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FRONTEGRA FUNDS
ANNUAL REPORT
FRONTEGRA OPPORTUNITY FUND
FRONTEGRA ASSET MANAGEMENT, INC.
--------
JUNE 30, 1999
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FRONTEGRA FUNDS
TABLE OF CONTENTS
Shareholder Letter 1
- ------------------------------------------------------------
Investment Highlights 3
- ------------------------------------------------------------
Schedule of Investments 4
- ------------------------------------------------------------
Statement of Assets and Liabilities 7
- ------------------------------------------------------------
Statements of Operations 8
- ------------------------------------------------------------
Statements of Changes in Net Assets 9
- ------------------------------------------------------------
Financial Highlights 10
- ------------------------------------------------------------
Notes to Financial Statements 11
- ------------------------------------------------------------
Report of Independent Auditors 14
- ------------------------------------------------------------
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless
accompanied or preceded by an effective Prospectus for the Fund. The Prospectus
includes more complete information about management fees and expenses,
investment objectives, risks and operating policies of the Fund. Please read the
Prospectus carefully.
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FRONTEGRA FUNDS
DEAR FELLOW SHAREHOLDERS:
We are pleased to present the June 30, 1999, Annual Report for the Frontegra
Opportunity Fund, managed by Reams Asset Management Company. This report
reflects a shortened year (November 1, 1998 through June 30, 1999), which
resulted from the alignment of our fiscal quarters with the calendar quarters
upon which most funds report. The Fund ended the fiscal period on a very strong
note, returning 23.20% over the last three months of the period compared to
15.55% for the benchmark, Russell 2000 Index.
Periods Ended June 30
-----------------------
3 months 8 months
Frontegra Opportunity Fund 23.20% 15.50%
Russell 2000 Index 15.55% 22.13%
Russell 2000 Value Index 16.56% 11.50%
MARKET REVIEW
The U.S. markets continued to charge forward over the past eight months, shaking
off the global economic crisis that swept through the markets in September and
October of 1998. Strong economic growth and benign inflation have teamed up to
largely fuel the growth in domestic equity markets. Early in the period, large
capitalization stocks drove the rebound in U.S. equities following the debacle
in the markets last fall. However, in recent months, small-cap stocks have
staged a comeback, outperforming their large-cap counterparts by nearly 9% over
the last three months. The Russell 2000, a proxy for small stocks, advanced
15.55% for the quarter while the S&P 500 was up 7.05%. Value-oriented small-cap
stocks narrowly outperformed their growth counterparts, with the Russell 2000
Value Index posting a 16.56% return compared with a 14.75% return for the
Russell 2000 Growth Index in the three month period. We are hopeful that this
is just the beginning of a sustained recovery in small-cap stocks.
PORTFOLIO REVIEW
With the portfolio rebounding strongly in recent months, many stocks contributed
to the advance. There were, however, several exceptional stocks in the
portfolio worth highlighting, particularly a number of holdings in the
Technology sector. Even though we are significantly underweighted in technology
relative to the benchmark, stock selection within the sector was strong. Our
value screens led us to a group of stocks in the Technology sector that have
businesses more cyclical in nature than most people would associate with a high
growth sector. Examples include electronics distributors (Pioneer Standard
Electronics), parts manufacturers (Artesyn Technology, Kemet Corp.), and
semiconductor equipment manufacturers (Electroglas, Inc.). During last year's
Asian-led slowdown, these businesses were negatively impacted, and in turn their
stock prices were driven to historically low valuations. Our investment in the
sector was early (not unusual for a value manager), and negatively impacted
portfolio returns in late 1998 and early 1999. During the second quarter,
however, these holdings reversed and appreciated from 55-100%.
Real Estate Investment Trusts (REITs) have delivered strong returns in the
recent months after lagging the market for some time. After a weak 1998, the
average REIT in the Fund is up nearly 20% this year. Expectations of a
continued strong economy eased concerns about a pending property glut and
falling rents. This in turn bolstered investor confidence that the high
dividend yields these securities provide would be secure.
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FRONTEGRA FUNDS
Finally, portfolio returns were bolstered by several acquisitions of portfolio
holdings during the period. Dames & Moore, Holophane Corp., and Juno Lighting,
Inc. were all acquired recently. While these three companies operate very
different businesses, they shared a number of positive traits. They enjoyed
strong competitive positions, good returns on capital, and they generated
significant free cash flow from operations. Generally, management used the free
cash flow to enhance value through strategic acquisitions or share repurchases.
