UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21463
Columbus Funds, Inc.
(Exact name of registrant as specified in charter)
227 Washington Street
Columbus, IN 47202
(Address of principal executive offices) (Zip code)
Michael G. Dow
Columbus Funds, Inc.
227 Washington Street
Columbus, IN 47202
(Name and address of agent for service)
Copies to:
Scott A. Moehrke
Kirkland & Ellis LLP
200 East Randolph Drive
Chicago, IL 60601
Registrant's telephone number, including area code: (812)372-6606
Date of fiscal year end: September 30
Date of reporting period: March 31, 2004
Item 1 - Reports to Stockholders
- --------------------------------------------------------------------------------
COLUMBUS FUNDS:
COLUMBUS CORPORATE OPPORTUNITY FUND
SEMI-ANNUAL REPORT
MARCH 31, 2004
Shares of Columbus Funds are distributed by an independent
third party, UMB Distribution Services, LLC.
- --------------------------------------------------------------------------------
COLUMBUS CORPORATE OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 2004 (UNAUDITED)
Principal
Amount Value
- ----------- ---------
CORPORATE BONDS 83.6%
Abitibi-Consolidated, Inc.
$5,000 8.30%, 8/1/05 $5,238
Adelphia Communications Corp.
5,000 10.25%, 6/15/11* 5,000
AES GENER SA - 144A
5,000 7.50%, 3/25/14 5,090
Ahold Finance USA, Inc.
5,000 8.25%, 7/15/10 5,550
Allied Holdings, Inc.
5,000 8.625%, 10/1/07 4,856
Allied Waste Industries, Inc. - 144A
5,000 5.75%, 2/15/11 4,837
American Standard, Inc.
5,000 7.375%, 4/15/05 5,250
ANR Pipeline Co.
5,000 7.00%, 6/1/25 5,137
Argosy Gaming Co.
8,000 10.75%, 6/1/09 8,440
Bausch & Lomb, Inc.
5,000 7.125%, 8/1/28 5,081
Boise Cascade Co.
5,000 6.50%, 11/1/10 5,361
Bowater, Inc.
5,000 4.11%, 3/15/10 4,950
Browning-Ferris Co.
1,000 7.875%, 3/15/05 1,028
Calpine Corp. - 144A
5,000 8.75%, 7/15/13 4,575
Charter Communications Holdings, LLC
10,000 8.625%, 4/1/09 8,250
Chesapeake Energy Corp.
2,000 7.75%, 1/15/15 2,215
Ciena Corp., Covertible
5,000 3.75%, 2/1/08 4,625
Circus Circus, Inc.
5,000 6.45%, 2/1/06 5,250
Citgo Petroleum Corp.
5,000 7.875%, 5/15/06 5,225
CMS Energy Corp.
5,000 9.875%, 10/15/07 5,512
Conseco Finance Securitizations Corp.
14,360 5.15%, 2/1/06 14,607
Continental Airlines, Inc.
4,170 6.541%, 9/15/08 3,899
COLUMBUS CORPORATE OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 2004 (UNAUDITED)
Principal
Amount Value
- ----------- ---------
Corning, Inc.
$5,000 7.625%, 8/1/24 $5,002
Crown Euro Holdings SA
5,000 9.50%, 3/1/11 5,612
DJ TRAC-X NA HY S2 T1 - 144A
15,000 7.375%, 3/25/09 15,169
Edison Mission Finance Co. - 144A
4,328 7.33%, 9/15/08 4,555
Felcor Suites LP
5,000 7.375%, 10/1/04 5,100
Fertinitro Finance Corp. - 144A
5,000 8.29%, 4/1/20 4,125
Finlay Fine Jewelry Corp.
5,000 8.375%, 5/1/08 5,138
Finova Group, Inc.
5,000 7.50%, 11/15/09 3,087
Fluor Corp.
5,000 6.95%, 3/1/07 5,150
FMC Corp.
5,000 10.25%, 11/1/09 5,875
GATX Financial Corp.
5,000 7.75%, 12/1/06 5,491
Georgia Gulf Corp.
