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 811-09437
Lindbergh Funds
(Exact name of registrant as specified in charter)
5520 Telegraph Road, Suite 204, St. Louis, MO 63129
(Address of principal executive offices) (Zip code)
Unified Fund Services, 431 North Pennsylvania Street, Indianapolis, In 46204
(Name and address of agent for service)
Registrant's telephone number, including area code: 314-416-0055
Date of fiscal year end: 08/31
Date of reporting period: 02/28/2003
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. 3507.
<page>
Item 1. Reports to Stockholders.
Management Discussion and Analysis
March 28, 2003
Dear Fellow Shareholder:
Like many mutual funds, the Signature Fund's fiscal year, which ends August
31, is different than the calendar year. Since this is the first report of the
new year, I'll briefly review calendar year 2002 results.
For stock investors, 2002 was distinctive in a number of ways. First, it
was the third consecutive losing year of this, the worst bear market in over 70
years. In addition, last year's losses were far worse than those of 2000 and
2001.
As manager of the Signature Fund, I'd characterize the year as extremely
challenging, one filled with potential pitfalls, some of which were obvious,
whereas others were well disguised. It was the kind of environment where the
market extracted huge penalties for each misstep, and it was quite easy to make
a misstep. I'm disappointed that we have suffered through another year of
losses, but I'm relieved that the fund's losses in 2002 were well-below average
(please see table below).
Two factors helped limit the Signature Fund's losses. First, it was
defensively positioned according to the dictates of the Market Meter. Stock
investments, for example, averaged around 60% of fund assets during most of this
past year. This fact alone, though, doesn't account for the large performance
disparity in the fund's favor. Fund losses were further mitigated because of the
above-average performance of its stock portfolio.
That's a brief summary of returns and events driving last year's results,
but what about the fund's longer term record?
Beginning with February 2000, the fund's annualized loss has averaged 8.4%
(see table). By comparison, the S&P 500's annualized loss was 13.9% over the
same period. In previous reports, I've shown returns since October 1, 1999, the
effective date of the fund's registration statement, and January 2000, the month
the fund was opened to outside shareholders. But February 2000 was actually the
month when the fund began investing both the assets of outside shareholders and
in accordance with its stated objectives. As a result, it has been determined
that the appropriate period for presenting fund performance is beginning on
February 1, 2000. (Returns shown in table for periods exceeding one year are
average-annual rates of return.)
- --------------- ------------ --------------------------------------------
Since Calendar Since
Feb. 1, 2000 Year 2002 Inception*
- -------------------------------- --------------- ------------------------
Lindbergh Signature Fund -8.4% -8.8% -6.6%
S&P 500 -13.9% -22.1% -10.4%
Wilshire 5000 -14.0% -20.9% -9.4%
Russell 2000 -8.6% -20.5% -3.6%
NASDAQ -29.6% -31.5% -19.0%
- -------------------------------- --------------- ------------ ------------
*Fund inception - October 1,
1999
- -------------------------------- --------------- ------------ ------------
(Please note: The fund's relative performance advantage vis-a-vis the S&P
500 is not as great when measured from its "Since Inception" date -' October 1,
1999 - as it is over the period beginning February 1, 2000. While the fund's
seed capital was in place and its registration statement became effective on
October 1, 1999, the fund was not ready for outside shareholders. During the
fall of 1999, the fund, in fact, had only one shareholder, a co-owner of
Lindbergh Capital Management, the fund"s advisor. Thus, the fund was mostly in
cash just as technology
<page>
stocks began their parabolic blowoff. Be that as it may,
the returns of this period have been treated as part of the fund's permanent
track record. Most importantly, though, no single outside shareholder was
penalized for this period of underperformance.) With this review of past
results, what can investors reasonably expect in the months ahead? Most
importantly, is this bear market over?
Before answering this question, I should put things in perspective. I'll
begin by reviewing the bearish case. It's based on three concerns: First, the
stock market has a huge valuation problem. By traditional value standards, for
example, stocks today remain more expensive than any previous period except
during the late 1990's bubble years. Admittedly, this is a tough pill to
swallow, given the steep plunge in stock prices. But it is a testament to the
overvaluation extremes reached during the mania.
