<PAGE>
PROSPECTUS
Carillon Capital Fund
of
Carillon Investment Trust
Carillon Capital Fund (the "Fund") is an investment
portfolio of Carillon Investment Trust (the "Trust"), a
diversified, open-end management investment company.
The Fund seeks to provide the highest total return through a
combination of income and capital appreciation consistent with
the reasonable risks associated with an investment portfolio,
which in the sole determination of the investment adviser, would
be of above average quality when compared to other portfolios.
The Fund's investments will include equity securities, debt
instruments and money market instruments. In purchasing debt
securities, the Fund will primarily invest in debt securities
rated in one of the four highest rating categories as determined
by a nationally recognized rating service, or, if unrated, of
equivalent quality as determined by the investment adviser. The
Fund may, however, invest up to 25% of the total value of the
debt securities it holds in high-yield (high-risk) bonds or the
equivalent thereof in unrated securities. High-yield (high-risk)
bonds typically are subject to greater market fluctuations and
risk of loss of income and principal due to default by the issuer
than are investments in lower yielding, higher-rated bonds.
As a result of the market risk inherent in any investment,
there is no assurance that the investment objective of the Fund
will be realized. Investments in the Fund are neither insured nor
guaranteed by the U.S. Government or any other entity or person.
A sales charge is deducted from the amount invested. This
sales charge ranges from 5% for investments of less than $50,000
to .5% for investments of $2,500,000 or more. (See "Sales
Charge," page 10.) Fund shares are suitable for purchase by
pension plan and IRA custodians, as well as the public generally.
---------------------------------
This Prospectus sets forth concisely the information that a
prospective investor should know before investing in the Fund,
and it should be read and kept for future reference. A Statement
of Additional Information dated February 28, 1996 that contains
further information about the Fund, has been filed with the
Securities and Exchange Commission and is incorporated by
reference into this Prospectus. A copy of the Statement of
Additional Information may be obtained without charge by calling
the Fund at (513) 595-2600, or by writing the Fund at P.O. Box
40409, Cincinnati, Ohio 45240.
-----------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Dated February 28, 1996
<PAGE>
FUND EXPENSES
Shareholder Transaction Expenses
(as a percentage of the offering price)
Maximum Sales Load Imposed on Purchase......... 5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Advisory Fees.................................. 0.75%
Other Expenses................................. 0.26%
Total Fund Operating Expenses.................. 1.01%
EXAMPLE The table below shows the expenses a shareholder would
pay on a $1,000 investment assuming a 5% annual return and no
redemptions.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Expenses $60 $81 $103 $168
</TABLE>
The 5% annual return is a standardized rate prescribed for
the purpose of this example and does not represent the past or
future return of the Fund.
The purpose of the preceding table is to assist investors in
understanding the various costs and expenses an investor in the
Fund would bear. All expenses are borne directly or indirectly by
shareholders. The expense figures for the 3-year, 5-year and 10-
year periods represent the cumulative expenses for those periods.
(For more information about Fund expenses, see "Management of the
Trust," page 8, and "Purchase of Fund Shares," page 9.)
The example should not be considered a representation of
past or future expenses and the actual expenses may be greater or
lesser than those shown.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial information in the table which follows,
insofar as it pertains to each of the five years in the period
ended October 31, 1995, has been audited in conjunction with the
annual audit of the financial statements of the Fund. The
financial statements for the year ended October 31, 1995, have
been audited by Deloitte & Touche LLP, whose unqualified report
thereon is included in the Statement of Additional Information.
The financial statements for the four years ended October 31,
1994, have been audited by another independent accountant, whose
reports expressed unqualified opinions on those statements. The
financial highlights should be read in conjunction with the
financial statements and notes thereto included in the Statement
of Additional Information. Further information about the
performance of the Fund is contained in the Trust's annual report
to shareholders which may be obtained without charge.
<TABLE>
<CAPTION>
Year ended October 31,
--------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of period $13.01 $13.00 $12.45 $12.48 $ 9.79
Investment Activities:
Net investment income .52 .35 .42 .45 .46
Net realized and
unrealized gain (losses) .73 .16 1.27 .50 2.71
------ ------ ------ ------ ------
Total from Investment
Operations 1.25 .51 1.69 .95 3.17
Distributions:
Net investment income (.51) (.32) (.42) (.45) (.48)
Net realized gains (1.05) (.18) (.72) (.53) --
------ ------ ------ ------ ------
Total Distributions (1.56) (.50) (1.14) (.98) (.48)
Net Asset Value,
End of period $12.70 $13.01 $13.00 $12.45 $12.48
====== ====== ====== ====== ======
Ratios/Supplemental Data:
Total Return <F2> 10.88% 4.56% 14.50% 8.15% 32.99%
Ratio of Expenses
to Average Net Assets 1.01% 1.05% 1.11% 1.10% 1.19%
Ratio of Net Investment
Income to Average
Net Assets 4.44% 3.89% 3.35% 3.61% 4.03%
Portfolio Turnover Rate 42.07% 53.20% 43.35% 48.03% 42.07%
Net Assets,
End of Period
(in thousands) $46,644 $41,849 $33,863 $29,807 $27,385
CAPTION
<PAGE>
Year ended October 31,
---------------------- Period ended
1990 1989 10/31/88<F1>
---- ---- --------
<S> <C> <C> <C>
Net Asset Value,
Beginning of period $11.84 $11.17 $10.45
Investment Activities:
Net investment income .60 .54 .30
Net realized and
unrealized gains (losses) (1.44) 1.07 .70
------ ------ ------
Total from Investment
Operations (.84) 1.61 1.00
Distributions:
Net investment income (.52) (.62) (.28)
Net realized gain (.69) (.32) --
------ ------ ------
Total Distribution (1.21) (.94) (.28)
Net Asset Value,
End of period $9.79 $11.84 $11.17
====== ====== ======
Ratios/Supplemental Data:
Total Return <F2> (8.00%) 14.33% 9.68%
Ratio of Expenses
to Average Net Assets 1.27% 1.44 1.34%<F3>
Ratio of Net Investment
Income to Average
Net Assets 5.12% 4.88% 4.35%<F3>
Portfolio Turnover Rate 101.07% 92.32% 40.03%<F3>
Net Assets,
End of Period
(in thousands) $20,022 $22,203 $29,807
<FN>
- ---------------
<F1>
Period from February 23, 1988 (the effective date of registration under the
Securities Act of 1933) through October 31, 1988.
<F2>
Assumes sales load is not imposed on either initial investment or
reinvestment of distributions.
<F3>
Annualized
</TABLE>
<PAGE>
<PAGE>
PERFORMANCE
From time to time the Fund may advertise "total return."
This calculation is based on historical earnings and is not
intended to indicate future performance. Investment return and
the principal value of an investment may fluctuate. Shares of
the Fund, when redeemed, may be worth more or less than their
original cost. All charges shown under "Fund Expenses" are
reflected in the calculation. Total return is computed by
finding the average annual rate of return that would equate the
initial amount invested to the ending redeemable value. The
calculation of total return assumes the reinvestment of all
dividends and distributions and the deduction of the maximum
sales load from the initial investment.
THE TRUST
The Trust was established under Massachusetts law pursuant
to a Declaration of Trust dated December 8, 1986, as an
unincorporated business trust, a form of organization that is
commonly called a Massachusetts business trust. The Trust is
registered with the Securities and Exchange Commission as a
diversified, open-end management investment company under the
Investment Company Act of 1940 ("1940 Act"). Such registration
does not involve the supervision of investments or investment
policy. The Declaration of Trust permits the Trustees to issue
an unlimited number of shares and to divide such shares into an
unlimited number of portfolios, all without shareholder
approval.
THE FUND
The Fund is the only portfolio of the Trust currently
being offered. The Fund is analogous to a diversified, open-
end management investment company (mutual fund). Each share of
the Fund has an equal proportionate interest in the net assets
and net liabilities of the Fund. Each shareholder of the Fund
is entitled to a pro rata share of all dividends and
distributions arising from the net income and capital gains on
its investments. The shares of the Fund are continually offered
for sale to the public at net asset value subject to the
imposition of a sales charge.
INVESTMENT OBJECTIVES AND POLICIES
The Fund has investment objectives which it pursues
through its investment policies. The investment objectives of
the Fund (described on the cover of this Prospectus) are
fundamental policies and may not be changed without approval of
a majority of shareholders. There can be no assurance that the
investment objectives of the Fund will be realized.
The Fund seeks to obtain the highest total return through
a combination of income and capital appreciation consistent
with the reasonable risks associated with an investment
portfolio, the securities of which are selected by the
investment adviser as representing securities that it believes
are of above-average quality as compared to other portfolios.
The Fund invests in equity, debt and money market
securities. The Fund may borrow for temporary or emergency
purposes up to 10% of the value of its assets.
There are no percentage limitations on the type of
securities in which the Fund may invest. The Fund may invest
entirely in equity securities, entirely in debt, entirely in
money market instruments, or in any combination of these types
of securities at the sole discretion of the investment adviser,
subject only to the investment objectives of the Fund and the
policies adopted by the Board of Trustees. The investment
adviser determines the proportion of Fund assets invested in
equity, debt and money market securities based on fundamental
value analysis; analysis of historical long term returns among
equity, debt and money market investments; and other market
influencing factors. The fundamental value analysis considers
the adviser's outlook over both the near and long-term, for
corporate profitability, short and long-term interest rates,
stock price earnings ratios for the market in total and
individual stocks and inflation rates. When the investment
climate as indicated by the fundamental factors is near
historical relationships, the portfolio will be structured
approximately 63% in equity, 30% in debt and 7% in money market
securities. In addition, market influencing factors relating to
monetary policy, equity momentum, market sentiment, economic
influences and market cycles are taken into consideration in
making the asset allocation decision.
<PAGE>
Deviations from historical fundamental market
relationships on either a current or anticipated basis, along
with the influences of market factors, may result under most
foreseeable circumstances in changes as much as 40%, plus or
minus, in the percentages allocated to equity, debt or money
market securities within the Fund's portfolio.
Equity Securities
In its equity investments, the Fund emphasizes a
combination of several themes in order to diversify its invest-
ment exposure. Most stocks purchased by the Fund display one or
more of the following criteria:
Low price earnings ratios in relation to their return
on equity.
High asset values in relation to stock price.
Foreign shares, listed on the New York or American
Stock Exchanges or purchased in the form of American Depository
Receipts, of companies judged to represent better fundamental
value than those of similar domestic companies.
A high level of dividend payment providing a yield
that is competitive with debt investments.
Debt Securities
The Fund may invest in rated or unrated debt securities,
including obligations of the U.S. Government and its agencies
and corporate debt obligations. The Fund's corporate debt
security investments will consist primarily of "investment
grade" corporate bonds; that is, bonds rated BBB or higher by
Standard & Poor's or Baa or higher by Moody's or that are
unrated but considered by the investment adviser to be of
equivalent credit quality. Up to 25% of the Fund's fixed-
income assets, however, may be invested in debt securities that
are below investment grade as defined above. Non-investment
grade (high-risk) debt securities are considered to have
speculative characteristics. These investments are subject to
greater market fluctuations and risk of loss of income and
principal than are investments in lower yielding fixed-
income securities.
High-yield (high-risk) bonds generally include any bonds
rated Ba or below by Moody's or BB or below by Standard &
Poor's or, if unrated, considered equivalent thereof by the
Fund's investment adviser. Bonds rated Ba or BB or below are
considered speculative. The Fund may invest up to 25% of the
value of its debt portfolio in bonds so rated (or unrated but
considered of equivalent quality). Bonds rated Ca or C are
described by the rating agencies as "speculative in a high
degree; often in default or [having] other marked
shortcomings." Bonds rated C or D generally are in default or
arrears and are described as having extremely poor prospects of
attaining any real investment standings. As of January 31,
1996, the Fund held long-term debt securities rated as follows:
<TABLE>
<CAPTION>
Moody's/Standard & Poor's % of Long-Term Debt
<S> <C>
Aaa/AAA .......................... 79.3%
Aa/AA ............................ 0.0%
A/A .............................. 12.9%
Baa/BBB .......................... 3.8%
Less than investment grade........ 4.0%
</TABLE>
See the Appendix for a description of corporate bond ratings.
For a more complete discussion of the risk factors
associated with high-yield bonds, see the discussion below
under "Principal Risk Factors," and "Certain Risk Factors
Relating to High-Yield, High-Risk Bonds" in the Statement of
Additional Information.
The adviser anticipates that average maturity will not
exceed 15 years, with the precise term to maturity dependent
upon general market and economic conditions.
<PAGE>
Money Market Instruments
The Fund may at any time be 100% invested in money market
instruments although it likely will invest in these securities
only temporarily pending investment in equity and debt
securities, or on a limited basis. The securities described
below are considered money market instruments if their
remaining maturities are less than 13 months.
Repurchase Agreements. A repurchase agreement is a
transaction where a Fund buys a security at one price and
simultaneously agrees to sell that same security back to the
original owner at a higher price. The investment adviser, on
behalf of the Board of Trustees, reviews the credit worthiness
of the other party to the agreement and must find it
satisfactory before engaging in a repurchase agreement.
Thereafter, the investment adviser, on behalf of the Board of
Trustees, monitors the borrower to ensure that adequate credit
standards continue to be met. It is the policy of the Fund to
require that repurchase agreements be fully collateralized at
all times. A majority of repurchase agreements mature in seven
days or less. In the event of the default or bankruptcy of the
other party, the Fund could experience delays in recovering its
money, may realize only a partial recovery or even no recovery,
and may also incur disposition costs.
