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FRONTEGRA FUNDS
SEMI-ANNUAL REPORT
Frontegra Total Return Bond Fund
FRONTEGRA ASSET MANAGEMENT, INC.
---------------
April 30, 1999
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FRONTEGRA FUNDS
TABLE OF CONTENTS
Shareholder Letter 1
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Investment Highlights 3
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Schedule of Investments 4
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Statement of Assets and Liabilities 9
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Statement of Operations 10
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Statements of Changes in Net Assets 11
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Financial Highlights 12
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Notes to Financial Statements 13
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This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless
accompanied or preceded by an effective Prospectus for the Fund. The Prospectus
includes more complete information about management fees and expenses,
investment objectives, risks and operating policies of the Fund. Please read the
Prospectus carefully.
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FRONTEGRA FUNDS
DEAR FELLOW SHAREHOLDERS:
We are pleased to present the April 30, 1999, Semi-Annual Report for the
Frontegra Total Return Bond Fund, managed by Reams Asset Management Company. The
last six months proved an exciting time in the fixed income markets, as many
sectors and individual securities rebounded from their lows following the
debacle in the markets last autumn. While corporate and mortgage bonds were
rallying, Treasury bond yields reversed course and increased significantly from
their lows reached in late 1998. Despite these countervailing forces, the Fund
posted strong results over the last six months and outperformed the benchmark
Lehman Brothers Aggregate Bond Index.
Frontegra Total Return Bond Fund 1.23%
Lehman Aggregate Bond Index 0.69%
MARKET REVIEW
Conditions in the bond market stabilized over the past six months following a
period of plummeting stock prices, exploding hedge funds and financial troubles
around the globe. The resulting flight to quality caused U.S. Treasury bond
yields to drop to the lowest levels in recent memory. Yields have since
increased across the curve, with the yield on the 10-year Treasury bond
increasing nearly 100 basis points over the last six months. At April 30, the
yield on the 10-year Treasury bond stood at 5.4%.
The widening of spreads between Treasury and non-Treasury issues in October,
1998, created unprecedented opportunities in the bond market. Over the last six
months, as markets have stabilized, corporate and mortgage spreads declined
significantly, although there continues to be ample value in non-Treasury
securities.
After reducing rates twice in 1998, the Federal Reserve left rates unchanged
over the past six months. The continued strength in the U.S. economy prevented
the Fed from easing, while the turmoil abroad likely restrained the Fed from
tightening the money supply by increasing rates.
PERFORMANCE REVIEW
The Fund's strong relative performance resulted from both top-down and bottom-up
strategies. From the top-down, we entered the period with lower than market
duration, given the rally in rates in the latter part of 1998. This strategy
added value, as rates backed up nearly 100 basis points.
Our individual bond selection also added value as we aggressively moved into
mortgage and corporate bonds early in the period. This move proved correct as
corporate bonds rallied and spreads returned to more normal levels. Mortgage-
and asset-backed bonds also narrowed in spread, providing strong results similar
to those in the corporate sector.
PORTFOLIO OUTLOOK AND STRATEGY
As you may recall, we focus our top-down efforts on determining the real, or
inflation-adjusted, interest rate on bonds when making our duration decision.
Given the Federal Reserve's monetary policy in recent years, we expect future
inflation to be near 2.5%. Since 10-year Treasury bonds now yield 5.4%, our
current estimate of real rates is 2.9%. This is close to the long-term neutral
range of 3.0% to 3.5%. Therefore portfolio duration now stands to 4.4, which is
near that of the benchmark. Our yield curve strategy is also neutral. Since long
rates have risen more quickly than short-term rates, we have added to the long
end of the curve, returning to a more neutral yield curve strategy.
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FRONTEGRA FUNDS
We continue to find good value in the corporate market, particularly in
utilities and aircraft equipment trusts. We believe that most of the value in
the corporate market can be found in the BBB sector of the market. Below
investment grade holdings account for 14% of the portfolio, concentrated in
electric utilities. Mortgage- and asset-backed bonds are also attractive and
comprise 28% of the Fund. We continue to find good value in pass-throughs and
commercial and multifamily securities. Currently, average portfolio quality is
AA- and the Fund has a yield advantage of 0.60% over the benchmark.
