<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
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Lindbergh Funds
- -----------------------------------------------------------------------
(Exact name of registrant as specified in charter)
5520 Telegraph Rd. St. Louis, MO 63129
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(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: 8/31
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Date of reporting period: 2/29/04
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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.
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Lindbergh
Signature Fund
An actively managed asset allocation fund.
Semi-Annual Report
February 29, 2004
<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
Privacy Policy 17
Lindbergh Signature Fund
<page>
Management Discussion and Analysis
March 24, 2004
Dear Fellow Shareholder:
Like many mutual funds, the Signature Fund's fiscal year, which ends August 31,
is different than the calendar year. For the first half of its fiscal year, or
the period ending February 29, 2004, the Signature Fund earned a 10.3% return.
The S&P 500 earned 14.6% over this same period.
Since this is the first report of the new year, I'll briefly review calendar
year 2003 results. After having been forced to endure three consecutive losing
years, stock investors in early 2003 were clearly shell shocked and numb. But
with an easy victory in Iraq, low interest rates, huge tax cuts, and signs of an
improving economy, the stock market reversed course in mid-March and proceeded
to move steadily higher through the remainder of the year.
As you can see in the accompanying table, returns earned by the various stock
averages were quite impressive. Nonetheless, many stock indexes remain well
below the peak levels reached in 2000. That, in itself, is testimony to the
strength of the recent bear market. Even if the bear market is over and, as I'll
describe below, that remains a very big IF, it has placed many stock averages in
a very deep hole.
- ---------------------------- ---------- -----------
Calendar Since
Year 2003 Inception*
- ---------------------------- ---------- -----------
Lindbergh Signature Fund 18.2% -1.1%
S&P 500 28.7% -3.3%
Wilshire 5000 31.7% -2.6%
Russell 2000 47.3% 5.5%
NASDAQ 50.0% -15.0%
- ---------------------------- ---------- -----------
*Fund inception -
February 1, 2000
- ---------------------------- ---------- -----------
For calendar year 2003, the Signature Fund shareholders earned an 18.2% total
return. The Fund's 2003 return lagged the stock averages, especially the more
speculative small-stock Russell 2000 and the tech-heavy NASDAQ. I, however, was
not disappointed by its 2003 return because, in part, an absolute return of
18.2% is well-above the return earned by the stock market over time. Also, the
Fund outperformed the S&P 500, its target index, during each of its first three
calendar years in operation. Finally, while I strive mightily to top the stock
averages over all periods, as a practical matter, underperformance is, at times,
unavoidable. I discussed some of the reasons for this in the September 2003
letter, which accompanied the Fund's 2003 annual report. Here's an excerpt:
". . . 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 (2003) 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 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 . .
.underperformed."
As you can see in the table, the Fund's "Since Inception" return is a -1.1%
(annual rate) vs. a -3.3% annualized loss for the S&P 500. Given the stock
market's recent strength, the size of the Fund's "Since Inception" performance
advantage, relative to the S&P 500, narrowed considerably over the past year.
This period, however, was but one battle in what will, most likely, be a long
war.
Speaking of battles, the stock market has had to contend with many serious
issues in recent years. While last year's gains provided a much needed salve to
investors' wounds, many problems remain unresolved. Instead, these problems have
been temporarily papered over with huge doses of economic stimuli. My concern is
that once the punch bowl of tax cuts and artificially cheap credit is taken
away, the bear market
Lindbergh Signature Fund
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may come out of hibernation. In other words, it's quite likely that the bear
market is not yet over; that last year's gains were simply a respite along the
path to even lower stock prices. In the paragraphs below, I'll describe why
risks for the economy and investors remain on the downside.
Due in part to the pending election, the Federal Reserve and Bush Administration
are in a full-court press to boost economic growth. While they're not yet flying
over the country dumping money from helicopters, they're certainly infusing the
economy with massive doses of fiscal and monetary stimuli.
And if you follow this money trail, you quickly discover that this stimuli is
all debt financed. Consider, for example, the federal budget. Even without the
tax cuts, it's awash in red ink. Therefore, new tax cuts can only be funded by
borrowing lots more money. And for better or worse, foreign investors are
lending us much of the money needed to fund tax cuts and this helps maintain our
profligate spending.
For its part, the Federal Reserve has forced short-term interest rates to
40-year lows. Among other things, this low interest rate environment, engineered
by the Fed, encourages homeowners to refinance their home mortgages and borrow
even more money. Government policies are purposely encouraging households to
live and spend well beyond their means.