5,000 7.625%, 11/15/05 5,288
Georgia-Pacific Corp.
7,000 8.875%, 5/15/31 7,840
Harrah's Operating Co., Inc.
5,000 7.875%, 12/15/05 5,412
Hasbro, Inc.
5,000 6.60%, 7/15/28 5,138
Hilton Hotels Corp.
10,000 7.625%, 5/15/08 11,225
HMH Properties, Inc.
5,000 7.875%, 8/1/08 5,194
Homer City Funding, LLC
5,000 8.137%, 10/1/19 5,525
Indianapolis Power & Light Co.
5,000 6.30%, 7/1/13 5,476
Insight Communications Co., Inc.
5,000 12.25%, 2/15/11** 4,225
J.C. Penney Co., Inc.
5,000 7.65%, 8/15/16 5,837
KCS Energy, Inc.
5,000 8.875%, 1/15/06 5,144
La Quinta Corp.
5,000 7.00%, 8/15/07 5,275
COLUMBUS CORPORATE OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 2004 (UNAUDITED)
Principal
Amount Value
- ----------- ---------
Lear Corp.
$5,000 7.96%, 5/15/05 $5,312
Liberty Media Corp.
3,000 3.50%, 9/25/06 3,055
LNR Property Corp.
5,000 7.625%, 7/15/13 5,300
Luscar Coal Ltd.
5,000 9.75%, 10/15/11 5,700
Navistar International Corp.
2,000 8.0%, 2/1/08 2,055
Norske Skog Canada Ltd.
5,000 8.625%, 6/15/11 5,375
Northwest Pipeline Corp.
10,000 6.625%, 12/1/07 10,600
Nova Chemicals Corp.
5,000 7.00%, 5/15/06 5,350
NRG Energy, Inc.
5,000 8.00%, 12/15/13 5,163
OMI Corp.
5,000 7.625%, 12/1/13 5,188
Park Place Entertainment Corp.
10,000 7.50%, 9/1/09 11,287
Parker & Parsley Ltd.
5,000 8.875%, 4/15/05 5,314
PDVSA Finance Ltd. 98-1
5,000 6.65%, 2/15/06 5,025
Pep Boys - Manny, Moe & Jack
4,000 6.92%, 7/7/06 4,240
Pope & Talbot, Inc.
5,000 8.375%, 6/1/13 5,200
Premcor Refining Group, Inc.
5,000 9.25%, 2/1/10 5,700
PSEG Energy Holdings, LLC
5,000 10.00%, 10/1/09 5,825
Reliant Energy Resources Corp.
5,000 8.125%, 7/15/05 5,347
Rogers Cable, Inc.
3,000 10.00%, 3/15/05 3,210
Rogers Wireless, Inc.
5,000 9.625%, 5/1/11 6,119
Royal Caribbean Cruises Ltd.
5,000 8.75%, 2/2/11 5,850
Sanmina-SCI Corp.
5,000 10.375%, 1/15/10 5,900
Servicemaster Co.
3,000 7.45%, 8/15/27 3,260
COLUMBUS CORPORATE OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 2004 (UNAUDITED)
Principal
Amount Value
- ----------- ---------
Shaw Communications, Inc.
$5,000 8.25%, 4/11/10 $5,850
Shaw Group, Inc.
5,000 10.75%, 3/15/10 5,050
Six Flags, Inc.
5,000 8.875%, 2/1/10 5,163
Stena AB
5,000 7.50%, 11/1/13 5,225
Telewest Communications PLC
5,000 11.00%, 10/1/07* 3,175
Tyco International Ltd.
5,000 6.375%, 2/15/06 5,323
United Air Lines, Inc.
4,909 7.811%, 10/1/09* 2,067
5,000 6.932%, 9/1/11* 2,354
WCI Communities, Inc.
5,000 9.125%, 5/1/12 5,575
Western Resources, Inc.
5,000 7.875%, 5/1/07 5,700
Xerox Corp.