In spite of all these positives, the share prices of these stocks lagged behind
the advance of the broader market. Frustrated by the market's mispricing of
their companies, management identified strategic buyers, and sold their
companies. Dames & Moore, an engineering construction firm, was sold for a 43%
premium and Holophane, a manufacturer of industrial lighting fixtures was sold
for a 73% premium.
In spite of all the good news in the portfolio recently, there were a couple of
sectors that trailed the general small-cap advance. After leading the market in
the first part of 1999, the Energy sector took a breather, posting single digit
returns in the second quarter. In addition, steadily higher interest rates
generated concern about the profitability of most companies in the Finance
sector. This sector's returns were only modestly positive with the rest of the
market up sharply. Fortunately, the Fund continues to maintain a material
underweighting to the Finance sector.
SUMMARY
We continue to be encouraged by recent performance and believe that the Fund is
well positioned to take advantage of opportunities afforded us in today's
market. We look forward to continued strong absolute and relative performance.
We also hope that the change in reporting periods is advantageous to
shareholders. As always, we appreciate your continued confidence and investment
in the Fund.
Regards,
<TABLE>
<CAPTION>
<C> <C> <C>
/s/ David R. Milroy /s/ Thomas J. Holmberg /s/ William D. Forsyth
David R. Milroy Thomas J. Holmberg, CFA William D. Forsyth, CFA
Reams Asset Management Co. Frontegra Asset Management Frontegra Asset Management
</TABLE>
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FRONTEGRA FUNDS
INVESTMENT HIGHLIGHTS
GROWTH OF A $100,000 INVESTMENT
Frontegra Lipper
Opportunity Small-Cap Russell
Fund Fund Index 2000 Index
--------- ----------- ------------
7/31/97 100,000 100,000 100,000
9/30/97 109,900 108,959 109,774
12/31/97 108,269 102,603 106,098
3/31/98 116,471 113,600 116,770
6/30/98 108,032 109,216 111,325
9/30/98 89,248 85,849 88,898
12/31/98 97,301 101,723 103,396
3/31/99 87,352 96,920 97,787
6/30/99 107,619 111,310 112,994
- ------------------------------
Portfolio Total Return
FOR THE PERIOD ENDED 6/30/99
- ------------------------------
ONE YEAR (0.38)%
AVERAGE ANNUAL
SINCE COMMENCEMENT 3.91%
- ------------------------------
This chart assumes an initial gross investment of $100,000 made on 7/31/97
(commencement of operations). Returns shown include the reinvestment of all
distributions. Past performance is not predictive of future results. Investment
return and principal value will fluctuate so that shares, when redeemed, may be
worth more or less than the original cost. In the absence of existing fee
waivers, total return would be reduced.
The Lipper Small-Cap Fund Index includes the 30 largest funds which, by
prospectus or portfolio practice, limit their investments to companies on the
basis of the size of the company.
The Russell 2000 Index is comprised of the smallest 2000 companies in the
Russell 3000 Index. The Russell 3000 Index is comprised of the 3000 largest U.S.
companies based on market capitalization.
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FRONTEGRA FUNDS
Frontegra Opportunity Fund
SCHEDULE OF INVESTMENTS
June 30, 1999
Number of Shares Value
- -----------------------------------------------------------------------
COMMON STOCKS 96.8%
Aerospace 0.5%
3,900 AAR Corp. $ 88,481
----------
Commercial Services 6.1%
15,300 Banta Corp. 321,300
10,400 Lawson Products, Inc. 261,950
31,100 Stolt-Nielsen S.A. 474,275
----------
1,057,525
----------
Consumer Durables 5.5%
22,450 CLARCOR Inc. 430,759
11,700 Harman International Industries, Inc. 514,800
----------
945,559
----------
Consumer Services 4.3%
26,800 Carmike Cinemas, Inc.<F1> 427,125
15,100 Interim Services Inc.<F1> 311,437
----------
738,562
----------
Dental Supplies & Equipment 1.6%
9,600 DENTSPLY International Inc. 268,800
----------
Electronic Technology 9.2%
19,900 Belden Inc. 476,356
12,400 Electroglas, Inc.<F1> 248,000
8,200 Kemet Corp.<F1> 188,087
26,700 UCAR International Inc.<F1> 674,175
----------
1,586,618
----------
Energy Minerals 4.2%
15,000 Mitchell Energy & Development Corp. 275,625
57,500 Santa Fe Snyder Corp.<F1> 438,438
----------
714,063
----------
Finance 7.3%
25,900 First Bell Bancorp, Inc. 459,725
34,200 Local Financial Corp.<F1> 342,000
40,400 Seacoast Financial Services Corp.<F1> 459,550
----------
1,261,275
----------
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Opportunity Fund
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1999
Number of Shares Value