Net-net, all this borrowing artificially pumps up consumer spending. As a result
of these policy initiatives, debt is growing much faster than the economy
itself. Is it really surprising then, that each year it's taking more and more
debt to sustain demand for the economy's goods and services?
If you strip away all the clutter, there's only one conclusion. With this huge
dose of economic stimulus, all debt funded, we're simply borrowing our way to
higher economic growth. Unfortunately, the bulk of this borrowing isn't being
used to finance new plants and equipment, the very type of spending that helps
promote future economic growth. Instead, we're borrowing to fund current
consumption.
As we've seen in recent years, high levels of debt-financed consumption can
easily boost short-term economic growth. But this poses several problems. First,
it does nothing to promote future growth and second, it is not sustainable over
the long term. Thus, today's economic growth isn't based on sound economic
fundamentals, but short-term gimmicks, gimmicks driven in large part by the
election cycle. Borrow and spend today . . . pay for it tomorrow - after the
election. That is the real mantra of today's political leaders. One thing for
sure, tomorrow will come, and pay we will.
While this debt gorging boosts short-term growth, it's destined to exert
considerable drag on future economic growth. Quite simply, the laws of economics
will soon force consumers to retrench, to pay off debts, and to live within
their means. I expect, at the very least, this will lead to another round of
economic sluggishness; a resumption of the post-bubble economic hangover. Also,
the risk of another, deeper recession, while unlikely, is an increasing
possibility.
This reminds me of another problem - the recent run up in stock prices. Before
delving into this issue, let me say up front, I've greatly enjoyed the gains
earned by fund shareholders this year. Nonetheless, the willingness of investors
to again pour huge sums of money back into stocks is surprising. Is there, for
example, anyone who still believes in all that new era hype? Surely not. Also,
logic suggests that investors should still be licking their wounds, wounds
inflicted by the grinding bear market. Finally, by the time-tested measures of
intrinsic value, stocks, as a class, are more expensive than at any time except
during the late stages of the market's final blowoff. Despite these facts,
investors are returning to the stock market in droves. What's going on?
Many investors, it seems, have been sold on the idea that when the bubble burst,
their main mistake was not to have cut losses. They should have just "jumped
ship" once the market headed lower. Well, this time many investors plan to avoid
this mistake, to get out before things get nasty. There's only one problem -
they'll all try to head for the exits at the same time. This stampede could, in
turn, precipitate a crash.
Lindbergh Signature Fund
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Unfortunately, the stock market is again beginning to resemble a casino - just
not as big a casino as the late 1990's monstrosity. The economy, on the other
hand, is being held together by such short-term band-aids as tax cuts and
ultra-low interest rates.
I wish I could offer a more cheerful assessment, but I keep coming back to one
thing. What's better - to be realistic and right, or simply become a perennial
optimist and incur unnecessary losses for your clients? I constantly strive to
remain objective and then to share my un-sugarcoated views with you.
(For example, I've regularly conveyed my skepticism about the market's long-term
potential going back to mid-1998. That is when I first used the term "bubble" to
describe stock prices. During the subsequent six years, stock investors have
endured an incredibly wild ride, but the stock market (S&P 500) shows only a
negligible gain. Pundits, however, seem surprised, even taken aback, by such
dismal results, but as the record shows, they came as no surprise to me, or
those who follow my market commentary.)
When assessing the prospects for the economy and markets, my goal is to add
value by being more right than wrong. A secondary and closely related goal is
like the Boy Scouts's motto - Be Prepared - to the fullest extent possible.
Finally, there is no such thing as perfection in this business, and you can't
prepare for the unforeseeable. So when events unfold in ways that could not be
anticipated, or one is simply wrong, it's important to be flexible; willing to
bend, but not break.
Here's an example of how events didn't work out as planned. In last fall's
annual report, I described why, in my view, economic growth going forward would
likely disappoint. By most measures, economic growth certainly has, in recent
months, fallen short of general expectations, but it has proven stronger than
what I was anticipating. Perhaps for this reason, the stock market has likewise
held up better than my expectations.
Also, I've been surprised that long-term interest rates are again approaching
40+ year lows. (Today's very low long-term interest rates has many investment
pros scratching their heads. The most likely explanation is Japan. In its effort
to prop up the yen, it is buying huge amounts of U.S. treasury bonds and this is
pushing down longer-term interest rates.) This drop in rates is leading to
another round of mortgage refinancing. Much of the money being taken out of
refinanced mortgages will soon be spent. In addition, this year's tax cut, will
be much larger than normal. These factors - mortgage refinancings and tax
refunds - will provide a big boost to the economy's performance well into this
summer.
