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)
Freddie Jacobs, Jr.
- -------------------
Unified Fund Services, Inc.
- ---------------------------
431 N. Pennsylvania St.
- ---------------------------
Indianapolis, IN 46204
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(Name and address of agent for service)
Registrant's telephone number, including area code: 314-416-0055
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Date of fiscal year end: 08/31
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Date of reporting period: 08/31/04
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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.
LINDBERGH SIGNATURE FUND
An actively managed asset allocation fund.
ANNUAL REPORT
AUGUST 31, 2004
LINDBERGH SIGNATURE FUND
TABLE OF CONTENTS
Management Discussion and Analysis 1
Performance Summary 4
Shareholder Expense Example 5
Schedule of Investments 7
Statement of Assets & Liabilities 10
Statement of Operations 11
Statement of Changes in Net Assets 12
Financial Highlights 13
Notes to Financial Statements 14
LINDBERGH SIGNATURE FUND
MANAGEMENT DISCUSSION AND ANALYSIS
SEPTEMBER 2, 2004
Dear Fellow Shareholder:
For the fiscal year ending August 31, the Signature Fund earned 1.1%. The S&P
500 by comparison earned 11.5%. As a result of this underperformance, the Fund's
performance advantage relative to its target index, the S&P 500, has narrowed
considerably since the last annual report. For example, the Fund's since
inception return is -2.8% giving it only a small advantage to the S&P 500.
As the Fund's portfolio manager, I surely feel the pain of this past year's
underperformance more acutely than most other Fund shareholders. At least from
my perspective in managing the Fund's portfolio, this past year was one where
nothing seemed to fall into place; or whatever could go wrong did.
Here's one most important example: Over most 12-month periods, the Fund's stock
investments have delivered superior returns relative to the S&P 500. But
unfortunately, over the past fiscal year this was not the case. During this
period, the returns earned by the stocks in the Fund actually lagged the market
(S&P 500) by over six percentage points. This, in turn, was one of the major
contributing factors to the Fund's underperformance this past fiscal year.
Another important drag on the Fund's returns was asset allocation. Asset
allocation is that decision on how to divide or allocate portfolio assets among
various alternative investments such as cash, bonds, and stocks. As you can
imagine, it is a key determinant of the returns earned in any investment
portfolio.
I employ asset allocation as a tool to improve returns and, where practical, to
lessen risk. Fund shareholders have benefited in varying degrees from such
efforts during the Fund's first three years, but that was not the case over this
past fiscal year. Instead, changes in asset allocation during this period
actually reduced the Fund's performance.
To summarize, the Fund's performance over this past fiscal year lagged the stock
market primarily for two reasons. First, the stocks in its portfolio
uncharacteristically underperformed. In addition, Fund returns were further
reduced due to my efforts to limit risks and boost returns by the adjustments
made to the Fund's overall stock market exposure.
* * * *
In my 18 years as a professional investment manager, I can't recall a more
aggravating or frustrating year. But when I put things in perspective, it helps
lessen the pain . . . at least a bit.
For example, I've studied many great long-term investment records and the
managers that earned them. With only one exception, each of these top managers
has been forced to endure extended periods - periods running at least two
consecutive years, and quite often more - of lagging performance relative to the
stock market. Even Warren Buffett, who is widely regarded as today's greatest
living investor, has encountered extended periods of sub-par returns.
The reason even great managers must work through periods of below-average
returns is mostly due to the perverse role of luck. Over the short-term, and in
investment management anything less than two-to-three years is short-term, luck
plays a big role in the returns earned. Simple good luck, for example, can make
an inept investment manager look like a genius, and an occasional run of bad
luck can make an investment genius look like a bumbling idiot. Unfortunately,
the passage of time is the only way to be sure whether a period of lagging
performance is simply due to a streak of bad luck, or if it is symptomatic of a
more fundamental flaw. It simply takes a fair bit of time to wash out the impact
of luck.
1
LINDBERGH SIGNATURE FUND
Here's a recent example of this point: Warren Buffett was interviewed by
Barron's in its October 27, 2003 issue. During the interview, Mr. Buffett made
one thing very clear - looking ahead, he saw very few good investment
opportunities. As a result, he said he was raising and holding a huge amount of
cash - about $24 billion worth to be exact - even though cash was paying less
than one percent, per annum.
As I'm writing this on September 2, about ten months after Mr. Buffett's
comments, we find that the stock market is up over six percent and bonds have,
on average, provided close to a four percent return. Thus, the $24 billion Mr.
