<page>
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 Rd. St. Louis, MO 63129
- --------------------------------------------------------
(Address of principal executive offices) (Zip code)
Timothy Ashburn Unified Fund Services, Inc. 431 N Pennsylvania St.
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: 08/31/03
----------
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. ss. 3507.
Item 1. Reports to Stockholders.
<page>
Lindbergh Signature Fund
An actively managed asset allocation fund.
Annual Report
August 31, 2003
<page>
TABLE OF CONTENTS
Management Discussion and Analysis 1
Performance Summary 4
Schedule of Investments 5
Statement of Assets & Liabilities 8
Statement of Operations 9
Statement of Changes in Net Assets 10
Financial Highlights 11
Notes to Financial Statements 12
Auditor's Report 17
Trustee and Officer Information 18
Additional Information 19
Privacy Policy 20
<page>
Management Discussion and Analysis
September 8, 2003
Dear Fellow Shareholder:
Through the close of the Signature Fund's fiscal year, August 31, stock
investors this year had enjoyed at least a reprieve from the brutal pounding
delivered by a very relentless bear market. With the advent of spring, the stock
market bear returned to the woods (perhaps to hibernate) and this, for a change,
gave the market bulls the upper hand. And with the bulls back in the driver's
seat, investors are again basking in the warmth of positive returns. As you can
see in the accompanying table, year to date, through August 31, 2003, Signature
Fund investors have enjoyed a positive 11.4% return. Signature Fund returns
modestly lag the stock market as measured by the S&P 500, which has gained
16.0%.
- -------------------------------- ------------ -------------
Year to
Date thru Since
8/31/03 Inception*
- -------------------------------- ------------ -------------
Lindbergh Signature Fund 11.4% -3.9%
S&P 500 16.0% -7.3%
Wilshire 5000 18.4% -6.8%
Russell 2000 31.0% 1.5%
NASDAQ 35.6% -19.5%
- -------------------------------- ------------ -------------
*Fund inception - February
1, 2000
- -------------------------------- ------------ -------------
By comparison, narrow, and more speculative stock indexes such as the small
company index, the Russell 2000, and the tech-stock laden NASDAQ, have enjoyed
far superior results relative to, both the stock market itself, and the
Signature Fund. But the Signature Fund's underperformance is not surprising; in
fact, it's to be expected. Why?
To begin with, as manager of the Signature Fund, I am most fortunate in the
sense that I have considerable latitude to adjust its portfolio structure in an
effort to improve returns. To the extent I am successful in such efforts, fund
shareholders benefit in two ways. Not only do they enjoy above average returns,
but such efforts tend to reduce risk.
And speaking of risk, investors these past few years have been forced to
confront more than the usual amount of uncertainties such as a faltering
economy, war in Iraq, rising oil prices, and volatile interest rates. Given
these geopolitical and macro-economic risks, I have purposely structured the
fund's portfolio defensively (low stock market exposure) during those periods
where such risks were most acute.
- -------------------------------- ------------
Returns
12//31/01
thru
8/31/02
- -------------------------------- ------------
Lindbergh Signature Fund -4.6%
S&P 500 -19.4%
Wilshire 5000 -18.4%
Russell 2000 -19.3%
NASDAQ -32.6%
- -------------------------------- ------------
As you can see in the nearby table, this flexibility to position the
Signature Fund more defensively can substantially benefit fund
shareholders. The returns depicted were excerpted from the last year's
annual report. During the period shown, the stock averages were suffering
major losses, but Signature Fund losses, by comparison, were well
contained.
It's also noteworthy that the numbers in the two tables tend to mirror
each other. The NASDAQ, for example, showed both huge losses last year and
huge gains this year, but through the math of compounding it takes a gain
of 48% to offset the 32.6% loss shown in the second table.
Nonetheless, when managing an investment portfolio to limit losses,
one must expect, at times, to incur costs in terms of lower returns. If,
for example, the Signature Fund is defensively structured, and the stock
market quickly reverses direction, moving from a general downtrend to an
uptrend, Signature Fund returns will lag stock market returns until it
becomes more fully invested.
Such a reversal occurred in early March when the stock market began
its current advance. As the evidence began to accumulate that the market
was in for a more sustained advance, I greatly increased the
1
<page>
equity component of the Signature Fund's portfolio. But by not fully
participating in the early stages of this upward move, the Signature Fund
thus far this year has modestly underperformed the stock market year to
date and for the fiscal year ending August 31. For the fiscal year, the
Fund gained 6.5% vs. a 12.1% return for the S&P 500. To briefly summarize,
a willingness to be defensive (hold less stock), will, at times, carry a
short-term opportunity costs in the form of below-average returns. Results
this year reflect such a cost, but as you can see in the second table,
there are also large potential benefits.
