PROSPECTUS
February 26, 1999
FRONTEGRA FUNDS, INC.
FRONTEGRA TOTAL RETURN BOND FUND
c/o Sunstone Financial Group, Inc.
P. O. Box 2142
Milwaukee, Wisconsin 53201-2142
1-888-825-2100
The FRONTEGRA TOTAL RETURN BOND FUND (the "Fund")
is a series of FRONTEGRA FUNDS, INC., (the "Company").
The investment objective of the Fund is a high
level of total return, consistent with the preservation
of capital. The Fund invests primarily in a
diversified portfolio of fixed income securities of
varying maturities.
This Prospectus contains information you should
consider before investing in the Fund. Please read it
carefully and keep it for future reference.
Neither the Securities and Exchange Commission nor
any state securities commission has approved or
disapproved these securities or determined if this
Prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
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TABLE OF CONTENTS
The Frontegra Total Return Bond Fund at a Glance 1
Fees and Expenses of the Fund 2
Investment Objective 3
Investment Strategy 3
Implementation of Investment Objective 4
Prior Performance of Reams 5
Financial Highlights 7
Fund Management 7
Your Account 8
Exchange Privilege 10
Valuation of Fund Shares 10
Tax-Sheltered Retirement Plans 11
Dividends, Capital Gain Distributions and Tax Treatment 11
Year 2000 Issue 12
You should rely only on the information contained in
this Prospectus and in the Statement of Additional
Information ("SAI"), which is available upon request.
The Company has not authorized others to provide
additional information. The Company does not authorize
use of this Prospectus in any state or jurisdiction
where the offering cannot legally be made.
The Frontegra Total Return Bond Fund at a Glance
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Investment Objective
The Fund's goal, also referred to as its
investment objective, is a high level of total return,
consistent with the preservation of capital.
Principal Investment Strategy
The Fund seeks to achieve its goal through
investment in a diversified portfolio of fixed income
securities of varying maturities. When making purchase
decisions, the Fund's subadviser, Reams Asset
Management Company, LLC ("Reams"), looks for securities
that it believes are undervalued in the fixed income
market.
Reams uses a two-step process in managing the
Fund. First, Reams evaluates market attractiveness to
establish a measure of the portfolio's average life,
which is referred to as duration. Next, Reams
assembles the Fund's portfolio from the best available
values based on analysis by the portfolio management
team.
Although the Fund will invest primarily in
investment grade fixed income securities, the Fund may
invest up to 25% of its assets in non-investment grade
fixed income securities (junk bonds).
Risk Factors
The main risks of investing in the Fund are:
Market Risks: The Fund's investments are subject
to market risk, so that the value of the Fund's
investments may go up or down. If the value of the
Fund's investments goes down, you may lose money. The
share price of the Fund is expected to fluctuate. Your
shares at redemption may be worth more or less than
your initial investment. Market risks associated with
fixed income investments include the possibility that
bond prices in general will decline over short or even
extended periods as interest rates rise.
Individual Bond Risks: The Fund's investments are
also subject to the risks inherent in individual bond
selections. While fixed income securities normally
fluctuate less in price than stocks, there have been
extended periods of increases in interest rates that
have caused significant declines in fixed income
securities prices.
Credit Risk: Individual issues of fixed income
securities may also be subject to the credit risk of
the issuer.
Who Should Invest
The Fund is suitable for long-term investors only
and is not designed as a short-term investment vehicle.
The Fund may be an appropriate investment for you if
you:
Seek long-term preservation of capital; and
Want to include a bond fund in your portfolio.
Performance Bar Chart and Tables
The return information provided in the bar chart
and tables below illustrates how the Fund's
performance can vary, which is one indication of
the risks of investing in the Fund. The
information also provides some indication of the
risks of investing in the Fund by showing how the
Fund's average annual returns compare
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with a broad
measure of market performance over the past two
calendar years. Please keep in mind that the
Fund's past performance does not necessarily
represent how it will perform in the future.
Calendar Year Total Returns
1997 1998
8.59% 8.43%
[bar chart]
Best and Worst Quarterly Performance
Best Quarter Return Worst Quarter Return
3.87% (0.88)%
(3rd quarter, 1998) (1st quarter, 1997)
Average Annual Total Returns
(For the calendar year ended December 31, 1998)
Fund/Index One Year Since
Inception
(11/25/96)
Total Return 8.43% 7.70%
Bond Fund
Lehman Brothers 8.69% 8.49%
Aggregate Bond
Index(1)
____________
(1) The Lehman Brothers Aggregate Bond Index
includes fixed rate debt issues rated investment grade
or higher by Moody's Investors Service, Standard &
Poor's Corporation or Fitch Investors Service, in that
order. All issues have at least one year to
maturity and an outstanding par value of at least $100
million. The index does not reflect investment
management fees, brokerage commissions and other
expenses associated with investing in fixed income
securities.
Fees and expenses of the Fund
This table describes the fees and expenses that
you may pay if you buy and hold shares of the Fund.
Fee Tables
Shareholder Fees (fees paid directly from your
investment) NONE*
*The Fund will charge a service fee of $10 for
redemptions effected via wire transfer, and $20 for
checks that do not clear.
Annual Fund Operating Expenses (expenses that are
deducted from Fund assets)(1)
Management Fees 0.40%
Distribution (12b-1) Fees NONE
Other Expenses 0.38%
Total Annual Fund
Operating Expenses 0.78%
Fee Waiver/Expense
Reimbursement(2) 0.28%
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Net Expenses 0.50%
____________
(1) Stated as a percentage of the Fund's average
net assets.
(2) Pursuant to an expense cap agreement dated
February 26, 1999 between the Fund's adviser, Frontegra
Asset Management, Inc. ("Frontegra") and the Fund,
Frontegra agreed to waive its management fee and/or
reimburse the Fund's operating expenses to the extent
necessary to ensure that the Fund's total operating
expenses do not exceed 0.50% of the Fund's average
daily net assets. The term of this expense cap
agreement is 12 months.
Example
The following Example is intended to help you
compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your
shares at the end of those periods. The Example also
assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower,
based on these assumptions, your costs would be as
follows:
1 Year $51
3 Years $160
5 Years $280
10 Years $628
Investment Objective
The Fund's investment objective is a high level of
total return, consistent with the preservation of
capital. This investment objective may not be changed
without shareholder approval.
Investment Strategy
The Fund will seek, under normal market
conditions, to achieve its investment objective by
investing in a diversified portfolio of fixed income
securities of varying maturities. The Fund will invest
at least 65% of its net assets in bonds. The Fund
considers a bond to be any debt instrument. These
instruments include: short-term fixed income
securities; U.S. government securities; corporate debt
securities, including convertible securities and
corporate commercial paper; mortgage-backed and other
asset-backed securities; structured notes and loan
participations; bank certificates of deposit, fixed
time deposits and bankers' acceptances; repurchase
agreements; obligations of foreign governments or their
subdivisions, agencies and instrumentalities; and
obligations of international agencies or supranational
entities. Although the Fund primarily will invest in
investment grade fixed income securities, the Fund may
invest up to 25% of its assets in fixed income
securities that are rated below investment grade. The
portfolio duration of the Fund will normally fall
between three and seven years based on market
conditions. Duration is a measure of a fixed income
security's average life that reflects the present value
of the security's cash flow, and accordingly is a
measure of price sensitivity to interest rate changes.
The longer the duration, the more susceptible the
portfolio will be to changes in interest rates.
As the Fund's subadviser, Reams attempts to
maximize total return over a long-term horizon through
opportunistic investing in a broad array of eligible
securities. The investment process combines active
duration and yield-curve management with bottom-up
issue selection, focusing on undervalued issues in the
fixed income market. Reams employs a two-step process
in managing the Fund. The first step is to establish
the portfolio's duration on the basis of whether the
bond market is under- or over-priced. To formulate its
strategies, Reams emphasizes inflation and monetary
policy. Reams determines market attractiveness by
comparing current real interest rates to historical
real interest rates. Once Reams has determined an
overall market strategy, the second step is to select
the most attractive bonds for the Fund. The portfolio
management team screens hundreds of issues to determine
how each will perform in various interest-rate
environments. The team constructs these scenarios by
considering the outlook for interest rates, fundamental
credit analysis and option-adjusted spread analysis.
The team compares these investment opportunities and
assembles the Fund's portfolio from the best available
values. Reams constantly monitors the expected returns
of
<PAGE>
the securities in the Fund versus those available in
the market and of other securities the firm is
considering for purchase. Reams' strategy is to
replace securities that it feels are approaching fair
market value with those that, according to its
analysis, are significantly undervalued.
Implementation of Investment Objective
In implementing its investment objective, the Fund
may invest in the following securities and use the
following investment techniques. Some of these
securities and investment techniques involve special
risks, which are described below and elsewhere in this
Prospectus.
Fixed Income Securities
The Fund may invest in a wide variety of fixed
income securities. Issuers of fixed income securities
have a contractual obligation to pay interest at a
specified rate on specified dates and to repay
principal on a specified maturity date. Certain
securities (usually intermediate- and long-term bonds)
have provisions that allow the issuer to redeem or
"call" a bond before its maturity. Issuers are most
likely to call such securities during periods of
falling interest rates. As a result, the Fund may be
required to invest the unanticipated proceeds of the
called security at lower interest rates, which may
cause the Fund's income to decline.
Commercial paper generally is considered the
shortest form of fixed income security. Notes whose
original maturities are two years or less are
considered short-term obligations. The term "bond"
generally refers to securities with maturities longer
than two years. Bonds with maturities of three years
or less are considered short-term, bonds with
maturities between three and ten years are considered
intermediate-term, and bonds with maturities greater
than ten years are considered long-term.
Principal Risks. In general, the longer the
maturity of a fixed income security, the higher its
yield and the greater its sensitivity to changes in
interest rates. Conversely, the shorter the maturity,
the lower the yield but the greater the price
stability. The values of fixed income securities also
may be affected by changes in the credit rating or
financial condition of their issuers. Generally, the
lower the credit rating of a security, the higher the
degree of risk as to the payment of interest and return
of principal. To compensate investors for taking on
such increased risk, issuers deemed to be less
creditworthy generally must offer investors higher
interest rates than do issuers with better credit
ratings.
Non-Investment Grade Debt Securities (Junk Bonds)
The Fund may invest up to 25% of its net assets in
junk bonds. Junk bonds, while generally offering
higher yields than investment grade securities with
similar maturities, involve greater risks, including
the possibility of default or bankruptcy. They are
regarded as predominantly speculative with respect to
the issuer's capacity to pay interest and repay
principal.
Principal Risks. Junk bond securities tend to be
more sensitive to economic conditions than are higher-
rated securities. As a result, they generally involve
more credit risk than securities in the higher-rated
categories. During an economic downturn or a sustained
period of rising interest rates, highly leveraged
issuers of junk bond securities may experience
financial stress and may not have sufficient revenues
to meet their payment obligations. The risk of loss
due to default by an issuer of these securities is
significantly greater than issuers of higher-rated
securities because such securities are generally
unsecured and are often subordinated to other
creditors. The Fund may have difficulty disposing of
certain junk bond securities because there may be a
thin trading market for such securities. The Fund
anticipates that such securities could be sold only to
a limited number of dealers or institutional investors.
To the extent a secondary trading market does exist, it
is generally not as liquid as the secondary market for
higher-rated securities. Periods of economic
uncertainty generally result in increased volatility in
the market prices of these securities and thus in the
Fund's net asset value.
<PAGE>
Mortgage- and Other Asset-Backed Securities
The Fund may invest in mortgage- and other asset-
backed securities. Mortgage-backed securities
represent direct or indirect participation in mortgage
loans secured by real property, and include single- and
multi-class pass-through securities and collateralized
mortgage obligations.
Asset-backed securities have structural
characteristics similar to mortgage-backed securities.
However, the underlying assets are not mortgage loans.
Instead, they include assets such as motor vehicle
installment sales contracts, installment loan
contracts, home equity loans, leases of various types
of property and receivables from credit card issuers or
other revolving credit arrangements.