Buffett invested in low returning cash last year has clearly underperformed both
the stock and bond markets. On the face of it, Mr. Buffett was wrong . . . but
was he really wrong??
Although his returns this past year clearly lag both stocks and bonds, it's
important to remember that he's only in the second inning of a long ball game.
If, for example, stock prices sell off over the next year or so, and bond prices
dribble lower, then over a full two-year span, events could easily prove Mr.
Buffett right. (When contemplating bets against Mr. Buffett, history suggests
one should tread very carefully.)
As I mentioned above, I was quite disappointed by the Signature Fund's
below-average performance over this past fiscal year. But feelings of
disappointment are driven by emotions. And when it comes to investing, long-term
success depends on maintaining a clear demarcation between one's emotions and
clear-headed logic.
My logical side, for example, understands full well that periods of sub-par
returns are a natural part of the investment cycle, and so cannot always be
avoided. So while I feel considerable pain and frustration over how the last
fiscal year played out, my confidence in the conceptual underpinnings and tools
used to manage the Signature Fund has never been higher.
The concepts underlying the Fund's investment approach have not changed since it
opened to outside shareholders in early 2000. There is, however, one big
difference today. That difference is the experience gained in managing the Fund
by these concepts in real time conditions and in a very demanding stock market
environment. The important lessons of this experience have allowed me to fine
tune and improve on the ways we work to achieve the Fund's goals. It is truly
ironic then, that despite the tremendous benefit of this experience, the Fund
earned much higher relative returns during its first three years than it did
over the last fiscal year! But again from my perspective, this was more of a
case where everything seemed to break the wrong way.
* * * *
With the just completed fiscal year now one for the history books, what will be
the key issues driving stock returns in the ensuing twelve months? The first
issue facing the market is election year politics. History shows that in most
instances, the stock market isn't affected much by who wins the election. This
time, however, it may be different because Mr. Kerry has made it clear that if
he wins, his administration will not renew many of the Bush administration tax
cuts - specifically those favoring stock investors.
Whether or not this is good economic or social policy is a subject for debate
among voters, candidates and the political parties. But for stock investors,
there is little to debate. If investor returns are reduced as a result of a tax
increase, it's bound to impact the attractiveness of stock investments and as a
result, stock prices. If Mr. Kerry wins, I expect any drag on stock prices from
the deleterious impact of higher taxes will be short-lived. The market will
shift its focus to other breaking news - be it good or bad.
And in my mind, the biggest possible bad news confronting the stock market is
overblown expectations regarding economic growth. Economic growth will likely
prove disappointing because American consumers have been living and spending
well beyond their means for a number of years. Last spring, in the Fund's
semi-annual report, I provided a detailed case as to why the law of economics
would soon force an end to this spending spree. In a nutshell, consumers are no
longer in a position to take on more debt; wages and salaries are growing below
the rate of inflation; and Uncle Sam lacks the wherewithal to fund
2
LINDBERGH SIGNATURE FUND
yet another round of tax cuts. As I explained in the spring report, these
factors should lead to a significant slowdown in consumer spending.
Now, six months later, signs of such a slowdown are seemingly popping up
everywhere. Since consumers have little choice but to pare back spending, I
expect economic growth in the year ahead will fall short, perhaps considerably
short, of general expectations. If I'm correct in this assessment, stock prices
will come under pressure as investors are forced to come to grip with this new
reality.
The supply of oil is yet another potential problem facing investors in the year
ahead. Supplies are very tight and production capabilities are limited.
Unfortunately, much of the world's proven oil reserves rest in areas with
significant political instability. One or more of these various political
tinderboxes could blow up and this could easily result in a major supply
disruption - something along the lines of the 1973-74 oil embargo. During that
embargo, oil prices more than tripled. Could it happen again? At the very least,
such an event is no longer a remote possibility. And oil in the $110-140 per
barrel range would, most likely, push the economy into a very serious recession.
Higher price inflation is yet another looming risk. To prop up the economy, the
Federal Reserve has held short-term interest rates below the rate of inflation
resulting in negative-real-interest rates. Economic history shows that past
instances of Fed-created negative-real-interest rates have, after an appropriate
lag, invariably resulted in rising inflation. The Fed has maintained
negative-interest rates for around two years, so we're moving into the zone
where higher inflation typically begins to manifest itself. And sure enough,
inflation this year has jumped ahead by about one percentage point. The
financial markets view this uptick in inflation as energy related, and as such,
they're not concerned. It's hard to say whether we're in for a new round of
rising inflation, or whether the recent increase is nothing more than a
short-term blip. But the mere fact that this is now a potential risk is cause
for concern. That's because a jump in the inflation rate, if sustained, would
cause considerable disruption in the financial markets.