5,000 7.15%, 8/1/04 5,075
------------
TOTAL CORPORATE BONDS
(COST $428,441) 431,791
------------
U.S. GOVERNMENT AGENCIES 1.0%
5,019 FGFB Pool L75018
6.50%, 9/1/05 5,146
------------
TOTAL U.S. GOVERTMENT AGENCIES
(COST $5,036) 5,146
------------
88,986 SHORT-TERM INVESTMENT 17.2%
UMB Bank Money
Market Fiduciary 88,986
------------
TOTAL SHORT-TERM INVESTMENT
(COST $88,986) 88,986
------------
TOTAL INVESTMENTS 101.8%
(COST $522,463) 525,923
LIABILITIES LESS
OTHER ASSETS (1.8%) (9,518)
------------
NET ASSETS 100.0% $516,405
============
* Issue in default
**Non-income producing
See notes to financial statements
COLUMBUS CORPORATE OPPORTUNITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2004 (UNAUDITED)
ASSETS:
Investments, at value (cost $522,463) $525,923
Interest receivable 8,438
Due from advisor 64,823
Prepaid expenses 4,719
---------
Total assets 603,903
---------
LIABILITIES:
Payable for securities purchased 16,777
Other accrued expenses 70,721
---------
Total liabilities 87,498
---------
NET ASSETS $516,405
=========
NET ASSETS CONSIST OF:
Paid-in-capital $505,096
Undistributed net investment income 109
Accumulated undistributed net realized gain on investments 7,740
Net unrealized appreciation on investments 3,460
---------
NET ASSETS 516,405
=========
SHARES OUTSTANDING, $0.0001 PAR VALUE,
(UNLIMITED SHARES AUTHORIZED) 50,500
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE 10.23
=========
See notes to financial statements.
COLUMBUS CORPORATE OPPORTUNITY FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 2004 (UNAUDITED)(1)
INVESTMENT INCOME:
Interest $5,805
---------
Total investment income 5,805
---------
EXPENSES:
Professional fees 94,120
Trustees' fees and expenses 12,189
Shareholder servicing fees 11,372
Administration and accounting fees 9,323
Custody fees 3,894
Reports to shareholders 3,580
Federal and state registration fees 2,203
Investment advisory fees 551
Insurance expense 447
Other expenses 2,372
---------
Total expenses before waiver and reimbursement of expenses 140,051
Less: Waiver and reimbursement of expenses (139,451)
---------
Net expenses 600
---------
NET INVESTMENT INCOME 5,205
---------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 7,740
Change in unrealized appreciation on investments 3,460
---------
Net gain on investments 11,200
---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 16,405
=========
(1) Commenced operations on December 31, 2003.
See notes to financial statements.
COLUMBUS CORPORATE OPPORTUNITY FUND
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED
MARCH 31, 2004(1)
(UNAUDITED)
-----------------
OPERATIONS:
Net investment income $5,205
Net realized gain on investments 7,740
Change in unrealized appreciation on investments 3,460
--------
Net increase in net assets resulting from operations 16,405
--------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 500,000
Shares issued to shareholders in
reinvestment of distributions 5,096
--------
Net increase from capital share transactions 505,096
--------
DISTRIBUTIONS PAID FROM:
Net investment income (5,096)
--------
Total distributions (5,096)
--------
TOTAL INCREASE IN NET ASSETS 516,405
NET ASSETS:
Beginning of period -
--------
End of period (includes undistributed net
investment income of $109) $516,405
========
(1) Commenced operations on December 31, 2003.
See notes to financial statements.
FINANCIAL HIGHLIGHTS
For a Fund Share Outstanding Throughout the Period.
PERIOD ENDED
MARCH 31, 2004(1)
(UNAUDITED)
-----------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.10
Net realized and unrealized gain on investments 0.23
--------
Total from investment operations 0.33
--------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (0.10)
--------
Total distributions (0.10)
--------
NET ASSET VALUE, END OF YEAR/PERIOD 10.23
========
TOTAL RETURN(2) 3.32%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of year/period $516,405
Ratio of expenses to average net assets(3) 0.49%
Ratio of expenses before waivers to average net assets(3) 114.19%
Ratio of net investment income to average net assets(3) 4.24%
Ratio of net investment income before waivers
to average net assets(3) (109.46)%
Portfolio turnover rate(2) 133%
(1) Commenced operations on December 31, 2003.
