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In the first quarter of 2026, the high-yield bond market experienced a downturn, reflected in a -0.53% return for the ICE BofA U.S. Cash Pay High Yield Index. This period was characterized by heightened volatility in both equity and interest rate markets, largely due to geopolitical events in the Middle East and evolving perspectives on the U.S. Federal Reserve's policies. Amidst these challenging conditions, the Carillon Chartwell Short Duration High Yield Fund demonstrated resilience, strategically outperforming its benchmarks by adhering to an investment philosophy centered on shorter maturities and superior credit quality.

The Fund’s strategic positioning allowed it to navigate the turbulent market environment effectively. Key to this performance was the careful selection of sectors; technology and electronics, alongside media, emerged as top contributors to the Fund's returns. Conversely, the insurance and service sectors faced headwinds, experiencing a drag on overall performance. This selective approach underscores the Fund's commitment to mitigating risks while still seeking advantageous opportunities within the high-yield landscape. The Fund also proactively expanded its portfolio by acquiring new positions in a contract compression company vital for oil and gas pipelines, a significant operator of power generation facilities, and a manufacturer specializing in electric sensing components, diversifying its holdings and reinforcing its robust investment framework.

A notable aspect of the Fund's management in Q1 2026 was its tactical adjustments to portfolio maturities. By extending the maturities of several existing positions, the Fund aimed to capitalize on steeper credit curves. This move was particularly strategic during a quarter marked by modest trading activity, allowing the Fund to enhance potential returns without significantly increasing exposure to market fluctuations. This approach is consistent with the Fund's overarching "all-weather" portfolio construction, which prioritizes managing both interest rate and credit risks through an emphasis on short-duration and high-quality debt instruments.

The Fund's disciplined investment process, characterized by rigorous fundamental research and a focus on actively mitigating risk, proved crucial during a period of market uncertainty. The ability to identify and invest in high-quality assets with shorter maturities, while judiciously adjusting portfolio duration, enabled the Fund to maintain stability and achieve competitive returns. This reflects a proactive management style that seeks to protect capital while also capturing upside potential in a dynamic credit market environment.