Principal Risks. The yield characteristics of
mortgage- and asset-backed securities differ from those
of traditional debt obligations. For example, interest
and principal payments are made more frequently on
mortgage- and asset-backed securities, usually monthly,
and principal may be prepaid at any time. As a result,
if the Fund purchases these securities at a premium, a
prepayment rate that is faster than expected will
reduce yield to maturity, while a prepayment rate that
is slower than expected will increase yield to
maturity. If the Fund purchases these securities at a
discount, a prepayment rate that is faster than
expected will increase yield to maturity, while a
prepayment rate that is slower than expected will
reduce yield to maturity. Accelerated prepayments on
securities purchased at a premium also impose a risk of
loss of principal because the premium may not have been
fully amortized at the time the principal is prepaid in
full. The market for privately issued mortgage- and
asset-backed securities is smaller and less liquid than
the market for government sponsored mortgage-backed
securities.
Portfolio Turnover
A change in the investments held by the Fund is
known as "portfolio turnover." Under normal market
conditions, the Fund anticipates that its annual
portfolio turnover rate will generally not exceed 225%
and is expected to be between 150% and 225%. A
portfolio turnover rate of 100% would occur, for
example, if all of the securities held by the Fund were
replaced within one year. In the event the Fund has a
portfolio turnover rate of 100% or more in any year, it
would result in the payment by the Fund of increased
brokerage costs, which would reduce the Fund's returns.
High portfolio turnover could also result in the
payment by shareholders of increased taxes on realized
investment gains. The Fund's portfolio turnover rate
is included under "Financial Highlights."
Prior Performance of Reams
As noted above, Reams is the Fund's subadviser.
The following table shows the historical composite
performance data for all of Reams' advisory accounts
which have investment objectives, policies, strategies
and risks substantially similar to the Fund, known as
the Reams Fixed Income Composite (the "Composite"), for
the periods indicated. Since its inception, the
Composite has shown an annual return of approximately
14%. The Composite has not been subject to the same
types of expenses to which the Fund is subject nor to
the diversification requirements, specific tax
restrictions and investment limitations imposed on the
Fund by the Internal Revenue Code of 1986, as amended
(the "Code") and the Investment Company Act of 1940, as
amended (the "1940 Act"), respectively. Consequently,
the performance results for the Composite could have
been adversely affected if the accounts included in the
Composite had been regulated under the federal security
and tax laws. The Composite's expenses are lower than
the Fund's expenses. If the Fund's expenses had been
deducted from the Composite's returns, the returns
would be lower than those shown. The data is provided
to illustrate the past performance of Reams in managing
a substantially similar portfolio as measured against
the Lehman Brothers Aggregate Bond Index and does not
represent the performance of the Fund. You should not
consider this performance data as an indication of the
future performance of the Fund or Reams.
Reams' performance information has been calculated
in accordance with recommended standards of the
Association for Investment Management and Research
("AIMR"), retroactively applied to all time periods.
All returns presented were calculated on a total return
basis and include all dividends and interest, accrued
income, if any, and realized and unrealized gains and
losses. All returns reflect the deduction of
investment advisory fees, brokerage commissions and
execution costs paid by the accounts included in the
Composite, without provision for federal or state
<PAGE>
income taxes. Cash and cash equivalents are included
in the performance returns. Total return is calculated
monthly in accordance with the time weighted rate of
return method provided for by AIMR standards accounted
for on a trade-date and accrual basis. AIMR standards
for calculation of total return differ from the
standards required by the SEC for calculation of
average annual total return. No leveraged positions
were used. The monthly returns are geometrically
linked to derive an annual total return.
The investment results of the Composite presented
below are Level 1 AIMR compliant, but are not intended
to predict or suggest the future returns of the Fund.
You should be aware that the use of a methodology
different than that used below to calculate performance
could result in different performance data.
Reams Asset Management Company, LLC
Reams Fixed Income Composite Performance History:
6/1/81-12/31/98(1)
Reams Fixed
Income Lehman
Year Composite Brothers
Total Aggregate
Return Bond Index(2)
1 9.16% 8.69%
3 7.86% 7.29%
5 7.87% 7.27%
From 14.33% 11.35%
Inception(3)
(1) For the Fund's performance, see the return
information under "The Frontegra Total Return Bond
Fund at a Glance."
(2) The Lehman Brothers Aggregate Bond Index
includes fixed rate debt issues rated investment
grade or higher by Moody's Investors Service,
Standard & Poor's Corporation or Fitch Investors
Service, in that order. All issues have at least one
year to maturity and an outstanding par value
of at least $100 million. The index does not reflect
investment management fees, brokerage commissions and
other expenses associated with investing in fixed
income securities.
(3) The Composite commenced operations on June 1,
1981.
Average Annualized Return in Percent: 6/1/81-12/31/98
Reams Fixed Income Composite Performance 14.33%
Lehman Brothers Aggregate Bond Index 11.35%
<PAGE>
Financial Highlights
The financial highlights table is intended to help
you understand the Fund's financial performance for the
period from November 25, 1996 (commencement of
operations) to October 31, 1998. The total returns in
the table represent the rate that an investor would
have earned on an investment in the Fund for the stated
periods (assuming reinvestment of all dividends and
distributions). The financial information included in
this table has been derived from the Fund's audited
financial statements. The table should be read in
conjunction with the financial statements and related
notes included in the Fund's Annual Report to
Shareholders, which is available without charge by
writing to the Company, c/o Sunstone Financial Group,
Inc., P.O. Box 2142, Milwaukee, Wisconsin 53201-2142,
or by calling, toll-free, 1-888-825-2100.
November 25,
Fiscal Year 1996(1)
Ended to
October 31, October 31,
1998 1997
Net asset value, beginning of period $30.85 $30.00
Income (loss) from investment
operations:
Net investment income 1.75 1.37
Net realized and unrealized gains 0.59 0.70
(losses) on investments
Total income (loss) from investment 2.34 2.07
operations
Less distributions paid:
From net investment income (1.75) (1.22)
From net realized gains on (0.06) -
investments
Total distributions paid (1.81) (1.22)
Net asset value, end of period $31.38 $30.85
Total return(2) 7.79% 7.13%
Supplemental data and ratios:
Net assets, end of period (in $48,457 $39,096
thousands)
Ratio of expenses to average net 0.50% 0.50%
assets(3)(4)
Ratio of net investment income to 5.79% 6.02%
average net assets(3)(4)
Portfolio turnover rate(2) 131% 202%
____________
(1) Commencement of operations.
(2) Not annualized for periods less than a full year.
(3) Net of waivers and reimbursements by Frontegra.
Without waivers and reimbursements of expenses, the
ratio of expenses to average net assets would have
been 0.78% and 1.27%, and the ratio of net
investment income to average net assets would have
been 5.51% and 5.25% for the fiscal year ended
October 31, 1998 and for the period November 25,
1996 to October 31, 1997, respectively.
(4)Annualized.
Fund Management
Under the laws of the State of Maryland, the Board
of Directors of the Company (the "Board of Directors")
is responsible for managing the Company's business and
affairs. The Board of Directors also oversees duties
required by applicable state and federal law. The
Company has entered into an investment advisory
agreement with Frontegra dated October 30, 1996, as
amended as of February 1, 1998 (the "Investment
Advisory Agreement"), pursuant to which Frontegra
supervises the management of the Fund's investments and
business affairs, subject to the supervision of the
<PAGE>
Company's Board of Directors. Frontegra has entered
into a subadvisory agreement with Reams under which
Reams serves as the Fund's portfolio manager and,
subject to Frontegra's supervision, manages the Fund's
portfolio assets. Frontegra provides office facilities
for the Fund and pays the salaries, fees, and expenses
of all officers and directors of the Fund who are
interested persons of Frontegra.
Adviser. The Fund is managed by Frontegra, which
supervises the management of the Fund's portfolio by
the subadviser and administers the Company's business
affairs. Frontegra was organized in 1996 and is
located at 400 Skokie Boulevard, Suite 500, Northbrook,
Illinois 60062. Mr. William D. Forsyth III and Mr.
Thomas J. Holmberg, Jr. each own 50% of Frontegra.
Under the Investment Advisory Agreement, the Fund
compensates Frontegra at the annual rate of 0.40% of
the Fund's average daily net assets. Pursuant to an
expense cap agreement dated February 26, 1999 between
Frontegra and the Fund, Frontegra agreed to waive its
management fee and/or reimburse the Fund's operating
expenses to the extent necessary to ensure that the
Fund's total operating expenses do not exceed 0.50% of
the Fund's average daily net assets. The term of this
expense cap agreement is 12 months. The expense cap
agreement has the effect of lowering the overall
expense ratio for the Fund and increasing the Fund's
overall return to investors for the time any such
amounts are waived and/or reimbursed.
Subadviser. Reams operated as a corporation
(Reams Asset Management Company, Inc.) from its
founding in 1981 until March 31, 1994, when it became
an Indiana limited liability company (LLC), with no
change in principals, employees or clients. Reams is
located at 227 Washington Street, Columbus, Indiana
47201. Under the subadvisory agreement, and with
certain exceptions described herein, Reams is
compensated by Frontegra for its investment advisory
services at the annual rate of 0.20% of the Fund's
average daily net assets. In recognition of the
economies of scale that will be gained by the Fund and
Frontegra, and with the exception of defined
contribution or 401(k) investments in the Fund, for
initial investments of over $15 million Frontegra will
compensate Reams an extra 0.10% of the average daily
net assets of such investments. For the fiscal year
ended October 31, 1998, Reams received $55,267.51 for
its investment advisory services to the Fund. Reams
provides continuous advice and recommendations
concerning the Fund's investments and is responsible
for selecting the broker/dealers who execute the
portfolio transactions. In executing such
transactions, Reams seeks to obtain the best net
results for the Fund. In addition to providing
investment advisory services to the Fund, Reams serves
as investment adviser to pension and profit-sharing
plans, and other institutional investors. As of
January 31, 1999, Reams had approximately $5.3 billion
under management, which includes fixed income
portfolios totaling approximately $5 billion. Mr. Fred
W. Reams owns units representing a majority of the
voting rights of Reams.
Portfolio Managers. The day-to-day management
responsibilities for the Fund's portfolio are primarily
handled by Reams' portfolio management team. The
portfolio management team has been managed primarily by
Mr. Robert A. Crider and Mr. Mark M. Egan since the
Fund's inception. Mr. Crider has been Senior Vice
President, Fixed Income Management, of Reams since
April, 1994 and was Senior Vice President, Fixed Income
Management, of Reams Asset Management, Inc. from 1981
until March, 1994. Mr. Egan has been Vice President,
Portfolio Manager of Reams since April, 1994, was Vice
President, Portfolio Manager, of Reams Asset Management
Company, Inc. from June, 1990 until March, 1994, and
was Portfolio Manager of National Investment Services,
until May, 1990. The fixed income portfolio managers
implement decisions on a team basis with respect to the
Fund's portfolio structure and issue selection.
Portfolio strategy is reviewed weekly by the fixed
income committee.
Your Account
How to Purchase Shares
Shares of the Fund are sold on a continuous basis
at net asset value. The Fund's net asset value is
determined as of the close of trading on the New York
Stock Exchange (the "NYSE") (generally 4:00 p.m.,
Eastern Time) on each day the NYSE is open. Your
purchase price will be the Fund's net asset value next
determined after the Fund receives your request in
proper form. A confirmation indicating the details of
the transaction will be sent to you promptly. Shares
are credited to your account, but certificates are not
issued. However, you will have full shareholder
rights.
<PAGE>
The Fund's minimum initial investment is $100,000.
Subsequent investments may be made by mail or wire with
a minimum subsequent investment of $1,000. The Fund
reserves the right to change or waive these minimums at
any time. You will be given at least 30 days' notice
of any increase in the minimum dollar amount of
purchases.
If you purchase shares of the Fund by check and
request the redemption of such shares within 15 days of
the initial purchase, payment of the redemption
proceeds may be delayed for up to seven business days
in order to ensure that the check has cleared. This is
a security precaution only and does not affect your
investment.
Initial Investment - Minimum $100,000
You may purchase shares of the Fund by completing
an application and mailing it along with a check or
money order payable to "Frontegra Funds, Inc." to:
Frontegra Funds, Inc., c/o Sunstone Financial Group,
Inc. (the "Transfer Agent"), P.O. Box 2142, Milwaukee,
Wisconsin 53201-2142. For overnight deliveries, please
use 207 E. Buffalo Street, Suite 315, Milwaukee,
Wisconsin 53202-5712. Purchases must be made in U.S.
dollars and all checks must be drawn on a U.S. bank.