U.S. Government Obligations. Securities issued and
guaranteed as to principal and interest by the U.S. Government
include a variety of Treasury securities that differ only in
their interest rates, maturities and times of issuance. At
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
U.S. Government. Agencies of the U.S. Government that issue or
guarantee obligations include, among others, Export-Import
Banks of the United States, Farmers Home Administration,
Federal Housing Administration, Government National Mortgage
Association, Maritime Administration, Small Business
Administration and The Tennessee Valley Authority. Obligations
of instrumentalities of the U.S. Government include securities
issued or guaranteed by, among others, the Federal National
Mortgage Association, Federal Home Loan Banks, Federal Home
Loan Mortgage Corporation, Federal Intermediate Credit Banks,
Banks for Cooperatives and the U.S. Postal Service. Some of
these securities, such as those guaranteed by the Government
National Mortgage Association, 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.
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 no negotiable certificate is
received.
Bankers' Acceptances. Bankers' acceptances are time drafts
drawn on commercial banks by borrowers usually in connection
with international commercial transactions (to finance the
import, export, transfer or storage of goods). The borrower is
liable for payment as well as the bank that 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 consists of unsecured
promissory notes issued by corporations to finance short-
term credit needs. Commercial paper is issued in bearer form
with maturities generally not exceeding nine months. Commercial
paper obligations may include variable amount master demand
notes.
<PAGE>
Variable amount master demand notes are obligations that permit
the investment of fluctuating amounts by the Fund at varying
rates of interest pursuant to direct arrangements between the
Fund, as lender, and the borrower. These notes permit daily
changes in the amounts borrowed. The Fund has the right to
increase the amount under the note at any time up to the full
amount provided by the note agreement, or to decrease the
amount, and the borrower may prepay up to the full amount of
the note without penalty. Because variable amount master demand
notes are direct lending arrangements between the lender and
borrower, it is not generally contemplated that such
instruments will be traded, and there is no secondary market
for these notes, although they are redeemable (and thus
immediately repayable by the borrower) at face value, plus
accrued interest, at any time. In connection with master demand
note arrangements, Carillon Advisers, Inc. will monitor on an
ongoing basis the earning power, cash flow, and other liquidity
ratios of the issuer, and the borrower's ability to pay
principal and interest on demand. While master demand notes, as
such, are not typically rated by credit rating agencies, if not
so rated the Fund may invest in them only if at the time of an
investment the issuer meets the criteria for other commercial
paper issuers. Because master demand notes are immediately
repayable by the borrower on demand, they are considered by the
Fund to have a maturity of one business day.
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.
Other Information
In addition to the investment policies described above,
the Fund's investments are subject to further restrictions
described in the Statement of Additional Information. Unless
otherwise specified, the Fund's investment objectives, policies
and restrictions are not fundamental policies and may be
changed without shareholder approval.
PRINCIPAL RISK FACTORS
The Fund's investment objectives involve the assumption of
reasonable risks which include financial and market risks and
current income volatility. Financial risk refers to the ability
of an issuer of a debt security to pay principal and interest
on that security and to the earnings stability and overall
financial soundness of an issuer of an equity security. Market
risk refers to the fluctuation in the price of the security
because of changes in conditions in the securities markets in
general and, with respect to debt securities, changes in the
overall level of interest rates. Current income volatility
refers to the degree and rapidity with which changes in the
overall level of interest rates become reflected in the level
of current income of the Fund.
The Fund is subject to varying degrees of financial and
market risks and current income volatility because it invests
in a variety of investments at the adviser's discretion. The
market value of debt securities is affected by changes in
general market interest rates. If interest rates fall, the
market value of these securities tends to rise; but if interest
rates rise, their value tends to fall. Market risk affects all
debt securities, but lower-rated and unrated securities may be
subject to a greater market risk than higher-rated
(lower-yield) securities. Equity securities are subject to
potentially wide variations in value because of activity in the
primary markets on which such securities are traded. Lower-
rated securities are generally subject to greater financial
risk than higher-rated securities as there is a greater
probability that issuers of lower-rated securities will not be
able to pay the principal and interest due on such securities,
especially during periods of adverse economic conditions.
Bonds rated below the four highest grades used by Standard
& Poor's or Moody's are frequently referred to as "junk" bonds,
reflecting the greater market and investment risks associated
with such bonds. Such risks relate not only to the greater
financial weakness of the issuers of such securities but also
to other factors including: (i) the sensitivity of such
securities to interest rates and economic changes (high-
yield, high-risk bonds are very sensitive to adverse economic
and corporate developments; their yields will fluctuate over
time and either an economic downturn or rising interest rates
could create financial stress on the issuers of such bonds,
possibly resulting in their defaulting on their obligations);
(ii) the payment expectations of holders of such securities
(high-yield, high-risk bonds may contain redemption or call
provisions which if exercised in a period of lower interest
rates would result in their being replaced by lower yielding
securities); (iii) the liquidity of such securities (there may
be little trading in certain high-yield, high-risk bonds which
may make it more difficult to dispose of the securities and
more difficult to determine their fair value). See "Certain
Risk Factors Relating to High-Yield, High-Risk Bonds" in the
Statement of Additional Information for a further discussion of
the risks summarized above.
The Fund is subject to the further risk that in order to
meet its objectives, the adviser must determine the proper mix
of equity, debt and money market securities. Moreover, the
timing of movements from one type of security to another could
have a negative effect on the Fund's overall objective.
Inherent in the fact that the adviser has great latitude with
respect to the Fund's portfolio composition is the risk that it
may not properly ascertain the appropriate mix of securities
for any particular economic cycle.
MANAGEMENT OF THE TRUST
Trustees
The Board of Trustees is responsible for supervising the
business affairs and investments of the Fund that are managed
on a daily basis by the Fund's investment adviser. The role of
the Trustees is not to approve specific investments, but to
exercise a control and review function.
Investment Adviser
Carillon Advisers, Inc. ("Adviser") serves as the Trust's
investment adviser under an Investment Advisory Agreement
("Agreement") originally dated December 30, 1987. Adviser,
whose principal business address is 1876 Waycross Road,
Cincinnati, Ohio 45240 (P.O. Box 40407, Cincinnati, Ohio
45240), was incorporated under the laws of Ohio on August 18,
1986, as successor to the advisory business of Carillon
Investments, Inc. Adviser is a wholly-owned subsidiary of The
Union Central Life Insurance Company ("UC"), a mutual life
insurance company organized in 1867 under the laws of Ohio.
Adviser is also the investment adviser of The Manhattan Life
Insurance Company (with assets of approximately $514 million as
of December 31, 1995), which is 73% owned by UC. Adviser is
also the investment adviser of Carillon Fund, Inc., a
registered open-end management investment company. George L.
Clucas has been primarily responsible for the day-to-day
management of the Fund's portfolio since 1988. Mr. Clucas is
Trustee, President and Chief Executive Officer of the Fund, and
President and Chief Executive Officer of the Adviser. He has
been affiliated with the Adviser and UC since 1987.
The Agreement provides that, subject to the control and
direction of the Board of Trustees, Adviser will manage the
investment and reinvestment of the assets of the Fund in
accordance with its investment objectives and policies. In
addition, Adviser agrees to formulate and implement a
continuing program for the management of the Fund's assets.
Adviser's obligations include the making and execution of all
investment decisions, and the placement of orders for the
purchase and sale of securities with or through such brokers,
dealers or issuers as Adviser may select.
Adviser is also required by the Agreement to furnish or
provide to the Fund any necessary office space, equipment and
personnel, clerical services, and other necessary office
expenses, and provide the services of individuals who perform
executive and administrative functions for the Fund. In order
to fulfill these obligations, Adviser has entered into an
Administration Agreement with Carillon Investments, Inc. to
furnish such services for which Adviser pays Carillon
Investments, Inc. an annual fee equal to .20% of the Fund's
average net assets. This fee does not increase the obligation
of the Fund in any way.
<PAGE>
Advisory Fee
Pursuant to the Agreement between the Fund and Adviser,
the Fund pays Adviser, as full compensation for all facilities
and services furnished, a fee based on its average net assets.
The fee, accrued daily and paid monthly, is computed at the
annual rate of .75% of the first $50,000,000, .65% of the next
$100,000,000, and .50% of all amounts over $150,000,000 of the
current value of the net assets of the Fund. The initial
advisory fee is higher than that charged most other funds, but
management believes it to be standard with regard to other
comparable funds. Because the fee is reduced (first reduction
at $50,000,000), it precisely recognizes "economies of size"
and the fixed costs associated with managing any fund. It gives
early recognition to the value of an increase in net assets.
Service Agreement
Under a Service Agreement between the Adviser and UC, UC
has agreed to make available to the Adviser the services of
certain employees of UC on a part-time basis for the purpose of
better enabling the Adviser to fulfill its obligations to the
Trust under the Agreement. Pursuant to the Service Agreement,
the Adviser shall reimburse UC for all the costs allocable to
the time spent on the affairs of the Adviser by the employees
provided by UC. 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. UC
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 UC
undertakes no obligation in respect thereto except as otherwise
expressly provided in the Service Agreement. The Service
Agreement was approved by the shareholders at a meeting held on
March 20, 1992.
Expenses
Adviser paid all of the fees and expenses incurred in the
organization and initial registration of the Trust and its
shares with the Securities and Exchange Commission and the
various states where offered.
The Fund incurs expenses that are accrued daily and
deducted from total income before dividends are paid. These
expenses include: the fee of Adviser, taxes, legal, transfer
and dividend disbursing agent, bookkeeping, custodian and
auditing fees, and other expenses relating to the Trust's
operations that are not expressly assumed by Adviser under its
Investment Advisory Agreement with the Trust. For the year
ended October 31, 1995, expenses ($439,494) as a percentage of
average net assets ($43,730,299) equalled 1.01%. (See "Fund
Expenses," page 2.)
It is estimated that the Fund will have an annual
portfolio turnover rate of 75%. For the year ended October 31,
1995, the actual portfolio turnover rate was 42.07%. Portfolio
turnover refers to the rate at which the securities held by the
Fund are replaced. The higher the rate, the higher the
transactional and brokerage costs associated with the turnover,
unless the securities traded can be bought and sold without
corresponding commission costs.
PURCHASE OF FUND SHARES
Principal Underwriter
Carillon Investments, Inc. ("Distributor"), whose address
is 1876 Waycross Road, Cincinnati, Ohio 45240 (P.O. Box 40409,
Cincinnati, Ohio 45240), serves as the principal underwriter
for shares of the Trust. Distributor is a wholly-owned
subsidiary of UC. Pursuant to a Distribution Agreement with the
Trust, Distributor is obligated to pay certain expenses in
connection with the offering of shares, including sales
commissions to its representatives and fees to other
broker-dealers offering the Fund shares. Broker-dealers
typically receive 90% of the sales charge. The staff of the
Securities and Exchange Commission is of the opinion that
broker-dealers receiving 90% or more of the sales charge are
considered underwriters under the Securities Act of 1933.
Distributor also pays for the printing and distribution of
prospectuses, sales literature and advertising costs in
connection with the offering of Fund shares.
<PAGE>
How Shares May Be Purchased
The Trust continuously offers the shares of the Fund at
the public offering price which is the net asset value per
share next computed after receipt by the transfer agent of an
order to purchase, plus a sales charge. An application form for
the purchase of Fund shares is included with this Prospectus or
can be obtained from Distributor or from a broker-dealer which
has entered into a selling agreement with Distributor. The
initial purchase order must be placed through the Distributor
or one of these brokers; subsequent purchases may be made
through the broker or Distributor, by mail or through an
automatic deduction from the shareholder's checking account.
The broker-dealers and the Distributor are responsible for the
prompt forwarding of orders to the transfer agent. If the
purchase order is received by the transfer agent before 4:00
p.m., Eastern Time, on a trading day, the shares will be
purchased at the net asset value per share determined at 4:00
p.m., Eastern Time, on that day. Purchase orders received after
4:00 p.m., Eastern Time, will be executed at the net asset
value determined at 4:00 p.m., Eastern Time, on the next
trading day. The initial investment must be at least $500 and
subsequent investments must be at least $50. The Trust has the
unqualified right not to accept a specific order for the
purchase of shares. A $15 service charge will be assessed for
all returned checks due to insufficient funds or closed
accounts.
The application form for the purchase of Fund shares
requires certain elections to be made by the shareholder if
he/she anticipates making subsequent purchases by bank wire
($500 minimum), by check or by automatic monthly deductions
($100 minimum) from his/her checking account. Third party
checks for investment into mutual fund accounts will no longer
be accepted; this refers to checks that are made payable to
someone other than the registered account owner and endorsed
over to a particular mutual fund. If the appropriate election
is made, money can be wired to the transfer agent by the
shareholder's bank for the purchase of Fund shares. The
shareholder's bank must be a member of the Federal Reserve
System. It is likely that the shareholder's bank will impose a
fee for this privilege. Of course, the shareholder may send
subsequent payments directly to the transfer agent: Firstar
Trust Company, Mutual Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701. Whenever placing an order, the
shareholder must give his/her account number. (See "Note" page
13.)
If there is a question concerning the purchase of shares,
contact the Distributor or your broker.
Sales Charge
A sales charge is deducted from investments in the Fund
shares. The amount of sales charge varies with the total amount
invested. The following is a table of sales charges applied
against investment in shares.