Investor complacency is yet another problem for the stock market. The
actions of institutional investors, for example, suggest that they are more
fearful of missing the next bull run than losing money! One symptom of this
problem is the market's powerful snapback recovery attempts following periods of
grinding sell offs.
The eagerness of big buyers to quickly jump back into stocks provides a
glimpse into the market's internal workings. There are many others. Such market
'internals' can be quantified and compared with previous periods in the market's
long history. In making such comparisons, one thing is clear - we're seeing none
of the signs that typically herald new bull markets.
Here's an example: One publication, Investor's Intelligence, surveys
investment newsletter writers as to whether they're bullish or bearish. It then
calculates a ratio of bulls to bears. Even in ordinary bear markets, the level
of bears normally hovers around 55-60% for weeks and sometimes months at a time.
Yet in this cycle, the percentage of bears only briefly spiked above 40%
before quickly receding. In fact, the bearish percentage reading during most of
this bear market has been less than 30%. Bearish scores of 30% or less are
typical of bull, not bear markets! This level of optimism, despite a crushing
bear market, is unprecedented and hard to fathom. By this example and other
measures, we are simply not seeing the kind of readings that accompany bear
market lows.
A faltering economy is the third problem overhanging the market. A poor
economy doesn't always signify troubles for the stock market. In fact, bear
markets typically end and new bull markets are born precisely when the economic
news is the most dire . . . but on the verge of improving. Today's economy,
while still growing, may be taking a turn for the worse and that's potentially
bad news for the stock market. I think a new recession is unlikely . . . perhaps
there's a one in three chance. It is, nonetheless, a growing possibility for
several reasons including: an approaching end to the mortgage refinancing boom;
too much idle plant and equipment; and the over leveraged balance sheets of both
businesses and consumers.
Consider, for a moment, the public's ability to spend. All the drivers of
the consumer spending boom are, one by one, falling by the wayside. Consumer
wealth is being destroyed by falling stock prices, income growth is slowing due,
in part, to a poor job market, and the likely end to the home refinancing boom
means no more cheap money to spend on big ticket purchases.
The economy will, most likely, muddle through these problems, but at a much
diminished growth rate. It is, however, precariously balanced and as such, it
wouldn't take much of a shock for the economy to slide back into recession. The
stock market has not discounted a recession. I thus expect such an event will be
greeted by falling stock prices.
To briefly summarize - the bearish case rests on an overvalued stock
market, poor market internals, and a weak economy. By these measures there is no
question, the stock market's glass is more than half empty.
There are, however, many facets to the market. Over valuation, for example,
may limit the market's long term potential, but investors with sufficient
speculative zeal will try to ignore this problem. As we've seen in recent years,
they may even succeed in such efforts for a while, but eventually the valuation
chickens will
<page>
come home to roost. So it's important to view the data
objectively, and also to correctly identify those factors driving the market
over both the short and the long terms.
This isn't easy because most of the daily data flow of economic and market
statistics is simple noise. This is where our proprietary Market Meter comes
into play. By scoring those factors that are proven precursors of future market
performance, it helps separate the wheat from the chaff. It is my primary
compass for navigating around the various pitfalls thrown in the path of stock
investors.
The good news is that the Market Meter score has reached 60. This is its
best reading since the early days of this bear market and just 10 points short
of an outright BUY signal.
So despite my concerns outlined above, the Market Meter is beginning to
sense a possible turn for the better. At this point, I view the Meter's signs of
improvement as a flicker of light at the end of the tunnel; a hopeful sign, but
nothing more. It's good news to see it moving in the right direction, but it
must continue to improve.
As with previous reports, I'm hoping for the best, but prepared for the
worst. This time, there's a difference. Given the Market Mete's improving
score, my hopes aren't simply wishful thinking.
There is, unfortunately, a 'bad news' aspect to an improving Market Meter
score. It's at least becoming conceivable that this bear market might end
without completely purging from the system the excesses of the mania years.
Thus, the market's problems in such areas as valuation, investor complacency,
and speculative froth could be carried into a new bull market.
If the Market Meter continues to improve, and we do enter a new bull market
before fully cleaning up after the last one, I think it will be a relative short
bull market . . . perhaps no more than a year or so. Under this scenario, I
expect that the bear, after a brief hibernation, will return to finish its job.