If your check does not clear, you will be charged a $20
service fee. You will also be responsible for any
losses suffered by the Fund as a result. All
applications to purchase shares of the Fund are subject
to acceptance by the Company and are not binding until
so accepted. The Company reserves the right to reject
an application in whole or in part.
Alternatively, you may place an order to purchase
shares of the Fund through a broker-dealer. Broker-
dealers may charge a transaction fee for placing orders
to purchase Fund shares. It is the responsibility of
the broker-dealer to place the order with the Fund on a
timely basis. Once you have purchased shares through a
broker-dealer, all future transactions must be placed
through that broker-dealer.
In addition, you may purchase shares of the Fund
by wire. To establish a new account by wire transfer,
please call the Transfer Agent at 1-888-825-2100. The
Transfer Agent will assign an account number to you at
that time. Funds should then be wired through the
Federal Reserve System as follows:
UMB Bank, n.a.
ABA Number 101000 695
For credit to Frontegra Funds, Inc.
Account Number 9870610221
For further credit to Frontegra Funds, Inc.
(investor account number)
(name or account registration)
(Social Security or Taxpayer
Identification Number)
(identify Frontegra Total Return Bond Fund)
The Fund is not responsible for the consequences
of delays resulting from the banking or Federal Reserve
wire system.
Subsequent Investments - Minimum $1,000
You may make additions to your account in amounts
of $1,000 or more by mail or by wire. When making an
additional purchase by mail, enclose a check payable to
"Frontegra Funds, Inc." along with the additional
investment form provided on the lower portion of your
account statement. To make an additional purchase by
wire, please follow the instructions listed above.
How to Redeem Shares
You may request redemption of part or all of your
Fund shares at any time. The price you receive will be
the net asset value next determined after the Fund
receives your request in proper form. Once your
redemption request is received in proper form, the Fund
normally will mail or wire your redemption proceeds the
next business day and, in any event, no later than
seven business days after receipt of a redemption
request. However, the Fund may hold payment of that
portion of an investment which was made by check which
has not been collected. In addition to the
<PAGE>
redemption
procedures described below, redemptions may also be
made through broker/dealers who may charge a commission
or other transaction fee.
Written Redemption
To redeem your Fund shares please furnish a
written, unconditional request to: Frontegra Funds,
Inc., c/o Sunstone Financial Group, Inc., P.O. Box
2142, Milwaukee, Wisconsin 53201-2142. For written
redemption requests sent via overnight delivery, please
use 207 E. Buffalo Street, Suite 315, Milwaukee,
Wisconsin 53202-5712. Your request must (i) be signed
exactly as the shares are registered, including the
signature of each owner and (ii) specify the number of
Fund shares or dollar amount to be redeemed. The
Transfer Agent may request additional documentation
from corporations, executors, administrators, trustees,
guardians, agents or attorneys-in-fact. Redemption
proceeds may be wired to a commercial bank authorized
on your account application. However, you will be
charged a $10 service fee for wire redemptions. If the
dollar amount requested to be redeemed is greater than
the current value of your account, your entire account
balance will be redeemed.
Signature Guarantees
Signature guarantees are required for: (i)
redemption requests mailed or wired to a person other
than the registered owner(s) of the shares, (ii)
redemption requests mailed or wired to other than the
address of record and (iii) redemption requests
submitted within 30 days of an address change. A
signature guarantee may be obtained from any bank,
savings and loan association, credit union, brokerage
firm or other eligible guarantor institution. A notary
public is not an acceptable guarantor.
Account Termination
Your account may be terminated by the Fund on not
less than 30 days' notice if the value of the shares in
the account falls below $10,000. Upon any such
termination, a check for the redemption proceeds will
be sent to the address of record within seven business
days of the redemption.
Exchange Privilege
You may exchange your shares in the Fund for
shares in any other Fund of the Company at any time by
written request. The value of the shares to be
exchanged and the price of the shares being purchased
will be the net asset value next determined after
receipt of instructions for exchange in proper form.
An exchange from one Fund to another is treated the
same as an ordinary sale and purchase for federal
income tax purposes and you will realize a capital gain
or loss. This is not a tax-free exchange. Exchange
requests should be directed to: Frontegra Funds, Inc.,
c/o Sunstone Financial Group, Inc., P.O. Box 2142,
Milwaukee, Wisconsin 53201-2142. For written exchange
requests sent via overnight delivery, please use 207
E. Buffalo Street, Suite 315, Milwaukee, Wisconsin
53202-5712. Exchange requests may be subject to
limitations, including those relating to frequency,
that may be established from time to time to ensure
that the exchanges do not disadvantage the Fund or its
shareholders. The Company reserves the right to modify
or terminate the exchange privilege upon 60 days'
written notice to each shareholder prior to the
modification or termination taking effect.
Valuation of Fund Shares
The price of Fund shares is the Fund's net asset
value, which is calculated using the market price
method of valuation and is determined as of the close
of trading (generally 4:00 p.m. Eastern Time) on each
day the New York Stock Exchange ("NYSE") is open for
business. The Fund does not determine net asset value
on days the NYSE is closed. The NYSE is closed on New
Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. In addition,
if any of these holidays falls on a Saturday, the NYSE
will not be open for trading on the preceding Friday,
and when such holiday falls on a Sunday, the NYSE will
not be open for trading on the succeeding Monday,
unless unusual business conditions exist, such as the
ending of a monthly or yearly period.
<PAGE>
Tax-Sheltered Retirement Plans
The Company offers through its Custodian, UMB
Bank, n.a., various qualified retirement plans for
adoption by individuals and employers. Participants in
these plans can accumulate shares of the Fund on a tax-
deferred basis. Please call 1-888-825-2100 for a
current list of the plans offered.
Dividends, Capital Gain Distributions And Tax Treatment
For federal income tax purposes, all dividends and
distributions of net realized short-term capital gains
are taxable as ordinary income whether reinvested or
received in cash unless you are exempt from taxation or
entitled to a tax deferral. Distributions paid by the
Fund from net realized long-term capital gains, whether
received in cash or reinvested in additional shares,
are taxable as a capital gain unless you are exempt
from taxation or entitled to a tax deferral. The
capital gain holding period is determined by the length
of time the Fund has held the security and not the
length of time you have held shares in the Fund.
Shareholders are informed annually as to the amount and
nature of all dividends and capital gains paid during
the prior year. Such capital gains and dividends may
also be subject to state or local taxes. If you are
not required to pay taxes on your income, you are
generally not required to pay federal income taxes on
the amounts distributed to you.
The Fund will usually distribute dividends
quarterly. The Fund will usually distribute capital
gains annually in December. When a dividend or capital
gain is distributed, the Fund's net asset value
decreases by the amount of the payment. If you
purchase shares shortly before a distribution, you
will, nonetheless, be subject to income taxes on the
distribution, even though the value of your investment
(plus cash received, if any) remains the same. The
Fund expects that, because of its investment
objectives, its distributions will consist primarily of
income.
All dividends or capital gain distributions will
automatically be reinvested in shares of the Fund at
the then prevailing net asset value unless an investor
specifically requests that either dividends or capital
gains or both be paid in cash. The election to receive
dividends or reinvest them may be changed by writing
to: Frontegra Funds, Inc., c/o Sunstone Financial
Group, Inc., P.O. Box 2142, Milwaukee, Wisconsin 53201-
2142. For overnight deliveries, please use 207
E. Buffalo Street, Suite 315, Milwaukee, Wisconsin
53202-5712. Such notice must be received at least five
business days prior to the record date of any dividend
or capital gain distribution.
If you do not furnish the Fund with your correct
Social Security Number or Taxpayer Identification
Number and/or the Fund receives notification from the
Internal Revenue Service requiring back-up withholding,
the Fund is required by federal law to withhold federal
income tax from your distributions and redemption
proceeds at a rate of 31%.
This section is not intended to be a full
discussion of federal income tax laws and the effect of
such laws on you. There may be other federal, state,
or local tax considerations applicable to a particular
investor. You are urged to consult your own tax
adviser.
<PAGE>
Year 2000 Issue
The Fund's operations depend on the seamless
functioning of computer systems in the financial
service industry, including those of the Adviser, the
Subadviser, the Transfer Agent and the Custodian. Many
computer software systems in use today cannot properly
process date-related information after December 31,
1999 because of the method by which dates are encoded
and calculated. This failure, commonly referred to as
the "Year 2000 Issue," could adversely affect the
handling of security trades, pricing and account
servicing for the Fund.
The Adviser has made compliance with the Year 2000
Issue a high priority and is taking steps that it
believes are reasonably designed to address the Year
2000 Issue with respect to its computer systems. The
Adviser has also been informed that comparable steps
are being taken by the Subadviser, the Transfer Agent,
the Custodian and other major service providers.
However, there can be no assurance that the steps taken
by the Adviser will be sufficient to avoid any adverse
impact.
With respect to the companies in which the Fund
invests, the Fund cannot make any assurances as to
their Year 2000 compliance efforts. In the event that
one or more of these companies is not Year 2000
compliant, the Fund's investment in such companies may
be adversely affected.
<PAGE>
DIRECTORS c/o Sunstone
William D. Forsyth Financial Group, Inc.
III 207 East Buffalo
Thomas J. Holmberg, Street, Suite 315
Jr. Milwaukee, Wisconsin
David L. Heald 53202-5712
OFFICERS For regular mail
William D. Forsyth deliveries, use:
III Frontegra Funds, Inc.
Thomas J. Holmberg, c/o Sunstone
Jr. Financial Group, Inc.
P.O. Box 2142
INVESTMENT ADVISER Milwaukee, Wisconsin
Frontegra Asset 53201-2142
Management, Inc.
400 Skokie Blvd. AUDITORS
Suite 500 Ernst & Young LLP
Northbrook, Illinois Sears Tower
60062 233 S. Wacker Drive
Chicago, Illinois
SUB-ADVISER 60606-6301
Reams Asset
Management Company, LEGAL COUNSEL
LLC Godfrey & Kahn, S.C.
227 Washington Street 780 N. Water Street
Columbus, Indiana Milwaukee, Wisconsin
47201 53202
CUSTODIAN
UMB Bank, n.a.
928 Grand Boulevard
Kansas City, Missouri
64141
ADMINISTRATOR AND FUND
ACCOUNTANT
Sunstone Financial
Group, Inc.
207 East Buffalo
Street, Suite 400
Milwaukee, Wisconsin
53202-5712
TRANSFER AGENT
Sunstone Financial
Group, Inc.
For overnight
deliveries, use:
Frontegra Funds, Inc.
Additional information regarding the Company and the
Fund is included in the Statement of Additional
Information ("SAI") which has been filed with the
Securities and Exchange Commission ("SEC") and is
incorporated in this Prospectus by reference. Further
information about the Fund's investments is also
available in the Fund's annual and semi-annual reports
to shareholders. The Fund's annual report provides a
discussion of the market conditions and investment
strategies that significantly affected the Fund's
performance during its last fiscal year. You may
receive the Fund's SAI, annual reports and semi-annual
reports free of charge, request other information about
the Fund and make shareholder inquiries by contacting
the Company at the address listed on the cover page of
this Prospectus or by calling, toll-free, 1-888-825-
2100.
Information about the Fund (including the SAI) can be
reviewed and copied at the SEC's Public Reference Room
in Washington, D.C. Please call the SEC at 1-800-SEC-
0330 for information relating to the operation of the
Public Reference Room. Reports and other information
about the Fund are also available on the SEC's Internet
Web site located at http://www.sec.gov. Alternatively,
copies of this information may be obtained, upon
payment of a duplicating fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-
6009.
The Company's 1940 Act File Number is 811-7685.
<PAGE>
PROSPECTUS
February 26, 1999
FRONTEGRA FUNDS, INC.
FRONTEGRA OPPORTUNITY FUND
c/o Sunstone Financial Group, Inc.
P. O. Box 2142
Milwaukee, Wisconsin 53201-2142
1-888-825-2100
The FRONTEGRA OPPORTUNITY FUND (the "Fund") is a
series of FRONTEGRA FUNDS, INC., (the "Company").