What does this mean for the year ahead? Although there is always a
possible opportunity cost associated with a below-average stock market
exposure, I continue to believe that fund shareholders will be rewarded by
my efforts to limit losses during periods where risks are more acute. And
for the economy and stock market, the potential for disappointments and
negative developments remains higher than usual. Therefore, in my view, the
risk of stock investors suffering more losses easily exceeds the possible
opportunity costs of not fully participating in the next big up move. As
you'll see, for this and the reasons described below, I believe it's best
for investors to err on the side of caution.
Part of my concern with risks in the stock market relate to the
economy. Despite the hope and expectations of most investors, I see no
evidence that the economy is on the road to a more sustainable and vigorous
growth path. I don't think another recession is likely, but it is,
nonetheless, a growing possibility. Instead, for the time being, I expect
economic growth will simply remain below average as the economy tries to
muddle through major structural problems.
While economic growth is likely to remain sub par in the foreseeable
future, growth during this year's summer and early fall months will be
stronger than normal. That's due primarily to the huge dose of economic
stimulus provided by this spring's round of interest rate cuts, the Bush
administration's tax cuts, and spending for the Iraqi war. But once the
benefits of this stimulus dissipates, I expect economic growth will again
prove disappointingly sluggish.
My skepticism about the economy's growth potential over the next year
really boils down to a few key points. The first point to keep in mind:
Only two factors have kept the economy from sliding into an extended slump
- consumption fueled by cash taken out from home refinancings and two major
tax cuts. In essence, the economy has been propped up the past few years by
short-term measures - falling interest rates and tax cuts.
Next point: With short-term interest rates hovering around one
percent, the refinancing boom as a force for economic growth is spent; it's
over. And with an election year looming, it's unlikely we're going to see
yet another round of tax cuts. With these props to economic growth now set
to fall by the wayside, the economy is left standing on some very wobbly
legs.
Just how wobbly becomes apparent when you consider this basic fact:
The American public has been spending well beyond its means. Personal
incomes, for instance, are growing at an annual rate in the 2.0-2.5 percent
range, but consumer spending is growing much faster than income. When the
growth in consumption exceeds the growth in income, it constitutes
unsustainable over consumption. The public has financed this spending
binge, first by stock market profits during the bubble years, and more
recently, by a huge increase in mortgage debt, and through tax cuts. But
these artificial boosts to spending will soon end. This, in turn, suggests
a significant slowdown in consumer spending.
The economy's one bright spot - the one factor that has kept this
economy chugging along, albeit at a reduced growth rate - is consumer
spending. Yet, the real drivers to consumer spending will soon fall by the
wayside. This creates a looming void . . . what will fill it?
Policy makers at the Fed and Bush administration fervently hope that
business spending will pick up any slack in consumer spending. Business
investment spending may improve enough to make up some of the shortfall.
But business spending's portion of the economy isn't that large. So as a
practical matter, it is most unlikely that business spending could fill the
void of a major slowdown in consumer spending.
2
<page>
With this perspective, we can draw several key points: First, even if
we assume a resurgence in business spending offsets, dollar for dollar, any
slowdown in consumer spending, it will do nothing to boost economic growth
back to a higher rate. Instead, growth will remain stuck in the 2 percent
range.
Second, if economic growth over the next year is to run in the 3.5
percent range, which is the consensus outlook among forecasters, consumers
must continue to live and spend well beyond their means AND there must be a
large increase in business spending.
Third, with short-term interest rates below one percent, and further
tax cuts no longer possible, policy makers simply have no more rabbits to
pull out of the hat; their hands are tied. For these reasons and more, I
expect that the law of economics will soon begin to exert considerable drag
on consumers and their ability to sustain current levels of spending.
Taken together, these facts suggest that the economy is in a box with
no easy way out. It is thus, by definition, suffering from major structural
problems - primarily related to excessive levels of debt. Unfortunately,
structural problems can only be healed with time, not short-term policy
fixes. Moreover, attempts to paper over structural problems with such
policy initiatives as tax and interest rate cuts, may, in fact, prolong the
problem and put off the day of reckoning. Despite these problems, I expect
the economy will continue to muddle through, much as it has in recent
years, at a sub-par growth rate. I, however, expect that this is about the
best we can hope for.