I naturally prefer that this market bear complete its task and thus set the
stage for an extended bull market. At this point, though, I'll gladly settle for
some relief; a period where we at least have a chance to make some real money
and not simply engage in damage control.
One final point. I've been expecting new lows in the stock market. If,
though, the Market Meter can hold steady, or continue to improve, the market has
probably seen the lows for this cycle. But before we begin a new bull market, I
still expect the stock averages to revisit the old lows set last summer and fall
- - somewhere around 7200-7400 on the Dow and in the 760-800 range for the S&P
500.
There is one major wild card in this assessment and that's the war with
Iraq. From my vantage point, about eight days into the ground war, it's too soon
to get any feel as to how or when it might end. For the human toll alone, I hope
the war ends quickly and with limited loss of life. If, however, we encounter
major setbacks, it could cause greater downside damage than I'm now expecting.
In conclusion, while it has been a challenging investment period, I'm
grateful for your patience and the privilege of serving your interests.
Most respectfully,
Dewayne Wiggins
President, Lindbergh Funds
<page>
Quarterly Fund Returns
09/30/99 10,000.00 10,000.00
11/30/99 10,296.90 10,848.85
02/29/00 10,437.27 10,704.94
05/31/00 10,621.56 11,164.49
08/31/00 11,306.11 11,961.14
11/30/00 9,696.45 10,392.98
02/28/01 9,273.15 9,828.37
05/31/01 9,410.49 9,986.97
08/31/01 8,673.70 9,044.77
11/30/01 8,589.33 9,123.61
02/28/02 9,008.77 8,894.48
05/31/02 9,202.82 8,605.48
08/31/02 8,471.78 7,418.78
11/30/02 8,302.31 7,617.98
02/28/03 7,907.40 6,877.46
Quarterly Fund Returns
Since 01/31/00
1/31/00 10,000.00 10,000.00
3/31/00 10,301.72 10,770.52
6/30/00 10,330.57 10,484.91
9/30/00 10,577.15 10,383.49
12/31/00 9,636.65 9,571.77
3/31/01 8,481.96 8,436.55
6/30/01 8,974.59 8,930.57
9/30/01 7,764.52 7,620.51
12/31/01 8,527.28 8,435.30
3/31/02 8,570.72 8,458.23
6/30/02 8,994.90 7,325.32
9/30/02 7,979.27 6,060.18
12/31/02 7,751.86 6,571.30
2/28/03 7,595.82 6,303.14
<page>
Schedule of Investments - February 28, 2003 (Unaudited)
<table>
<s> <c>
COMMON STOCKS - 50.37%
Number of Shares Market Value
Arrangement Of Transportation Of Freight & Cargo - 2.01%
6,390 Expeditors International Of Washington, Inc. $ 218,474
-----------------
Beverages - 1.63%
7,200 Constellation Brands, Inc. - Class A* 177,336
-----------------
Heavy Construction Other Than Buildings - 1.82%
5,200 Jacobs Engineering Group, Inc.* 197,496
-----------------
Hospital & Medical Service Plans - 3.67%
7,110 Coventry Health Care, Inc.* 201,426
2,390 UnitedHealth Group, Inc.* 198,131
-----------------
399,557
-----------------
Misc. Industrial & Commercial Machinery & Equip. -1.87%
6,620 Moog, Inc. - Class A* 203,234
-----------------
Miscellaneous Food Preparations & Kindred Products - 1.91%
5,000 American Italian Pasta Co.* 207,550
-----------------
Operative Builders - 2.01%
4,300 Pulte Homes Corp. 218,569
-----------------
Real Estate Investment Trusts - 2.10%
6,770 Kimco Realty Corp. 228,149
-----------------
Refuse Systems - 1.63%
5,310 Waste Connections, Inc.* 176,717
-----------------
Retail - Eating Places - 5.9%
8,100 Applebee's International, Inc. 207,684
7,580 Brinker International, Inc* 210,118
9,480 Sonic Corp.* 213,490
-----------------
631,292
-----------------
Retail - Family Clothing Stores - 2.15%
6,830 Ross Stores, Inc. $233,654
-----------------
Retail - Retail Stores - 1.85%
4,050 Alberto Culver Co. 201,325
-----------------
16,500 Retail - Women's Clothing Stores - 2.74%
Chico's Fashions, Inc.* 298,155
-----------------
Savings Institution, Federal Chartered - 2.00%
3,010 Golden West Financial Corp. 217,924
-----------------
Services - Health Services - 2.49%