This summary of potential pitfalls suggests that in the year ahead, there are a
lot of things that could go wrong . . . but isn't that always the case? Also,
don't investors need that proverbial "wall of worry" to climb before stock
prices can go higher? That is true, but I don't see much evidence that investors
are worried about any of these issues. Instead, we're in an environment where
complacency reigns the day; and complacency tends to herald sub-par stock
returns. Regarding potential pitfalls, today's market is confronted by a much
larger than usual "accidents waiting to happen." Sure, there's a very good
chance we'll avoid a major spike in oil prices, and a fair-to-good chance that
the inflation cat remains in its bag. But after some years, these types of risks
are again back "in play." As such, they should not be dismissed out of hand
given their potential to wreak considerable havoc on the financial markets.
Regarding the economy, I think there's high probability that growth should prove
disappointingly slow. While sluggish growth per se may not tank the stock
market, at the very least, it should keep a lid on stock prices.
In conclusion, in the fiscal year ahead, I believe that the greatest risk is not
in missing out on a big up move. Instead, the real risk is on the downside.
Therefore, when contemplating investment courses of action, I continue to
believe it's prudent to err on the side of caution.
Sincerely,
/s/ Dewayne Wiggins
Dewayne Wiggins
The Fund's investment objectives, risks, charges and expenses must be considered
carefully before investing. The prospectus contains this and other important
information about the investment company and may be obtained by calling (888)
505-6361. Please read it carefully before investing. The fund is distributed by
Unified Financial Securities, Inc. Member NASD.
3
LINDBERGH SIGNATURE FUND
PERFORMANCE SUMMARY
Lindbergh
Signature Fund S&P 500 Index
($8,765) (8,492)
--------------- -------------
2/1/2000 10,000.00 10,000.00
3/31/2000 10,301.72 10,770.52
6/30/2000 10,330.57 10,484.91
9/30/2000 10,577.15 10,383.49
12/31/2000 9,636.98 9,571.77
3/31/2001 8,482.25 8,436.55
6/30/2001 8,974.90 8,930.57
9/30/2001 7,764.79 7,620.51
12/31/2001 8,527.57 8,435.30
3/31/2002 8,571.01 8,458.23
6/30/2002 8,995.21 7,325.32
9/30/2002 7,979.54 6,060.18
12/31/2002 7,780.15 6,571.30
3/31/2003 7,721.88 6,364.28
6/30/2003 8,219.17 7,344.56
9/30/2003 8,405.71 7,538.79
12/31/2003 9,194.16 8,456.68
3/31/2004 9,619.98 8,600.11
6/30/2004 9,473.28 8,747.53
8/31/2004 8,765.37 8,491.82
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, 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. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE RETURNS SHOWN DO NOT REFLECT
DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE
REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR
HIGHER THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT
MONTH END MAY BE OBTAINED BY CALLING (888)505-6361.
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDING AUGUST 31, 2004
Since Inception
One Year (February 1, 2000)
-------- ------------------
Lindbergh Signature Fund 1.14% -2.84%
S&P 500 Index 11.45% -3.51%
4
LINDBERGH SIGNATURE FUND
FUND HOLDINGS - (UNAUDITED)
- -------------
LINBERGH SIGNATURE FUND PORTFOLIO HOLDINGS AS OF AUGUST 31, 2004
[GRAPH OMITTED]
EXCHANGE TRADED SHORT-TERM OTHER ASSETS
COMMON STOCKS FUNDS INVESTMENTS LESS LIABILITIES
------------- ---------------- ------------ ----------------
50.04% 12.68% 37.40% (0.12)%
The Fund invests in common stocks, bonds and money market instruments in
proportions consistent with their expected returns and risks 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.
ABOUT YOUR FUND'S EXPENSES - (UNAUDITED)
- --------------------------
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, reinvested dividends, or other distributions; redemption fees; and
exchange fees; and (2) ongoing costs, including management fees; distribution
and/or service (12b-1) fees; and other Fund expenses. This Example is intended
to help you understand your ongoing costs (in dollars) of investing in the Fund
and to compare these costs with the ongoing costs of investing in other mutual
funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period.