Investors, however, clearly believe we've solved the economy's
problems; that we are now entering a period of sustained and vigorous
economic growth. This, at least, is the only logical rationale behind this
year's run up in stock prices. But for the reasons described, I believe the
economy will fall well short of such expectations. This sets the stage for
a pending collision between unrealistic investor expectations and the
economy's potential to meet such expectations. For both the economy and
stock market, risks remain on the downside.
If my assessment is correct, the stock market is facing yet another
period of heavy selling. What will provide the catalyst for the next sell
off? As I mentioned above, due to the latest round of home refinancings and
the child tax credit rebate checks, economic growth in this year's just
concluded third quarter will be very strong. This latest spending binge,
though, should be the economy's last hurrah.
With no more tax cuts and no more cash to take out from mortgage
refinancings, the easy money pipeline will soon be empty. Very shortly the
weekly flow of economic statistics will begin to reflect this fact. As the
bad news begins to trickle in, investors will be in denial. But as the
evidence mounts, it will become impossible to deny, the economy isn't off
to the races. Instead, it's entering yet another slowdown. At that point,
if not before, I expect the stock market will come under considerable
selling pressure.
I'll conclude with one final thought. Excessive debt and an enormous
misallocation of capital is what best characterizes the late 1990s stock
market bubble and economic boom. It has, unfortunately, taken far longer
than almost anyone expected to work off these excesses; it is still a work
in progress, in my view. As such, my goal in this unusual economic
environment is to opportunistically make money whenever possible, but also
to avoid major losses. The returns summarized on page 1 attest to our
success in meeting this goal. But if I'm to attain this goal in the year
ahead, I must continue to be objective in my assessment; to see the
economic glass not as half full, but as it truly is. For the reasons
described, I believe that for stock investors, the risks remain on the
downside. Better days are ahead, but we're not there yet.
Sincerely,
/s/ Dewayne Wiggins
Dewayne Wiggins
President, Lindbergh Funds
3
<page>
Lindbergh S&P 500
2/1/00 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 9,636.98 9,571.77
3/31/01 8,482.25 8,436.55
6/30/01 8,974.90 8,930.57
9/30/01 7,764.79 7,620.51
12/31/01 8,527.57 8,435.30
3/31/02 8,571.01 8,458.23
6/30/02 8,995.21 7,325.32
9/30/02 7,979.54 6,060.18
12/31/02 7,780.15 6,571.30
3/31/03 7,721.88 6,364.28
6/30/03 8,219.17 7,344.56
8/31/03 8,667.47 7,619.56
This graph shows the value of a hypothetical initial investment of
$10,000 in the Fund and the S&P 500 Index on February 1, 2000, inception
date for performance measurement, and held through August 31, 2003. The S&P
500 Index is an unmanaged group of stocks whose total return includes the
reinvestment of any dividends and capital gain distributions, but does not
reflect expenses, which have lowered the Fund's return. The returns shown
do not reflect deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The Fund's return
represents past performance and is not a guarantee of future results.
Average Annual Total Return For the Periods Ending August 31, 2003
Since Inception
One Year (February 1, 2000)
Lindbergh Signature Fund 6.52% -3.91%
S&P 500 Index 12.06% -7.31%
4
<page>
Schedule of Investments - August 31, 2003
COMMON STOCKS - 53.46%
<table>
<s> <c> <c>
Number of Shares Market Value
Arrangement Of Transportation Of Freight
and Cargo - 1.87%
6,390 Expeditors International Of Washington, Inc. $ 240,967
----------------
Communication Equipment - 2.64%
7,930 UTStarcom, Inc. * 340,673
----------------
Crude Petroleum & Natural Gas - 1.81%
3,381 Apache Corp. 233,221
----------------
Electromedical & Electrotherapeutic Apparatus - 1.85%
4,570 St. Jude Medical, Inc. * 237,960
----------------
Heavy Construction Other Than Buildings - 1.89%
5,200 Jacobs Engineering Group, Inc. * 243,516
----------------
In Vitro & In Vivo Diagnostic Substances - 2.09%
6,470 IDEXX Laboratories, Inc. * 269,217
----------------
Miscellaneous Transportation Equipment - 2.02%
3,360 Polaris Industries, Inc. 259,594
----------------
Orthopedic, Prosthetic & Surgical Appliances - 1.92%
5,920 Respironics, Inc. * 246,627
----------------
Pharmaceutical Preparations - 1.85%
5,000 American Pharmaceutical Partners, Inc. * 238,200
----------------
Real Estate Investment Trusts - 2.19%
6,770 Kimco Realty Corp. 282,174
----------------
Retail - Apparel & Accessory Stores - 2.23%
8,540 Pacific Sunwear of California, Inc. * 286,517
----------------
Retail - Eating Places - 2.02%
8,100 Applebee's International, Inc. 260,334
----------------
Retail - Home Furnishings & Equipment Stores - 1.82%
5,440 Bed Bath & Beyond, Inc. * 234,083
----------------
</table>
See accompanying notes which are an integral part of the financial statements.