<TABLE>
<CAPTION>
Percent of Percent of
Amount Invested Offering Price Net
Investment
- ----------------------------------------------------------------
<S> <C> <C>
Less than $50,000 5% 5.26%
$50,000 but less than $150,000 4% 4.17%
$150,000 but less than $500,000 3% 3.09%
$500,000 but less than $1,500,000 2% 2.04%
$1,500,000 but less than $2,500,000 1% 1.01%
$2,500,000 or more .5% .50%
</TABLE>
For example, from the total investment (public offering
price) of $5,000, $250 would be deducted and the net amount
invested would be $4,750. This $250 represents 5% of the
purchase payment and 5.26% of the net amount invested.
Reduced Sales Charge
Shares of the Fund may be purchased at a reduced sales
charge under certain circumstances briefly described here.
Complete procedural details are given in the Statement of
Additional Information.
(a) LETTER OF INTENT: Shareholders who sign a Letter of
Intent will be permitted to aggregate their current investment
in the Trust with the subsequent investments they intend to
make over the next 13-month period in shares of the Fund.
<PAGE>
(b) RIGHT OF ACCUMULATION AND COMBINED ACCOUNTS: If
notified to do so by the shareholder at the time a purchase is
made, the Fund takes into account the current net asset value
of shares owned by the shareholder in addition to the dollar
amount of his or her new investment in determining the sales
charge. The Fund also will consider, if notified to do so, the
current net asset value of shares owned, or the aggregate
dollar amount of new investment in Fund shares being made by
the shareholder's spouse and/or children under the age of 21.
Purchases of Fund shares for qualified retirement plans
under section 401(a) of the Internal Revenue Code ("Code"),
plans adopted by public school systems and certain tax-exempt
organizations under section 403(b) of the Code, Individual
Retirement Arrangements purchased by or on behalf of
individuals pursuant to section 408 of the Code, and government
deferred compensation plans pursuant to section 457 of the Code
will not be subject to the sales charge.
Purchases of the Fund shares by Distributor, or companies
affiliated with Distributor, and by directors, officers and
employees of Distributor or affiliated companies will not be
subject to the sales charge. Fund shares purchased by the
spouse and/or children under the age of 21 of the directors,
officers and employees of the Distributor or such affiliated
companies also will not be subject to the sales charge.
Determining Net Asset Value
The net asset value of the shares of the Fund is
determined once daily, Monday through Friday at 4:00 p.m.,
Eastern Time, on days there are purchases or redemptions of
Fund shares, except 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), the day following Thanksgiving Day, December
24, 1996, 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 its shares. Such determination is
made by adding the values of all securities and other assets of
the Fund, subtracting liabilities and expenses, and dividing
the resulting figure by the number of shares of the Fund
outstanding. Expenses, including the advisory fee payable to
Adviser, are accrued daily.
Securities held by the Fund, except for money market
instruments maturing in 60 days or less, are valued as follows:
(a) 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 last bid prices: (b) securities
traded only in the over-the counter market that are not part of
the NASDAQ National Market System 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; and (c)
securities and assets for which market quotations are not
readily available are valued at fair value as determined in
good faith by, or under procedures adopted by, the Board of
Trustees. Money market instruments maturing in 60 days or less
are valued pursuant to the amortized cost method.
Shareholder Accounts
When shares are initially purchased, an account is
automatically established for the shareholder. Any shares that
are subsequently purchased or received as a distribution will
be credited directly to the shareholder's account. No
certificates are issued.
REDEMPTION OF SHARES
Fund shares can be disposed of and cash received by
sending a written request for redemption to Firstar Trust
Company, Mutual Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701, or by telephone or telegraphic request to
Firstar at 1-800-338-1579 if this option was elected on the
shareholder's application form.
<PAGE>
Upon receipt of a written request for redemption in "good
order" as described below, a check will be forwarded by
Firstar, as transfer agent for the Trust, equal to the amount
of the net asset value of the redeemed shares next determined
after the redemption request has been received. If the request
for redemption is received by Firstar before 4:00 p.m., Eastern
Time, the shares will be redeemed at the net asset value per
share determined at 4:00 p.m., Eastern Time, on that day.
Requests for redemption received by the transfer agent after
4:00 p.m., Eastern Time, will be executed at the net asset
value determined at 4:00 p.m., Eastern Time, on the next
trading day.
The check normally will be forwarded immediately after
redemption. However, the Trust reserves the right to take up to
seven days to make payment. The proceeds of the redemption may
be more or less than the original cost. This is particularly
true when redemption is sought shortly after investment where a
sales charge was deducted from the investment. If the shares to
be redeemed were paid for by check (including certified or
cashier's checks), to allow clearance, the proceeds from the
redemption request will not be disbursed until 15 days after
the receipt of such payment.
A written redemption request will be considered to be
received in "good order" only if:
1. The number of shares to be redeemed and the
shareholder account number is indicated in writing;
2. The written request is signed by the registered owner
and by any co-owner of the account in exactly the same name or
names used in establishing the account; and
3. The signatures on the written redemption request for
amounts in excess of $10,000 are guaranteed by a national bank,
a state bank (not including a savings bank), a trust company,
Distributor, or by a member firm of the New York, American,
Boston, Midwest, Pacific or Philadelphia Stock Exchanges.
If requested on the original application for a Fund
account, telephone or telegraphic instructions for redemption
will be honored with the following restrictions: (a) Requests
for redemption to be paid by Fed wire must be in an amount of
at least $1,000 and will be sent only to the bank and account
stated in the application. The shareholder's bank must be a
member of the Federal Reserve System. A charge of $7.50 is
imposed for Fed wires. This charge is set and may be changed by
Firstar. (b) Telephone redemption requests must be less than
$10,000 and will be mailed only to the account address
appearing on the Fund's records. Redemptions will be priced at
the next calculated net asset value after receipt of the
request by the transfer agent. (See "Determining Net Asset
Value," page 11.)
Telephone redemption requests may be made by calling the
transfer agent at 1-800-338-1579 between the hours of 9:00 a.m.
and 8:00 p.m., Eastern Time, on Monday through Friday
(excepting holidays). The transfer agent will need to know the
shareholder's name, account number, and either the number of
shares or the dollar amount to be redeemed.
Other supporting legal documents may be required from
corporations or other organizations, fiduciaries or persons
other than the shareholders of record making the request for
redemption.
The Trust has the right to suspend redemption or payment
at times when the New York Stock Exchange is closed (other than
customary weekend or holiday closings) or during periods of
emergency or other periods as permitted by the Securities and
Exchange Commission. In the case of any such suspension, the
request for redemption may be withdrawn, or payment may be
received based upon the net asset value next determined after
the suspension is lifted.
Because of the high cost of maintaining small accounts,
the Trust may elect to close any account which, due to
redemptions, has a current value of less than $500 by redeeming
all of the shares in the account and mailing the proceeds to
the shareholder of record. If the Trust so elects, the
shareholder will be notified in writing that an account has a
value of less than $500 and will be allowed 30 days in which to
make an additional investment in order to avoid having the
account closed.
<PAGE>
Note
Shareholders are advised that during periods of drastic
economic or market changes, telephone and telegraphic
procedures may be difficult to implement. If a shareholder is
unable to place an order or request a redemption via the
telephone or telegraph, he should make a written request
instead.
SHAREHOLDER VOTING
Under the Declaration of Trust, no annual and regular
meetings of shareholders are required. Shareholder meetings
ordinarily will not be held unless required by the Investment
Company Act of 1940. The Board of Trustees is a
self-perpetuating body and the Trustees will continue in their
positions until they resign, die, or are removed by a written
agreement signed by at least two-thirds of the remaining
Trustees, by vote of the shareholders of the Trust voting not
less than two-thirds of the shares then outstanding, cast in
person or by proxy at any meeting called for that purpose, or
by a written declaration signed by shareholders voting not less
than two-thirds of the shares then outstanding and filed with
the Trust's custodian.
On any matter submitted to shareholders, shares of the
Fund entitle their holders to one vote per share (with
proportionate voting for fractional shares). When issued, the
Fund's shares are fully paid and nonassessable, have no
preemptive or subscription rights, and are fully transferable.
There are no conversion rights. Shares do not have cumulative
voting rights, which means that in situations in which
shareholders elect Trustees, holders of more than 50% of the
shares voting for the election of Trustees can elect 100% of
the Trustees of the Trust and the holders of less than 50% of
the shares voting for the election of Trustees will not be able
to elect any Trustees. UC initially invested $10 million in the
Fund. UC is free to redeem its investment at any time subject
to retaining at least $100,000 in the Fund.
In addition to UC's own investment, shares of the Fund are
sold to the trustees of certain UC employee benefit plans to
fund retirement benefits for UC's employees. As of January 31,
1996, UC and UC's plan trustees owned 34.10% and 42.97%,
respectively, of Fund shares, and consequently, UC has voting
control of the Trust.
SHAREHOLDER LIABILITY
Under Massachusetts law, the shareholders of the Trust
could, under certain circumstances, be held personally liable
for the obligations of the Trust. However, the Declaration of
Trust disclaims shareholder liability for acts or obligations
of the Trust and indicates that notice of such disclaimer can
be given in each agreement, obligation or instrument entered
into or executed by the Board of Trustees or a Trustee. The
Declaration of Trust provides for indemnification from the
Trust property for all losses and expenses of any shareholder
held personally liable for the obligations of the Trust. Thus,
the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which
the Trust itself would be unable to meet its obligations.
DIVIDENDS AND DISTRIBUTIONS
It is the intention of the Fund to distribute quarterly
substantially all of its net investment income, if any. For
dividend purposes, net investment income of the Fund consists
of all dividends or interest earned by the Fund less expenses
(including the investment advisory fee). All net realized
capital gains, if any, of the Fund are distributed
periodically, no less frequently than annually. All dividends
and capital gains distributions are automatically reinvested in
additional shares at net asset value unless the shareholder
requests such dividends and distributions be paid in cash.
<PAGE>
TAXES
Under the Internal Revenue Code, the Fund intends to elect
and qualify as a regulated investment company. As a regulated
investment company, the Fund will not be subject to federal
income tax on net investment income and capital gains, if any,
that it distributes to its shareholders if at least 90% of its
net investment income and net short-term capital gains for the
taxable year is distributed, but will be subject to tax at
regular corporate rates on any income or gains that are not
distributed.
Payments of dividends to shareholders that are not out of
net long-term capital gains and that do not exceed the current
or accumulated income of the Fund are taxable as ordinary
income in the tax year of the shareholder in which the dividend
is paid, whether paid in cash or reinvested in shares. A
portion of the dividends paid by the Fund will be eligible for
the 70% dividends-received deduction allowed to corporations.
The portion generally will be equal to the proportion that the
Fund's dividends from U.S. corporations bear to the Fund's
gross income.
A 4% nondeductible excise tax will be imposed to the
extent the Fund does not distribute at least 98% of its
ordinary income earned during the calendar year and 98% of its
net capital gains (both long- and short-term) earned during its
taxable year by the end of the calendar year. For purposes of
the 4% excise tax, dividends and distributions will be treated
as paid when actually distributed, except that dividends
declared in December payable to shareholders of record on a
specified date in December, and paid before February 1 of the
following year, will be treated as having been (i) paid on the
record date, and (ii) received by each shareholder on such
date. Under this rule, therefore, a shareholder may be taxed in
one year on dividends or distributions actually received in
January of the following year.
The Fund will send written notices to its shareholders
regarding the tax status of all distributions made during each
taxable year.
The Trust will be required to withhold 31% of any
reportable income payments made to a shareholder if the
shareholder has not provided an accurate taxpayer
identification number, in a manner as provided by the IRS, to
the Trust or the IRS notifies the Trust that a shareholder has
not reported all interest and dividend income required to be
shown on the shareholder's federal income tax return.
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
Trust's assets, and is its bookkeeping, transfer and dividend
disbursing agent.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to P.O. Box 701,
Milwaukee, Wisconsin 53201-0701, or may be made by calling
1-800-338-1579.
STATEMENT OF ADDITIONAL INFORMATION
A copy of the Statement of Additional Information that
provides more detailed information about the Trust is available
upon request. The Table of Contents of this Statement follows.
<PAGE>
TABLE OF CONTENTS
STATEMENT OF ADDITIONAL INFORMATION
Page
The Trust................................................... 2
Investment Policies......................................... 3
Money Market Instruments and Investment Techniques........ 3
Investment Restrictions..................................... 7
Portfolio Turnover.......................................... 9
Management of the Trust ................................... 10
Compensation Table....................................... 12
Investment Adviser......................................... 12
Approval of the Agreement................................ 12
Responsibilities of the Adviser.......................... 13
Trust Expenses........................................... 13
Advisory Fee............................................. 14
Administration........................................... 14
Brokerage Allocation..................................... 14
Other Clients of the Adviser............................. 15
Determination of Net Asset Value........................... 16
Performance................................................ 17
Distribution of Shares..................................... 18
Purchase and Redemption of Shares.......................... 18
Sales Charge............................................. 18
Qualifying for a Reduced Sales Charge.................... 18
Redemptions.............................................. 19
Taxes...................................................... 20
Custodian, Transfer and Dividend Disbursing Agent.......... 20
Additional Information..................................... 21
Independent Auditors................................ 21
<PAGE>
<PAGE>
APPENDIX
CORPORATE BOND RATINGS
Moody's Investors Services, Inc.
Aaa--Bonds which are rated Aaa are judged to be of the
best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt-edge." Interest
payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective
elements may 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 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 payment or of maintenance of other terms of the
contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
Ca--Bonds which are rated Ca represent obligations which
are speculative in a high degree. Such issues are often in
default or have other marked shortcomings.