The investment objective of the Fund is capital
appreciation. The Fund invests primarily in a
diversified portfolio of equity securities of companies
with small market capitalizations.
This Prospectus contains information you should
consider before investing in the Fund. Please read it
carefully and keep it for future reference.
Neither the Securities and Exchange Commission nor
any state securities commission has approved or
disapproved these securities or determined if this
Prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
The Frontegra Opportunity Fund at a Glance 1
Fees and Expenses of the Fund 2
Investment Objective 3
Investment Strategy 3
Implementation of Investment Objective 4
Prior Performance of Reams 4
Financial Highlights 6
Fund Management 6
Your Account 7
Exchange Privilege 9
Valuation of Fund Shares 9
Tax-Sheltered Retirement Plans 10
Dividends, Capital Gain Distributions and Tax Treatment 10
Year 2000 Issue 11
You should rely only on the information contained in
this Prospectus and in the Statement of Additional
Information ("SAI"), which is available upon request.
The Company has not authorized others to provide any
additional information. The Company does not authorize
use of this Prospectus in any state or jurisdiction
where the offering cannot legally be made.
<PAGE>
The Frontegra Opportunity Fund at a Glance
Investment Objective
The Fund's goal, also referred to as its
investment objective, is capital appreciation.
Principal Investment Strategy
The Fund seeks to achieve its goal primarily
through investment in a diversified portfolio of equity
securities of companies with small market
capitalizations. For this purpose, a small
capitalization company would typically have a market
capitalization of $1 billion or less. In constructing
a portfolio for the Fund, the Fund's subadviser, Reams
Asset Management Company LLC ("Reams"), selects
securities with the highest expected rates of return
based on the analysis of its portfolio management team.
Equity securities in which the Fund may invest include
common stocks, preferred stocks, depositary receipts,
warrants to purchase common and preferred stocks and
securities convertible or exchangeable into common or
preferred stocks. Under normal market conditions, the
Fund will invest at least 80% of its assets in these
securities. Under unusual circumstances, as a
temporary defensive technique, the Fund may invest up
to 100% of its total assets in cash and short-term
fixed income securities.
Risk Factors
The main risks of investing in the Fund are:
Small Cap Risks: Because the Fund will invest
primarily in small capitalization stocks, which are
more volatile than investments in large companies, you
should expect that the value of the Fund's shares will
be more volatile than the shares of a fund that invests
in medium or large capitalization companies.
Market Risks: The Fund's investments are subject
to market risk, so that the value of the Fund's
investments may go up or down. If the value of the
Fund's investments goes down, you may lose money. The
share price of the Fund is expected to fluctuate. Your
shares at redemption may be worth more or less than
your initial investment. Market risks associated with
equity investments include the possibility that stock
prices in general will decline over short or even
extended periods.
Stock Selection Risks: The stocks selected for
inclusion in the Fund's portfolio may decline in value
or not increase in value when the stock market in
general is rising.
Who Should Invest
The Fund is suitable for long-term investors only
and is not designed as a short-term investment vehicle.
The Fund may be an appropriate investment for you if
you:
Seek long-term capital appreciation;
Want to include a small-cap fund in your
portfolio; and
Are willing to accept the risk that your
investment may fluctuate.
Performance Bar Chart and Tables
The return information provided in the bar chart
and tables below illustrates how the Fund's
performance can vary, which is one indication of
the risks of investing in the Fund. The
information also provides some indication of the
risks of investing in the Fund by comparing the
Fund's performance with a broad measure of market
performance over the past calendar year. Please
keep in mind that the Fund's past performance does
not necessarily represent how it will perform in
the future.
<PAGE>
Calendar Year Total Returns
1998
(10.13)%
[bar chart]
Best and Worst Quarterly Performance
Best quarter return Worst quarter return
9.02% (17.39)%
(4th quarter, 1998) (3rd quarter, 1998)
Average Annual Total Returns
(For the calendar year ended December 31, 1998)
Fund/Index One Year Since
Inception
(7/31/97)
Opportunity Fund (10.13)% (1.91)%
Russell 2000 (2.55)% 2.38%
Index(1)
_________________
(1)The Russell 2000 Index is an unmanaged index
generally representative of the U.S. market for small
domestic stocks. The index does not reflect investment
management fees, brokerage commissions and other
expenses associated with investing in equity
securities.
Fees and Expenses of the Fund
This table describes the fees and expenses that
you may pay if you buy and hold shares of the Fund.
Fee Tables
Shareholder Fees (fees paid directly from your
investment) NONE*
_______________
*The Fund will charge a service fee of $10 for
redemptions effected via wire transfer, and $20 for
checks that do not clear.
<PAGE>
Annual Fund Operating Expenses (expenses that are
deducted from Fund assets)(1)
Management Fees 0.65%
Distribution (12b-1) Fees NONE
Other Expenses 1.88%
Total Annual Fund
Operating Expenses 2.53%
Fee Waiver/Expense
Reimbursement(2) 1.63%
Net Expenses 0.90%
_______________
(1) Stated as a percentage of the Fund's average
net assets.
(2) Pursuant to an expense cap agreement dated
February 26, 1999 between the Fund's adviser, Frontegra
Asset Management, Inc. ("Frontegra") and the Fund,
Frontegra agreed to waive its management fee and/or
reimburse the Fund's operating expenses to the extent
necessary to ensure that the Fund's total operating
expenses do not exceed 0.90% of the Fund's average
daily net assets. The term of this expense cap
agreement is 12 months.
Example
The following Example is intended to help you
compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your
shares at the end of those periods. The Example also
assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower,
based on these assumptions, your costs would be as
follows:
1 Year $92
3 Years $287
5 Years $498
10 Years $1,108
Investment Objective
The Fund's investment objective is capital
appreciation. This investment objective may not be
changed without shareholder approval.
Investment Strategy
Under normal conditions, the Fund will seek to
achieve its investment objective by investing its
assets primarily in equity securities with small market
capitalizations. The Fund will invest at least 80% of
its net assets in equity securities. These securities
include: common stocks; preferred stocks; warrants to
purchase common stocks or preferred stocks; depositary
receipts; and securities convertible into common or
preferred stocks, such as convertible bonds and
debentures rated Baa or higher by Moody's Investors
Service ("Moody's") or BBB or higher by Standard &
Poor's ("S&P"), Duff & Phelps, Inc. ("D&P") or Fitch
Investors Service, Inc. ("Fitch"). At least 65% of the
Fund's total assets will normally be invested in equity
securities of those companies with a market
capitalization of $1 billion or less at the time of the
Fund's investment. In general, investments in small
capitalization companies often involve greater risks
than investments in larger capitalized companies.
In seeking to achieve the Fund's investment
objective, Reams uses a value-oriented discipline.
Reams evaluates the small-cap market by using a number
of valuation criteria, including both current and
historical measures, for ratios comparing price to
earnings, price to book value and price to sales. The
portfolio management team then constructs a focus list
based in part on each company's competitive position,
capital structure, cash flow and management. The team
then determines a target price for the stock, thus
providing a specific expected rate of return. The
approximately 50 securities with the highest expected
rates of return would be among those securities
selected for
<PAGE>
the Fund's portfolio. Reams constructs a
portfolio using a bottom-up analysis. On average, a
security will be held by the Fund for approximately 12
months. Ultimately, securities will be sold due to the
emergence of superior alternatives.
Implementation of Investment Objective
In implementing its investment objective, the Fund
may invest in the following securities and use the
following investment techniques. Some of these
securities and investment techniques involve special
risks, which are described below and elsewhere in this
Prospectus.
Common Stocks and Other Equity Securities
The Fund will invest at least 80% of its net
assets in common stocks and other equity securities.
Other equity securities may include depositary
receipts, preferred stocks, warrants to purchase common
and preferred stocks and securities convertible or
exchangeable into common or preferred stock.
Principal Risks. Common stocks and other equity
securities generally increase or decrease in value
based on the earnings of a company and on general
industry and market conditions. A fund that invests a
significant amount of its assets in common stocks and
other equity securities is likely to have greater
fluctuations in share price than a fund that invests a
significant portion of its assets in fixed income
securities.
Small Companies
The Fund will normally invest at least 65% of its
total assets in small companies. Small companies have
a market capitalization of $1 billion or less at
purchase.
Principal Risks. While smaller companies may have
the potential for rapid growth, investments in smaller
companies often involve greater risks than investments
in larger, more established companies because smaller
companies may lack the management experience, financial
resources, product diversification and competitive
strengths of larger companies. In addition, in many
instances the securities of smaller companies are
traded only over-the-counter or on a regional
securities exchange, and the frequency and volume of
their trading is substantially less than is typical of
larger companies. Therefore, the securities of smaller
companies may be subject to greater and more abrupt
price fluctuations. When making large sales, the Fund
may have to sell portfolio holdings at discounts from
quoted prices or may have to make a series of small
sales over an extended period of time due to the
trading volume of smaller company securities. An
investment in the Fund may be subject to greater price
fluctuations than an investment in a fund that invests
primarily in larger companies.
Temporary Strategies
The Fund may invest up to 100% of its total assets
in cash and short-term fixed income securities for
temporary defensive purposes in response to adverse
market or economic conditions. To the extent the Fund
engages in any of these temporary strategies, the Fund
may not achieve its investment objective.
Prior Performance of Reams
As noted above, Reams is the Fund's subadviser.
The following table shows the historical composite
performance data for all of Reams' advisory accounts
which have investment objectives, policies, strategies
and risks substantially similar to the Fund, known as
the Reams' Small Capitalization Value Equity Composite
(the "Composite"), for the periods indicated. Since
its inception, the Composite has shown an annual return
of approximately 17.65%. The Composite has not been
subject to the same types of expenses to which the Fund
is subject nor to the diversification requirements,
specific tax restrictions and investment limitations
imposed on the Fund by the Internal Revenue Code of
1986, as amended (the "Code"), and the Investment
Company Act of 1940, as amended (the "1940 Act"),
respectively. Consequently, the performance results
for the Composite could have been adversely affected if
the Composite had been regulated under the federal
security and tax laws. The Composite's expenses are
lower than the Fund's expenses. If the Fund's expenses
had been deducted from the Composite's returns, the
returns would be lower than those shown. The data is
provided to illustrate the past performance of Reams in
managing a
<PAGE>
substantially similar portfolio as measured
against the Russell 2000 Index and does not represent
the performance of the Fund. You should not consider
this performance data as an indication of the future
performance of the Fund or Reams.
Reams' performance information has been calculated
in accordance with recommended standards of the
Association for Investment Management and Research
("AIMR"), retroactively applied to all time periods.
All returns presented were calculated on a total return
basis and include all dividends and interest, if any,
accrued income, if any, and realized and unrealized
gains and losses. All returns reflect the deduction of
investment advisory fees, brokerage commissions and
execution costs paid by the Composite, without
provision for federal or state income taxes. Cash and
cash equivalents are included in the performance
returns. Total return is calculated monthly in
accordance with the time weighted rate of return method
provided for by AIMR standards accounted for on a trade-
date and accrual basis. AIMR standards for calculation
of total return differ from the standards required by
the SEC for calculation of average annual total return.
No leveraged positions were used. The monthly returns
are geometrically linked to derive an annual total
return.
The investment results of the Composite presented
below are unaudited and are not intended to predict or
suggest the future returns of the Fund. You should be
aware that the use of a methodology different than that
used below to calculate performance could result in
different performance data.
Reams Asset Management Company, LLC
Reams Small Capitalization Value Equity Composite
Performance History: 1/1/95-12/31/98(1)
Reams Small Russell 2000
Year Capitalization Index(2)
Composite
Total Return
1 (10.83)% (2.55)%
3 13.56% 11.58%
From 17.65% 15.57%
Inception(3)
__________
(1) For the Fund's performance, see the return
information under "The Frontegra Opportunity Fund at
a Glance."
(2) The Russell 2000 Index is an unmanaged index
generally representative of the U.S. market for small
domestic stocks. The index does not reflect
investment management fees, brokerage commissions and
other expenses associated with investing in equity
securities.
(3) The Composite commenced operations on January 1,
1995.