5
<page>
Schedule of Investments - August 31, 2003
<table>
<s> <c> <c>
Retail - Women's Clothing Stores - 4.16%
16,500 Chico's Fashions, Inc. * $ 536,085
----------------
Savings Institution, Federally Chartered - 2.02%
3,010 Golden West Financial Corp. 259,673
----------------
Services - Computer Integrated Systems Design - 2.01%
5,820 CACI International, Inc. * 259,630
----------------
Services - Computer Programming Services - 2.25%
8,310 Cognizant Technology Solutions Corp. * 289,437
----------------
Services - Educational Services - 2.23%
4,990 Corinthian Colleges, Inc. * 287,174
----------------
Services - Equipment Rental & Leasing - 2.25%
3,630 Rent-A-Center, Inc. * 290,219
----------------
Services - Personal Services - 2.33%
8,670 Regis Corp. 299,895
----------------
Services - Pharmacy Services - 1.71%
3,400 Express Scripts, Inc. * 220,354
----------------
State Commercial Bank - 2.05%
8,000 Pacific Capital Bancorp 264,320
----------------
Surety Insurance - 2.03%
4,640 MBIA, Inc. 261,974
----------------
Surgical & Medical Instruments & Apparatus - 1.76%
3,000 Stryker Corp. 227,400
----------------
Trucking (No Local) - 2.45%
12,252 Heartland Express, Inc. * 313,039
----------------
TOTAL COMMON STOCKS (Cost $5,574,599) 6,882,283
----------------
Unit Investment Trusts - 2.00%
31,000 iShares Inc. MSCI Japan (a) 257,300
----------------
TOTAL UNIT INVESTMENT TRUSTS (Cost $259,086) 257,300
----------------
</table>
See accompanying notes which are an integral part of the financial statements.
6
<page>
Schedule of Investments - August 31, 2003
<table>
<s> <c> <c>
Contracts Options on Futures - 0.82%
25 S&P 500 Index Future / November 2003 @ 950 $ 105,625
----------------
TOTAL OPTIONS ON FUTURES (Cost $129,575) 105,625
----------------
SHORT-TERM INVESTMENTS - 43.72%
Principal Amount Market Value
U.S. Treasury & Agency Obligations - 38.78%
5,000,000 U.S Treasury Bill, 10/16/2003 (a) (Cost $4,993,372) 4,993,372
----------------
Money Market Securities - 4.94%
635,964 Money Market Fiduciary, 0.27%, (b) (Cost $635,964) 635,964
----------------
TOTAL INVESTMENTS (Cost $11,592,596) - 100.00% $ 12,874,544
----------------
Other assets less liabilities - 0.00% 37
----------------
TOTAL NET ASSETS - 100.00% $ 12,874,581
================
</table>
* Non-income producing.
(a) A portion of the security held at broker as collateral for futures trading.
(b) Variable rate security; the coupon rate shown represents the rate at August
31, 2003.
See accompanying notes which are an integral part of the financial statements.
7
<page>
Statement of Assets & Liabilities August 31, 2003
ASSETS
<table>
<s> <c>
Amount
Investments in securities, at value (cost $11,592,596) $ 12,874,544
Interest receivable 175
Dividends receivable 516
Variation margin on futures contracts 16,625
----------------------
Total assets 12,891,860
----------------------
LIABILITIES Amount
Other payables and accrued expenses $ 17,279
----------------------
Total liabilities 17,279
----------------------
Net Assets $ 12,874,581
SOURCES OF NET ASSETS Amount
Net Assets consist of:
Paid in capital $ 15,733,917
Accumulated net investment income (loss) (136,026)
Accumulated net realized gain (loss) on investments (4,036,862)
Net unrealized appreciation (depreciation) on:
Investments 1,305,899
Options (23,951)
Futures contracts 31,604
----------------------
Net Assets $ 12,874,581
======================
Shares of capital stock outstanding (no par value, unlimited shares authorized) 158,695
Net asset value, offering and redemption price per share ($12,874,581 / 158,695) $ 81.13
======================
</table>
See accompanying notes which are an integral part of the financial statements.