Actual Expenses
- ---------------
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.60), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
- --------------------------------------------
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so,
5
LINDBERGH SIGNATURE FUND
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as,
redemption fees, or exchange fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
- ----------------------------- ---------------------------- -------------------------------- ---------------------
Lindbergh Signature Fund Beginning Account Value Ending Account Expenses Paid
February 29, 2004 Value During Period*
August 31, 2004 August 31, 2004
- ----------------------------- ---------------------------- -------------------------------- ---------------------
Actual $1,000.00 $917.23 $3.58
(-8.28% return)
- ----------------------------- ---------------------------- -------------------------------- ---------------------
Hypothetical $1,000.00 $1,021.13 $3.77
(5% return before expenses)
- ----------------------------- ---------------------------- -------------------------------- ---------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.75%, multiplied
by the average account value over the period, multiplied by 182/366 (to reflect
the one-half year period).
6
LINDBERGH SIGNATURE FUND
SCHEDULE OF INVESTMENTS - AUGUST 31, 2004
COMMON STOCKS - 50.04%
Number of Shares Market Value
---------------- -------------
CRUDE PETROLEUM & NATURAL GAS - 6.65%
6,762 Apache Corp. $ 302,194
10,160 Patina Oil & Gas Corp. 271,983
15,100 Plains Exploration & Production * 293,091
---------------
867,268
---------------
DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT - 2.73%
13,040 General Maritime Corp. * 355,731
---------------
ELECTRIC HOUSWARES & FANS - 2.00%
9,650 Helen of Troy, Ltd * 260,550
---------------
ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS - 2.36%
4,570 St. Jude Medical, Inc. * 307,333
---------------
MISCELLANEOUS TRANSPORTATION EQUIPMENT - 2.43%
6,720 Polaris Industries, Inc. 316,915
---------------
MOTORCYCLES, BICYCLES & PARTS - 2.46%
5,250 Harley-Davidson, Inc. 320,355
---------------
ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES - 5.24%
9,320 Mine Safety Appliances Co. 368,420
5,920 Respironics, Inc. * 314,944
---------------
683,364
---------------
POULTRY SLAUGHTERING & PROCESSING - 1.93%
7,360 Sanderson Farms, Inc. 251,638
---------------
REAL ESTATE INVESTMENT TRUSTS - 2.00%
14,560 Annaly Mortgage Management, Inc. 259,896
---------------
RETAIL - EATING PLACES - 2.24%
12,150 Applebee's International, Inc. 292,450
---------------
RETAIL - WOMEN'S CLOTHING STORES - 2.51%
8,000 Chico's Fashions, Inc. * 327,200
---------------
See accompanying notes which are an integral part of the financial statements.
7
LINDBERGH SIGNATURE FUND
SCHEDULE OF INVESTMENTS - AUGUST 31, 2004
COMMON STOCKS - 50.04% - CONTINUED
Number of Shares Market Value
---------------- -------------
SERVICES - COMPUTER PROGRAMMING SERVICES - 3.50%
16,620 Cognizant Technology Solutions Corp. * $ 455,720
---------------
SERVICES - HEALTH SERVICES - 1.99%
2,640 Wellpoint Health Networks * 259,195
---------------
SERVICES - MEDICAL LABORATORIES - 2.30%
3,500 Quest Diagnostics 299,600
---------------
SERVICES - PERSONAL SERVICES - 2.72%
8,670 Regis Corp. 354,863
---------------
SURGICAL & MEDICAL INSTRUMENTS & APPARATUS - 2.09%
6,000 Stryker Corp. 271,800
---------------
WHOLESALE - COMPUTERS & PERIPHERAL
EQUIPMENT & SOFTWARE - 2.64%
5,740 ScanSource, Inc. * 344,630
---------------
WHOLESALE - MEDICAL, DENTAL &
HOSPITAL EQUIPMENT & SUPPLIES - 2.25%
4,000 Patterson Companies, Inc. * 292,920
---------------
TOTAL COMMON STOCKS (Cost $5,407,025) 6,521,428
---------------
EXCHANGE-TRADED FUNDS - 12.68%
31,000 iShares MSCI Japanese Index Fund 309,380
8,100 iShares Russell 2000 Value Index Fund 1,343,385
---------------
TOTAL EXCHANGE-TRADED FUNDS (Cost $1,617,613) 1,652,765
---------------
See accompanying notes which are an integral part of the financial statements.