SUMMARY
The Fund benefited from the volatility that returned to the market in late 1998,
after a long period of relative calm. We believe that the Fund continues to be
well positioned to take advantage of opportunities afforded us in today's market
environment. As always, we appreciate your continued confidence and investment
in the Fund.
Sincerely,
/s/ Mark M. Egan /s/ Robert A. Crider
Mark M. Egan, CFA, CPA Robert A. Crider, CFA
Reams Asset Management Co. Reams Asset Management Co.
/s/ Thomas J. Holmberg /s/ William D. Forsyth
Thomas J. Holmberg, CFA William D. Forsyth, CFA
Frontegra Asset Management Frontegra Asset Management
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FRONTEGRA FUNDS
INVESTMENT HIGHLIGHTS
Growth of a $100,000 Investment
Frontegra Total Lehman Brothers
Return Bond Fund Aggregate Bond Index
------------------- --------------------
11/25/96 100,000 100,000
1/31/97 99,407 99,850
4/30/97 99,926 100,471
7/31/97 105,090 105,392
10/31/97 107,128 107,573
1/31/98 109,524 110,558
4/30/98 110,422 111,434
7/31/98 112,387 113,687
10/31/98 115,478 117,617
1/31/99 117,386 119,488
4/30/99 116,509 118,426
- ----------------------------
Portfolio Total Return
FOR THE PERIOD ENDED 4/30/99
- ----------------------------
ONE YEAR 5.86%
AVERAGE ANNUAL
SINCE COMMENCEMENT 6.64%
- ----------------------------
This chart assumes an initial gross investment of $100,000 made on 11/25/96
(commencement of operations). Returns shown include the reinvestment of all
distributions. Past performance is not predictive of future results. Investment
return and principal value will fluctuate so that shares, when redeemed, may be
worth more or less than the original cost. In the absence of existing fee
waivers, total return would be reduced.
The 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 IBCA, Inc., in that order. All issues have at least one
year to maturity and an outstanding par value of at least $100 million. Price,
coupon, paydown and total return are reported for all sectors on a month-end to
month-end basis. All returns are market value-weighted inclusive of accrued
interest.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
SCHEDULE OF INVESTMENTS
April 30, 1999 (Unaudited)
Principal Amount Value
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ASSET-BACKED SECURITIES 13.6%
$ 384,181 Capco America Securitization Corp., 5.86%, 12/15/07 $377,109
900,000 Capita Equip RBL TRS, SRS97-1, 6.19%, 2/15/02 904,248
862,617 Chase CMBS, 97-2 A1, 6.45%, 12/19/29 866,757
498,139 Commercial Mortgage Asset Trust 1999-C1 A1,
6.25%, 8/17/06 500,121
600,000 Fingerhut Master Trust 1998-2A, 6.23%, 2/15/07 601,428
46,180 Green Tree Recreational, 96-A-A1, 5.55%, 2/15/18 45,962
250,000 Green Tree, 95-7-A5, 6.95%, 11/25/26 256,147
48,390 Green Tree, 95-9-A3, 6.20%, 1/15/27 48,723
200,000 Green Tree 96-7-M1, 7.70%, 10/15/27 200,130
512,999 J.P. Morgan 1996-C2, 6.47%, 3/25/05 512,666
213,316 Lehman Trust 96-2-A3, 7.11%, 10/25/09 216,106
71,819 Mego 1996-2-A2, 7.275%, 2/25/18 72,683
46,464 Pru. Mtg. 1993-5-A4, 7.00%, 2/25/00 46,672
146,458 RTC 1991-6-A1, 6.92%, 5/25/19 147,295
102,354 RTC 1991-6-C1, 9.00%, 9/25/28 103,134
95,582 Sec. Pac. 1992-3-A3, 7.45%, 9/15/12 95,969
11,943 SASCO 1996-CFL-A-1C, 5.94%, 2/25/28 11,964
1,500,000 World Financial 1996-B, 6.95%, 4/15/06 1,556,775
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TOTAL ASSET-BACKED SECURITIES
(cost $6,549,605) 6,563,889
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CORPORATE BONDS 52.4%
Airlines 5.6%
619,767 America West Airlines, Inc., 7.33%, 7/2/08 633,110
494,873 Continental Airlines 98-1, 6.648%, 9/15/17 488,554
400,000 Delta Air Lines, Inc. 89-B, 9.75%, 6/1/03 442,268
488,202 Delta Air Lines, Inc., 9.375%, 9/11/07 535,904
600,000 US Airways Inc., 6.85%, 1/30/18 605,796
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2,705,632
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Diversified 2.7%
800,000 FMC Corp., 7.125%, 11/25/02 795,872
