class B* 1,400 19,337
GreenPoint Financial Corporation 1,800 42,862
Hibernia Corporation 2,600 27,625
Horace Mann Educators 700 13,737
HSB Group, Incorporated 500 16,905
Investment Technology Group, Incorporated 500 14,375
Keystone Financial, Incorporated 800 16,850
Legg Mason, Incorporated 900 32,625
Marshall & Isley Corporation 1,700 106,780
Mercantile Bankshares Corporation 1,100 35,130
National Commerce Bancorp 1,800 40,837
NCO Group, Incorporated* 400 12,050
North Fork Bancorporation, Incorporated 2,100 36,750
Ohio Casualty Corporation 1,000 16,063
Old Republic International Corporation 2,100 28,613
Oxford Health Plans* 1,300 16,494
Pacific Century Financial Corporation 1,300 24,294
PMI Group (The), Incorporated 750 36,609
Protective Life Corporation 1,100 34,994
Provident Financial Group, Incorporated 700 25,113
ReliaStar Financial Corporation 1,500 58,781
Sovereign Bancorp, Incorporated 3,600 26,831
TCF Financial Corporation 1,400 34,825
Unitrin, Incorporated 1,200 45,150
Webster Financial Corporation 700 16,494
Westamerica Bancorporation 600 16,763
Wilmington Trust Corporation 500 24,125
Zions Bancorporation 1,400 82,863
----------
1,798,759
----------
CAPITAL GOODS - 3.99%
AGCO Corporation 1,000 13,437
Albany International Corporation Class A* 510 7,905
American Power Conversion Corporation* 3,200 84,400
American Standard Company* 1,200 55,050
AMETEK, Incorporated 500 9,530
Carlisle Compaines, Incorporated 500 18,000
Cirrus Logic, Incorporated* 1,100 14,643
Cordant Technologies, Incorporated 600 19,800
Diebold, Incorporated 1,100 25,850
Donaldson Company, Incorporated 800 19,250
Federal Signal Corporation 800 12,850
Flowserve Corporation 600 10,200
Granite Construction, Incorporated 400 7,375
Harsco Corporation 700 22,225
Hillenbrand Industries 1,100 34,855
Hubbell, Incorporated Class B 1,100 29,975
Jacobs Engineering Group, Incorporated* 400 13,000
Kaydon Corporation 500 13,405
Kennametal, Incorporated 500 16,812
MagneTek, Incorporated* 400 3,075
Miller (Herman), Incorporated 1,300 29,900
Newport News Shipbuilding, Incorporated 500 13,750
Nordson Corporation 300 14,475
Pentair, Incorporated 800 30,800
Precision Castparts, Incorporated 400 10,500
Rayonier, Incorporated 400 19,325
Reynolds & Reynolds Class A 1,300 29,250
SCI Systems, Incorporated* 1,200 98,625
Sensormatic Electronics Corporation* 1,200 20,925
Sequa Corporation* 200 10,787
SPX Corporation* 500 40,405
Stewart & Stevenson Services, Incorporated 500 5,922
Structural Dynamics Research Corporation* 600 7,650
Symbol Technologies, Incorporated 1,400 88,987
Tecumseh Products Company Class A 300 14,155
Trinity Industries 600 17,062
Vishay Intertechnology, Incorporated* 1,375 43,483
Wallace Computer Services, Incorporated 700 11,637
York International Corporation 600 16,462
----------
955,737
----------
CONSUMER CYCLICAL - 5.55%
ACNielsen Corporation* 900 22,163
Abercrombie & Fitch Company* 1,700 45,368
American Eagle Outfitters* 800 36,000
Arvin Industries, Incorporated 400 11,350
Bandag, Incorporated 400 10,000
Barnes & Noble, Incorporated* 1,100 22,687
Belo (A.H.) Corporation 1,900 36,219
BJ's Wholesale Club, Incorporated* 1,200 43,800
Borders Group, Incorporated* 1,300 20,880
Borg-Warner Automotive, Incorporated 400 16,200
Burlington Industries, Incorporated* 900 3,600
Callaway Golf Company 1,200 21,225
CBRL Group, Incorporated 1,000 9,702
Claire's Stores, Incorporated 800 17,900
Clayton Homes, Incorporated 2,300 21,130
CompUSA, Incorporated* 1,500 7,687
Dollar Tree Stores, Incorporated* 1,000 48,437
Family Dollar Stores, Incorporated 2,800 45,675
Fastenal Company* 600 26,962
Furniture Brands International, Incorporated* 800 17,600
Heilig-Meyers Company 1,000 2,750
Houghton Mifflin Company 500 21,093
Imation Corporation* 600 20,137
International Game Technology* 1,500 30,468
Jones Apparel Group, Incorporated* 2,000 54,250
Lands' End, Incorporated* 500 17,375
Lear Corporation* 1,100 35,200
Lee Enterprises, Incorporated 700 22,355
Mark IV Industries, Incorporated 800 14,150
Media General, Incorporated 400 20,800
Meritor Automotive, Incorporated 1,100 21,312
Micro Warehouse, Incorporated* 600 11,100
Modine Manufacturing Company 500 12,500
Mohawk Industries, Incorporated* 1,000 26,375
Neiman-Marcus Group, Incorporated* 800 22,350
OfficeMax, Incorporated* 1,900 10,450
Payless ShoeSource, Incorporated* 500 23,500
Readers Digest Association 1,700 49,725
Ross Stores, Incorporated 1,500 26,906
Saks, Incorporated* 2,400 37,350
Scholastic Corporation* 300 18,656
Shaw Industries, Incorporated 2,200 33,963
Superior Industries, Incorporated 400 10,725
Teleflex, Incorporated 600 18,788
Tiffany & Company 1,200 107,100
Unifi, Incorporated* 1,000 12,313
USG Corporation 800 37,700
Visx, Incorporated* 1,100 56,925
Warnaco Group (The) Class A 900 11,081
WestPoint Stevens, Incorporated 900 15,750
Williams-Sonoma, Incorporated* 900 41,400
----------
1,329,132
----------
CONSUMER NON-DURABLE - 12.53%
Acuson Corporation* 400 5,025
Appria Healthcare Group, Incorporated* 900 16,144
Banta Corporation 400 9,025
Beckman Coulter, Incorporated 500 25,438
Bergen Brunswig Corporation Class A 2,200 18,288
Beverly Enterprises, Incorporated* 1,700 7,438
Bob Evans Farms, Incorporated 600 9,263
Brinker International, Incorporated* 1,100 26,400
Buffets, Incorporated* 700 7,000
Carter-Wallace, Incorporated 700 12,556
Chris-Craft Industries, Incorporated* 600 43,275
Church & Dwight Company, Incorporated 600 16,013
Cintas Corporation* 1,800 95,625
Comdisco, Incorporated 2,500 93,125
Concord EFS, Incorporated* 3,350 86,263
Covance, Incorporated* 1,000 10,813
Dean Foods Company 600 23,850
DENTSPLY International, Incorporated 900 21,263
Devry, Incorporated* 1,100 20,488
Dial (The) Corporation 1,700 41,331
Dole Food Company, Incorporated 900 14,625
Dreyer's Grand Ice Cream, Incorporated 500 8,500
Express Scripts Incorporated* 600 38,400
First Health Group Corporation* 800 21,500
Flowers Industries, Incorporated 1,600 25,500
Forest Laboratories Class A* 1,400 86,013
Foundation Health Systems Class A* 2,000 19,875
Gilead Sciences, Incorporated* 700 37,888
Gtech Holdings Corporation* 600 13,200
Hannaford Brothers Company 700 48,519
Harte-Hanks, Incorporated 1,100 23,925
Health Management Association Class A* 4,200 56,175
Hispanic Broadcasting Corporation* 930 85,763
Hon Industries 1,000 21,938
Hormel Foods Corporation 1,200 48,750
ICN Pharmaceuticals, Incorporated 1,300 32,906
International Multifoods, Incorporated 300 3,975
International Speedway Corporation Class A* 900 45,338
Interstate Bakeries Corporation 1,100 19,938
Iowa Beef Processing, Incorporated* 1,500 27,000
IVAX Corporation* 1,700 43,775
Lancaster Colony Corporation 700 23,188
Lance, Incorporated 500 5,000
Lincare Holdings, Incorporated* 900 31,219
Lone Star Steakhouse & Saloon, Incorporated* 500 4,461
Mandalay Resort Group, Incorporated* 1,500 30,188
McCormick & Company, Incorporated 1,200 35,700
MedImmune, Incorporated* 1,100 182,463
Millennium Pharmaceuticals, Incorporated* 650 79,300
Minimed, Incorporated* 500 36,625
Modis Professional Services, Incorporated* 1,600 22,800
Mylan Laboratories, Incorporated* 2,100 52,894
Navigant Consulting Company* 700 7,613
Omnicare, Incorporated 1,500 18,000
Outback Steakhouse, Incorporated* 1,200 31,125
PacifiCare Health System Class B* 700 37,100
Papa John's International, Incorporated* 500 13,031
Park Place Entertainment* 5,000 62,500
Perrigo Company* 1,200 9,600
Premier Parks, Incorporated* 1,300 37,538
PSS World Medical, Incorporated* 1,200 11,325
Quorum Health Group, Incorporated* 1,200 11,175
RJ Reynolds Tobacco Holdings, Incorporated 1,800 31,725
Ruddick Corporation 800 12,400
Sepracor, Incorporated* 500 49,594
Smucker (The J.M.) Company Class A 500 9,750
Standard Register Company 500 9,688
Starbuck Corporation* 3,000 72,750
STERIS Corporation* 1,100 11,344
Stryker Corporation 1,600 111,400
Suiza Foods Corporation* 500 19,813
Sybron International Corporation 1,700 41,969
Total Renal Care Holdings, Incorporated* 1,300 8,694
Trigon Healthcare, Incorporated* 600 17,700
Tyson Foods, Incorporated Class A 3,800 61,750
Universal Corporation 500 11,406
Universal Foods Corporation 800 16,300
Univision Commiunication, Incorporated* 1,700 173,719
U.S. Foodservices, Incorporated* 1,700 28,475
Viad Corporation 1,600 44,600
Vlasic Foods International, Incorporated* 700 3,981
Washington Post Class B 200 111,175
Westwood One, Incorporated* 900 68,400
Whitman Corporation 2,300 30,906
----------
3,002,510
----------
ENERGY - 3.47%
BJ Services Company* 1,200 50,175
Devon Energy Corporation 1,400 46,025
ENSCO International, Incorporated* 2,200 50,325
Global Marine, Incorporated* 2,900 48,213
Hanover Compressor Company* 450 16,988
Kinder Morgan, Incorporated 1,800 36,338
Murphy Oil Corporation 700 40,163
Nabor Industries, Incorporated* 2,300 71,156
National Fuel Gas Company 600 27,900
Noble Affiliates 900 19,294
Noble Drilling Corporation* 2,200 72,050
Ocean Energy, Incorporated* 2,700 20,925
Pennzoil-Quaker State Company 1,300 13,244
Pioneer Natural Resources Company* 1,600 14,300
Questar Corporation 1,400 21,000
Santa Fe Synder Corporation* 3,000 24,000
Smith International, Incorporated* 800 39,750
Tidewater, Incorporated 900 32,400
Transocean Sedco Forex, Incorporated 1,600 53,900
Ultramar Diamond Shamrock Corporation* 1,400 31,763
Valero Energy Corporation 900 17,888
Varco International, Incorporated* 1,100 11,206
Weatherford International, Incorporated* 1,800 71,888
----------
830,891
----------
MANUFACTURING - 3.64%
Airgas, Incorporated* 1,100 10,450
AK Steel Holding Corporation 1,700 32,088
Albemarle Corporation 800 15,350
Bowater, Incorporated 800 43,450
Cabot Corporation 1,100 22,413
Carpenter Technology, Incorporated 400 10,975
CDW Computer Centers* 700 55,038
Chesapeake Corporation 300 9,150
CK Witco Corporation 1,924 25,734
Cleveland-Cliffs Corporation, Incorporated 200 6,225
Consolidated Papers, Incorporated 1,500 47,719
Cytec Industries* 700 16,188
Dexter Corporation 400 15,900
Ethyl Corporation 1,400 5,513
Federal Mogul Corporation 1,200 24,150
Ferro Corporation 600 13,200
Fuller (H.B.) Company 200 11,188
Georgia Gulf Corporation 500 15,219
Georgia-Pacific Company Timber Group 1,400 34,475
Glatfeler (P.H.) Company 700 10,194
Hanna (M.A.) Company 800 8,750
IMC Global, Incorporated 1,900 31,113
Longview Fibre Company 800 11,400
Lubrizol (The) Corporation 900 27,788
Lyondell Chemical Company 1,900 24,225
Martin Marietta Materials, Incorporated 800 32,800
MAXXAM, Incorporated* 100 4,288
Minerals Technologies, Incorporated 300 12,019
Novellus Systems, Incorporated* 600 73,519
Olin Corporation 700 13,869
Oregon Steel Mills, Incorporated 400 3,175
Quantum Corporation-DLT & Storage* 2,700 40,838
RPM, Incorporated 1,800 18,338
Ryerson Tull, Incorporated* 400 7,775
Schulman (A.), Incorporated 500 8,156
Solutia, Incorporated 1,800 27,788
Sonoco Products, Incorporated 1,700 38,675
Southdown, Incorporated 600 30,975
UCAR International, Incorporated* 700 12,468
Wausau-Mosinee Paper Mills 800 9,350
Wellman, Incorporated 600 11,175
----------
873,103
----------
SERVICE - 1.87%
Apollo Group, Incorporated* 1,300 26,081
Cambridge Technology Partner (Mass.), Incorporated* 1,000 26,250
Convergys Corporation 2,550 78,413
Fiserv, Incorporated 2,000 76,625
Kelly Services, Incorporated Class A 600 15,075
Manpower, Incorporated 1,200 45,150
NCH Corporation 100 4,456
NOVA Corporation* 1,200 37,875
Ogden Corporation 800 9,550
Olsten Corporation 1,300 14,706
Pittston Brink's Group, Incorporated 700 15,400
Robert Half International, Incorporated* 1,500 42,844
Rollins, Incorporated 500 7,500
Sotheby's, Incorporated 1,000 30,000
Stewart Enterprises, Incorporated Class A 1,800 8,550
Sylvan Learning Systems, Incorporated* 800 10,400
----------
448,875
----------
TECHNOLOGY - 16.63%
Adtran, Incorporated* 600 30,863
Affiliated Computer, Incorporated* 800 36,800
Altera Corporation* 3,300 163,556
Arrow Electronics, Incorporated* 1,600 40,600
Atmel Corporation* 3,300 97,556
Avnet, Incorporated 700 42,350
Axciom Corporation* 1,400 33,600
Biogen, Incorporated* 2,500 211,250
Cadence Design Systems, Incorporated* 4,000 96,000
Chiron Corporation* 3,000 127,125
Cypress Semiconductor, Corporation* 1,800 58,275
DST Systems, Incorporated* 1,000 76,313
Electronic Arts, Incorporated* 1,000 84,000
Genzyme Corporation-General Division* 1,400 63,000
Harris Corporation 1,300 34,694
Informix Corporation* 3,300 37,744
Intergrated Device, Incorporated* 1,500 43,500
Intuit, Incorporated* 3,200 191,800
Jabil Circuit, Incorporated* 1,400 102,200
Keane, Incorporated* 1,200 38,100
Legato Systems, Incorporated* 1,400 96,338
Linear Technology Corporation 2,500 178,906
Litton Industries, Incorporated* 700 34,913
Maxim Integrated Products, Incorporated* 4,400 207,625
Mentor Graphics Corporation* 1,100 14,506
Microchip Technologies, Incorporated* 800 54,750
NCR Corporation* 1,600 60,600
Network Associates, Incorporated* 2,300 61,381
Policy Management Systems Corporation* 600 15,338
Polycom, Incorporated* 500 31,844
QLogic Corporation* 600 95,925
Rational Software Corporation* 1,400 68,775
Sanmina Corporation* 1,000 99,875
Siebel Systems, Incorporated* 3,200 268,800
Sterling Commerce, Incorporated* 1,400 47,688
Sterling Software, Incorporated* 1,400 44,100
Storage Technology Corporation* 1,600 29,500
SunGard Data Systems, Incorporated 2,100 49,875
Sykes Enterprises, Incorporated* 700 30,713
Symantec Corporation* 1,000 58,625
Synopsys, Incorporated* 1,200 80,100
Transaction Systems Architects, Incorporated* 500 14,000
Veritas Software Corporation* 4,200 601,125
Vitesse Semiconductor Corporation* 2,500 131,094
----------
3,985,722
----------
TRANSPORTATION - 1.32%
Airborne Freight Corporation 800 17,600
Alaska Airgroup, Incorporated* 400 14,050
Alexander & Baldwin, Incorporated 700 15,969
Arnold Industries, Incorporated 400 5,625
CNF Transportation, Incorporated* 800 27,600
GATX Corporation 800 27,000
Harley Davidson, Incorporated 2,500 160,156
Hunt (J.B.) Transportation Services, Incorporated 600 8,306
Overseas Shipholding Group 600 8,888
Swift Transportation Company, Incorporated* 1,100 19,388
Wisconsin Central Transportion Corporation* 800 10,750
----------
315,332
----------
UTILITIES - 6.63%
AGL Resources, Incorporated 900 15,300
Allegheny Energy, Incorporated 1,800 48,488
Alliant Energy Corporation 1,300 35,750
American Water Works, Incorporated 1,600 34,000
Black Hills Corporation 300 6,656
Blyth Industries, Incorporated* 750 18,422
Broadwing, Incorporated* 3,500 129,063
Calpine Corporation* 1,000 64,000
Cleco Corporation 400 12,825
CMP Group, Incorporated 500 13,781
COMSAT Corporation 907 18,027
Conectiv, Incorporated 1,500 25,219
DPL, Incorporated 2,600 45,013
DQE, Incorporated 1,200 41,550
Energy East Corporation 1,900 39,544
Hawaiian Electric Industries, Incorporated* 500 14,438
IDACORP, Incorporated* 600 16,088
Illinova Corporation 1,100 38,225
Indiana Energy, Incorporated 500 8,875
IPALCO, Incorporated 1,400 23,887
Kansas City Power & Light Company 1,000 22,063
KeySpan Energy Corporation 2,200 51,013
LG&E Energy Corporation 2,100 36,619
MCN Energy Group, Incorporated 1,400 33,250
MidAmerican Energy Holdings Company* 1,000 33,688
Minnesota Power, Incorporated 1,200 20,325
Montana Power Company 1,800 64,913
New England Electric System 1,000 51,750
NiSource, Incorporated 2,000 35,750
Northeast Utilities 2,200 45,238
NSTAR* 1,000 40,500
OGE Energy Corporation 1,300 24,700
Potomac Electric Power Company 1,900 43,581
Public Services Company of New Mexico 700 11,375
Puget Sound Energy, Incorporated 1,400 27,125
SCANA Corporation 1,700 45,688
Sierra Pacific Resources, Incorporated 1,300 22,506
Tech Data Corporation* 900 24,413
TECO Energy, Incorporated 2,100 38,981
Telephone & Data Systems, Incorporated 1,000 126,000
UtiliCorp United, Incorporated 1,500 29,156
Washington Gas Light Company 800 22,000
Waters Corporation* 1,000 53,000
Wisconsin Energy Corporation 1,900 36,575
----------
1,589,360
----------
Total Common Stocks (cost $14,150,437) 15,129,421
----------
UNIT INVESTMENT TRUST - 3.10%
MidCap SPDR Trust Unit Series I 9,150 742,294
----------
Total Unit Investment Trust (cost $695,562) 742,294
----------
<CAPTION>
SHORT-TERM INVESTMENTS<F3> - 33.44%
PRINCIPAL VALUE
<S> <C> <C>
VARIABLE RATE DEMAND NOTES<F1> - 9.69%
Firstar Bank (4.240% due 12/31/31) $ 850,005 850,005
General Mills (6.095% due 12/31/31) 420,016 420,016
Pitney Bowes (6.095% due 12/31/31) 802,698 802,698
Wisconsin Corp. (6.160% due 12/31/31) 249,320 249,320
----------
2,322,039
----------
U.S. TREASURY BILL - 23.75%
U.S. Treasury Bill (4.975% due 01/13/00) 5,700,000 5,690,633
----------
Total Short-Term Investments (cost $8,012,672) 8,012,672
----------
TOTAL INVESTMENTS - 99.68% (cost <F2> 23,884,387
----------
OTHER ASSETS AND LIABILITIES - .32% 78,985
----------
TOTAL NET ASSETS - 100% $23,963,372
==========
- --------------------
*Non-income producing
<FN>
<F1> Interest rates vary periodically based on current market rates. The
maturity shown for each variable rate demand note is the later of the next
scheduled interest rate adjustment date or the date on which principal can be
recovered through demand. Information as of December 31, 1999.
<F2> Represents cost for income tax purposes which is substantially the same
for financial reporting purposes. Gross unrealized appreciation and
depreciation of securities as of December 31, 1999 was $2,962,796
and ($1,974,498) respectively.