8
LINDBERGH SIGNATURE FUND
SCHEDULE OF INVESTMENTS - AUGUST 31, 2004
SHORT-TERM INVESTMENTS - 37.40%
Principal Amount Market Value
- ---------------- ------------
U.S. TREASURY & AGENCY OBLIGATIONS - 26.82%
$ 3,500,000 U.S. Treasury Bill, 10/14/2004
(a) (COST $3,495,822) $ 3,495,822
---------------
MONEY MARKET SECURITIES - 10.58%
1,378,398 Money Market Fiduciary, 0.47%, (b)
(COST $1,378,398) 1,378,398
---------------
TOTAL INVESTMENTS (COST $11,898,858) - 100.12% 13,048,413
---------------
OTHER ASSETS LESS LIABILITIES - (0.12)% (15,486)
---------------
TOTAL NET ASSETS - 100.00% $ 13,032,927
===============
* 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, 2004.
See accompanying notes which are an integral part of the financial statements.
9
LINDBERGH SIGNATURE FUND
STATEMENT OF ASSETS & LIABILITIES - AUGUST 31, 2004
ASSETS
Amount
-----------------
Investments in securities, at value (cost $11,898,858) $ 13,048,413
Interest receivable 428
Dividends receivable 932
Receivable from Advisor 7,900
Variation margin on futures contracts 6,375
-----------------
TOTAL ASSETS 13,064,048
-----------------
LIABILITIES
Amount
-----------------
Accrued administration, fund accounting and transfer agent fees $ 8,915
Accrued Advisor fee 7,900
Accrued expenses 14,110
Trustee fees payable 196
-----------------
TOTAL LIABILITIES 31,121
-----------------
NET ASSETS 13,032,927
=================
SOURCES OF NET ASSETS
Amount
-----------------
Net Assets consist of:
Paid in capital $ 15,625,361
Accumulated net realized (loss) on investments (3,748,622)
Net unrealized appreciation (depreciation) on:
Investments 1,149,555
Futures contracts 6,633
-----------------
NET ASSETS $ 13,032,927
=================
Shares of capital stock outstanding
(no par value, unlimited shares authorized) 158,944
Net asset value, offering and redemption price per share
($13,032,927 / 158,944) $ 82.00
=================
See accompanying notes which are an integral part of the financial statements.
10
LINDBERGH SIGNATURE FUND
STATEMENT OF OPERATIONS
- - FOR THE YEAR ENDED AUGUST 31, 2004
INVESTMENT INCOME
Amount
-----------------
Dividend income $ 66,045
Interest income 43,989
-----------------
TOTAL INCOME 110,034
-----------------
EXPENSES
Amount
-----------------
Investment adviser fee (Note 3) $ 103,069
Legal expenses 20,481
Administration expenses 18,000
Fund accounting expenses 18,000
Transfer agent expenses 17,407
Auditing expenses 11,397
Custodian expenses 7,324
Registration expenses 5,100
Trustee expenses 4,864
Pricing expenses 3,322
Printing expenses 733
Miscellaneous expenses 188
Insurance expenses 1,701
-----------------
Total expenses before waived & reimbursed expenses 211,586
Expenses waived & reimbursed by Adviser (Note 3) (108,550)
-----------------
Total operating expenses 103,036
-----------------
NET INVESTMENT INCOME 6,998
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Amount
----------------
Net realized gain (loss) on:
Investment securities $ 408,547
Options (164,885)
Futures contracts 44,577
Change in net unrealized appreciation (depreciation) on:
Investment securities (156,344)
Options 23,951
Futures contracts (24,971)
-----------------
Net realized and unrealized gain (loss)
on investment securities 130,875
-----------------
Net increase in net assets resulting from operations $ 137,873
=================
See accompanying notes which are an integral part of the financial statements.
11
LINDBERGH SIGNATURE FUND
STATEMENT OF CHANGES IN NET ASSETS
Year ended Year ended
August 31, 2004 August 31, 2003
---------------------- ------------------
OPERATIONS
Net investment income $ 6,998 $ 8,424
Net realized gain (loss) on investment securities, options
and futures contracts 288,239 (205,333)
Change in net unrealized appreciation (depreciation) (157,364) 1,060,926
---------------------- ------------------
Net increase in net assets resulting from operations 137,873 864,017
---------------------- ------------------
DISTRIBUTIONS
From net investment income (8,438) (36,432)
---------------------- ------------------
Total distributions (8,438) (36,432)
---------------------- ------------------
SHARE TRANSACTIONS
Proceeds from shares sold 758,721 1,754,615
Shares issued in reinvestment of distributions 8,438 36,432
Shares redeemed (738,248) (39,650)
---------------------- ------------------
Net increase in net assets resulting
from share transactions 28,911 1,751,397
---------------------- ------------------
TOTAL INCREASE IN NET ASSETS 158,346 2,578,982
---------------------- ------------------
NET ASSETS
Beginning of period 12,874,581 10,295,599
---------------------- ------------------
End of period $ 13,032,927 $ 12,874,581
====================== ==================
Accumulated undistributed net investment income $ - $ -
---------------------- ------------------
TRANSACTIONS IN FUND SHARES:
Shares sold 8,614 24,027
Shares reinvested 100 495
Shares redeemed (8,465) (537)
---------------------- ------------------
Net increase in number of shares outstanding 249 23,985
====================== ==================
See accompanying notes which are an integral part of the financial statements.