Average Annualized Return in Percent: 1/1/95-12/31/98
Reams Composite Performance 17.65%
Russell 2000 Index 15.57%
<PAGE>
Financial Highlights
The financial highlights table is intended to help
you understand the Fund's financial performance for the
period from July 31, 1997 (commencement of operations)
to October 31, 1998. The total returns in the table
represent the rate that an investor would have earned
or lost on an investment in the Fund for the stated
periods (assuming reinvestment of all dividends and
distributions). The financial information included in
this table has been derived from the Fund's audited
financial statements. The table should be read in
conjunction with the financial statements and related
notes included in the Fund's Annual Report to
Shareholders, which is available without charge by
writing to the Company, c/o Sunstone Financial Group,
Inc., P.O. Box 2142, Milwaukee, Wisconsin 53201-2142,
or by calling, toll-free, 1-888-825-2100.
July 31,
Fiscal Year 1997(1)
Ended to
October 31, October 31,
1998 1997
Net asset value, beginning of $32.22 $30.00
period
Income (loss) from investment
operations:
Net investment income 0.26 0.04
Net realized and unrealized gains (4.52) 2.18
(losses) on investments
Total income (loss) from investment (4.26) 2.22
operations
Less distributions paid:
From net investment income (0.03) -
From capital gains - -
Total distributions paid (0.03) -
Net asset value, end of period $27.93 $32.22
Total return(2) (13.24)% 7.40%
Supplemental data and ratios:
Net assets, end of period (in $6,827 $5,900
thousands)
Ratio of expenses to average net 0.90% 0.90%
assets(3)(4)
Ratio of net investment income to 0.92% 2.61%
average net assets(3)(4)
Portfolio turnover rate(2) 54% 9%
____________
(1) Commencement of operations.
(2) Not annualized for periods less than a full
year.
(3) Net of waivers and reimbursements by Frontegra.
Without waivers and reimbursements of expenses, the
ratio of expenses to average net assets would have
been 2.53% and 12.02% and the ratio of net
investment income to average net assets would have
been (0.71)% and (8.51)% for the fiscal year ended
October 31, 1998 and for the period July 31, 1997
through October 31, 1997, respectively.
(4) Annualized.
Fund Management
Under the laws of the State of Maryland, the Board
of Directors of the Company (the "Board of Directors")
is responsible for managing the Company's business and
affairs. The Board of Directors also oversees duties
required by applicable state and federal law. The
Company has entered into an investment advisory
agreement with Frontegra dated October 30, 1996, as
amended as of February 1, 1998 (the "Investment
Advisory Agreement"), pursuant to which Frontegra
supervises the management of the Fund's investments and
business affairs, subject to the supervision of the
Company's Board of Directors. Frontegra has entered
into a subadvisory agreement with Reams under which
Reams serves as the Fund's portfolio manager and,
subject to Frontegra's supervision, manages the Fund's
portfolio assets.
<PAGE>
Frontegra provides office facilities
for the Fund and pays the salaries, fees and expenses
of all officers and directors of the Fund who are
interested persons of Frontegra.
Adviser. The Fund is managed by Frontegra, which
supervises the management of the Fund's portfolio by
the subadviser and administers the Company's business
affairs. Frontegra was organized in 1996 and is
located at 400 Skokie Boulevard, Suite 500, Northbrook,
Illinois 60062. Mr. William D. Forsyth III and Mr.
Thomas J. Holmberg, Jr. each own 50% of Frontegra.
Under the Investment Advisory Agreement, the Fund
compensates Frontegra for its management services 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 between Frontegra and the Fund,
Frontegra agreed to waive its management fee and/or
reimburse the Fund's operating expenses to the extent
necessary to ensure that the Fund's total operating
expenses do not exceed 0.90% of the Fund's average
daily net assets. The term of this expense cap
agreement is 12 months. The expense cap agreement has
the effect of lowering the overall expense ratio for
the Fund and increasing the Fund's overall return to
investors for the time any such amounts are waived
and/or reimbursed.
Subadviser. Reams operated as a corporation
(Reams Asset Management Company, Inc.) from its
founding in 1981 until March 31, 1994, when it became
an Indiana limited liability company (LLC), with no
change in principals, employees or clients. Reams is
located at 227 Washington Street, Columbus, Indiana
47201. Under the subadvisory agreement, and with
certain exceptions described herein, Reams is
compensated by Frontegra for its investment advisory
services at the annual rate of 0.45% of the Fund's
average daily net assets. In recognition of the
economies of scale that will be gained by the Fund and
Frontegra, and with the exception of defined
contribution or 401(k) investments in the Fund, for
initial investments of over $15 million Frontegra will
compensate Reams an extra 0.10% of the average daily
net assets of such investments. For the fiscal year
ended October 31, 1998, Reams did not receive any
compensation for its investment advisory services to
the Fund. Reams provides continuous advice and
recommendations concerning the Fund's investments and
is responsible for selecting the broker/dealers who
execute the portfolio transactions. In executing such
transactions, Reams seeks to obtain the best net
results for the Fund. In addition to providing
investment advisory services to the Fund, Reams serves
as investment adviser to pension and profit-sharing
plans, and other institutional investors. As of
January 31, 1999, Reams had approximately $5.3 billion
under management, which includes equity portfolios
totaling approximately $300 million. Mr. Fred W. Reams
owns units representing a majority of the voting rights
of Reams.
Portfolio Managers. The day-to-day management
responsibilities for the Fund's portfolio are primarily
handled by Reams' portfolio management team. The
portfolio management team has been managed primarily by
Mr. Reams and Mr. David R. Milroy. Mr. Reams has been
President of Reams since April, 1994 and was President
of Reams Asset Management Company, Inc. from its
founding in 1981 until March, 1994. Mr. Milroy has
been Senior Vice President, Equity Management, of Reams
since April, 1994, was Vice President and Senior Vice
President, Equity Management, of Reams Asset Management
Company, Inc. from June, 1990 until March, 1994, and
was Portfolio Manager of Loomis, Sayles & Co. from May,
1985 until May, 1990. The portfolio management team
approves scenarios established for individual
securities submitted by each analyst, and makes the
final buy and sell decisions.
Your Account
How to Purchase Shares
Shares of the Fund are sold on a continuous basis
at net asset value. The Fund's net asset value is
determined as of the close of trading on the New York
Stock Exchange (the "NYSE") (generally 4:00 p.m.,
Eastern Time) on each day the NYSE is open. Your
purchase price will be the Fund's net asset value next
determined after the Fund receives your request in
proper form. A confirmation indicating the details of
the transaction will be sent to you promptly. Shares
are credited to your account, but certificates are not
issued. However, you will have full shareholder
rights.
The Fund's minimum initial investment required is
$100,000. Subsequent investments may be made by mail
or wire with a minimum subsequent investment of $1,000.
The Fund reserves the right to change or waive these
minimums at any time. You will be given at least 30
days' notice of any increase in the minimum dollar
amount of purchases.
<PAGE>
If you purchase shares of the Fund by check and
request the redemption of such shares within 15 days of
the initial purchase, payment of the redemption
proceeds may be delayed for up to seven business days
in order to ensure that the check has cleared. This is
a security precaution only and does not affect your
investment.
Initial Investment - Minimum $100,000
You may purchase shares of the Fund by completing
an application and mailing it along with a check or
money order payable to "Frontegra Funds, Inc." to:
Frontegra Funds, Inc., c/o Sunstone Financial Group,
Inc. (the "Transfer Agent"), P.O. Box 2142, Milwaukee,
Wisconsin 53201-2142. For overnight deliveries, please
use 207 E. Buffalo Street, Suite 315, Milwaukee,
Wisconsin 53202-5712. Purchases must be made in U.S.
dollars and all checks must be drawn on a U.S. bank.
If your check does not clear, you will be charged a $20
service fee. You will also be responsible for any
losses suffered by the Fund as a result. All
applications to purchase shares of the Fund are subject
to acceptance by the Company and are not binding until
so accepted. The Company reserves the right to decline
an application in whole or in part.
Alternatively, you may place an order to purchase
shares of the Fund through a broker/dealer.
Broker/dealers may charge a transaction fee for placing
orders to purchase Fund shares. It is the
responsibility of the broker/dealer to place the order
with the Fund on a timely basis.
In addition, you may purchase shares of the Fund
by wire. To establish a new account by wire transfer,
please call the Transfer Agent at 1-888-825-2100. The
Transfer Agent will assign an account number to you at
that time. Funds should then be wired through the
Federal Reserve System as follows:
UMB Bank, n.a.
ABA Number 101000 695
For credit to Frontegra Funds, Inc.
Account Number 9870610221
For further credit to Frontegra Funds, Inc.
(investor account number)
(name or account registration)
(Social Security or Taxpayer
Identification Number)
(identify Frontegra Opportunity Fund)
The Fund is not responsible for the consequences of
delays resulting from the banking or Federal Reserve
wire system.
Subsequent Investments - Minimum $1,000
You may make additions to your account in amounts
of $1,000 or more by mail or by wire. When making an
additional purchase by mail, enclose a check payable to
"Frontegra Funds, Inc." along with the additional
investment form provided on the lower portion of your
account statement. To make an additional purchase by
wire, please follow the instructions listed above.
How to Redeem Shares
You may request redemption of part or all of your
Fund shares at any time. The price you receive will be
the net asset value next determined after the Fund
receives your request in proper form. Once your
redemption request is received in proper form, the Fund
normally will mail or wire your redemption proceeds the
next business day and, in any event, no later than
seven business days after receipt of a redemption
request. However, the Fund may hold payment of that
portion of an investment which was made by check which
has not been collected. In addition to the redemption
procedures described below, redemptions may also be
made through broker/dealers who may charge a commission
or other transaction fee.
<PAGE>
Written Redemption
To redeem your Fund shares please furnish a
written, unconditional request to: Frontegra Funds,
Inc., c/o Sunstone Financial Group, Inc., P.O. Box
2142, Milwaukee, Wisconsin 53201-2142. For written
redemption requests sent via overnight delivery, please
use 207 E. Buffalo Street, Suite 315, Milwaukee,
Wisconsin 53202-5712. The request must (i) be signed
exactly as the shares are registered, including the
signature of each owner and (ii) specify the number of
Fund shares or dollar amount to be redeemed. The
Transfer Agent may request additional documentation
from corporations, executors, administrators, trustees,
guardians, agents or attorneys-in-fact. Redemption
proceeds may be wired to a commercial bank authorized
on your account application. However, you will be
charged a $10 service fee for wire redemptions. If the
dollar amount requested to be redeemed is greater than
the current value of your account, your entire account
balance will be redeemed.
Signature Guarantees
Signature guarantees are required for: (i)
redemption requests mailed or wired to a person other
than the registered owner(s) of the shares, (ii)
redemption requests mailed or wired to other than the
address of record and (iii) redemption requests
submitted within 30 days. A signature guarantee may be
obtained from any bank, savings and loan association,
credit union, brokerage firm or other eligible
guarantor institution. A notary public is not an
acceptable guarantor.
Account Termination
Your account may be terminated by the Fund on not
less than 30 days' notice if the value of the shares in
the account falls below $10,000. Upon any such
termination, a check for the redemption proceeds will
be sent to the address of record within seven business
days of the redemption.
Exchange Privilege
You may exchange your shares in the Fund for
shares in any other Fund of the Company at any time by
written request. The value of the shares to be
exchanged and the price of the shares being purchased
will be the net asset value next determined after
receipt of instructions for exchange in proper form.
An exchange from one Fund to another is treated the
same as an ordinary sale and purchase for federal
income tax purposes and you will realize a capital gain
or loss. This is not a tax-free exchange. Exchange
requests should be directed to: Frontegra Funds, Inc.,
c/o Sunstone Financial Group, Inc., P.O. Box 2142,
Milwaukee, Wisconsin 53201-2142. For written exchange
requests sent via overnight delivery, please use 207
E. Buffalo Street, Suite 315, Milwaukee, Wisconsin
53202-5712. Exchange requests may be subject to
limitations, including those relating to frequency,
that may be established from time to time to ensure
that the exchanges do not disadvantage the Fund or its
shareholders. The Company reserves the right to modify
or terminate the exchange privilege upon 60 days'
written notice to each shareholder prior to the
modification or termination taking effect.