<F3> Securities and other current assets with an aggregate value of $8,084,700
have been segregated with the custodian to cover margin
requirements for the following open futures contracts at December 31, 1999:
<CAPTION>
Appreciation/
Type Contracts (Depreciation)
<S> <C> <C>
Standard & Poor's MidCap 400 Index (03/00) 36 $ 1,064,700
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
BALANCED INDEX PORTFOLIO
<TABLE>
<CAPTION>
COMMON STOCKS - 57.24%
SHARES VALUE
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 7.63%
Aetna Life and Casualty Company 400 $ 22,325
AFLAC, Incorporated 700 33,031
Allstate (The) Corporation 2,100 50,400
American Express Company 1,200 199,500
American General Corporation 600 45,525
American International Group, Incorporated 4,000 432,500
AmSouth Bancorp, Incorporated 1,000 19,313
Aon Corporation 700 28,000
Associates First Capital Corporation 1,900 52,131
BB&T Corporation 800 21,900
Banc One Corporation 3,000 96,188
BankAmerica Corporation 4,500 225,844
Bank of New York Company, Incorporated 1,900 76,000
Bear Stearns Companies, Incorporated 300 12,825
Capital One Financial Corporation 500 24,094
Charles Schwab Corporation 2,100 80,588
Chase Manhattan Corporation 2,200 170,913
Chubb Corporation 500 28,156
CIGNA Corporation 500 40,281
Cincinnati Financial Corporation 400 12,475
Citigroup, Incorporated 8,800 488,950
Comerica, Incorporated 400 18,675
Conseco, Incorporated 800 14,300
Countrywide Credit Industries, Incorporated 300 7,575
Fannie Mae 2,700 168,581
Federal Home Loan Mortgage Corporation 1,800 84,713
Fifth Third Bancorp 800 58,700
First Union Corporation 2,500 82,031
Firstar Corporation 2,600 54,925
Fleet Financial Group, Incorporated 2,400 83,550
Franklin Resources, Incorporated 700 22,444
Golden West Financial, Incorporated 400 13,400
Hartford Financial Services Group 600 28,425
Household International, Incorporated 1,200 44,700
Huntington Bancshares 600 14,325
Jefferson-Pilot Corporation 300 20,475
KeyCorp 1,200 26,550
Lehman Brothers Holdings 300 25,406
Lincoln National Corporation 500 20,000
Loews Corporation 300 18,206
Marsh & McLennan Companies, Incorporated 700 66,981
MBIA, Incorporated 300 15,844
MBNA Corporation 2,100 57,225
Mellon Bank Corporation 1,300 44,281
Merrill Lynch & Company 1,000 83,500
MGIC Investment Corporation 300 18,056
Morgan (J. P.) & Company 500 63,313
Morgan Stanley, Dean Witter & Company 1,500 214,125
National City Corporation 1,600 37,900
Northern Trust Corporation 600 31,800
Old Kent Financial Corporation 300 10,613
PaineWebber Group, Incorporated 400 15,525
Pinnacle West, Incorporated 200 6,113
PNC Bank Corporation 800 35,600
Progressive Corporation 200 14,625
Providian Financial Corporation 400 36,425
Regions Financial Corporation 600 15,075
SAFECO Corporation 300 7,463
SLM Holding Corporation 400 16,900
SouthTrust Corporation 400 15,125
State Street Corporation 400 29,225
St. Paul Companies 600 20,213
Summit Bancorp 500 15,313
SunTrust Banks, Incorporated 800 55,050
Synovus Financial Corporation 700 13,913
Torchmark Corporation 300 8,719
T. Rowe Price Associates, Incorporated 300 11,081
Union Planters Corporation 400 15,775
UNUMprovident Corporation 600 19,238
U.S. Bancorp 1,900 45,244
Wachovia Corporation 500 34,000
Washingon Mutual, Incorporated 1,500 39,000
Wells Fargo & Company 4,300 173,881
----------
4,255,061
----------
CAPITAL GOODS - 4.85%
Allied Waste Industries, Incorporated* 500 4,406
Armstrong World Industries, Incorporated 100 3,338
Boeing Company 2,500 103,907
Briggs & Stratton Corporation 100 5,364
Caterpillar, Incorporated 900 42,357
Cooper Industries, Incorporated 200 8,089
Corning, Incorporated 600 77,363
Crane Company 200 3,975
Cummins Engine Company, Incorporated 100 4,832
Danaher Corporation 400 19,300
Deere & Company 600 26,026
Dover Corporation 500 22,688
Emerson Electric Company 1,100 63,113
Fluor Corporation 200 9,175
Foster Wheeler Corporation 100 888
General Dynamics Corporation 500 26,375
General Electric Company 8,500 1,315,375
Grainger (W.W.), Incorporated 200 9,563
Honeywell, Incorporated 2,000 115,375
Illinois Tool Works, Incorporated 800 54,050
Ingersoll-Rand Company 400 22,025
ITT Industries, Incorporation 200 6,688
Johnson Controls, Incorporated 200 11,375
Lockheed Martin Corporation 1,000 21,875
Masco Company 1,200 30,450
Milacron, Incorporated 100 1,538
Minnesota Mining & Manufacturing Company 1,000 97,875
Navistar International, Incorporated* 200 9,475
Northrop Grumman Corporation 200 10,813
Owens-Corning Fiberglass Corporation 100 1,931
PACCAR, Incorporated 200 8,863
Pall Corporation 300 6,469
Parker-Hannifin Corporation 300 15,394
Perkinelmer, Incorporated 100 4,169
Pitney-Bowes, Incorporated 700 33,819
Raychem Corporation 900 23,906
Rockwell International Corporation 500 23,938
Solectron Corporation* 800 76,100
Textron, Incorporated 400 30,675
Thermo Electron Corporation* 400 6,000
Thomas & Betts Company 100 3,188
Timken Company 200 4,088
TRW, Incorporated 300 15,581
Tyco International Limited 4,300 167,163
United Technologies Corporation 1,300 84,500
Waste Management, Incorporated 1,600 27,500
Xerox Corporation 1,700 38,569
----------
2,699,526
----------
CONSUMER CYCLICAL - 7.35%
American Greetings Company Class A 200 4,725
American Online, Incorporated* 5,800 437,538
AutoZone, Incorporated* 400 12,925
Bed Bath & Beyond, Incorporated* 400 13,900
Best Buy Company, Incorporated* 500 25,094
Black & Decker Corporation 200 10,450
Brunswick Corporation 200 4,450
Carnival Corporation 1,600 76,500
Centex Corporation 200 4,938
Circuit City Stores, Incorporated 500 22,531
Clear Channel Communications* 900 80,325
Comcast Corporation Class A Special 1,900 96,069
Consolidated Stores Corporation* 300 4,875
Cooper Tire & Rubber Company 200 3,113
Costco Wholesale Corporation* 600 54,750
Dana Corporation 400 11,975
Dayton Hudson Corporation 1,100 80,781
Delphi Automotive Systems 1,500 23,625
Deluxe Corporation 200 5,488
Dillard's, Incorporated Class A 300 6,056
Dollar General Corporation 600 13,650
Donnelley (R.R.) & Sons Company 300 7,444
Dow Jones & Company, Incorporated 200 13,600
Eaton Corporation 200 14,525
Ecolab, Incorporated 300 11,738
Federated Department Stores* 500 25,281
Fleetwood Enterprises 100 2,063
Ford Motor Company 3,100 165,656
Gannett Company, Incorporated 700 57,094
Gap, Incorporated 2,200 101,200
General Motors Corporation 1,700 123,569
Genuine Parts Company 500 12,406
Goodyear Tire & Rubber 400 11,275
Harcourt General, Incorporated 200 8,050
Harrah's Entertainment, Incorporated* 300 7,931
Hilton Hotels Corporation 1,000 9,625
Home Depot, Incorporated 5,850 401,091
Jostens, Incorporated 100 2,431
Kaufman & Broad Home Corporation 100 2,419
K Mart Corporation* 1,300 13,081
Knight-Ridder, Incorporated 200 11,900
Kohl's Department Stores Corporation* 400 28,875
Leggett & Platt, Incorporated 500 10,719
Limited (The), Incorporated 600 25,988
Lowe's Companies, Incorporated 1,000 59,750
Marriott International Class A 600 18,938
May Department Stores Company 900 29,025
Maytag Corporation 200 9,600
Mediaone Group* 1,600 122,900
McGraw-Hill Companies, Incorporated 500 30,813
Meredith Corporation 100 4,169
Mirage Resorts, Incorporated* 500 7,656
National Service Industries, Incorporated 100 2,950
New York Times Class A 500 24,563
Nordstrom, Incorporated 400 10,475
Office Depot, Incorporated* 1,000 10,938
Penney (J.C.) Company, Incorporated 700 13,956
Pep Boys-Manny, Moe & Jack 100 913
Pulte Corporation 100 2,250
Sears Roebuck & Company 1,000 30,438
Snap-On Tools, Incorporated 200 5,313
Stanley (The) Works 200 6,025
Staples, Incorporated* 1,200 24,900
Tandy Corporation 500 24,594
Time Warner, Incorporated 3,400 246,288
Times Mirror Company Class A 200 13,400
TJX Companies, Incorporated 800 16,350
Toys "R" Us, Incorporated* 600 8,588
Tribune Company 600 33,038
Wal-Mart Stores, Incorporated 11,600 801,850
Walt Disney Company, The 5,400 157,950
Whirlpool Corporation 200 13,013
Yahoo!, Incorporated* 700 302,881
----------
4,095,243
----------
CONSUMER NON-DURABLE - 10.45%
Abbott Laboratories 4,000 145,250
Alberto-Culver Company Class B 100 2,581
Albertson's, Incorporated 1,100 35,475
Allergan, Incorporated 300 14,925
ALZA Corporation Class A* 300 10,388
American Home Products Corporation 3,400 134,088
Amgen, Incorporated* 2,600 156,163
Anheuser-Busch Companies, Incorporated 1,200 85,050
Archer-Daniels-Midland Company 1,600 19,500
Avon Products, Incorporated 700 23,100
Bausch & Lomb, Incorporated 100 6,844
Baxter International, Incorporated 800 50,250
Becton, Dickinson Company 700 18,725
BestFoods, Incorporated 700 36,794
Biomet, Incorporated 300 12,000
Boston Scientific Corporation* 1,100 24,063
Bristol-Meyers Squibb Company 5,200 333,775
Brown Foremann Class B 200 11,450
Campbell Soup Company 1,100 42,556
Cardinal Health, Incorporated 700 33,513
CBS, Corporation* 2,000 127,875
Clorox Company 600 30,225
Coca-Cola Company 6,400 372,800
Coca-Cola Enterprises 1,100 22,138
Colgate-Palmolive Company 1,500 97,500
Columbia/HCA Healthcare Corporation 1,500 43,969
ConAgra, Incorporated 1,300 29,331
Coors (Adolph) Class B 100 5,250
C.R. Bard, Incorporated 100 5,300
CVS Corporation 1,000 39,938
Darden Restaurants 300 5,437
Eastman Kodak Company 800 53,000
Fortune Brands, Incorporated 400 13,224
General Mills, Incorporated 800 28,600
Gillette Company 2,800 115,324
Great Atlantic & Pacific Tea Company, Incorporated 100 2,787
Guidant Corporation* 800 37,600
Hasbro, Incorporated 500 9,530
Heinz (H.J.) Company 900 35,830
HEALTHSOUTH Corporation* 1,100 5,912
Hershey Foods Corporation 400 19,000
Humana, Incorporated* 400 3,274
International Flavors & Fragrance, Incorporated 300 11,324
Johnson & Johnson Company 3,500 325,937
Kellogg Company 1,100 33,893
Kimberly-Clark Corporation 1,400 91,350
Kroger Company* 2,200 41,525
Lilly (Eli) & Company 2,800 186,200
Liz Claiborne, Incorporated 200 7,525
Longs Drug Stores Corporation 100 2,580
Mallincrokdt, Incorporated 200 6,362
Manor Care, Incorporated* 300 4,800
Mattel, Incorporated 1,100 14,437
McDonald's Corporation 3,500 141,093
McKesson HBOC, Incorporated 700 15,793
Medtronic, Incorporated 3,000 109,312
Merck & Company, Incorporated 6,100 409,080
Newell Rubbermaid, Incorporated 700 20,300
NIKE, Incorporated Class B 700 34,693
PepsiCo, Incorporated 3,800 133,950
Pfizer, Incorporated 10,100 327,618
Pharmacia & Upjohn, Incorporated 1,300 58,500
Philip Morris Companies, Incorporated 6,200 143,762
Polaroid Corporation 100 1,880
Procter & Gamble Company 3,500 383,468
Quaker Oats Company 300 19,687
Quintiles Transnational Corporation* 300 5,605
RJR Nabisco Holdings, Incorporated 800 8,500
Ralston-Ralston Purina Group 800 22,300
Reebok International Limited* 100 818
Rite Aid Corporation 700 7,830
Russell Company 100 1,674
Safeway, Incorporated* 1,300 46,230
Sara Lee Corporation 2,300 50,743
Schering-Plough Corporation 3,800 160,312
Seagram Company, Limited* 1,100 49,430
Supervalu, Incorporated 400 8,000
St. Jude Medical* 200 6,137
Sysco Corporation 900 35,605
Tenet Healthcare Corporation* 800 18,800
TRICON Global Restaurants* 400 15,450
Tupperware Corporation 200 3,387
Unilever N.V. ADR 1,500 81,655
United HealthCare Corporation 500 26,562
UST, Incorporated 500 12,593
V.F. Corporation 300 9,000
Viacom, Incorporated Class B* 1,800 108,787
Walgreen Company 2,600 76,050
Warner-Lambert Company 2,200 180,262
Watson Pharmaceuticals, Incorporated* 200 7,162
Wellpoint Health Networks, Incorporated* 200 13,187
Wendy's International, Incorporated 300 6,187
Winn-Dixie Stores, Incorporated 400 9,574
Wrigley (Wm), Jr. Company 300 24,880
----------
5,822,123
----------
ENERGY - 3.13%
Amerada Hess Corporation 200 11,350
Anadarko Petroleum Corporation 300 10,238
Apache Corporation 300 11,081
Ashland, Incorporated 200 6,588
Atlantic Richfield Company 800 69,200
Baker Hughes, Incorporated 900 18,956
Burlington Resources, Incorporated 600 19,838
Chevron Corporation 1,700 147,263
Conoco, Incorporated Class B 1,600 39,800
Exxon Corporation 9,000 725,063
Halliburton Company 1,100 44,275
Helmerich & Payne, Incorporated 100 2,181
Kerr-McGee Company 200 12,400
McDermott International, Incorporated 200 1,813
Occidental Petroleum 900 19,463
Phillips Petroleum Company 700 32,900
Rowan Companies, Incorporated* 200 4,338
Royal Dutch Petroleum Company ADR 5,600 338,450
Schlumberger Limited 1,400 78,750
Sunoco, Incorporated 200 4,700
Texaco, Incorporated 1,400 76,038
Tosco Corporation 400 10,875
Transocean Sedco Forex, Incorporated 271 9,131
Union Pacific Resources Group 700 8,925
Unocal Corporation 600 20,138
USX-Marathon Group, Incorporated 800 19,750
----------
1,743,504
----------
MANUFACTURING - 1.81%
Air Products & Chemicals, Incorporated 600 20,137
Alcan Aluminum Limited 600 24,712
Alcoa, Incorporated 1,000 83,000
Allegheny Teledyne, Incorporated 200 4,487
Avery Dennison Company 300 21,862
Ball Corporation 100 3,938
Barrick Gold Corporation* 1,000 17,687
Bemis Company 100 3,487
Bethlehem Steel Corporation* 300 2,512
Boise Cascade Corporation 100 4,050
Champion International Corporation 200 12,387
Crown Cork & Seal Company, Incorporated 300 6,712
Dow Chemical Company 600 80,175
DuPont (E.I.) De Nemours & Company 2,700 177,852
Eastman Chemical Company 200 9,537
Englehard Corporation 300 5,662
FMC Corporation 100 5,730
Fort James Corporation 600 16,424
Freeport-McMoRan Copper & Gold* 400 8,450
Georgia-Pacific Company 400 20,300
Goodrich BF Company 300 8,250
Grace, (W.R.) & Company* 200 2,775
Great Lake Chemical Corporation 200 7,637
Hercules, Incorporated 300 8,362
Homestake Mining Company 700 5,469
Inco, Limited* 500 11,750
International Paper Company 1,100 62,081
Louisiana Pacific Corporation 300 4,275
Mead Corporation 300 13,031
Millipore Corporation 100 3,863
Monsanto Company 1,600 57,000
Newmont Mining Corporation 400 9,800
Nucor Corporation 200 10,963
Owens-Illinois, Incorporated* 400 10,025
Pactiv Corporation* 400 4,250
Phelps Dodge, Incorporated 200 13,425
Placer Dome, Incorporated 800 8,600
Potlatch Corporation 100 4,463
PPG Industries, Incorporated 500 31,281
Praxair, Incorporated 400 20,125
Reynolds Metals Company 200 15,325
Rohm & Haas Company 600 24,413
Sealed Air Corporation* 200 10,363
Sherwin-Williams Company 400 8,400
Sigma-Aldrich Corporation 300 9,019
Temple-Inland, Incorporated 100 6,594
Union Carbide Corporation 300 20,025
USX-U.S. Steel Group, Incorporated 200 6,600
Vulcan Materials Company 300
11,981
Westvaco Corporation 300 9,788
Weyerhaeuser Company 600 43,088
Willamette Industries 300 13,931
Worthington Industries, Incorporated 200 3,313
1,009,366
SERVICE - .91%
Automatic Data Processing, Incorporated 1,600 86,200
Block (H&R), Incorporated 300 13,125
Cendant Corporation* 1,900 50,469
Ceridian Corporation* 400 8,625
Computer Sciences Corporation* 400 37,850
Dun & Bradstreet Corporation 400 11,800
Electronic Data Systems Corporation 1,300 87,019
Equifax, Incorporated 400 9,425
First Data Corporation 1,100 54,244
IMS Health, Incorporated 800 21,750
Interpublic (The) Group of Companies, Incorporated 700 40,381
Omnicom Group, Incorporated 500 50,000
Paychex, Incorporated 600 24,000
Service Corporation International 700 4,856
Shared Medical Systems, Incorporated 100 5,094
----------
504,838
----------
TECHNOLOGY - 14.84%
3 COM Corporation* 900 42,300
Adaptec, Incorporated* 300 14,963
ADC Telecommunications, Incorporated 400 29,025
Adobe Systems, Incorporated 300 20,175
Advanced Micro Devices, Incorporated* 400 11,575
Analog Devices, Incorporated* 400 37,200
Andrew Corporation* 200 3,788
Apple Computer, Incorporated* 400 41,125
Applied Materials, Incorporated* 1,000 126,688
Autodesk, Incorporated 200 6,750
BMC Software, Incorporated* 600 47,963
Cabletron Systems, Incorporated* 500 13,000
Cisco Systems, Incorporated* 8,400 899,850
Citrix Systems, Incorporated 200 24,600
COMPAQ Computers Corporation 4,400 119,075
Computer Associates International, Incorporated 1,400 97,913
Compuware Corporation* 900 33,525
Comverse Technology* 200 28,950
Dell Computer Corporation* 6,600 336,600
EMC Corporation Massachusetts* 2,600 284,050
Gateway, Incorporated* 800 57,650
General Instrument Corporation* 500 42,500
Hewlett-Packard Company 2,600 296,238
IKON Office Solution, Incorporated 400 2,725
Intel Corporation 8,600 707,888
International Business Machines Corporation 4,700 507,600
KLA-Tencor Corporation* 200 22,275
Lexmark International Group, Incorporated Class A* 300 27,150
LSI Logic Corporation* 400 27,000
Lucent Technologies, Incorporated 8,000 598,500
Micron Technology, Incorporated* 700 54,425
Microsoft Corporation* 13,300 1,552,775
Molex, Incorporated 400 22,675
Motorola, Incorporated 1,600 235,600
National Semiconductor* 400 17,125
Network Appliance, Incorporated* 400 33,225
Nortel Networks Corporation 3,400 343,400
Novell, Incorporated* 900 35,944
Oracle Systems Corporation* 3,700 414,631
Parametric Technology Company* 700 18,944
PE Corporation PE Biosystems Group, Incorporated 300 36,094
PeopleSoft, Incorporated* 600 12,788
Qualcom, Incorporated* 1,600 281,800
Seagate Technology, Incorporated* 500 23,281
Scientific-Atlanta, Incorporated 200 11,125
Silicon Graphics, Incorporated* 500 4,906
Sun Microsystems, Incorporated* 4,000 309,750
Tektronix, Incorporated 100 3,888
Tellabs, Incorporated* 1,000 64,188
Teradyne, Incorporated* 400 26,400
Texas Instruments, Incorporated 2,000 193,750
Unisys Corporation* 800 25,550
Xilinx, Incorporated* 800 36,375
----------
8,267,280
----------
TRANSPORTATION - .41%
AMR Corporation* 400 26,800
Burlington Northern Santa Fe Corporation 1,200 29,100
CSX Corporation 600 18,825
Delta Air Lines, Incorporated 400 19,925
FDX Corporation* 800 32,750
Kansas City Southern Industries 300 22,388
Norfolk Southern Company 1,000 20,500
Ryder System 200 4,888
Southwest Airlines Company 1,300 21,044
Union Pacific Corporation 600 26,175
US Airways Group, Incorporated* 200 6,413
----------
228,808
----------
UTILITIES - 5.86%
AES Corporation* 500 37,375
ALLTELL Corporation 800 66,150
Ameren Corporation 400 13,100
AT & T Corporation 8,300 421,225
American Electric Power Company 500 16,063
Bell Atlantic Corporation 4,000 246,250
BellSouth Corporation 4,900 229,381
Carolina Power & Light Company 400 12,175
Central & SouthWest Corporation 600 12,000
Centurytel, Incorporated 400 18,950
CINergy Corporation 400 9,650
CMS Energy Corporation 300 9,356
Coastal Corporation 600 21,263
Columbia Energy Group 200 12,650
Consolidated Edison, Incorporated 600 20,700
Consolidated Natural Gas Company 200 12,988
Constellation Energy Group, Incorporated 400 11,600
Dominion Resources 500 19,625
DTE Energy Company 400 12,550
Duke Energy Corporation 900 45,113
Eastern Enterprises, Incorporated 100 5,744
Edison International 900 23,569
El Paso Energy Corporation 600 23,288
Enron Corporation 1,900 84,313
Entergy Corporation 600 15,450
FirstEnergy Corporation 600 13,613
Florida Progress Corporation 300 12,694
FPL Group, Incorporated 500 21,406
General Public Utilities Corporation 300 8,981
Global Crossing Limited* 2,000 100,000
GTE Corporation 2,500 176,406
MCI WorldCom, Incorporated* 7,350 390,009
New Century Energies, Incorporated 300 9,113
NEXTEL Communications, Incorporated Class A* 900 92,813
Niagara Mohawk Holdings, Incorporated* 500 6,969
Nicor, Incorporated 100 3,250
Northern States Power Company 400 7,800
Oneok, Incorporated 100 2,513
PECO Energy Company 500 17,375
PG & E Corporation 1,000 20,500
PP & L Resources, Incorporated 400 9,150
People's Energy Corporation 100 3,350
Public Service Enterprises Group, Incorporated 600 20,888
Reliant Energy, Incorporated 800 18,300
SBC Communications, Incorporated 8,900 433,875
Sempra Energy 600 10,425
Southern Company 1,800 42,300
Sprint Corporation FON Group 2,300 154,819
Sprint PCS Group, Incorporated* 1,100 112,750
Texas Utilities Holdings Companies 700 24,894
Unicom Corporation 600 20,100
US West, Incorporated 1,300 93,600
Williams Companies, Incorporated 1,100 33,619
----------
3,262,040
----------
Total Common Stocks (cost $29,273,582) 31,887,789
----------
<CAPTION>
U.S. TREASURY OBLIGATIONS - 9.17%
PRINCIPAL VALUE
<S> <C> <C>
U.S. Treasury Note (6.250% due 01/31/02) $ 900,000 $ 900,000
U.S. Treasury Note (7.250% due 05/15/04) 2,300,000 2,370,438
U.S. Treasury Note (6.500% due 05/15/05) 800,000 800,250
U.S. Treasury Bond (6.250% due 08/15/23) 1,100,000 1,037,438
----------
Total U.S. Treasury Obligations (cost $5,235,756) 5,108,126
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 3.13%
FEDERAL HOME LOAN MORTGAGE CORPORATION
5.750% due 07/15/03 1,800,000 1,741,559
----------
Total U.S. Government Agency Obligations
(cost $1,778,018) 1,741,559
----------
MORTGAGE-BACKED SECURITIES - 14.43%
FEDERAL HOME LOAN MORTGAGE CORPORATION
FNCI (6.500% due 07/01/14) 2,405,264 2,335,110
FNCL(7.000% due 07/01/29) 5,897,518 5,704,620
----------
Total Mortgage-Backed Securities (cost $8,232,062) 8,039,730
----------
CORPORATE BONDS - 10.87%
AIR TRANSPORTATION - .88%
Delta Airlines (7.900% due 12/15/09) 500,000 489,534
----------
BANK, BANK HOLDING COMPANIES, & OTHER BANK
SERVICES - 2.21%
Erac USA Finance (7.950% due 12/15/09) 500,000 495,437
Household Finance Corp. (7.200% due 07/15/06) 750,000 737,023
----------
1,232,460
----------
CAPITAL GOODS - 1.76%
Caterpillar, Inc. (7.250% due 09/15/09) 1,000,000 981,772
----------
CONSUMER CYCLICALS - .88%
Ford Motor Cr. Corp. (6.700% due 07/16/04) 500,000 489,110
----------
CONSUMER NON-DURABLE - 1.73%
Great Lakes Chemical Corp. (7.000% due 07/15/09) 500,000 475,790
Wal-Mart Stores (6.875% due 08/10/09) 500,000 486,729
----------
962,519
----------
MANUFACTURING - 1.65%
Champion Intl. Corp. (7.200% due 11/01/26) 450,000 423,056
Rohm & Haas Co. (6.950% due 07/15/04) 500,000 494,257
----------
917,313
----------
UTILITIES - 1.76%
Sonat, Inc. (7.625% due 07/15/11)) 1,000,000 982,070
----------
Total Corporate Bonds (cost $6,178,368) 6,054,778
----------
UNIT INVESTMENT TRUST - .11%
S&P 500 Depositary Receipt 400 58,750
----------
Total Unit Investment Trust (cost $52,600) 58,750
----------
SHORT-TERM INVESTMENT<F3> - 3.91%
VARIABLE RATE
DEMAND NOTES <F1> - 3.91%
Firstar Bank (6.240% due 12/31/31) 2,182,051 2,182,051
----------
Total Short-Term Investments (cost $2,182,051) 2,182,051
----------
TOTAL INVESTMENTS - 98.86% (cost $52,932,437)<F2> 55,072,783
----------
OTHER ASSETS AND LIABILITIES - 1.14% 635,133
----------
TOTAL NET ASSETS - 100% $55,707,916
===========
- ------------
*Non-income producing
<FN>
<F1> Interest rates vary periodically based on current market rates. Rates
shown are as of December 31, 1999. The maturity shown for each variable rate
demand note is the later of the next scheduled interest adjustment
date or the date on which principal can be recovered through demand.
Information shown is as of December 31, 1999.
<F2> Represents cost for income tax purposes which is substantially the same
for financial reporting purposes. Gross unrealized appreciation and
depreciation of securities as of December 31, 1999 was $5,009,480 and
($2,959,698) respectively.
<F3> Securities with an aggregate value of $1,855,250 have been segregated
with the custodian to cover margin requirements for the following open futures
contracts at December 31, 1999:
<CAPTION> Appreciation/
Type Contracts (Depreciation)
<S> <C> <C>
Standard & Poor's Balanced Index (03/00) 5 $51,300
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
LEHMAN AGGREGATE BOND INDEX PORTFOLIO
U.S. TREASURY OBLIGATIONS - 33.96%
<TABLE>
<CAPTION>
PRINCIPAL VALUE
<S> <C> <C>
U.S. TREASURY NOTES & BONDS - 33.96%
5.625% due 04/30/00 $ 250,000 $ 249,922
6.250% due 01/31/02 1,500,000 1,500,000
6.500% due 05/15/05 1,450,000 1,450,454
6.125% due 08/15/07 800,000 779,750
6.250% due 08/15/23 1,300,000 1,226,063
----------
5,206,189
----------
Total U.S. Treasury Obligations (cost $5,358,480) 5,206,189
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.31%
FEDERAL HOME LOAN MORTGAGE CORPORATION
5.750% due 07/15/03 1,000,000 967,533
----------
Total U.S. Government Agency Obligations
(cost $989,444) 967,533
----------
MORTGAGE-BACKED SECURITIES - 36.95%
FEDERAL NATIONAL MORTGAGE ASSOCIATION
FNCI (6.500% due 07/01/14) 2,886,316 2,802,132
FNCL(7.000% due 07/01/29) 2,957,377 2,862,291
----------
Total Mortgage-Backed Securities (cost $5,780,056) 5,664,423
----------
CORPORATE BONDS - 20.42%
AIR TRANSPORTATION - 1.60%
Delta Airlines (7.900% due 12/15/09) 250,000 244,767
----------
BANK, BANK HOLDING COMPANIES, & OTHER BANK
SERVICES - 4.84%
Erac USA Finance (7.950% due 12/15/09) 250,000 247,718
Household Finance Corp. (7.200% due 07/15/06) 250,000 245,674
US West Cap. (6.875% due 08/15/01) 250,000 249,150
742,542
CAPITAL GOODS - 3.20%
Caterpillar, Inc. (7.250% due 09/15/09) 500,000 490,886
CONSUMER CYCLICALS - 3.20%
Ford Motor Cr. Corp. (6.700% due 07/16/04) 500,000 489,110
CONSUMER NON-DURABLE - 3.14%
Great Lakes Chemical Corp. (7.000% due 07/15/09) 250,000 237,895
Wal-Mart Stores (6.875% due 08/10/09) 250,000 243,364
----------
481,259
----------
MANUFACTURING - 2.84%
Champion Intl. Corp. (7.200% due 11/01/26) 200,000 188,025
Rohm & Haas Co. (6.950% due 07/15/04) 250,000 247,128
----------
435,153
----------
UTILITIES - 1.60%
Sonat, Inc. (7.625% due 07/15/11)) 250,000 245,518
----------
Total Corporate Bonds (cost $3,191,810) 3,129,235
----------
SHORT-TERM INVESTMENT - .92%
VARIABLE RATE
DEMAND NOTES (1) - .92%
Firstar Bank (6.240% due 12/31/31) 141,671 141,671
----------
Total Short-Term Investment (cost $141,671) 141,671
----------
TOTAL INVESTMENTS - 98.56% (cost $15,461,461)<F2> 15,109,051
----------
OTHER ASSETS AND LIABILITIES - 1.44% 220,868
----------
TOTAL NET ASSETS - 100% $15,329,919
==========
<FN>
<F1> Interest rates vary periodically based on current market rates. Rates
shown are as of December 31, 1999. The maturity shown for each variable rate
demand note is the later of the next scheduled interest adjustment date or the
date on which principal can be recovered through demand. Information shown is
as of December 31, 1999.