500,000 Union Carbide Corp., 6.79%, 6/1/25 493,290
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1,289,162
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See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Principal Amount Value
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Energy 3.1%
$1,000,000 CMS Energy Corp., 7.375%, 11/15/00 $1,007,030
502,726 Salton Sea Funding, 7.37%, 5/30/05 517,500
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1,524,530
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Engines - Internal Combustion 1.0%
500,000 Cummins Engine, 6.25%, 3/1/03 491,310
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Fertilizers 1.0%
500,000 IMC Global Inc., 6.625%, 10/15/01 496,815
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Financial 2.9%
300,000 Associates Corp. NA, 5.80%, 4/20/04 296,445
1,049,141 Midland Funding Corp., 10.33%, 7/23/02 1,098,976
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1,395,421
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Food Products 1.2%
400,000 ConAgra Inc., 5.50%, 10/15/02 391,536
250,000 Dole Foods, 6.375%, 10/1/05 239,410
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630,946
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Forest Products & Paper 1.6%
800,000 Boise Cascade Corp., 7.48%, 6/15/05 784,120
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Medical/Hospitals 0.5%
300,000 Columbia/HCA Healthcare, 7.69%, 6/15/25 253,380
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Oil & Gas 4.9%
613,000 Oryx Energy Corp., 10.00%, 4/1/01 653,740
500,000 PDV America, Inc., 7.75%, 8/1/00 482,565
850,000 PDV America, Inc., 7.875%, 8/1/03 789,514
500,000 R&B Falcon Corp., 6.50%, 4/15/03 428,750
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2,354,569
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Real Estate Investment Trust 2.5%
500,000 HPRT Properties Trust, 6.75%, 12/18/02 485,485
750,000 United Dominion Realty Trust, 7.60%, 1/25/02 738,892
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1,224,377
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See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Principal Amount Value
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Services 2.9%
$ 236,067 Federal Express Corp., 8.04%, 11/22/07 $246,121
334,050 Federal Express Corp., 7.85%, 1/30/15 341,192
150,000 Federal Express Corp., 7.84%, 1/30/18 155,288
500,000 Service Corporation International, 6.30%, 3/15/03 490,420
150,000 Service Corporation International, 7.00%, 6/1/15 150,726
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1,383,747
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Transportation 1.0%
500,000 JB Hunt Transport Services, 7.00%, 9/15/04 501,250
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Utilities 11.7%
400,000 Cleveland Electric Illuminating Co. (The),
7.85%, 7/30/02 415,824
500,000 Cleveland Electric Illuminating Co. (The),
7.67%, 7/1/04 521,080
250,000 Cogentrix Energy, 8.10%, 3/15/04 250,000
500,000 Niagara Mohawk Power Corp., 7.25%, 10/1/02 511,245
896,000 North Atlantic Energy Corp., 9.05%, 6/1/02 902,926
250,000 Sithe/Independence Funding, 8.50%, 6/30/07 265,630
200,000 Sithe/Independence Funding, 9.00%, 12/30/13 223,522
500,000 Texas Utilities, 6.75%, 3/1/03 511,385
1,000,000 Utilicorp United Inc. (AMBAC Insured),
6.875%, 10/1/04 1,021,120
1,000,000 Utilicorp United Inc., 6.70%, 10/15/06 1,018,370
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5,641,102
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Waste Management 1.9%
500,000 WMX Technologies, Inc., 6.65%, 5/15/05 503,415
400,000 WMX Technologies, Inc., 7.10%, 8/1/26 407,712
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911,127
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Yankee Bonds 7.9%
1,250,000 Republic of Argentina, Floating Rate,
8.726%, 4/10/05 1,187,500
400,000 Imperial Tobacco O/S BV, 7.125%, 4/1/09 392,704
1,000,000 PDVSA Finance Ltd., 1998-1, 6.45%, 2/15/04 927,430