3,980 Wellpoint Health Network, Inc.* 270,680
-----------------
Services - Nursing & Personal Care Facilities - 1.37%
6,250 Sunrise Assisted Living, Inc.* 149,250
-----------------
Services - Personal Services - 3.68%
4,900 H & R Block, Inc. 198,793
8,670 Regis Corp. 202,011
-----------------
400,804
-----------------
State Commercial Bank -5.83%
5,187 Commerce Bancshares, Inc. 201,048
8,000 Pacific Capital Bancorp 225,040
6,120 Popular, Inc. 207,407
-----------------
633,495
-----------------
Trucking (No Local) - 2.03%
12,252 Heartland Express, Inc.* 220,536
-----------------
Wholesale - Medical, Dental & Hospital Equip. - 1.78%
4,400 Patterson Dental Co.* 193,644
-----------------
TOTAL COMMON STOCKS (Cost $5,355,543)
5,477,841
-----------------
SHORT-TERM INVESTMENTS - 49.83%
Principal Amount Market Value
U.S. Treasury & Agency Obligations - 33.96
3,700,000 U.S. Treasury Bill, 4/17/03 (Cost $3,693,720) (a) $3,693,720
-----------------
Money Market Securities - 15.87%
1,725,941 Money Market Fiduciary, 0.367%, (Cost $1,725,941) (b) 1,725,941
-----------------
TOTAL INVESTMENTS (Cost $10,775,204) - 100.09% 10,897,502
-----------------
Liabilities in excess of other assets - (0.09%) (21,534)
-----------------
TOTAL NET ASSETS - 100.00% $ 10,875,968
-----------------
</table>
* Non-Income Producing
(a) Securities segregated as initial margin for open futures contracts are
$500,000 of the total $3,700,000 investment.
(b) Variable rate security; the coupon rate shown represents the rate at
February 28, 2003.
<page>
Statement of Assets & Liabilities (Unaudited) February 28, 2003
<table>
<s> <c>
ASSETS
Amount
Investments in securities, at value (cost $10,775,204) $ 10,897,502
Interest receivable 499
Dividends receivable 649
Variation margin on futures contracts 1,460
-----------------------
Total assets 10,900,110
-----------------------
LIABILITIES
Amount
Other payables and accrued expenses $24,142
Total liabilities 24,142
-----------------------
Net Assets $10,875,968
SOURCES OF NET ASSETS
Amount
Net Assets consist of:
Paid in capital $15,277,271
Accumulated net investment income (loss) (136,280)
Accumulated net realized loss on investments (4,375,878)
Net unrealized appreciation (depreciation) on:
Investments 122,298
Futures contracts (11,443)
-----------------------
Net Assets $ 10,875,968
=======================
Shares of capital stock outstanding(no par value, unlimited shares authorized) 152,422
Net asset value,offering and redemption price per share($10,875,968 / 152,422) 71.35
=======================
</table>
<page>
Statement of Operations (Unaudited)
- for the six months ended Februay 28, 2003
<table>
<s> <c>
INVESTMENT INCOME
Amount
Dividend income $21,157
Interest income 25,950
-----------------
Total Income 47,107
-----------------
EXPENSES
Amount
Investment advisor fee (Note 3) 38,721
Transfer agent expenses 8,775
Legal expenses 9,015
Administration expenses 8,929
Fund accounting expenses 8,928
Auditing expenses 3,539
Custodian expenses 3,112
Trustee expenses 3,472
Pricing expenes 1,339
Printing expenses 1,984
Registration expenses 2,484
Miscellaneous expenses 379
Insurance expenses 792
-----------------
Total expenses before waived & reimbursed expenses 91,469
Expenses waived & reimbursed by Adviser (Note 3) (52,532)
-----------------
Total operating expenses 38,937
-----------------
Net Investment Income (Loss) 8,170
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Amount
Net realized gain (loss) on:
Investment securities (103,790)
Futures contracts (440,560)
Change in net unrealized appreciation (depreciation) on:
Investment securities (103,885)
Futures contracts (37,885)
-----------------
Net gain (loss) on investment securities (686,120)
-----------------
Net increase (decrease) in net assets resulting from operations $(677,950)
=================
</table>
<page>
Statement of Changes in Net Assets (Unaudited)