<F2> Represents cost for income tax purposes which is substantially the same
for financial reporting purposes. Gross unrealized appreciation and
depreciation of securities as of December 31, 1999 was $0 and($368,567)
respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Carillon Fund, Inc. ("Fund") is registered under the Investment
Company Act of 1940, as amended, as a no-load, diversified,
open-end management investment company. The shares of the
variable insurance series of the Fund are sold only to The Union
Central Life Insurance Company (Union Central) and its separate
accounts to fund the benefits under certain variable insurance
and retirement products. The Fund's shares are offered in nine
different portfolios - Equity Portfolio, Bond Portfolio, S&P 500
Index Portfolio, S&P MidCap 400 Index Portfolio, Balanced Index
Portfolio, Lehman Aggregate Bond Index Portfolio, Equity Fund,
Nasdaq 100 Index Fund, and Russell 2000 Small Cap Index Fund
(individually "Portfolio"). The Equity Portfolio seeks long-
term appreciation of capital by investing primarily in common
stocks and other equity securities. The Bond Portfolio seeks a
high level of current income as is consistent with reasonable
investment risk by investing primarily in long-term, fixed-
income, investment-grade corporate bonds. The S&P 500 Index
Portfolio seeks investment results that correspond to the total
return performance of U.S. common stocks, as represented in the
Standard & Poor's 500 composite stock Index. The S&P MidCap 400
Index Portfolio seeks investment results that correspond to the
total return performance of U.S. common stocks, as represented
by the S&P MidCap 400 composite stock Index. The Balanced
Index Portfolio seeks investment results, with respect to 60% of
its assets, that correspond to the total return of U.S. common
stocks, as represented by the S&P 500 Index and, with respect to
40% of its assets, that correspond to the total return
performance of investment grade bonds, as represented by the
Lehman Brothers Aggregate Bond Index. The Lehman Aggregate Bond
Index Portfolio seeks investment results that correspond to the
total performance of the bond market, as represented by the
Lehman Brothers Aggregate Bond Index. The financial statements
of the Equity Fund, the Nasdaq 100 Index Fund, and the Russell
2000 Small Cap Index Fund are presented separately.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Securities valuation - Securities held in each Portfolio, except
for money market instruments maturing in 60 days or less, are
valued as follows: Securities traded on stock exchanges
(including securities traded in both the over-the-counter market
and on an exchange), or listed on the NASDAQ National Market
System, are valued at the last sales price as of the close of the
New York Stock Exchange on the day the securities are being
valued, or, lacking any sales, at the closing bid prices.
Securities traded only in the over-the-counter market are valued
at the last bid price, as of the close of trading on the New York
Stock Exchange, quoted by brokers that make markets in the
securities. Other securities for which market quotations are not
readily available are valued at fair value as determined in good
faith under procedures adopted by the Board of Directors. Money
market instruments with a remaining maturity of 60 days or less
held in each Portfolio are valued at amortized cost which
approximates market.
Securities transactions and investment income - Securities
transactions are recorded on the trade date (the date the order to
buy or sell is executed). Dividend income is recorded on the ex-
dividend date and interest income is recorded on an accrual basis.
All amortization of discount is recognized currently under the
effective interest method. Gains and losses on sales of
investments are calculated on the identified cost basis for
financial reporting and tax purposes.
Federal taxes - It is the intent of the Fund to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its net investment
income and any net realized capital gains. Regulated investment
companies owned by the segregated asset accounts of a life
insurance company, held in connection with variable annuity
contracts, are exempt from excise tax on undistributed income.
Therefore, no provision for income or excise taxes has been
recorded. The Bond Portfolio has a capital loss carry forward of
$334,560 which can be carried forward until 2006. The Equity
Portfolio, Balanced Index Portfolio, and Lehman Aggregate Bond
Index Portfolio have a capital loss carryforward of $15,358,910,
$861,163, and $24,369 which can be carried forward until 2007.
Distributions -Distributions from net investment income in all
Portfolios generally are declared and paid quarterly. Net
realized capital gains are distributed periodically, no less
frequently than annually. Distributions are recorded on the ex-
dividend date. All distributions are reinvested in additional
shares of the respective Portfolio at the net asset value per
share.
The amount of distributions are determined in accordance with
federal income tax regulations which may differ from generally
accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent
these differences are permanent in nature, such amounts are
reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require
reclassification. Distributions which exceed net investment
income and net realized capital gains for financial reporting
purposes but not for tax purposes are reported as distributions in
excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment
income and net realized capital gains for tax purposes, they are
reported as distributions of paid-in-capital.
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Expenses - Allocable expenses of the Fund are charged to each
Portfolio based on the ratio of the net assets of each Portfolio
to the combined net assets of the Fund. Nonallocable expenses
are charged to each Portfolio based on specific identification.
Foreign Currency - The Funds' accounting records are maintained
in U.S. dollars. All Portfolios may purchase foreign securities
within certain limitations set forth in the Prospectus. Amounts
denominated in or expected to settle in foreign currencies are
translated into U.S. dollars at the spot rate at the close of
the London Market. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign
exchange rates on investments from the underlying fluctuation in
the securities resulting from market prices. All are included
in net realized and unrealized gain or loss for investments.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
Investment advisory fees - The Fund pays investment advisory
fees to Carillon Advisers, Inc. (the Adviser), under terms of an
Investment Advisory Agreement (the Agreement). Certain officers
and directors of the Adviser are affiliated with the Fund. The
Fund pays the Adviser, as full compensation for all services and
facilities furnished, a monthly fee computed separately for each
Portfolio on a daily basis, at an annual rate, as follows:
(a) for the Equity Portfolio - .65% of the first $50,000,000,
.60% of the next $100,000,000, and .50% of all over
$150,000,000 of the current net asset value:
(b) for the Bond Portfolio - .50% of the first $50,000,000,
.45% of the next $100,000,000, and .40% of all over
$150,000,000 of the current net asset value.
(c) for the S & P 500 Index Portfolio - .30% of the current
net asset value.
(d) for the S & P MidCap 400 Index Portfolio - .30% of the
current net asset value.
(e) for the Balanced Index Portfolio - .30% of the current
net asset value.
(f) for the Lehman Aggregate Bond Index Portfolio - .30% of
the current net asset value.
The Agreement provides that if the total operating expenses of
the Fund, exclusive of the advisory fee and certain other
expenses as described in the Agreement, for any fiscal quarter
exceed an annual rate of 1% of the average daily net assets of
the Equity or Bond Portfolios, the Adviser will reimburse the
Fund for such excess, up to the amount of the advisory fee for
that year. The Adviser has agreed to pay any other expenses of
the S&P 500 Index Portfolio, the S&P MidCap 400 Index Portfolio,
the Balanced Index Portfolio, and the Lehman Aggregate Bond
Index Portfolio, other than the advisory fee for that Portfolio,
to the extent that such expenses exceed 0.30% of its average
annual net assets. As a result, for the period ended December
31, 1999, the adviser reimbursed the S&P MidCap 400 Index
Portfolio $12,912, Balanced Index Portfolio $13,736 and the
Lehman Aggregate Bond Index Portfolio $12,692.
In addition to providing investment advisory services, the
Adviser is responsible for providing certain administrative
functions to the Fund. The Adviser has entered into an
Administration Agreement with Carillon Investments, Inc. (the
Distributor) under which the Distributor furnishes substantially
all of such services for an annual fee of .20% of the Fund's
average net assets for the Equity and Bond Portfolios, and .05%
of the Fund's average net assets for the S & P 500 Index
Portfolio, S&P MidCap 400 Index Portfolio, Balanced Index
Portfolio and Lehman Aggregate Bond Index Portfolio. The fee is
borne by the Adviser, not the Fund.
Carillon Advisers, Inc. and Carillon Investments, Inc. are
wholly-owned subsidiaries of Union Central.
Directors' fees - Each director who is not affiliated with the
Adviser receives fees from the Fund for service as a director.
Members of the Board of Directors who are not affiliated with
the Adviser are eligible to participate in a deferred
compensation plan. The value of each director's deferred
compensation account will increase or decrease at the same rate
as if it were invested in shares of the Scudder Money Market
Fund.
NOTE 3 - FUTURES CONTRACTS
S&P 500 Index Portfolio, S&P MidCap 400 Index Portfolio,
Balanced Index Portfolio, and Lehman Aggregate Bond Index
Portfolio (collectively, the Index Portfolios) may enter into
futures contracts that relate to securities or indices in which
they may invest. They may also purchase and write call and put
options on such contracts. The Index Portfolios may invest up
to 20% of their assets in such futures and/or options, except
that until each Portfolio reaches $25 million, it may invest up
to 100% in such futures and/or options. These contracts provide
for the sale of a specified quantity of a financial instrument
at a fixed price at a future date. When the Index Portfolios
enter into a futures contract, they are required to deposit and
maintain as collateral such initial margin as required by the
exchange on which the contract is traded. Under terms on the
contract, the Portfolios agree to receive from or pay to the
broker an amount equal to the daily fluctuation in the value of
the contract (known as the variation margin). The variation
margin is recorded as unrealized gain or loss until the contract
expires or is otherwise closed, at which time the gain or loss
is realized. The Portfolios invest in futures as a substitute
to investing in the common stock positions in the Index that
they intend to match. The potential risk to the Index
Portfolios is that the change in the value in the underlying
securities may not correlate to the value of the contracts.
NOTE 4 - SUMMARY OF PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities for the year ended December
31, 1999 excluding short-term obligations, follow:
<TABLE>
<CAPTION>
S&P 500 S&P MidCap
Equity Bond Index 400 Index
Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C>
Total Cost
of Purchases of:
Common Stocks $146,277,984 $ ---- $105,592,384 $18,397,554
U.S. Government
Securities ---- 15,721,481 ---- ----
Corporate Bonds ---- 3,591,945 ---- ----
------------ ----------- ------------ -----------
$146,277,984 $59,313,426 $105,592,384 $18,397,554
============ =========== ============ ===========
<CAPTION>
Total Proceeds
from Sales of:
Common Stocks $263,377,283 $ 630,623 $ 6,765,962 $ 4,569,423
U.S. Government
Securities ---- 34,920,009 ---- ----
Corporate Bonds ---- 36,774,402 ---- ----
------------ ----------- ------------ -----------
$263,377,283 $72,325,034 $ 6,765,962 $ 4,569,423
============ =========== ============ ===========
<CAPTION>
Balanced Index Lehman Aggregate Bond Index
<S> <C> <C>
Total Cost of Purchases of:
Common Stocks $47,651,261 $ ----
U.S. Government Securities 38,027,258 19,806,062
Corporate Bonds 11,163,893 4,686,352
----------- -----------
$96,842,412 $24,492,414
=========== ===========
Total Proceeds from Sales of:
Common Stocks $20,744,013 $ ----
U.S. Government Securities 19,512,901 8,368,132
Corporate Bonds 5,002,635 753,392
----------- -----------
$45,259,549 $ 9,121,524
=========== ===========
</TABLE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
Equity Portfolio
Year Ended December 31,
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $ 14.89 $ 20.35 $ 19.45 $ 16.54 $ 14.30
------- ------- ------- ------- -------
Investment Activities:
Net investment income .10 .25 .23 .29 .24
Net realized and unrealized
gains/(losses) (.05) 2.80) 3.23 3.61 3.36
------- ------- ------- ------- -------
Total from
Investment Activities .05 (2.55) 3.46 3.90 3.60
------- ------- ------- ------- -------
Distributions:
Net investment income (.12) (.23) (.27) (.27) (.23)
Net realized gains (2.20) (2.68) (2.29) (.72) (1.13)
------- ------- ------- ------- -------
Total Distributions (2.32) (2.91) (2.56) (.99) (1.36)
------- ------- ------- ------- -------
Net Asset Value,
End of year $ 12.62 $ 14.89 $ 20.35 $ 19.45 $ 16.54
======= ======= ======= ======= =======
Total Return 2.05% (15.31%) 20.56% 24.52% 26.96%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .69% .62% .62% .64% .66%
Ratio of Net Investment
Income to Average Net Assets .67% 1.41% 1.23% 1.66% 1.73%
Portfolio Turnover Rate 86.47% 62.50% 57.03% 52.53% 34.33%
Net Assets,
End of Year (000's) $124,444 $248,783 $335,627 $288,124 $219,563
</TABLE>
<PAGE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock
outstanding throughout the year.
<TABLE>
<CAPTION>
Bond Portfolio
Year Ended December 31,
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $ 11.13 $ 11.29 $ 10.91 $ 11.07 $ 10.04
------- ------- ------- ------- -------
Investment Activities:
Net investment income .72 .77 .79 .79 .88
Net realized and unrealized
gains / (losses) (.84) (.05) .37 (.04) .98
------- ------- ------- ------- -------
Total from
Investment Activities (.12) .72 1.16 .75 1.86
------- ------- ------- ------- -------
Distributions:
Net investment income (.65) (.76) (.72) (.87) (.83)
In excess of net
investment income ---- ---- ---- (.04) ----
Net realized gains ---- (.12) (.06) ---- ----
------- ------- ------- ------- -------
Total Distributions (.65) (.88) (.78) (.91) (.83)
------- ------- ------- ------- -------
Net Asset Value,
End of year $ 10.36 $ 11.13 $ 11.29 $ 10.91 $ 11.07
------- ------- ------- ------- -------
Total Return (1.11%) 6.52% 11.02% 7.19% 19.03%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .60% .58% .60% .62% .65%
Ratio of Net Investment
Income to Average Net Assets 6.62% 6.84% 7.15% 7.24% 7.43%
Portfolio Turnover Rate 56.07% 67.57% 113.41% 202.44% 111.01%
Net Assets,
End of Year (000's) $98,428 $113,762 $99,892 $85,634 $73,568
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding throughout the year.
S&P 500 Index Portfolio
Year Ended December 31,
1999 1998 1997 1996<F1>
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $ 19.49 $ 15.74 $ 12.13 $ 10.00
------- ------- ------- -------
Investment Activities:
Net investment income .21 .20 .20 .20
Net realized and unrealized
gains / (losses) 3.75 4.21 3.72 2.12
------- ------- ------- -------
Total from
Investment Activities 3.96 4.41 3.92 2.32
------- ------- ------- -------
Distributions:
Net investment income (.19) (.20) (.21) (.19)
Net realized gains (.14) (.46) (.10) .--
------- ------- ------- -------
Total Distributions (.33) (.66) (.31) (.19)
------- ------- ------- -------
Net Asset Value,
End of year $ 23.12 $19.49 $ 15.74 $ 12.13
------- ------- ------- -------
Total Return 20.52% 28.54% 32.72% 23.37%
Ratios / Supplemental Data:
Ratio of Net Expenses to
Average Net Assets .39% .43% .50% .59%<F2>
Ratio of Net Investment
Income to Average Net Assets 1.10% 1.25% 1.48% 2.14%<F2>
Portfolio Turnover Rate 3.45% 2.64% 9.06% 1.09%
Net Assets, End of Year (000's) $284,132 $131,345 $55,595 $29,205
------- ------- ------- -------
<FN>
<F1> The portfolio commenced operation on December 29, 1995. The financial
highlights table for the period ending December 31, 1995 is not presented
because the activity for the period did not round to $0.01 in any category of
the reconciliation of beginning to ending net asset value per share. The
ratios and total return were all less than 0.1%. The net assets at December
31, 1995 were $305,148.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by .25%
for the year ended December 31, 1996, had the Adviser not waived a portion of
its fee.
</FN>
</TABLE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
S&P MidCap 400 Index Portfolio
Period from May 3, 1999 to
December 31,1999<F1>
<S> <C>
Net Asset Value,
Beginning of period $ 10.00
-------
Investment Activities:
Net investment income .10
Net realized and unrealized
gains/(losses) 1.01
-------
Total from Investment Activities 1.11
-------
Distributions:
Net investment income (.07)
Net realized gains ----
-------
Total Distributions (.07)
-------
Net Asset Value,
End of year $ 11.04
=======
Total Return 11.14%
Ratios / Supplemental Data:
Ratio of Expenses to
Average Net Assets<F2> .60%<F3>
Ratio of Net Investment
Income to Average Net Assets<F2> 1.69%<F3>
Portfolio Turnover Rate 47.55%<F3>
Net Assets, End of Year (000's) $23,963
- ---------------
<FN>
<F1> The portfolio commenced operations on May 3, 1999.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net
assets would have decreased by .09% for the period ended December 31, 1999,
had the Adviser not reimbursed expenses.
<F3> The ratios are annualized.
</FN>
</TABLE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
Balanced Index Portfolio
Period from May 3, 1999 to
December 31,1999<F1>
<S> <C>
Net Asset Value,
Beginning of period $ 10.00
-------
Investment Activities:
Net investment income .18
Net realized and unrealized
gains/(losses) .34
-------
Total from Investment Activities .52
-------
Distributions:
Net investment income (.11)
Net realized gains ----
-------
Total Distributions (.11)
-------
Net Asset Value,
End of year $ 10.41
=======
Total Return 5.31%
Ratios / Supplemental Data:
Ratio of Expenses to
Average Net Assets<F2> .47%<F3>
Ratio of Net Investment
Income to Average Net Assets<F2> 2.94%<F3>
Portfolio Turnover Rate 141.58%<F3>
Net Assets, End of Year (000's) $55,708
_____________
<FN>
<F1> The portfolio commenced operations on May 3, 1999.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by .03%
for the period ended December 31, 1999, had the Adviser not reimbursed
expenses.
<F3> The ratios are annualized.
</FN>
</TABLE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
Lehman Aggregate Bond Index Portfolio
Period from June 30, 1999 to
December 31,1999<F1>
<S> <C>
Net Asset Value,
Beginning of period $ 10.00
-------
Investment Activities:
Net investment income .31
Net realized and unrealized
gains/(losses) (.26)
-------
Total from Investment Activities .05
-------
Distributions:
Net investment income (.23)
Net realized gains ----
-------
Total Distributions (.23)
-------
Net Asset Value,
End of year $ 9.82
=======
Total Return .47%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets<F2> .56%<F3>
Ratio of Net Investment
Income to Average Net Assets<F2> 5.66%<F3>
Portfolio Turnover Rate 112.64%<F3>
Net Assets, End of Year (000's) $15,330
_____________
<FN>
<F1> The portfolio commenced operations on June 30, 1999.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by .15%
for the period ended December 31, 1999, had the Adviser not reimbursed
expenses.
<F3> The ratios are annualized.
</FN>
</TABLE>
<PAGE>
SUMMIT MUTUAL FUNDS, INC.
- --------------------------------------------------------------
Lehman Aggregate Bond Index Portfolio
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2000
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 Summit Mutual Funds, Inc.'s ("Fund") current
Prospectus, dated May 1, 2000, which may be obtained by calling
the Fund at (513) 595-2600, or writing the Fund at P.O. Box
40409, Cincinnati, Ohio 45240-0409.
-----------------------
TABLE OF CONTENTS
Page
Investment Policies (7)....................................... 2
Money Market Instruments and Investment Techniques...........2
Certain Risk Factors Relating to High-Yield, High-Risk Bonds.6
Investments in Foreign Securities............................6
Futures Contracts............................................7
Options......................................................9
Lending Portfolio Securities................................13
Investment Restrictions.......................................13
Portfolio Turnover............................................16
Management of the Fund (14)...................................17
Directors and Officers......................................17
Investment Adviser..........................................19
Payment of Expenses.........................................20
Advisory Fee................................................21
Investment Advisory Agreement...............................21
Administration..............................................22
Service Agreement...........................................23
Securities Activities of Adviser............................23
Code of Ethics..............................................23
Determination of Net Asset Value (16).........................24
Purchase and Redemption of Shares (16)........................24
Taxes (15)....................................................25
Portfolio Transactions and Brokerage..........................25
General Information (2).......................................26
Capital Stock...............................................26
Voting Rights...............................................27
Additional Information......................................28
Independent Auditors..........................................28
( ) indicates page on which the corresponding section appears in
the Prospectus.
SMFI 515Bond 5-00
<PAGE>
CARILLON FUND, INC.
- --------------------------------------------------------------
INVESTMENT POLICIES
The following specific policies supplement the Fund's
"Investment Objectives and Policies" set forth in the
Prospectus.
Money Market Instruments and Investment Techniques
Certain money market instruments and investment techniques
are described below. 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
was 112.64% for 1999.
MANAGEMENT OF THE FUND
Directors and Officers
The directors and executive officers of the Fund and their
principal occupations during the past five years are set forth
below. Unless otherwise noted, the address of each executive
officer and director is 1876 Waycross Road, Cincinnati, Ohio
45240.
<TABLE>
<CAPTION>
Position(s)
Name, Address with Principal Occupation(s)
and Age the Fund During Past Five Years
- ------------- ----------- -----------------------
<S> <C> <C>
George M. Callard, M.D. Director Professor of Clinical Surgery,
3021 Erie Avenue University of Cincinnati
Cincinnati, Ohio 45208
(Age 66)
Theodore H. Emmerich Director Consultant; former Partner, Ernst &
1201 Edgecliff Place Whinney, Accountants
Cincinnati, Ohio 45206
(73)
Richard H. Finan Director Attorney at Law; President of the
11137 Main Street Ohio State Senate
Cincinnati, Ohio 45241
(65)
Yvonne L. Gray Director Chief Operating Officer, United Way
2400 Reading Road and Community Chest; prior thereto,
Cincinnati, Ohio 45202 Vice President/Trust Operations
(49) Officer, Fifth Third Bank
Jean Patrice Director Former Interim President, Cincinnati
Harrington, S.C. State Technical and Community College;
3217 Whitfield Avenue Former Executive Director, Cincinnati
Cincinnati, Ohio 45220 Youth Collaborative; President
(77) Emeritus (formerly, President) College
of Mount St. Joseph
John H. Jacobs* Director President and Chief Operating Officer,
(53) Union Central; Director, Summit
Investment Partners, Inc. ("Adviser")
Director, Carillon Investments, Inc.;
Prior to July, 1998, Officer and
employee, Union Central
Charles W. McMahon Director Retired Senior Vice President and
19 Iron Woods Drive Director, Union Central
Cincinnati, Ohio 45239
(79)
Harry Rossi* Director Director Emeritus, Union Central;
8548 Wyoming Club Drive Director, Adviser and Carillon
Cincinnati, Ohio 45215 Investments, Inc.; former Chairman,
(80) President and Chief Executive Officer,
Union Central
Steven R. Sutermeister Director, Senior Vice President, Union Central;
(47) President President, Director and Chief
and Chief Executive Officer, Adviser;
Executive Director, Carillon Investments, Inc.
Officer
John F. Labmeier Vice President Vice President, Associate General
(51) and Secretary Counsel and Assistant Secretary, Union
Central; Vice President and Secretary,
Carillon Investments, Inc.; Secretary,
Adviser
Thomas G. Knipper Controller Treasurer, Adviser; prior to July,
(43) and Treasurer 1995, Treasurer of The Gateway Trust
and Vice President and Controller of
Gateway Advisers, Inc.
John M. Lucas Assistant Counsel and Assistant to Secretary,
(49) Secretary Union Central
</TABLE>
- ---------------
* Messrs. Jacobs, Rossi and Sutermeister 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.
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, no
officers and directors of Carillon Fund owned 5% or more of the
outstanding shares of any Fund. Directors who are not officers
or employees of Union Central or Adviser are paid a fee plus
actual out-of-pocket expenses by Carillon Fund for each meeting
of the Board of Directors attended. Total fees and expenses
incurred for 1999 were $68,200.
<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
(retired 11/15/99)
Richard H. Finan $15,300 -- -- $15,300
Director
Yvonne L. Gray $2,900 -- -- $2,900
Director
(beginning 11/15/99)
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
Steven R. Sutermeister N/A N/A N/A N/A
</TABLE>
** Messrs. Callard and McMahon have been deferring their
compensation each year. As of December 31, 1999, the total
amount deferred, including interest, was as follows:
Dr. Callard - $100,978; Mr. McMahon - $29,371.
Investment Adviser
The Fund has entered into an Investment Advisory Agreement
("Agreement") with Summit Investment Partners, Inc. ("Adviser"),
formerly known as 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 Steven R. Sutermeister, President
and Chief Executive Officer; John H. Jacobs, Director; 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 9 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 approved the Agreement as amended on July 3, 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. The
sole shareholder of the Portfolio approved the Service Agreement
on July 3, 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.
Code of Ethics
The Adviser, as well as the Fund, has adopted a code of ethics
under Rule 17j-1 of the Investment Company Act of 1940.
Employees of the Adviser are permitted to make personal
securities transactions, subject to the requirements and
restrictions set forth in the Adviser's code of ethics. The
code of ethics contains provisions and requirements designed to
identify and address certain conflicts of interest between
personal investment activities and the interests of investment
advisory clients such as the Funds. Among other things, the
code of ethics, which generally complies with standards
recommended by the Investment Company Institute's Advisory Group
on Personal Investing, prohibits certain types of transactions
absent prior approval, imposes time periods during which
personal transactions may not be made in certain securities, and
requires the submission of duplicate broker confirmations and
monthly reporting of securities transactions. Additional
restrictions apply to portfolio managers, traders, research
analysts and others involved in the investment advisory process.
Exceptions to these and other provisions of the code of ethics
may be granted in particular circumstances after review by
appropriate personnel.
DETERMINATION OF NET ASSET VALUE
As described on page 9 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 shares of the Summit Pinnacle Series of
Portfolios, 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.
During 1999, 30% of the Fund's total brokerage was
allocated to brokers who furnish statistical data or research
information. Brokerage commissions paid during 1999, 1998 and
1997 were $801,294, $740,176 and 587,069, respectively.