12
LINDBERGH SIGNATURE FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING DURING THE PERIOD
Years Ended
August 31,
------------------------------------------------------
Period ended
2004 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 0.04 0.06 0.26 1.52 4.18
Net realized and unrealized gain
(loss) 0.88 4.90 (2.07) (28.05) 8.75
---------------- --------- ---------- ---------- ---------------
Total from investment operations 0.92 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 $ 82.00 $ 81.13 $ 76.43 $ 79.72 $ 111.21
================ ========= ========== ========== ===============
TOTAL RETURN 1.14% 6.52% -2.34% -23.28% 13.07% (b)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 13,033 $ 12,875 $ 10,296 $ 12,928 $ 15,482
Ratio of expenses to average net assets 0.75% 0.75% 0.75% 0.75% 0.75% (c)
Ratio of expenses to average net assets
before waiver & reimbursement 1.54% 1.69% 1.72% 1.57% 2.00% (c)
Ratio of net investment income to
average net assets 0.05% 0.08% 0.32% 1.66% 4.33% (c)
Ratio of net investment income to
average net assets before waiver
& reimbursement 0.84% (0.87)% (0.65)% 0.85% 3.08% (c)
Portfolio turnover rate 76.93% 74.13% 63.69% 62.79% 5.38%
(a) For the period October 1, 1999 (effective date of registration) to August 31, 2000.
(b) Not annualized.
(c) Annualized.
See accompanying notes which are an integral part of the financial statements.
13
LINDBERGH SIGNATURE FUND
LINDBERGH SIGNATURE FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2004
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.
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, in accordance
with Trust valuation procedures. 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.
The Fund may purchase and write options in combination with each other, or in
combination with futures or forward contracts, to adjust the risk and return
characteristics of the overall position. For example, the Fund may purchase a
put option and write a call option on the same underlying instrument, in order
to construct a combined position whose risk and return characteristics are
similar to selling a futures contract. Another possible combined position would
involve writing a call option at one "strike" price and buying a call option at
a lower price, in order to reduce the risk of the written call option in the
event of a substantial price increase. Because combined options positions
involve multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.
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
14
LINDBERGH SIGNATURE FUND
LINDBERGH SIGNATURE FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2004 - CONTINUED
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
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. The treatment for financial reporting purposes of
distributions made to shareholders during the year from net investment income or
net realized capital gains may differ from their ultimate treatment for federal
income tax purposes. These differences are caused by differences in the timing
of the recognition of certain components of income, expense or realized capital
gain for federal income tax purposes. Where such differences are permanent in
nature, they are reclassified in the components of the net assets based on their
ultimate characterization for federal income tax purposes. Any such
reclassifications will have no effect on net assets, results of operations or
net asset values per share of a Fund. For the year and period ended August 31,
2004, there were no such reclassifications.
15
LINDBERGH SIGNATURE FUND
LINDBERGH SIGNATURE FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2004 - CONTINUED
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. For this and other services, the Fund has agreed to pay
to the Adviser a fee equal to 0.75% of the Fund's average annual net assets.
Through the fiscal year ending August 31, 2004, the Adviser had entered into an
agreement to waive fees and reimburse Fund expenses, as required, so that the
Fund's total expense ratio would not exceed 0.75% of Fund assets.
Although the Adviser earned fees of $103,069 for the year ended August 31, 2004,
it did not collect any such fees for its services. Instead, to maintain fund
expense at 0.75%, the Adviser not only had to forego all fees, but also
reimbursed the Fund $5,481. This agreement to cap fund expenses expired on
August 31, 2004.
With its expiration, the Adviser has notified the board of trustees that, due to
the cost of complying with the many new regulations governing registered
investment companies, it lacks the resources to maintain Fund expenses at 0.75%
throughout the 2005 fiscal year. The Adviser, however, is committed to
maintaining the Fund's expense ratio at 0.75% at least through the end of
calendar year 2004.