<table>
<s> <c> <c>
INCREASE (DECREASE) IN NET ASSETS
Six months ended
February 28, 2003 Year ended
(Unaudited) August 31, 2002
------------------------------------------------
Operations:
Net investment income (loss) $8,170 $36,536
Net realized gain (loss) on investment securities (544,350) (340,740)
Change in net unrealized appreciation (depreciation) (141,770) 61,612
----------------------- -------------------
Increase (decrease) in net assets resulting from operations (677,950) (242,592)
----------------------- -------------------
Distributions to shareholders:
From net investment income (36,433) (230,003)
From net realized gain - -
----------------------------------------------
Total distributions (36,433) (230,003)
----------------------------------------------
Share Transactions:
Net proceeds from sale of shares 1,280,048 240,912
Shares issued in reinvestment 36,433 230,003
Shares redeemed (21,729) (2,630,922)
----------------------- -------------------
Net increase (decrease) in net assets resulting
from share transactions 1,294,752 (2,160,007)
----------------------------------------------
Total increase (decrease) in net assets 580,369 (2,632,602)
----------------------------------------------
Net Assets:
Beginning of period 10,295,599 12,928,201
----------------------- -------------------
End of period [including accumulated undistributed
net investment income (loss) of $36,536 and
$229,906, respectively] $10,875,968 $10,295,599
======================= ===================
Transactions in Fund Shares:
Shares sold 17,514 3,025
Shares reinvested 495 2,896
Shares redeemed (296) (33,373)
----------------------- -------------------
Net increase (decrease) in number of shares outstanding 17,713 (27,452)
==============================================
</table>
<page>
Financial Highlights (Unaudited)
<table>
<s> <c> <c> <c> <c>
Six months ended Period Ended
February 28, 2003 Year ended Year ended August 31,
(Unaudited) August 31, 2002 August 31, 2001 2000 (a)
----------------------------------------------------------------------------------------
Selected Per Share Data:
Net asset value, beginning
of period $76.43 $79.72 $111.21 $100.00
----------------------- ----------------- ------------------ ----------------
Income from investment
operations
Net investment income 0.06 0.26 1.52 4.18
Net realized and
unrealized gain (loss) (4.88) (2.07) (28.05) 8.75
------------------------ ----------------- ------------------ ----------------
Total from investment
operations (4.82) (1.81) (26.53) 12.93
------------------------ ----------------- ------------------ ----------------
Less Distributions:
From net investment income (0.26) (1.48) (3.26) (1.71)
From net realized gain 0.00 0.00 (1.70) (0.01)
----------------------- ------------------ ------------------ ----------------
Total distributions
(0.26) (1.48) (4.96) (1.72)
----------------------- ------------------ ----------------- ----------------
Net asset value, end of
period $71.35 $76.43 $79.72 $111.21
======================= ================= ================== ================
Total Return (6.32)% (b) (2.34)% (23.28)% 13.07% (b)
Ratios and Supplemental Data:
Net assets, end of period (000) $10,876 $10,296 $12,928 $15,482
Ratio of expenses to average
net assets 0.75% (c) 0.75% 0.75% 0.75% (c)
Ratio of expenses to average
net assets before waiver &
reimbursement 1.77% (c) 1.72% 1.57% 2.00% (c)
Ratio of net investment
income to average net assets 0.16% (c) 0.32% 1.66% 4.33% (c)
Ratio of net investment
income to average net assets before
waiver & reimbursement (0.86)% (c) (0.65)% 0.85% 3.08%(c)
Portfolio turnover rate 11.41% 63.69% 62.79% 5.38%
</table>
(a) For the period October 1, 1999 (effective date of
registration) to August 31, 2000.
(b) For periods of less than one full year, total
returns are not annualized.
(c) Annualized.