(2) Not annualized for periods less than a year
(3) Annualized
See notes to financial statements.
COLUMBUS CORPORATE OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2004 (UNAUDITED)
1. ORGANIZATION
Columbus Funds, Inc. (the "Company"), which consists of the Columbus Low
Duration Fund, Columbus Intermediate Fund, Columbus Core Fund, Columbus
Core Plus Fund and Columbus Corporate Opportunity Fund, is a Maryland
company incorporated on July 3, 2003. The Company is currently offering
shares of the Columbus Corporate Opportunity Fund (the "Fund") to
investors. The Fund commenced operations at the close of business on
December 31, 2003. Shares of the Columbus Low Duration Fund, Columbus
Intermediate Fund, Columbus Core Fund and Columbus Core Plus Fund are not
currently being offered. The Company is an open-end diversified series
management investment company registered under the Investment Company Act
of 1940 (the "1940 Act").
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
financial statements have been prepared in accordance with accounting
policies generally accepted in the United States of America that require
management to make certain estimates and assumptions at the date of the
financial statements. Actual results may differ from such estimates.
INVESTMENT VALUATION - Fixed income securities are valued by a pricing
service utilizing electronic data processing techniques to determine values
for normal institutional-sized trading units of fixed income securities
without regard to sale or bid prices when such values are believed to more
accurately reflect the fair market value of such securities; otherwise,
actual sale or bid prices are used. Short-term securities having a maturity
of 60 days or less are valued at amortized cost, which approximates market
value. Common stocks and other equity-type securities are valued at the
last sales price on the national securities exchange on which such
securities are primarily traded, or for Nasdaq-listed securities, the
official closing price. Securities and assets for which market quotations
are not readily available are valued at fair value as determined in good
faith by or under the direction of the Board of Directors.
FEDERAL INCOME TAXES - It is the Fund's policy to meet the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all investment company net taxable income and
net capital gains each year to shareholders in a manner which results in no
tax cost to the Fund. Therefore, no federal income tax or excise tax
provision has been made.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME - Securities transactions are
accounted for on a trade date basis. Realized gains and losses from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income is
recognized daily on an accrual basis.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income are
declared and paid monthly. Distributions of net realized capital gains, if
any, are declared and paid at least annually.
COLUMBUS CORPORATE OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2004 (UNAUDITED)
Distributions to shareholders are determined in accordance with federal
income tax regulations and are recorded on the ex-dividend date. The
character of distributions made during the year from net investment income
or net realized gains may differ from the characterization for federal
income tax purposes due to differences in the recognition of income,
expense and gain items for financial statement and tax purposes. Where
appropriate, reclassifications between net asset accounts are made for such
differences that are permanent in nature.
3. CAPITAL TRANSACTIONS
Transactions of the Fund were as follows:
PERIOD ENDED
MARCH 31, 2004
--------------
SHARES DOLLARS
Shares sold 50,000 $500,000
Shares issued to
holders in reinvestment
of dividends and capital gains 500 5,096
------ --------
Net increase 50,500 $505,096
------ --------
4. INVESTMENT TRANSACTIONS
Purchases and sales of securities for the Fund, excluding short-term
investments, for the period ended March 31, 2004 were $870,503 and
$443,688, respectively. Purchases and sales of U.S. Government securities
for the period ended March 31, 2004 were $130,063 and $126,614,
respectively.
5. INVESTMENT ADVISORY AGREEMENT
The Company has an agreement with Reams Asset Management Company LLC (the
"Adviser"), with whom certain officers and directors of the Company are
affiliated, to furnish investment advisory services to the Fund. Under the
terms of this agreement the Fund compensates the Adviser at the annual rate
of 0.45% of the Fund's average daily net assets.