I, however, expect at some point we must "pay the Piper" for speculative
excesses in the stock market and our increasingly hefty debt burdens. I
certainly don't want to be caught off-guard when this day of reckoning arrives.
But I will be pleased, if it can be put off for another year, and during the
interim, give us a chance to earn some profits.
For now at least, the Signature Fund is maintaining a close to fully-invested
equity position. I am, though, prepared to quickly reduce the Fund's equity
exposure if that day of reckoning hits sooner rather than later. Please stay
tuned.
Respectfully yours,
/s/ Dewayne Wiggins
Dewayne Wiggins
President, Lindbergh Funds
Lindbergh Signature Fund
<page>
Performance Summary
Lindbergh S&P
Signature 500
Fund Index
($9,557) ($8,732)
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 8,670.02 7,619.56
2/29/04 9,556.91 8,731.96
This graph shows the value of a hypo-thetical 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 February 29, 2004. 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 February 29, 2004
Since Inception
One Year (February 1, 2000)
Lindbergh Signature Fund 25.30% -1.10%
S&P 500 Index 38.43% -3.27%
Lindbergh Signature Fund
<page>
<table>
<s> <c> <c>
Schedule of Investments - February 29, 2004 (Unaudited)
COMMON STOCKS - 48.41%
Number of Market Value
Shares
Communication Equipment - 1.81%
7,930 UTStarcom, Inc. * $ 262,729
---------------
Crude Petroleum & Natural Gas - 1.92%
6,762 Apache Corp. 278,392
---------------
Electromedical & Electrotherapeutic Apparatus - 2.29%
4,570 St. Jude Medical, Inc. * 332,011
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In Vitro & In Vivo Diagnostic Substances - 2.28%
6,470 IDEXX Laboratories, Inc. * 330,423
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Miscellaneous Transportation Equipment - 1.96%
3,360 Polaris Industries, Inc. 284,558
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Orthopedic, Prosthetic & Surgical Appliances - 2.14%
5,920 Respironics, Inc. * 309,675
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Pharmaceutical Preparations - 3.81%
7,500 American Pharmaceutical Partners, Inc. * 267,750
3,760 Forest Laboratories, Inc. * 283,805
---------------
551,555
---------------
Real Estate Investment Trusts - 4.25%
14,560 Annaly Mortgage Management, Inc. 297,024
6,770 Kimco Realty Corp. 317,852
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614,876
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Retail - Apparel & Accessory Stores - 2.12%
12,810 Pacific Sunwear of California, Inc. * 307,056
---------------
Retail - Eating Places - 2.29%
8,100 Applebee's International, Inc. 331,371
---------------
Retail - Women's Clothing Stores - 2.36%
8,000 Chico's Fashions, Inc. * 342,000
---------------
</table>
See accompanying notes which are an integral part of the financial statements.
Lindbergh Signature Fund
<page>
<table>
<s> <c> <c>
Schedule of Investments - February 29, 2004 (Unaudited)
COMMON STOCKS - 48.41% - continued
Number of Market Value
Shares
Savings Institution, Federally Chartered - 2.40%
3,010 Golden West Financial Corp. $ 347,414
---------------
Services - Computer Programming Services - 2.72%
8,310 Cognizant Technology Solutions Corp. * 394,226
---------------
Services - Educational Services - 2.07%
4,990 Corinthian Colleges, Inc. * 300,148
---------------
Services - Equipment Rental & Leasing - 2.04%
9,075 Rent-A-Center, Inc. * 295,028
---------------
Services - Nursing & Personal Care Facilities - 1.81%
7,460 Sunrise Senior Living, Inc. * 262,294
---------------
Services - Personal Services - 2.59%
8,670 Regis Corp. 374,717
---------------
Services - Pharmacy Services - 1.71%
3,400 Express Scripts, Inc. * 247,384
---------------
Surety Insurance - 2.11%
4,640 MBIA, Inc. 305,266
---------------
Surgical & Medical Instruments & Apparatus - 1.84%
3,000 Stryker Corp. 266,190
---------------
Wholesale - Computers & Peripheral
Equipment & Software - 1.89%
5,740 ScanSource, Inc. * 273,568
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TOTAL COMMON STOCKS (Cost $5,284,262) 7,010,881
---------------
Exchange-Traded Funds - 11.43%
31,000 iShares MSCI Japanese Index Fund 301,010
8,000 iShares Russell 2000 Value Index Fund 1,354,960
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TOTAL EXCHANGE-TRADED FUNDS (Cost $1,566,934) 1,655,970
---------------
</table>
See accompanying notes which are an integral part of the financial statements.