8
<page>
Statement of Operations
- for the year ended August 31, 2003
INVESTMENT INCOME
<table>
<s> <c>
Amount
Dividend income $ 38,711
Interest income 53,848
----------------
----------------
Total Income 92,559
----------------
EXPENSES
Amount
Investment advisor fee (Note 3) 84,044
Legal expenses 23,482
Administration expenses 18,000
Fund accounting expenses 18,000
Transfer agent expenses 16,008
Auditing expenses 9,023
Custodian expenses 6,636
Registration expenses 5,062
Trustee expenses 4,874
Pricing expenses 3,100
Insurance expenses 1,479
----------------
Total expenses before waived & reimbursed expenses 189,708
Expenses waived & reimbursed by Adviser (Note 3) (105,573)
----------------
----------------
Total operating expenses 84,135
----------------
----------------
Net Investment Income (Loss) 8,424
----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Amount
Net realized gain (loss) on:
Investment securities 28,693
Options (38,303)
Futures contracts (195,723)
Change in net unrealized appreciation (depreciation) on:
Investment securities 1,083,480
Options (23,951)
Futures contracts 1,397
----------------
Net realized and unrealized gain (loss) on investment securities 855,593
----------------
----------------
Net increase (decrease) in net assets resulting from operations $ 864,017
================
</table>
See accompanying notes which are an integral part of the financial statements.
9
<page>
Statement of Changes in Net Assets
INCREASE (DECREASE) IN NET ASSETS
<table>
<s> <c> <c>
Year ended Year ended
August 31, 2003 August 31, 2002
--------------------------------------
Operations
Net investment income (loss) $ 8,424 $ 36,536
Net realized gain (loss) on investment securities, options
and futures contracts (205,333) (340,740)
Change in net unrealized appreciation (depreciation) 1,060,926 61,612
------------------ -----------------
------------------ -----------------
Net increase (decrease) in net assets resulting from operations 864,017 (242,592)
------------------ -----------------
Distributions
From net investment income (36,432) (230,003)
From net realized gain - -
------------------ -----------------
------------------ -----------------
Total distributions (36,432) (230,003)
------------------ -----------------
Share Transactions
Proceeds from shares sold 1,754,615 240,912
Shares issued in reinvestment of distributions 36,432 230,003
Shares redeemed (39,650) (2,630,922)
------------------ -----------------
Net increase (decrease) in net assets resulting
from share transactions 1,751,397 (2,160,007)
------------------ -----------------
------------------ -----------------
Total Increase (Decrease) in Net Assets 2,578,982 (2,632,602)
------------------ -----------------
Net Assets
Beginning of period 10,295,599 12,928,201
------------------ -----------------
End of period $ 12,874,581 $ 10,295,599
================== =================
Transactions in Fund Shares:
Shares sold 24,027 3,025
Shares reinvested 495 2,896
Shares redeemed (537) (33,373)
------------------ -----------------
Net increase (decrease) in number of shares outstanding 23,985 (27,452)
================== =================
</table>
See accompanying notes which are an integral part of the financial statements.
10
<page>
Financial Highlights
<table>
<s> <c> <c> <c> <c>
Period Ended
Year ended Year ended Year ended August 31,
August 31,2003 August 31,2002 August 31,2002 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) 4.90 (2.07) (28.05) 8.75
---------------- ----------
---------------- ---------- ---------- -----------
Total from investment operations 4.96 (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 $ 81.13 $ 76.43 $ 79.72 $ 111.21
================ ========== ========== ===========
Total Return 6.52% (2.34)% (23.28)% 13.07% (b)
Ratios and Supplemental Data:
Net assets, end of period (000) $ 12,875 $ 10,296 $ 12,928 $ 15,482
Ratio of expenses to average net assets 0.75% 0.75% 0.75% 0.75% (c)
Ratio of expenses to average net assets
before waiver & reimbursement 1.69% 1.72% 1.57% 2.00% (c)
Ratio of net investment income to
average net assets 0.08% 0.32% 1.66% 4.33% (c)
Ratio of net investment income to
average net assets before waiver & reimbursement (0.87)% (0.65)% 0.85% 3.08% (c)
Portfolio turnover rate 74.13% 63.69% 62.79% 5.38% (c)
</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.