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
twenty-two classes of stock, one for each Portfolio. The
authorized capital stock of the Fund consists of 490,000,000
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:
<TABLE>
<CAPTION>
Fund Authorized Capital Stock
<S> <C>
Summit Pinnacle Series
Zenith Portfolio 40,000,000 shares
Bond Portfolio 30,000,000 shares
Capital Portfolio 30,000,000 shares
S&P 500 Index Portfolio 30,000,000 shares
Micro-Cap Portfolio 20,000,000 shares
S&P MidCap 400 Index Portfolio 20,000,000 shares
Balanced Index Portfolio 20,000,000 shares
Lehman Aggregate Bond Index Portfolio 20,000,000 shares
Russell 2000 Small Cap Index Portfolio 20,000,000 shares
Nasdaq-100 Index Portfolio 20,000,000 shares
Summit Apex Series
S&P 500 Index Fund 20,000,000 shares
S&P MidCap 400 Index Fund 20,000,000 shares
Russell 2000 Small Cap Index Fund 20,000,000 shares
Balanced Index Fund 20,000,000 shares
Nasdaq 100 Index Fund 20,000,000 shares
Lehman Aggregate Bond Index Fund 20,000,000 shares
Bond Fund 20,000,000 shares
Everest Fund 20,000,000 shares
Micro-Cap Fund 20,000,000 shares
Short-term Government Fund 20,000,000 shares
High Yield Bond Fund 20,000,000 shares
Emerging Markets Bond Fund 20,000,000 shares
</TABLE>
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, as stated in their report appearing
herein. The financial statements are included in this Statement
of Additional Information in reliance upon the report of
Deloitte & Touche LLP, given upon their authority as experts in
auditing and accounting.
The financial statements of the Fund have been audited by
Deloitte & Touche LLP, 1700 Courthouse Plaza NE, Dayton, Ohio
45402, independent auditors.
<PAGE>
FINANCIAL STATEMENTS
CARILLON FUND, INC.
YEAR ENDED DECEMBER 31, 1999
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
S&P MidCap
Equity Bond S&P 500 Index 400 Index
Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C>
ASSETS
Investments in securities,
at value $121,761,182 $96,867,215 $283,095,748 $23,884,387
(cost $117,983,514;
$102,150,381;$212,828,461;
$22,858,671)
Cash 1,028,346 ---- 245,948 30,586
Receivables:
Shares sold 21,904 423 362,891 141,278
Securities sold 1,941,766 ---- 158,191 ----
Interest and dividends 144,881 1,886,486 326,280 21,523
Variation margin ---- ---- 46,750 50,400
Prepaid expenses and other 21,192 9,335 9,450 707
------------ ----------- ------------ -----------
124,919,271 98,763,459 284,245,258 24,128,881
------------ ----------- ------------ -----------
LIABILITIES
Payables:
Investment securities
purchased 350,600 ---- ---- ----
Shares redeemed 31,779 132,201 348 146,945
Investment advisory fees 66,945 40,550 68,045 2,539
Custodian and portfolio
accounting fees 11,351 7,289 8,602 2,752
Professional fees 12,320 12,519 13,609 12,397
Other accrued expenses 1,920 1,803 22,569 876
Deferred directors'
compensation ---- 141,361 ---- ----
------------ ----------- ------------ -----------
474,915 335,723 113,173 165,509
------------ ----------- ------------ -----------
NET ASSETS
Paid-in capital 136,005,906 103,016,838 211,762,698 21,744,598
Undistributed net
investment income 152,655 1,076,167 422,075 73,642
Accumulated net realized
gain/(loss) on
investments and
futures contracts (15,491,873) (382,103) 1,153,950 54,716
Net unrealized
appreciation/
(depreciation) on
investments and futures
contracts 3,777,668 (5,283,166) 70,793,362 2,090,416
------------ ----------- ------------ -----------
$124,444,356 $98,427,736 $284,132,085 $23,963,372
============ =========== ============ ===========
Shares authorized
($.10) par value 40,000,000 30,000,000 30,000,000 20,000,000
Shares outstanding 9,864,734 9,497,171 12,290,004 2,171,259
Net asset value,
offering and
redemption price
per share $12.62 $10.36 $23.12 $11.04
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
Balanced Index Lehman Aggregate Bond
Portfolio Index Portfolio
<S> <C> <C>
ASSETS
Investments in securities, at value $ 55,072,783 $ 15,109,051
(cost $52,932,437; $15,461,461)
Cash 286,322 ----
Receivables:
Shares sold ---- 1,533
Securities sold 21,572 ----
Interest and dividends 362,508 239,912
Variation margin 4,250 ----
Prepaid expenses and other 1,092 206
----------- -----------
55,748,527 15,350,702
----------- -----------
LIABILITIES
Payables:
Investment securities purchased ---- ----
Shares redeemed 11,194 564
Investment advisory fees 9,982 3,920
Custodian and portfolio
accounting fees 4,234 2,001
Professional fees 12,395 13,488
Other accrued expenses 2,806 810
Deferred directors' compensation ----- ----
----------- -----------
40,611 20,783
----------- -----------
NET ASSETS
Paid-in capital 54,133,169 15,595,910
Undistributed net
investment income 386,128 126,945
Accumulated net realized gain/
(loss) on investments and
futures contracts (1,003,027) (40,526)
Net unrealized appreciation/
(depreciation) on investments
and futures contracts 2,191,646 (352,410)
----------- -----------
$ 55,707,916 $ 15,329,919
=========== ===========
Shares authorized ($.10) par value 20,000,000 20,000,000
Shares outstanding 5,351,487 1,561,278
Net asset value, offering
and redemption price
per share $10.41 $9.82
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF OPERATIONS
Year Ended December 31, 1999
<TABLE>
<CAPTION>
S&P MidCap
Equity Bond S&P 500 Index 400 Index
Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 273,980 $ 7,844,702 $ 551,258 $ 204,182
Dividends (net of
foreign withholding
taxes of $66,850; $0;
$38,219; $0) 2,037,883 ---- 2,588,328 112,906
----------- ----------- ----------- ----------
2,311,863 7,844,702 3,139,586 317,088
----------- ----------- ----------- ----------
EXPENSES
Investment advisory fees 1,025,375 514,217 632,729 41,235
Custodian fees
and expenses 42,087 26,969 65,041 9,948
Portfolio accounting fees 37,005 53,137 54,348 20,149
Professional fees 15,606 13,833 15,956 15,649
Director's fees 12,092 11,770 13,795 7,122
Transfer agent fees 6,994 6,815 6,663 2,158
Other 33,320 27,252 27,831 849
----------- ----------- ----------- ----------
1,172,479 653,993 816,363 97,110
----------- ----------- ----------- ----------
Expense reimbursement ---- ---- ---- (12,912)
1,172,479 653,993 816,363 84,198
----------- ----------- ----------- ----------
NET INVESTMENT INCOME 1,139,384 7,190,709 2,323,223 232,890
----------- ----------- ----------- ----------
REALIZED AND UNREALIZED
GAIN/(LOSS)
Net realized gain/(loss)
on investments (15,155,238) 69,654 58,334 520,589
Net realized gain/(loss)
on futures contracts ----- ----- 1,260,613 (465,873)
(15,155,238) 69,654 1,318,947 54,716
----------- ----------- ----------- ----------
Net change in unrealized
appreciation/
(depreciation) on
investments, futures
contracts, and
translation of assets
and liabilities in
foreign currencies 15,500,859 (8,498,194) 37,850,127 2,090,416
----------- ----------- ----------- ----------
NET REALIZED AND
UNREALIZED GAIN/ LOSS) 345,621 (8,428,540) 39,169,074 2,145,132
----------- ----------- ----------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS $ 1,485,005 $(1,237,831) $41,492,297 $2,378,022
=========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
STATEMENTS OF OPERATIONS
Year Ended December 31, 1999
<TABLE>
<CAPTION>
Balanced Index Lehman Aggregate Bond
Portfolio Index Portfolio
<S> <C> <C>
INVESTMENT INCOME
Interest $ 942,872 $525,582
Dividends (net of foreign withholding
taxes of $2,929; $0) 265,876 ----
---------- --------
1,208,748 525,582
---------- --------
EXPENSES
Investment advisory fees 106,499 25,344
Custodian fees and expenses 20,699 2,428
Portfolio accounting fees 23,946 10,510
Professional fees 15,665 15,648
Director's fees 7,124 4,895
Transfer agent fees 1,834 945
Other 3,417 480
---------- --------
179,184 60,250
Expense reimbursement (13,736) (12,692)
---------- --------
165,448 47,558
---------- --------
NET INVESTMENT INCOME 1,043,300 478,024
---------- --------
REALIZED AND UNREALIZED GAIN/(LOSS)
Net realized gain/(loss)
on investments (1,230,497) (40,526)
Net realized gain/(loss) on
futures contracts 227,470 ----
---------- --------
(1,003,027) (40,526)
---------- --------
Net change in unrealized
appreciation/(depreciation) on
investments, futures contracts,
and translation of assets and
liabilities in foreign currencies 2,191,646 (352,410)
---------- --------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) 1,188,619 (392,936)
---------- --------
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $2,231,919 $ 85,088
---------- --------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Equity Portfolio
Year Ended December 31,
1999 1998
<S> <C> <C>
OPERATIONS
Net investment income $ 1,139,384 $ 4,315,972
Net realized gain/(loss)
on investments and futures (15,155,238) 29,356,244
Net change of unrealized appreciation/
(depreciation) on investments, futures
contracts, and translation of assets
and liabilities in foreign currencies 15,500,859 (82,894,401)
------------ ------------
1,485,005 (49,222,185)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (1,534,834) (3,999,567)
Net realized gain (29,666,177) (43,531,579)
------------ ------------
(31,201,011) (47,531,146)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 4,114,679 27,909,508
Reinvestment of distributions 31,201,011 47,531,146
Payments for shares redeemed (129,938,136) (65,531,975)
------------ ------------
(94,622,446) 9,908,679
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (124,338,452) (86,844,652)
NET ASSETS
Beginning of year 248,782,808 335,627,460
------------ ------------
End of year $124,444,356 $248,782,808
------------ ------------
UNDISTRIBUTED NET INVESTMENT INCOME $ 152,655 $ 548,105
------------ ------------
FUND SHARE TRANSACTIONS
Sold 305,666 1,482,774
Reinvestment of distributions 2,727,392 2,544,159
Redeemed (9,872,069) (3,814,089)
------------ ------------
Net increase (decrease) from
fund share transactions (6,839,011) 212,844
------------ ------------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Bond Portfolio
Year Ended December 31,
1999 1998
<S> <C> <C>
OPERATIONS
Net investment income $ 7,190,709 $ 8,002,882
Net realized gain/(loss) on
investments and futures 69,654 (382,978)
Net change of unrealized appreciation/
(depreciation) on investments, futures
contracts, and translation of assets
and liabilities in foreign currencies (8,498,194) (644,567)
------------ ------------
(1,237,831) 6,975,337
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (6,544,239) (7,895,961)
Net realized gain on investments ----- (1,121,637)
------------ ------------
(6,544,239) 9,017,598)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 23,415,382 50,015,086
Reinvestment of distributions 6,544,239 9,017,598
Payments for shares redeemed (37,512,126) (43,120,208)
------------ ------------
(7,552,505) 15,912,476
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (15,334,575) 13,870,215
NET ASSETS
Beginning of year 113,762,311 99,892,096
------------ ------------
End of year $ 98,427,736 $113,762,311
------------ ------------
UNDISTRIBUTED NET INVESTMENT INCOME $ 1,076,167 $ 382,160
------------ ------------
FUND SHARE TRANSACTIONS
Sold 2,160,763 4,379,828
Reinvestment of distributions 615,367 799,240
Redeemed (3,498,330) (3,811,138)
------------ ------------
Net increase (decrease) from
fund share transactions (722,200) 1,367,930
------------ ------------
</TABLE>
The accompanying notes are an integral part of
the financial statements
.
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
S&P 500 Index Portfolio
Year Ended December 31,
1999 1998
<S> <C> <C>
OPERATIONS
Net investment income $ 2,323,223 $ 1,144,225
Net realized gain/(loss) on
investments and futures 1,318,947 1,188,196
Net change in unrealized appreciation/
(depreciation) on investments, futures
contracts, and translation of assets
and liabilities in foreign currencies 37,850,127 20,913,178
------------ ------------
41,492,297 23,245,599
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (1,983,080) (1,101,958)
Net realized gain (1,193,873) (1,947,719)
------------ ------------
(3,176,953) (3,049,677)
------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 128,095,131 58,542,452
Reinvestment of distributions 3,176,953 3,049,677
Payments for shares redeemed (16,800,128) (6,037,935)
------------ ------------
114,471,956 55,554,194
------------ ------------
NET INCREASE IN NET ASSETS 152,787,300 75,750,116
NET ASSETS
Beginning of year 131,344,785 55,594,669
------------ ------------
End of year $284,132,085 $131,344,785
------------ ------------
UNDISTRIBUTED NET INVESTMENT INCOME $ 442,075 $ 81,932
FUND SHARE TRANSACTIONS
Sold 6,182,960 3,377,397
Reinvestment of distributions 152,279 175,601
Redeemed (783,304) (345,887)
------------ ------------
Net increase from fund share transactions 5,551,935 3,207,111
------------ ------------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
S & P MidCap 400 Index Portfolio
Period from May 3, 1999 to
December 31, 1999
<S> <C>
OPERATIONS
Net investment income $ 232,890
Net realized gain/(loss) on investments and futures 54,716
Net change of unrealized appreciation/(depreciation)
on investments, futures contracts, and translation
of assets and liabilities in foreign currencies 2,090,416
-----------
2,378,022
-----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (159,248)
Net realized gain on investments ----
-----------
(159,248)
-----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 33,292,532
Reinvestment of distributions 159,248
Payments for shares redeemed (11,707,182)
-----------
21,744,598
-----------
NET INCREASE (DECREASE) IN NET ASSETS 23,963,372
NET ASSETS
Beginning of year ----
-----------
End of year $23,963,372
-----------
UNDISTRIBUTED NET INVESTMENT INCOME $ 73,642
-----------
FUND SHARE TRANSACTIONS
Sold 3,297,454
Reinvestment of distributions 15,195
Redeemed (1,141,390)
-----------
Net increase (decrease) from fund share transactions 2,171,259
-----------
</TABLE>
The accompanying notes are an integral part of
the financial statements
.
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Balanced Index Portfolio
Period from May 3, 1999
to December 31, 1999
<S> <C>
OPERATIONS
Net investment income $ 1,043,300
Net realized gain/(loss) on investments and futures (1,003,027)
Net change of unrealized appreciation/(depreciation)
on investments, futures contracts, and translation
of assets and liabilities in foreign currencies 2,191,646
----------
2,231,919
----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (657,172)
Net realized gain on investments ----
----------
(657,172)
----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 98,304,751
Reinvestment of distributions 657,172
Payments for shares redeemed (44,828,754)
----------
54,133,169
----------
NET INCREASE (DECREASE) IN NET ASSETS 55,707,916
NET ASSETS
Beginning of year ----
----------
End of year $55,707,916
----------
UNDISTRIBUTED NET INVESTMENT INCOME $ 386,128
----------
FUND SHARE TRANSACTIONS
Sold 9,807,128
Reinvestment of distributions 69,542
Redeemed (4,525,183)
----------
Net increase (decrease) from fund share transactions 5,351,487
----------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Lehman Aggregate Bond Index Portfolio
Period from June 30, 1999
to December 31,1999
<S> <C>
OPERATIONS
Net investment income $ 478,024
Net realized gain/(loss) on investments and futures (40,526)
Net change of unrealized appreciation/(depreciation)
on investments, futures contracts, and translation
of assets and liabilities in foreign currencies (352,410)
----------
85,088
----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (351,079)
Net realized gain on investments ----
----------
(351,079)
----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 18,759,494
Reinvestment of distributions 351,079
Payments for shares redeemed (3,514,663)
----------
15,595,910
----------
NET INCREASE (DECREASE) IN NET ASSETS 15,329,919
NET ASSETS
Beginning of year ----
----------
End of year $15,329,919
----------
UNDISTRIBUTED NET INVESTMENT INCOME $ 126,945
----------
FUND SHARE TRANSACTIONS
Sold 1,876,067
Reinvestment of distributions 35,284
Redeemed (350,073)
----------
Net increase (decrease) from fund share transactions 1,561,278
----------
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
COMMON STOCKS - 89.28%
SHARES VALUE
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 16.00%
Banc One Corporation 65,000 $ 2,084,062
Banco Latinoamericano De Exportanciones Sponsored ADR 75,000 1,762,500
Bank of America Corporation 60,000 3,011,250
Charter One Financial, Incorporated 110,085 2,105,375
Chase Manhattan, N.A. 15,000 1,165,312
Fannie Mae 30,000 1,873,125
Federal Home Loan Mortgage Corporation 30,000 1,411,875
First Union Corporation 70,000 2,296,875
Golden State Bancorp* 100,000 1,725,000
Jefferies Group, Incorporated 27,800 611,600
Raymond James Financial Corporation 100,000 1,868,750
-----------
19,915,724
-----------
CAPITAL GOODS - .47%
LSI Industries, Incorporated 26,900 581,712
CONSUMER CYCLICAL - 11.68%
Ford Motor Company 50,000 2,671,875
Dayton Hudson Corporation 20,000 1,468,750
General Motors Corporation 23,000 1,671,812
Media General, Incorporated Class A 40,000 2,080,000
National RV Holdings, Incorporated* 29,100 560,175
Stanley Furniture Company* 130,700 2,401,612
Strattec Security Corporation* 56,000 1,813,000
Toll Brothers, Incorporated* 100,000 1,862,500
-----------
14,529,724
-----------
CONSUMER NON-DURABLE - 14.20%
General Mills, Incorporated 60,000 2,145,000
H. J. Heinz Company 35,000 1,393,438
Invacare Corporation 117,000 2,347,313
PepsiCo, Incorporated 50,000 1,762,500
Pharmacia & Upjohn, Incorporated 30,000 1,350,000
Sara Lee Corporation 65,000 1,434,063
SPX Corporation* 30,000 2,424,375
TRICON Global Restaurants* 55,000 2,124,375
Watson Pharmaceuticals, Incorporated* 75,000 2,685,938
-----------
17,667,002
-----------
ENERGY - 7.75%
Coastal Corporation 30,000 1,063,125
Conoco, Incorporated Class B 110,000 2,736,250
Houston Exploration Company* 86,500 1,713,781
Newfield Exploration Company* 40,000 1,070,000
Pride International, Incorporated 100,000 1,462,500
Union Pacific Resources Group 125,000 1,593,750
-----------
9,639,406
-----------
MANUFACTURING - 5.66%
Cytec, Incorporated* 90,000 2,081,250
D.R. Horton, Incorporated 190,000 2,624,375
ITT Industries, Incorporated 70,000 2,340,625
-----------
7,046,250
-----------
REAL ESTATE - 3.54%
Chicago Title Corporation 32,800 1,517,000
FelCor Lodging Trust, Incorporated 100,000 1,750,000
Hospitality Properties Trust 60,000 1,143,750
-----------
4,410,750
-----------
SERVICE - 2.22%
Convergys Corporation* 90,000 2,767,500
-----------
TECHNOLOGY - 8.95%
Intel Corporation 30,000 2,469,375
Cisco Systems, Incorporated* 20,000 2,142,500
International Business Machines Corporation 28,000 3,024,000
Microsoft Corporation* 30,000 3,502,500
-----------
11,138,375
-----------
TRANSPORTATION - 5.18%
America West Holdings Corporation Class B* 90,000 1,867,500
AMR Corporation* 20,000 1,340,000
Delta Air Lines, Incorporated 30,000 1,494,375
Whitman Corporation 130,000 1,746,875
-----------
6,448,750
-----------
UTILITIES - 13.63%
Alliant Energy Corporation 25,000 687,500
Avista Corporation 79,000 1,219,563
Bell Atlantic Corporation 40,000 2,462,500
Bell South Corporation 53,200 2,490,425
GTE Corporation 35,000 2,469,688
Niagara Mohawk Holdings, Incorporated* 145,000 2,020,938
SBC Communications, Incorporated 60,000 2,925,000
Scana Corporation 100,000 2,687,500
-----------
16,963,114
-----------
Total Common Stocks (cost $108,315,886) 111,108,307
UNIT INVESTMENT TRUST - 8.56%
MidCap SPDR Trust Unit Series I 77,000 6,246,625
S&P 500 Depositary Receipt 30,000 4,406,250
Total Unit Investment Trust (cost $9,667,628) 10,652,875
-----------
TOTAL INVESTMENTS - 97.84% (cost $117,983,514)<F1> 121,761,182
-----------
OTHER ASSETS AND LIABILITIES - 2.16% 2,683,174
-----------
TOTAL NET ASSETS - 100% $124,444,356
-----------
____________
*Non-income producing
(ADR) American Depository Receipt
<FN>
<F1> Represents cost for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at December 31,1999 for financial
reporting purposes was $11,755,811 and ($8,188,293).
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
BOND PORTFOLIO
<TABLE>
<CAPTION>
U.S. TREASURY OBLIGATIONS - 32.87%
PRINCIPAL VALUE
<S> <C> <C>
U.S. TREASURY NOTES & BONDS - 32.87%
7.750% due 02/15/01 $5,000,000 $ 5,085,940
0.000% due 08/15/02 2,000,000 1,700,338
5.875% due 11/15/05 6,000,000 5,825,628
5.625% due 02/15/06 5,000,000 4,784,375
7.000% due 07/15/06 2,000,000 2,048,750
6.500% due 10/15/06 6,000,000 5,983,128
6.625% due 05/15/07 5,000,000 5,020,315
6.125% due 08/15/29 2,000,000 1,906,876
-----------
32,355,350
-----------
Total U.S. Treasury Obligations (cost $33,552,586) 32,355,350
-----------
MORTGAGE-BACKED SECURITIES - 1.26%
FEDERAL HOME LOAN MORTGAGE CORPORATION - .34%
7.500% due 02/01/02 11,544 11,586
9.500% due 04/01/05 21,799 22,566
7.500% due 06/01/07 54,783 54,743
11.000% due 05/01/10 979 1,026
12.500% due 08/01/10 7,648 8,353
8.000% due 11/01/16 22,971 23,193
9.500% due 02/01/18 31,040 32,690
6.500% due 07/01/23 192,554 183,671
-----------
337,828
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - .86%
12.000% due 04/01/00 886 901
9.000% due 08/01/01 11,088 11,292
8.500% due 01/01/02 9,918 10,177
10.500% due 06/01/04 5,539 5,759
10.500% due 05/01/05 133,418 138,694
6.500% due 06/01/08 592,511 580,424
8.000% due 08/01/17 97,821 99,069
-----------
846,316
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - .06%
9.000% due 05/15/20 56,689 59,471
-----------
Total Mortgage-backed Securities (cost $1,245,367) 1,243,615
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 5.07%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.29%
59 E (8.900% due 11/15/20) $ 487,165 $ 499,399
106 G (8.250% due 12/15/20) 758,778 771,462
-----------
1,270,861
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - .08%
1988-30 D (9.500% due 12/25/18) 73,313 76,338
-----------
PRIVATE SECTOR - 3.70%
Securitized Asset Sales, Inc. 1993-2 B2
(6.500% due 07/25/08) 221,947 213,484
CMC2 Securities Corp. 1993 E 1 E 1CP
(0.000% due 12/25/08) 230,974 182,239
Country Wide Mortgage-Backed Securities, Inc.
1994 - 8B1
(6.000% due 03/01/09) 689,032 649,558
Capstead Mortgage Securities Corp. C - 4
(10.950% due 02/01/14) 90,454 90,455
Boams 99-3 B3 (6.250% due 05/25/14) 942,744 827,164
NSCOR 1996 - 5 B1 (8.000% due 11/25/26) 1,617,510 1,600,332
MSC (1998 - 1) PO (0.000% due 03/25/28) 112,724 77,824
-----------
3,641,056
-----------
Total Collateralized Mortgage Obligations
(cost $5,012,535) 4,988,255
-----------
ASSET-BACKED SECURITIES - 7.14%
COMMERCIAL MORTGAGE-BACKED SECURITIES- 5.26%
Chase Commercial Mortgage Sec.(6.600% due 12/19/07) 2,609,885 2,208,615
NMFC 98-4 B3 (6.250% due 10/25/2028) 1,356,843 1,123,969
Paine Webber Mortgage Acceptance 96 M1 E
(7.655% due 01/02/12) 2,000,000 1,840,000
-----------
5,172,584
-----------
HOME EQUITY - 1.88%
Ditech Home Loan Owner Trust (7.250% due 06/15/21) 2,000,000 1,855,620
-----------
Total Asset-backed Securities (cost $7,768,030) 7,028,204
-----------
CORPORATE BONDS AND NOTES - 50.42%
AIR TRANSPORTATION - 1.84%
Continental Airlines (7.820% due 10/15/13) 911,413 903,439
NWA Trust No. 2 Class B (10.230% due 06/21/14) 876,923 912,763
-----------
1,816,202
-----------
BANK, BANK HOLDING COMPANIES, & OTHER BANK
SERVICES- 10.71%
Ahmanson Capital Trust (8.360% due 12/01/26) 1,500,000 1,418,686
Banc Tec Inc. (7.500% due 06/01/08) 1,500,000 1,348,568
Erac USA Finance (7.950% due 12/15/09) 1,000,000 990,873
Fairfax Financial Holdings (7.375% due 03/15/06) 1,000,000 900,678
GS Escrow Corp. (6.750% due 08/01/01) 300,000 289,151
GS Escrow Corp. (7.000% due 08/01/03) 1,000,000 925,226
Household Finance Corp. (7.200% due 07/15/06) 1,500,000 1,474,046
Lodgian Finance Corp. (12.250% due 07/15/09) 1,000,000 990,000
NationsBank Corp. (7.625% due 04/15/05) 1,000,000 1,014,290
Sovereign Bancorp (10.500% due 11/15/06) 250,000 255,000
Svenska Handelsbanken (7.125% due 03/07/07) 1,000,000 932,710
-----------
10,539,228
-----------
CONSUMER NON-DURABLE - 3.00%
LTV Corp. Sr. Nts. (11.750% due 11/15/09) 1,000,000 1,040,000
Sequa Corp. Sr. Nts. (9.000% due 08/01/09) 1,000,000 967,500
World Color Press Inc. Sr. Nts.(7.750% due 02/15/09) 1,000,000 950,000
-----------
2,957,500
-----------
ELECTRIC - 3.21%
Carolina Power & Light Sr. Nts.