COLUMBUS CORPORATE OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2004 (UNAUDITED)
Under the investment advisory agreement, if the aggregate annual operating
expenses (including the investment advisory and the administration fee)
exceed the expense limitation cap of 0.49% of the Fund's average daily net
assets the Adviser will reimburse the Fund for the amount of such excess
until January 31, 2005. After such time, the Adviser may voluntarily waive
all or a portion of its management fee and/or reimburse all or a portion of
a Fund's operating expenses. During the period ended March 31, 2004, the
Adviser waived investment advisory fees for the Fund of $551 and reimbursed
the Fund $138,900 for other expenses. Any waiver or reimbursement is
subject to later adjustment to allow the Adviser to recoup amounts waived
or reimbursed to the extent actual fees and expenses for a period are less
than the expense limitation caps. The Adviser will only be entitled to
recoup these amounts for a period of three years from the date the amount
was waived or reimbursed. At March 31, 2004, $139,451 was available for
potential recoupment.
6. FEDERAL INCOME TAX INFORMATION
At March 31, 2004, gross unrealized appreciation and depreciation on
investments, based on aggregate cost for federal income tax purposes was as
follows:
Gross unrealized appreciation $6,069
Gross unrealized depreciation (2,609)
-----
Net unrealized appreciation on investments $3,460
======
Cost of securities on a tax basis $522,463
========
The difference between cost amounts for financial statement and federal
income tax purposes is due primarily to timing differences in recognizing
certain gains and losses in security transactions.
DIRECTORS Michael G. Dow
David B. McKinney
Michael D. Schoen
Thomas M. Taugher
Allan T. Young
INVESTMENT ADVISER REAMS ASSET MANAGEMENT COMPANY, LLC
227 Washington Street
P.O. Box 727
Columbus, Indiana 47202-0727
ADMINISTRATOR, TRANSFER AGENT UMB FUND SERVICES, INC.
AND DIVIDEND-DISBURSING AGENT 803 West Michigan Avenue, Suite A
Milwaukee, Wisconsin 53233
CUSTODIAN UMB BANK, N.A.
1010 Grand Blvd.
Kansas City, Missouri 64141
INDEPENDENT AUDITORS DELOITTE & TOUCHE LLP
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
LEGAL COUNSEL KIRKLAND & ELLIS LLP
200 East Randolph Drive
Chicago, Illinois 60601
DISTRIBUTOR UMB DISTRIBUTION SERVICES, LLC
803 West Michigan Avenue, Suite A
Milwaukee, Wisconsin 53233
This report is submitted for the general information of shareholders of Columbus
Funds. It is not authorized for distribution to prospective investors unless
accompanied or preceded by an effective Prospectus for the Columbus Funds. The
Prospectus provides more complete information, including fees and expenses, the
investment objectives, risks and operating policies of the Funds. Read the
Prospectus carefully.
CF 410 0304
Item 2 - Code of Ethics
Not applicable to semi-annual reports.
Item 3 - Audit Committee Financial Expert
Not applicable to semi-annual reports.
Item 4 - Principal Accountant Fees and Services
Not applicable to semi-annual reports.
Item 5 - Audit Committee of Listed Registrants
Not applicable.
Item 6 - Schedule of Investments
Disclosure requirement currently not effective.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9 - Submission of Matters to a Vote of Security Holders
None.
Item 10 - Controls and Procedures
(a) The registrant's principal executive officer and principal financial officer
have concluded that the registrant's disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended,
are effective based on their evaluation of these disclosure controls and
procedures within 90 days of the filing date of this report on Form N-CSR.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Item 11 - Exhibits
(a)(1) Code of Ethics.
Not applicable to semi-annual reports.
(a)(2) Certification for each principal executive and principal financial
officer of the registrant as required by Rule 30a-2 under the Act (17 CFR
270.30a-2(a)).
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) - Filed as an attachment to this filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Columbus Funds, Inc.
By: /s/ Michael G. Dow
Michael G. Dow
President
Date: June 4, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Michael G. Dow
Michael G. Dow
President
Date: June 4, 2004
By: /s/ David B. McKinney
David B. McKinney
Treasurer
Date: June 4, 2004