See accompanying notes which are an integral part of the financial statements.
11
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
August 31, 2003
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 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 are valued at the last
quoted sale price. Lacking a last sale price, a security is valued at the
mean of its last bid and ask price. NASDAQ over-the counter securities are
valued at the average of closing bid and asked prices. 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.
12
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
August 31, 2003 - continued
Note 2 - Significant Accounting Policies - (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 endeavors 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.
13
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
August 31, 2003 - 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,
2004, and to inform the Fund prior to that date, if the commitment is to
continue. For the year ended August 31, 2003, the Adviser earned fees of
$84,044, and waived all fees earned and reimbursed expenses to the Fund of
$21,529. 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 August 31, 2003 the
distribution plan has not been activated.
Note 4- Securities Transactions
For the year ended August 31, 2003, purchases and sales proceeds from
investment securities, excluding short-term investments were as follows:
Purchases Sales
Lindbergh Signature Fund $4,562,364 $4,376,495
14
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
August 31, 2003 - continued
Note 5 - Unrealized Appreciation (Depreciation)
At August 31, 2003, the cost for federal income tax purposes is
$11,712,686 and the composition of gross unrealized appreciation
(depreciation) of investment securities is as follows:
Appreciation Depreciation Net Appreciation
Lindbergh Signature Fund $1,311,760 $(149,902) $1,161,858
The difference between book cost and tax cost represents post-October
loss deferrals in the amount of $120,090.
At August 31, 2003, the aggregate settlement value of open futures
contracts expiring in September 2003 and the related unrealized
appreciation (depreciation) were:
NASDAQ 100 Index 5 $671,000 $5,210
S&P 500 Index 7 $1,763,475 $26,394
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 August 31, 2003 Charles Schwab & Co. holds 97.89% of outstanding Fund
shares in an omnibus account for the benefit of others.
Note 7 - Capital Loss Carryforwards
At August 31, 2003, the Fund has capital loss carryforwards of
$4,158,638 of which $3,823,359 expires in 2009, $119,627 expires in 2010,
and $215,652 expires in 2011. The Fund also has elected to defer
post-October losses totaling $120,090.
Note 8 - Distributions To Shareholders
The tax character of distributions paid during 2003 and 2002 was as
follows:
Distributions paid from: 2003 2002
------------ --------------
Ordinary Income $ 36,432 $230,003
Short-term gain - -
Long-term gain - -
------------ --------------
$ 36,432 $230,003
============ ==============
15
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
August 31, 2003 - continued
Note 8 - Distributions To Shareholders - (continued)
As of August 31, 2003, the components of distributable earnings
(accumulated losses) on a tax basis were as follows:
Undistributed ordinary income (loss) $ (136,026)
Undistributed long-term gain (loss) (3,916,772)
Unrealized appreciation (depreciation) 1,197,121
-------------------
-------------------
$(2,855,677)
===================
The difference between book basis and tax basis unrealized
appreciation is attributable to the tax deferral of post-October losses.
16
<page>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Trustees
Lindbergh Signature Fund:
We have audited the accompanying statement of assets and liabilities of the
Lindbergh Signature Fund, including the schedule of portfolio investments, as of
August 31, 2003, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended and financial highlights for the each of the three years and for the
period from October 1, 1999 (commencement of operations) to August 31, 2000 in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
investments and cash held as of August 31, 2003 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
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Lindbergh Signature Fund as of August 31, 2003, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the three
years and for the period from October 1, 1999 (commencement of operations) to
August 31, 2000 in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
September 24, 2003
17
<page>
Trustees and Officers of the Trust (Unaudited)
Trustees and officers of the Trust, together with information as to
their principal business occupations during at least the last five years,
are shown below. The officers of the Trust listed below are affiliated
persons of the Trust and the Adviser.