Standard & Poor's Corporation
AAA--This is the highest rating assigned by Standard &
Poor's to a debt obligation and indicates an extremely strong
capacity to pay principal and interest.
AA--Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very
strong, and in the majority of instances they differ from AAA
issues only in a small degree.
A--Bonds rated A have a strong capacity to pay principal
and interest, although they are somewhat more susceptible to
the adverse of changes in circumstances and economic
conditions.
<PAGE>
BBB--Bonds rated BBB are regarded as having 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 the respect to
the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality
and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
COMMERCIAL PAPER RATINGS
Moody's Investors Services, Inc.
A Prime rating is the highest commercial paper rating
assigned by Moody's Investors Services, Inc. Issuers rated
Prime are further referred to by use of numbers 1, 2 and 3 to
denote relative strength within this highest classification.
Among the factors considered by Moody's in assigning ratings
for an issuer are the following: (1) management; (2) economic
evaluation of the industry and an appraisal of speculative type
risks which may be inherent in certain areas; (3) competition
and customer acceptance of products; (4) liquidity; (5) amount
and quality of long-term debt; (6) ten-year earnings trends;
(7) financial strength of a parent company and its relationship
with the issuer; and (8) recognition by management of
obligations which may be present or may arise as a result of
public interest questions and preparations to meet such
obligations.
Standard & Poor's Corporation
Commercial paper rated A by Standard & Poor's Corporation
has the following characteristics: Liquidity ratios are better
than the industry average. Long-term senior debt rating is "A"
or better. In some cases, BBB credits may be acceptable. The
issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances. Typically, the
issuer's industry is well established, the issuer has a strong
position within its industry and the reliability and quality of
management is unquestioned. Issuers rated A are further
referred to by use of numbers 1, 2 and 3 to denote relative
strength within this classification.
<PAGE>
(these two pages are actually set up as one page with two
columns - the Prospectus is folded is half, with this page
serving as the front and back - the left side (back) is as
follows)
TABLE OF CONTENTS
Page
Fund Expenses....................... 2
Financial Highlights................ 3
Performance......................... 4
The Trust........................... 4
The Fund............................ 4
Investment Objectives and Policies.. 4
Equity Securities................. 5
Debt Securities................... 5
Money Market Instruments.......... 6
Other Information................. 7
Principal Risk Factors.............. 7
Management of the Trust............. 8
Trustees.......................... 8
Investment Adviser................ 8
Advisory Fee...................... 9
Service Agreement................. 9
Expenses.......................... 9
Purchase of Fund Shares............. 9
Principal Underwriter............. 9
How Shares May Be Purchased....... 10
Sales Charge...................... 10
Reduced Sales Charge.............. 10
Determining Net Asset Value....... 11
Shareholder Accounts.............. 11
Redemption of Shares................ 11
Shareholder Voting.................. 13
Shareholder Liability............... 13
Dividends and Distributions......... 13
Taxes............................... 14
Custodian, Transfer and
Dividend Disbursing Agent......... 14
Shareholder Inquiries............... 14
Statement of Additional Information. 14
Table of Contents of Statement
of Additional Information......... 15
Appendix
Corporate Bond Ratings............ 16
Commercial Paper Ratings.......... 17
<PAGE>
(this is the cover side (right side) -
alongside the left two-thirds of the page
and next to the fund identification there
is a graphic of a carillon tower)
CARILLON
--------
CAPITAL
--------
FUND
--------
Carillon
Investment Trust
1876 Waycross Road
Cincinnati, Ohio 45240
- ---------------------------------------------
PROSPECTUS
- ---------------------------------------------
INVESTMENT ADVISER
Carillon Advisers, Inc.
1876 Waycross Road
Cincinnati, Ohio 45240
- ---------------------------------------------
DISTRIBUTOR
Carillon Investments, Inc.
1876 Waycross Road
Cincinnati, Ohio 45240
- ---------------------------------------------
Dated February 28, 1996
CIT 432 2-96
<PAGE>
CARILLON INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
February 28, 1996
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 for Carillon Capital Fund.
Accordingly, this Statement should be read in conjunction with
the Prospectus, dated February 28, 1996, that may be obtained
by calling the Trust at (513) 595-2600, or writing the Trust at
P.O. Box 40409, Cincinnati, Ohio 45240.
TABLE OF CONTENTS
Page
The Trust............................................ 2
Investment Policies.................................. 3
Money Market Instruments and Investment Techniques. 3
Investment Restrictions.............................. 7
Portfolio Turnover................................... 9
Management of the Trust.............................. 10
Compensation Table................................. 12
Investment Adviser................................... 12
Approval of the Agreement.......................... 12
Responsibilities of the Adviser.................... 13
Trust Expenses..................................... 13
Advisory Fee....................................... 14
Administration..................................... 14
Brokerage Allocation............................... 14
Other Clients of the Adviser....................... 15
Determination of Net Asset Value..................... 16
Performance.......................................... 17
Distribution of Shares............................... 18
Purchase and Redemption of Shares.................... 18
Sales Charge....................................... 18
Qualifying for a Reduced Sales Charge.............. 18
Redemptions........................................ 19
Taxes................................................ 20
Custodian, Transfer and Dividend Disbursing Agent.... 20
Additional Information............................... 21
Independent Auditors ......................... 21
CIT 444 2-96
<PAGE>
THE TRUST
Carillon Investment Trust ("Trust") is registered with the
Securities and Exchange Commission under the Investment Company
Act of 1940 ("1940 Act") as a diversified, open-end management
investment company. The Trust was organized on December 8,
1986, pursuant to a Declaration of Trust under the laws of the
Commonwealth of Massachusetts, as a voluntary association known
as a "Massachusetts business trust." It operated as a "series
company," as that term is used in Rule 18f-2 under the 1940
Act. The Trust originally had three series: the Carillon
Capital Fund ("Fund"), the Carillon Growth Stock Fund ("Growth
Fund") and the Carillon U.S. Government Securities Fund ("U.S.
Securities Fund"). On February 22, 1989, The Union Central
Life Insurance Company ("UC"), the sole shareholder of the
Growth Fund and the U.S. Securities Fund, voted to dissolve
these funds. Consequently, the Trust is now composed only of
Carillon Capital Fund, whose shares are currently being sold.
UC, an insurance company organized under the laws of Ohio,
provided the initial capital for the Fund by purchasing one
million shares. UC is free to redeem its investment at any
time, subject to retaining at least $100,000 in the Fund. The
principal business address of UC is 1876 Waycross Road,
Cincinnati, Ohio 45240 (P.O. Box 40888, Cincinnati, Ohio
45240).
In addition to UC's own investment, shares of the Fund are
sold to the trustees of certain UC employee benefit plans to
fund retirement benefits for UC's employees. As of January 31,
1996, UC and UC's plan trustees owned 34.10% and 42.97%,
respectively, of Fund shares, and, consequently, UC has voting
control of the Trust.
As described under "Shareholder Voting" in the Prospectus
for the Fund, the Declaration of Trust provides that no annual
or regular meetings of shareholders are required. In addition,
after the Trustees were initially elected by shareholders, the
Trustees became a self-perpetuating body. Thus, there
ordinarily will be no shareholder meetings unless otherwise
required by the 1940 Act.
The 1940 Act specifically requires that a shareholder
meeting be held for the purpose of electing Trustees if at any
time less than a majority of the Trustees has been elected by
the shareholders of the Trust. The shareholders also have the
power to remove a Trustee by the affirmative vote of the
holders of not less than two-thirds of the shares outstanding
and entitled to vote either by a declaration in writing filed
with the custodian or by votes cast in person or by proxy at a
meeting called for the purpose of removal. The Trustees will
promptly call such a meeting when requested to do so by the
record holders of not less than 10 percent of the outstanding
shares.
Ten or more shareholders who have been shareholders for at
least six months preceding the date of application and who hold
in the aggregate either shares having a net asset value of at
least $25,000 or at least one percent of the outstanding
shares, whichever is less, may apply in writing to the Trustees
stating that they wish to communicate with other shareholders
to obtain signatures in order to request a meeting to remove a
Trustee. This application must be accompanied by the proposed
communication and form of the request that they wish to
transmit. The Trustees will, within five business days after
receipt of such application, either: (1) afford to the
applicants access to a list of the names and addresses of all
shareholders; or (2) inform such applicants as to the
approximate number of shareholders of record and the
approximate cost of mailing to them the proposed communication
and request, and upon tender by the applicants of the amount so
determined, undertake to mail such communications to
shareholders of record.
The phrase "a majority of the outstanding voting
securities" of the Fund (or of the Trust) means the vote of the
lesser of: (1) 67% of the shares of the Fund (or the Trust)
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 Fund (or the
Trust).
INVESTMENT POLICIES
The following specific policies supplement the "Investment
Objectives and Policies" set forth in the Prospectus for the
Fund.
Money Market Instruments and Investment Techniques
The Fund may at any time be 100% invested in money market
instruments, subject only to its objective of highest total
return. These securities will only be considered money market
instruments if their remaining maturities are less than 13
months.
Repurchase Agreements A repurchase agreement is an instrument
under which the purchaser (i.e., the Fund) 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 Fund may otherwise invest. Repurchase agreements
usually are for short periods, normally under one week, and are
considered to be loans under the 1940 Act. Repurchase
agreements will be fully collateralized at all times and
interest on the underlying security will not be taken into
account for valuation purposes. Securities underlying
repurchase agreements will be held by the Trust's custodian.
If the issuer of the repurchase agreement defaults and
does not repurchase the underlying security, the Fund 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 Fund may be delayed or
prevented from obtaining the underlying security for its own
purposes. In order to minimize any such risk, the Fund will
only engage in repurchase agreements with recognized securities
dealers and banks determined to present minimal credit risk by
Carillon Advisers, Inc. on behalf of the Board of Trustees.
U.S. Government Obligations Securities issued and guaranteed
as to principal and interest by the U.S. Government include a
variety of Treasury securities that differ only in their
interest rates, maturities and times of issuance. At 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
U.S. Government. Agencies of the U.S. Government that 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 U.S. 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
the Government National Mortgage Association, 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 no negotiable certificate is received.
Bankers' Acceptances Bankers' acceptances are time drafts
drawn on commercial banks by borrowers usually in connection
with international commercial transactions (to finance the
import, export, transfer or storage of goods). The borrower is
liable for payment as well as the bank that 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 consists of unsecured
promissory notes issued by corporations to finance short-term
credit needs. Commercial paper is issued in bearer form with
maturities generally not exceeding nine months. Commercial
paper obligations may include variable amount master demand
notes. Variable amount master demand notes are obligations
that permit the investment of fluctuating amounts by the Fund
at varying rates of interest pursuant to direct arrangements
between the Fund, as lender, and the borrower. These notes
permit daily changes in the amounts borrowed. The Fund has the
right to increase the amount under the note at any time up to
the full amount provided by the note agreement, or to decrease
the amount, and the borrower may prepay up to the full amount
of the note without penalty. Because variable amount master
demand notes are direct lending arrangements between the lender
and the borrower, it is not generally contemplated that such
instruments will be traded, and there is no secondary market
for these notes, although they are redeemable (and thus
immediately repayable by the borrower) at face value, plus
accrued interest, at any time. In connection with master
demand note arrangements, Carillon Advisers, Inc. will monitor
on an ongoing basis the earning power, cash flow and other
liquidity ratios of the issuer, and the borrower's ability to
pay principal and interest on demand. While master demand
notes, as such, are not typically rated by credit rating
agencies, if not so rated the Fund may invest in them only if
at the time of an investment the issuer meets the criteria for
all other commercial paper issuers. Because master demand
notes are immediately repayable by the borrower on demand, they
are considered by the Fund to have a maturity of one business
day.
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.
GNMA Certificates GNMA certificates are mortgage-backed
securities representing part ownership of a pool of mortgage
loans on which timely payment of interest and principal is
guaranteed by the full faith and credit of the U.S. government.
GNMA certificates differ from typical bonds because principal
is repaid monthly over the term of the loan rather than
returned in a lump sum at maturity. Because both interest and
principal payments (including prepayments) on the underlying
mortgage loans are passed through to the holder of the
certificate, GNMA certificates are called "pass-through"
securities.
Although the mortgage loans in the pool have maturities of
up to 30 years, the actual average life of the GNMA
certificates typically will be substantially less because the
mortgages are subject to normal principal amortization and may
be prepaid prior to maturity. Prepayment rates vary widely and
may be affected by changes in market interest rates. In periods
of falling interest rates, the rate of prepayment tends to
increase, thereby shortening the actual average life of the
GNMA certificates. Conversely, when interest rates are rising,
the rate of prepayment tends to decrease, thereby lengthening
the actual average life of the GNMA certificates. Accordingly,
it is not possible to predict accurately the average life of a
particular pool. Reinvestment of prepayments may occur at
higher or lower rates that the original yield on the
certificates. Due to the prepayment feature and the need to
reinvest prepayments of principal at current rates, GNMA
certificates can be less effective than typical bonds of
similar maturities at "locking-in" yields during periods of
declining interest rates, although they may have comparable
risks of decline in value during periods of rising interest
rates.