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
February 28, 2003 (unaudited)
Note 1 - General
The Lindbergh Signature Fund (the "Fund") is organized as a non-diversified
series of Lindbergh Funds, a Massachusetts business trust, pursuant to a trust
agreement dated June 16, 1999. The Lindbergh Signature Fund's primary objective
is to increase the value of your investment over the long-term through capital
appreciation and earned income. Capital preservation is an important but
secondary objective. The Fund seeks to achieve this objective by investing in
common stocks, bonds and money market instruments in proportions consistent with
their expected returns and risk as assessed by the Fund's adviser, Lindbergh
Capital Management, Inc. (the "Adviser"). In evaluating potential risk and
return tradeoffs, the Adviser reviews general macro-economic conditions, Federal
Reserve policy and employs various analytical models.
When, in the Adviser's judgment, conditions are favorable for stock
investments, the fund will normally be fully invested in commons stocks. If
however, in the Adviser's view, stock market conditions are less favorable for
investors, all or a portion of the fund assets will be shifted out of stocks and
into such fixed income investments as bonds and cash. The Fund is permitted to
be 100% invested in any one of the three asset classes - stocks, bonds, or cash.
The trust agreement permits the Board of Trustees (the "Board") to issue and
unlimited number of shares of beneficial interest of separate series without par
value. The Fund is the only series of funds currently authorized by the Board.
Note 2 - Significant Accounting Policies
The following is a summary of the significant accounting policies followed
by the Fund in the preparation of its financial statements.
A) Portfolio Valuations
Securities, which are traded on any exchange or on the NASDAQ
over-the-counter market, are valued at the last quoted sale price. Lacking a
last sale price, a security is valued at its last bid price except when, in the
Adviser's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. Securities
are valued as determined in good faith under the general supervision of the
Board of Trustees when: market quotations are not readily available; the Adviser
determines that the last bid price does not accurately reflect the current
value; or restricted securities are being valued.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Fund's adviser believes such prices accurately reflect the fair market value of
such services. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith under the
general supervision of the Board of Trustees. Short-term investments in
fixed-income securities with maturities of less than 60 days when acquired, or
which subsequently are within 60 days of maturity, are valued by using the
amortized cost method of valuation, which the Board has determined will
represent fair value. Lindbergh Signature Fund Notes to the Financial Statements
February 28, 2003 (unaudited) - continued
B) Futures Contracts
The Fund uses index futures contracts, when appropriate, with the
objectives of maintaining full exposure to the stock market, enhancing returns,
maintaining liquidity, and minimizing transaction costs. The Fund may purchase
futures contracts to immediately invest incoming cash in the market, or sell
futures in response to cash outflows, thereby simulating a fully invested
position in the underlying index while maintaining a cash balance for liquidity.
The Fund may seek to enhance returns by using futures contracts instead of the
underlying securities when futures are believed to be priced more attractively
than the underlying securities. The Fund will not effect a futures or options
transaction if the aggregate value of the Fund's securities subject to
outstanding futures and options would exceed 100% of the Fund's total assets.
The primary risks associated with the use of futures contracts are imperfect
correlation between changes in market values of stocks held by the Fund and the
prices of futures contracts, the possibility of an illiquid market, or that the
counterparty will fail to perform its obligation.
Futures contracts are valued at their quoted daily settlement prices. The
aggregate principal amounts of the contracts are not recorded in the financial
statements. Fluctuations in the value of the contracts are recorded in the
Statement of Assets and Liabilities as an asset (liability) and in the Statement
of Operations as unrealized appreciation (depreciation) until the contracts are
closed, when they are recorded as realized gains (losses) on futures contracts.
C) Portfolio Transactions and Related Income
Investment transactions are recorded on a trade date basis. Realized gains
and losses from investment transactions are recorded on the identified cost
basis. Interest income is recorded on the accrual basis and dividend income is
recorded on the ex-dividend date. Discounts and premiums on securities purchased
are amortized over the life of the respective securities.
D) Dividends and Distributions to Shareholders
The Fund intends to comply with federal tax rules regarding the
distribution of substantially all of its net investment income as dividends to
its shareholders on an annual basis, and to distribute its net long-term capital
gains and its short-term capital gains at least once a year. However, to the
extent that net realized gains of the Fund could be reduced by any capital loss
carryovers, such gains will not be distributed.