(5.950% due 03/01/09) 1,000,000 903,392
Edison Mission Nts. (7.730% due 06/15/09) 1,000,000 992,254
-----------
3,161,155
-----------
ENERGY - 4.88%
Eagle Geophysical Inc.* (10.750% due 07/15/08)<F1> 1,000,000 80,000
Federal-Mogul Co. (7.375% due 01/15/06) 1,000,000 916,258
Louis Dreyfus Nts. (6.875% due 12/01/07) 1,500,000 1,353,510
Mitchell Energy Development Corp.
(6.750% due 02/15/04) 1,750,000 1,663,613
Rural/Metro Corp. Sr. Nts. (7.875% due 03/15/08) 1,000,000 787,500
-----------
4,800,881
-----------
ENTERTAINMENT & LEISURE - 2.39%
Imax Corp. Sr. Nts. (7.875% due 12/01/05) 1,000,000 945,000
Royal Caribbean (7.000% due 10/15/07) 1,500,000 1,405,804
-----------
2,350,804
-----------
FOOD, BEVERAGE, & TOBACCO - .96%
RJR Nabisco Inc. (7.550% due 06/15/15) 1,000,000 945,311
-----------
GAMING INDUSTRY - 1.15%
Casino Magic of Louisiana (13.000% due 08/15/03) 1,000,000 1,128,750
-----------
HEALTH CARE - 2.48%
Tenet Healthcare Corp. (7.875% due 01/15/03) 1,000,000 968,750
Universal Health Services Sr. Notes
(8.750% due 08/15/05) 1,500,000 1,475,372
-----------
2,444,122
-----------
INSURANCE - 3.07%
Farmers Insurance Exchange (8.500% due 08/01/04) 1,000,000 1,025,546
Prudential Ins. Surplus Notes (8.100% due 07/15/15) 1,000,000 1,000,658
USF&G Capital (8.470% due 01/10/27) 1,000,000 992,427
-----------
3,018,631
-----------
MEDIA & CABLE - 2.13%
CF Cable TV Inc. (9.125% due 07/15/07) 1,000,000 1,064,039
Continental Cablevision (8.300% due 05/15/06) 1,000,000 1,028,658
-----------
2,092,697
-----------
MEDIA CONGLOMERATE - 4.00%
News American Holdings (6.625% due 01/09/08) 1,500,000 1,396,831
Time Warner Inc. (8.110% due 08/15/06) 1,500,000 1,533,786
Viacom Inc. Sr. Notes (7.750% due 06/01/05) 1,000,000 1,010,867
-----------
3,941,484
-----------
PAPER & FOREST PRODUCT - .54%
Westvaco Corp. (10.300% due 01/15/19) 500,000 526,850
-----------
REAL ESTATE - 2.80%
Colonial Properties Sr. Nts. (8.050% due 07/15/06) 1,500,000 1,434,543
Healthcare Properties Nts. (6.875% due 06/08/05) 1,500,000 1,319,023
-----------
2,753,566
-----------
TELECOMMUNICATIONS - 6.36%
360 Communications Sr. Nts. (7.500% due 03/01/06) 1,500,000 1,509,892
Arch Communications Group Sub. Deb.
(6.750% due 12/01/03) 1,000,000 560,000
Call-Net Enterprises (10.800% due 05/15/09) 1,000,000 492,500
IMC Global Nts. (7.625% due 11/01/05) 1,250,000 1,218,161
Talton Holdings Inc. Sr. Nts. (11.000% due 06/30/07) 1,000,000 950,000
Worldcom Inc. (7.750% due 04/01/07) 1,500,000 1,529,078
-----------
6,259,631
-----------
TRANSPORTATION - .90%
Midway Air Lines (8.140% due 01/02/13) 1,000,000 889,560
-----------
Total Corporate Bond and Notes (cost $52,946,444) 49,626,372
-----------
SHORT TERM INVESTMENTS - 1.65%
VARIABLE RATE DEMAND NOTES<F2> - 1.65%
Firstar Bank (6.240% due 12/31/31) 1,625,419 1,625,419
-----------
Total Short-Term Investments (cost $1,625,419) 1,625,419
-----------
TOTAL INVESTMENTS - 98.41% (cost $102,150,381)<F3> 96,867,215
-----------
OTHER ASSETS AND LIABILITIES - 1.59% 1,560,521
-----------
TOTAL NET ASSETS - 100.00% $98,427,736
===========
* Non-Income Producing
<FN>
<F1> Bond is in default.
<F2> Interest rates vary periodically based on current market rates. Rates
shown are as of December 31, 1999. The maturity shown for each
variable rate demand note is the later of the next scheduled interest
adjustment date or the date on which principal can be
recovered through demand. Information shown is as of December 31, 1999.
<F3> Represents cost for income tax purposes which is substantially the same
for financial reporting purposes. Gross unrealized appreciation and
depreciation of securities at December 31, 1999 was $512,914 and ($5,796,080)
respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
S&P 500 INDEX PORTFOLIO
<TABLE>
<CAPTION>
COMMON STOCKS - 92.60%
SHARES VALUE
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 12.21%
Aetna Life and Casualty Company 3,200 $ 178,600
AFLAC, Incorporated 5,700 268,969
Allstate (The) Corporation 17,200 412,800
American Express Company 9,600 1,596,000
American General Corporation 5,300 402,137
American International Group, Incorporated 33,122 3,581,315
AmSouth Bancorp, Incorporated 8,400 162,225
Aon Corporation 5,500 220,000
Associates First Capital Corporation 15,600 428,025
BB&T Corporation 7,100 194,362
Banc One Corporation 24,546 787,005
BankAmerica Corporation 36,452 1,829,435
Bank of New York Company, Incorporated 15,700 628,000
Bear Stearns Companies, Incorporated 2,504 107,045
Capital One Financial Corporation 4,200 202,387
Charles Schwab Corporation 17,500 671,562
Chase Manhattan Corporation 17,600 1,367,300
Chubb Corporation 3,800 213,987
CIGNA Corporation 4,000 322,250
Cincinnati Financial Corporation 3,500 109,155
Citigroup, Incorporated 72,050 4,003,277
Comerica, Incorporated 3,300 154,068
Conseco, Incorporated 7,000 125,125
Countrywide Credit Industries, Incorporated 2,400 60,600
Fannie Mae 21,900 1,367,380
Federal Home Loan Mortgage Corporation 14,900 701,230
Fifth Third Bancorp 6,600 484,275
First Union Corporation 21,100 692,343
Firstar Corporation 20,914 441,807
Fleet Financial Group, Incorporated 19,580 681,628
Franklin Resources, Incorporated 5,400 173,137
Golden West Financial 3,500 117,250
Hartford Financial Services Group 4,700 222,662
Household International, Incorporated 10,000 372,500
Huntington Bancshares 4,932 117,751
Jefferson-Pilot Corporation 2,200 150,150
KeyCorp 9,600 212,400
Lehman Brothers Holdings 2,600 220,187
Lincoln National Corporation 4,200 168,000
Loews Corporation 2,300 139,580
Marsh & McLennan Companies, Incorporated 5,700 545,418
MBIA, Incorporated 2,100 110,905
MBNA Corporation 17,100 465,975
Mellon Bank Corporation 10,900 371,280
Merrill Lynch & Company 7,900 659,650
MGIC Investment Corporation 2,300 138,430
Morgan (J. P.) & Company 3,700 468,512
Morgan Stanley, Dean Witter & Company 11,900 1,698,725
National City Corporation 13,200 312,675
Northern Trust Corporation 4,800 254,400
Old Kent Financial Corporation 2,550 90,205
PaineWebber, Incorporated 3,000 116,437
Pinnacle West, Incorporated 1,850 56,540
PNC Bank Corporation 6,300 280,350
Progressive Corporation 1,600 117,000
Providian Financial Corporation 3,000 273,187
Regions Financial Corporation 4,700 118,087
SAFECO Corporation 2,800 69,650
SLM Holding Corporation 3,400 143,650
SouthTrust Corporation 3,600 136,124
State Street Corporation 3,400 248,412
St. Paul Companies 4,900 165,068
Summit Bancorp 3,700 113,312
SunTrust Banks, Incorporated 6,800 467,925
Synovus Financial Corporation 6,000 119,250
T. Rowe Price Associates, Incorporated 2,600 96,037
Torchmark Corporation 2,800 81,375
Union Planters Corporation 3,000 118,312
UNUMprovident Corporation 5,098 163,455
U.S. Bancorp 15,500 369,093
Wachovia Corporation 4,300 292,400
Washingon Mutual, Incorporated 12,384 321,983
Wells Fargo & Company 35,100 1,419,355
-----------
34,691,086
-----------
CAPITAL GOODS - 7.87%
Allied Waste Industries, Incorporated* 4,000 35,250
Armstrong World Industries, Incorporated 900 30,037
Briggs & Stratton 500 26,812
Boeing Company 20,000 831,250
Caterpillar, Incorporated 7,600 357,675
Cooper Industries, Incorporated 2,000 80,875
Corning, Incorporated 5,200 670,475
Crane Company 1,400 27,825
Cummins Engine Company, Incorporated 900 43,480
Danaher Corporation 3,000 144,750
Deere & Company 5,000 216,875
Dover Corporation 4,400 199,650
Emerson Electric Company 9,300 533,587
Fluor Corporation 1,600 73,400
Foster Wheeler Corporation 900 7,987
General Dynamics Corporation 4,300 226,825
General Electric Company 70,100 10,847,975
Grainger (W.W.), Incorporated 2,000 95,625
Honeywell, Incorporated 16,962 978,495
Illinois Tool Works, Incorporated 6,450 435,777
Ingersoll-Rand Company 3,500 192,718
ITT Industries, Incorporated 1,900 63,531
Johnson Controls, Incorporated 1,800 102,375
Lockheed Martin Corporation 8,500 185,937
Masco Company 9,600 243,600
Milacron, Incorporated 800 12,300
Minnesota Mining & Manufacturing Company 8,600 841,725
NACCO Industries, Incorporated 200 11,112
Navistar International* 1,400 66,325
Northrop Grumman Corporation 1,500 81,093
Owens Corning Fiberglass Corporation 1,200 23,175
Pall Corporation 2,700 58,218
PACCAR, Incorporated 1,700 75,330
Parker-Hannifin Corporation 2,400 123,150
Perkinelmer, Incorporated 1,000 41,688
Pitney Bowes, Incorporated 5,700 275,381
Raytheon Company - Class B 7,200 191,250
Rockwell International Corporation 4,100 196,288
Solectron Corporation* 6,300 599,288
Textron, Incorporated 3,200 245,400
Thermo Electron Corporation* 3,400 51,000
Thomas & Betts Company 1,200 38,250
Timken Company 1,300 26,568
TRW, Incorporated 2,600 135,038
Tyco International Limited 36,104 1,403,542
United Technologies Corporation 10,200 663,000
Waste Management, Incorporated 13,270 228,078
Xerox Corporation 14,200 322,163
-----------
22,362,148
-----------
CONSUMER CYCLICAL - 11.97%
American Greetings Company Class A 1,400 33,075
American Online, Incorporated* 47,800 3,605,913
Amgen, Incorporated* 21,800 1,309,363
AutoZone, Incorporated* 3,100 100,168
Bed Bath & Beyond, Incorporated* 3,000 104,250
Best Buy Company, Incorporated* 4,400 220,825
Black & Decker Corporation 1,900 99,275
Brunswick Corporation 2,000 44,500
Carnival Corporation 13,200 631,125
Centex Corporation 1,300 32,094
Circuit City Stores, Incorporated 4,300 193,768
Clear Channel Communications* 7,200 642,600
Comcast Corporation Class A Special 16,100 814,056
Cooper Tire & Rubber Company 1,600 24,900
Consolidated Stores Corporation* 2,400 39,000
Costco Companies, Incorporated* 4,700 428,875
Dana Corporation 3,549 106,247
Dayton Hudson Corporation 9,400 690,312
Delphi Automotive Systems 12,058 189,913
Deluxe Corporation 1,600 43,900
Dillard's, Incorporated Class A 2,300 46,430
Dollar General Corporation 5,650 128,537
Donnelley (R.R.) & Sons Company 2,700 66,994
Dow Jones & Company, Incorporated 1,900 129,200
Eaton Corporation 1,600 116,200
Ecolab, Incorporated 2,800 109,550
Federated Department Stores* 4,500 227,531
Fleetwood Enterprises, Incorporated 700 14,438
Ford Motor Company 25,800 1,378,688
Gannett Company, Incorporated 6,000 489,375
Gap, Incorporated 18,275 840,650
General Motors Corporation 13,700 995,819
Genuine Parts Company 3,800 94,288
Goodyear Tire & Rubber 3,300 93,019
Harcourt General, Incorporated 1,500 60,375
Harrah's Entertainment, Incorporated* 2,700 71,381
Hilton Hotels Corporation 7,900 76,038
Home Depot, Incorporated 49,200 3,373,275
Jostens, Incorporated 700 17,019
Kaufman & Broad Home Corporation 1,000 24,188
K Mart Corporation* 10,500 105,656
Knight-Ridder, Incorporated 1,800 107,100
Kohl's Department Stores Corporation* 3,500 252,656
Leggett & Platt, Incorporated 4,200 90,038
Limited (The), Incorporated 4,600 199,238
Lowe's Companies, Incorporated 8,200 489,950
Marriott International Class A 5,300 167,281
May Department Stores Company 7,150 230,588
Maytag Corporation 1,800 86,400
McGraw-Hill Companies, Incorporated 4,200 258,825
Meredith Corporation 1,100 45,856
Mirage Resorts, Incorporated* 4,100 62,781
New York Times Class A 3,700 181,763
Nordstrom, Incorporated 3,000 78,563
Office Depot, Incorporated* 7,000 76,563
Penney (J.C.) Company, Incorporated 5,600 111,650
Pep Boys - Manny, Moe & Jack 1,100 10,038
Pulte Corporation 900 20,250
Sears Roebuck & Company 8,100 246,544
Snap-On Tools, Incorporated 1,200 31,875
Stanley (The) Works 1,900 57,238
Staples, Incorporated* 9,950 206,463
Tandy Corporation 4,100 201,669
Times Mirror Company Class A 1,300 87,100
Time Warner, Incorporated 27,500 1,992,031
TJX Companies, Incorporated 6,600 134,888
Toys "R" Us, Incorporated* 5,200 74,425
Tribune Company 5,100 280,819
Wal-Mart Stores, Incorporated 95,100 6,573,788
Walt Disney Company, The 44,100 1,289,925
Whirlpool Corporation 1,600 104,100
Yahoo!, Incorporated* 5,675 2,455,502
-----------
34,018,717
-----------
CONSUMER NON-DURABLE - 16.78%
Abbott Laboratories 32,900 1,194,681
Alberto-Culver Company Class B 1,200 30,975
Albertson's, Incorporated 9,076 292,701
Allergan, Incorporated 2,800 139,300
ALZA Corporation Class A* 2,200 76,175
American Home Products Corporation 27,900 1,100,306
Anheuser-Busch Companies, Incorporated 9,900 701,663
Archer-Daniels-Midland Company 12,956 157,901
Avon Products, Incorporated 5,200 171,600
Bausch & Lomb, Incorporated 1,200 82,125
Baxter International, Incorporated 6,200 389,438
Becton, Dickinson Company 5,300 141,775
BestFoods, Incorporated 6,000 315,375
Biomet, Incorporated 2,400 96,000
Boston Scientific Corporation* 8,900 194,688
Bristol-Meyers Squibb Company 42,400 2,721,550
Brown-Forman Corporation 1,500 85,875
Campbell Soup Company 9,100 352,056
Cardinal Health, Incorporated 6,000 287,250
CBS, Corporation* 16,315 1,043,140
Clorox Company 5,100 256,913
Coca-Cola Company 52,800 3,075,600
Coca-Cola Enterprises 9,100 183,138
Colgate-Palmolive Company 12,400 806,000
Columbia/HCA Healthcare Corporation 12,000 351,750
ConAgra, Incorporated 10,500 236,906
Coors (Adolph) Class B 800 42,000
C.R. Bard, Incorporated 1,100 58,300
CVS Corporation 8,400 335,475
Darden Resturants, Incorporated 2,800 50,750
Eastman Kodak Company 6,700 443,875
Fortune Brands, Incorporated 3,500 115,719
General Mills, Incorporated 6,500 232,375
Gillette Company 22,900 943,194
Great Atlantic & Pacific Tea Company, Incorporated 800 22,300
Guidant Corporation 6,600 310,200
Hasbro, Incorporated 4,150 79,109
Heinz (H.J.) Company 7,700 306,556
HEALTHSOUTH Corporation* 8,300 44,613
Hershey Foods Corporation 3,000 142,500
Humana, Incorporated* 3,600 29,475
International Flavors & Fragrance, Incorporated 2,200 83,050
Johnson & Johnson Company 29,700 2,765,813
Kellogg Company 8,700 268,069
Kimberly-Clark Corporation 11,600 756,900
Kroger Company* 17,800 335,975
Lilly (Eli) & Company 23,300 1,549,450
Liz Claiborne, Incorporated 1,300 48,913
Longs Drug Stores Corporation 800 20,650
Mallincrokdt, Incorporated 1,500 47,719
Manor Care, Incorporated* 2,200 35,200
Mattel, Incorporated 9,000 118,125
Mediaone Group* 13,100 1,006,244
McDonald's Corporation 28,900 1,165,031
McKesson HBOC, Incorporated 5,972 134,743
Medtronic, Incorporated 25,500 929,156
Merck & Company, Incorporated 49,900 3,346,419
NIKE, Incorporated Class B 6,000 297,375
Newell Rubbermaid, Incorporated 5,991 173,739
PepsiCo, Incorporated 31,100 1,096,275
Pfizer, Incorporated 82,700 2,682,581
Pharmacia & Upjohn, Incorporated 11,100 499,500
Philip Morris Companies, Incorporated 50,600 1,173,288
Polaroid Corporation 1,000 18,813
Procter & Gamble Company 28,100 3,078,706
Quaker Oats Company 2,900 190,313
Quintiles Transnational Corporation* 2,450 45,784
RJR Nabisco Holdings Corporation 6,950 73,844
Ralston-Ralston Purina Group 6,900 192,338
Reebok International Limited* 1,200 9,825
Rite Aid Corporation 5,500 61,531
Russell Company 700 11,725
Safeway, Incorporated* 10,900 387,631
Sara Lee Corporation 19,400 428,013
Schering-Plough Corporation 31,400 1,324,688
Seagram Company, Limited 9,300 417,919
Supervalu, Incorporated 3,000 60,000
St. Jude Medical* 1,800 55,238
Sysco Corporation 7,000 276,938
Tenet Healthcare Corporation* 6,700 157,450
TRICON Global Restaurants* 3,300 127,463
Tupperware Corporation 1,200 20,325
Unilever N.V. ADR 12,242 666,424
United HealthCare Corporation 3,600 191,250
UST, Incorporated 3,700 93,194
V.F. Corporation 2,500 75,000
Viacom, Incorporated - Class B* 14,900 900,519
Walgreen Company 21,400 625,950
Warner-Lambert Company 18,300 1,499,456
Watson Pharmaceuticals, Incorporated* 2,100 75,206
Wellpoint Health Networks* 1,400 92,313
Wendy's International, Incorporated 2,600 53,625
Winn-Dixie Stores, Incorporated 3,200 76,600
Wrigley (Wm) Jr. Company 2,500 207,344
-----------
47,670,962
-----------
ENERGY - 5.07%
Amerada Hess Corporation 1,900 107,825
Anadarko Petroleum Corporation 2,700 92,138
Apache Corporation 2,400 88,650
Ashland, Incorporated 1,500 49,406
Atlantic Richfield Company 6,900 596,850
Baker Hughes, Incorporated 6,990 147,227
Burlington Resources, Incorporated 4,650 153,741
Chevron Corporation 14,000 1,212,750
Conoco, Incorporated Class B 13,427 334,014
Exxon Corporation 73,778 5,943,740
Halliburton Company 9,400 378,350
Helmerich & Payne, Incorporated 1,100 23,994
Kerr-McGee Company 1,890 117,180
McDermott International, Incorporated 1,300 11,780
Occidental Petroleum 7,900 170,838
Phillips Petroleum Company 5,400 253,800
Rowan Companies, Incorporated* 1,800 39,038
Royal Dutch Petroleum Company ADR 45,800 2,768,038
Schlumberger Limited 11,800 663,750
Sunoco, Incorporated 1,900 44,650
Texaco, Incorporated 11,800 640,888
Tosco Corporation 3,100 84,281
Transocean Sedco Forex, Incorporated 2,284 76,958
Union Pacific Resources Group 5,400 68,850
Unocal Corporation 5,200 174,525
USX-Marathon Group, Incorporated 6,600 162,938
-----------
14,406,199
-----------
MANUFACTURING - 2.93%
Air Products & Chemicals, Incorporated 4,900 164,456
Alcan Aluminum Limited 4,700 193,581
Alcoa, Incorporated 7,800 647,400
Allegheny Teledyne, Incorporated 1,950 43,753
Avery Dennison Corporation 2,400 174,900
Ball Corporation 600 23,625
Barrick Gold Corporation 8,400 148,575
Bemis Company 1,100 38,363
Bethlehem Steel Corporation* 2,800 23,450
B.F. (The) Goodrich Company 2,400 66,000
Boise Cascade Corporation 1,200 48,600
Champion International Corporation 2,100 130,069
Crown Cork & Seal Company, Incorporated 2,600 58,175
Dow Chemical Company 4,700 628,038
DuPont (E.I.) De Nemours & Company 22,300 1,469,000
Eastman Chemical Company 1,700 81,069
Englehard Corporation 2,700 50,963
FMC Corporation* 700 40,119
Fort James Corporation 4,600 125,925
Freeport-McMoRan Copper & Gold* 3,500 73,938
Georgia-Pacific Company 3,700 187,775
Great Lakes Chemical Corporation 1,200 45,825
Hercules, Incorporated 2,300 64,113
Homestake Mining Company 5,600 43,750
Inco, Limited* 4,100 96,350
International Paper Company 8,800 496,650
Louisiana Pacific Corporation 2,300 32,775
Mead Corporation 2,200 95,563
Millipore Corporation 1,000 38,625
Monsanto Company 13,600 484,500
National Service Industries, Incorporated 900 26,550
Newmont Mining Corporation 3,600 88,200
Nucor Corporation 1,900 104,144
Owens-Illinois, Incorporated* 3,200 80,200
Pactiv Corporation* 3,700 39,313
Phelps Dodge Corporation 1,765 118,476
Placer Dome, Incorporated 7,000 75,250
Potlatch Corporation 600 26,775
PPG Industries, Incorporated 3,700 231,481
Praxair, Incorporated 3,400 171,063
Reynolds Metals Company 1,400 107,275
Rohm & Haas Company 4,648 189,116
Sealed Air Corporation* 1,800 93,262
Sherwin-Williams Company 3,500 73,500
Sigma-Aldrich Corporation 2,200 66,138
Spring Industries, Incorporated 400 15,975
Temple-Inland, Incorporated 1,200 79,125
Union Carbide Corporation 2,900 193,575
USX-U.S. Steel Group, Incorporated 1,900 62,700
Vulcan Materials Company 2,100 83,869
Westvaco Corporation 2,100 68,513
Weyerhaeuser Company 5,000 359,063
Willamette Industries 2,400 111,450
Worthington Industries, Incorporated 1,900 31,469
W.R. Grace & Company* 1,500 20,813
-----------
8,333,220
-----------
SERVICE - 1.42%
Automatic Data Processing, Incorporated 13,400 721,925
Block (H&R), Incorporated 2,100 91,875
Cendant Corporation* 15,200 403,750
Computer Sciences Corporation* 3,600 340,650
Dun & Bradstreet Corporation 3,400 100,300
Electronic Data Systems Corporation 10,054 672,990
Equifax, Incorporated 3,000 70,688
First Data Corporation 9,000 443,813
IMS Health, Incorporated 6,600 179,438
Interpublic (The) Group of Companies, Incorporated 6,000 346,125
Omnicom Group, Incorporated 3,800 380,000
Paychex, Incorporated 5,300 212,000
Service Corporation International 5,800 40,238
Shared Medical System Corporation 600 30,563
-----------
4,034,355
-----------
TECHNOLOGY - 24.25%
3COM Corporation 7,400 347,800
Adaptec, Incorporated* 2,200 109,725
Adobe Systems, Incorporated 2,600 174,850
ADC Telecommunications, Incorporated* 3,200 232,200
Advanced Micro Devices, Incorporated* 3,100 89,706
Analog Devices, Incorporated* 3,700 344,100
Andrew Corporation* 1,800 34,088
Apple Computer, Incorporated* 3,400 349,563
Applied Materials, Incorporated* 8,100 1,026,169
Autodesk, Incorporated 1,300 43,875
BMC Software, Incorporated* 5,200 415,675
Cabletron Systems, Incorporated* 3,900 101,400
Ceridian Corporation* 3,100 66,844
Cisco Systems, Incorporated* 69,900 7,488,038
Citrix Systems, Incorporated* 1,900 233,700
COMPAQ Computers Corporation 36,300 982,369
Computer Associates International, Incorporated 11,500 804,281
Compuware, Incorporated* 7,600 283,100
Comverse Technology, Incorporated* 1,500 217,125
Dell Computer Corporation* 54,300 2,769,300
EMC Corporation Massachusetts* 21,743 2,375,423
Gateway 2000, Incorporated* 6,800 490,025
General Instrument Corporation* 3,700 314,500
Hewlett-Packard Company 21,800 2,483,838
IKON Office Solution, Incorporated 3,200 21,800
Intel Corporation 71,400 5,877,113
International Business Machines Corporation 38,500 4,158,000
KLA-Tencor Corporation* 1,900 211,613
Lexmark International Group, Incorporated Class A* 2,700 244,350
LSI Logic Corporation* 3,200 216,000
Lucent Technologies, Incorporated 67,000 5,012,438
Micron Technology, Incorporated* 5,800 450,950
Microsoft Corporation* 110,300 12,877,525
Molex, Incorporated 3,400 192,737
Motorola, Incorporated 13,000 1,914,250
National Semiconductor* 3,700 158,406
Network Appliance, Incorporated* 3,200 265,800
Nortel Networks Corporation 28,540 2,882,540
Novell, Incorporated* 7,100 283,556
Oracle Systems Corporation* 30,400 3,406,700
Parametric Technology Company* 5,800 156,963
PE Corporation PE Biosystems Group, Incorporated 2,200 264,688
PeopleSoft, Incorporated* 5,200 110,825
Qualcom, Incorporated* 14,000 2,465,750
Seagate Technology, Incorporated* 4,500 209,531
Scientific-Atlanta, Incorporated 1,700 94,563
Silicon Graphics, Incorporated* 3,900 38,269
Sun Microsystems, Incorporated* 33,400 2,586,413
Tektronix, Incorporated 1,000 38,875
Tellabs, Incorporated* 8,600 552,013
Teradyne, Incorporated* 3,700 244,200
Texas Instruments, Incorporated 17,100 1,656,563
Unisys Corporation* 6,600 210,788
Xilinx, Incorporated* 6,900 313,734
-----------
68,894,647
-----------
TRANSPORTATION - .65%
AMR Corporation* 3,200 214,400
Burlington Northern Santa Fe Corporation 9,800 237,650
CSX Corporation 4,700 147,463
Delta Air Lines, Incorporated 2,800 139,475
FDX Corporation* 6,400 262,000
Kansas City Southern Industries 2,400 179,100
Norfolk Southern Company 8,100 166,050
Ryder System 1,400 34,213
Southwest Airlines Company 10,750 174,016
Union Pacific Corporation 5,300 231,213
US Airways Group, Incorporated* 1,500 48,094
-----------
1,833,674
-----------
UTILITIES - 9.45%
AES Corporation* 4,400 328,900
ALLTELL Corporation 6,700 554,006
Ameren Corporation 2,900 94,975
AT & T Corporation 68,289 3,465,667
American Electric Power Company 4,100 131,713
Bell Atlantic Corporation 33,200 2,043,875
BellSouth Corporation 40,200 1,881,863
Carolina Power & Light Company 3,400 103,488
Central & SouthWest Corporation 4,500 90,000
Centurytel, Incorporated 3,000 142,125
CINergy Corporation 3,400 82,025
CMS Energy Corporation 2,500 77,969
Coastal Corporation 4,600 163,013
Columbia Energy Group 1,700 107,525
Consolidated Edison, Incorporated 4,700 162,150
Consolidated Natural Gas Company 2,000 129,875
Constellation Energy Group, Incorporated 3,200 92,800
Dominion Resources 4,100 160,925
DTE Energy Company 3,100 97,263
Duke Energy 7,800 390,975
Eastern Enterprises 600 34,463
Edison International 7,400 193,788
El Paso Energy Corporation 4,900 190,181
Enron Corporation 15,300 678,938
Entergy Corporation 5,300 136,475
FirstEnergy Corporation 5,000 113,438
Florida Progress Corporation 2,100 88,856
FPL Group, Incorporated 3,800 162,688
General Public Utilities Corporation 2,600 77,838
Global Crossing Limited* 16,185 809,250
GTE Corporation 20,800 1,467,700
MCI WorldCom, Incorporated* 60,709 3,221,398
New Century Energies, Incorporated 2,500 75,938
NEXTEL Communications, Incorporated Class A* 7,800 804,375
Niagara Mohawk Holdings, Incorporated* 4,000 55,750
Nicor, Incorporated 1,000 32,500
Northern States Power Company 3,300 64,350
Oneok, Incorporated 700 17,588
PECO Energy Company 4,000 139,000
People's Energy Corporation 800 26,800
PG & E Corporation 8,200 168,100
PP & L Resources, Incorporated 3,100 70,913
Public Service Enterprises Group, Incorporated 4,700 163,619
Reliant Energy, Incorporated 6,300 144,113
SBC Communications, Incorporated 72,857 3,551,779
Sempra Energy 5,100 88,613
Southern Company 14,400 338,400
Sprint Corporation FON Group 18,600 1,252,013
Sprint PCS Group, Incorporated* 9,250 948,125
Texas Utilities Holdings Company 5,900 209,819
Unicom Corporation 4,600 154,100
US West Communications Group 10,800 777,600
Williams Companies, Incorporated 9,300 284,232
-----------
26,843,872
-----------
Total Common Stocks (cost $192,821,593) 263,088,880
-----------
<CAPTION>
SHORT-TERM INVESTMENTS<F3> - 7.04%
PRINCIPAL VALUE
<S> <C> <C>
VARIABLE RATE DEMAND NOTES (1) - 6.54%
Firstar Bank (6.240% due 12/31/31) $10,708,146 $ 10,708,146
General Mills (6.095% due 12/31/31) 3,590,940 3,590,940
Sara Lee (6.090% due 12/31/31) 942,527 942,527
Warner Lambert (6.044% due 12/31/31) 3,193,948 3,193,948
Wisconsin Corporation (6.160% due 12/31/31) 150,128 150,128
-----------
18,585,689
-----------
U.S. Treasury Bill - .50%
U.S. Treasury Bill (4.960% due 01/20/00) 1,425,000 1,421,179
-----------
Total Short-Term Investments (cost $20,006,868) 20,006,868
-----------
TOTAL INVESTMENTS - 99.64% (cost $212,828,461)<F2> 283,095,748
-----------
OTHER ASSETS AND LIABILITIES - .36% 1,036,337
-----------
TOTAL NET ASSETS - 100% $284,132,085
============
- -----------------
*Non-income producing
<FN>
<F1> Interest rates vary periodically based on current market rates. Rates
shown are as of December 31, 1999. The maturity shown for each variable rate
demand note is the later of the next scheduled interest adjustment date or the
date on which principal can be recovered through demand. Information shown is
as of December 31, 1999.