FNMA and FHLMC Mortgage-Backed Obligations The Federal
National Mortgage Association ("FNMA"), a federally chartered
and privately owned corporation, issues pass-through securities
representing an interest in a pool of conventional mortgage
loans. FNMA guarantees the timely payment of principal and
interest but this guarantee is not backed by the full faith and
credit of the U.S. government. The Federal Home Loan Mortgage
Corporation ("FHLMC"), a corporate instrumentality of the
United States, issues participation certificates that represent
an interest in a pool of conventional mortgage loans. FHLMC
guarantees the timely payment of interest and the ultimate
collection of principal and maintains reserves to protect
holders against losses due to default, but the certificates are
not backed by the full faith and credit of the U.S. government.
As is the case with GNMA certificates, the actual maturity of
and realized yield on particular FNMA and FHLMC pass-through
securities will vary based on the prepayment experience of the
underlying pool of mortgages.
Mortgage-Related Securities The Fund may invest in
collateralized mortgage obligations ("CMOs") or mortgage-
backed bonds issued by financial institutions such as
commercial banks, savings and loan associations, mortgage banks
and securities broker-dealers (or affiliates of such
institutions established to issue these securities). CMOs are
obligations fully collateralized directly or indirectly by a
pool of mortgages on which payments of principal and interest
are dedicated to payment of principal and interest on the CMOs.
Payments on the underlying mortgages (both interest and
principal) are passed through to the holders, although not
necessarily on a pro rata basis, on the same schedule as they
are received. Mortgage-backed bonds are general obligations of
the issuer fully collateralized directly or indirectly by a
pool of mortgages. The mortgages serve as collateral for the
issuer's payment obligations on the bonds, but interest and
principal payments on the mortgages are not passed through
either directly (as with GNMA certificates and FNMA and FHLMC
pass-through securities) or on a modified basis (as with CMOs).
Accordingly, a change in the rate of prepayments on the pool of
mortgages could change the effective maturity of a CMO but not
that of a mortgage-backed bond (although, like many bonds,
mortgage-backed bonds may be callable by the issuer prior to
maturity).
The Fund may also invest in a variety of more risky CMOs,
including interest only ("IOs"), principal only ("POs"),
inverse floaters, or a combination of these securities.
Stripped mortgage-backed securities ("SMBS") are usually
structured with several classes that receive different
proportions of the interest and principal distributions from a
pool of mortgage assets. A common type of SMBS will have one
class receiving all of the interest from the mortgage assets
(an IO), while the other class will receive all of the
principal (a PO). However, in some instances, one class will
receive some of the interest and most of the principal while
the other class will receive most of the interest and the
remainder of the principal. If the underlying mortgage assets
experience greater-than-anticipated or less-than-anticipated
prepayments of principal, the Fund may fail to fully recoup its
initial investment or obtain its initially assumed yield on
some of these securities. The market value of the class
consisting entirely of principal payments generally is
unusually volatile in response to changes in interest rates.
The yields on classes of SMBS that have more uncertain timing
of cash flows are generally higher than prevailing market
yields on other mortgage-backed securities because there is a
greater risk that the initial investment will not be fully
recouped or received as planned over time.
The Fund may invest in another CMO class known as
leveraged inverse floating rate debt instruments ("inverse
floaters"). The interest rate on an inverse floater resets in
the opposite direction from the market rate of interest to
which the inverse floater is indexed. An inverse floater may be
considered to be leveraged to the extent that its interest rate
varies by a magnitude that exceeds the magnitude of the change
in the index rate of interest. The higher degree of leverage
inherent in inverse floaters is associated with greater
volatility in their market values. Accordingly, the duration of
an inverse floater may exceed its stated final maturity.
Certain CMOs may be deemed to be illiquid securities for
purposes of the Fund's 10% limitation on investments in such
securities. The investment adviser limits investments in more
risky CMOs to no more than 5% of its total assets.
<PAGE>
Certain Risk Factors Relating to High-Yield (High-Risk) Bonds
The Fund may, to a limited extent, invest in high-yield (high-
risk) bonds. That is, up to a maximum of 25% of the total
value of the Fund's portfolio of debt securities may be
invested in high-yield bonds or unrated bonds equivalent
thereto. These bonds present certain risks which are discussed
below.
Sensitivity to Interest Rates and Economic Changes High-
yield bonds are very sensitive to adverse economic changes and
corporate developments. 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 Fund 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 Fund'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 Fund might 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 Fund's assets. If the Fund
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 Fund's rate of return.
Liquidity and Valuation There may be little trading in the
secondary market for particular bonds, which may affect
adversely the Fund'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.
INVESTMENT RESTRICTIONS
The Trust has adopted the following fundamental
restrictions relating to the investment of assets of the Fund
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 the Fund.
The Trust's fundamental investment restrictions provide that
the Fund is not allowed to:
(1) Issue senior securities [except that the Fund 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 U.S. 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.
<PAGE>
(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 separate industries. This restriction does not
apply to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
(5) Purchase or sell commodities, commodity contracts or
real estate, except that the Fund may purchase securities of
issuers which invest or deal in any of the above, and except
that the Fund may invest in securities that are secured by real
estate. This restriction does not apply to obligations issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities nor to futures contracts.
(6) Purchase any securities on margin (except that the
Trust may obtain such short-term credit as may be necessary for
the clearance of purchases and sales of portfolio securities)
or make short sales of securities or maintain a short position.
(7) Make loans, except through the purchase of obligations
in private placements or by entering into repurchase agreements
(the purchase of publicly traded obligations not being
considered the making of a loan).
(8) Lend its securities.
(9) Borrow amounts in excess of 10% of its total assets,
taken at market value at the time of the borrowing, and then
only from banks as a temporary measure for extraordinary or
emergency purposes, or to meet redemption requests that might
otherwise require the untimely disposition of securities, and
not for investment or leveraging. Securities will not be
purchased while borrowings are outstanding.
(10) Mortgage, pledge, hypothecate or in any manner
transfer, as security for indebtedness, any securities owned or
held by the Fund. This restriction shall not apply to
borrowings permitted by restriction number (9) above.
(11) Underwrite securities of other issuers except insofar
as the Trust may be deemed an underwriter under the Securities
Act of l933 in the sale of restricted securities.
(12) Invest in companies for the purpose of exercising
control.
(13) The Fund is limited to investing no more than 10% of
its assets in illiquid securities (including restricted
securities and repurchase agreements maturing in more than
seven days) or in the securities of issuers which together with
any predecessors have a record of less than three years
continuous operation.
The Trust, in regard to the Fund, has also adopted the
following additional investment restrictions that are not
fundamental and may be changed by the Board of Trustees without
shareholder approval. Under these restrictions, the Fund may
not:
(1) Invest in securities of foreign issuers (other than
Canadian) except American Depository Receipts and securities
listed for trading on the New York or American Stock Exchange.
(2) Participate on a joint (or a joint and several) basis
in any trading account in securities (but this does not
prohibit the "bunching" of orders for the sale or purchase of
securities of the Fund with other accounts advised or sponsored
by the adviser or any of its affiliates to reduce brokerage
commissions or otherwise to achieve best overall execution).
(3) Purchase or retain the securities of any issuer, if,
to the knowledge of the Trust, officers and Trustees of the
Trust, the adviser or any affiliate thereof each owning
beneficially more than .5% of one of the securities of such
issuer, own in the aggregate more than 5% of the securities of
such issuer.
(4) Purchase or sell interests in oil, gas, or other
mineral exploration or development programs, or real estate
mortgage loans, except that the Fund may purchase securities of
issuers which invest or deal in any of the above, and except
that the Fund 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
U.S. Government, its agencies or instrumentalities.
(5) Purchase securities of other investment companies with
an aggregate value in excess of 5% of the Fund's total assets,
except in connection with a merger, consolidation, acquisition
or reorganization, or by purchase in the open market of
securities of closed-end investment companies where no
underwriter or dealer's commission or profit, other than
customary broker's commission, is involved, and only if
immediately thereafter not more than 10% of the Fund's total
assets, taken at market value, would be invested in such
securities.
If a percentage restriction (for either fundamental or
nonfundamental policies) is adhered to at the time of
investment, a later increase or decrease in percentage beyond
the specified limit resulting from a change in values of
portfolio securities or amount of net assets shall not be
considered a violation.
PORTFOLIO TURNOVER
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 Fund'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 that must be borne directly by the Fund. 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 Fund shares and by requirements that enable
the Fund to receive certain favorable tax treatments.
Portfolio turnover rates, of course, depend in large part on
the level of purchases and redemptions of shares of the Fund.
However, because rate of portfolio turnover is not a limiting
factor, particular holdings may be sold at any time, if
investment judgment or the Fund operations make a sale
advisable. It is estimated that the annual portfolio turnover
rate for the Fund will be 75%. For the years ended October 31,
1995, October 31, 1994 and October 31, 1993, the actual
portfolio turnover rates were 42%, 53%, and 43%, respectively.
MANAGEMENT OF THE TRUST
Trustees and Officers
The Trustees and executive officers of the Trust and their
principal occupations for the last five years are set forth
below. Unless otherwise noted, the address of each executive
officer and Trustee is 1876 Waycross Road, Cincinnati, Ohio
45240.
<TABLE>
<CAPTION>
Principal
Occupation(s)
Name, Address Position(s) with During Past
and Age the Trust Five Years
- ------------- ---------------- --------------
<S> <C> <C>
George M. Callard, M.D.* Trustee Cardiovascular Surgeon
3021 Erie Avenue and Professor of
Cincinnati, Ohio 45208 of Clinical Surgery,
(Age 62) University of
Cincinnati
George L. Clucas** Trustee, Senior Vice President,
(52) President and UC; Director,
Chief Executive President and Chief
Officer Executive Officer,
Carillon Advisers, Inc.
("Adviser"); Director,
Carillon Investments,
Inc. ("CII")
Theodore H. Emmerich* Trustee Consultant; former Partner,
1201 Edgecliff Pl. Ernst & Whinney, Accountants
Cincinnati, Ohio 45206
(69)
James M. Ewell* Trustee Retired Senior Vice President
9000 Indian Ridge Road and Director, The Procter
Cincinnati, Ohio 45243 and Gamble Company
(80)
Richard H. Finan* Trustee Attorney at Law; President
11137 Main Street Pro Tempore of the
Cincinnati, Ohio 45241 Ohio State Senate
(61)
Jean Patrice Harrington, Trustee Former Executive Director,
S.C.* Cincinnati Youth
3217 Whitfield Ave. Collaborative; President
Cincinnati, Ohio 45220 Emeritus (formerly, President),
(70) College of Mount St. Joseph
John H. Jacobs** Trustee Senior Vice President, UC;
(49) prior to December, 1992,
Officer and employee, UC
Charles W. McMahon* Trustee Retired Senior Vice
2031 W. Galbraith Rd., #E President and Director, UC
Cincinnati, Ohio 45239
(76)
Harry Rossi** Trustee Director Emeritus, UC; Director,
8548 Wyoming Club Drive Adviser; former Chairman,
Cincinnati, Ohio 45215 President and Chief Executive
(76) Officer, UC
Stephen R. Hatcher Senior Vice Senior Vice President and Chief
(53) President Financial Officer, UC
John F. Labmeier Vice President Second Vice President,
(47) and Secretary Associate General Counsel and
Assistant Secretary, UC; Vice
President and Secretary, CII;
Secretary, Adviser
Thomas G. Knipper Controller Assistant Controller, UC; prior
(38) to July, 1995, Treasurer of
The Gateway Trust and Vice
President and Controller of
Gateweay Advisers, Inc.; prior
to April, 1992, Senior Manager
of Deloitte & Touche.
Joseph A. Tucker Treasurer Assistant to the Treasurer, UC;
(61) prior to October, 1992, Officer
and employee, UC
John M. Lucas Assistant Assistant to the Secretary, UC;
(45) Secretary prior to October, 1992, Officer
and employee, UC
</TABLE>
- -----------------
*Trustees identified with an asterisk are members of the Audit
Committee.
**Messrs. Clucas, Jacobs and Rossi are considered to be
"interested persons" of the Fund as defined in the Investment
Company Act of 1940 because of their affiliation with the
Adviser.
As of the date of this Statement of Additional information,
Officers and Trustees collectively owned less than 1% of the
outstanding shares of the Fund. Trustees who are not officers or
employees of the Adviser or any of its affiliates are paid a fee
of $250 plus actual out-of-pocket expense by the Trust for each
meeting of the Board of Trustees attended and $500 per calendar
quarter ($2,000 annually). Trustees who are members of the Audit
Committee are compensated at the rate of $150 per Audit Committee
meeting. The total of such fees incurred by the Trust for the
year ended October 31, 1995 was $21,573.
<PAGE>
<PAGE>
Compensation Table
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Total
Pension or Estimated Compensation
Retirement Annual From
Benefits Estimated Registrant
Aggregate Accrued Annual and Fund
Compensation As Part of Benefits Complex*
Name of Person, From Fund Upon Paid to
Position Registrant Expenses Retirement Directors
- --------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
George M. Callard, 3,300 -- -- 10,600
M.D.
Trustee
George L. Clucas N/A N/A N/A N/A
Trustee
Theodore H. Emmerich 3,300 -- -- 10,800
Trustee
James M. Ewell 3,300 -- -- 10,600
Trustee
Richard H. Finan 3,300 -- -- 10,600
Trustee
Jean Patrice 3,300 -- -- 10,600
Harrington, S.C.
Trustee
John H. Jacobs N/A N/A N/A N/A
Trustee
Charles W. McMahon 3,300 -- -- 10,600
Trustee
Harry Rossi N/A N/A N/A N/A
Trustee
</TABLE>
*Each of the Trustees also serves as a director of Carillon Fund,
Inc.