Lindbergh Signature Fund
<page>
<table>
<s> <c> <c>
Schedule of Investments - February 29, 2004 (Unaudited)
SHORT-TERM INVESTMENTS - 40.22%
Principal Market Value
Amount
U.S. Treasury & Agency Obligations - 34.49%
$ 5,000,000 U.S Treasury Bill, 4/15/2004 (a) (Cost $4,994,385) $ 4,994,410
---------------
Money Market Securities - 5.73%
829,392 Money Market Fiduciary, 0.26%, (b) (Cost $829,392) 829,392
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TOTAL INVESTMENTS (Cost $12,674,973) - 100.06% 14,490,653
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Other assets less liabilities - (0.06)% (8,448)
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TOTAL NET ASSETS - 100.00% $14,482,205
===============
</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
February 29, 2004.
See accompanying notes which are an integral part of the financial statements.
Lindbergh Signature Fund
<page>
<table>
<s> <c>
Statement of Assets & Liabilities (Unaudited) February 29, 2004
ASSETS
Amount
Investments in securities, at value (cost $12,674,973) $ 14,490,653
Receivable from Adviser 8,140
Interest receivable 141
Dividends receivable 301
Variation margin on futures contracts 3,950
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Total assets 14,503,185
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LIABILITIES
Amount
Accrued administration, fund accounting and transfer agent fees $ 9,501
Accrued investment adviser fee 8,140
Accrued expenses 3,273
Trustee fees payable 66
---------------------
Total liabilities 20,980
---------------------
Net Assets 14,482,205
---------------------
SOURCES OF NET ASSETS
Amount
Net Assets consist of:
Paid in capital $ 16,025,898
Accumulated net investment income (loss) (143,694)
Accumulated net realized gain (loss) on investments (3,555,590)
Net unrealized appreciation (depreciation) on:
Investments 1,815,680
Futures contracts 339,911
---------------------
Net Assets $ 14,482,205
=====================
Shares of capital stock outstanding (no par value, unlimited shares authorized) 161,986
Net asset value, offering and redemption price per share ($14,482,205 / 161,986) $ 89.40
=====================
</table>
See accompanying notes which are an integral part of the financial statements.
Lindbergh Signature Fund
<page>
Statement of Operations (Unaudited)
- for the six months ended February 29, 2004
<table>
<s> <c>
INVESTMENT INCOME
Amount
Dividend income $ 26,300
Interest income 24,658
-----------------
Total Income 50,958
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EXPENSES
Amount
Investment adviser fee (Note 3) $ 50,243
Legal expenses 7,979
Administration expenses 8,981
Fund accounting expenses 8,981
Transfer agent expenses 8,832
Auditing expenses 5,377
Custodian expenses 3,405
Registration expenses 2,475
Trustee expenses 1,992
Pricing expenses 1,579
Printing expenses 529
Miscellaneous expenses 211
Insurance expenses 941
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Total expenses before waived & reimbursed expenses 101,525
Expenses waived & reimbursed by Adviser (Note 3) (51,338)
-----------------
Total operating expenses 50,187
-----------------
Net Investment Income (Loss) 771
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Amount
Net realized gain (loss) on:
Investment securities $ 436,790
Options (164,885)
Futures contracts 209,367
Change in net unrealized appreciation (depreciation) on:
Investment securities 509,781
Options 23,951
Futures contracts 308,307
-----------------
Net realized and unrealized gain (loss) on investment securities 1,323,311
-----------------
Net increase (decrease) in net assets resulting from operations $ 1,324,082
=================
</table>
See accompanying notes which are an integral part of the financial statements.