200,000 PDVSA Finance Ltd., 1998-1, 7.40%, 8/15/16 153,864
700,000 Petroleos Mexicanos, 8.85%, 9/15/07 671,125
500,000 Rothmans Nedrlnd Holdings, 6.875%, 5/6/08 500,770
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3,833,393
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TOTAL CORPORATE BONDS
(cost $25,576,604) 25,420,881
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See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Principal Amount Value
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U.S. GOVERNMENT AGENCIES 14.8%
$ 515,000 FHLMC - GNMA, Series 20H, 5.50%, 10/25/23 $457,989
350,000 FHLMC - GNMA, Series 20L, 5.50%, 10/25/23 301,577
241,460 FNMA, Pool 073339, 6.18%, 1/1/03 242,817
286,089 FNMA, Pool 160098, 7.91%, 3/1/04 303,520
429,893 FNMA, Pool 252093, 6.5%, 11/1/28 427,207
486,871 FNMA, Pool 411429, 6.5%, 2/1/28 483,828
481,587 FNMA, Pool 423088, 6.5%, 4/1/28 478,577
998,790 FNMA, Pool 433043, 6.5%, 6/1/28 992,548
506,313 FNMA, Pool 447704, 6.5%, 11/1/28 503,148
495,689 FNMA, Pool 448235, 6.5%, 11/1/28 492,591
1,055,211 FNMA, Pool 448635, 6.5%, 11/1/28 1,048,616
465,038 FNMA, Pool 449012, 6.5%, 11/1/28 462,131
493,773 FNMA, Pool 487778, 6.5%, 3/1/29 490,687
118,606 FNMA, Series 91-26G, 8.00%, 4/25/06 122,019
85,000 FNMA, Series 94-3PL, 5.50%, 1/25/24 77,194
78,900 GNMA, Pool 36629, 9.50%, 10/15/09 85,015
196,947 GNMHB, Pool 331001, 8.25%, 7/15/07 207,594
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TOTAL U.S. GOVERNMENT AGENCIES
(cost $7,184,934) 7,177,058
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U.S. TREASURY OBLIGATIONS 15.4%
U.S. Treasury Bonds 8.7%
1,000,000 7.50%, 11/15/16 1,171,470
2,930,000 6.25%, 8/15/23 3,051,536
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4,223,006
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U.S. Treasury Notes 6.7%
1,870,000 5.75%, 8/15/03 1,904,128
350,000 6.50%, 10/15/06 372,684
940,000 6.125%, 8/15/07 981,811
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3,258,623
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TOTAL U.S. TREASURY OBLIGATIONS
(cost $7,475,986) 7,481,629
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See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Principal Amount Value
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SHORT-TERM INVESTMENT 2.5%
$1,230,732 UMB Bank Money Market Fiduciary $1,230,732
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TOTAL SHORT-TERM INVESTMENT
(cost $1,230,732) 1,230,732
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TOTAL INVESTMENTS 98.7%
(cost $48,017,861) 47,874,189
Cash and Other Assets, less Liabilities 1.3% 651,217
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NET ASSETS 100.0% $48,525,406
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See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
ASSETS:
Investments at value (cost $48,017,861) $47,874,189
Interest receivable 645,714
Receivable from adviser 11,146
Deferred organizational costs, net 22,086
Other assets 5,453
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Total assets 48,558,588
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LIABILITIES:
Accrued investment advisory fee 15,961
Accrued expenses 17,221
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Total liabilities 33,182
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NET ASSETS $48,525,406
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NET ASSETS CONSIST OF:
Paid in capital $48,738,409
Accumulated net investment income 278,731
Accumulated net realized loss on investments (348,062)
Net unrealized depreciation on investments (143,672)
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NET ASSETS $48,525,406
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CAPITAL STOCK, $0.01 PAR VALUE
Authorized 100,000,000
Issued and outstanding 1,611,932
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $30.10
======
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1999 (Unaudited)