INVESTMENT ADVISER
Approval of the Agreement
The Trust has entered into an Investment Advisory Agreement
("Agreement") on behalf of the Fund with Carillon Advisers, Inc.
("Adviser"), whose principal business address is l876 Waycross
Road, Cincinnati, Ohio 45240 (P.O. Box 40407, Cincinnati, Ohio
45240). The Adviser was incorporated under the laws of Ohio on
August 18, l986, and is a wholly-owned subsidiary of UC, a mutual
insurance company organized in 1867 under the laws of Ohio.
Executive officers and directors of the Adviser who are
affiliated with the Trust are George L. Clucas, President and
Chief Executive Officer; Thomas G. Knipper, Treasurer; and John
F. Labmeier, Secretary.
The Agreement was approved by shareholders on February 22,
l989 and approved for continuance each year thereafter by the
Board of Trustees. The Agreement was last continued by the Board
of Trustees on December 13, 1995. The Agreement will continue in
effect from year to year if approved annually by the Trustees or
by a majority of the outstanding shares of the Fund. In either
case, continuance of the Agreement must be approved by a majority
of the Trustees who are not parties to the Agreement or
interested persons (as defined by the l940 Act) of any such
party. The Agreement is not assignable and may be terminated
without penalty by the Trust or the Adviser on 60 days' notice to
the other party.
If the question of continuance of the Agreement (or adoption
of any new agreement) is presented to shareholders, continuance
(or adoption) shall be effective only if approved by a majority
vote of the outstanding voting securities.
Responsibilities of the Adviser
Pursuant to the Agreement, the Trust has retained the
Adviser to manage the investment of the Fund's assets, including
the placing of orders for the purchase and sale of the portfolio
securities of the Fund. The Adviser is at all times subject to
the direction and supervision of the Trustees of the Trust.
The Adviser continuously furnishes an investment program for
the Fund, is responsible for the actual management of the Fund
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 Fund 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 Agreement provides that the Adviser shall not be liable
to the Trust or to any shareholder for any error of judgment or
mistake of law or for any loss suffered by the Trust or by any
shareholder in connection with matters to which the 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.
Trust Expenses
Under the advisory Agreement, Adviser is required to furnish
at its own expense or to pay the expenses of the Trust for the
following: office space and all necessary office facilities and
equipment; necessary executive and other personnel for managing
the affairs of the Trust, including personnel for the performance
of clerical, accounting and other office functions (exclusive of
those relating to and to be performed under contracts for
custodial, bookkeeping, transfer and dividend-disbursing agency
services by a bank or other service supplier selected to perform
such services); all information and services, other than services
of counsel, required in connection with the preparation of
registration statements and prospectuses, including amendments
and revisions thereto; and all annual, semiannual and periodic
reports, notices and proxy solicitation material furnished to
shareholders of the Trust or regulatory authorities (excluding
any costs of printing or mailing such items).
The Fund pays all other expenses incurred in its operation
and for the general administration of the Fund. Expenses other
than the Adviser's fee that are borne directly include, but are
not limited to, brokerage commissions, dealer markups, expenses
incurred in the acquisition of Fund securities, transfer taxes,
transaction expenses of the custodian, pricing services used by
the Fund, custodian, dividend disbursing agent, transfer agent,
bookkeeping services, pricing, shareholders' and Trustees'
meetings, Trustees' fees, registration fees and costs, fees and
expenses of legal counsel not including employees of the Adviser,
or any affiliate of the Adviser, independent accountants,
membership dues of industry associations, postage, insurance
premiums including fidelity bond, and all other costs properly
payable by the Fund.
The Agreement also provides that the expense limitations
required by State Blue Sky Laws shall be observed where
applicable. The Adviser is required to reimburse certain
additional expenses that exceed any State expense limitation.
Presently, the expense limitation requirement is 2.5% of the
first $30 million of average net assets, 2.0% of the next $70
million average net assets and 1.5% of the remaining average net
assets.
Advisory Fee
As full compensation for the services and facilities
furnished to the Fund and expenses of the Trust assumed by the
Adviser, the Fund pays the Adviser a monthly fee based on the
average net assets of the Fund. This fee is computed at the
annual rate of .75% of the first $50,000,000, .65% of the next
$100,000,000, and .50% of all amounts over $150,000,000.
There is no assurance the Fund will reach a net asset level
high enough to realize a reduction in the rate of the advisory
fee. The advisory fees the Fund paid to Adviser for the years
ended October 31, 1995, October 31, 1994 and October 31, 1993
amounted to $327,862, $281,657 and $238,690, respectively.
Administration
The Adviser is responsible for providing certain
administrative functions to the Trust 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 Trust's average net assets. The fee
is borne by the Adviser, not the Trust. 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.
Brokerage Allocation
The Adviser is primarily responsible for the investment
decisions of the Fund, 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. The Fund has no 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 Trust 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 Fund will not
necessarily be paying the lowest spread or commission available.
If the securities in which the Fund invests are traded
primarily in the over-the-counter market, where possible, the
Adviser 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 the
securities transactions consists primarily of brokerage
commissions or dealer or underwriter spreads.
While the Adviser seeks to obtain the most favorable net
results in effecting transactions in the Fund securities, dealers
who provide supplemental investment research to the Adviser may
receive orders for transactions by the Trust. 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 Trust will
benefit by such supplemental research services, the Adviser is
authorized to pay commissions to brokers or dealers furnishing
such services that might be in excess of commissions that another
broker or dealer 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 the
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 the years ended October 31, 1995, October 31, 1994
and October 31, 1993, the Fund paid $27,280, 26,640 and $32,593,
respectively, in brokerage commissions. Of the brokerage
commissions paid during the year ended October 31, 1995, 45% was
paid to brokers furnishing statistical data or research
information. These commissions were for transactions aggregating
100% of the Fund's total transactions during the same time
period. No commissions were paid to affiliates of the Trust.
Other Clients of the Adviser
The Agreement in no way restricts the Adviser from acting as
investment manager or adviser to others. Securities recommended
for purchase for the Trust may also be recommended to other
clients, including registered investment companies, for which the
Adviser acts as an adviser. Because of different investment
objectives or other factors, a particular security may be bought
by one or more of the Adviser's clients, when one or more other
clients are selling the same security. If purchases or sales of
securities for the Fund or other clients of the Adviser arise for
consideration at or about the same time, transactions in such
securities will be made for the Fund 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 occasion when the Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other
clients, 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 with those to be
sold or purchased for other accounts in order to obtain more
favorable execution and lower 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 equitable and consistent
with its fiduciary obligations to the Trust and to such other
entities. In some cases this procedure may adversely affect the
size of the position obtainable for the Fund.
DETERMINATION OF NET ASSET VALUE
As described in the Prospectus for the Fund, the net asset
value of its shares is determined once daily, Monday through
Friday, at the close of business of the New York Stock Exchange
(presently 4:00 PM Eastern Time) when there are purchases or
redemptions of its shares, except: (i) when the New York Stock
Exchange is closed (currently New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day); (ii) the day following
Thanksgiving Day; (iii) December 24, 1996; and (iv) any day on
which changes in the value of the Fund securities will not
materially affect the current net asset value of its shares. Net
asset value is determined by dividing the Fund's total net assets
by the number of shares outstanding at the time of calculation.
Total net assets are determined by adding the total current value
of portfolio securities, cash, receivables and other assets and
subtracting liabilities.
Securities held by the Fund, except for money market
instruments maturing in 60 days or less, will be valued as
follows: (a) 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 last bid prices; (b) securities traded
only in the over-the-counter market that are not part of the
NASDAQ National Market System 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; and (c)
securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith
by, or under procedures adopted by, the Board of Trustees.
Money market instruments with a remaining maturity of 60
days or less held by the Fund 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 qualified 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.
<PAGE>
PERFORMANCE
From time to time the Fund may advertise its "average total
return." These figures will be based on historical earnings and
are not intended to indicate future performance.
TOTAL RETURN - The total return quotation is based upon a
hypothetical $1,000 invested at the public offering price
made at the beginning of 1, 5 or 10 year periods (or
fractional portion thereof). In general, the total return
is computed by finding the average annual compounded rates
of return over the 1-, 5-, and 10-year periods or from the
effective date if the Fund has been in effect less than the
stated periods, that would equate the initial amount invested
to the ending redeemable value. The formula for determining
the total return is P(1+T)(to the nth power)=ERV.
Recurring charges, if any, are prorated among investors. The
flat fee is divided by the average account value per $1,000
per investor in order to equate the flat fee to a $1,000
account size basis.
Performance information for the Fund may be compared, in reports
and promotional literature, to: (i) the Standard & Poor's 500
Stock Index ("S&P 500"), or other indices measuring performance
of a pertinent group of securities so that investors may compare
the Fund's results with those of a group of securities widely
regarded by investors as representative of the securities markets
in general; (ii) other investment products tracked by Lipper
Analytical Services, a widely used independent research firm
which ranks mutual funds and other investment companies by
overall performance, investment objectives, and assets, or
tracked by other ratings services, companies, publications, or
persons such as Morningstar who rank investment products on
overall performance or other criteria; (iii) Lehman Brothers U.S.
Treasury Composite; and (iv) the Consumer Price Index (measure
for inflation) to assess the real rate of return from an
investment in the Fund. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions
for administrative and management costs and expenses.
Performance Through October 31, 1995
The average total return for the Fund from inception to date
periods ended October 31, 1995 are as follows.
<TABLE>
<CAPTION>
Average Annual Total Return*
Period Ended October 31, 1995
Since
Inception Date 1 Year 5 Years Inception
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Carillon Capital Fund 2/28/88 5.34% 12.68% 10.19%
- --------------------------------------------------------------------
</TABLE>
*Based upon the maximum sales charge of 5%
<PAGE>
DISTRIBUTION OF SHARES
Distributor
Carillon Investments, Inc. ("CII"), located at l876
Waycross Road, Cincinnati, Ohio 45240 (P.O. Box 40409,
Cincinnati, Ohio 45240), serves as the principal underwriter of
Fund shares. Pursuant to a Distribution Agreement with the
Trust, CII agrees to use its best efforts to promote, offer for
sale and sell the shares of the Fund to the public on a
continuous basis whenever and wherever it is legally authorized
to do so. In so doing, CII conducts its affairs in accordance
with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. ("NASD").
CII sells Fund shares primarily through its own registered
representatives. CII may, however, authorize the sale of
shares by firms that are registered broker-dealers and are
members of the NASD.
CII receives no compensation on redemption or repurchase
of Fund shares and receives no brokerage commissions or
compensation other than the sales load and administration fee
from the Adviser. CII received $1,576, $174 and $1,271,
respectively, in aggregate commissions from the sale of Trust
shares for the years ended October 31, 1995, October 31, 1994
and October 31, 1993. Of these amounts, CII retained $315, $35
and $254 for the respective periods.
PURCHASE AND REDEMPTION OF SHARES
Sales Charge
Application forms for the purchase of Fund shares can be
obtained from CII or from a broker-dealer that has entered into
a dealer agreement with CII. Shares are sold at the next
computed net asset value with the imposition of a sales load
ranging from 5% on investments of less than $50,000 to .5% for
investments over $2,500,000.
Qualifying for a Reduced Sales Charge
As the chart shown in the Prospectus for the Fund
indicates, the percentage sales charge decreases at various
break points as the amount of an investment is increased. Even
though an investment, considered alone, does not qualify for a
reduced sales charge, it may qualify for a reduced charge when
made as part of one or both of the following investment
programs:
(a) LETTER OF INTENT: An investor may qualify for a
reduced sales charge by executing a Letter of Intent indicating
the total amount to be invested in Fund shares within the 13-
month period following the date of the Letter. The sales
charge made in connection with each investment during the 13-
month period will be at the rate applicable to the total amount
that has been indicated will be invested during the period.
However, a number of shares sufficient to pay the larger sales
charge will be escrowed until the Letter of Intent is
completed.
An existing shareholder should sign a Letter of Intent only
if the amount intended to be invested qualifies for a reduced
sales charge.
Although an investor is not under any legal obligation to
make the investments specified in a Letter of Intent, there is
a provision for a price adjustment in the event that the amount
invested differs from that specified in the Letter. Sufficient
shares would be held in escrow during the period covered by the
Letter to make up any difference in sales price based upon the
amount actually invested. But even if the Letter is not
completed, the sales charge applicable to the investments made
while the Letter is in effect will not be higher than that
which would apply if the Letter had been for the amount
actually invested. The Letter of Intent form is part of the
Investment Application.
(b) RIGHT OF ACCUMULATION AND COMBINED ACCOUNTS: To
determine whether or not a reduced sales charge applies to an
investment, the Fund, when notified to do so by the investor at
the time a purchase is made, takes into account not only the
money then being invested in Fund shares, but also the current
net asset value of all shares already owned by the investor,
his or her spouse and any minor children for whom the investor
or spouse is the custodian.
As an example, assume that an investor already owns Fund
shares with a total net asset value of $40,000 and now wishes
to invest $10,000 more. The reduced sales charge of 4% will
apply to the $10,000 investment.
The aggregate amount invested at one time by the investor,
his or her spouse, and for the accounts of any minor children
for which the investor or spouse is the custodian may be
considered a single purchase for the purpose of computing the
sales charge. A trustee or other fiduciary may likewise
aggregate the amounts invested on behalf of the beneficiaries
under a single trust estate or a single fiduciary account.
Such persons are required to notify the Trust of the
shareholder accounts being combined at the time of investment
in order to take advantage of this reduced sales charge
privilege.