E) Federal Income Taxes
The Fund intends to qualify each year as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund
will not be subject to federal income taxes to the extent that it distributes
substantially all of its net investment income and any realized capital gains.
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
February 28, 2003 (unaudited) - continued
Note 2 - Significant Accounting Policies - (continued)
F) Other
Generally accepted accounting principles require that permanent financial
reporting/tax differences relating to shareholder distributions be reclassified
to paid-in capital.
G) Estimates
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Note 3 - Agreements and Other Transactions with Affiliates
The Fund retains Lindbergh Capital Management, Inc., (the "Adviser") to
manage the Fund's investments. The Adviser will be paid an advisory fee equal to
0.75% of the average annual net assets of the Fund. Actual total expenses,
including advisory fees, will not exceed 0.75% because the Adviser's contract
with the Fund requires it to reimburse fund expenses to maintain total annual
fund operating expenses at 0.75% through August 31, 2003, and to inform the Fund
prior to that date, if the commitment is to continue. For the six months ended
February 28, 2003, the Adviser earned fees of $38,721, and waived all fees
earned and reimbursed expenses to the Fund of $13,811. Certain members of
management of the Adviser are also members of management of the trust.
The Fund retains Unified Financial Securities, Inc. (the "Distributor") to
act as the principal distributor of the Fund's shares. The Fund has adopted a
plan, pursuant to Rule 12b-1 under the Investment Company Act of 1940, which
permits the Fund to pay directly, or reimburse the Fund's Adviser and
Distributor, for certain distribution and promotion expenses related to
marketing its shares, in an amount not to exceed 0.25% of the average daily net
assets of the Fund. As of February 28, 2003 the distribution plan has not been
activated
Note 4- Securities Transactions
For the six months ended February 28, 2003, purchases and sales proceeds
from investment securities, excluding short-term investments were as follows:
Purchases Sales
Lindbergh Signature Fund $639,120 $739,761
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Lindbergh Signature Fund
Notes to the Financial Statements
February 28, 2003 (unaudited) - continued
Note 5 - Unrealized Appreciation (Depreciation)
At February 28, 2003, the cost for federal income tax purposes is
$10,775,204 and the composition of gross unrealized appreciation (depreciation)
of investment securities is as follows:
Appreciation Depreciation Net Appreciation
Lindbergh Signature Fund $391,119 $(268,821) $122,298
At February 28, 2003, the aggregate settlement value of open futures
contracts expiring in March 2003 and the related unrealized appreciation
(depreciation) were:
Futures Contracts Number of Long Aggregate Unrealized
Contracts Settlement Value Depreciation
NASDAQ 100 Index 5 $505,250 $(3,011)
Futures Contracts Number of Short Aggregate Unrealized
Contracts Settlement Value Depreciation
S&P 500 Index (4) $(840,900) $(8,432)
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Note 6 - Related Party Transactions
The beneficial ownership, either directly or indirectly, of more than 25%
of the voting securities of a Fund creates a presumption of control of the Fund,
under Section 2(a)(9) of the Investment Company Act of 1940. As of February 28,
2003 Charles Schwab & Co. holds 97.85% of outstanding Fund shares in an omnibus
account for the benefit of others.
Item 2. Code of Ethics. Not applicable to Semi-Annual Reports.
Item 3. Audit Committee Financial Expert. Not applicable to Semi-Annual
Reports.
Items 4-8. Reserved
Item 9. Controls and Procedures. Not applicable to Semi-Annual Reports
for the period ended February 28, 2003.
Item 10. Exhibits. Certifications required by Item 10(b) of Form N-CSR are
filed herewith.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2 under
the Act (17 CFR 270.30a-2).]
SIGNATURES
[See General Instruction F: the report must be signed by the
registrant, and by each officer that provided a certification.]
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.
(Registrant) Lindbergh Funds
By (Signature and Title)
* /S/ Dewayne Wiggins
[Dewayne Wiggins, President]
Date 04/16/2003
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 (Signature and Title)
* /s/ Dewayne Wiggins
[Dewayne Wiggins, President]
Date 04/16/2003
By (Signature and Title)
* /s/ Mike Durham
[Mike Durham, Chief Financial Officer]
Date 04/16/2003