INVESTMENT INCOME:
Interest
$1,643,758
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EXPENSES:
Investment advisory fees 96,038
Fund administration and accounting fees 42,017
Shareholder servicing 10,297
Pricing 7,456
Legal fees 6,883
Audit fees 6,333
Amortization of organizational costs 4,373
Custody fees 3,788
Insurance 3,208
Federal and state registration fees 2,809
Reports to shareholders 1,159
Directors' fees and related expenses 1,050
Other 352
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Total expenses before waiver 185,763
Waiver of expenses by adviser (65,716)
-----------
Net expenses 120,047
-----------
NET INVESTMENT INCOME 1,523,711
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REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) on investments (344,790)
Change in unrealized appreciation/depreciation on investments (576,946)
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NET GAINS (LOSSES) ON INVESTMENTS (921,736)
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NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $601,975
===========
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
APRIL 30, 1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998
------------ ------------
OPERATIONS:
Net investment income $1,523,711 $2,696,141
Net realized gains (losses) on investments (344,790) 1,082,198
Change in net unrealized appreciation/
depreciation on investments (576,946) (266,487)
------------ ------------
Net increase (decrease) in net assets
resulting from operations 601,975 3,551,852
------------ ------------
DISTRIBUTIONS PAID FROM:
Net investment income (1,482,467) (2,634,499)
Net realized gains on investments (1,084,178) (83,976)
------------ ------------
Net decrease in net assets resulting
from distributions paid (2,566,645) (2,718,475)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 810,619 11,881,429
Shares issued to holders in
reinvestment of distributions 2,540,708 2,687,931
Shares redeemed (1,318,000) (6,041,766)
------------ ------------
Net increase in net assets resulting from
capital share transactions 2,033,327 8,527,594
------------ ------------
TOTAL INCREASE IN NET ASSETS 68,657 9,360,971
------------ ------------
NET ASSETS:
Beginning of period 48,456,749 39,095,778
------------ ------------
End of period (includes undistributed net
investment income of $278,731 and
$241,806, respectively) $48,525,406 $48,456,749
============ ============
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
APRIL 30, OCTOBER OCTOBER
1999 31, 31,
(UNAUDITED) 1998 1997<F1>
------ ------ ------
NET ASSET VALUE,
BEGINNING OF PERIOD $31.38 $30.85 $30.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (loss) 0.97 1.75 1.37
Net realized and unrealized gains
(losses) on investments (0.59) 0.59 0.70
------ ------ ------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 0.38 2.34 2.07
------ ------ ------
LESS DISTRIBUTIONS PAID:
From net investment income (0.95) (1.75) (1.22)
From net realized gains on investments (0.71) (0.06) -
------ ------ ------
TOTAL DISTRIBUTIONS PAID (1.66) (1.81) (1.22)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $30.10 $31.38 $30.85
====== ====== ======
TOTAL RETURN<F2> 1.23% 7.79% 7.13%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $48,525 $48,457 $39,096
Ratio of expenses to average net assets<F3><F4> 0.50% 0.50% 0.50%
Ratio of net investment income
to average net assets<F3><F4> 6.34% 5.79% 6.02%
Portfolio turnover rate<F2> 67% 131% 202%
<F1> Commenced operations on November 25, 1996
<F2> Not annualized for periods less than a full year
<F3> Net of waivers and reimbursements by Adviser. Without waivers and
reimbursements of expenses, the ratio of expenses to average net assets
would have been 0.77%, 0.78% and 1.27%, and the ratio of net investment
income to average net assets would have been 6.07%, 5.51% and 5.25% for the
periods ended April 30, 1999, October 31, 1998 and October 31, 1997,
respectively.