Valuation of Fund Shares
The price of Fund shares is the Fund's net asset
value, which is calculated using the market price
method of valuation and is determined as of the close
of trading (generally 4:00 p.m. Eastern Time) on each
day the New York Stock Exchange ("NYSE") is open for
business. The Fund does not determine net asset value
on days the NYSE is closed. The NYSE is closed on New
Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. In addition,
if any of these holidays falls on a Saturday, the NYSE
will not be open for trading on the preceding Friday,
and when such holiday falls on a Sunday, the NYSE will
not be open for trading on the succeeding Monday,
unless unusual business conditions exist, such as the
ending of a monthly or yearly period.
<PAGE>
Tax-Sheltered Retirement Plans
The Company offers through its Custodian, UMB
Bank, n.a., various qualified retirement plans for
adoption by individuals and employers. Participants in
these plans can accumulate shares of the Fund on a tax-
deferred basis. Please call 1-888-825-2100 for a
current list of the plans offered.
Dividends, Capital Gain Distributions And Tax Treatment
For federal income tax purposes, all dividends and
distributions of net realized short-term capital gains
are taxable as ordinary income whether reinvested or
received in cash unless you are exempt from taxation or
entitled to a tax deferral. Distributions paid by the
Fund from net realized long-term capital gains, whether
received in cash or reinvested in additional shares,
are taxable as a capital gain unless you are exempt
from taxation or entitled to a tax deferral. The
capital gain holding period is determined by the length
of time the Fund has held the security and not the
length of time you have held shares in the Fund.
Shareholders are informed annually as to the amount and
nature of all dividends and capital gains paid during
the prior year. Such capital gains and dividends may
also be subject to state or local taxes. If you are
not required to pay taxes on your income, you are
generally not required to pay federal income taxes on
the amounts distributed to you.
The Fund will distribute dividends and capital
gains at least annually. When a dividend or capital
gain is distributed, the Fund's net asset value
decreases by the amount of the payment. If you
purchase shares shortly before a distribution, you
will, nonetheless, be subject to income taxes on the
distribution, even though the value of your investment
(plus cash received, if any) remains the same. The
Fund expects that, because of its investment objective,
its distributions will consist primarily of capital
gains. All dividends or capital gain distributions
will automatically be reinvested in shares of the Fund
at the then prevailing net asset value unless an
investor specifically requests that either dividends or
capital gains or both be paid in cash. The election to
receive dividends or reinvest them may be changed by
writing to: Frontegra Funds, Inc., c/o Sunstone
Financial Group, Inc., P.O. Box 2142, Milwaukee,
Wisconsin 53201-2142. For overnight deliveries, please
use 207 E. Buffalo Street, Suite 315, Milwaukee,
Wisconsin 53202-5712. Such notice must be received at
least five business days prior to the record date of
any dividend or capital gain distribution.
If you do not furnish the Fund with your correct
Social Security Number or Taxpayer Identification
Number and/or the Fund receives notification from the
Internal Revenue Service requiring back-up withholding,
the Fund is required by federal law to withhold federal
income tax from your distributions and redemption
proceeds at a rate of 31%.
This section is not intended to be a full
discussion of federal income tax laws and the effect of
such laws on you. There may be other federal, state,
or local tax considerations applicable to a particular
investor. You are urged to consult your own tax
adviser.
<PAGE>
Year 2000 Issue
The Fund's operations depend on the seamless
functioning of computer systems in the financial
service industry, including those of the Adviser, the
Subadviser, the Transfer Agent and the Custodian. Many
computer software systems in use today cannot properly
process date-related information after December 31,
1999 because of the method by which dates are encoded
and calculated. This failure, commonly referred to as
the "Year 2000 Issue," could adversely affect the
handling of security trades, pricing and account
servicing for the Fund.
The Adviser has made compliance with the Year 2000
Issue a high priority and is taking steps that it
believes are reasonably designed to address the Year
2000 Issue with respect to its computer systems. The
Adviser has also been informed that comparable steps
are being taken by the Subadviser, the Transfer Agent,
the Custodian and other major service providers.
However, there can be no assurance that the steps taken
by the Adviser will be sufficient to avoid any adverse
impact.
With respect to the companies in which the Fund
invests, the Fund cannot make any assurances as to
their Year 2000 compliance efforts. In the event that
one or more of these companies is not Year 2000
compliant, the Fund's investment in such companies may
be adversely affected.
<PAGE>
DIRECTORS c/o Sunstone
William D. Forsyth Financial Group, Inc.
III 207 East Buffalo
Thomas J. Holmberg, Street, Suite 315
Jr. Milwaukee, Wisconsin
David L. Heald 53202-5712
OFFICERS For regular mail
William D. Forsyth deliveries, use:
III Frontegra Funds, Inc.
Thomas J. Holmberg, c/o Sunstone
Jr. Financial Group, Inc.
P.O. Box 2142
INVESTMENT ADVISER Milwaukee, Wisconsin
Frontegra Asset 53201-2142
Management, Inc.
400 Skokie Blvd. AUDITORS
Suite 500 Ernst & Young LLP
Northbrook, Illinois Sears Tower
60062 233 S. Wacker Drive
Chicago, Illinois
SUB-ADVISER 60606-6301
Reams Asset
Management Company, LEGAL COUNSEL
LLC Godfrey & Kahn, S.C.
227 Washington Street 780 N. Water Street
Columbus, Indiana Milwaukee, Wisconsin
47201 53202
CUSTODIAN
UMB Bank, n.a.
928 Grand Boulevard
Kansas City, Missouri
64141
ADMINISTRATOR AND FUND
ACCOUNTANT
Sunstone Financial
Group, Inc.
207 East Buffalo
Street, Suite 400
Milwaukee, Wisconsin
53202-5712
TRANSFER AGENT
Sunstone Financial
Group, Inc.
For overnight
deliveries, use:
Frontegra Funds, Inc.
Additional information regarding the Company and the
Fund is included in the Statement of Additional
Information ("SAI") which has been filed with the
Securities and Exchange Commission ("SEC") and is
incorporated in this Prospectus by reference. Further
information about the Fund's investments is also
available in the Fund's annual and semi-annual reports
to shareholders. The Fund's annual report provides a
discussion of the market conditions and investment
strategies that significantly affected the Fund's
performance during its last fiscal year. You may
receive the Fund's SAI, annual reports and semi-annual
reports free of charge, request other information about
the Fund and make shareholder inquiries by contacting
the Company at the address listed on the cover page of
this Prospectus or by calling, toll-free, 1-888-825-
2100.
Information about the Fund (including the SAI) can be
reviewed and copied at the SEC's Public Reference Room
in Washington, D.C. Please call the SEC at 1-800-SEC-
0330 for information relating to the operation of the
Public Reference Room. Reports and other information
about the Fund are also available on the SEC's Internet
Web site located at http://www.sec.gov. Alternatively,
copies of this information may be obtained, upon
payment of a duplicating fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-
6009.
The Company's 1940 Act File Number is 811-7685.
<PAGE>
PROSPECTUS
February 26, 1999
FRONTEGRA FUNDS, INC.
FRONTEGRA GROWTH FUND
c/o Sunstone Financial Group, Inc.
P. O. Box 2142
Milwaukee, Wisconsin 53201-2142
1-888-825-2100
The FRONTEGRA GROWTH FUND (the "Fund") is a series
of FRONTEGRA FUNDS, INC., (the "Company").
The investment objective of the Fund is long-term
capital appreciation. The Fund invests primarily in a
diversified portfolio of equity securities of companies
with mid- to large-sized market capitalizations.
This Prospectus contains information you should
consider before investing in the Fund. Please read it
carefully and keep it for future reference.
Neither the Securities and Exchange Commission nor
any state securities commission has approved or
disapproved these securities or determined if this
Prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
The Frontegra Growth Fund at a Glance 1
Fees and Expenses of the Fund 1
Investment Objective 2
Investment Strategy 2
Implementation of Investment Objective 3
Prior Performance of Northern 3
Financial Highlights 4
Fund Management 5
Your Account 6
Exchange Privilege 8
Valuation of Fund Shares 8
Tax-Sheltered Retirement Plans 8
Dividends, Capital Gain Distributions and Tax Treatment 8
Year 2000 Issue 9
You should rely only on the information contained in
this Prospectus and in the Statement of Additional
Information ("SAI"), which is available upon request.
The Company has not authorized others to provide
additional information. The Company does not authorize
use of this Prospectus in any state or jurisdiction
where the offering cannot legally be made.
<PAGE>
The Frontegra Growth Fund at a Glance
Investment Objective
The Fund's goal, also referred to as its
investment objective, is long-term capital
appreciation.
Principal Investment Strategy
The Fund seeks to achieve its goal primarily
through investment in a diversified portfolio of equity
securities of companies with mid- to large-sized market
capitalizations. For this purpose, a mid- to large-
sized market capitalization company would typically
have a market capitalization of $1 billion or more. In
constructing a portfolio for the Fund, the Fund's
subadviser, Northern Capital Management Incorporated
("Northern"), selects securities with the highest
expected rates of return based on Northern's analysis
of each company's competitive position. Equity
securities in which the Fund may invest include common
stocks, preferred stocks, warrants to purchase common
stocks or preferred stocks, depositary receipts and
securities convertible or exchangeable into common or
preferred stocks. Under normal market conditions, the
Fund will invest at least 65% of its assets in these
securities. Under unusual circumstances, as a
temporary defensive technique, the Fund may invest up
to 20% of its total assets in cash and short-term fixed
income securities.
Risk Factors
The main risks of investing in the Fund are:
Market Risks: The Fund's investments are subject
to market risk, so that the value of the Fund's
investments may go up or down. If the value of the
Fund's investments goes down, you may lose money. The
share price of the Fund is expected to fluctuate with
changing market valuations of its portfolio holdings.
Your shares at redemption may be worth more or less
than your initial investment. Market risks associated
with equity investments include the possibility that
stock prices in general will decline over short or even
extended periods.
Stock Selection Risks: The stocks selected for
inclusion in the Fund's portfolio may decline in value
or not increase in value when the stock market in
general is rising.
Who Should Invest
The Fund is suitable for long-term investors only
and is not designed as a short-term investment vehicle.
The Fund may be an appropriate investment for you if
you:
Seek long-term capital appreciation;
Want to include a mid- to large-cap fund in your
portfolio; and
Are willing to accept the risk that your
investment may fluctuate.
Performance Tables
Because the Fund has been in operation for less
than a full calendar year, it has no annual
returns history.
Fees and Expenses of the Fund
This table describes the fees and expenses that
you may pay if you buy and hold shares of the Fund.
<PAGE>
Fee Tables
Shareholder Fees (fees paid directly from your
investment) NONE*
__________
*The Fund will charge a service fee of $10 for
redemptions effected via wire transfer, and $20 for
checks that do not clear.
Annual Fund Operating Expenses (expenses that are
deducted from Fund assets)(1)
Management Fees 0.80%
Distribution (12b-1) Fees NONE
Other Expenses 8.43%
Total Annual Fund
Operating Expenses 9.23%
Fee Waiver/Reimbursement(2) 8.43%
Net Expenses 0.80%
________________
(1) Stated as a percentage of the Fund's average
net assets.
(2) Pursuant to an expense cap agreement dated
February 26, 1999 between the Fund's adviser, Frontegra
Asset Management, Inc. ("Frontegra") and the Fund,
Frontegra agreed to waive its management fee and/or
reimburse the Fund's operating expenses to the extent
necessary to ensure that the Fund's total operating
expenses do not exceed 0.80% of the Fund's average
daily net assets. The term of this expense cap
agreement is 12 months.
Example
The following Example is intended to help you
compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your
shares at the end of those periods. The Example also
assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower,
based on these assumptions, your costs would be as
follows:
1 Year $82
3 Years $255
5 Years $444
10 Years $990
Investment Objective
The Fund's investment objective is long-term
capital appreciation. This investment objective may
not be changed without shareholder approval.