<table>
<s> <c> <c> <c> <c> <c>
(1) (2) (3) (4) (5) (6)
Name, Address, Positions Held Term of Principal Occupation(s) Port-folios Other
and Age with Fund Office and During Past 5 Years Over-seen Director-ships
Length of Held by
Time Served Director
INTERESTED
TRUSTEES #
Dewayne L. Wiggins* (54) Trustee and Unlimited President of Adviser since One None
5520 Telegraph Rd. #204 President term of office 1988
St. Louis, MO 63129 Served since
June 1999
Susan Wiggins* Trustee Unlimited Secretary of the Adviser One None
(47) term of office since 1992
2668 Cripple Creek Served since
St. Louis, MO 63129 June 1999
DISINTERESTED
TRUSTEES
Brian D. Fitzpatrick (50) Trustee* Unlimited Associate Professor of One None
18135 Canterbury term of office Finance, Rockhurst
Stillwell, KS 66085 Served since University, since 1989;
June 1999 Management Assessor, Sprint,
Inc. since 1992
Roger J. Levy Trustee* Unlimited President, The Illtex Agency, One None
(64) term of office Inc. since 1994; Director and
4302B Laclede Ave. Served since Chief Financial Officer of
St. Louis, MO 63108 June 1999 Access Control Technologies,
Inc. 1990-1998; registered
representative of Park Avenue
Life of the Guardian Life
Insurance Co. To January 2002
David M. Weinbaum (54) Trustee* Unlimited Author since 1995; President, One None
1106 Kingshighway term of office Melrose Properties since
Rolla, MO 65401 Served since 1994: owner/operator of eight
June 1999 McDonalds restaurants through
Davaron Corp., Aarmy Corp.
and sole proprietorships
since 1975
</table>
# Interested Trustee as defined in the 1940 Act.
* Dewayne L. Wiggins and Susan Wiggins are husband and wife
18
<page>
OTHER OFFICERS
<table>
<s> <c> <c>
Name, Address and Age Position Held Occupation During Past 5 Years
With Fund
Sandra J. Britton (50) Secretary Administrative Assistant for Adviser since August 1998;
5520 Telegraph Road #204 Accounting for Family Fare 1992 to June 1998.
St. Louis, MO 63129
Carol Highsmith (39) Vice President Assistant Secretary of the Ameriprime Funds and
431 N. Pennsylvania St. and Assistant Ameriprime Advisors Trust since October 2002; Assistant
Indianapolis, IN 46204 Secretary Secretary of the Unified Series Trust since December
2002; employed by Unified Fund Services, Inc. (November
1994 to present).
Ismael Lopez (55) Principal Vice President, Fund Accounting and Fund
431 N. Pennsyvania St. Accounting Administration, Unified Fund Services (September 2003
Indianapolis, IN 46204 Officer to present), Private Consultant (August 2002-August
2003), Director of Fund Administration, Orbitex Fund
Services (January 2000-July 2002), Assistant Controller
of The Reserve Funds (1997 - September 1999)
</table>
ADDITIONAL INFORMATION - TRUSTEES AND PROXY VOTING
Part B of the Trust's Registration Statement on Form N-1A, the
Statement of Additional Information ("SAI"), includes additional
information about the Trustees.
The SAI also includes a description of the policies and procedures
that the Trust uses to determine how to vote proxies relating to portfolio
securities.
You may obtain a copy of the SAI, without charge, by calling (888)
505-6361, Monday through Friday, 7 a.m. to 4 p.m. ET; and on the Securities
and Exchange Commission ("SEC") website at www.sec.gov.
Beginning in August 2004, the Trust will, without charge, provide a
copy of its proxy voting record to shareholders requesting same by calling
(888) 505-6361. The proxy voting record will also be available on the SEC
website at www.sec.gov.
19
<page>
NOTICE OF PRIVACY POLICIES AND PROCEDURES
We collect non-public personal information about you from the
following sources: (i) information we receive from you on applications or
other forms; and (ii) information about your transactions with us.
Our policies prohibit disclosure of non-public personal information
about present or former individual shareholders to anyone, except as
permitted or required by law and except as necessary for entities providing
services to us, performing functions for us or maintaining records on our
behalf, to perform the applicable function.
All services provided to you are through our service providers. All
records containing your non-public personal information are at our service
providers. These entities include our transfer agent, administrative
service provider, and investment adviser. Contracts with these entities
prohibit them from disclosing non-public personal information about you,
require them to restrict access to the information to those employees who
need to know that information, and, require them to maintain physical,
electronic, and procedural safeguards that comply with federal standards to
guard your non-public personal information. We restrict access to
non-public personal information about you to the entities described above.
20
<page>
Item 2. Code of Ethics.
(a) As of the end of the period covered by this report, the registrant
has adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless
of whether these individuals are employed by the registrant or a third
party.