<F2> Represents cost for income tax purposes which is substantially the same
for financial reporting purposes. Gross unrealized appreciation and
depreciation of securities as of December 31, 1999 was $85,263,024
and ($15,035,097) respectively.
<F3> Securities and other current assets with an aggregate value of $20,407,750
have been segregated with the custodian to cover margin requirements for the
following open futures contracts at December 31, 1999:
<CAPTION>
Unrealized
Type Contracts Appreciation/(Depreciation)
<S> <C> <C>
Standard & Poor's 500 Index (03/00) 47 $ 459,425
Standard & Poor's 500 Index (03/00) 2 28,100
Standard & Poor's 500 Index (03/00) 1 12,300
Standard & Poor's 500 Index (03/00) 1 12,325
Standard & Poor's 500 Index (03/00) 1 12,925
Standard & Poor's 500 Index (03/00) 1 1,000
Standard & Poor's 500 Index (03/00) 2 0
-------
$526,075
========
</TABLE>
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
S&P MIDCAP 400 INDEX PORTFOLIO
<TABLE>
<CAPTION>
COMMON STOCKS - 63.14%
SHARES VALUE
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 7.51%
Allmerica Financial Corporation 900 $ 50,062
AMBAC Financial Group, Incorporated 1,100 57,405
American Financial Group, Incorporated 1,000 26,375
Associated Banc-Corp 1,000 34,250
Astoria Financial Corporation 900 27,393
CCB Financial Corporation 700 30,493
Charter One Financial, Incorporated 3,440 65,790
Checkfree Holding Corporation* 900 94,050
City National Corporation 700 23,055
Compass Bancshares, Incorporated 1,900 42,393
Dime Bancorp, Incorporated 1,800 27,225
E*Trade Group, Incorporated* 4,000 104,500
Edwards (A.G.), Incorporated 1,500 48,093
Everest Reinsurance Holdings 800 17,850
FINOVA (The) Group, Incorporated 1,000 35,500
Firstmerit Corporation 1,500 34,500
First Security Corporation 3,200 81,700
First Tennessee National Corporation 2,100 59,850
First Virginia Banks, Incorporated 800 34,400
Gartner Group, Incorporated Class B* 1,400 19,337
GreenPoint Financial Corporation 1,800 42,862
Hibernia Corporation 2,600 27,625
Horace Mann Educators 700 13,737
HSB Group, Incorporated 500 16,905
Investment Technology Group, Incorporated 500 14,375
Keystone Financial, Incorporated 800 16,850
Legg Mason, Incorporated 900 32,625
Marshall & Isley Corporation 1,700 106,780
Mercantile Bankshares Corporation 1,100 35,130
National Commerce Bancorp 1,800 40,837
NCO Group, Incorporated* 400 12,050
North Fork Bancorporation, Incorporated 2,100 36,750
Ohio Casualty Corporation 1,000 16,063
Old Republic International Corporation 2,100 28,613
Oxford Health Plans* 1,300 16,494
Pacific Century Financial Corporation 1,300 24,294
PMI Group (The), Incorporated 750 36,609
Protective Life Corporation 1,100 34,994
Provident Financial Group, Incorporated 700 25,113
ReliaStar Financial Corporation 1,500 58,781
Sovereign Bancorp, Incorporated 3,600 26,831
TCF Financial Corporation 1,400 34,825
Unitrin, Incorporated 1,200 45,150
Webster Financial Corporation 700 16,494
Westamerica Bancorporation 600 16,763
Wilmington Trust Corporation 500 24,125
Zions Bancorporation 1,400 82,863
----------
1,798,759
----------
CAPITAL GOODS - 3.99%
AGCO Corporation 1,000 13,437
Albany International Corporation Class A* 510 7,905
American Power Conversion Corporation* 3,200 84,400
American Standard Company* 1,200 55,050
AMETEK, Incorporated 500 9,530
Carlisle Compaines, Incorporated 500 18,000
Cirrus Logic, Incorporated* 1,100 14,643
Cordant Technologies, Incorporated 600 19,800
Diebold, Incorporated 1,100 25,850
Donaldson Company, Incorporated 800 19,250
Federal Signal Corporation 800 12,850
Flowserve Corporation 600 10,200
Granite Construction, Incorporated 400 7,375
Harsco Corporation 700 22,225
Hillenbrand Industries 1,100 34,855
Hubbell, Incorporated Class B 1,100 29,975
Jacobs Engineering Group, Incorporated* 400 13,000
Kaydon Corporation 500 13,405
Kennametal, Incorporated 500 16,812
MagneTek, Incorporated* 400 3,075
Miller (Herman), Incorporated 1,300 29,900
Newport News Shipbuilding, Incorporated 500 13,750
Nordson Corporation 300 14,475
Pentair, Incorporated 800 30,800
Precision Castparts, Incorporated 400 10,500
Rayonier, Incorporated 400 19,325
Reynolds & Reynolds Class A 1,300 29,250
SCI Systems, Incorporated* 1,200 98,625
Sensormatic Electronics Corporation* 1,200 20,925
Sequa Corporation* 200 10,787
SPX Corporation* 500 40,405
Stewart & Stevenson Services, Incorporated 500 5,922
Structural Dynamics Research Corporation* 600 7,650
Symbol Technologies, Incorporated 1,400 88,987
Tecumseh Products Company Class A 300 14,155
Trinity Industries 600 17,062
Vishay Intertechnology, Incorporated* 1,375 43,483
Wallace Computer Services, Incorporated 700 11,637
York International Corporation 600 16,462
----------
955,737
----------
CONSUMER CYCLICAL - 5.55%
ACNielsen Corporation* 900 22,163
Abercrombie & Fitch Company* 1,700 45,368
American Eagle Outfitters* 800 36,000
Arvin Industries, Incorporated 400 11,350
Bandag, Incorporated 400 10,000
Barnes & Noble, Incorporated* 1,100 22,687
Belo (A.H.) Corporation 1,900 36,219
BJ's Wholesale Club, Incorporated* 1,200 43,800
Borders Group, Incorporated* 1,300 20,880
Borg-Warner Automotive, Incorporated 400 16,200
Burlington Industries, Incorporated* 900 3,600
Callaway Golf Company 1,200 21,225
CBRL Group, Incorporated 1,000 9,702
Claire's Stores, Incorporated 800 17,900
Clayton Homes, Incorporated 2,300 21,130
CompUSA, Incorporated* 1,500 7,687
Dollar Tree Stores, Incorporated* 1,000 48,437
Family Dollar Stores, Incorporated 2,800 45,675
Fastenal Company* 600 26,962
Furniture Brands International, Incorporated* 800 17,600
Heilig-Meyers Company 1,000 2,750
Houghton Mifflin Company 500 21,093
Imation Corporation* 600 20,137
International Game Technology* 1,500 30,468
Jones Apparel Group, Incorporated* 2,000 54,250
Lands' End, Incorporated* 500 17,375
Lear Corporation* 1,100 35,200
Lee Enterprises, Incorporated 700 22,355
Mark IV Industries, Incorporated 800 14,150
Media General, Incorporated 400 20,800
Meritor Automotive, Incorporated 1,100 21,312
Micro Warehouse, Incorporated* 600 11,100
Modine Manufacturing Company 500 12,500
Mohawk Industries, Incorporated* 1,000 26,375
Neiman-Marcus Group, Incorporated* 800 22,350
OfficeMax, Incorporated* 1,900 10,450
Payless ShoeSource, Incorporated* 500 23,500
Readers Digest Association 1,700 49,725
Ross Stores, Incorporated 1,500 26,906
Saks, Incorporated* 2,400 37,350
Scholastic Corporation* 300 18,656
Shaw Industries, Incorporated 2,200 33,963
Superior Industries, Incorporated 400 10,725
Teleflex, Incorporated 600 18,788
Tiffany & Company 1,200 107,100
Unifi, Incorporated* 1,000 12,313
USG Corporation 800 37,700
Visx, Incorporated* 1,100 56,925
Warnaco Group (The) Class A 900 11,081
WestPoint Stevens, Incorporated 900 15,750
Williams-Sonoma, Incorporated* 900 41,400
----------
1,329,132
----------
CONSUMER NON-DURABLE - 12.53%
Acuson Corporation* 400 5,025
Appria Healthcare Group, Incorporated* 900 16,144
Banta Corporation 400 9,025
Beckman Coulter, Incorporated 500 25,438
Bergen Brunswig Corporation Class A 2,200 18,288
Beverly Enterprises, Incorporated* 1,700 7,438
Bob Evans Farms, Incorporated 600 9,263
Brinker International, Incorporated* 1,100 26,400
Buffets, Incorporated* 700 7,000
Carter-Wallace, Incorporated 700 12,556
Chris-Craft Industries, Incorporated* 600 43,275
Church & Dwight Company, Incorporated 600 16,013
Cintas Corporation* 1,800 95,625
Comdisco, Incorporated 2,500 93,125
Concord EFS, Incorporated* 3,350 86,263
Covance, Incorporated* 1,000 10,813
Dean Foods Company 600 23,850
DENTSPLY International, Incorporated 900 21,263
Devry, Incorporated* 1,100 20,488
Dial (The) Corporation 1,700 41,331
Dole Food Company, Incorporated 900 14,625
Dreyer's Grand Ice Cream, Incorporated 500 8,500
Express Scripts Incorporated* 600 38,400
First Health Group Corporation* 800 21,500
Flowers Industries, Incorporated 1,600 25,500
Forest Laboratories Class A* 1,400 86,013
Foundation Health Systems Class A* 2,000 19,875
Gilead Sciences, Incorporated* 700 37,888
Gtech Holdings Corporation* 600 13,200
Hannaford Brothers Company 700 48,519
Harte-Hanks, Incorporated 1,100 23,925
Health Management Association Class A* 4,200 56,175
Hispanic Broadcasting Corporation* 930 85,763
Hon Industries 1,000 21,938
Hormel Foods Corporation 1,200 48,750
ICN Pharmaceuticals, Incorporated 1,300 32,906
International Multifoods, Incorporated 300 3,975
International Speedway Corporation Class A* 900 45,338
Interstate Bakeries Corporation 1,100 19,938
Iowa Beef Processing, Incorporated* 1,500 27,000
IVAX Corporation* 1,700 43,775
Lancaster Colony Corporation 700 23,188
Lance, Incorporated 500 5,000
Lincare Holdings, Incorporated* 900 31,219
Lone Star Steakhouse & Saloon, Incorporated* 500 4,461
Mandalay Resort Group, Incorporated* 1,500 30,188
McCormick & Company, Incorporated 1,200 35,700
MedImmune, Incorporated* 1,100 182,463
Millennium Pharmaceuticals, Incorporated* 650 79,300
Minimed, Incorporated* 500 36,625
Modis Professional Services, Incorporated* 1,600 22,800
Mylan Laboratories, Incorporated* 2,100 52,894
Navigant Consulting Company* 700 7,613
Omnicare, Incorporated 1,500 18,000
Outback Steakhouse, Incorporated* 1,200 31,125
PacifiCare Health System Class B* 700 37,100
Papa John's International, Incorporated* 500 13,031
Park Place Entertainment* 5,000 62,500
Perrigo Company* 1,200 9,600
Premier Parks, Incorporated* 1,300 37,538
PSS World Medical, Incorporated* 1,200 11,325
Quorum Health Group, Incorporated* 1,200 11,175
RJ Reynolds Tobacco Holdings, Incorporated 1,800 31,725
Ruddick Corporation 800 12,400
Sepracor, Incorporated* 500 49,594
Smucker (The J.M.) Company Class A 500 9,750
Standard Register Company 500 9,688
Starbuck Corporation* 3,000 72,750
STERIS Corporation* 1,100 11,344
Stryker Corporation 1,600 111,400
Suiza Foods Corporation* 500 19,813
Sybron International Corporation 1,700 41,969
Total Renal Care Holdings, Incorporated* 1,300 8,694
Trigon Healthcare, Incorporated* 600 17,700
Tyson Foods, Incorporated Class A 3,800 61,750
Universal Corporation 500 11,406
Universal Foods Corporation 800 16,300
Univision Commiunication, Incorporated* 1,700 173,719
U.S. Foodservices, Incorporated* 1,700 28,475
Viad Corporation 1,600 44,600
Vlasic Foods International, Incorporated* 700 3,981
Washington Post Class B 200 111,175
Westwood One, Incorporated* 900 68,400
Whitman Corporation 2,300 30,906
----------
3,002,510
----------
ENERGY - 3.47%
BJ Services Company* 1,200 50,175
Devon Energy Corporation 1,400 46,025
ENSCO International, Incorporated* 2,200 50,325
Global Marine, Incorporated* 2,900 48,213
Hanover Compressor Company* 450 16,988
Kinder Morgan, Incorporated 1,800 36,338
Murphy Oil Corporation 700 40,163
Nabor Industries, Incorporated* 2,300 71,156
National Fuel Gas Company 600 27,900
Noble Affiliates 900 19,294
Noble Drilling Corporation* 2,200 72,050
Ocean Energy, Incorporated* 2,700 20,925
Pennzoil-Quaker State Company 1,300 13,244
Pioneer Natural Resources Company* 1,600 14,300
Questar Corporation 1,400 21,000
Santa Fe Synder Corporation* 3,000 24,000
Smith International, Incorporated* 800 39,750
Tidewater, Incorporated 900 32,400
Transocean Sedco Forex, Incorporated 1,600 53,900
Ultramar Diamond Shamrock Corporation* 1,400 31,763
Valero Energy Corporation 900 17,888
Varco International, Incorporated* 1,100 11,206
Weatherford International, Incorporated* 1,800 71,888
----------
830,891
----------
MANUFACTURING - 3.64%
Airgas, Incorporated* 1,100 10,450
AK Steel Holding Corporation 1,700 32,088
Albemarle Corporation 800 15,350
Bowater, Incorporated 800 43,450
Cabot Corporation 1,100 22,413
Carpenter Technology, Incorporated 400 10,975
CDW Computer Centers* 700 55,038
Chesapeake Corporation 300 9,150
CK Witco Corporation 1,924 25,734
Cleveland-Cliffs Corporation, Incorporated 200 6,225
Consolidated Papers, Incorporated 1,500 47,719
Cytec Industries* 700 16,188
Dexter Corporation 400 15,900
Ethyl Corporation 1,400 5,513
Federal Mogul Corporation 1,200 24,150
Ferro Corporation 600 13,200
Fuller (H.B.) Company 200 11,188
Georgia Gulf Corporation 500 15,219
Georgia-Pacific Company Timber Group 1,400 34,475
Glatfeler (P.H.) Company 700 10,194
Hanna (M.A.) Company 800 8,750
IMC Global, Incorporated 1,900 31,113
Longview Fibre Company 800 11,400
Lubrizol (The) Corporation 900 27,788
Lyondell Chemical Company 1,900 24,225
Martin Marietta Materials, Incorporated 800 32,800
MAXXAM, Incorporated* 100 4,288
Minerals Technologies, Incorporated 300 12,019
Novellus Systems, Incorporated* 600 73,519
Olin Corporation 700 13,869
Oregon Steel Mills, Incorporated 400 3,175
Quantum Corporation-DLT & Storage* 2,700 40,838
RPM, Incorporated 1,800 18,338
Ryerson Tull, Incorporated* 400 7,775
Schulman (A.), Incorporated 500 8,156
Solutia, Incorporated 1,800 27,788
Sonoco Products, Incorporated 1,700 38,675
Southdown, Incorporated 600 30,975
UCAR International, Incorporated* 700 12,468
Wausau-Mosinee Paper Mills 800 9,350
Wellman, Incorporated 600 11,175
----------
873,103
----------
SERVICE - 1.87%
Apollo Group, Incorporated* 1,300 26,081
Cambridge Technology Partner (Mass.), Incorporated* 1,000 26,250
Convergys Corporation 2,550 78,413
Fiserv, Incorporated 2,000 76,625
Kelly Services, Incorporated Class A 600 15,075
Manpower, Incorporated 1,200 45,150
NCH Corporation 100 4,456
NOVA Corporation* 1,200 37,875
Ogden Corporation 800 9,550
Olsten Corporation 1,300 14,706
Pittston Brink's Group, Incorporated 700 15,400
Robert Half International, Incorporated* 1,500 42,844
Rollins, Incorporated 500 7,500
Sotheby's, Incorporated 1,000 30,000
Stewart Enterprises, Incorporated Class A 1,800 8,550
Sylvan Learning Systems, Incorporated* 800 10,400
----------
448,875
----------
TECHNOLOGY - 16.63%
Adtran, Incorporated* 600 30,863
Affiliated Computer, Incorporated* 800 36,800
Altera Corporation* 3,300 163,556
Arrow Electronics, Incorporated* 1,600 40,600
Atmel Corporation* 3,300 97,556
Avnet, Incorporated 700 42,350
Axciom Corporation* 1,400 33,600
Biogen, Incorporated* 2,500 211,250
Cadence Design Systems, Incorporated* 4,000 96,000
Chiron Corporation* 3,000 127,125
Cypress Semiconductor, Corporation* 1,800 58,275
DST Systems, Incorporated* 1,000 76,313
Electronic Arts, Incorporated* 1,000 84,000
Genzyme Corporation-General Division* 1,400 63,000
Harris Corporation 1,300 34,694
Informix Corporation* 3,300 37,744
Intergrated Device, Incorporated* 1,500 43,500
Intuit, Incorporated* 3,200 191,800
Jabil Circuit, Incorporated* 1,400 102,200
Keane, Incorporated* 1,200 38,100
Legato Systems, Incorporated* 1,400 96,338
Linear Technology Corporation 2,500 178,906
Litton Industries, Incorporated* 700 34,913
Maxim Integrated Products, Incorporated* 4,400 207,625
Mentor Graphics Corporation* 1,100 14,506
Microchip Technologies, Incorporated* 800 54,750
NCR Corporation* 1,600 60,600
Network Associates, Incorporated* 2,300 61,381
Policy Management Systems Corporation* 600 15,338
Polycom, Incorporated* 500 31,844
QLogic Corporation* 600 95,925
Rational Software Corporation* 1,400 68,775
Sanmina Corporation* 1,000 99,875
Siebel Systems, Incorporated* 3,200 268,800
Sterling Commerce, Incorporated* 1,400 47,688
Sterling Software, Incorporated* 1,400 44,100
Storage Technology Corporation* 1,600 29,500
SunGard Data Systems, Incorporated 2,100 49,875
Sykes Enterprises, Incorporated* 700 30,713
Symantec Corporation* 1,000 58,625
Synopsys, Incorporated* 1,200 80,100
Transaction Systems Architects, Incorporated* 500 14,000
Veritas Software Corporation* 4,200 601,125
Vitesse Semiconductor Corporation* 2,500 131,094
----------
3,985,722
----------
TRANSPORTATION - 1.32%
Airborne Freight Corporation 800 17,600
Alaska Airgroup, Incorporated* 400 14,050
Alexander & Baldwin, Incorporated 700 15,969
Arnold Industries, Incorporated 400 5,625
CNF Transportation, Incorporated* 800 27,600
GATX Corporation 800 27,000
Harley Davidson, Incorporated 2,500 160,156
Hunt (J.B.) Transportation Services, Incorporated 600 8,306
Overseas Shipholding Group 600 8,888
Swift Transportation Company, Incorporated* 1,100 19,388
Wisconsin Central Transportion Corporation* 800 10,750
----------
315,332
----------
UTILITIES - 6.63%
AGL Resources, Incorporated 900 15,300
Allegheny Energy, Incorporated 1,800 48,488
Alliant Energy Corporation 1,300 35,750
American Water Works, Incorporated 1,600 34,000
Black Hills Corporation 300 6,656
Blyth Industries, Incorporated* 750 18,422
Broadwing, Incorporated* 3,500 129,063
Calpine Corporation* 1,000 64,000
Cleco Corporation 400 12,825
CMP Group, Incorporated 500 13,781
COMSAT Corporation 907 18,027
Conectiv, Incorporated 1,500 25,219
DPL, Incorporated 2,600 45,013
DQE, Incorporated 1,200 41,550
Energy East Corporation 1,900 39,544
Hawaiian Electric Industries, Incorporated* 500 14,438
IDACORP, Incorporated* 600 16,088
Illinova Corporation 1,100 38,225
Indiana Energy, Incorporated 500 8,875
IPALCO, Incorporated 1,400 23,887
Kansas City Power & Light Company 1,000 22,063
KeySpan Energy Corporation 2,200 51,013
LG&E Energy Corporation 2,100 36,619
MCN Energy Group, Incorporated 1,400 33,250
MidAmerican Energy Holdings Company* 1,000 33,688
Minnesota Power, Incorporated 1,200 20,325
Montana Power Company 1,800 64,913
New England Electric System 1,000 51,750
NiSource, Incorporated 2,000 35,750
Northeast Utilities 2,200 45,238
NSTAR* 1,000 40,500
OGE Energy Corporation 1,300 24,700
Potomac Electric Power Company 1,900 43,581
Public Services Company of New Mexico 700 11,375
Puget Sound Energy, Incorporated 1,400 27,125
SCANA Corporation 1,700 45,688
Sierra Pacific Resources, Incorporated 1,300 22,506
Tech Data Corporation* 900 24,413
TECO Energy, Incorporated 2,100 38,981
Telephone & Data Systems, Incorporated 1,000 126,000
UtiliCorp United, Incorporated 1,500 29,156
Washington Gas Light Company 800 22,000
Waters Corporation* 1,000 53,000
Wisconsin Energy Corporation 1,900 36,575
----------
1,589,360
----------
Total Common Stocks (cost $14,150,437) 15,129,421
----------
UNIT INVESTMENT TRUST - 3.10%
MidCap SPDR Trust Unit Series I 9,150 742,294
----------
Total Unit Investment Trust (cost $695,562) 742,294
----------
<CAPTION>
SHORT-TERM INVESTMENTS<F3> - 33.44%
PRINCIPAL VALUE
<S> <C> <C>
VARIABLE RATE DEMAND NOTES<F1> - 9.69%
Firstar Bank (4.240% due 12/31/31) $ 850,005 850,005
General Mills (6.095% due 12/31/31) 420,016 420,016
Pitney Bowes (6.095% due 12/31/31) 802,698 802,698
Wisconsin Corp. (6.160% due 12/31/31) 249,320 249,320
----------
2,322,039
----------
U.S. TREASURY BILL - 23.75%
U.S. Treasury Bill (4.975% due 01/13/00) 5,700,000 5,690,633
----------
Total Short-Term Investments (cost $8,012,672) 8,012,672
----------
TOTAL INVESTMENTS - 99.68% (cost <F2> 23,884,387
----------
OTHER ASSETS AND LIABILITIES - .32% 78,985
----------
TOTAL NET ASSETS - 100% $23,963,372
==========
- --------------------
*Non-income producing
<FN>
<F1> Interest rates vary periodically based on current market rates. The
maturity shown for each variable rate demand note is the later of the next
scheduled interest rate adjustment date or the date on which principal can be
recovered through demand. Information as of December 31, 1999.