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, 2004 the distribution plan has not been activated.
NOTE 4 - SECURITIES TRANSACTIONS
For the year ended August 31, 2004, purchases and sales proceeds from investment
securities, excluding short-term investments and U.S. government obligations
were as follows:
16
LINDBERGH SIGNATURE FUND
LINDBERGH SIGNATURE FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2004 - CONTINUED
NOTE 4 - SECURITIES TRANSACTIONS - (CONTINUED)
Purchases Sales
--------- -----
Lindbergh Signature Fund $7,434,996 $6,652,708
NOTE 5 - UNREALIZED APPRECIATION (DEPRECIATION)
At August 31, 2004, the cost for federal income tax purposes is $11,898,858 and
the composition of gross unrealized appreciation (depreciation) of investment
securities is as follows:
Net
Appreciation Depreciation Appreciation
Lindbergh Signature Fund $1,347,745 $(191,557) $1,156,188
At August 31, 2004, the aggregate settlement value of open futures contracts
expiring in September 2004 and the related unrealized appreciation
(depreciation) were:
Number of Long Aggregate Unrealized
Futures Contracts Contracts Settlement Value Appreciation
S&P 500 Index 5 $276,025 $6,633
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, 2004
Charles Schwab & Co. holds 97.69% of outstanding Fund shares in an omnibus
account for the benefit of others.
NOTE 7 - CAPITAL LOSS CARRYFORWARDS
At August 31, 2004, 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.
NOTE 8 - DISTRIBUTIONS TO SHAREHOLDERS
The tax character of distributions paid during the fiscal years ended August 31,
2004 and 2003 were as follows:
Distributions paid from: 2004 2003
------------ -----------
Ordinary Income $ 8,438 $ 36,432
Short-term gain - -
Long-term gain - -
------------ -----------
$ 8,438 36,432
============ ============
17
LINDBERGH SIGNATURE FUND
LINDBERGH SIGNATURE FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2004 - CONTINUED
NOTE 8 - DISTRIBUTIONS TO SHAREHOLDERS - (CONTINUED)
On December 24, 2003, the Fund paid an income dividend of $0.0531 per share to
shareholders of record on December 23, 2003.
As of August 31, 2004, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
Undistributed ordinary income (loss) $ -
Undistributed long-term gain (loss) (3,748,622)
Unrealized appreciation (depreciation) 1,156,188
--------------
$ (2,592,434)
==============
NOTE 9 - 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.
18
LINDBERGH SIGNATURE FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To The Shareholders and
Board of Trustees
Lindbergh Signature Fund
We have audited the accompanying statement of assets and liabilities of
Lindbergh Signature Fund, including the schedule of portfolio investments, as of
August 31, 2004, and the related statement of operations, changes in net assets,
and the financial highlights for the year 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 audit. The statement of changes in net assets
for the year ended August 31, 2003 and financial highlights for each of the four
years in the period then ended were audited by McCurdy & Associates CPA's, Inc.,
whose audit practice was acquired by Cohen McCurdy, Ltd. McCurdy & Associates
CPA's, Inc. expressed unqualified opinions on those statements.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004 by correspondence with the
Fund's 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
audit provides a reasonable basis for our opinion.
In our opinion, the 2004 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Lindbergh Signature Fund as of August 31, 2004, the results of its operations,
changes in net assets and the financial highlights for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Cohen McCurdy, Ltd.
Westlake, Ohio 44145
October 22, 2004
LINDBERGH SIGNATURE FUND
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.
(1) (2) (3) (4) (5) (6)
NAME, ADDRESS, POSITIONS HELD TERM OF PRINCIPAL OCCUPATION(S) PORTFOLIOS OTHER
AND AGE WITH FUND OFFICE AND DURING PAST 5 YEARS OVERSEEN DIRECTORSHIPS
LENGTH OF HELD BY
TIME SERVED DIRECTOR
INTERESTED
TRUSTEES #
----------
Dewayne L. Wiggins* Trustee and Unlimited President of Adviser since One None
(55) President term of office 1988
5520 Telegraph Rd. #204 Served since
St. Louis, MO 63129 June 1999
Susan Wiggins* Trustee Unlimited Secretary of the Adviser One None
(48) term of office since 1992
2668 Cripple Creek Served since
St. Louis, MO 63129 June 1999
DISINTERESTED
TRUSTEES
-------------
Brian D. Fitzpatrick Trustee Unlimited Associate Professor of One None
(51) term of office Finance, Rockhurst
18135 Canterbury Served since University, since 1989;
Stillwell, KS 66085 June 1999 Management Assessor, Sprint,
Inc. since 1992
Roger J. Levy Trustee Unlimited President, The Illtex One None
(66) term of office Agency, Inc. since 1994;
4302B Laclede Ave. Served since Director and Chief Financial
St. Louis, MO 63108 June 1999 Officer of Access Control
Technologies, Inc.