- -----------------------------------------------------------------------
Health Technology 2.6%
22,500 Haemonetics Corp.<F1> $ 451,406
----------
Industrial Services 4.5%
9,300 Jacobs Engineering Group, Inc.<F1> 353,400
14,500 Quanex Corp. 413,250
----------
766,650
----------
Non-Energy Minerals 7.6%
17,300 Giant Cement Holding, Inc.<F1> 395,737
24,100 International Specialty Products Inc.<F1> 245,519
8,300 Lone Star Industries, Inc. 311,769
12,400 Noble Affiliates, Inc. 349,525
----------
1,302,550
----------
Process Industries 4.3%
14,150 Ferro Corp. 389,125
18,900 Furon Co. 359,100
----------
748,225
----------
Producer Manufacturing 16.1%
25,100 BE Aerospace, Inc.<F1> 469,056
27,700 Bush Industries, Inc. 460,513
45,400 Griffon Corp.<F1> 354,687
12,900 Holophane Corp.<F1> 491,813
20,700 Interface, Inc. 178,538
27,700 Northwest Pipe Co.<F1> 460,512
13,200 Standex International Corp. 361,350
----------
2,776,469
----------
Real Estate Investment Trusts 7.7%
6,700 Amli Residential Properties Trust 149,913
18,900 Asset Investors Corp. 282,319
7,200 First Industrial Realty Trust, Inc. 197,550
17,100 Great Lakes REIT, Inc. 277,875
10,900 Prentiss Properties Trust 256,150
15,000 Winston Hotels, Inc. 157,500
----------
1,321,307
----------
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Opportunity Fund
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1999
Number of Shares Value
- -----------------------------------------------------------------------
Retail 8.0%
15,800 The Finish Line, Inc.<F1> $ 177,750
33,600 Goody's Family Clothing, Inc.<F1> 384,300
37,500 Maxwell Shoe Company Inc.<F1> 339,844
32,400 World Fuel Services Corp. 477,900
----------
1,379,794
----------
Technology Services 4.7%
32,400 Pioneer-Standard Electronics, Inc. 388,800
10,800 Zebra Technologies Corp.<F1> 415,125
----------
803,925
----------
Transportation 2.6%
28,500 Arnold Industries, Inc. 439,969
----------
TOTAL COMMON STOCKS
(cost $15,215,823) 16,651,178
----------
Principal Amount
- ----------------
SHORT-TERM INVESTMENT 6.2%
$1,071,992 UMB Bank Money Market Fiduciary 1,071,992
----------
TOTAL SHORT-TERM INVESTMENT
(cost $1,071,992) 1,071,992
----------
TOTAL INVESTMENTS 103.0%
(cost $16,287,815) 17,723,170
Liabilities, less Other Assets (3.0)% (511,759)
----------
NET ASSETS 100.0% $17,211,411
===========
<F1> Non-income producing
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Opportunity Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
ASSETS:
Investments at value (cost $16,287,815) $ 17,723,170
Receivable for investments sold 562,766
Interest and dividends receivable 32,263
Receivable from adviser 16,347
Deferred organizational costs, net 24,911
Other assets 320
----------
Total assets 18,359,777
----------
LIABILITIES:
Payable for investments purchased 1,118,651
Accrued investment advisory fee 9,113
Accrued expenses 20,602
----------
Total liabilities 1,148,366
----------
NET ASSETS $ 17,211,411
==========
NET ASSETS CONSIST OF:
Paid in capital $ 15,879,137
Accumulated net investment income 66,964
Accumulated net realized loss on investments (170,045)
Net unrealized appreciation on investments 1,435,355
----------
NET ASSETS $ 17,211,411
==========
CAPITAL STOCK, $0.01 PAR VALUE
Authorized 100,000,000
Issued and outstanding 537,561
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $32.02
======
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Opportunity Fund
STATEMENTS OF OPERATIONS
EIGHT MONTHS ENDED YEAR ENDED
JUNE 30, 1999 OCTOBER 31, 1998
------------------ -----------------
INVESTMENT INCOME:
Dividends $ 142,120 $ 124,106
Interest 15,834 7,849
--------- ---------
157,954 131,955
--------- ---------
EXPENSES:
Investment advisory fees 54,105 47,155
Fund administration and accounting fees 38,102 57,625
Legal fees 10,518 16,025
Audit fees 9,261 13,502
Shareholder servicing 9,172 12,837
Amortization of organizational costs 5,355 8,078
Custody fees 4,470 5,209
Federal and state registration fees 3,825 10,437
Reports to shareholders 3,757 6,584
Directors' fees and related expenses 1,994 775
Insurance 1,377 1,690
Pricing 1,270 1,765
Other 623 1,420
--------- ---------
Total expenses before waiver 143,829 183,102
Waiver and reimbursement of
expenses by adviser (68,914) (117,911)
--------- ---------
Net expenses 74,915 65,191
--------- ---------
NET INVESTMENT INCOME 83,039 66,764
--------- ---------
REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) on investments (19,993) (158,568)
Change in net unrealized appreciation/
depreciation on investments 2,235,006 (905,970)
--------- ---------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS 2,215,013 (1,064,538)
--------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $2,298,052 $ (997,774)