<F2> Represents cost for income tax purposes which is substantially the same
for financial reporting purposes. Gross unrealized appreciation and
depreciation of securities as of December 31, 1999 was $2,962,796
and ($1,974,498) respectively.
<F3> Securities and other current assets with an aggregate value of $8,084,700
have been segregated with the custodian to cover margin
requirements for the following open futures contracts at December 31, 1999:
<CAPTION>
Appreciation/
Type Contracts (Depreciation)
<S> <C> <C>
Standard & Poor's MidCap 400 Index (03/00) 36 $ 1,064,700
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
BALANCED INDEX PORTFOLIO
<TABLE>
<CAPTION>
COMMON STOCKS - 57.24%
SHARES VALUE
<S> <C> <C>
BANKING & FINANCIAL SERVICE - 7.63%
Aetna Life and Casualty Company 400 $ 22,325
AFLAC, Incorporated 700 33,031
Allstate (The) Corporation 2,100 50,400
American Express Company 1,200 199,500
American General Corporation 600 45,525
American International Group, Incorporated 4,000 432,500
AmSouth Bancorp, Incorporated 1,000 19,313
Aon Corporation 700 28,000
Associates First Capital Corporation 1,900 52,131
BB&T Corporation 800 21,900
Banc One Corporation 3,000 96,188
BankAmerica Corporation 4,500 225,844
Bank of New York Company, Incorporated 1,900 76,000
Bear Stearns Companies, Incorporated 300 12,825
Capital One Financial Corporation 500 24,094
Charles Schwab Corporation 2,100 80,588
Chase Manhattan Corporation 2,200 170,913
Chubb Corporation 500 28,156
CIGNA Corporation 500 40,281
Cincinnati Financial Corporation 400 12,475
Citigroup, Incorporated 8,800 488,950
Comerica, Incorporated 400 18,675
Conseco, Incorporated 800 14,300
Countrywide Credit Industries, Incorporated 300 7,575
Fannie Mae 2,700 168,581
Federal Home Loan Mortgage Corporation 1,800 84,713
Fifth Third Bancorp 800 58,700
First Union Corporation 2,500 82,031
Firstar Corporation 2,600 54,925
Fleet Financial Group, Incorporated 2,400 83,550
Franklin Resources, Incorporated 700 22,444
Golden West Financial, Incorporated 400 13,400
Hartford Financial Services Group 600 28,425
Household International, Incorporated 1,200 44,700
Huntington Bancshares 600 14,325
Jefferson-Pilot Corporation 300 20,475
KeyCorp 1,200 26,550
Lehman Brothers Holdings 300 25,406
Lincoln National Corporation 500 20,000
Loews Corporation 300 18,206
Marsh & McLennan Companies, Incorporated 700 66,981
MBIA, Incorporated 300 15,844
MBNA Corporation 2,100 57,225
Mellon Bank Corporation 1,300 44,281
Merrill Lynch & Company 1,000 83,500
MGIC Investment Corporation 300 18,056
Morgan (J. P.) & Company 500 63,313
Morgan Stanley, Dean Witter & Company 1,500 214,125
National City Corporation 1,600 37,900
Northern Trust Corporation 600 31,800
Old Kent Financial Corporation 300 10,613
PaineWebber Group, Incorporated 400 15,525
Pinnacle West, Incorporated 200 6,113
PNC Bank Corporation 800 35,600
Progressive Corporation 200 14,625
Providian Financial Corporation 400 36,425
Regions Financial Corporation 600 15,075
SAFECO Corporation 300 7,463
SLM Holding Corporation 400 16,900
SouthTrust Corporation 400 15,125
State Street Corporation 400 29,225
St. Paul Companies 600 20,213
Summit Bancorp 500 15,313
SunTrust Banks, Incorporated 800 55,050
Synovus Financial Corporation 700 13,913
Torchmark Corporation 300 8,719
T. Rowe Price Associates, Incorporated 300 11,081
Union Planters Corporation 400 15,775
UNUMprovident Corporation 600 19,238
U.S. Bancorp 1,900 45,244
Wachovia Corporation 500 34,000
Washingon Mutual, Incorporated 1,500 39,000
Wells Fargo & Company 4,300 173,881
----------
4,255,061
----------
CAPITAL GOODS - 4.85%
Allied Waste Industries, Incorporated* 500 4,406
Armstrong World Industries, Incorporated 100 3,338
Boeing Company 2,500 103,907
Briggs & Stratton Corporation 100 5,364
Caterpillar, Incorporated 900 42,357
Cooper Industries, Incorporated 200 8,089
Corning, Incorporated 600 77,363
Crane Company 200 3,975
Cummins Engine Company, Incorporated 100 4,832
Danaher Corporation 400 19,300
Deere & Company 600 26,026
Dover Corporation 500 22,688
Emerson Electric Company 1,100 63,113
Fluor Corporation 200 9,175
Foster Wheeler Corporation 100 888
General Dynamics Corporation 500 26,375
General Electric Company 8,500 1,315,375
Grainger (W.W.), Incorporated 200 9,563
Honeywell, Incorporated 2,000 115,375
Illinois Tool Works, Incorporated 800 54,050
Ingersoll-Rand Company 400 22,025
ITT Industries, Incorporation 200 6,688
Johnson Controls, Incorporated 200 11,375
Lockheed Martin Corporation 1,000 21,875
Masco Company 1,200 30,450
Milacron, Incorporated 100 1,538
Minnesota Mining & Manufacturing Company 1,000 97,875
Navistar International, Incorporated* 200 9,475
Northrop Grumman Corporation 200 10,813
Owens-Corning Fiberglass Corporation 100 1,931
PACCAR, Incorporated 200 8,863
Pall Corporation 300 6,469
Parker-Hannifin Corporation 300 15,394
Perkinelmer, Incorporated 100 4,169
Pitney-Bowes, Incorporated 700 33,819
Raychem Corporation 900 23,906
Rockwell International Corporation 500 23,938
Solectron Corporation* 800 76,100
Textron, Incorporated 400 30,675
Thermo Electron Corporation* 400 6,000
Thomas & Betts Company 100 3,188
Timken Company 200 4,088
TRW, Incorporated 300 15,581
Tyco International Limited 4,300 167,163
United Technologies Corporation 1,300 84,500
Waste Management, Incorporated 1,600 27,500
Xerox Corporation 1,700 38,569
----------
2,699,526
----------
CONSUMER CYCLICAL - 7.35%
American Greetings Company Class A 200 4,725
American Online, Incorporated* 5,800 437,538
AutoZone, Incorporated* 400 12,925
Bed Bath & Beyond, Incorporated* 400 13,900
Best Buy Company, Incorporated* 500 25,094
Black & Decker Corporation 200 10,450
Brunswick Corporation 200 4,450
Carnival Corporation 1,600 76,500
Centex Corporation 200 4,938
Circuit City Stores, Incorporated 500 22,531
Clear Channel Communications* 900 80,325
Comcast Corporation Class A Special 1,900 96,069
Consolidated Stores Corporation* 300 4,875
Cooper Tire & Rubber Company 200 3,113
Costco Wholesale Corporation* 600 54,750
Dana Corporation 400 11,975
Dayton Hudson Corporation 1,100 80,781
Delphi Automotive Systems 1,500 23,625
Deluxe Corporation 200 5,488
Dillard's, Incorporated Class A 300 6,056
Dollar General Corporation 600 13,650
Donnelley (R.R.) & Sons Company 300 7,444
Dow Jones & Company, Incorporated 200 13,600
Eaton Corporation 200 14,525
Ecolab, Incorporated 300 11,738
Federated Department Stores* 500 25,281
Fleetwood Enterprises 100 2,063
Ford Motor Company 3,100 165,656
Gannett Company, Incorporated 700 57,094
Gap, Incorporated 2,200 101,200
General Motors Corporation 1,700 123,569
Genuine Parts Company 500 12,406
Goodyear Tire & Rubber 400 11,275
Harcourt General, Incorporated 200 8,050
Harrah's Entertainment, Incorporated* 300 7,931
Hilton Hotels Corporation 1,000 9,625
Home Depot, Incorporated 5,850 401,091
Jostens, Incorporated 100 2,431
Kaufman & Broad Home Corporation 100 2,419
K Mart Corporation* 1,300 13,081
Knight-Ridder, Incorporated 200 11,900
Kohl's Department Stores Corporation* 400 28,875
Leggett & Platt, Incorporated 500 10,719
Limited (The), Incorporated 600 25,988
Lowe's Companies, Incorporated 1,000 59,750
Marriott International Class A 600 18,938
May Department Stores Company 900 29,025
Maytag Corporation 200 9,600
Mediaone Group* 1,600 122,900
McGraw-Hill Companies, Incorporated 500 30,813
Meredith Corporation 100 4,169
Mirage Resorts, Incorporated* 500 7,656
National Service Industries, Incorporated 100 2,950
New York Times Class A 500 24,563
Nordstrom, Incorporated 400 10,475
Office Depot, Incorporated* 1,000 10,938
Penney (J.C.) Company, Incorporated 700 13,956
Pep Boys-Manny, Moe & Jack 100 913
Pulte Corporation 100 2,250
Sears Roebuck & Company 1,000 30,438
Snap-On Tools, Incorporated 200 5,313
Stanley (The) Works 200 6,025
Staples, Incorporated* 1,200 24,900
Tandy Corporation 500 24,594
Time Warner, Incorporated 3,400 246,288
Times Mirror Company Class A 200 13,400
TJX Companies, Incorporated 800 16,350
Toys "R" Us, Incorporated* 600 8,588
Tribune Company 600 33,038
Wal-Mart Stores, Incorporated 11,600 801,850
Walt Disney Company, The 5,400 157,950
Whirlpool Corporation 200 13,013
Yahoo!, Incorporated* 700 302,881
----------
4,095,243
----------
CONSUMER NON-DURABLE - 10.45%
Abbott Laboratories 4,000 145,250
Alberto-Culver Company Class B 100 2,581
Albertson's, Incorporated 1,100 35,475
Allergan, Incorporated 300 14,925
ALZA Corporation Class A* 300 10,388
American Home Products Corporation 3,400 134,088
Amgen, Incorporated* 2,600 156,163
Anheuser-Busch Companies, Incorporated 1,200 85,050
Archer-Daniels-Midland Company 1,600 19,500
Avon Products, Incorporated 700 23,100
Bausch & Lomb, Incorporated 100 6,844
Baxter International, Incorporated 800 50,250
Becton, Dickinson Company 700 18,725
BestFoods, Incorporated 700 36,794
Biomet, Incorporated 300 12,000
Boston Scientific Corporation* 1,100 24,063
Bristol-Meyers Squibb Company 5,200 333,775
Brown Foremann Class B 200 11,450
Campbell Soup Company 1,100 42,556
Cardinal Health, Incorporated 700 33,513
CBS, Corporation* 2,000 127,875
Clorox Company 600 30,225
Coca-Cola Company 6,400 372,800
Coca-Cola Enterprises 1,100 22,138
Colgate-Palmolive Company 1,500 97,500
Columbia/HCA Healthcare Corporation 1,500 43,969
ConAgra, Incorporated 1,300 29,331
Coors (Adolph) Class B 100 5,250
C.R. Bard, Incorporated 100 5,300
CVS Corporation 1,000 39,938
Darden Restaurants 300 5,437
Eastman Kodak Company 800 53,000
Fortune Brands, Incorporated 400 13,224
General Mills, Incorporated 800 28,600
Gillette Company 2,800 115,324
Great Atlantic & Pacific Tea Company, Incorporated 100 2,787
Guidant Corporation* 800 37,600
Hasbro, Incorporated 500 9,530
Heinz (H.J.) Company 900 35,830
HEALTHSOUTH Corporation* 1,100 5,912
Hershey Foods Corporation 400 19,000
Humana, Incorporated* 400 3,274
International Flavors & Fragrance, Incorporated 300 11,324
Johnson & Johnson Company 3,500 325,937
Kellogg Company 1,100 33,893
Kimberly-Clark Corporation 1,400 91,350
Kroger Company* 2,200 41,525
Lilly (Eli) & Company 2,800 186,200
Liz Claiborne, Incorporated 200 7,525
Longs Drug Stores Corporation 100 2,580
Mallincrokdt, Incorporated 200 6,362
Manor Care, Incorporated* 300 4,800
Mattel, Incorporated 1,100 14,437
McDonald's Corporation 3,500 141,093
McKesson HBOC, Incorporated 700 15,793
Medtronic, Incorporated 3,000 109,312
Merck & Company, Incorporated 6,100 409,080
Newell Rubbermaid, Incorporated 700 20,300
NIKE, Incorporated Class B 700 34,693
PepsiCo, Incorporated 3,800 133,950
Pfizer, Incorporated 10,100 327,618
Pharmacia & Upjohn, Incorporated 1,300 58,500
Philip Morris Companies, Incorporated 6,200 143,762
Polaroid Corporation 100 1,880
Procter & Gamble Company 3,500 383,468
Quaker Oats Company 300 19,687
Quintiles Transnational Corporation* 300 5,605
RJR Nabisco Holdings, Incorporated 800 8,500
Ralston-Ralston Purina Group 800 22,300
Reebok International Limited* 100 818
Rite Aid Corporation 700 7,830
Russell Company 100 1,674
Safeway, Incorporated* 1,300 46,230
Sara Lee Corporation 2,300 50,743
Schering-Plough Corporation 3,800 160,312
Seagram Company, Limited* 1,100 49,430
Supervalu, Incorporated 400 8,000
St. Jude Medical* 200 6,137
Sysco Corporation 900 35,605
Tenet Healthcare Corporation* 800 18,800
TRICON Global Restaurants* 400 15,450
Tupperware Corporation 200 3,387
Unilever N.V. ADR 1,500 81,655
United HealthCare Corporation 500 26,562
UST, Incorporated 500 12,593
V.F. Corporation 300 9,000
Viacom, Incorporated Class B* 1,800 108,787
Walgreen Company 2,600 76,050
Warner-Lambert Company 2,200 180,262
Watson Pharmaceuticals, Incorporated* 200 7,162
Wellpoint Health Networks, Incorporated* 200 13,187
Wendy's International, Incorporated 300 6,187
Winn-Dixie Stores, Incorporated 400 9,574
Wrigley (Wm), Jr. Company 300 24,880
----------
5,822,123
----------
ENERGY - 3.13%
Amerada Hess Corporation 200 11,350
Anadarko Petroleum Corporation 300 10,238
Apache Corporation 300 11,081
Ashland, Incorporated 200 6,588
Atlantic Richfield Company 800 69,200
Baker Hughes, Incorporated 900 18,956
Burlington Resources, Incorporated 600 19,838
Chevron Corporation 1,700 147,263
Conoco, Incorporated Class B 1,600 39,800
Exxon Corporation 9,000 725,063
Halliburton Company 1,100 44,275
Helmerich & Payne, Incorporated 100 2,181
Kerr-McGee Company 200 12,400
McDermott International, Incorporated 200 1,813
Occidental Petroleum 900 19,463
Phillips Petroleum Company 700 32,900
Rowan Companies, Incorporated* 200 4,338
Royal Dutch Petroleum Company ADR 5,600 338,450
Schlumberger Limited 1,400 78,750
Sunoco, Incorporated 200 4,700
Texaco, Incorporated 1,400 76,038
Tosco Corporation 400 10,875
Transocean Sedco Forex, Incorporated 271 9,131
Union Pacific Resources Group 700 8,925
Unocal Corporation 600 20,138
USX-Marathon Group, Incorporated 800 19,750
----------
1,743,504
----------
MANUFACTURING - 1.81%
Air Products & Chemicals, Incorporated 600 20,137
Alcan Aluminum Limited 600 24,712
Alcoa, Incorporated 1,000 83,000
Allegheny Teledyne, Incorporated 200 4,487
Avery Dennison Company 300 21,862
Ball Corporation 100 3,938
Barrick Gold Corporation* 1,000 17,687
Bemis Company 100 3,487
Bethlehem Steel Corporation* 300 2,512
Boise Cascade Corporation 100 4,050
Champion International Corporation 200 12,387
Crown Cork & Seal Company, Incorporated 300 6,712
Dow Chemical Company 600 80,175
DuPont (E.I.) De Nemours & Company 2,700 177,852
Eastman Chemical Company 200 9,537
Englehard Corporation 300 5,662
FMC Corporation 100 5,730
Fort James Corporation 600 16,424
Freeport-McMoRan Copper & Gold* 400 8,450
Georgia-Pacific Company 400 20,300
Goodrich BF Company 300 8,250
Grace, (W.R.) & Company* 200 2,775
Great Lake Chemical Corporation 200 7,637
Hercules, Incorporated 300 8,362
Homestake Mining Company 700 5,469
Inco, Limited* 500 11,750
International Paper Company 1,100 62,081
Louisiana Pacific Corporation 300 4,275
Mead Corporation 300 13,031
Millipore Corporation 100 3,863
Monsanto Company 1,600 57,000
Newmont Mining Corporation 400 9,800
Nucor Corporation 200 10,963
Owens-Illinois, Incorporated* 400 10,025
Pactiv Corporation* 400 4,250
Phelps Dodge, Incorporated 200 13,425
Placer Dome, Incorporated 800 8,600
Potlatch Corporation 100 4,463
PPG Industries, Incorporated 500 31,281
Praxair, Incorporated 400 20,125
Reynolds Metals Company 200 15,325
Rohm & Haas Company 600 24,413
Sealed Air Corporation* 200 10,363
Sherwin-Williams Company 400 8,400
Sigma-Aldrich Corporation 300 9,019
Temple-Inland, Incorporated 100 6,594
Union Carbide Corporation 300 20,025
USX-U.S. Steel Group, Incorporated 200 6,600
Vulcan Materials Company 300
11,981
Westvaco Corporation 300 9,788
Weyerhaeuser Company 600 43,088
Willamette Industries 300 13,931
Worthington Industries, Incorporated 200 3,313
1,009,366
SERVICE - .91%
Automatic Data Processing, Incorporated 1,600 86,200
Block (H&R), Incorporated 300 13,125
Cendant Corporation* 1,900 50,469
Ceridian Corporation* 400 8,625
Computer Sciences Corporation* 400 37,850
Dun & Bradstreet Corporation 400 11,800
Electronic Data Systems Corporation 1,300 87,019
Equifax, Incorporated 400 9,425
First Data Corporation 1,100 54,244
IMS Health, Incorporated 800 21,750
Interpublic (The) Group of Companies, Incorporated 700 40,381
Omnicom Group, Incorporated 500 50,000
Paychex, Incorporated 600 24,000
Service Corporation International 700 4,856
Shared Medical Systems, Incorporated 100 5,094
----------
504,838
----------
TECHNOLOGY - 14.84%
3 COM Corporation* 900 42,300
Adaptec, Incorporated* 300 14,963
ADC Telecommunications, Incorporated 400 29,025
Adobe Systems, Incorporated 300 20,175
Advanced Micro Devices, Incorporated* 400 11,575
Analog Devices, Incorporated* 400 37,200
Andrew Corporation* 200 3,788
Apple Computer, Incorporated* 400 41,125
Applied Materials, Incorporated* 1,000 126,688
Autodesk, Incorporated 200 6,750
BMC Software, Incorporated* 600 47,963
Cabletron Systems, Incorporated* 500 13,000
Cisco Systems, Incorporated* 8,400 899,850
Citrix Systems, Incorporated 200 24,600
COMPAQ Computers Corporation 4,400 119,075
Computer Associates International, Incorporated 1,400 97,913
Compuware Corporation* 900 33,525
Comverse Technology* 200 28,950
Dell Computer Corporation* 6,600 336,600
EMC Corporation Massachusetts* 2,600 284,050
Gateway, Incorporated* 800 57,650
General Instrument Corporation* 500 42,500
Hewlett-Packard Company 2,600 296,238
IKON Office Solution, Incorporated 400 2,725
Intel Corporation 8,600 707,888
International Business Machines Corporation 4,700 507,600
KLA-Tencor Corporation* 200 22,275
Lexmark International Group, Incorporated Class A* 300 27,150
LSI Logic Corporation* 400 27,000
Lucent Technologies, Incorporated 8,000 598,500
Micron Technology, Incorporated* 700 54,425
Microsoft Corporation* 13,300 1,552,775
Molex, Incorporated 400 22,675
Motorola, Incorporated 1,600 235,600
National Semiconductor* 400 17,125
Network Appliance, Incorporated* 400 33,225
Nortel Networks Corporation 3,400 343,400
Novell, Incorporated* 900 35,944
Oracle Systems Corporation* 3,700 414,631
Parametric Technology Company* 700 18,944
PE Corporation PE Biosystems Group, Incorporated 300 36,094
PeopleSoft, Incorporated* 600 12,788
Qualcom, Incorporated* 1,600 281,800
Seagate Technology, Incorporated* 500 23,281
Scientific-Atlanta, Incorporated 200 11,125
Silicon Graphics, Incorporated* 500 4,906
Sun Microsystems, Incorporated* 4,000 309,750
Tektronix, Incorporated 100 3,888
Tellabs, Incorporated* 1,000 64,188
Teradyne, Incorporated* 400 26,400
Texas Instruments, Incorporated 2,000 193,750
Unisys Corporation* 800 25,550
Xilinx, Incorporated* 800 36,375
----------
8,267,280
----------
TRANSPORTATION - .41%
AMR Corporation* 400 26,800
Burlington Northern Santa Fe Corporation 1,200 29,100
CSX Corporation 600 18,825
Delta Air Lines, Incorporated 400 19,925
FDX Corporation* 800 32,750
Kansas City Southern Industries 300 22,388
Norfolk Southern Company 1,000 20,500
Ryder System 200 4,888
Southwest Airlines Company 1,300 21,044
Union Pacific Corporation 600 26,175
US Airways Group, Incorporated* 200 6,413
----------
228,808
----------
UTILITIES - 5.86%
AES Corporation* 500 37,375
ALLTELL Corporation 800 66,150
Ameren Corporation 400 13,100
AT & T Corporation 8,300 421,225
American Electric Power Company 500 16,063
Bell Atlantic Corporation 4,000 246,250
BellSouth Corporation 4,900 229,381
Carolina Power & Light Company 400 12,175
Central & SouthWest Corporation 600 12,000
Centurytel, Incorporated 400 18,950
CINergy Corporation 400 9,650
CMS Energy Corporation 300 9,356
Coastal Corporation 600 21,263
Columbia Energy Group 200 12,650
Consolidated Edison, Incorporated 600 20,700
Consolidated Natural Gas Company 200 12,988
Constellation Energy Group, Incorporated 400 11,600
Dominion Resources 500 19,625
DTE Energy Company 400 12,550
Duke Energy Corporation 900 45,113
Eastern Enterprises, Incorporated 100 5,744
Edison International 900 23,569
El Paso Energy Corporation 600 23,288
Enron Corporation 1,900 84,313
Entergy Corporation 600 15,450
FirstEnergy Corporation 600 13,613
Florida Progress Corporation 300 12,694
FPL Group, Incorporated 500 21,406
General Public Utilities Corporation 300 8,981
Global Crossing Limited* 2,000 100,000
GTE Corporation 2,500 176,406
MCI WorldCom, Incorporated* 7,350 390,009
New Century Energies, Incorporated 300 9,113
NEXTEL Communications, Incorporated Class A* 900 92,813
Niagara Mohawk Holdings, Incorporated* 500 6,969
Nicor, Incorporated 100 3,250
Northern States Power Company 400 7,800
Oneok, Incorporated 100 2,513
PECO Energy Company 500 17,375
PG & E Corporation 1,000 20,500
PP & L Resources, Incorporated 400 9,150
People's Energy Corporation 100 3,350
Public Service Enterprises Group, Incorporated 600 20,888
Reliant Energy, Incorporated 800 18,300
SBC Communications, Incorporated 8,900 433,875
Sempra Energy 600 10,425
Southern Company 1,800 42,300
Sprint Corporation FON Group 2,300 154,819
Sprint PCS Group, Incorporated* 1,100 112,750
Texas Utilities Holdings Companies 700 24,894
Unicom Corporation 600 20,100
US West, Incorporated 1,300 93,600
Williams Companies, Incorporated 1,100 33,619
----------
3,262,040
----------
Total Common Stocks (cost $29,273,582) 31,887,789
----------
<CAPTION>
U.S. TREASURY OBLIGATIONS - 9.17%
PRINCIPAL VALUE
<S> <C> <C>
U.S. Treasury Note (6.250% due 01/31/02) $ 900,000 $ 900,000
U.S. Treasury Note (7.250% due 05/15/04) 2,300,000 2,370,438
U.S. Treasury Note (6.500% due 05/15/05) 800,000 800,250
U.S. Treasury Bond (6.250% due 08/15/23) 1,100,000 1,037,438
----------
Total U.S. Treasury Obligations (cost $5,235,756) 5,108,126
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 3.13%
FEDERAL HOME LOAN MORTGAGE CORPORATION
5.750% due 07/15/03 1,800,000 1,741,559
----------
Total U.S. Government Agency Obligations
(cost $1,778,018) 1,741,559
----------
MORTGAGE-BACKED SECURITIES - 14.43%
FEDERAL HOME LOAN MORTGAGE CORPORATION
FNCI (6.500% due 07/01/14) 2,405,264 2,335,110
FNCL(7.000% due 07/01/29) 5,897,518 5,704,620
----------
Total Mortgage-Backed Securities (cost $8,232,062) 8,039,730
----------
CORPORATE BONDS - 10.87%
AIR TRANSPORTATION - .88%
Delta Airlines (7.900% due 12/15/09) 500,000 489,534
----------
BANK, BANK HOLDING COMPANIES, & OTHER BANK
SERVICES - 2.21%
Erac USA Finance (7.950% due 12/15/09) 500,000 495,437
Household Finance Corp. (7.200% due 07/15/06) 750,000 737,023
----------
1,232,460
----------
CAPITAL GOODS - 1.76%
Caterpillar, Inc. (7.250% due 09/15/09) 1,000,000 981,772
----------
CONSUMER CYCLICALS - .88%
Ford Motor Cr. Corp. (6.700% due 07/16/04) 500,000 489,110
----------
CONSUMER NON-DURABLE - 1.73%
Great Lakes Chemical Corp. (7.000% due 07/15/09) 500,000 475,790
Wal-Mart Stores (6.875% due 08/10/09) 500,000 486,729
----------
962,519
----------
MANUFACTURING - 1.65%
Champion Intl. Corp. (7.200% due 11/01/26) 450,000 423,056
Rohm & Haas Co. (6.950% due 07/15/04) 500,000 494,257
----------
917,313
----------
UTILITIES - 1.76%
Sonat, Inc. (7.625% due 07/15/11)) 1,000,000 982,070
----------
Total Corporate Bonds (cost $6,178,368) 6,054,778
----------
UNIT INVESTMENT TRUST - .11%
S&P 500 Depositary Receipt 400 58,750
----------
Total Unit Investment Trust (cost $52,600) 58,750
----------
SHORT-TERM INVESTMENT<F3> - 3.91%
VARIABLE RATE
DEMAND NOTES <F1> - 3.91%
Firstar Bank (6.240% due 12/31/31) 2,182,051 2,182,051
----------
Total Short-Term Investments (cost $2,182,051) 2,182,051
----------
TOTAL INVESTMENTS - 98.86% (cost $52,932,437)<F2> 55,072,783
----------
OTHER ASSETS AND LIABILITIES - 1.14% 635,133
----------
TOTAL NET ASSETS - 100% $55,707,916
===========
- ------------
*Non-income producing
<FN>
<F1> Interest rates vary periodically based on current market rates. Rates
shown are as of December 31, 1999. The maturity shown for each variable rate
demand note is the later of the next scheduled interest adjustment
date or the date on which principal can be recovered through demand.