Lindbergh Signature Fund
<page>
Statement of Changes in Net Assets
<table>
<s> <c> <c>
Six months ended
February 29, 2004 Year ended
(Unaudited) August 31, 2003
----------------------- ------------------
Operations
Net investment income (loss) $ 771 $ 8,424
Net realized gain (loss) on investment securities, options
and futures contracts 481,272 (205,333)
Change in net unrealized appreciation (depreciation) 842,039 1,060,926
----------------------- ------------------
Net increase (decrease) in net assets resulting from operations 1,324,082 864,017
----------------------- ------------------
Distributions
From net investment income (8,438) (36,432)
----------------------- ------------------
Total distributions (8,438) (36,432)
----------------------- ------------------
Share Transactions
Proceeds from shares sold 510,085 1,754,615
Shares issued in reinvestment of distributions 8,438 36,432
Shares redeemed (226,543) (39,650)
----------------------- ------------------
Net increase (decrease) in net assets resulting
from share transactions 291,980 1,751,397
----------------------- ------------------
Total Increase (Decrease) in Net Assets 1,607,624 2,578,982
----------------------- ------------------
Net Assets
Beginning of period 12,874,581 10,295,599
----------------------- ------------------
End of period $ 14,482,205 $ 12,874,581
======================= ==================
Accumulated net investment income (loss) $ (7,667) $ (136,026)
----------------------- ------------------
Transactions in Fund Shares:
Shares sold 5,797 24,027
Shares reinvested 100 495
Shares redeemed (2,606) (537)
----------------------- ------------------
Net increase (decrease) in number of shares outstanding 3,291 23,985
======================= ==================
</table>
See accompanying notes which are an integral part of the financial statements.
Lindbergh Signature Fund
<page>
Financial Highlights
<table>
<s> <c> <c> <c> <c> <c>
Years Ended
Six months ended August 31,
----------------------------------
February 29, 2004 Period ended
(Unaudited) 2003 2002 2001 August 31, 2000(a)
---------------- ---------------------------------------------------
Selected Per Share Data:
Net asset value, beginning of period $ 81.13 $ 76.43 $ 79.72 $ 111.21 $ 100.00
---------------- --------- ---------- ---------- ---------------
Income from investment operations
Net investment income 0.02 0.06 0.26 1.52 4.18
Net realized and unrealized gain (loss) 8.30 4.90 (2.07) (28.05) 8.75
---------------- --------- ---------- ---------- ---------------
Total from investment operations 8.32 4.96 (1.81) (26.53) 12.93
---------------- --------- ---------- ---------- ---------------
Less Distributions:
From net investment income (0.05) (0.26) (1.48) (3.26) (1.71)
From net realized gain - - - (1.70) (0.01)
---------------- --------- ---------- ---------- ---------------
Total distributions (0.05) (0.26) (1.48) (4.96) (1.72)
---------------- --------- ---------- ---------- ---------------
Net asset value, end of period $ 89.40 $ 81.13 $ 76.43 $ 79.72 $ 111.21
================ ========= ========== ========== ===============
Total Return 10.26% (b) 6.52% -2.34% -23.28% 13.07% (b)
Ratios and Supplemental Data:
Net assets, end of period (000) $ 14,482 $ 12,875 $ 10,296 $ 12,928 $ 15,482
Ratio of expenses to average net assets 0.75% (c) 0.75% 0.75% 0.75% 0.75% (c)
Ratio of expenses to average net assets
before waiver & reimbursement 1.51% (c) 1.69% 1.72% 1.57% 2.00% (c)
Ratio of net investment income to
average net assets 0.01% (c) 0.08% 0.32% 1.66% 4.33% (c)
Ratio of net investment income to
average net assets before waiver
& reimbursement (0.75)%(c) (0.87)% (0.65)% 0.85% 3.08% (c)
Portfolio turnover rate 24.01% 74.13% 63.69% 62.79% 5.38%
</table>
(a) For the period October 1, 1999 (effective date of registration) to August
31, 2000.
(b) Not annualized.
(c) Annualized.
Lindbergh Signature Fund
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
February 29, 2004 (Unaudited)
----------------------------------------------------------------------
Note 1 - General
The Lindbergh Signature Fund (the "Fund") is organized as a non-diversified
series of Lindbergh Funds, a Massachusetts business trust (the "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 an 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 that trade on an organized exchange are valued at the closing price
reported by the exchange on which the securities are traded. Lacking a closing
price, the securities are valued at the average of the closing bid and asked
prices on the exchange. Over-the-counter securities are valued at the reported
closing price. Lacking a closing price, the securities are valued at the average
of the closing bid and asked prices. Debt securities maturing in 60 days or less
are usually valued at amortized (gradually reduced) cost. Longer-term debt
securities may be valued by an independent pricing service. Securities with
unavailable market quotations and other assets are valued at "fair value" -
which is determined or directed by the Board of Trustees.
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.
Lindbergh Signature Fund
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
February 29, 2004 (Unaudited) - continued
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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 subchapter M of 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.