========= =========
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Opportunity Fund
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1999 OCTOBER 31, 1998 OCTOBER 31, 1997<F1>
------------------ ------------------ ---------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 83,039 $ 66,764 $ 7,206
Net realized gains (losses)
on investments (19,993) (158,568) (1,205)
Change in net unrealized appreciation/
depreciation on investments 2,235,006 (905,970) 106,319
----------- ----------- -----------
Net increase (decrease) in net
assets resulting from operations 2,298,052 (997,774) 112,320
----------- ----------- -----------
DISTRIBUTIONS PAID FROM:
Net investment income (80,263) (7,018) -
----------- ----------- -----------
Net decrease in net assets resulting
from distributions paid (80,263) (7,018) -
----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 8,086,316 1,925,149 5,787,348
Shares issued to holders in
reinvestment of distributions 80,263 7,018 -
----------- ----------- -----------
Net increase in net assets resulting
from capital share transactions 8,166,579 1,932,167 5,787,348
----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS 10,384,368 927,375 5,899,668
----------- ----------- -----------
NET ASSETS:
Beginning of period 6,827,043 5,899,668 -
----------- ----------- -----------
End of period (includes undistributed
net investment income of $66,964,
$64,806 and $8,034, respectively) $17,211,411 $6,827,043 $5,899,668
=========== ========== ===========
</TABLE>
<F1> Commenced operations on July 31, 1997
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Opportunity Fund
FINANCIAL HIGHLIGHTS
EIGHT MONTHS ENDED YEAR ENDED PERIOD ENDED
JUNE 30, OCTOBER 31, OCTOBER 31,
1999 1998 1997<F1>
------------- ------------- ------------
NET ASSET VALUE,
BEGINNING OF PERIOD $27.93 $32.22 $30.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.07 0.26 0.04
Net realized and unrealized gains
(losses) on investments 4.23 (4.52) 2.18
-------- -------- --------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 4.30 (4.26) 2.22
-------- -------- --------
LESS DISTRIBUTIONS PAID:
From net investment income (0.21) (0.03) -
-------- -------- --------
TOTAL DISTRIBUTIONS PAID (0.21) (0.03) -
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $32.02 $27.93 $32.22
======== ======== ========
TOTAL RETURN<F2> 15.49% (13.24)% 7.40%
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, end of period
(in thousands) $17,211 $6,827 $5,900
Ratio of expenses to average
net assets<F3><F4> 0.90% 0.90% 0.90%
Ratio of net investment income
to average net assets<F3><F4> 1.00% 0.92% 2.61%
Portfolio turnover rate<F2> 38% 54% 9%
<F1> Commenced operations on July 31, 1997
<F2> Not annualized for periods less than a full year
<F3> Net of waivers and reimbursements by Adviser. Without waivers and
reimbursements of expenses, the ratio of expenses to average net assets
would have been 1.73%, 2.53% and 12.02%, and the ratio of net investment
income (loss) to average net assets would have been 0.17%, (0.71)% and
(8.51)% for the periods ended June 30, 1999, October 31, 1998 and October
31, 1997, respectively.
<F4> Annualized
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Opportunity Fund
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(1) ORGANIZATION
Frontegra Funds, Inc. ("Frontegra") was incorporated on May 24, 1996, as a
Maryland corporation and is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company
issuing its shares in series, each series representing a distinct portfolio
with its own investment objectives and policies. Frontegra consists of
three series: the Frontegra Opportunity Fund (the "Fund"), the Frontegra
Total Return Bond Fund and the Frontegra Growth Fund. The Fund commenced
operations on July 31, 1997. Costs incurred by the Fund in connection with
its organization, registration and the initial public offering of shares
have been deferred and will be amortized over the period of benefit, but
not to exceed five years from the date upon which the Fund commenced its
investment activities.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
(a) Investment Valuation
Securities (other than short-term instruments) for which market
quotations are readily available are valued at the last trade price on
the national securities exchange on which such securities are
primarily traded. Securities for which there were no transactions on a
given day or securities not listed on a national securities exchange
are valued at the most recent bid price. Securities maturing within 60
days or less when purchased are valued by the amortized cost method.