Investment Strategy
The Fund will seek, under normal market
conditions, to achieve its investment objective by
investing its assets primarily in the equity securities
of companies with mid- to large-sized market
capitalizations. The Fund will invest at least 80% of
its net assets in equity securities. These securities
include: common stocks; preferred stocks; warrants to
purchase common stocks or preferred stocks; depositary
receipts; and securities convertible into common or
preferred stocks, such as convertible bonds and
debentures rated Baa or higher by Moody's Investors
Service ("Moody's") or BBB or higher by Standard &
Poor's ("S&P"), Duff & Phelps, Inc. ("D&P") or Fitch
Investors Service, Inc. ("Fitch"). At least 65% of the
Fund's total assets will normally be invested in equity
securities of those companies with a market
capitalization of $1 billion or more at the time of the
Fund's investment.
<PAGE>
In seeking to achieve the Fund's investment
objective, Northern identifies companies with market
capitalizations greater than $1 billion and historical
earnings growth greater than the Standard & Poor's 500r
Stock Index (the "S&P 500"). Northern then assesses
the competitive position of each such company through
fundamental research, including an evaluation of its
products or services, its management, and the industry
competition, and through Northern's proprietary
price/growth analysis. A target price is then
established for each security based on projected
earnings growth relative to market expectations. The
45-55 securities with the highest expected rates of
return would be among those securities selected for the
Fund's portfolio. On average, a security will be held
by the Fund for approximately 12 months. Securities
are generally sold as a result of price appreciation,
when they become less attractive on a risk/return basis
relative to their growth prospects and other identified
securities, or when the assumptions used in Northern's
proprietary price/growth analysis change with respect
to the security.
Implementation of Investment Objective
In implementing its investment objective, the Fund
may invest in the following securities and use the
following investment techniques. Some of these
securities and investment techniques involve special
risks, which are described below and elsewhere in this
Prospectus.
Common Stocks and Other Equity Securities
The Fund will invest at least 65% of its net
assets in common stocks and other equity securities.
Other equity securities may include depositary
receipts, preferred stocks, warrants to purchase common
and preferred stocks and securities convertible or
exchangeable into common or preferred stock.
Principal Risks. Common stocks and other equity
securities generally increase or decrease in value
based on the earnings of a company and on general
industry and market conditions. A fund that invests a
significant amount of its assets in common stocks and
other equity securities is likely to have greater
fluctuations in share price than a fund that invests a
significant portion of its assets in fixed income
securities.
Temporary Strategies
The Fund may invest up to 20% of its total assets
in cash and short-term fixed income securities to meet
anticipated redemption requests, pending investment and
to pay expenses. The Fund may temporarily exceed this
20% limitation, but only in circumstances pending
investment and only for short periods of time.
Prior Performance of Northern
The following table shows the historical composite
performance data for all of Northern's advisory
accounts which have investment objectives, policies,
strategies and risks substantially similar to the Fund,
known as the NCM Equity Portfolio (the "Composite"),
for the periods indicated. Since its inception, the
Composite has shown an annual return of approximately
23%. The Composite has not been subject to the same
types of expenses to which the Fund is subject nor to
the diversification requirements, specific tax
restrictions and investment limitations imposed on the
Fund by the Internal Revenue Code of 1986, as amended
(the "Code"), and the Investment Company Act of 1940,
as amended (the "1940 Act"), respectively.
Consequently, the performance results for the Composite
could have been adversely affected if the Composite had
been regulated under the federal security and tax laws.
The Composite's expenses are lower than the Fund's
expenses. If the Fund's expenses had been deducted
from the Composite's returns, the returns would be
lower than those shown. The data is provided to
illustrate the past performance of Northern in managing
a substantially similar portfolio as measured against
the Russell 1000 Growth Index and the S&P 500 and does
not represent the performance of the Fund. You should
not consider this performance data as an indication of
the future performance of the Fund or Northern.
Northern's performance information has been
calculated in accordance with recommended standards of
the Association for Investment Management and Research
("AIMR"), retroactively applied to all time periods.
All returns presented were calculated on a total return
basis and include all dividends and interest, if any,
accrued income, if any, and realized and unrealized
gains and losses. All returns reflect the deduction of
investment advisory fees, brokerage
<PAGE>
commissions and
execution costs paid by the Composite, without
provision for federal or state income taxes. Cash and
cash equivalents are included in the performance
returns. Total return is calculated monthly in
accordance with the time weighted rate of return method
provided for by AIMR standards accounted for on a trade-
date and accrual basis. AIMR standards for calculation
of total return differ from the standards required by
the SEC for calculation of average annual total return.
No leveraged positions were used. The monthly returns
are geometrically linked to derive an annual total
return.
The investment results of the Composite presented
below are unaudited and are not intended to predict or
suggest the future returns of the Fund. You should be
aware that the use of a methodology different than that
used below to calculate performance could result in
different performance data.
Northern Capital Management
NCM Equity Composite Performance History: 1/1/91-
12/31/98
NCM Equity Russell 1000
Year Composite Growth S&P
Rate of Index(1) 500(2)
Return
1 23.74% 38.69% 28.57%
3 25.39% 30.66% 28.23%
5 22.29% 25.69% 24.04%
From 23.34% 21.62% 20.81%
Inception(3)
____________
(1) The Russell 1000 Growth Index is an unmanaged
index that contains securities typically selected by
growth managers as being representative of the U.S.
stock market. The index does not reflect investment
management fees, brokerage commissions and other
expenses associated with investing in equity
securities.
(2) The S&P 500 is an unmanaged index generally
representative of the U.S. stock market. The index
does not reflect investment management fees,
brokerage commissions and other expenses associated
with investing in equity securities.
(3) The Composite commenced operations on January 1,
1991.
Average Annualized Return in Percent: 1/1/91-12/31/98
NCM Equity Composite Performance 23.34%
Russell 1000 Growth Index 21.62%
S&P 500 20.81%
Financial Highlights
The financial highlights table is intended to help
you understand the Fund's financial performance for the
period from March 18, 1998 (commencement of operations)
to October 31, 1998. The total return in the table
represents the rate that an investor would have lost on
an investment in the Fund for the stated period
(assuming reinvestment of all dividends and
distributions). The financial information included in
this table has been derived from the Fund's audited
financial statements. The table should be read in
conjunction with the financial statements and related
notes included in the Fund's Annual Report to
Shareholders, which is available without charge by
writing to the Company, c/o Sunstone Financial Group,
Inc., P.O. Box 2142, Milwaukee, Wisconsin 53201-2142,
or by calling, toll-free, 1-888-825-2100.
<PAGE>
March 18, 1998(1)
to
October 31, 1998
Net asset value, beginning of period $10.00
Income (loss) from investment operations:
Net investment income 0.01
Net realized and unrealized gains (losses) on (0.72)
investments
Total income (loss) from investment operations (0.71)
Less distributions paid:
From net investment income -
Total distributions paid -
Net asset value, end of period $9.29
Total return(2) (7.10)%
Supplemental data and ratios:
Net assets, end of period (in thousands) $2,343
Ratio of expenses to average net assets(3)(4) 0.80%
Ratio of net investment income to average net 0.28%
assets(3)(4)
Portfolio turnover rate(2) 67%
____________
(1) Commencement of operations.
(2) Not annualized.
(3) Net of waivers and reimbursements by Frontegra.
Without waivers and reimbursements of expenses, the
ratio of expenses to average net assets would have
been 9.23% and the ratio of net investment income to
average net assets would have been (8.15)%.
(4) Annualized.
Fund Management
Under the laws of the State of Maryland, the Board
of Directors of the Company (the "Board of Directors")
is responsible for managing the Company's business and
affairs. The Board of Directors also oversees duties
required by applicable state and federal law. The
Company has entered into an investment advisory
agreement with Frontegra dated October 30, 1996, as
amended as of February 1, 1998 (the "Investment
Advisory Agreement"), pursuant to which Frontegra
supervises the management of the Fund's investments and
business affairs, subject to the supervision of the
Company's Board of Directors. Frontegra has entered
into a subadvisory agreement with Northern under which
Northern serves as the Fund's portfolio manager and,
subject to Frontegra's supervision, manages the Fund's
portfolio assets. Frontegra provides office facilities
for the Fund and pays the salaries, fees, and expenses
of all officers and directors of the Fund who are
interested persons of Frontegra.
Adviser. The Fund is managed by Frontegra, which
supervises the management of the Fund's portfolio by
the subadviser and administers the Company's business
affairs. Frontegra was organized in 1996 and is
located at 400 Skokie Boulevard, Suite 500, Northbrook,
Illinois 60062. Mr. William D. Forsyth III and Mr.
Thomas J. Holmberg, Jr. each own 50% of Frontegra.
Under the Investment Advisory Agreement, the Fund
compensates Frontegra for its management services at
the annual rate of 0.80% of the Fund's average daily
net assets. Pursuant to an expense cap agreement dated
February 26, 1999 between Frontegra and the Fund,
Frontegra agreed to waive its management fee
<PAGE>
and/or
reimburse the Fund's operating expenses to the extent
necessary to ensure that the Fund's total operating
expenses do not exceed 0.80% of the Fund's average
daily net assets. The term of this expense cap
agreement is 12 months. The expense cap agreement has
the effect of lowering the overall expense ratio for
the Fund and increasing the Fund's overall return to
investors at the time any such amounts are waived
and/or reimbursed.
Subadviser. Northern is located at 8018 Excelsior
Drive, Suite 300, Madison, Wisconsin 53717. Under the
subadvisory agreement, Northern is compensated by
Frontegra for its investment advisory services at the
annual rate of (i) 0.25% of the Fund's average daily
net assets prior to the first date when the Fund's
average daily net assets exceed $200 million and (ii)
0.30% of the Fund's average daily net assets on and
after the first date when the Fund's average daily net
assets exceed $200 million. For the fiscal year ended
October 31, 1998, Northern received $2,131.54 from
Frontegra for its services to the Fund. Northern
provides continuous advice and recommendations
concerning the Fund's investments and is responsible
for selecting the broker/dealers who execute the
portfolio transactions. In executing such
transactions, Northern seeks to obtain the best net
results for the Fund. While Northern has not
previously provided investment advice to a mutual fund,
Northern serves as investment adviser to pension and
profit-sharing plans, institutional investors and
private accounts. As of January 31, 1999, Northern had
approximately $1.3 billion under management. United
Asset Management Corporation, an investment adviser
holding company, owns 100% of the voting stock of
Northern.
Portfolio Managers. The day-to-day management
responsibilities for the Fund's portfolio are primarily
handled by Northern's portfolio management team. The
portfolio management team is managed primarily by
Daniel T. Murphy and Brian A. Hellmer. The Fund's
overall investment strategy, and portfolio allocation
and risk parameters are determined by Northern's
Investment Committee, which consists of Stephen L.
Hawk, Mr. Murphy and Mr. Hellmer. Mr. Hawk, Chairman
of Northern, has been with the firm since March 1983;
Mr. Murphy, the President, Chief Investment Officer,
Portfolio Manager and a Director of Northern, joined
the firm in March 1995 and was a Senior Investment
Analyst at Brinson Partners, Inc. from December 1989 to
March 1995; and Mr. Hellmer, Senior Vice President and
Director of Research of Northern, joined the firm in
April 1996 and was an Investment Officer of Fleet
Investment Advisors from July 1989 to April 1996. The
portfolio management team reviews and approves the
analyst's recommendations and makes the final buy and
sell decisions. The Fund's portfolio is reviewed on a
weekly basis by the Investment Committee.
Your Account
How to Purchase Shares
Shares of the Fund are sold on a continuous basis
at net asset value. The Fund's net asset value is
determined as of the close of trading on the New York
Stock Exchange (the "NYSE") (generally 4:00 p.m.,
Eastern Time) on each day the NYSE is open. Your
purchase price will be the Fund's net asset value next
determined after the Fund receives your request in
proper form. A confirmation indicating the details of
the transaction will be sent to you promptly. Shares
are credited to your account, but certificates are not
issued. However, you will have full shareholder
rights.
The Fund's minimum initial investment is $100,000.
Subsequent investments may be made by mail or wire with
a minimum subsequent investment of $1,000. The Fund
reserves the right to change or waive these minimums at
any time. You will be given at least 30 days' notice
of any increase in the minimum dollar amount of
purchases.