(b) For purposes of this item, "code of ethics" means written
standards that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) Amendments:
During the period covered by the report, there have not been any
amendments to the provisions of the code of ethics.
(d) Waivers:
During the period covered by the report, the registrant has not
granted any express or implicit waivers from the provisions of the code of
ethics.
Item 3. Audit Committee Financial Expert.
The registrant's board of trustees has determined that the registrant
does not have an audit committee financial expert. The audit committee is
made up of individuals who have extensive financial and business
experience, but do not have the accounting experience necessary to come
within the definition of "audit committee financial expert." Due to the
size of the fund, the board of trustees has concluded that it would not be
cost effective to commence a search for an individual willing to serve on
the board who has a background to come within the definition of "audit
committee financial expert" and to expand the number of independent
trustees.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees
The aggregate fees billed for each of the last two fiscal years for
professional services rendered by McCurdy & Associates, CPA's, Inc. (the
"principal accountant") for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those
fiscal years:
FY 2003 $ 8,850
-------
FY 2002 $ 8,400
-----
(b) Audit-Related Fees
There were no fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this Item.
(c) Tax Fees
Set forth below are the aggregate fees billed in each of the last two
fiscal years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning.
Registrant [Adviser]
FY 2003 $ 650 $ 0
------ --------
FY 2002 $ 600 $ 0
------ -------
The fees were for preparation of 1120RIC and Form 8613 (excise tax).
(d) All Other Fees
There were no fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than the
services reported in paragraphs (a) through (c) of this Item.
(e) (1) Audit Committee's Pre-Approval Policies
In January 2001 registrant adopted an audit committee charter to
provide the audit committee with guidance. The audit committee consisted
(and consists) of three independent members of the board of trustees. The
charter [in parts 3, 4, 5, 13 and 23] called for receipt and review of the
principal accountant's written statement concerning independence; dialogue
concerning relationships or services to others [which involved all service
providers including registrant's custodian, investment adviser, transfer
agent, fund accountants and administrator]; and, prior to the board of
trustees selecting registrant's auditor, review and assess services
provided, fees charged and to be charged, and other relevant data. For the
current fiscal year, 2003, the audit committee addressed separate approval
of non-audit services.
In October 2003 registrant revised its audit committee charter to
contain, among other things, express provision for selecting registrant's
auditor [part IV. 1 and 15] and for pre-approving all permitted non-audit
services [part IV. 16]. With respect to auditor selection, the revised
charter expressly states that the audit committee is to consider [part IV.
1]:
(a) the audit scope and plan to assure completeness and effective use
of resources;
(b) the auditor's formal written statement delineating relationships
with the Trust;
(c) the auditors relationships or service to others which may impact
objectivity or independence;
(d) rotation of audit partners; and
(e) fees or other compensation paid to the auditor
(2) Percentages of Services Approved by the Audit Committee
Registrant [Adviser]
Audit-Related Fees: 100 % N.A. %
--------- --------
Tax Fees: 100 % N.A. %
--------- --------
All Other Fees: N.A. % N.A. %
--------- --------
All services to registrant's principal accountant were pre-approved by
registrant's board of trustees as recommended by its audit committee.
Item 5. Audit Committee of Listed Companies. Not applicable.
Item 6. Reserved.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds.
Not applicable.
Item 8. Reserved.
Item 9. Controls and Procedures.
(a) Based on an evaluation of the registrant's disclosure controls and
procedures as of October 16, 2003, the disclosure controls and procedures
are reasonably designed to ensure that the information required in filings
on Forms N-CSR is recorded, processed, summarized, and reported on a timely
basis.
(b) There were no significant changes in the registrant's internal
control over financial reporting that occurred during the registrant's last
fiscal half-year that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
Item 10. Exhibits.
(a)(1) Code is filed herewith
(a)(2) Certifications required by Item 10(a)(2) of Form N-CSR are filed
herewith.
(b) Certification required by Item 10(b) of Form N-CSR is filed herewith.
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.
(Registrant) Lindbergh Funds
By
Dewayne Wiggins
---------------------------------------------
Dewayne Wiggins, President
Date October 28, 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
Dewayne Wiggins
---------------------------------------------
Dewayne Wiggins, President
Date October 28, 2003
------------------------------------------
By
Ismael Lopez
---------------------------------------------
Ismael Lopez, Principal Accounting Officer
Date October 30, 2003
------------------------------------------
<page>