Redemptions
The Trust is required to redeem all full and fractional
shares of the Fund 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 is not
reasonably practicable; or (c) the Securities and Exchange
Commission by order permits postponement for the protection of
shareholders.
<PAGE>
TAXES
Under the Internal Revenue Code ("Code"), the Fund is a
separate entity for purposes of the "regulated investment
company" provisions of Subchapter M of the Code. The Fund has
elected to be treated as a regulated investment company and, as
such, it will be relieved of federal income tax liability on
the amounts it distributes. In order to qualify as a regulated
investment company, the Fund must: (a) derive at least 90
percent of its annual gross income from dividends, interest,
gains from the sale of securities or other income derived with
respect to investing in securities; (b) derive less than 30
percent of its gross income from gains realized on the sale or
other disposition of securities held for less than three
months; and (c) diversify its holdings so that, at the end of
each fiscal quarter: (i) at least 50% of the market value of
its assets is represented by cash, government securities and
other securities limited in respect of any one issuer to 5% of
assets and to not more than 10% of the voting securities of
such issuer; and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other
than U.S. Government securities).
It is expected, although it is not wholly clear, that any
net gain realized from closing out options on U.S. Treasury
securities or options on futures contracts for such securities
will be considered gain from the sale of securities and,
therefore, will be qualifying income for purposes of the 90
percent requirement. In order to meet this qualification
requirement, the Fund may be required to defer disposing of
certain options, futures contracts and underlying securities
beyond the time when it might otherwise be advantageous to do
so. These requirements may also limit 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; (d) write options on securities held for less
than six months; and (e) write options on futures contracts to
the extent they are considered commodities and not securities.
The Code imposes a 4% nondeductible excise tax on a
regulated investment company to the extent such company does
not distribute at least 98% of its ordinary income and 98% of
its capital gains (both long-term and short-term) each year by
the end of such year. Dividends and distributions will be
treated as paid when actually distributed, except that
dividends declared in December payable to shareholders of
record on a specified date in December, and paid before
February 1 of the following year, will be treated as having
been (i) paid by the Fund on the record date and (ii) received
by each shareholder on that date.
The above discussion is informational only and is not to
be considered tax advice. Participants are urged to consult a
competent tax adviser before taking any action which could have
tax consequences.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
Firstar Trust Company, Mutual Fund Services, P.O. Box 701,
Milwaukee, WI 53201-0701, is the custodian and transfer and
dividend disbursing agent for the Trust. Pursuant to its
agreement with the Fund, Firstar Trust Company determines the
net asset value of the Trust's shares on a daily basis and
performs certain other duties.
<PAGE>
ADDITIONAL INFORMATION
This Statement of Additional Information and the
Prospectus for the Fund do not contain all the information set
forth in the registration statement and exhibits relating
thereto, that the Trust has filed with the Securities and
Exchange Commission, Washington, D.C., under the Securities Act
of l933 and the l940 Act, to which reference is hereby made.
INDEPENDENT AUDITORS
The financial statements of the Fund have been audited by
Deloitte & Touche LLP, 1700 Courthouse Plaza NE, Dayton, Ohio
45402, independent auditors, whose report follows. The
financial statements are included in this Statement of
Additional Information in reliance upon the report of Deloitte
& Touche LLP, given upon their authority as experts in auditing
and accounting.
<PAGE>
CARILLON CAPITAL FUND
OF
CARILLON INVESTMENT TRUST
ANNUAL REPORT
October 31, 1995
(<PAGE>
Report of Independent Accountants
============================================================
To the Board of Trustees and Shareholders of
Carillon Capital Fund of Carillon Investment Trust
We have audited the accompanying statement of assets and
liabilities of Carillon Capital Fund, including the schedule of
investments, as of October 31, 1995, and the financial
highlights, the related statement of operations, and the
statement of changes in net assets for the year then ended.
These financial statements and financial highlights ("financial
statements") are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial
statements based on our audits. The financial highlights for
the other years presented and the statement of changes in net
assets for the year ended October 31, 1994 were audited by
other auditors whose report, dated December 2, 1994, expressed
an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosure in the financial statements. Our
procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements as of October 31,
1995, present fairly, in all material respects, the financial
position of Carillon Capital Fund as of October 31, 1995, and
the results of its operations, the changes in its net assets,
and the financial highlights for the year then ended, in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Dayton, Ohio
November 28, 1995
<PAGE>
CARILLON CAPITAL FUND
SCHEDULE OF INVESTMENTS
- --------------------------------------------------
OCTOBER 31, 1995
- --------------------------------------------------
COMMON STOCKS - 36.73%
- --------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
AUTO PARTS - 0.88%
Breed Technologies, Incorporated 9,500 $ 176,938
Strattec Security Corporation* 14,000 234,500
-----------
411,438
-----------
BANK & BANK HOLDING COMPANIES - 2.90%
ABN AMRO Holdings NV Sponsored ADR 8,228 345,233
Banco Latinoamericano de Exportaciones ADR* 15,000 626,250
Deutsche Bank AG Sponsored ADR 8,370 378,422
-----------
1,349,905
-----------
BUILDING & HOUSING - 0.90%
ABT Building Products Company* 11,000 141,625
Falcon Products, Incorporated 20,000 280,000
-----------
421,625
-----------
BUSINESS - MECHANICS & SOFTWARE - 1.28%
DH Technology, Incorporated 30,240 597,240
-----------
CHEMICAL - 2.82%
Bayer AG Sponsored ADR 25,000 664,647
Ciba-Geigy Sponsored ADR 15,000 648,696
-----------
1,313,343
-----------
CONGLOMERATE - 0.71%
Mannesman AG ADR 1,000 328,987
-----------
CONTAINER - 1.42%
AEP Industries, Incorporated 29,169 656,303
-----------
ENGINEERING & CONSTRUCTION - 0.25%
Mestek, Incorporated* 10,000 115,000
-----------
GOLD & PRECIOUS METALS - 1.72%
Free State Consolidated Gold Mines Limited ADR 7,000 66,063
Minorco Sponsored ADR 21,000 572,250
Royal Oak Mines, Incorporated* 45,000 165,938
-----------
804,251
-----------
HEALTH CARE - 1.92%
Lunar Corporation* 15,000 558,750
Orthofix International NV* 12,000 117,000
Sofamor / Danek Group* 9,000 220,500
-----------
896,250
-----------
HEALTH CARE SERVICES - 0.94%
Rightchoice Managed Care Incorporated
- Class A* 15,000 191,250
United Wisconsin Services, Incorporated 10,000 248,750
-----------
440,000
-----------
HOSPITAL SUPPLY & SERVICES - 0.81%
Allied Healthcare Products Incorporated 20,000 380,000
-----------
HOUSEHOLD PRODUCTS - 1.49%
Chromecraft Revington Incorporated* 7,000 168,000
Helen of Troy Limited, Bermuda* 13,000 240,500
Lifetime-Hoan Corporation 29,947 284,497
-----------
692,997
-----------
INSURANCE - 2.30%
Capital American Financial Corporation 10,000 $ 196,250
Gainsco Incorporated 21,000 181,125
RLI Corporation 14,520 339,405
Torchmark Corporation 5,000 207,500
United Insurance Companies, Incorporated 8,800 149,600
-----------
1,073,880
-----------
INTERNATIONAL BOND - 0.38%
Templeton Global Income Fund 25,000 175,000
-----------
INVESTMENT COMPANIES - 1.02%
BlackRock Strategic Term Trust 25,000 187,500
France Growth Fund, Incorporated 4,333 41,705
New Germany Fund 20,000 245,000
-----------
474,205
MACHINERY - AGRICULTURE & CONSTRUCTION - 1.01%
Lindsay Manufacturing Company* 13,359 470,905
-----------
MISCELLANEOUS - ENERGY - 1.19%
Holly Corporation 12,000 261,000
Repsol S.A. Sponsored ADR 10,000 296,250
-----------
557,250
-----------
MISCELLANEOUS - MANUFACTURING - 0.60%
ILC Technology, Incorporated* 10,000 93,750
Versa Technologies, Incorporated 12,000 186,000
-----------
279,750
-----------
MISCELLANEOUS - SERVICE - 0.22%
PCA International Incorporated 10,000 103,750
-----------
OIL & GAS - DOMESTIC - 0.73%
Horsham Corporation 15,000 202,500
Plains Resources, Incorporated* 20,000 136,250
-----------
338,750
-----------
OIL & GAS - INTERNATIONAL - 0.29%
YPF S. A. Sponsored ADR 8,000 137,000
-----------
OIL & GAS - SERVICES - 1.37%
Global Industries Incorporated* 15,000 393,750
Offshore Logistics, Incorporated* 20,000 247,500
-----------
641,250
-----------
REAL ESTATE - 8.22%
Associated Estates Realty Corporation 20,000 410,000
Bradley Real Estate Incorporated 13,000 186,875
CBL & Associates Properties Incorporated 16,000 340,000
Duke Realty Investments Incorporated 12,000 367,500
Felcor Suite Hotels Incorporated 10,000 288,750
Glimcher Realty Trust 15,000 270,000
Health Care Property Investors, Incorporated 6,704 227,098
IRT Properties Company 25,000 237,500
LTC Properties Incorporated 14,000 203,000
Merry Land & Investment Company 18,000 378,000
Mid-America Apartment Communities 18,000 414,000
NAB Asset Corporation 15,000 69,375
Shurgard Storage Centers Incorporated 17,400 443,700
-----------
3,835,798
-----------
RETAIL - GENERAL - 0.21%
Claire's Stores, Incorporated 500 9,812
Value City Department Stores* 15,000 90,000
-----------
99,812
-----------
SAVINGS & LOAN - 0.76%
Standard Federal Bancorp 10,000 355,000
-----------
UTILITIES - 0.39%
Texas Utilities Company 5,000 183,750
Total Common Stocks (cost $13,680,192) 17,133,439
-----------
<CAPTION>
- -----------------------------------
PREFERRED STOCK - 0.72%
- -----------------------------------
SHARES VALUE
------ -----
<S> <C> <C>
METAL & MINERAL - 0.72%
Freeport McMoRan Copper & Gold 10,000 $ 335,000
-----------
Total Preferred Stocks (cost $347,888) 335,000
-----------
<CAPTION>
- --------------------------------------------------
U.S. TREASURY OBLIGATIONS - 12.73%
- --------------------------------------------------
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
U.S. TREASURY NOTES - 12.73%
7.500% due 02/29/96 $ 250,000 $ 251,563
7.250% due 08/31/96 500,000 506,563
7.250% due 11/15/96 250,000 254,140
8.000% due 01/15/97 250,000 256,953
6.750% due 02/28/97 900,000 912,938
6.375% due 01/15/99 1,300,000 1,324,375
6.375% due 07/15/99 350,000 356,890
6.000% due 10/15/99 1,550,000 1,563,077
6.250% due 02/15/03 500,000 508,750
-----------
Total U.S. Treasury Notes (cost $5,788,004) 5,935,249
-----------
<CAPTION>
- --------------------------------------------------
MORTGAGE - BACKED SECURITIES - 22.53%
- --------------------------------------------------
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION - 4.79%
7.500% due 06/01/07 $ 70,920 $ 71,609
6.250% due 01/15/09 417,388 406,461
8.250% due 03/01/12 139,896 143,853
8.500% due 03/01/16 242,116 250,582
8.500% due 06/15/17 400,000 402,504
7.500% due 07/01/17 132,984 133,951
11.000% due 04/01/19 247,195 272,864
10.500% due 05/01/19 159,413 174,259
11.000% due 11/01/19 341,287 376,727
-----------
2,232,810
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 2.95%
9.500% due 09/01/05 36,555 38,444
6.000% due 12/01/08 363,751 354,821
5.500% due 01/01/09 368,017 353,400
6.000% due 03/01/09 279,808 272,939
5.500% due 04/01/09 371,612 356,569
-----------
1,376,173
-----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - 1.03%
10.250% due 04/15/16 21,826 23,726
9.000% due 11/15/16 177,801 187,984
9.500% due 05/15/18 86,985 92,965
9.000% due 12/15/19 165,304 174,208
-----------
478,883
-----------
MISCELLANEOUS - 13.76%
FNMA Remic 93-12 ED (7.500% due 02/25/06) 1,000,000 1,027,030
FNMA Remic 92-18 HC (7.500% due 03/25/07) 400,000 413,060
FNMA Remic 93-163 PN (7.000% due 07/25/07) 250,000 255,220
FHLMC 1422 FA (5.970% due 11/15/07)<F1> 500,000 496,750
GNMA Remic 94-6 C (7.990% due 12/16/15) 1,384,338 1,402,501
Merrill Lynch Mortgage Investors 1992-F B
(6.938% due 09/15/17)<F1> 500,000 474,375
FNMA Remic 92-119 E (8.000% due 07/25/20) 500,000 517,150
FNMA Remic 92-112 (8.000% due 12/25/20) 780,000 808,782
FNMA Remic 93-127 FA
(5.240% due 10/25/21)<F1> 500,000 469,540
FNMA Remic 92-66 F (6.406% due 05/25/22)<F1> 555,365 557,008
-----------
6,421,416
-----------
Total Mortgage-Backed Securities
(cost $10,269,727) 10,509,282
-----------
<CAPTION>
- --------------------------------------------------
CORPORATE BONDS AND NOTES - 7.07%
- --------------------------------------------------
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
BANKS - 1.18%
Boatmens Bancshares, Inc. Sub. Note
(9.250% due 11/01/01) $ 240,000 $ 272,549
Comerica Inc., Sub. Note
(9.750% due 05/01/99) 250,000 275,086
-----------
547,635
-----------
FINANCIAL SERVICES - 0.49%
Pacific Gulf Properties, Inc. Sub.