Lindbergh Signature Fund
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
February 29, 2004 (Unaudited) - continued
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Note 2 - Significant Accounting Policies - (continued)
F) Other
Accounting principles generally accepted in the United States of America require
that permanent tax differences relating to shareholder distributions be
reclassified to paid-in capital.
G) Estimates
Preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America 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 six months ended
February 29, 2004, the Adviser earned fees of $50,243, and waived all fees
earned and reimbursed expenses to the Fund of $1,095. 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 29, 2004 the distribution plan has not been activated.
Note 4 - Securities Transactions
For the six months ended February 29, 2004, purchases and sales proceeds from
investment securities, excluding short-term investments and U.S. government
obligations were as follows:
Purchases Sales
Lindbergh Signature Fund $2,454,332 $1,873,609
Lindbergh Signature Fund
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
February 29, 2004 (Unaudited) - continued
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Note 5 - Unrealized Appreciation (Depreciation)
At February 29, 2004, the cost for federal income tax purposes is $12,674,973
and the composition of gross unrealized appreciation (depreciation) of
investment securities is as follows:
Net
Appreciation Depreciation Appreciation
Lindbergh Signature Fund $1,865,264 $(49,584) $1,815,680
At February 29, 2004, the aggregate settlement value of open futures contracts
expiring in March 2004 and the related unrealized appreciation (depreciation)
were:
Number of Aggregate Unrealized
Futures Contracts Long Contracts Settlement Value Appreciation
NASDAQ 100 Index 5 $735,750 $34,260
S&P 500 Index 17 $4,864,550 $305,651
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 29, 2004
Charles Schwab & Co. holds 97.98% of outstanding Fund shares in an omnibus
account for the benefit of others.
Note 7 - Distributions To Shareholders
The tax character of distributions paid during the fiscal years ended August 31,
2003 and 2002 were as follows:
Distributions paid from: 2003 2002
------------- ---------------
Ordinary Income $ 36,432 $ 230,003
Short-term gain - -
Long-term gain - -
------------- ---------------
$ 36,432 $ 230,003
============= ===============
On December 24, 2003, the Fund paid an income dividend of $0.0531 per share to
shareholders of record on December 23, 2003. During the six months ended
February 29, 2004, the Fund paid ordinary income distributions of $8,438.
Lindbergh Signature Fund
<page>
Lindbergh Signature Fund
Notes to the Financial Statements
February 29, 2004 (Unaudited) - continued
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Note 8 - Change of Auditors
On April 23, 2004, Cohen McCurdy, Ltd. ("Cohen") was selected to replace McCurdy
& Associates CPA's, Inc. ("McCurdy") as the Fund's independent auditor for the
2004 fiscal year. The Trust's selection of Cohen was recommended by the Audit
Committee and was approved by the Board of Trustees.
McCurdy's report on the Fund's balance sheet as of August 31, 2003 did not
contain an adverse opinion or a disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles. At the balance
sheet date and through the date of the engagement of Cohen, there were no
disagreements between the Fund and McCurdy on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which such disagreements, if not resolved to the satisfaction of
McCurdy, would have caused it to make reference to the subject matter of the
disagreement in connection with its reports on the financial statements for such
years.
Lindbergh Signature Fund
<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.
Lindbergh Signature Fund
<page>
Item 2. Code of Ethics. Not Applicable
Item 3. Audit Committee Financial Expert. Not Applicable
Item 4. Principal Accountant Fees and Services. Not Applicable
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. Purchases of Equity Securities by Closed-End Funds. Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders. Not Applicable
Item 10. Controls and Procedures.
(a) Based on an evaluation of the registrant's disclosure controls and
procedures as of April 8, 2004 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 11. Exhibits.
(a)(1) Not Applicable
(a)(2) Certifications by the registrant's principal executive officer and
principal financial officer, pursuant to Section 302 of the Sarbanes- Oxley
Act of 2002 and required by Rule 30a-2under the Investment Company Act of
1940 are filed herewith.
(a)(3) Not Applicable
(b) Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 is filed herewith.
<page>
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
* /s/ Dewayne Wiggins
-------------------------------------------
Dewayne Wiggins, President
Date May 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/ Dewayne Wiggins
-------------------------------------------
Dewayne Wiggins, President
Date May 4, 2004
By
* /s/ Freddie Jacobs, Jr.
-------------------------------------------------------------
Freddie Jacobs, Jr., Principal Accounting Officer
Date May 4, 2004
<page>