1990-1998; registered
representative of Park
Avenue Life of the Guardian
Life Insurance Co. to
January 2002
David M. Weinbaum (55) Trustee Unlimited Author since 1995; One None
1106 Kingshighway term of office President, Melrose
Rolla, MO 65401 Served since Properties since 1994:
June 1999 owner/operator of eight
McDonalds restaurants
through Davaron Corp., Aarmy
Corp. and sole
proprietorships since 1975
# Interested Trustee as defined in the 1940 Act, in that they are officers and
shareholders of the Adviser.
* Dewayne L. Wiggins and Susan Wiggins are husband and wife
20
LINDBERGH SIGNATURE FUND
OTHER OFFICERS (UNAUDITED)
NAME, ADDRESS AND AGE POSITION HELD OCCUPATION DURING PAST 5 YEARS
WITH FUND
Sandra J. Britton (51) Secretary Administrative Assistant for Adviser since August 1998.
5520 Telegraph Road #204
St. Louis, MO 63129
Carol Highsmith (39) Vice Employed by Unified Fund Services, Inc. since November
431 N. Pennsylvania St. President and 1994.
Indianapolis, IN 46204 Secretary
Freddie Jacobs, Jr. (33) Principal Employed by Unified Fund Services, Inc. since December
431 N. Pennsylvania St. Accounting 2003; Employed by U.S. Bancorp from 1998 - 2003
Indianapolis, IN 46204 Officer
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 during the most recent 12-month period ended June 30, 2004
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.
21
LINDBERGH SIGNATURE FUND
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 the 2003 and 2004 fiscal years for professional
services rendered by McCurdy & Associates, CPA's, Inc. and Cohen McCurdy, Ltd.
(the "principal accountant"), respectively, for the audit of the registrant's
annual financial statements or services that are
-2-
normally provided by the accountant in connection with statutory and regulatory
filings or engagements for those fiscal years:
FY 2004 $ 9,642
FY 2003 $ 9,312
(b) AUDIT-RELATED FEES
------------------
Registrant Adviser
---------- -------
FY 2004 $ 0 $ 0
FY 2003 $ 630 $ 0
Nature of the fees: post-effective consent
(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 2004 $ 650 $ 0
FY 2003 $ 630 $ 0
Nature of the fees: review excise tax dividend calculations
(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 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, 2004, the audit committee addressed separate approval of
non-audit services.
-3-
In October 2003 registrant revised its audit committee charter to contain, among
other things, express provision for selecting registrant's auditor and for
pre-approving all permitted non-audit services. With respect to auditor
selection, the revised charter expressly states that the audit committee is to
consider:
(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.
(f) During audit of registrant's financial statements for the most recent fiscal
year, less than 50 percent of the hours expended on the principal accountant's
engagement were attributed to work performed by persons other than the principal
accountant's full-time, permanent employees.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's investment
adviser (not including any sub-adviser whose role is primarily portfolio
management and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant:
Registrant Adviser
---------- -------
FY 2004 $ 650 $ 0
FY 2003 $ 1,260 $ 0
(h) The registrant's audit committee has considered whether the provision of
non-audit services to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant, that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with
maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED COMPANIES. Not applicable.
-4-
ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable
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.
The registrant has not adopted procedures by which shareholders may recommend
nominees to the registrant's board of trustees.
ITEM 10. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the registrant's disclosure controls and
procedures as of August 26, 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 second 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) Code is filed herewith.
(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.
-5-
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 (Signature and Title)
*/s/ Dewayne Wiggins
- ------------------------------------------------------
Dewayne Wiggins, President
Date November 3, 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 (Signature and Title)
*/s/ Dewayne Wiggins
- ------------------------------------------------------
Dewayne Wiggins, President
Date November 3, 2004
--------------------------------------------------
By (Signature and Title)
* /s/ Freddie Jacobs, Jr.
- ------------------------------------------------------------
Freddie Jacobs, Jr., Principal Accounting Officer
Date November 5, 2004
--------------------------------------------------------
-6-