If you purchase shares of the Fund by check and
request the redemption of such shares within 15 days of
the initial purchase, payment of the redemption
proceeds may be delayed for up to seven business days
in order to ensure that the check has cleared. This is
a security precaution only and does not affect your
investment.
Initial Investment - Minimum $100,000
You may purchase shares of the Fund by completing
an application and mailing it along with a check or
money order payable to "Frontegra Funds, Inc." to:
Frontegra Funds, Inc., c/o Sunstone Financial Group,
Inc. (the "Transfer Agent"), P.O. Box 2142, Milwaukee,
Wisconsin 53201-2142. For overnight deliveries, please
use 207 E. Buffalo Street, Suite 315, Milwaukee,
Wisconsin 53202-5712. Purchases must be made in U.S.
dollars and all checks must be drawn on a U.S. bank.
If your check does not clear, you will be charged a $20
service fee. You will
<PAGE>
also be responsible for any
losses suffered by the Fund as a result. All
applications to purchase shares of the Fund are subject
to acceptance by the Company and are not binding until
so accepted. The Company reserves the right to decline
an application in whole or in part.
Alternatively, you may place an order to purchase
shares of the Fund through a broker/dealer.
Broker/dealers may charge a transaction fee for placing
orders to purchase Fund shares. It is the
responsibility of the broker/dealer to place the order
with the Fund on a timely basis.
In addition, you may purchase shares of the Fund
by wire. To establish a new account by wire transfer,
please call the Transfer Agent at 1-888-825-2100. The
Transfer Agent will assign an account number to you at
that time. Funds should then be wired through the
Federal Reserve System as follows:
UMB Bank, n.a.
ABA Number 101000 695
For credit to Frontegra Funds, Inc.
Account Number 9870610221
For further credit to Frontegra Funds, Inc.
(investor account number)
(name or account registration)
(Social Security or Taxpayer
Identification Number)
(identify Frontegra Growth Fund)
The Fund is not responsible for the consequences of
delays resulting from the banking or Federal Reserve
wire system.
Subsequent Investments - Minimum $1,000
You may make additions to your account in amounts
of $1,000 or more by mail or by wire. When making an
additional purchase by mail, enclose a check payable to
"Frontegra Funds, Inc." along with the additional
investment form provided on the lower portion of your
account statement. To make an additional purchase by
wire, please follow the instructions listed above.
How to Redeem Shares
You may request redemption of part or all of your
Fund shares at any time. The price you receive will be
the net asset value next determined after the Fund
receives your request in proper form. Once your
redemption request is received in proper form, the Fund
normally will mail or wire your redemption proceeds the
next business day and, in any event, no later than
seven business days after receipt of a redemption
request. However, the Fund may hold payment of that
portion of an investment which was made by check which
has not been collected. In addition to the redemption
procedures described below, redemptions may also be
made through broker/dealers who may charge a commission
or other transaction fee.
Written Redemption
To redeem your Fund shares please furnish a
written, unconditional request to: Frontegra Funds,
Inc., c/o Sunstone Financial Group, Inc., P.O. Box
2142, Milwaukee, Wisconsin 53201-2142. For written
redemption requests sent via overnight delivery, please
use 207 E. Buffalo Street, Suite 315, Milwaukee,
Wisconsin 53202-5712. Your request must (i) be signed
exactly as the shares are registered, including the
signature of each owner and (ii) specify the number of
Fund shares or dollar amount to be redeemed. The
Transfer Agent may request additional documentation
from corporations, executors, administrators, trustees,
guardians, agents or attorneys-in-fact. Redemption
proceeds may be wired to a commercial bank authorized
on your account application. However, you will be
charged a $10 service fee for wire redemptions. If the
dollar amount requested to be redeemed is greater than
the current value of your account, your entire account
balance will be redeemed.
<PAGE>
Signature Guarantees
Signature guarantees are required for: (i)
redemption requests mailed or wired to a person other
than the registered owner(s) of the shares, (ii)
redemption requests mailed or wired to other than the
address of record and (iii) redemption requests
submitted within 30 days of an address change. A
signature guarantee may be obtained from any bank,
savings and loan association, credit union, brokerage
firm or other eligible guarantor institution. A notary
public is not an acceptable guarantor.
Account Termination
Your account may be terminated by the Fund on not
less than 30 days' notice if the value of the shares in
the account falls below $10,000. Upon any such
termination, a check for the redemption proceeds will
be sent to the address of record within seven business
days of the redemption.
Exchange Privilege
You may exchange your shares in the Fund for
shares in any other Fund of the Company at any time by
written request. The value of the shares to be
exchanged and the price of the shares being purchased
will be the net asset value next determined after
receipt of instructions for exchange in proper form.
An exchange from one Fund to another is treated the
same as an ordinary sale and purchase for federal
income tax purposes and you will realize a capital gain
or loss. This is not a tax-free exchange. Exchange
requests should be directed to: Frontegra Funds, Inc.,
c/o Sunstone Financial Group, Inc., P.O. Box 2142,
Milwaukee, Wisconsin 53201-2142. For written exchange
requests sent via overnight delivery, please use 207
E. Buffalo Street, Suite 315, Milwaukee, Wisconsin
53202-5712. Exchange requests may be subject to
limitations, including those relating to frequency,
that may be established from time to time to ensure
that the exchanges do not disadvantage the Fund or its
shareholders. The Company reserves the right to modify
or terminate the exchange privilege upon 60 days'
written notice to each shareholder prior to the
modification or termination taking effect.
Valuation of Fund Shares
The price of Fund shares is the Fund's net asset
value, which is calculated using the market price
method of valuation and is determined as of the close
of trading (generally 4:00 p.m. Eastern Time) on each
day the New York Stock Exchange ("NYSE") is open for
business. The Fund does not determine net asset value
on days the NYSE is closed. The NYSE is closed on New
Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. In addition,
if any of these holidays falls on a Saturday, the NYSE
will not be open for trading on the preceding Friday,
and when such holiday falls on a Sunday, the NYSE will
not be open for trading on the succeeding Monday,
unless unusual business conditions exist, such as the
ending of a monthly or yearly period.
Tax-Sheltered Retirement Plans
The Company offers through its Custodian, UMB
Bank, n.a., various qualified retirement plans for
adoption by individuals and employers. Participants in
these plans can accumulate shares of the Fund on a tax-
deferred basis. Please call 1-888-825-2100 for a
current list of the plans offered.
Dividends, Capital Gain Distributions And Tax Treatment
For federal income tax purposes, all dividends and
distributions of net realized short-term capital gains
are taxable as ordinary income whether reinvested or
received in cash unless you are exempt from taxation or
entitled to a tax deferral. Distributions paid by the
Fund from net realized long-term capital gains, whether
received in cash or reinvested in additional shares,
are taxable as a capital gain unless you are exempt
from taxation or entitled to a tax deferral. The
capital gain holding period is determined by the length
of time the Fund has held the security and not the
length of time you have held shares in the Fund.
Shareholders are informed annually as to the amount and
nature of all dividends and capital gains paid during
the prior year. Such capital gains and dividends may
also be subject to state or
<PAGE>
local taxes. If you are
not required to pay taxes on your income, you are
generally not required to pay federal income taxes on
the amounts distributed to you.
The Fund will usually distribute dividends and
capital gains at least annually. When a dividend or
capital gain is distributed, the Fund's net asset value
decreases by the amount of the payment. If you
purchase shares shortly before a distribution, you
will, nonetheless, be subject to income taxes on the
distribution, even though the value of your investment
(plus cash received, if any) remains the same. The
Fund expects that, because of its investment objective,
its distributions will consist primarily of capital
gains. All dividends or capital gain distributions
will automatically be reinvested in shares of the Fund
at the then prevailing net asset value unless an
investor specifically requests that either dividends or
capital gains or both be paid in cash. The election to
receive dividends or reinvest them may be changed by
writing to: Frontegra Funds, Inc., c/o Sunstone
Financial Group, Inc., P.O. Box 2142, Milwaukee,
Wisconsin 53201-2142. For overnight deliveries, please
use 207 E. Buffalo Street, Suite 315, Milwaukee,
Wisconsin 53202-5712. Such notice must be received at
least five business days prior to the record date of
any dividend or capital gain distribution.
If you do not furnish the Fund with your correct
Social Security Number or Taxpayer Identification
Number and/or the Fund receives notification from the
Internal Revenue Service requiring back-up withholding,
the Fund is required by federal law to withhold federal
income tax from your distributions and redemption
proceeds at a rate of 31%.
This section is not intended to be a full
discussion of federal income tax laws and the effect of
such laws on you. There may be other federal, state,
or local tax considerations applicable to a particular
investor. You are urged to consult your own tax
adviser.
Year 2000 Issue
The Fund's operations depend on the seamless
functioning of computer systems in the financial
service industry, including those of the Adviser, the
Subadviser, the Transfer Agent and the Custodian. Many
computer software systems in use today cannot properly
process date-related information after December 31,
1999 because of the method by which dates are encoded
and calculated. This failure, commonly referred to as
the "Year 2000 Issue," could adversely affect the
handling of security trades, pricing and account
servicing for the Fund.
The Adviser has made compliance with the Year 2000
Issue a high priority and is taking steps that it
believes are reasonably designed to address the Year
2000 Issue with respect to its computer systems. The
Adviser has also been informed that comparable steps
are being taken by the Subadviser, the Transfer Agent,
the Custodian and the Fund's other major service
providers. However, there can be no assurance that the
steps taken by the Adviser will be sufficient to avoid
any adverse impact.
With respect to the companies in which the Fund
invests, the Fund cannot make any assurances as to
their Year 2000 compliance efforts. In the event that
one or more of these companies is not Year 2000
compliant, the Fund's investment in such companies may
be adversely affected.
<PAGE>
DIRECTORS
William D. Forsyth TRANSFER AGENT
III Sunstone Financial
Thomas J. Holmberg, Group, Inc.
Jr. For overnight
David L. Heald deliveries, use:
Frontegra Funds, Inc.
OFFICERS c/o Sunstone
William D. Forsyth Financial Group, Inc.
III 207 East Buffalo
Thomas J. Holmberg, Street, Suite 315
Jr. Milwaukee, Wisconsin
53202-5712
INVESTMENT ADVISER
Frontegra Asset For regular mail
Management, Inc. deliveries, use:
400 Skokie Blvd. Frontegra Funds, Inc.
Suite 500 c/o Sunstone
Northbrook, Illinois Financial Group, Inc.
60062 P.O. Box 2142
Milwaukee, Wisconsin
SUB-ADVISER 53201-2142
Northern Capital
Management, Inc. AUDITORS
8018 Excelsior Drive Ernst & Young LLP
Suite 300 Sears Tower
Madison, Wisconsin 233 S. Wacker Drive
53717 Chicago, Illinois
60606-6301
CUSTODIAN
UMB Bank, n.a. LEGAL COUNSEL
928 Grand Boulevard Godfrey & Kahn, S.C.
Kansas City, Missouri 780 N. Water Street
64141 Milwaukee, Wisconsin
53202
ADMINISTRATOR AND FUND
ACCOUNTANT
Sunstone Financial
Group, Inc.
207 East Buffalo
Street, Suite 400
Milwaukee, Wisconsin
53202-5712
Additional information regarding the Company and the
Fund is included in the Statement of Additional
Information ("SAI") which has been filed with the
Securities and Exchange Commission ("SEC") and is
incorporated in this Prospectus by reference. Further
information about the Fund's investments is also
available in the Fund's annual and semi-annual reports
to shareholders. The Fund's annual report provides a
discussion of the market conditions and investment
strategies that significantly affected the Fund's
performance during its last fiscal year. You may
receive the Fund's SAI, annual reports and semi-annual
reports free of charge, request other information about
the Fund and make shareholder inquiries by contacting
the Company at the address listed on the cover page of
this Prospectus or by calling, toll-free, 1-888-825-
2100.
Information about the Fund (including the SAI) can be
reviewed and copied at the SEC's Public Reference Room
in Washington, D.C. Please call the SEC at 1-800-SEC-
0330 for information relating to the operation of the
Public Reference Room. Reports and other information
about the Fund are also available on the SEC's Internet
Web site located at http://www.sec.gov. Alternatively,
copies of this information may be obtained, upon
payment of a duplicating fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-
6009.
The Company's 1940 Act File Number is 811-7685.