Any securities for which market quotations are not readily available
are valued at their fair value as determined in good faith by Reams
Asset Management Co., LLC (the "Sub-Adviser") pursuant to guidelines
established by the Board of Directors.
(b) Federal Income Taxes
No federal income tax provision has been made since the Fund intends
to meet the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute substantially all
investment company net taxable income and net capital gains to
shareholders in a manner which results in no tax cost to the Fund.
(c) Distributions to Shareholders
Dividends from net investment income and distributions of net realized
gains, if any, will be declared and paid at least annually.
Distributions to shareholders are recorded on the ex-dividend date.
The character of distributions made during the period from net
investment income or net realized gains may differ from the
characterization for federal income tax pur-
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FRONTEGRA FUNDS
Frontegra Opportunity Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
poses due to differences in the recognition of income, expense and
gain items for financial statement and tax purposes. Where
appropriate, reclassifications between net asset accounts are made
for such differences that are permanent in nature. Accordingly, at
June 30, 1999, reclassifications were recorded to decrease accumulated
net investment income by $618, decrease accumulated net realized
losses on investments by $2,795 and decrease paid in capital by
$2,177.
(d) Other
Investment transactions are accounted for on the trade date. The Fund
determines the gain or loss realized from investment transactions by
comparing the original cost of the security lot sold with the net sale
proceeds. Dividend income is recognized on the ex-dividend date and
interest income is recognized on an accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of
increases and decreases in net assets from operations during the
reporting period. Actual results could differ from those estimates.
(3) INVESTMENT ADVISER
The Fund has an agreement with the Adviser, with whom certain officers and
directors of the Fund are affiliated, to furnish investment advisory
services to the Fund. Under the terms of this agreement, the Fund will pay
the Adviser a monthly fee at the annual rate of 0.65% of the Fund's average
daily net assets. Pursuant to an expense cap agreement dated February 26,
1999, the Adviser agreed to waive its management fee and/or reimburse the
Fund's operating expenses (exclusive of brokerage, interest, taxes and
extraordinary expenses) to ensure that the Fund's operating expenses do not
exceed 0.90% of the Fund's average daily net assets. The term of this
expense cap agreement is twelve months.
(4) CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
EIGHT MONTHS ENDED YEAR ENDED
JUNE 30, 1999 OCTOBER 31, 1998
--------------------- ------------------
Shares sold 290,271 61,127
Shares issued to holders in
reinvestment of distributions 2,845 216
--------- --------
Net increase in shares outstanding 293,116 61,343
========= ========
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FRONTEGRA FUNDS
Frontegra Opportunity Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1999
(5) INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Fund for the eight months ended June 30, 1999, are
summarized below:
Purchases $12,459,486
Sales $4,567,402
There were no purchases or sales of U.S. government securities.
At June 30, 1999, gross unrealized appreciation and depreciation of
investments, based on cost for federal income tax purposes of $16,303,361
were as follows:
Appreciation $2,268,975
Depreciation (849,166)
--------------
Net appreciation on investments $1,419,809
==============
At June 30, 1999, the Fund had an accumulated net realized capital loss
carryover of $132,054 expiring in 2006. To the extent the Fund realizes
future net capital gains, taxable distributions to its shareholders will be
offset by any unused capital loss carryover.
For the eight months ended June 30, 1999, 100% of dividends paid from
taxable income (including short-term capital gains) qualify for the
dividends received deduction available to corporate shareholders.
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FRONTEGRA FUNDS
Frontegra Opportunity Fund
REPORT OF INDEPENDENT AUDITORS
June 30, 1999
To the Board of Directors and Shareholders of the Frontegra Funds,
Inc./Frontegra Opportunity Fund:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Frontegra Opportunity Fund (the "Fund") as
of June 30, 1999, and the related statements of operations for the eight months
then ended and year ended October 31, 1998, the statements of changes in net
assets and the financial highlights for the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 owned as of
June 30, 1999, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Frontegra Opportunity Fund at June 30, 1999, the results of its operations for
the eight months then ended and year ended October 31, 1998, the statements of
changes in net assets and the financial highlights for the periods indicated
therein, in conformity with generally accepted accounting principles.
/s/ Ernst & Young, LLP
Chicago, Illinois
July 21, 1999
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FRONTEGRA FUNDS, INC.
c/o Sunstone Financial Group, Inc.
P.O. Box 2142, Milwaukee, Wisconsin 53201-2142
FO-410-0699