Information shown is as of December 31, 1999.
<F2> Represents cost for income tax purposes which is substantially the same
for financial reporting purposes. Gross unrealized appreciation and
depreciation of securities as of December 31, 1999 was $5,009,480 and
($2,959,698) respectively.
<F3> Securities with an aggregate value of $1,855,250 have been segregated
with the custodian to cover margin requirements for the following open futures
contracts at December 31, 1999:
<CAPTION> Appreciation/
Type Contracts (Depreciation)
<S> <C> <C>
Standard & Poor's Balanced Index (03/00) 5 $51,300
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
LEHMAN AGGREGATE BOND INDEX PORTFOLIO
U.S. TREASURY OBLIGATIONS - 33.96%
<TABLE>
<CAPTION>
PRINCIPAL VALUE
<S> <C> <C>
U.S. TREASURY NOTES & BONDS - 33.96%
5.625% due 04/30/00 $ 250,000 $ 249,922
6.250% due 01/31/02 1,500,000 1,500,000
6.500% due 05/15/05 1,450,000 1,450,454
6.125% due 08/15/07 800,000 779,750
6.250% due 08/15/23 1,300,000 1,226,063
----------
5,206,189
----------
Total U.S. Treasury Obligations (cost $5,358,480) 5,206,189
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.31%
FEDERAL HOME LOAN MORTGAGE CORPORATION
5.750% due 07/15/03 1,000,000 967,533
----------
Total U.S. Government Agency Obligations
(cost $989,444) 967,533
----------
MORTGAGE-BACKED SECURITIES - 36.95%
FEDERAL NATIONAL MORTGAGE ASSOCIATION
FNCI (6.500% due 07/01/14) 2,886,316 2,802,132
FNCL(7.000% due 07/01/29) 2,957,377 2,862,291
----------
Total Mortgage-Backed Securities (cost $5,780,056) 5,664,423
----------
CORPORATE BONDS - 20.42%
AIR TRANSPORTATION - 1.60%
Delta Airlines (7.900% due 12/15/09) 250,000 244,767
----------
BANK, BANK HOLDING COMPANIES, & OTHER BANK
SERVICES - 4.84%
Erac USA Finance (7.950% due 12/15/09) 250,000 247,718
Household Finance Corp. (7.200% due 07/15/06) 250,000 245,674
US West Cap. (6.875% due 08/15/01) 250,000 249,150
742,542
CAPITAL GOODS - 3.20%
Caterpillar, Inc. (7.250% due 09/15/09) 500,000 490,886
CONSUMER CYCLICALS - 3.20%
Ford Motor Cr. Corp. (6.700% due 07/16/04) 500,000 489,110
CONSUMER NON-DURABLE - 3.14%
Great Lakes Chemical Corp. (7.000% due 07/15/09) 250,000 237,895
Wal-Mart Stores (6.875% due 08/10/09) 250,000 243,364
----------
481,259
----------
MANUFACTURING - 2.84%
Champion Intl. Corp. (7.200% due 11/01/26) 200,000 188,025
Rohm & Haas Co. (6.950% due 07/15/04) 250,000 247,128
----------
435,153
----------
UTILITIES - 1.60%
Sonat, Inc. (7.625% due 07/15/11)) 250,000 245,518
----------
Total Corporate Bonds (cost $3,191,810) 3,129,235
----------
SHORT-TERM INVESTMENT - .92%
VARIABLE RATE
DEMAND NOTES (1) - .92%
Firstar Bank (6.240% due 12/31/31) 141,671 141,671
----------
Total Short-Term Investment (cost $141,671) 141,671
----------
TOTAL INVESTMENTS - 98.56% (cost $15,461,461)<F2> 15,109,051
----------
OTHER ASSETS AND LIABILITIES - 1.44% 220,868
----------
TOTAL NET ASSETS - 100% $15,329,919
==========
<FN>
<F1> Interest rates vary periodically based on current market rates. Rates
shown are as of December 31, 1999. The maturity shown for each variable rate
demand note is the later of the next scheduled interest adjustment date or the
date on which principal can be recovered through demand. Information shown is
as of December 31, 1999.
<F2> Represents cost for income tax purposes which is substantially the same
for financial reporting purposes. Gross unrealized appreciation and
depreciation of securities as of December 31, 1999 was $0 and($368,567)
respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of
the financial statements.
CARILLON FUND, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Carillon Fund, Inc. ("Fund") is registered under the Investment
Company Act of 1940, as amended, as a no-load, diversified,
open-end management investment company. The shares of the
variable insurance series of the Fund are sold only to The Union
Central Life Insurance Company (Union Central) and its separate
accounts to fund the benefits under certain variable insurance
and retirement products. The Fund's shares are offered in nine
different portfolios - Equity Portfolio, Bond Portfolio, S&P 500
Index Portfolio, S&P MidCap 400 Index Portfolio, Balanced Index
Portfolio, Lehman Aggregate Bond Index Portfolio, Equity Fund,
Nasdaq 100 Index Fund, and Russell 2000 Small Cap Index Fund
(individually "Portfolio"). The Equity Portfolio seeks long-
term appreciation of capital by investing primarily in common
stocks and other equity securities. The Bond Portfolio seeks a
high level of current income as is consistent with reasonable
investment risk by investing primarily in long-term, fixed-
income, investment-grade corporate bonds. The S&P 500 Index
Portfolio seeks investment results that correspond to the total
return performance of U.S. common stocks, as represented in the
Standard & Poor's 500 composite stock Index. The S&P MidCap 400
Index Portfolio seeks investment results that correspond to the
total return performance of U.S. common stocks, as represented
by the S&P MidCap 400 composite stock Index. The Balanced
Index Portfolio seeks investment results, with respect to 60% of
its assets, that correspond to the total return of U.S. common
stocks, as represented by the S&P 500 Index and, with respect to
40% of its assets, that correspond to the total return
performance of investment grade bonds, as represented by the
Lehman Brothers Aggregate Bond Index. The Lehman Aggregate Bond
Index Portfolio seeks investment results that correspond to the
total performance of the bond market, as represented by the
Lehman Brothers Aggregate Bond Index. The financial statements
of the Equity Fund, the Nasdaq 100 Index Fund, and the Russell
2000 Small Cap Index Fund are presented separately.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Securities valuation - Securities held in each Portfolio, except
for money market instruments maturing in 60 days or less, are
valued as follows: Securities traded on stock exchanges
(including securities traded in both the over-the-counter market
and on an exchange), or listed on the NASDAQ National Market
System, are valued at the last sales price as of the close of the
New York Stock Exchange on the day the securities are being
valued, or, lacking any sales, at the closing bid prices.
Securities traded only in the over-the-counter market are valued
at the last bid price, as of the close of trading on the New York
Stock Exchange, quoted by brokers that make markets in the
securities. Other securities for which market quotations are not
readily available are valued at fair value as determined in good
faith under procedures adopted by the Board of Directors. Money
market instruments with a remaining maturity of 60 days or less
held in each Portfolio are valued at amortized cost which
approximates market.
Securities transactions and investment income - Securities
transactions are recorded on the trade date (the date the order to
buy or sell is executed). Dividend income is recorded on the ex-
dividend date and interest income is recorded on an accrual basis.
All amortization of discount is recognized currently under the
effective interest method. Gains and losses on sales of
investments are calculated on the identified cost basis for
financial reporting and tax purposes.
Federal taxes - It is the intent of the Fund to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its net investment
income and any net realized capital gains. Regulated investment
companies owned by the segregated asset accounts of a life
insurance company, held in connection with variable annuity
contracts, are exempt from excise tax on undistributed income.
Therefore, no provision for income or excise taxes has been
recorded. The Bond Portfolio has a capital loss carry forward of
$334,560 which can be carried forward until 2006. The Equity
Portfolio, Balanced Index Portfolio, and Lehman Aggregate Bond
Index Portfolio have a capital loss carryforward of $15,358,910,
$861,163, and $24,369 which can be carried forward until 2007.
Distributions -Distributions from net investment income in all
Portfolios generally are declared and paid quarterly. Net
realized capital gains are distributed periodically, no less
frequently than annually. Distributions are recorded on the ex-
dividend date. All distributions are reinvested in additional
shares of the respective Portfolio at the net asset value per
share.
The amount of distributions are determined in accordance with
federal income tax regulations which may differ from generally
accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent
these differences are permanent in nature, such amounts are
reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require
reclassification. Distributions which exceed net investment
income and net realized capital gains for financial reporting
purposes but not for tax purposes are reported as distributions in
excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment
income and net realized capital gains for tax purposes, they are
reported as distributions of paid-in-capital.
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Expenses - Allocable expenses of the Fund are charged to each
Portfolio based on the ratio of the net assets of each Portfolio
to the combined net assets of the Fund. Nonallocable expenses
are charged to each Portfolio based on specific identification.
Foreign Currency - The Funds' accounting records are maintained
in U.S. dollars. All Portfolios may purchase foreign securities
within certain limitations set forth in the Prospectus. Amounts
denominated in or expected to settle in foreign currencies are
translated into U.S. dollars at the spot rate at the close of
the London Market. The Fund does not isolate that portion of
the results of operations resulting from changes in foreign
exchange rates on investments from the underlying fluctuation in
the securities resulting from market prices. All are included
in net realized and unrealized gain or loss for investments.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
Investment advisory fees - The Fund pays investment advisory
fees to Carillon Advisers, Inc. (the Adviser), under terms of an
Investment Advisory Agreement (the Agreement). Certain officers
and directors of the Adviser are affiliated with the Fund. The
Fund pays the Adviser, as full compensation for all services and
facilities furnished, a monthly fee computed separately for each
Portfolio on a daily basis, at an annual rate, as follows:
(a) for the Equity Portfolio - .65% of the first $50,000,000,
.60% of the next $100,000,000, and .50% of all over
$150,000,000 of the current net asset value:
(b) for the Bond Portfolio - .50% of the first $50,000,000,
.45% of the next $100,000,000, and .40% of all over
$150,000,000 of the current net asset value.
(c) for the S & P 500 Index Portfolio - .30% of the current
net asset value.
(d) for the S & P MidCap 400 Index Portfolio - .30% of the
current net asset value.
(e) for the Balanced Index Portfolio - .30% of the current
net asset value.
(f) for the Lehman Aggregate Bond Index Portfolio - .30% of
the current net asset value.
The Agreement provides that if the total operating expenses of
the Fund, exclusive of the advisory fee and certain other
expenses as described in the Agreement, for any fiscal quarter
exceed an annual rate of 1% of the average daily net assets of
the Equity or Bond Portfolios, the Adviser will reimburse the
Fund for such excess, up to the amount of the advisory fee for
that year. The Adviser has agreed to pay any other expenses of
the S&P 500 Index Portfolio, the S&P MidCap 400 Index Portfolio,
the Balanced Index Portfolio, and the Lehman Aggregate Bond
Index Portfolio, other than the advisory fee for that Portfolio,
to the extent that such expenses exceed 0.30% of its average
annual net assets. As a result, for the period ended December
31, 1999, the adviser reimbursed the S&P MidCap 400 Index
Portfolio $12,912, Balanced Index Portfolio $13,736 and the
Lehman Aggregate Bond Index Portfolio $12,692.
In addition to providing investment advisory services, the
Adviser is responsible for providing certain administrative
functions to the Fund. The Adviser has entered into an
Administration Agreement with Carillon Investments, Inc. (the
Distributor) under which the Distributor furnishes substantially
all of such services for an annual fee of .20% of the Fund's
average net assets for the Equity and Bond Portfolios, and .05%
of the Fund's average net assets for the S & P 500 Index
Portfolio, S&P MidCap 400 Index Portfolio, Balanced Index
Portfolio and Lehman Aggregate Bond Index Portfolio. The fee is
borne by the Adviser, not the Fund.
Carillon Advisers, Inc. and Carillon Investments, Inc. are
wholly-owned subsidiaries of Union Central.
Directors' fees - Each director who is not affiliated with the
Adviser receives fees from the Fund for service as a director.
Members of the Board of Directors who are not affiliated with
the Adviser are eligible to participate in a deferred
compensation plan. The value of each director's deferred
compensation account will increase or decrease at the same rate
as if it were invested in shares of the Scudder Money Market
Fund.
NOTE 3 - FUTURES CONTRACTS
S&P 500 Index Portfolio, S&P MidCap 400 Index Portfolio,
Balanced Index Portfolio, and Lehman Aggregate Bond Index
Portfolio (collectively, the Index Portfolios) may enter into
futures contracts that relate to securities or indices in which
they may invest. They may also purchase and write call and put
options on such contracts. The Index Portfolios may invest up
to 20% of their assets in such futures and/or options, except
that until each Portfolio reaches $25 million, it may invest up
to 100% in such futures and/or options. These contracts provide
for the sale of a specified quantity of a financial instrument
at a fixed price at a future date. When the Index Portfolios
enter into a futures contract, they are required to deposit and
maintain as collateral such initial margin as required by the
exchange on which the contract is traded. Under terms on the
contract, the Portfolios agree to receive from or pay to the
broker an amount equal to the daily fluctuation in the value of
the contract (known as the variation margin). The variation
margin is recorded as unrealized gain or loss until the contract
expires or is otherwise closed, at which time the gain or loss
is realized. The Portfolios invest in futures as a substitute
to investing in the common stock positions in the Index that
they intend to match. The potential risk to the Index
Portfolios is that the change in the value in the underlying
securities may not correlate to the value of the contracts.
NOTE 4 - SUMMARY OF PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities for the year ended December
31, 1999 excluding short-term obligations, follow:
<TABLE>
<CAPTION>
S&P 500 S&P MidCap
Equity Bond Index 400 Index
Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C>
Total Cost
of Purchases of:
Common Stocks $146,277,984 $ ---- $105,592,384 $18,397,554
U.S. Government
Securities ---- 15,721,481 ---- ----
Corporate Bonds ---- 3,591,945 ---- ----
------------ ----------- ------------ -----------
$146,277,984 $59,313,426 $105,592,384 $18,397,554
============ =========== ============ ===========
<CAPTION>
Total Proceeds
from Sales of:
Common Stocks $263,377,283 $ 630,623 $ 6,765,962 $ 4,569,423
U.S. Government
Securities ---- 34,920,009 ---- ----
Corporate Bonds ---- 36,774,402 ---- ----
------------ ----------- ------------ -----------
$263,377,283 $72,325,034 $ 6,765,962 $ 4,569,423
============ =========== ============ ===========
<CAPTION>
Balanced Index Lehman Aggregate Bond Index
<S> <C> <C>
Total Cost of Purchases of:
Common Stocks $47,651,261 $ ----
U.S. Government Securities 38,027,258 19,806,062
Corporate Bonds 11,163,893 4,686,352
----------- -----------
$96,842,412 $24,492,414
=========== ===========
Total Proceeds from Sales of:
Common Stocks $20,744,013 $ ----
U.S. Government Securities 19,512,901 8,368,132
Corporate Bonds 5,002,635 753,392
----------- -----------
$45,259,549 $ 9,121,524
=========== ===========
</TABLE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
Equity Portfolio
Year Ended December 31,
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $ 14.89 $ 20.35 $ 19.45 $ 16.54 $ 14.30
------- ------- ------- ------- -------
Investment Activities:
Net investment income .10 .25 .23 .29 .24
Net realized and unrealized
gains/(losses) (.05) 2.80) 3.23 3.61 3.36
------- ------- ------- ------- -------
Total from
Investment Activities .05 (2.55) 3.46 3.90 3.60
------- ------- ------- ------- -------
Distributions:
Net investment income (.12) (.23) (.27) (.27) (.23)
Net realized gains (2.20) (2.68) (2.29) (.72) (1.13)
------- ------- ------- ------- -------
Total Distributions (2.32) (2.91) (2.56) (.99) (1.36)
------- ------- ------- ------- -------
Net Asset Value,
End of year $ 12.62 $ 14.89 $ 20.35 $ 19.45 $ 16.54
======= ======= ======= ======= =======
Total Return 2.05% (15.31%) 20.56% 24.52% 26.96%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .69% .62% .62% .64% .66%
Ratio of Net Investment
Income to Average Net Assets .67% 1.41% 1.23% 1.66% 1.73%
Portfolio Turnover Rate 86.47% 62.50% 57.03% 52.53% 34.33%
Net Assets,
End of Year (000's) $124,444 $248,783 $335,627 $288,124 $219,563
</TABLE>
<PAGE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock
outstanding throughout the year.
<TABLE>
<CAPTION>
Bond Portfolio
Year Ended December 31,
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $ 11.13 $ 11.29 $ 10.91 $ 11.07 $ 10.04
------- ------- ------- ------- -------
Investment Activities:
Net investment income .72 .77 .79 .79 .88
Net realized and unrealized
gains / (losses) (.84) (.05) .37 (.04) .98
------- ------- ------- ------- -------
Total from
Investment Activities (.12) .72 1.16 .75 1.86
------- ------- ------- ------- -------
Distributions:
Net investment income (.65) (.76) (.72) (.87) (.83)
In excess of net
investment income ---- ---- ---- (.04) ----
Net realized gains ---- (.12) (.06) ---- ----
------- ------- ------- ------- -------
Total Distributions (.65) (.88) (.78) (.91) (.83)
------- ------- ------- ------- -------
Net Asset Value,
End of year $ 10.36 $ 11.13 $ 11.29 $ 10.91 $ 11.07
------- ------- ------- ------- -------
Total Return (1.11%) 6.52% 11.02% 7.19% 19.03%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets .60% .58% .60% .62% .65%
Ratio of Net Investment
Income to Average Net Assets 6.62% 6.84% 7.15% 7.24% 7.43%
Portfolio Turnover Rate 56.07% 67.57% 113.41% 202.44% 111.01%
Net Assets,
End of Year (000's) $98,428 $113,762 $99,892 $85,634 $73,568
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding throughout the year.
S&P 500 Index Portfolio
Year Ended December 31,
1999 1998 1997 1996<F1>
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of year $ 19.49 $ 15.74 $ 12.13 $ 10.00
------- ------- ------- -------
Investment Activities:
Net investment income .21 .20 .20 .20
Net realized and unrealized
gains / (losses) 3.75 4.21 3.72 2.12
------- ------- ------- -------
Total from
Investment Activities 3.96 4.41 3.92 2.32
------- ------- ------- -------
Distributions:
Net investment income (.19) (.20) (.21) (.19)
Net realized gains (.14) (.46) (.10) .--
------- ------- ------- -------
Total Distributions (.33) (.66) (.31) (.19)
------- ------- ------- -------
Net Asset Value,
End of year $ 23.12 $19.49 $ 15.74 $ 12.13
------- ------- ------- -------
Total Return 20.52% 28.54% 32.72% 23.37%
Ratios / Supplemental Data:
Ratio of Net Expenses to
Average Net Assets .39% .43% .50% .59%<F2>
Ratio of Net Investment
Income to Average Net Assets 1.10% 1.25% 1.48% 2.14%<F2>
Portfolio Turnover Rate 3.45% 2.64% 9.06% 1.09%
Net Assets, End of Year (000's) $284,132 $131,345 $55,595 $29,205
------- ------- ------- -------
<FN>
<F1> The portfolio commenced operation on December 29, 1995. The financial
highlights table for the period ending December 31, 1995 is not presented
because the activity for the period did not round to $0.01 in any category of
the reconciliation of beginning to ending net asset value per share. The
ratios and total return were all less than 0.1%. The net assets at December
31, 1995 were $305,148.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by .25%
for the year ended December 31, 1996, had the Adviser not waived a portion of
its fee.
</FN>
</TABLE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
S&P MidCap 400 Index Portfolio
Period from May 3, 1999 to
December 31,1999<F1>
<S> <C>
Net Asset Value,
Beginning of period $ 10.00
-------
Investment Activities:
Net investment income .10
Net realized and unrealized
gains/(losses) 1.01
-------
Total from Investment Activities 1.11
-------
Distributions:
Net investment income (.07)
Net realized gains ----
-------
Total Distributions (.07)
-------
Net Asset Value,
End of year $ 11.04
=======
Total Return 11.14%
Ratios / Supplemental Data:
Ratio of Expenses to
Average Net Assets<F2> .60%<F3>
Ratio of Net Investment
Income to Average Net Assets<F2> 1.69%<F3>
Portfolio Turnover Rate 47.55%<F3>
Net Assets, End of Year (000's) $23,963
- ---------------
<FN>
<F1> The portfolio commenced operations on May 3, 1999.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net
assets would have decreased by .09% for the period ended December 31, 1999,
had the Adviser not reimbursed expenses.
<F3> The ratios are annualized.
</FN>
</TABLE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
Balanced Index Portfolio
Period from May 3, 1999 to
December 31,1999<F1>
<S> <C>
Net Asset Value,
Beginning of period $ 10.00
-------
Investment Activities:
Net investment income .18
Net realized and unrealized
gains/(losses) .34
-------
Total from Investment Activities .52
-------
Distributions:
Net investment income (.11)
Net realized gains ----
-------
Total Distributions (.11)
-------
Net Asset Value,
End of year $ 10.41
=======
Total Return 5.31%
Ratios / Supplemental Data:
Ratio of Expenses to
Average Net Assets<F2> .47%<F3>
Ratio of Net Investment
Income to Average Net Assets<F2> 2.94%<F3>
Portfolio Turnover Rate 141.58%<F3>
Net Assets, End of Year (000's) $55,708
_____________
<FN>
<F1> The portfolio commenced operations on May 3, 1999.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by .03%
for the period ended December 31, 1999, had the Adviser not reimbursed
expenses.
<F3> The ratios are annualized.
</FN>
</TABLE>
Note 5 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
Lehman Aggregate Bond Index Portfolio
Period from June 30, 1999 to
December 31,1999<F1>
<S> <C>
Net Asset Value,
Beginning of period $ 10.00
-------
Investment Activities:
Net investment income .31
Net realized and unrealized
gains/(losses) (.26)
-------
Total from Investment Activities .05
-------
Distributions:
Net investment income (.23)
Net realized gains ----
-------
Total Distributions (.23)
-------
Net Asset Value,
End of year $ 9.82
=======
Total Return .47%
Ratios/Supplemental Data:
Ratio of Expenses to
Average Net Assets<F2> .56%<F3>
Ratio of Net Investment
Income to Average Net Assets<F2> 5.66%<F3>
Portfolio Turnover Rate 112.64%<F3>
Net Assets, End of Year (000's) $15,330
_____________
<FN>
<F1> The portfolio commenced operations on June 30, 1999.
<F2> The ratios of net expenses to average net assets would have increased
and net investment income to average net assets would have decreased by .15%
for the period ended December 31, 1999, had the Adviser not reimbursed
expenses.
<F3> The ratios are annualized.
</FN>
</TABLE>