<F4> Annualized
See notes to financial statements.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
NOTES TO FINANCIAL STATEMENTS
April 30, 1999 (Unaudited)
(1) ORGANIZATION
Frontegra Funds, Inc. ("Frontegra") was incorporated on May 24, 1996, as a
Maryland corporation and is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end diversified investment
company issuing its shares in series, each series representing a distinct
portfolio with its own investment objectives and policies. Frontegra
consists of three series: the Frontegra Total Return Bond Fund (the
"Fund"), the Frontegra Opportunity Fund and the Frontegra Growth Fund. The
Fund commenced operations on November 25, 1996. Costs incurred by the Fund
in connection with its organization, registration and the initial public
offering of shares have been deferred and will be amortized over the period
of benefit, but not to exceed five years from the date upon which the Fund
commenced its investment activities.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
(a) Investment Valuation
Debt securities (other than short-term instruments) are valued at bid
prices furnished by a pricing service, unless actual sale prices are
available. Securities maturing within 60 days or less when purchased
are valued by the amortized cost method. Any securities for which
market quotations are not readily available are valued at their fair
value as determined in good faith by Reams Asset Management Co., LLC
(the "Sub-Adviser") pursuant to guidelines established by the Board of
Directors.
(b) Federal Income Taxes
No federal income tax provision has been made since the Fund intends
to meet the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute substantially all
investment company net taxable income and net capital gains to
shareholders in a manner which results in no tax cost to the Fund.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
NOTES TO FINANCIAL STATEMENTS (continued)
April 30, 1999 (Unaudited)
(c) Distributions to Shareholders
Dividends from net investment income are usually declared and paid
quarterly. Distributions of net realized gains, if any, will be
declared and paid at least annually. Distributions to shareholders are
recorded on the ex-dividend date. The character of distributions made
during the year from net investment income or net realized gains may
differ from the characterization for federal income tax purposes due
to differences in the recognition of income, expense and gain items
for financial statement and tax purposes. Where appropriate,
reclassifications between net asset accounts are made for such
differences that are permanent in nature. Accordingly, at April 30,
1999, reclassifications were recorded to decrease accumulated net
investment income by $4,319, decrease accumulated net realized losses
on investments by $6,275 and decrease paid in capital by $1,956.
(d) Other
Investment transactions are accounted for on the trade date. The Fund
determines the gain or loss realized from investment transactions by
comparing the original cost of the security lot sold with the net sale
proceeds. Dividend income is recognized on the ex-dividend date and
interest income is recognized on an accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of
increases and decreases in net assets from operations during the
reporting period. Actual results could differ from those estimates.
(3) INVESTMENT ADVISER
The Fund has an agreement with the Adviser, with whom certain officers and
directors of the Fund are affiliated, to furnish investment advisory
services to the Fund. Under the terms of this agreement, the Fund will pay
the Adviser a monthly fee at the annual rate of 0.40% of the Fund's average
daily net assets. The Adviser has agreed to voluntarily waive its
management fee and/or reimburse the Fund's operating expenses (exclusive of
brokerage, interest, taxes and extraordinary expenses) to ensure that the
Fund's operating expenses do not exceed 0.50% of the Fund's average daily
net assets.
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FRONTEGRA FUNDS
Frontegra Total Return Bond Fund
NOTES TO FINANCIAL STATEMENTS (continued)
April 30, 1999 (Unaudited)
(4) CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
--------------- --------------
Shares sold 25,697 385,190
Shares issued to holders in
reinvestment of distributions 83,579 86,889
Shares redeemed (41,596) (195,049)
--------- ---------
67,680 277,030
========= =========
(5) INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments and U.S. government securities, for the Fund for the six months
ended April 30, 1999, are summarized below:
Purchases $12,925,111
Sales $13,508,591
Purchases and sales of U.S. government securities were $19,676,118 and
$17,687,445, respectively.
At April 30, 1999, gross unrealized appreciation and depreciation of
investments, based on cost for federal income tax purposes of $48,049,992
were as follows:
Appreciation $ 373,054
Depreciation (548,857)
----------
Net depreciation on investments $(175,803)
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FRONTEGRA FUNDS, INC.
c/o Sunstone Investor Services, LLC
P.O. Box 2142, Milwaukee, Wisconsin 53201-2142
FB-410-0699