Convertible Deb. (8.375% due 02/15/01) 250,000 230,625
-----------
GAMING - 0.57%
Circus Circus Enterprises, Inc. Senior
Sub. Note (10.625% due 06/15/97) 250,000 266,180
-----------
HOMEBUILDER- 0.56%
Toll Corporation Senior Sub. Note
(10.500% due 03/15/02) 250,000 260,625
-----------
INSURANCE - 0.52%
American Financial Group Note
(9.750% due 08/01/99) 120,000 120,521
Reliance Financial Services Corporation
Senior Note (9.480% due 11/01/00)<F1> 125,000 124,047
-----------
244,568
-----------
OIL & GAS EXPLORATION SERVICES - 1.38%
Columbia Gas Systems Inc. Deb.
(10.500% due 06/01/12)<F2> 250,000 376,946
Rowan Companies, Inc. Senior Note
(11.875% due 12/01/01) 250,000 268,750
-----------
645,696
-----------
SAVINGS & LOAN - 0.30%
Golden West Financial Corporation Sub.
Note (10.250% due 12/01/00) 120,000 139,271
TELEPHONE & TELECOMMUNICATIONS - 0.35%
United Telecommunications, Inc. Note
(9.750% due 04/01/00) 144,000 161,437
-----------
UTILITIES - ELECTRIC - 1.72%
Connecticut Light & Power Company
1st Ref Mtg. (7.625% due 04/01/97) 296,000 301,049
El Paso Electric 1st Mtg.
(6.750% due 05/01/98)<F2> 200,000 191,750
New Orleans Public Service Inc.
1st Mtg. Note (8.670% due 04/01/05) 300,000 309,406
-----------
802,205
-----------
Total Corporate Bonds and Notes
(cost $3,075,100) 3,298,242
-----------
<CAPTION>
- --------------------------------------------------
SHORT-TERM INVESTMENTS - 18.88%
- --------------------------------------------------
PRINCIPAL VALUE
--------- -----
<S> <C> <C>
COMMERCIAL PAPER - 10.67%
Columbia Healthcare Corporation
(5.890% due 12/05/95) $1,000,000 $ 994,437
Nabisco Inc. (5.890% due 12/04/95) 1,000,000 994,601
Pennzoil Company (5.880% due 12/08/95) 1,000,000 993,957
Time Warner Entertainment Company
(6.000% due 11/10/95) 1,000,000 998,500
Union Pacific Corporation
(5.840% due 11/13/95) 1,000,000 998,053
-----------
4,979,548
-----------
VARIABLE RATE DEMAND NOTES<F3>- 8.21%
General Mills, Inc. (5.460% due 11/01/95) 1,909,639 1,909,639
Pitney Bowes Credit Corporation
(5.467% due 11/01/95) 1,185,676 1,185,676
Sara Lee Corporation (5.447% due 11/01/95) 488,619 488,619
Southwestern Bell Telephone Company
(5.447% due 11/01/95) 30,000 30,000
Warner Lambert Company (5.438% due 11/01/95) 207,670 207,670
Wisconsin Electric Power Company
(5.508% due 11/01/95) 7,552 7,552
-----------
3,829,156
-----------
Total Short-Term Investments (cost $8,808,704) 8,808,704
-----------
TOTAL INVESTMENTS - 98.66% (cost $41,969,615) 46,019,916<F4>
OTHER ASSETS AND LIABILITIES - 1.34% 624,070
-----------
TOTAL NET ASSETS - 100.00% $46,643,986
===========
- --------
*Non-income producing
(ADR) American Depository Receipt
<FN>
<F1>
Interest rates vary periodically based on current market rates. Rates shown
are as of October 31, 1995.
<F2>
Interest payments in default.
<F3>
Interest rates vary periodically based on current market rates. The maturity
shown for each variable rate demand note is the later of the next scheduled
interest rate adjustment date or the date on which principal can be recovered
through demand. Information shown is as of October 31, 1995.
<F4>
Gross unrealized appreciation and depreciation of securities at October 31,
1995 for financial reporting purposes was $4,997,811 and $947,510 respectively;
tax amounts were substantially the same.
</FN>
</TABLE>
The accompanying notes are an integral part of the
financial statements.<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CARILLON CAPITAL FUND
STATEMENT OF ASSETS AND LIABILITIES
=================================================================
OCTOBER 31, 1995
<S> <C>
ASSETS
Investments in securities,
at value (cost $41,969,615) $ 46,019,916
Cash 11,292
Receivable for investment securities sold 403,271
Interest and dividends receivable 261,263
Prepaid expenses 2,136
------------
46,697,878
------------
LIABILITIES
Professional fees 18,451
Investment advisory fees 29,801
Portfolio accounting and custody fees 1,866
Transfer agency fees 964
Printing expenses 1,534
Other 1,276
------------
53,892
------------
NET ASSETS
Paid-in capital 41,848,367
Accumulated undistributed net investment income 279,832
Accumulated undistributed net realized gain 465,486
Unrealized appreciation, net 4,050,301
------------
$ 46,643,986
============
Shares outstanding
(without par value, unlimited authorization) 3,673,615
============
Net asset value and redemption price per share $ 12.70
============
Offering price per share
(Net asset value per share/.95)* $ 13.37
============
</TABLE>
* A sales charge of 5% is imposed on investments of less than
$50,000. Reduced sales charges apply for investments in excess
of this amount.
The accompanying notes are an integral part of the financial
statements.
<PAGE>
<TABLE>
<CAPTION>
CARILLON CAPITAL FUND
STATEMENT OF OPERATIONS
============================================================
YEAR ENDED OCTOBER 31, 1995
<S> <C>
INVESTMENT INCOME
Interest $ 2,042,370
Dividends (net foreign withholding
taxes of $14,152) 338,548
------------
2,380,918
------------
EXPENSES
Investment advisory fees 327,862
Portfolio accounting fees 29,548
Professional fees 20,605
Trustees' fees 21,573
Custodial fees and expenses 11,027
Registration and filing fees 11,171
Transfer agency fees 10,924
Other 6,784
------------
439,494
------------
NET INVESTMENT INCOME 1,941,424
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 495,485
Net change in unrealized appreciation /
(depreciation) of investments 2,094,445
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 2,589,930
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 4,531,354
============
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
<TABLE>
<CAPTION>
CARILLON CAPITAL FUND
STATEMENTS OF CHANGES IN NET ASSETS
==================================================================
For the year ended October 31,
------------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 1,941,424 $ 1,466,085
Net realized gain on investments 495,485 3,195,104
Net change in unrealized
appreciation/(depreciation) of investments 2,094,445 (2,875,627)
----------- -----------
4,531,354 1,785,562
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (1,797,101) (1,227,530)
Net realized gain on investments (3,369,426) (487,992)
----------- -----------
(5,166,527) (1,715,522)
----------- -----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 1,012,125 6,256,782
Net asset value of shares issued to
shareholders in reinvestment of dividends 5,166,372 1,715,522
Payments for shares redeemed (748,468) (56,406)
----------- -----------
5,430,029 7,915,898
----------- -----------
NET INCREASE IN NET ASSETS 4,794,856 7,985,938
NET ASSETS
Beginning of year 41,849,130 33,863,192
----------- -----------
End of year (including
undistributed net investment income of
$279,832 for 1995 and $286,864 for 1994) $46,643,986 $41,849,130
=========== ===========
FUND SHARE TRANSACTIONS:
Sold 81,022 481,658
Issued in reinvestment of dividends 438,699 132,777
Redeemed (61,626) (4,343)
----------- -----------
Net increase from share transactions 458,095 610,092
=========== ===========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
<PAGE>
<PAGE>
CARILLON CAPITAL FUND
NOTES TO FINANCIAL STATEMENTS
=============================================================
OCTOBER 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Carillon Capital Fund (the Fund) is a series of Carillon
Investment Trust (the Trust) registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end
management investment company.
Securities valuation - Securities traded on securities 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 of valuation, or if there were
no reported sales on that date, the last bid price. 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
by, or under procedures adopted by the Board of Trustees. Money
market instruments with a remaining maturity of 60 days or less
are valued at amortized cost which approximates market.
Securities transactions and investment income - Securities
transactions are recorded on the trade date (the date the order
to buy or sell is executed). Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual
basis. Gains and losses on sales of investments are calculated
on the identified cost basis for financial reporting and tax
purposes. The cost of investments is substantially the same for
financial reporting and tax purposes.
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 substantially all of its
net investment income and any net realized capital gains.
Therefore, no provision for income or excise taxes has been
recorded.
Dividends and capital gains distributions - Dividends from net
investment income are declared and paid quarterly by the Fund.
Net realized capital gains are distributed periodically, no less
frequently than annually. Dividends from net investment income
and capital gains distributions are recorded on the ex-dividend
date. All dividends and distributions are automatically
reinvested in additional shares of the Fund at the net asset
value per share unless the shareholder requests such dividends
and distributions be paid in cash.
The amount of dividends and 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. Dividends and distributions which
exceed net investment income and net realized capital gains for
financial reporting purposes but not for tax purposes are
reported as dividends 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 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. Certain officers and directors of
the Adviser are affiliated with the Fund. The Fund pays the
Adviser, as full compensation for all services and facilities
furnished, a monthly fee computed on a daily basis, at an annual
rate of .75% of the first $50,000,000, .65% of the next
$100,000,000, and .50% of all amounts over $150,000,000 of the
net assets of the Fund.
The Investment Advisory Agreement provides that if, in any
calendar quarter, the total of all ordinary business expenses
applicable to the Trust should exceed the expense limitations as
required by any applicable state law, the Adviser will reimburse
the Trust for such excess. No such reimbursements were required
for the periods presented in the financial statements.
In addition to providing investment advisory services, the
Adviser is responsible for providing certain administrative
functions to the Fund. The Adviser has entered into an
Administration Agreement with Carillon Investments, Inc. (the
Distributor) under which the Distributor furnishes substantially
all of such services for an annual fee of .20% of the Fund's
average net assets. The fee is borne by the Adviser, not the
Fund.
Distribution agreement - The Distributor serves as the principal
underwriter of the shares of the Trust pursuant to a Distribution
Agreement with the Trust. Under the terms of this agreement, the
Distributor will pay all expenses related to selling and
distributing the Trust's shares, including preparing, printing
and mailing sales materials. The Distributor receives a
percentage of the offering price of fund shares sold to
unaffilated parties ranging from 5% on investment of less that
$50,000 to .5% on investments in excess of $2,500,000. During
the year ended October 31, 1995, the Distributor received
commissions of $315.
Other - At October 31, 1995, The Union Central Life Insurance
Company (Union Central) owned 2,999,068 shares of the Fund and
therefore is a controlling person of the Fund and is able to cast
a deciding vote on matters submitted to a vote of the Fund's
shareholders.
Union Central owns all of the outstanding stock of Carillon
Investments, Inc. and Carillon Advisers, Inc.
Each trustee who is not affiliated with the Adviser receives fees
from the Trust for services as a trustee.
NOTE 3 - SUMMARY 0F PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securites for the year ended October 31,
1995, excluding short-term securities, follow:
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
----------------- -------------------
<S> <C> <C>
Common Stocks $ 8,750,476 $ 4,327,716
U.S. Government Securities 7,718,253 7,621,147
Corporate Bonds 2,037,969 2,357,420
------------- ------------
$ 18,506,698 $14,306,283
============= ============
</TABLE>
NOTE 4 - FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding
throughout the year.
<TABLE>
<CAPTION>
Year ended October 31,
--------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $13.01 $13.00 $12.45 $12.48 $ 9.79
------ ------ ------ ------ ------
Investment Operations:
Net investment income .52 .35 .42 .45 .46
Net realized and
unrealized gain .73 .16 1.27 .50 2.71
------ ------ ------ ------ ------
Total from Investment
Operations 1.25 .51 1.69 .95 3.17
------ ------ ------ ------ ------
Distributions:
Net investment income (.51) (.32) (.42) (.45) (.48)
Net realized gain (1.05) (.18) (.72) (.53) --
------ ------ ------ ------ ------
Total Distribution (1.56) (.50) (1.14) (.98) (.48)
------ ------ ------ ------ ------
Net Asset Value,
End of Year $12.70 $13.01 $13.00 $12.45 $12.48
====== ====== ====== ====== ======
Total Return <F1> 10.88% 4.56% 14.50% 8.15% 32.99%
Ratios/Supplemental Data:
- ------------------------
Ratio of Expenses to
Average Net Assets 1.01% 1.05% 1.11% 1.10% 1.19%
Ratio of Net Investment
Income to Average
Net Assets 4.44% 3.89% 3.35% 3.61% 4.03%
Portfolio Turnover Rate 42.07% 53.20% 43.35% 48.03% 42.07%
Net Assets,
End of Year (000's) $46,644 $41,849 $33,863 $29,807 $27,384
<FN>
<F1>
Assumes sales load is not imposed on either intitial investment or reinvestment
of distributions.
</FN>
</TABLE>
- -----------------------------------------------
FEDERAL INCOME TAX INFORMATION (Unaudited)
During the year ended October 31, 1995, the Fund made total
distributions of $1.56 per share, of which $.51 per share is
from investment incom and $1.05 per share is from net realized
gains. Of the $.51 per share, 9% qualifed for the dividends-
received deduction for corporations.
